Edited Thesis Chap.1-3
Edited Thesis Chap.1-3
Edited Thesis Chap.1-3
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CHAPTER I
INTRODUCTION
Background of the Study
Covid-19 has become a major global crisis which started late December 2019 in Wuhan,
China. A crisis refers to "a sudden and unexpected event that threatens to disrupt an
organization's operations and poses both a financial and a reputational threat" (Coombs,
2007:163). It distracts economic consumption and mobility of people due to strict compliance
on the health protocol. Small business was heavily affected due to the health crisis brought by
the pandemic were health protocols and lockdowns are strictly imposed. Owners started to get
worn out on how they will manage their businesses and get rid the economic impact of the
pandemic on their finances and business stability. Small businesses started to lay off some of
their workforce and began to worry about their economic loss.
Covid-19 Pandemic hit the Philippines and became a shocking and worrisome health
crisis due to alarming increase of Covid-19 patients. Thus, by the order of President Rodrigo
Duterte Proclamation Nos. 929 and 922(s. 2020) and Republic Act No. 11332 all heads,
agencies, departments, offices and instrumentalities of the government are hereby directed
coordinate and implement guidelines to impose Enhance Community Quarantine over the entire
Luzon effective on 12 a.m. of March 17, 2020. Under Executive Order No. 61-20 Enhanced
Community Quarantine was imposed to restrict the movement of people to and from Ilocos
Norte in compliance to the previous proclamation of President Rodrigo Duterte. Large and
small businesses are highly hit by the strict lockdowns imposed where people are not allowed to
go out in their community to work and to leisure. Lockdowns cause massive problems on their
income and starting to worry about their businesses. The widespread closing of stores and
businesses in the Philippines and around the world due to the coronavirus is unprecedented.
Stores, factories and many other businesses have closed by policy mandate or downward
demand shifts. Many of these closures may be permanent because of the inability to pay
ongoing expenses and survive the shutdown.
Early work on crisis management indicates that a sudden and unexpected event
threatens business goals and exert stress on management to take prompt action to respond
(Hermann 1963). However, some small businesses failed to take proper actions to respond the
impact of the Covid-19 Pandemic. Moreover, early crisis management actions of some business
owners do not succeed due to the large scale that the crisis impacted to the owners as well as
business consumers.
According to Herbane “the core of crisis management is to develop strategies that
minimize economic loss and increase resilience through a crisis event. Existing literature on
crisis management mostly targets large firms with less attention on small and medium size
enterprises (Herbane, 2013). Small businesses are vulnerable due to existing business ideas are
largely for big corporation not on the small businesses. Existing economic policy and literature
ideas are highly benefited the large-scale corporation on managing crisis management due to
their highly skilled technocrats and economic managers.
Small firms, due to resource constraints, weaker market positioning, and other factors,
may be more vulnerable to crisis events. However, SMEs may have advantages as flexibility,
learning capabilities, innovation, customer relations (Herbane, 2010, 2013; Hong & Li, 2012;
Irvine & Anderson, 2006). Herbane and company, suggests that small businesses may have the
capability to cope up the economic impact of the pandemic by innovation, flexibility, learning
capabilities, and customer relations. Small owners must be flexible coping the new trends of
consumptions due to health protocols and consumers mobility. Owners must adapt the Covid-19
Pandemic and innovate their businesses to comply with the global trends of electronic
consumptions and consumer’s mobility. Small businesses must develop strong customer’s
relations and trust in maintaining a well-organized place in securing health through proper
health protocol implementations.
Generally, this study aims to determine the coping mechanisms of small enterprises in
the City of Batac, Ilocos Norte during the COVID-19 pandemic. Specifically, it seeks to answer
the following questions:
1. What is the socio-demographic and business profile of the respondents in terms of:
1.1 educational attainment
1.2 nature of the business
1.3 number of employees
1.4 estimated average monthly income before and during the pandemic?
2. What are the economic effects of the Covid-19 on small entrepreneurs in the City of
Batac, Ilocos Norte?
3. What are the coping mechanisms of small enterprises to contend with the pandemic in
terms of:
2.1 layoff some employees
2.2 decrease salaries
2.3 rotating schedules
2.4 reduce operation hours
2.5 promos or reduce product costs
2.6 innovation and online marketing
2.7 monitor employee’s health
2.8 implement health and safety protocol
2.9 reduce operational cost and capital
4. What support do small entrepreneurs need to keep their businesses going during and
after the pandemic? (eg. Government support, rents, tax, etc..)
