Chapter II

THEORETICAL FRAMEWORK

This chapter presents the relevant theories, the related literature and studies, the

conceptual framework, and the hypothesis of the study.

Relevant Theories

Challenge and Support Theory. According to (Sanford, 1962), a balanced

quantity of challenge and support is needed for something to grow. Too much support

and the person will never grow and develop. Too much challenge will make a person

frustrated and quit trying. He believed that for growth and personal development to take

place, a person needs to have a challenge and support balance.

Sanford added a factor to this theory in 1966, the element of readiness. In short,

an individual cannot grow until they are physically and psychologically ready to grow.

For example, introducing a higher accounting lesson to senior high school students

without them learning the basics is not a great idea because they are not simply ready for

it. The situation is the same for a person planning to be an entrepreneur. He cannot start a

business without knowing the basic knowledge of how to run it in the first place.

The relation of this theory in our study is that the entrepreneurs of the sari-sari

store have to have a balance between facing challenges and support. Understanding that

challenges are one of the foundations of success is essential because one may not succeed

without having the honor to face the challenges given to them. Support coming from

families, friends, peers, or partners can also strengthen the foundation of success.
 The Iceberg Theory of Success. According to Mueller (2020), the excellent

metaphor for success is a much larger part hidden beneath the iceberg or what is visible

above the waterline. It means that the visible part of the iceberg is the success and

accomplishments that every one of us can see and the hidden part of it is the efforts to

achieve an outcome.

Success repeatedly dazzles people so that they will not notice the great efforts

they need to make to achieve a possibly great outcome. Hard work, failures, sacrifice,

determination, disappointment, and dedication make success possible in real life.

In our study, this theory makes us realize that every successful entrepreneur

should overcome challenges to reach their goals and make their dream, a successful

entrepreneur, come true.

The Wheel of Retailing Theory. According to McNair (1958), this theory

includes three cycles: the entry, trade-up, and vulnerable phases. In the entry phase,

retailers enter the market with low prices and affordable services to increase market

penetration. As the marketing mix improves and market share increases, retailers

provide more variety, better facilities, and better service, while typically increasing

prices. In the vulnerable phase, competition from new, more innovative businesses

causes retailers to lose both market share and profitability.

The relation of this theory in our study is the retailing itself since the sari-sari

store is a retailing business where retail is the sale of goods and services to consumers, as

opposed to wholesale, which is the sale of goods and services to businesses and
institutions. A retailer buys things in bulk from manufacturers, either directly or through

a wholesaler, and then resells them to consumers in smaller amounts for a profit.

Related Literature

Age. Entrepreneurship has become an attractive career option for both the young

and the old, but age has not been thoroughly examined as a variable of interest among

entrepreneurship scholars. In this review, we present 12 theoretical perspectives

regarding the effect of age on entrepreneurs' success and our critiques. We then present

the results of an exploratory meta-analysis with effect sizes from 102 samples. The

results show that age has a weak, positive linear relationship with overall entrepreneurial

success, but it does exhibit signs of a U-shaped relationship, with the relationship being

negative among younger samples but positive among older samples. The positive effect

size becomes more pronounced when more females are included in the sample. The effect

size of age does not differ by entrepreneurs' tenure running the firm. In terms of the type

of success measures, age hurts growth but has a positive effect on subjective success,

firm size, financial success, and no effect on survival. We compare our results with

previous meta-analyses on employees' age to show the uniqueness of entrepreneurs'

careers and we offer suggestions for future studies. (Zhao, 2020)

Sex. Perceptions and institutional frameworks can be barriers or facilitators to the

development of female entrepreneurship policies. Institutions rely on factual data on the

gender gap to evaluate their policies. However, the literature shows that the research and

institutions should also analyze the impact of social beliefs on the success of these

policies and initiatives. This study focuses on the impact of these perceptions in

promoting female entrepreneurship. Data were collected from 287 responses to a

questionnaire from Spanish women and men and were analyzed using multivariate

regression analysis. The results show that the perception of a lack of equality increases

the gender gap even if there are specific and effective policies in a society that attempt to

eliminate the gender gap in terms of the role of women in the home or positions of power.

