I.

INTRODUCTION OF THE RESEARCH

It has gotten increasingly difficult to do business in the

Philippines. This is the situation. many Philippine businesses face stiff
competition from multinational corporations from countries like China,
India, and Vietnam, which can make large contributions because of
their incredibly cheap production costs, they may lower the pricing of
their items. Many Filipino businesses, particularly those in traditional
sectors like clothing, are struggling. Footwear, furniture, and
handicrafts that compete only on price have with the increasing cost of
manufacturing inputs (labor, materials, etc.), it's become nearly
impossible. among other industries, raw materials, and power). Many
of these businesses have chosen to fold up because the margins had
gotten too thin or because maintaining commercial activities has
become unprofitable.

Global epidemic crises such as the coronavirus (COVID19) can

usually expose small and medium-sized enterprises (SMEs) to various
types of challenges and endanger their lives. This study aims to
develop theoretical models that provide insights into the relationship
between innovation practices and SME performance and survival,
highlighting the effective role of external support in such relationships.

The impact of the COVID 19 pandemic is felt in all economic

sectors and institutions, including small and medium-sized enterprises
(SMEs) (Hasanat et al., 2020). SMEs lack labor and means of
production due to distortions affecting the supply chain, negatively
impact sales (Gurría, 2020; Segal & Gerstel, 2020), and fulfill financial
obligations and employee salaries I am suffering from the ability to do
(Robinson & Kengaharan). According to a published survey, SMEs
could not tolerate the effects of the economic crisis (Latham, 2009;
Michael & Robbins, 1998).
 Researchers emphasize that SMEs are often the most affected
by the economic crisis (Latham, 2009; Robbins & Pearce II, 1993).
Therefore, socio-economic crises related to people's health, such as
the COVID 19 pandemic, are expected to have serious implications for
SMEs. These companies, whether customers or suppliers need
strong connections with people (Nugent & Yhee, 2002). The
government has adopted several policies to mitigate the negative
effects of this crisis (Ahmad et al., 2020). SMEs have received
financial support from national and international NGOs and financial
institutions during the COVID19 crisis (Song et al., 2020). In addition,
SME owners have adopted a variety of practices and strategies to
address the effects of the crisis (Thorgren & Williams, 2020).

III. RESEARCH QUESTIONS

The research study will focus on determining Innovative

management practices of small food businesses in the City of Ligao.
Especially, it will answer the following question.
1. What kind of management practices did the food business do
to outdo its competitors?
2. What kind of innovations did the business do to earn more profit?
3. What is the impact of the innovations done on the business?

IV. SCOPE AND LIMITATION

This investigation is conducted to determine the Innovative

Management Practices of Small Food Businesses in the City of Ligao,
this way, the researchers could determine the Innovative Management
Practices of Small Food Businesses in the City of Ligao. The aspect
 looked into is quantitative information on several innovative
management practices having a small food business in the city of Ligao
and the data behind this. This investigation focuses on 15 small
businesses in Ligao City.

The methods that will be employed are the descriptive-

quantitative and qualitative methods. It will also employ purposive
sampling and the conventional method. The statistical tools to be used
are frequency count, percentage technique, and rank order.

V. REVIEW OF RELATED LITERATURE AND STUDIES

This part presents related literature and studies that are relevant
to the study. After the presentation of the review is the synthesis,
state-of-the-art, and the gap to be bridged by this study, the theoretical
and conceptual framework of the study, and the definition of terms.

The researchers visited different websites and read some books,

including Encyclopedia, Almanac, and Philippine National Newspaper
that are related to the present research.

Related Literature

Foreign

According to Linzalone and Lerro (2021), Positional innovation,

as one of the four forms of innovation in Francis and Bessant's "4P's"
_
model paradigm, process, position, and product, is an effective
product innovation technique for producers of mature and established
items like food. Despite its status as one of the world's most important
sectors, positioning developments in food goods remain understudied
in management literature. This work begins by developing a
theoretical examination of the notions to address this gap. It then
reveals how a small business handles positioning innovation using a
case-study research technique. Finally, theoretical and practical
consequences are presented and explored.

