EFFECTS OF COVID 19 PANDEMIC ON MICRO, SMALL, AND MEDIUM-SIZED

ENTERPRISES IN SAN FRANCISCO, AGUSAN DEL SUR

A Research

Presented to

the Faculty of College of Business Education of

St. Francis Xavier College

In Partial Fulfillment

of the degree of Bachelor of Science in

Accountancy/Accounting Information System

by:

Esmao, Jessa Mae

Enriquez, Kaye Jay M.

Malahay, Jolina June A.

March 15, 2022

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 CHAPTER 1

The Problem and its Background

This chapter includes the introduction, statement of the problem, theoretical

framework, significance of the study, research questions, scope and the delimitation,

and the definition of terms used.

Introduction

The widespread of COVID-19 to the world has created an unusual and a big

scarce of demand and supply globally that causes massive effect and disruptions to

the businesses, most especially owners of small businesses.

The Novel Coronavirus (Covid-19) outbreak crisis that have started in Wuhan

China in December 2019 has spread globally to over 200 countries, including Asia,

Europe, the US and Australia. This outbreak has been categorized as a pandemic by

the World Health Organization (WHO, 2019) as it shows an increasing human-to-

human infection (Qiu, Rutherford, Mao & Chu, 2017) leading to over 200,000 deaths

within three months since the start of the outbreak (WHO, 2020). Covid – 19

significantly transformed people’s lives and business activities at the national,

regional and global levels. Micro, Small, Medium-Sized Enterprises (MSMEs) are

among the most affected.

According to (Kaberia & Muathe, 2020) study, Micro, Small, Medium

Enterprises (MSMEs) plays a significant and indispensable role in the economic

development of a country. MSMEs pandemic situation would impact the economy.

Despite instituting policies and regulations to promote economic growth, there is a

major issue that has developed as a result of the pandemic crisis, which has affected

the operation of micro, small, and medium-sized businesses (MSMEs). Numerous

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enterprises are facing different issues with a certain degree of losses. Particularly,

enterprises are facing a variety of problems such as a decrease in demand, supply

chain disruptions, cancelation of export orders, raw material shortage, and

transportation disruptions, among others (Shafi, M., Liu, J., & Ren, W. 2020).

Nevertheless, it is evident that Covid – 19 outbreaks have significantly impacted

micro, small and medium enterprises (MSMEs).

In the Philippines micro, small, and medium enterprises (MSMEs), comprises

the majority of all businesses in the country. Based on Congressional Policy and

Budget Research Department, micro, small and medium enterprises (MSMEs) are

considered the backbone of many economies in the world including the Philippines. 

Over 99 percent of firms registered in the Philippines are micro, small, and medium

enterprises (MSMEs) (Philippine Statistics Authority [PSA] cited in Department of

Trade and Industry (DTI, 2019). Being a major contributor to economic activity,

MSMEs generated about 62 percent of the country’s total employment and

accounted for 25 percent of the country’s total exports revenue in 2019 (PSA cited in

DTI, 2019). Collectively, MSMEs are those with employee size of less than 200 and

with asset size of below P100 million. These businesses were greatly affected by the

coronavirus disease 2019 (COVID 19) in a matter of months. MSMEs are trying to

cope with the pandemic's dilemma, which has forced most establishments to close

due to the enhanced community quarantine (ECQ).

According to survey performed in the Philippines in February 2020, around 65

percent of respondents believe the COVID-19 pandemic will have a substantial

impact on the country’s economy. The government’s nationwide lockdowns have had

a negative impact on people’s livelihood (Statista,2021).

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 Consequently, the Municipality of San Francisco has not been spared from

the COVID-19 impact. Many owners of SMES’s has been affected a lot because of

the imposed restrictions of the Inter-Agency Task Force (IATF). Big or small

businesses have to be closed down for the mean time and travel restrictions has

greatly contributed to the downfall or bankruptcy of many small business owners.