The main result is that these perceptions ultimately affect women’s entrepreneurial

intentions. The results have policy implications for companies and public institutions

willing to change the gender narrative about entrepreneurship and design policies and

initiatives that help women overcome cultural barriers and effectively promote female

entrepreneurship. (Illie et al., 2021)

Educational Attainment. According to Jimenez et al. (2015), we propose that

different levels of education vary between each other in terms of their impact and

whether we analyze either formal or informal entrepreneurship. Our results show that

tertiary education increases formal entrepreneurship as a consequence of higher self-

confidence, lower perceived risk, and enhanced human capital. At the same time, tertiary

education also hurts informal entrepreneurship as it increases awareness of and sensitivity

to the possible negative repercussions of this kind of activity. In addition, we show that

the impact of secondary education on formal entrepreneurship is positive as well,

although in this case, the effect on informal entrepreneurship is not significant. Even

though secondary education also increases awareness of the potential negative

repercussions of informal entrepreneurship, this effect is counteracted by a lack of

management skills.

Physical Status of the Store. Based on the past literature regarding the factors of

loyalty, the study considers physical attractiveness and intellectual competence combined
with a traditional loyalty model in proposing its conceptual framework. It then estimates

the relevant parameters using a linear structural equation model (SEM). The subjects of

the study consist of consumers in Kaohsiung City, Taiwan, aged at least 20 years old who

have experience in engaging the services of real estate companies during housing

transactions. A total of 300 questionnaires were distributed, with 268 valid ones being

returned, for a valid return rate of 89.33%. The effect of physical attractiveness on

satisfaction through trust is more significant than its effect on satisfaction through

intellectual competence. These findings show that physical attractiveness, intellectual

competence, and trust play an important role in determining satisfaction and loyalty. Past

studies related to loyalty introduced various factors of loyalty; however, they rarely

explored the effects of physical attractiveness and intellectual competence on loyalty.

That is the difference between this study and past research. (Yeh et al., 2020)

Capital. Small and medium businesses (SMEs) play a critical role in the

economy, yet they are plagued by a shortage of finance. Determining the influence of

cash sources both inside and outside the firm is critical to the company’s survival and

growth. As a result, the purpose of this research is to determine the impact of capital on

the growth of SMEs in Vietnam. The key factors of this research are equity and

liabilities, which are two proxies for a firm’s capital. The data is based on the results of a

survey conducted every two years from 2005 to 2015, which included over 2,600 SMEs

in 20 processing and manufacturing industries in ten provinces and cities, including

Hanoi, Hai Phong, Ho Chi Minh City, Ha Tay, Phu Tho, Nghe An, Quang Nam, Khanh

Hoa, Lam Dong, and Long An. The findings show that characteristics such as equity

capital, total workforce growth rate, and male entrepreneurs have a positive impact on
enterprise growth, whereas liabilities, firm age, and export hurt enterprise growth. The

study has demonstrated that equity has a positive impact while liabilities hurt the growth

of Vietnamese SMEs. (Ha et al., 2021)

Location. According to Luthor (2019), research has shown that the location of a

business is one of its most important factors for success. The location has an even

larger effect on microentrepreneurs, those entrepreneurs opening a small-scale business

employing less than nine people. The importance of location strategy is especially

important for these small businesses because it impacts whether enough profits will be

generated to sustain the business. The importance of location in business success cannot

be understated. The location of the business positions it not only to attract a customer

base but also to attract the right sort of talent to make the business a success. A

business’s location also helps it create a brand and image since there are always parts of

a city that carry a reputation, whether it is a reputation for simple living or a reputation

for luxurious extravagance. Placing your business in a part of town that reflects your

brand and products can impact the success of your establishment.

Store Debtor. This research investigated the impact of debt in a sari-sari store in

Del Pilar Castillejos, Zambales. The research survey respondents were composed of

twenty (20) sari-sari store owners. Based on the summary of findings, the researcher

concluded that the store owners believe that the impact of debt on their business is the

possibility of bankruptcy, lessening their business income, their business will be less

productive, their business will not grow and their business will be stable. Some of the

store owners limit the amount of debt for every customer for them to minimize the

possibility of bankruptcy of their business. The debts have a big impact on a business,
especially in a small businesses like sari-sari stores. Some of the debtors did not pay well

and those debts reduced the progress of the business. The most preferred limited amount

of some store owners is one thousand (1,000) to two thousand (2,000) pesos for every

customer. Debts have a big impact, yet they should have some strategies or solutions to

help the business grow. The success of the business is not all about having a lot of profit

for a day; it is about how the owners manage it. Listing the names of the creditors, the

value of their debts and the date when they borrowed is already used in most of the sari-

sari stores in Del Pilar Castillejos, Zambales for them to remind the creditors about their

past or new debts. (Gonzales, 2019)

Debt. Small and medium-sized enterprises (SMEs) are the backbone of the Asian

economy. They make up more than 96% of all Asian businesses, providing two out of

three private-sector jobs on the continent. Therefore, it is vital for Asian economies’

economic success that they have fully functioning support measures for SMEs. However,

SMEs face major challenges in accessing cheap finance, mainly because of the

asymmetric information problem between suppliers and demanders of funds and the high

transaction costs. These lead to more collateral requirements for lending to SMEs with

higher lending interest rates, which hinder their growth. As most Asian countries are

bank-dominant economies, capital market financing is not a realistic option for SMEs.