The study aims to determine the socio-demographic profile and coping mechanisms of
small enterprises in City of Batac, Ilocos Norte during the COVID-19 pandemic. The guidance
must be taken care to:
3. Determine the economic effects of the Covid-19 pandemic on small entrepreneurs in the
City of Batac during the pandemic.
4. Determine the measures that small enterprises employed to take care of their businesses
during the Covid 19 pandemic.
5. Determine government and other institution financial support on small enterprises to keep
their businesses during and after the pandemic.
Business Owners. The results will provide the small enterprises owners best insights
and strategies on how to cope up during Covid-19 Pandemic and to lower the risk of
economic loss during COVID-19 pandemic. It will give realization to small business
enterprises the importance of having multiple strategies in dealing a crisis.
SME’s Researchers. The results of this study will serve as a spring board for the
SME’s researchers which may venture on related studies specifically on the coping
mechanisms of small businesses during a pandemic. The research team will also be
able to develop their critical and development skills to acquire new learning business
strategies to be used in future economic and health crisis.
Local Government Officials. The results will help the local government officers to
determine the coping mechanisms of small enterprises of Batac City and also to serve
as a guide in implementing local government support in small enterprises during a
pandemic.
The general intent of this study is to determine the coping mechanisms of micro
enterprises in City of Batac, Ilocos Norte during the COVID-19 pandemic.
This study is designed to have thorough knowledge on the coping mechanisms of small
enterprises and during the COVID-19 pandemic. This study is designed to get valuable
information on their coping mechanisms to be used in the future advent of a pandemic.
The study will utilize descriptive correlational design. The respondents of the study will
be composed of 50 small enterprises owners. Data will be gathered from the respondents using
checklist and limited responses in the form of questionnaire.
Data will also be gathered through an online survey in the form of checklist and limited
to the responses of the small enterprises owners in the questionnaire on June- July,2021.
The study is limited to small business enterprises owners of Batac City. However, if the
respondents are not available, managers can answer the questionnaire on his behalf.
Questionnaire through google forms will be sent to the owners for verification on the needed
vital information.
Definition of Terms
The following represents an initial identification of some terms and concepts. For a
better understanding of this study, the following terms are operational defined.
Small Enterprises Owners: It refers to the person who owns the business. It also refers
to the entity that managing the business and having a final say on financial matters of the
business.
Managers: It refers to a person who controls the activities, business dealings, and
administering managerial post. They are served tp guide employees below his/her rank.
Health Protocols. It refers to the process of enabling people to limit face to face
conversations and gatherings. It requires basic health minimum standard by wearing
protective masks and face shields and monitoring log for customers
CHAPTER II
This chapter presents the related literature and studies from foreign sources. This will
also present the synthesis of the art, theoretical and conceptual framework to fully understand
the research done and lastly the definition of terms for the better comprehension of the study.
Crisis Planning, Diagnosis, and Response SMEs should establish a crisis plan in the
good days. Irvine & Anderson (2006) and Munoz et al. (2019) also found that small firms with
proper crisis planning survive and recover better from crises events. Ferris et al. (2007) and
Maniero & Gibson (2003) concluded that HR should be responsible for coming up with a crisis
plan, involving various organizational levels, and guarantee its timely dissemination. Ruff and
Aziz (2003) stated that SMEs should have a crisis management team involving staff from
various fields and even outside crisis specialists.
Researchers concluded that having a crisis warning system is crucial to survival from crisis
events. Kurschus et al. (2015) suggested that SMEs need to adopt a comprehensive crisis
warning system that fully considers both financial and non-financial factors. The authors also
proposed a stakeholder perspective of crisis diagnosis to identify a possible crisis at an early
stage. Liu (2013) studied the feasibility of constructing a crisis-based early warning intelligence
system. Leadership and HR are critical during crisis events (Tannenbaum & Schmidt, 1957;
Perkings & Murphy, 2013; Edmond et al., 2014; Xu, 2013; Guo, 2018; Cheng, 2018). Losing
critical employees during crisis can be disastrous (Hao, Zhang & Shang, 2010). Dent &
Cudworth (2018) identified the effectiveness of leadership and decision-making and the
effectiveness of teamwork as the top two challenges to effective crisis response. SMEs should
provide proper training for managers on crisis stress management (Ferris et al., 2007; Maniero
& Gibson, 2003) and resolving conflicts in the workplace.