SMEs profit enormously from dynamic, knowledge-based, labor-

intensive sectors, according to Dodourova and Bevis (2014) 2, but they
have restricted alternatives in mature capital-intensive asset-based
industries. Grimaldi et al. (2013) investigated the importance of SMEs'
dynamic skills in the innovation process. They discovered that SMEs
with good detecting, seizing, and configuring abilities are more likely to
develop open innovation techniques. Hossain Journal of Global
Entrepreneurship Research (2015) 5:6 Page 5 of 12 Vertical and
horizontal collaborations with consumers, suppliers, and other
agencies have a more distinct role in the innovation process of SMEs,
according to Zeng et al. (2010), than horizontal collaboration with
research institutions, academic institutes, and government
organizations. Guräu and Lasch (2011) found certain variables that
help SMEs build and maintain open-source software.

According to Fitzroy and Hubert (2007) 3, Companies must break

out of their thought habits to innovate successfully. For example, Tim
Warren, director of research and technical services at Royal
Dutch/Shell, was certain that Shell's staff had tremendous stores of
inventive ability that had not been tapped; investing in new
technology, R&D, and continual improvement- companies must seek
benefits from the newest technologies for effective innovation.
Supporting and fostering new ideas, experimentation, and creativity
that will result in new goods, services, or processes is what innovation
is all about

The indicators used to assess innovativeness comprised the

level of involvement in R&D, the extent of innovation, and the
qualifications of the workforce. Firms were asked to indicate their level
of involvement in R&D. For a small number of firms (13) R&D was
their primary activity. In total, almost 60 % claimed to be highly
involved in R&D, although a quarter undertook R&D. The 2005 survey
on the effects of entrepreneurial orientation, asked about the nature of
innovations between product/service, process, and logistics or delivery
of service

Some firms recorded innovative activity across a broad spectrum

whereas others recorded innovations only in respect of product or
service. The diversity or extent of innovative activity was considered
an important indicator of innovativeness (Daft, 2005) Pro-activeness
The concept of proactiveness refers to a firm’s efforts to seize new
opportunities. Firms can use to act proactively: (1) introducing new
products or technological capabilities ahead of the competition-
maintaining a high level of pro-activeness is central to the corporate
culture of some major corporations.

Small and medium enterprises have long been building blocks of

the Philippine economy comprising more than a majority of the total
businesses operating in the country. Despite the numbers given and
their contributions, many problems beseech the sector. One is in the
aspect of the Economic Factors. Areas such as accounting systems,
financing, working capital management, and capital budgeting are
some of the basic concerns of SMEs which if not given the necessary
attention could have an impact on the performance of the enterprise
as a whole. The organizational performances of these enterprises are
also dependent on these Economic Factors and practices such as
their competitive advantage, profitability, productivity, sustainability,
and innovation.

Local

Related Studies

According to Caputo, et. al. (2002), the diffusion of innovation

within firms is reduced because of high costs and the resulting risks
related to innovation activities, fear of changes that accompany
innovations, and modest information about public and private
incentives for innovation. These factors especially affect SMEs
because of the moderate knowledge base they own, the little time an
entrepreneur may dedicate to innovation activities, because of other
daily demands of the job; modest financial resources, and diffused
aversion to realizing partnerships with potential innovation suppliers.
To overcome these limitations, Caputo, et. al. (2002) proposed a
model for innovation transfer to SMEs, the main features of which are
as follows: Networked architecture, which contributes to the interaction
of the different involved actors to increase the transfer’s success
chances, Introduction of an organizational unit – innovation center (IC)
– which collects knowledge on innovations and financial – fiscal
subsidies’ availability, Proposition of an organizational actor –
innovation promoter (IP) – who is the main interlocutor of the enacted
SME willing to realize an innovation transfer.

Indeed, innovation has become critical in enhancing the

capability of firms to adjust to rapid changes in the business
environment. This means not only remaining economically competitive
but also being responsive to social and environmental imperatives.
Without a doubt, “unless organizations are prepared to renew their
products and processes continuingly, their survival chances are
seriously threatened” (Tidd, Bessant, and Pavitt, 1997). However, very
few studies on the innovation practices of firms in the Philippines have
been undertaken (Beng Hui, et. al., 2005; Habaradas, 2005;
Habaradas & Tolentino, 2010; and Macapanpan, 1999; as cited by
Ancog & Aquino, 2007), effectively limiting the knowledge base from
which local firms can derive useful lessons for their attempts at
upgrading their products/services and organizational processes. Even
fewer are published studies that focus on the innovation practices of
small- and medium enterprises (SMEs) in the Philippines, which
comprise the bulk of businesses in the country, employ more than
two-thirds of the country’s total workforce, and contribute about one-
third of the national output (Habaradas, 2009).