Therefore, we need to look for solutions that make bank lending to SMEs easier. This

study will highlight the difficulties of SMEs in accessing finance and provide measures

for mitigating them. The remedies proposed in this paper are the development of credit

information infrastructures for SMEs and the utilization of credit-rating techniques for

SMEs to address the asymmetric information problem and the development of a

sustainable credit guarantee scheme to solve the collateral issue of the SMEs and ease

they are assessed to finance. (Yoshino & Taghizadeh-Hesary, 2018)

Competitors. The retail industry is the fastest growing industry in India

contributing to 10 percent of the nation’s GDP. It is also standing among the top five

retail industries in the world. The industry consists of both organized and unorganized

retailers. A major portion of the industry is the small retailers who do their business

without proper knowledge and skills but to earn a living. With the coming up of FDI in

retail and the entry of giant companies into the field, many small retailers started to lose

their profits. Small retailers are considered to be the backbone of every industry as they

help in developing the economy by bringing balanced regional development, upholding

traditional values, and also developing small industries. Therefore, it is important to

protect these small unorganized retailers. The major problems faced by small retailers

include lack of proper knowledge, lack of finance, lack of technical and marketing skills,

financial instability, and competition from big and foreign retailers. Various strategies

such as better customer relationships, reservations for retailers, use of modern

technologies, and strong retailer associations can be implemented to develop the retailers

in India. The government should also take steps to ensure that the small retailers are

protected and made competent to perform their business. (George, 2019)

Decrease in Demand. Due to the rapid change in customer demands and needs,

manufacturers are increasingly shifting from mass production to mass customization. The

product platform strategy, which is one of the enablers of mass customizations, has been

implemented by many companies to offer a wide range of products that belong to a

family. Recently, a new platform approach was developed where an optimal platform is
formed for a product family and is customized for different variants by adding, removing,

and/ or substituting platform components to form product variants as orders are received.

In this paper, the effect of product platform design and customers’ demand on the

production cost is investigated using Discrete-Event Simulation (FlexSim). The product

platform and the product platform scalability concepts are examined and compared. The

findings of this research demonstrate that effective platform implementation has a direct

effect on the overall production costs as well as improving customer satisfaction by

offering the desired level of customized products. (Aljorephani & Elmaraghy, 2016)

Handling Money. Small businesses are vital for economic development and

employment generation. The implementation of sound cash management practices is

essential to ensure profitability. The study aimed to identify the impact of cash

management on profitability. This study adopted a correlational research design. The

purposive sampling method was adopted while undertaking research. 80 samples were

considered while collecting data. The sample structure consisted of small and medium

manufacturing businesses in the Kirtipur Municipality. Owners of such enterprises were

taken as a sample because they can better understand cash management. Data were

collected using five-point Likert Scale Questionnaires. Data were analyzed using mean,

correlation, and regression models. The study found that Cash management has an

insignificant but positive effect on profitability. It clarifies that conversion cycle, cash

flow, and inventory management positively affect profitability but the effect is nominal.

(Pandey, 2019)

Pricing Strategy. Price is a critical component for any business and can be

crucial in the survival of the business. If the price is not set in line with the selected target
market it can negatively impact the product and the company’s profitability. The main

goal of any profit-seeking organization is to make a profit and to achieve this goal all

areas related to the management of the product, costs, and the setting of the price need to

be managed correctly. The primary aim of this study was therefore to investigate the

factors considered by small business enterprises (SMEs) when developing their pricing

strategies. To address this problem adequately, the research methodology was based on

the primary data collected from South African SMEs. As SMEs show common traits all

over the world, it is accepted that any findings will be universally applicable. A

questionnaire was distributed to 88 SMEs to gather relevant data regarding factors

considered when determining prices. The data were quantified and analyzed by

examining the frequency of occurrences and the importance of the problem. The study

found that SMEs generally agree that price setting is influenced by competitor

information and macro-environmental factors such as fuel prices and inflation. There was

a general agreement amongst the SMEs that consumer relationships and the benefits that

they, the consumers enjoy from the product as well as product performance are important

aspects to consider when determining prices. (Cant, 2016)

Choice of Product. According to Storenvy (2017), sales success requires offering

the right product in the right place at the right time and for the right customer. The right

product selection powers energetic growth not only of large companies but propels small

companies, too.  Correct product selection and stock are crucially important for a retailer.