Timely communication at the management level is essential during crises. Tang (2018)
and Nong (2018) found that social media is widely used as a channel for effective crisis
communications by professionals and management. Finally, robustness and flexibility are
highly demanding when managing trans boundary crises. Firms need to rapidly customize their
strategies and timely reorganize their courses of action (Ansell et al., 2010). Figure 1
summarizes the crisis management strategies for SMEs from the literature reviewed.
Some companies recover from crisis, and others do not. McConnell (2011) stated that
recovery from crises is never entire and complete, particularly in SMEs due to their resource
constraints and relatively weak market positions (Hong & Li, 2012; Corey & Deitch, 2011).
During challenging times, new startup firms have a high chance of surviving during crisis
periods than during the growth period, likely due to the lack of job opportunities (Simon-Moya
et al., 2016).
Survival Strategies
The five categories are operation, financial, human resources, products, and network.
All participating firms report using operation strategies (close down or reduce operation hours),
HR strategies (Flexible HR policy), financial strategies (cost cut), and network strategies
(customer relation) during the COVID- 19 outbreak. Four out of six firms have kept timely
communication at the management level (HR). Three out of six firms have adopted other
survival strategies on the list. The participating firms find these strategies useful for surviving
through the crisis.
Our research findings are consistent with current literature, such as Doern et al. (2016)
and Spillan & Ziemnowicz (2003). Unlike previously reported crises (Doern et al., 2016; Irvine
& Anderson, 2004 and 2006), small firms increased flexibility of staff policies (HR), reduced
costs (financial), and improved customer relations (network).
Crisis Management
It is worthwhile mentioning several other qualitative studies about the impact of the
crisis on small firms, for example, after Hurricane Katrina (Runyan 2006), the 2011 London
riots (Doern 2016), and, more recently, entrepreneurial firms in Germany during the COVID-19
pandemic (Kuckertz et al. 2020). However, none of these qualitative studies have adopted an
integrative perspective on the crisis, as Bundy et al. (2017) propose. Runyan (2006) and Doern
(2016) focus on the internal perspective of firms and only during the crisis. Meanwhile,
Kuckertz et al. (2020) gather the internal views of the startups and external organizations
(investors, accelerator, association, and corporation) but only during the crisis stage. Thus, there
is limited understanding of the dynamics between the internal and external perspectives during
a crisis, and how they occur at different crisis stages.
Coping Strategies
Perhaps the greatest determinant of success for entrepreneurs and small business owners
is maintaining a keen eye on the needs and desires of their customers. In times of drastic
change, this perspective is even more important, as existing business models will be destroyed
and new opportunities will be created. If small business owners can take solace in anything, it
is that the internet has democratized the marketplace and created numerous possibilities for
engaging with customers. While small business owners should certainly spend appropriate time
assessing the viability of government rescue programs to maintain their operations, the optimal
means of risk mitigation is the identification of new customers and new opportunities to pursue
growth and infuse some positive momentum back into the business. This pandemic will
eventually pass and small business owners who use this time to meaningfully connect with their
customer base, develop stronger community ties, improve their own skillsets, and innovate their
business models will emerge stronger than ever before.
Third, similar to connecting with and meeting the needs of customers, considering the
needs of your employees is also critical. The economic reality for many businesses right now is
layoffs, furloughs, and equally awful outcomes. If your business is in a position where shedding
workforce to preserve the venture is required, we empathize—it a miserable position in which
to be. However, in times like these it is more important than ever to be a strong leader—so be
transparent, accountable, and overcommunicate. Transparency means letting employees know
what is happening to the business from a revenue and business model perspective. While many
owners tend to keep this kind of information confidential, sharing more than normal and letting
employees understand the economic reality in the short term can help them understand your
business model, builds trust, and can create value for you in the long term.