Luckily, as the restrictions became less strict the municipality of San Francisco,

Agusan del Sur has prioritized the gradual development of MSMEs particularly on

micro and small-scale firms for economic growth, job creation, and the development

of an industrial sector as their means of coping over the effects of the pandemic.

Accounting system, said by Celik & Ecer (2009), and all

practices that are included in it, then, can be further studied
to identify correlations with other variables and be used for
any further purpose in future studies. With this, researchers
aimed to explore and obtain a deep understanding about
accountancy culture of the University of St. Louis
Tuguegarao, and how it is manifested in the accountancy
program and what components/features/relevant factors
comprise it.
This study aims to conceptualize the
meaning of “Accountancy Culture” so as to encompass the
Accounting system, said by Celik & Ecer (2009), and all
practices that are included in it, then, can be further studied
to identify correlations with other variables and be used for
any further purpose in future studies. With this, researchers
aimed to explore and obtain a deep understanding about
accountancy culture of the University of St. Louis
Tuguegarao, and how it is manifested in the accountancy
program and what components/features/relevant factors
comprise it.

All of these unprecedented happening greatly inspires the researchers to

study the effects of COVID-19 pandemic to the MSME’s. The researchers wanted to

reach out to the MSME’s to help understand and assess the implications and

consequences of the COVID-19 pandemic on communities and economies that are

essential for guiding and tailoring our local government units' and partners' actions to

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the issue and ensuring everyone's safety throughout the recovery and restoration

process.

Theoretical Framework

This study will examine the effects of Covid 19 on the micro, small, medium

enterprises (MSMEs) in San Francisco, Agusan del Sur.

Keynesian Theory

The indicated theory states that consumption is a function of income

; hence, an increase in income results in an increase in consumption as well

(O’Donnell, 2019). In keeping with the previously stated premise, the Keynesian

theory indicates that poor product demand in a certain region's economy, in this

case, is thought to play a big role in generating a major downturn in that region's

economy (Hepburn et al., 2020). Moreover, the theory states that the key

determinant of short run consumption is the current disposable income (Ahmad and

French, 2014).

Theory of Comparative Advantage

According to the mentioned theory, the business's ability to provide goods and

services at a lower opportunity cost than competitors in order to realize the goal of

more cohesive sales margins than their respective counterparts. As a result of the

changes being made to the production channels of small and medium-sized

businesses, it can be stated that it increases the possibility of the businesses

allocating their resources, which are deemed scarce by the novel coronavirus, to

other sectors that can be considered vital for their sustenance and sustainability

(Addison et al., 2020).

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Objectives of the Study

The objectives addressed in this study is to describe the effects of COVID-19

pandemic to the MSME’S business owners.

1. Describe degree of impact of COVID 19 or the lockdowns to MSMEs.

2. Describe the various issues faced by MSMEs in San Francisco.

3. Describe the coping mechanisms of MSMEs in San Francisco.

4. Describe how will the MSMEs going to tackle about the cash flow shortage.

5. Tell how long will be the survival period of MSMEs during COVID 19 lockdown.

6. Tell how long is the time required to get back to normal business operations by the

MSMEs.

7. Tell the needed assistance from the government by the MSMEs.

Significance of the Study

The study will contribute to set appropriate strategies and policies related to

empower MSMEs in San Francisco, Agusan del Sur during the Covid-19 pandemic.

The study will be of great significance to MSMEs, government, and future

researchers.

MSMEs. It would provide an opportunity for diversification, business

opportunities and coping strategies now and in the near future.

Local Government Unit. It would provide the basis for effective policies for

the sector’s survival of the covid- 19 challenges and also adopt strategies to mitigate

likely future events.

Future Researchers. This can help future researchers who want to study

other challenges present in the operating environment of MSMEs.

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Scope and Delimitation of the Study

This study is restricted by resource limitation, both financial and non-financial.

Due to the limited time financial, and study scope constraints, the research study had

to focus on a limited number of objectives.

Because of limited access to scarce resources, this study focusses on the

selected MSMEs located in San Francisco, Agusan del Sur as the target population.

