Chapter 2

Review of Related Literature and Related Studies

In this chapter, the present study provided related literature and studies after the in-

depth search done by the researchers. The literature and studies were reviewed to

strengthen the data and information about the study. This study also includes the synthesis

of the state of the art, bridge gap by the study, theoretical framework and paradigm,

conceptual framework and paradigm that is needed to fully understand the research study.

Related Literature

According to Investopedia (2018), microenterprise is a small business that operates

with fewer than 10 people and started with a small amount of capital. Most of the

microenterprise are specialize in providing goods and services in local areas. They serve an

important purpose in the improvement of the people’s quality of life in the developing

countries by producing goods and services to the people. Also, microenterprise helps

microenterprise owners and employees by providing them additional income for their

families. However, given the size and resources, micro providers have limited access to

financial advisors and expertise that help them better manage the business that caused them

to manage the enterprise on their own.

In the article of Michalowicz (2011), it was stated that microenterprises make up

the largest area of businesses in the world. It is considered as the backbone of the country.

Because of the growing population, the number of microbusinesses will continue to grow.

Engaging to microbusiness is a good option to generate income because it involves low

9
start-up cost, low overhead because owners do not worry on big payroll each month and it

is easy to tap into one of talents to capitalize on the business.

However, on the report of Thompson (2016), it was explained that poor people in

the developing world often lack access to safe places to keep their savings. They cannot

obtain credit to start business or to grow their own business. The poor do not have basic

services like insurance to protect themselves against drought and natural disasters. The

micro and small enterprises owned by poor often have little help in getting access to new

technologies or business networks that could improve opportunities to sell their products.

The microenterprises improve the lives of the very poor by helping them to protect

themselves against risks and illness through the income generated in running the micro

business.

Moreover, it was stated on the article of Roberts et al. (2018), that microbusiness

provides an average of 38 percent of the owners’ household incomes. It creates jobs that

foster skill development and employ local residents who are disadvantaged or excluded

from traditional labor markets. Microbusinesses have different roles in the community.

They provide products and services tailored to locale. They occupy vacant storefronts that

provide places for people in the community to meet. They stimulate inflow of community

resources and they become role models in supporting the future entrepreneurs. Because

microbusiness was highly local, owners rely heavily on local financial and network

resources. Poor communities often lack to local resources, preventing promising micro-

entrepreneurs from succeeding, and robbing communities of the benefits of the ideas and

efforts of thousands of promising entrepreneurs.

10
 Additionally, as stated by Chakrabarty (2011), microenterprise provides

employment to the people and also support industries by supplying raw materials, basic

goods, finished goods and etc. It plays a vital role in the economy of the developing nation.

However, engaging to the microenterprise has relatively higher failure rate because of the

inadequate availability of credit support system from to develop the business.

Microenterprise is the beginning of the process in achieving greater heights in the business,

if only given the support to build skills and knowledge levels of owners and also the

employees.

In line with the article of Fiala (2017), it was stated that across the developing

world, microenterprises offer important income generating opportunities for people with

limited formal employment options, but these businesses often struggle to grow and fail to

provide more than subsistence-level income for their owners. Lack of access to finance and

management ability are important constraints to microenterprise growth. Without capital

and appropriate skills, it is difficult for businesses to grow.

On the composition of Phansalkars (2018), it stated that encouraging and financing

micro-enterprises among the rural poor is today seen as a major livelihood promotion

method. Enterprise should be one of the sufficiently high social value justifying public

investment. Even though the microenterprise produces social good, it must also offer

sufficient individual benefit to a user of its product or service so that the people will be

willing to pay a fee. Livelihoods and poverty alleviation programs have therefore taken

promoting micro-enterprises of rural and urban individuals.

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 Furthermore, based on the Association for Enterprise Opportunity (2013),

microbusinesses are well-poised to take advantage of the changes under way in our labor

market and the broader economy. With lower start-up capital requirements and lower

educational barriers than other sectors, microbusinesses will flourish with the participation

and risk-taking that are essential for success in the new economy. Microbusinesses not only

impact the livelihood of owners, they also lead to better outcomes for their families, local

communities, and entire regions, as well as the national economy. Microbusinesses can

provide opportunities for many individuals in society.