Nobody can offer the customer everything at once, but the available product selection

should provide sufficient alternatives. If a client seeking a dress does not find an

appropriate one in red, there should be an option to choose a blue one instead. A retailer
can increase the number of buying customers by changing and improving the product

selection. Selection corrections assist the customer in finding the product they were

looking for or a sufficiently similar one that satisfies their needs, says Harvard Business

Review. It is advisable therefore to analyze the buyer’s critical decisive factors while in

the shop – product price, brand, size, taste, color, etc. Also, it would be wise to think

about the alternatives the customers could choose from if they fail to find the perfect

product.

Related Studies

This paper magnified the stories of success and failures of women micro-

entrepreneurs in managing their ‘sari-sari’ stores. Results revealed that new investments,

enhanced family income, productivity, and resourcefulness were the stories that they

highlighted as a success. They also revealed that failures framed them to be determined,

faithful, diligent, and optimistic. Lastly, they shared significant insights that women

entrepreneurs must be business-oriented, develop people skills, and employ strong

willpower. (Gano-An & Gempes, 2020)

This study identified the challenges faced by entrepreneurs of sari-sari stores to

overcome the said gap. The study showed that the alternative action of the respondents if

ever they experience loss in operating sari-sari stores is that they will use their personal

savings to start again. The challenges faced by entrepreneurs of sari-sari stores contain

four (4) categories known as location, financial, inventory, and customer-related

challenges. (Olgasan et al., 2019)

 The main problem of the study was to find out the attitude of the sari-sari store

owners towards microfinancing. The result shows that sari-sari store owners have a

positive attitude towards microfinancing, and it helps them in their business and lives. It

also shows a significant difference between the demographic profile of the store owners

and their attitude toward microfinancing and its perceived benefits in their businesses and

lives. (Cruzat et al., 2019)

The study investigated the problems that are perceived by immigrant spaza shop

owners as negatively affecting the performance of their businesses. The results showed

that the problems experienced by immigrant spaza shop owners include crime,

xenophobia, lack of sufficient finance, high competition, inability to speak the language,

high cost of operation, and poor location. (Fatoki, 2016)

Paradigm of the Study

Independent Variable Dependent Variables

The demographic profile of the
respondents in terms of:
 Age
 Sex
 Educational Attainment
The profile of the store affects the
operation of the business in terms of:
 Physical Status of the store
 Capital
 Location

Sari-sari stores owners approaches to

overcoming challenges in terms of:
 Debt/ Financial Support
 Store Debtors
 Competitors / Economic
Instability
 Decrease in demand

The significant relationship in

strategical management toward
business growth in terms of:
 Handling Money
 Terms and Conditions on
Debt / Not allowing credits
 Research Paradigm Figure shows the relationship between the profile of the

respondents to the profile of the store, approaches to overcoming challenges, and the

strategical management of the entrepreneurs of sari-sari stores in the selected township of

Bataan.

Hypotheses

There is a significant relationship between strategical management and business

growth.
 Notes in Chapter II

Nevitt Sanford. (1962). Sanford's Challenges & Support Theory. The American College.
New York: Wiley. https://imjoeboe.wordpress.com/2011/04/28/challenge-
support/
Steve Mueller. (2020). The Iceberg Theory of Success. Planet Of Success.
https://www.planetofsuccess.com/blog/2011/the-iceberg-theory-of-success/
Malcolm P. McNair. (1958). The Wheel of Retailing Theory. The Investors Book.
https://theinvestorsbook.com/wheel-of-retailing.html
Hao Zhao, Gina O'Connor, Jihong Wu, & G.T. Lumpkin. (2020). Age and
entrepreneurial career success: A review and a meta-analysis. Journal of
Business Venturing. 10.1016/j.jbusvent.2020.106007 
Carmelia Ellie, Abel Monfort, Gaton Fornes, & Guillermo Cardoza. (2021). Promoting
Female Entrepreneurship: The Impact of Gender Gap Beliefs and Perceptions.
Sage Journals. https://doi.org/10.1177/21582440211018468
Alfredo Jiménez, Carmen Palmero-Cámara, Maria Josefa González-Santos, Jeronimo
González-Bernal, & Juan Alfredo Jiménez-Eguizábal. (2015). The impact of
educational levels on formal and informal entrepreneurship. BRQ Business
Research Quarterly, 18(3), 204–212. 10.1016/j.brq.2015.02.002 