Foreign

McAdam and Armstrong (2001) define innovation as "the

harnessing of creative ability within individuals and the workforce in
response to change, by doing things differently or better across
products, processes or procedures." Their definition is an attempt to
integrate previous definitions derived from the literature (Mogee and
Schact, 1980; Drucker, 1985; Mole and Elliot, 1987; and Gobeli and
Brown, 1994). Specifically, technological innovation activities are all
those scientific, technological, organizational, financial, and
commercial steps that actually, or intended to, lead to the
implementation of new or improved products and processes. The main
activities involved are the acquisition of knowledge (patents, licenses,
technical services, etc.), the acquisition of machinery and equipment,
and various other preparations for product delivery, including tooling
up, staff training, marketing, and R&D (Virasa and Tangjitpiboon,
2000).

Beise and Licht (1996), as cited by Audretsch (2004), identified

the following barriers to innovation: (a) too long a gestation period
required for innovative activity, (b) legal restrictions and restrictive
government policies, (c) long-drawn-out processes for obtaining
government approval for a new product, (c) shortage of financial
capital, (d) lack of competent employees, and (e) very high levels of
risk. Also worth mentioning is the study by Caputo, Cucchiella,
Fratocchi, Pelagagge, and Scacchia (2002), which identified several
obstacles to SME innovation: (a) high innovation costs, (b) high risks
related to innovation activities, (c) absence of financial resources, (d)
absence of skilled workers, (e) organizational constraints, (f)
 regulations and technical standards, (g) low customer interest in
product innovation, (h) absence of information on technology, and (i)
absence of market information.

A study by McAdam and Armstrong (2001) on the symbiosis of

quality and innovation in SMEs shows that quality in SMEs is more
suited to structured continuous improvement than large organization
quality models, such as the business excellence model and ISO,
which were found to be “overly bureaucratic and inflexible. Higher
scoring SMEs linked large-scale innovation to their quality efforts and
considered quality to be both a catalyst and a foundation for more
radical innovation efforts. The study also showed that encouraging
employees to be creative and to generate knowledge led to increased
empowerment, risk-taking, and experimentation, ultimately leading to
innovation. Furthermore, quality efforts aimed at getting feedback from
the customer lead to a source of outside knowledge for use in devising
innovations. Finally, there was clear evidence that a culture of
continuous improvement, linked to organizational goals, was a “good
foundation on which larger-scale innovation could be established and
developed.” However, the study also concluded that “quality and
innovation cannot be quickly incorporated in SMEs,” and that “there
must be a careful and systematic development program” (McAdam
and Armstrong, 2001).

Local

According to Macapanpan (1999), Studies on innovative

activities in the country have consistently echoed these issues. Nearly
two decades ago, a survey of Filipino firms engaged in food
processing, textile and garments, metals and metal fabrication,
chemicals, and electronics and electrical goods was undertaken, with
the survey results suggesting that most firms that engaged in
innovations were large firms with large assets Further, many of these
firms reported that the government was not an important factor in their
conduct of innovation activities and that government research
institution were poorly sources of innovation ideas. Firms also
mentioned that financial as well as human resource constraints were
their main barriers to conducting innovation activities.

According to Macasaquit (2011), results of a survey of

manufacturing establishments across the CALABARZON (Cavite,
Laguna, Batangas, Rizal, and Quezon) area that was conducted by
PIDS in 2008 suggested that Philippine firms undertake product and
process innovations, but that linkages of these innovative firms with
R&D institutions (such as universities and technology resource
centers), and government agencies were weak. This should be a
focus of attention as promoting more innovation activities, especially
among MSMEs, entails linking knowledge generators and enterprise
developers since innovation is a process by which new knowledge is
transformed into new goods and new services. These research
findings throughout the years were further validated by Albert et al.,
(2012), which described the results of the pilot 2009 Survey of
Innovation Activities, conducted by the Department of Science and
Technology in cooperation with the PIDS and the then National
Statistics Office. This study also provided a conceptual framework for
measuring innovation in the country.

According to Ancog and Aquino (2007), Critical to promoting

innovation is innovation policy, which continues to be embedded
within science and technology policy. In the Philippines, STI is merely
viewed as providing a supporting role in the quest for economic and
social development. Programs on STI have always been related to
priority sectors in Philippine development plans, such as agriculture.
Furthermore, STI plans, programs, and policies do not appear to have
been provided with the required resources. Further, there is currently
a dearth of studies on the impact of STI plans and interventions given
the different thrusts across administrations.

Gap Bridge by the Study

After considering all the literature and studies which the

researchers found to be related to this study, the researchers assured
that until this time there is still no research material in existence that
deals with the subject of Innovative management practices of small
food businesses in the City of Ligao. This is the gap that the study
attempts to bridge.