Related Studies

The study of Gomez et al. (2015), was designed as a qualitative research study to

illuminate how microenterprises contribute to the job creation and economic opportunity.

This research focused on the understanding the quality of the jobs provided by

microenterprise. Using the purposive sampling method, the researchers conducted 104

interviews with an open-ended questions that allowed for exploration of wide range issue.

A content analysis was used to search for overall patterns and themes among responses.

The report examined the contribution of these jobs to the workers’ quality of life by

providing meaning and purpose, positive engagement and involvement, and work

friendships. Most of the employees of microenterprise value their jobs as ways to support

their families and build their futures.

While on the study of Silva et al. (2016), it was verified the influence of microcredit

on the development of microbusinesses and on the quality of life of the micro

entrepreneurs' families in the State of Minas Gerais, Brazil. The study developed a

12
quantitative research with a probabilistic samples consisting of 250 micro entrepreneurs.

Descriptive-statistical techniques and analysis of structural equation model were applied.

The collection tool used was a structured questionnaire which sought to understand the

respondents’ profile. The questionnaires was developed with a Likert Scale of 5 points-

strongly disagree (1) to totally agree (5). The study revealed that the factor business

management exerts positive influence on the quality of life of the micro entrepreneurs.

Respondents reported improvement in care with family clothing and hygiene, in the

purchase of suitable school supplies for their children, improvement in food and in the

possibility of enjoying leisure activities more frequently through the microcredit of the

micro business.

Another study conducted by Maseya (2015), aimed to determine the type of impact

that micro and small enterprises have on the livelihood of the low income residents of the

community. This study sought whether microenterprises could transform the lives of

people who rely on them for a living. A qualitative research design was used to have an in

depth information from the people who has relevant information for the study. The study

was also limited through the use of interviews in getting the relevant information. The

researchers used purposive and snowballing sampling method from the population of the

micro and small enterprises in Khayelitsa. Twenty-two (22) respondents were interviewed

and observed by the researchers in conducting the study. The data were presented in a

narrative analysis coupled with graphs and tables. The result of the study concluded that

microenterprises have positive impact on the livelihood of the low income households. The

income that was generated in the microenterprises were mostly used for the household

consumption. Most of the households were able to provide health care, shelter, education

13
for children and extended family members, food and household property and some were

able to purchase a vehicle.

On the other hand, the study of Nabutola (2014), investigated the factors

influencing the performance of micro, small and medium enterprises in the Central

Business District Bonguma County. The researchers administered questionnaires and also

interview schedule in getting information of the study. Descriptive resign was applied

because variables under the study have already occurred and beyond control. Through the

stratified random sampling, there was a total of 427 employees and owners/mangers that

were selected from the micro, small and medium enterprises in Bonguma. Data were

analyzed through qualitative and quantitative techniques. Based from the findings of the

study, one factor that influence MSME’s is age. MSME’s have relatively younger

employees and owners. Most micro and small enterprises are owned and mainly run by

people in their late 20s and early 30s which comprise of the youthful population. The

younger owner/manager has the necessary motivation, energy and commitment to work

and is more inclined to take risks that result to the improved performance of the business.

In accordance with Osunsan et al. (2015), their study sought to identify the effect of

the age of owners on the small scale enterprises performance in Kampala, Uganda. The

study adopted ex post facto, descriptive correlation, descriptive comparative and cross-

sectional survey design. The data were collected using the standardized and improvised

questionnaire to the 409 samples of micro and small enterprise owners in Kampala. The

researchers used the potent parametric statistical techniques such as one way ANOVA,

Pearson’s Linear Correlation Coefficient (PLCC) and regression analysis. The result of this

research study indicated that there were no correlations between age of the owners and the

14
performance of the business in Kampala. Better micro and small businesses were not

limited to certain age groups. The study concluded that the need to make resources for

business growth were both for young and old business owners. Regardless of the age of the

owners, they provide employment for the residents of a community for the success of their

business.

