Carmelotes, Kirk Johnson Q.

BSA – IV Accounting Thesis Dec 11, 2018

Market Orientation and Business Practices: An Improvement in the Performance of MSMEs in

General Santos City

Background of the Study:

Business has been part of human society. It is our source of needs, entertainment any

other else. Businesses help our society to grow in different fields, especially in our economic

aspect. Also, it allows a lot of people to acquire a way of living to sustain their needs and wants.

Businesses are scattered around the globe, where there’s an innovation and transcendence in a

society.

Philippines is one of the countries that is currently booming in terms of its economy,

allowing our country to compete with other nations, especially on ASEAN countries. Also, it

caters a lot of people to have jobs resulting in a decrease in unemployment rate. However, in

the midst of all these things, there’s still a lot of improvement that should be done, especially to

those starters in regards to their market orientation and business practices. Across the nation,

General Santos City is one of the cities that is also improving where emergence of MSMEs are

evident. MSMEs are categorized as the starters of the business field and should thrive more to

compete against established businesses to succeed. These entities are in need of guidance like

orientation and practices to address their weaknesses, inadequacy and control allowing them

to serve more their customers as well as keeping a good relationship among their employees.
 Market orientation and business practices have been a problem to these entities, where

mismanagement and the flow of operation towards their customers are affected.

Preliminary Literature Review

MSMEs. Perequit (2006) said that Micro, Small and Medium Enterprises (MSMEs) are

the backbone of all economies and are a key resource of economic growth, dynamism and

flexibility in advanced industrialized countries, as well as in emerging and developing

economies. MSMEs constitute the dominant form of business organization, accounting for over

98% and up to 99% of enterprises depending on the country. They are responsible for between

60 – 70% net job creations. Small businesses are particularly important for bringing innovative

products or techniques to the market.

As of 2010 by SEPO (2012), there were a total of 777,687 business enterprises in the

Philippines. Of this figure, MSMEs represented 99.6 percent with 774,664 establishments while

large enterprises represented 0.4 percent with 3,023 establishments. Micro enterprises

comprised 91.6 percent (709,899) of the total number of MSMEs while small and medium

enterprises accounted for 8 percent (61,979) and 0.4 percent (2,786), respectively.

Market Orientation. Market orientation is one of the basic keys of a marketing concept

and marketing strategy paradigm. Therefore, researches on market orientation in early 1990s

have gained wide support and have been conceptualized in two related but different

approaches (Piercy, Harris, & Lane, 2002).

 The first approach was developed by Kohli and Jaworski (1990) which is known as the

behavior-based view of market orientation. The second one was proposed by Narver and Slater

(1990) known as the culture-based interpretation of market orientation. Hult, Ketchen, and

Slater (2005) concluded their research by recognizing the importance of both Narver and

Slater’s and Kohli and Jaworski’s concepts. While the previous detected business culture and

the latter business information process behaviors, they together created more wholistic image

of market orientation than neither alone. Hult et al. (2005) disagreed with the idea that market

orientation directly leads to enhanced performance. Thus, they hypothesized that market

orientation and market information processing (MIP) both are positively related to business

responsiveness, which in the end has positive effect on performances.

Market orientation is a root concept in marketing theory (Kok, Hillebrand, & Biemans,

2003). Although there are different definitions of market orientation, this concept usually

focuses on three components: customers, competitors, and coordination among tasks. All the

definitions offered from market orientation by experts, such as Kohli and Jaworski (1990), have

an operational focus on data collection, data dissemination, and the ability to respond to what

has been received (Erdil, Erdil, & Keskin, 2004). Further, Grinstein (2008) cited the definition of

market orientation (MO) from Narver and Slater (1990) that defined market orientation as: “…

the most effectively and efficiently creates the necessary behaviors for the creation of superior

value for buyers and thus, continues superior performance for the business”

According to Studiowide (2018), this is a culture rather than an individual process. It’s

the norms, mindsets, values and behaviours of employers; alongside the structure, systems and
control of the organisation. Marketing oriented businesses define their activities as service

activities carried out towards the satisfaction of their customers.

Business Practices. Practice is a method, procedure, process, or rule used in a particular

field or profession; a set of these regarded as standard. Business practices allow entities to

integrate their flow of operation, where planning, organizing and division of duties are

important practices that should be done.

Business Performance. Measuring business performance in today’s economic

environment is a critical issue for academic scholars and practising managers. In general,

business performance is defined as “the operational ability to satisfy the desires of the

company’s major shareholders” (Smith & Reece, 1999, p. 153), and it must be assessed to

measure an organisation’s accomplishment.

Performance is an indicator that may be comprised of productivity, quality, consistency,

and so forth. Business performance refers to the outcomes of various organizational processes

which occur in the course of its daily organizational activities. A number of researches have

examined and proposed the concept of business performance (Appiah-Adu & Ranchhod 1998),

but Ford and Schellenberg (1982) argued that many researchers still have different arguments

in defining it. However, Dess and Robinson (1984) wrote that most of them have the same view

in term of defining it as a complex phenomenon.

It is difficult to measure the performance of an organization. However, Kim (2005)

stated that the evaluation can still be implemented in traditional ways, as an objective

measurement. Initially the measurement was focused on financial indicators, with time, the
measurement model were increased by adding non-financial indicators. This measurement

process has a positive impact on the business success as the report of an organization’s

performance level is able to quantify the results.

Statement of the Problem

1. What is the effect of implementing market orientation and business practices among

MSMEs in General Santos City:

1.1 Business;

1.2 Customers, and;

1.3 Employees?

2. How could market orientation and business practices reduce the cost of operation

among MSMEs in General Santos City?

3. What is the level of performance of MSMEs in General Santos City in terms of the

following:

3.1 Market Orientation, and;

3.2 Business Practices?

Methodology

This study is a qualitative and quantitative type of study, where it focuses on a

descriptive type of research. The study is also focusing on the effect of having market

orientation and business among MSMEs that will enable them to thrive more against other

established businesses here in General Santos City.