Definition of Terms

Cashflow shortage - A cash flow shortage happens when more money is flowing out

of a business than is flowing into the business. That means, during a cash flow

shortage, you might not have enough money to cover payroll or other operating

expenses.

COVID 19- Coronavirus disease (COVID-19) - is an infectious disease caused by the

SARS-CoV-2 virus. Most people who fall sick with COVID-19 will experience mild to

moderate symptoms and recover without special treatment. However, some will

become seriously ill and require medical attention.

Key stakeholders - A key stakeholder is among the most important stakeholders for

a company. Key stakeholders are highly interested in a particular company's

success, as they are most affected by its business. Likewise, a business's success

and growth often depend upon its key stakeholders.

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Lockdowns - a period of time in which people are not allowed to leave their homes or

travel freely, because of a dangerous disease.

Micro small and medium-sized enterprises (MSMEs) - Non-subsidiary, independent

firms which employ less than a given number of employees. This number varies

across countries. The most frequent upper limit designating an MSMEs is 200

employees.

Normal business operations - refer to activities that businesses engage in on a daily

basis to increase the value of the enterprise and earn a profit. The activities can be

optimized to generate sufficient revenues.

Pandemic - an outbreak of a disease that occurs over a wide geographic area (such

as multiple countries or continents) and typically affects a significant proportion of the

population: a pandemic outbreak of a disease

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 CHAPTER 2

Review of Related Literature

Conceptual Literature

Research Literature

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 CHAPTER 3

Research Methodology

This chapter presents the research methodologies used in the study. This

covers the research design, locale of the study, respondents of the study, research

instrument, validity of the research instrument, reliability of the research instrument

and data-gathering procedure.

Research Design

In this study the researcher employed qualitative descriptive design in

collecting data from the respondents through an interview. The quantitative

descriptive design is used in this study since the main focus of this research is to

describe the effects of COVID-19 pandemic on small, and medium-sized enterprises

in San Francisco, Agusan del Sur.

It was also supported by the Harappa Learning Private Limited by stating that

a descriptive method of research is one that describes the characteristics of a

phenomenon, situation or population. Descriptive research accurately describes a

research problem without asking why a particular event happened. By researching

market patterns, the descriptive method answers how patterns change, what caused

the change and when the change occurred, instead of dwelling on why the change

happened.

Locale of the Study

The study will be conducted at San Francisco, Agusan del Sur. This place

was selected because it is one of the places wherein you cannot deny the effects of

the COVID-19 pandemic to the owners of small, medium-sized enterprises.

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Respondents of the Study

Respondents of this study will the small, medium-sized business

owners residing at San Francisco, Agusan del Sur. Since they will describe to us the

effects of COVID-19 pandemic to their businesses. They will also answer series of

interview questions that the researcher will ask them which supplies the solution

needed.

Research Instrument

The researchers will gather the data through an interview. They will ask a

series of questions regarding the effects of COVID-19 to the Micro, Small and

Medium Enterprises business owners. Since the study is to present the effects of

COVID-19 to the MSME’s, the researchers formulated a set of questions to

determine the data. On the interview proper, it will be record through an audio

recording application or device to avoid misinterpretations and confusions, in which

will be transcribed later on.

Validity of the Research Instrument

The set of formulated questions by the researchers will be presented to the

experts of their own field for corrections, comments and suggestions.

Data Gathering Procedure

The researchers will make an intent letter to the Municipality of San Francisco

Office asking permission for their contact numbers. Researchers will then contact

them giving them the option to be interviewed whether virtually or in person and the

availability of their schedule. On the day of the scheduled interviews, researchers will

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assure them that all the ethical standards of interviews will be implemented.

Respondents will also be made aware that their answers will be recorded and will be

transcribed. Respondents will be asked to answer the questions honestly.

Moreover, the researchers will be using convenience sampling method. The

convenience sampling is an appropriate procedure in choosing the sample for the

research as the respondents has an equal chance of being chosen.

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