In line with the study of Kotur (2014), it was aimed to investigate the influence of

age and gender on the performance of the employees in the enterprises. It involved the use

of questionnaires as instrument in gathering information. Also, the study used empirical

testing of the problem statements set forth for the study. Based on the tabulations and

statistical tests, gender has a significant difference on the performance of the enterprises. In

addition, it was stated that globalization of business gives individuals equal opportunity to

work in different organizations. Both men and women compete for job positions in a

certain business. However, it was stated on the study that female workers are more

productive than males. But, even though male and female employees exhibit different

levels of performances at their work, they still have opportunity to work in business.

Moreover, in the study of Shava et al. (2016), it was established the performance of

MSMEs differs significantly and assess the gender gap if MSME could be allocated to

gender differences in business related experience. The study used the descriptive research

design with the use of self-administered questionnaires in gathering data. In the data

analysis of the study, the researchers used the t-test and chi-square. T-test was used to

investigate whether being male or female had significant influence on the microenterprises

performance. The chi-square test was used to control the level of business-related

experience between genders to critically examine the association between gender and

15
performance. The study concluded that controlling the level of business-related experience

between male and female owners has no difference in the performance of MSMEs. When

other key factors such as managerial experience, prior business ownership and industry

experience of entity owners are also taken into consideration, it would provide evidence to

indicate the insignificant difference in the performance of male and female-owned entities.

On the other hand, the study of Ibasco (2018), aimed to determine the role of

microenterprises to the entrepreneurial development in Daet, Camarines Norte. This study

used the descriptive research design that described the facts and characteristics of the given

population that also involved content analysis. Using the non-probability purposive

sampling method, there were a total of forty (40) respondents that were registered micro

entrepreneurs in Daet. The researchers used the unstructured interview that answered by the

respondents based on their experiences. This study dealt with the qualitative data analyses

that were expressed through words as a unit of analysis. In this study, it was found that

microenterprises have a role in the developing entrepreneurial abilities, improving

entrepreneurial service and providing employment. The average years that micro

entrepreneurs have been managing microenterprises was five years which gave them

background experiences regarding the field before they started their own business Also, it

was concluded that being engaged to micro businesses for a long period of time gives

knowledge, skills and experiences not only to micro entrepreneurs but also to employees

that helps them in running the business.

Another study of Radipere (2014), examined the effect that age and business size

have on the business performance. A structured research questionnaires was used to collect

data from the 500 MSME in retail industry through interviewer administrated and self-

16
administrated survey. An ex post facto and cross sectional design was used in this study.

The study assumed causality and statistical inferences about how the whole population will

be made based on a representative sample. The analysis of variance (ANOVA) is the

statistical method for testing the null hypothesis so that the means of several populations

are equal. The study concluded that number of years in business is no longer a significant

factor of a company. It was found that there was no significant difference between the

number of years in business and company’s performance. It was determined that maturity

of business was not based on the number of years in business of owner/managers thus it

was based on the effective used of employees.

Synthesis of the State of the Art

The different studies and literature that found and reviewed had direct and indirect

similarities and differences that was relevant to the present study. The related literature and

studies focused on the different roles of microenterprises in the economy.

The article of Fiala (2017), Michalowcz (2011), Investopedia (2018) and the study

of Gomez (2015) stated that microenterprises help in creating income opportunity to the

community. Microenterprise contribute to the economy by giving the poor a chance to

engage in business and earn money for their families. It is similar to the present study in

terms of the objective that was assessing the impact of microenterprise to the lives of the

microenterprise’ employees in Mantagbac Daet, Camarines Norte.