Theoretical Framework

This study adopted three interrelated theories which have a direct

factual link to the study.

The first theory adopted was Schumpeter’s theory of innovation

by Joseph. A. Schumpeter believes that an entrepreneur can earn
economic profits by introducing successful innovations. In other
words, the innovation theory of profit posits that the main function of
an entrepreneur is to introduce innovations, and the profit in the form
of reward is given for his performance. According to Schumpeter,
innovation refers to new policies that entrepreneurs take to reduce the
overall cost of production and increase the demand for products.
Therefore, innovation can be divided into two categories. The first
category includes all activities that reduce the total cost of production,
such as the introduction of new production processes or technologies,
the introduction of new machines, and innovative ways to organize the
industry. The second category of innovation includes all such
activities. Reduce post-product demand growth. For example, the
introduction of new products or new quality products, the emergence
or development of new markets, the discovery of new sources of raw
materials, and new varieties or designs of products.
 Rogers' innovation diffusion theory explains how, why, and at
what rate new ideas are taken up by individuals. Rogers defines five
categories of innovation adopters. Innovators are willing to take risks;
they are enthusiastic and thrive on change. Much diffusion research
involves technological innovations so Rogers (2003) usually used the
word “technology” and “innovation” as synonyms. For Rogers, “a
technology is a design for instrumental action that reduces the
uncertainty in the cause-effect relationships involved in achieving the
desired outcome” (p. 13). It is composed of two parts: hardware and
software. While hardware is “the tool that embodies the technology in
the form of a material or physical object,” software is “the information
base for the tool” (Rogers, 2003, p. 259). Since software (as a
technological innovation) has a low level of observability, its rate of
adoption is quite slow. For Rogers (2003), adoption is a decision of
“full use of an innovation as the best course of action available” and
rejection is a decision “not to adopt an innovation” (p. 177). Rogers
defines diffusion as “the process in which an innovation is
communicated through certain channels over time among the
members of a social system” (p. Five). As expressed in this definition,
innovation, communication channels, time and social systems are the
four keys. A component of the spread of innovation,

The last theory adopted was by Eric Havelock (1973) proposes

two change innovation methods, the reflex response versus the
rational problem-solving method. The former is not likely to result in
uptake of the innovation, while the latter can lead to lasting change.
Because we must all deal with change at every level of life, we must
learn how to manage it. As part of this effort, we turn to theories of
change that can help us understand-stage, and manage change so it
can be a constructive rather than destructive force in our lives.
 Eric Havelock formulated one widely studied and accepted
theory of change and how we deal with it. Havelock’s Theory of
Change gives us one way of looking at the change in a six-stage
process that acknowledges resistance to change and the need to
carefully plan for change.

Conceptual Framework

This research deals primarily with the Innovative management

practices of small food businesses in the City of Ligao. The output of
the study will be the responses of the small business owners of Ligao
City. The second frame contains the process such as statistical tools
that will be used in treating the data gathered. The descriptive survey
method was used in employing the questionnaire checklist issued to the
respondents to get the needed data for the study
Schumpeter’s theory of
innovation by Joseph. A.
Schumpeter, 1911

Innovative management
practices of small food
Rogers' innovation
diffusion theory businesses in the City of
By E.M. Rogers,1962
Ligao.

Havelock's Theory of
Change by Eric
Havelock,1973

Figure 2

THEORETICAL PARADIGM
 INPUT PROCESS OUTPUT

Descriptive
Innovative
Method Effective
management Innovative
*Questionnaire
practices of *Interview management
small food Statistical practices of
businesses Tools small food
in the City of *Percentage businesses in
technique
Ligao the City of
*Frequency
Ligao
*Ranking
*Qualitative

FEEDBACK

Figure 3
CONCEPTUAL PARADIGM
IV. RESEARCH DESIGN AND METHODOLOGY

The researcher will make use of the descriptive method in this study to
gather information about the Innovative management practices of small food
businesses in the City of Ligao. A questionnaire is an instrument to be used
in gathering the information needed in this research. This was deemed
appropriate to elicit a response from the respondents about the research.

Table 1

Respondents of the Study

Location of the Respondents Sample Size

a.