Figure 1 shows the research paradigm of the study. The paradigm used is the
independent variable--dependent variable model (IV-DV). The socio demographic profile
characteristics of the respondents are the independent variables and the coping mechanisms of
small businesses are the dependent variable. The first box shows the Socio-demographic profile
of the respondents. The second box shows the coping mechanisms strategies of small
businesses of the respondents. The line signifies the relationship between the socio-
demographic profile of the respondents and the coping mechanisms of small enterprises during
COVID 19 pandemic. The socio demographic profile will be correlated to coping mechanisms
of the respondents to see the effect of the profile of the respondents to its coping mechanisms
strategies that the respondents employed.
METHODOLOGY
This chapter presents the methods which will be utilized by the researchers that includes
the research design, locale, instrument, sampling, data gathering procedure, and statistical tools
that will be used in analysing the data.
Research Design
The study will use the descriptive research design. Descriptive research design will be
used to determine the socio-demographic profile of the respondents as to age, sex, and monthly
income loss, nature of the business, and the number of employees; the coping mechanisms of
the respondents during the pandemic as crisis management strategies, survival strategies,
rresilience, dynamic learning, and strategic renewal. It is correlational research design because
it aims to determine the significant relationship between the socio-demographic profile of the
respondents and their coping mechanisms of during the COVID-19 pandemic.
This study about coping mechanisms of small enterprises during Covid pandemic will
be conducted at Batac City.
City of Batac is situated at the south-western portion of the Province of Ilocos Norte. It
is booming city where business grow at an alarming state. It situated at the boundaries at west
Paoay and Curimao, Pinili at the south boundaries, Nueva Era at the southeast, Sarrat and
Banna on the east, San Nicolas on the north boundaries. It is a large land area with a land area
of 161.06 square kilometers or 62.19 square miles which constitutes 4.64% of Ilocos Norte's
total area, occupied by 43 Barangays. Its population as determined by the 2015 Census was
55,201. This represented 9.31% of the total population of Ilocos Norte province, or 1.10% of
the overall population of the Ilocos Region.
Batac City is a home of booming commercial enterprises because of its location. It home
newly built enterprises. Many small enterprises are being built in its Centro proper alone.
Population and Sampling
The subjects in the study will be the micro entrepreneur owners in the City of Batac, Ilocos
Norte. Fifty percent of the … and micro businesses in the City will be the respondents of the
study. The number of respondents will be equally divided to the two identified categories:
service and retail.
Research Instrument
The instrument will be presented to the research adviser for suggestions, then it will be
presented to the panel members. Suggestions given by the panel members will be incorporated.
Then, it will be presented to the adviser before it will be pilot tested to 5 small business owners
in City of Batac. Questions which will be found to be difficult and broad to understand will be
revised and suggestions that will be solicited from the respondents will be taken to refine the
questionnaire.
The researchers will present the research proposal to the research panelist for approval
and revisions. Proposed study will be reviewed by the advisory committee that will then be
forwarded to the University Research Ethics Review Board (URERB) by submitting a copy of
research proposal for ethics review and to ensure that the research study satisfactorily complied
with the key ethical principles.
Researchers must get Aapproval of the panellist and the URERB, the researchers will
request permission from the Dean of College of Business and Economics and Accountancy to
conduct the study with their research adviser, ________________________.
Permission Letter from the respondents with regards to their participation in the study
and informed consent will be attached to the questionnaire to ensure voluntary participation.
The respondents will sign the informed consent indicating that they willing to be the
respondents of the study. The researchers shall ensure confidentiality of information from the
respondents and ensure them that gathered information will be used for academic purposes
only.
In the conduct of the study, the researchers will use paper-pencil survey questionnaire in
the form of checklist. Researchers may used google form checklist to have a back up plan for
gathering data. To ensure 100% retrieval of the questioners, the researchers may personally
attend to the distribution and collection of the instrument.
After gathering the desired information, data will be collected for analysis and
interpretation.
Data Analysis
Relationship between variables was tested with Pearson-r correlation analysis. The test
of significance will also employ to determine the strength of the relationship among the
variables being correlated.
Data will be analyzed to get the relationship of Socio Demographic Profile of the
respondents and its coping mechanisms strategies. Data will be treated confidential and it is
used for academic research purposes only.
Statistical Treatment
The study aims to determine the socio demographic profile and the coping mechanisms
of small business owners in City of Batac during the COVID-19 pandemic. The profile of the
respondents as to age, sex, monthly income loss, nature of the business and number of
employees will be presented using frequency and percentage distribution to draw a common
description.
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