On the article of Investopedia (2018), Roberts (2018), Phansakars (2018) and

Association of Enterprises Opportunity (2013) explained that microenterprises help in

improving the quality of life of the people in the community. The same with the study of

17
Maseya (2015) and Silva (2016) that aimed to examine the impact of microenterprise to the

livelihood of the micro-entrepreneurs. It was similar to the current study as it focused of the

quality of life of the residents in Mantagbac but differs on the participants, locale and the

design used in conducting the study.

However, on the article of Investopedia (2018), Thompson (2011), Chakrabarty

(2016) and Fiala (2017) stated that microenterprises remain stagnant because of the lack of

access and support from the experts that could help in improving the enterprise. The

microenterprise help improving the life of the poor but with the lack of access to experts

prevent the business to grow. The present study differs as it focuses on the positive effects

of microenterprise in the community.

The study of Nabutola (2014), Kotur (2014), Osunsan (2015), Shava (2016) and

Radipere (2014) focused on the factors that influence microenterprises’ performance such

as age, gender and the number of years in business of the micro entrepreneurs. The present

study was similar in determining the significant impact of the variable profile of the

respondents to the microenterprises. The study differs on the design used and statistical

treatment. The study also differs as it focused on the impact of microenterprises to the

quality of life of the residents in Mantagbac Daet, Camarines Norte.

Gap Bridged By the Study

The present study differs from the related literatures and studies that the researchers

had found and reviewed. There were no studies about the impact of microenterprise to the

quality of life of the residents of Mantagbac Daet, Camarines Norte. The current study was

different in terms of the locale where the study was conducted. No studies similar to the

current study in regards to the participants and the research design used. Other studies also

18
said to be different in a way that the aforementioned studies focused on the different factors

that affects the performance of the microenterprises. The current study focused on the

impact of microenterprises to the quality of life of the employees.

Theoretical Framework

Keynes’ Income and Employment Theory was the basis of this study. The theory

supported the study as it focused on the interrelation factors that affect business. This

theory was composed of the concept about microenterprises.

John Maynard Keynes was a British economist who propounded his own theory. In

1936, he brought out his famous book “General Theory of Income, Interest and Money.”

He was known for his economic theory which is Income and Employment Theory that

emphasized the relationship between the income output and employment. This theory

stated that an effective demand is equal to the income and as well as to the employment and

economic stability. This theory showed that economy in a certain country could be in

equilibrium even at less than full employment level and believes that equilibrium level of

income and employment is determined by aggregate demand and supply. Keynes offers the

thinking to every business entrepreneurs that if demand increase, the business’ employment

and income also increases.

The Income and Employment Theory support the study as it composed about the

concept between enterprises and the employment. Along with this theory, it formulated the

idea that it did not end on the relationship of the enterprise and the employment. It was also

conceptualized the effect in engaging to the enterprises to generate income for the business

owners and employees.

19
 John Maynard Keynes’
Income and Employment
Theory

Microenterprise: Its
Impact to the Quality of
Life of the Residents of
Mantagbac Daet,
Camarines Norte

Fig. 1. Theoretical Paradigm

20
Conceptual Framework

The study was conducted to know the impact of microenterprise to the quality of

life of the residents of Mantagbac, Daet, Camarines Norte. The input was processed to

provide information about the respondents to find out the output of the study. The

researchers identified the profile of the respondents which was the residents of Mantagbac

who were employed in the microenterprises within and surrounding the vicinity. The

profile of the microenterprise employees distinguished in terms of their age, gender, and

the number of years working in the microenterprise.

The process used by researchers was through the survey method. The researcher-

made questionnaire was used to gather the data. These researcher-made questionnaire

contained questions that was answered by the respondents. The gathered data was analyzed

and interpreted through statistics to acquire relevant information for the study. There was

analysis of the data to evaluate the relationship between the microenterprises and the

quality of life of the residents of Barangay Mantagbac, Daet, Camarines Norte.

After the study was conducted, the outcome of this research was a booklet that

would be useful for the residents in the community. The booklet was composed of

information and recommendations to improve the quality of life of the residents in the

Mantagbac. The feedbacks of the study were the assessment and evaluation of the impact

of microenterprise to the quality of life of the residents of Mantagbac, Daet, Camarines

Norte.