CENTRO STREET, CITY OF LIGAO, ALBAY 15

Total 15

Sampling

The respondents of the study are the selected small business

owners in Ligao City regarding the Innovative management practices of
small food businesses in the City of Ligao. There are 15 respondents
needed in this research to gather the data needed.

b. Research Instrument/s

A fully structured set of questionnaires will be utilized to extract

the necessary data from the gathered document. Part 1 contains the
demographic profile of the respondents. Part 2 discusses the contents
of the part of the questionnaire and identified them. The questionnaire
will be distributed to all the respondents and each of them will be
instructed to study the given questionnaire, it was retrieved on the time
set for the retrieval of the questionnaire.
c. Statistical Instrument

For a clearer interpretation of the data gathered from the survey

questionnaire, the researcher used the following statistical procedures:

1. Simple Percentage. This statistic will use in describing the

demographic profile of the respondents in terms of age, gender,
educational attainment, and length of service.

The formula for computing this statistic is as follows:

P = F / N (100)

Where: P = computed percent

F = Frequency for each class or category

N = Total number of respondents

100 = constant multiplier to change the decimal into percentage value

d. Data Gathering Procedures

The researcher’s formula is the questionnaire that will be distributed

to the selected small businesses in Ligao City regarding the Innovative
management practices of small food businesses in the City of Ligao, who are
the target respondents of the study. After the finalization of the
questionnaire, the researchers will be delivered them personally to the
respondents.
 NOTES

Books

Linzalone, R. and Lerro, A. (2021), "Managing positional innovation in small

food enterprises. The bakery industry", Measuring Business Excellence, Vol.
25 No. 4, pp. 509-526. https://doi.org/10.1108/MBE-10-2020-0141

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Entrepreneurial and
Environmental
Sustainability
Orientations on Firm
Performance:
A Study of Small
Businesses in the
Philippines
by Banjo Roxas, Nicholas
Ashill, and Doren Chadee
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Entrepreneurial and
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Sustainability
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Performance:
A Study of Small
Businesses in the
Philippines
by Banjo Roxas, Nicholas
Ashill, and Doren Chadee
Effects of
Entrepreneurial and
Environmental
Sustainability
Orientations on Firm
Performance:
A Study of Small
Businesses in the
Philippines
by Banjo Roxas, Nicholas
Ashill, and Doren Chade
Effects of
Entrepreneurial and
Environmental
Sustainability
Orientations on Firm
Performance:
A Study of Small
Businesses in the
Philippines
by Banjo Roxas, Nicholas
Ashill, and Doren Chade
Effects of Entrepreneurial and EnvironmentalSustainability Orientations on Firm
Performance: A Study of Small Businesses in the Philippinesby Banjo Roxas,
Nicholas Ashill, and Doren Chadee, Journal of Small Business Management 2017
55(S1), pp. 163–178.

3rd Edition Strategic Management the Challenge of Creating Value By Peter

FitzRoy, James M. Hulbert, Timothy O'Shannassy.Copyright Year 2016.

Caputo, A., Cucchiella, F., Fratocchi, L., Pelagagge, P., and Scacchia, F. (2002). A
methodological framework for innovation transfer to SMEs. Industrial Management,
102 (5/6), 271-283.

Ancog, A. and Aquino, A. (2007). The emerging national system of innovation in the
Philippines, in Science, Technology Policy and the Diffusion of Knowledge:
Understanding the Dynamics of Innovation Systems in the Asia Pacific, edited by
Turpin, T. and V.V. Krishna, pp. 337-377. Cheltenhan and MA: Edward Elgar.

Llanto and del Prado (2015) analyzed the determinants of innovation activity and
subsequently, they found that innovation, particularly process innovation, is
positively associated with an increase in sales, profits, and labor productivity. Using
data for ASEAN member states including the Philippines, Harvie, Narjoko and Oum
(2010) found that innovation is an important determinant of SMEs’ participation in
the global value chain because it is through product and process innovation (both
product and process) that SMEs can meet the requirements of higher tier firms.
The National Statistics Office has been subsumed into the Philippine Statistics
Authority (PSA), by the Philippine Statistical Act of 2013.

Internet

The Turkish Online Journal of Educational Technology – TOJET April 2006 ISSN:
1303-6521 volume 5 Issue 2 Article 3 DETAILED REVIEW OF ROGERS’
DIFFUSION OF INNOVATIONS THEORY AND EDUCATIONAL TECHNOLOGY-
RELATED STUDIES BASED ON ROGERS’ THEORY Ismail SAHIN Iowa State
University.

https://businessjargons.com/schumpeters-innovation-theory-of-profit.html

https://www.brighthubpm.com/change-management/86803-havelocks-theory-of-
change/