21
 Input Process Output

Socio-demographic
profile of the
respondents in terms of:
a. Age
b. Gender
c. Number of Data Gathering
years working Procedure
Booklet that contained
in the business  Researcher- recommendations to
made the residents employed
The impact of questionnaire in the microenterprises
microenterprise to the to improve their quality
quality of life of the of life.
Analysis of data and
residents of Mantagbac. interpretation

The significant
difference between the
impacts of
microenterprises to the
profile of the residents.

Feedback

Fig. 2. Conceptual Paradigm

22
 NOTES
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terms/m/microenterprise.asp

Michalowicz M. (2011).” The Rise of The Micro-Enterprise and Why It Matters.”

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insights/articles/the-rise-of-the-micro-enterprise-and-why-it-matters/

Thompson E. (2016). “Microenterprise Development.” USAID from the American People.

Retrieved from https://www.usaid.gov/what-we-do/economic-growth-and-
trade/microenterprise-development

Roberts P. et al. (2018). “The Macro Benefits of Microbusinesses.” Retrieved from

https://ssir.org/articles/entry/the_macro_benefits_of_microbusinesses#

Chakrabarty, K. (2011). “Microenterprise Development- path to creating MNC’s of

tomorrow.” Retrieved from https://www.bis.org/review/r111207b.pdf

Fiala N. (2017), “Growing microenterprises: How gender and family can impact
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cations/wcms_547454.pdf

Phansalkar S. (2017). “Why Rural India Needs to Widen Domain foe Microenterprises.”
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rural-india/

Association for Enterprise Opportunity (2013). “Bigger than you think” Retrieved from
https://aeoworks.org/pdf/Bigger20Than%20You%20Think%20%20The%20Econ
omic%20Impact%20of%20Microbusiness%20in%20th%20United%20States.pdf

Gomez L. et al. (2015). “Microbusiness, Gainful Jobs.” FIELD at the Aspen Institute.
Retrieved from https://assets.aspeninstitute.org/content/uploads/2014/05/
GainfulJobs.pdf

Silva W. et al. (2016). “Microbusiness Development and Quality of Life of Micro

Entrepreneurs' Families.” Retrieved from http://www.scielo.br/scielo.php?
script=sci_arttext&pid=S1678-69712016000400176

Maseya, E. (2015). “The Impact Assessment of Microenterprises on the Livelihoods of

the Low Income Households in Khayelitsa.” Retrieved from file:///C:/Users/ \
admin/Downloads/Maseya_e_ma_ems_2015%20(9).pdf

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Nabutola, J. (2014). “Influence of Micro Small and Medium Enterprises on
Improvement of Service Delivery in Central District Bungoma County.”
University of Nairobi Retrieved from file:///C:/Users/admin/Downloads/orca
_share_media1550585892420.pdf
Osunsan O. (2015). “Owner/Manager Age and Performance of Small Business
Enterprises in Kampala, Uganda.” Retrieved from: https://www.research
gate.net/publication/308801939_OwnerManager_Age_and_Performance
of_Small_Business_Enterprises_in_Kampala_Uganda

Kotur, B (2014). “Influence of Age and Gender on the Performance.” retrieved from
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Shava H. et al. (2016). “Influence of gender on SME performance in emerging

economies.” Retrieved from https://actacommercii.co.za/index.php/acta/
article/view/408/599

Ibasco J. et al. A Thesis for the Practical Research. “The Role of Microenterprises to the
Entrepreneurial Development in Daet, Camarines Norte.” (p. 203).

Radipere, S (2014). “The role of age and business size on small business performance in
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https://businessperspectives.org/images/pdf/applications/publishing/templates/articl
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XrrsWncwvZcP76xuiOlNPOfTZqJI3qw5HpowY

Encyclopedia Britannica (2018). “Income and Employment Theory.” Retrieved from

https://www.britannica.com/science/income-and-employment-theory

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