Wen-Chih Yeh, Chun-Chang Lee, Cheng Yu, Pei-Shan Wu, Jia-Yu Chang, & Jiun-Hau
Huang. (2020). Sustainability: The Impact of the Physical Attractiveness and
Intellectual Competence on Loyalty. Multidisciplinary Digital Publishing
Institute. http://dx.doi.org/10.3390/su12103970

Van Ha, Van Nguyen, & Truong Dang. (2021). The Impact of Capital on Growth of
Small and Medium Enterprises: Evidence from Vietnam. Journal of Asian
Finance, Economics and Business Vol 9 No 1 0353–0362.
10.13106/jafeb.2022.vol9.no1.0353
Jason Luthor. (2019). Why is Business Location Important? Azcentral Part of the USA
Today Network. https://yourbusiness.azcentral.com/low-population-growth-
affect-local-business-16288.html
Christine B. Gonzales. (2019). The Impact of Debt in a Sari-sari Store in Del Pilar
Castillejos, Zambales. Scribd.
 https://www.scribd.com/document/432107532/The-Impact-of-Debt-in-a-Sari-
Sari-Store
Naoyuki Yoshino, & Farhad Taghizadeh-Hesary. (2018). The Role of SMEs in Asia and
Their Difficulties in Accessing Finance. ADBI Working Paper 911. Tokyo: Asian
Development Bank Institute. https://www.adb.org/publications/role-smes-asia-
and-theirdifficulties-accessing-finance
Elsa George. (2019, May 2). A Study on The Problems Faced by Small Retailers in India.
International Journal for Research in Engineering Application & Management.
Vol. 05, p.30. http://ijream.org/papers/IJREAMV05I0250045.pdf
Sufian K. Aljorephani, & Hoda A. ElMaraghy. (2016). Impact of Product Platform and
Market Demand on Manufacturing System Performance and Production Cost.
Procedia CIRP, pp. 74–79. 10.1016/j.procir.2016.07.068
Dhruba Lal Pandey. (2019). Impact of Cash Management on Profitability in Small
Manufacturing Organization. Silver Jubilee Issue PRAVAHA. Volume 25 Issue 1
ISSN 2350-854X.
https://www.nepjol.info/index.php/pravaha/article/view/31934/25230
Michael Colin Cant. (2016). Key Factors Influencing Pricing Strategies for Small
Business Enterprises (SMEs): Are They Important? The Journal of Applied
Business Research.
https://clutejournals.com/index.php/JABR/article/download/9820/9914/36489
Storenvy. (2017). Why the Right Product Selection is Crucially Important for a Retailer.
ERPLY. https://erply.com/why-the-right-product-selection-is-crucially-important-
for-a-retailer/
Jonathan C. Gano-An, & Gloria P. Gempes. (2020). The success and failures of sari-sari
stores: Exploring the minds of women micro-entrepreneurs. Holistica Journal of
Business and Public Administration, vol. 11, iss. 2, pp. 25-51.
https://www.researchgate.net/publication/343702379_The_Success_and_Failures
_of_Sari-Sari_Stores_Exploring_the_Minds_of_Women_Micro-Entrepreneurs
Aj R. Olgasan, Nilje T. Coloso, Rynze G. Rubio, Trexie B. Tamon, Jane C. Samoya,
Jahziel B. Alicaway, & Rhea T. Quiador. (2019). Challenges Faced by
Entrepreneurs of Sari-sari Stores in Kabankalan City. Scribd.
https://www.scribd.com/document/438346950/Challenges-Faced-by-
Entrepreneurs-of-Sari-sari-Stores-in-Kabankalan-City\
Jericho P. Cruzat, Ramizes D. Festejo, & Ramon O. Atento. (2019). Attitude of Sari-sari
Store Owners in Barangay Makiling, Calamba City, Laguna towards
Microfinancing. LPU- Laguna Journal of Business and Accountancy. Vol. 3 No.
2. https://lpulaguna.edu.ph/wp-content/uploads/2019/10/4.-Attitude-of-Sari-Sari-
Store-Owners-in-Barangay-Makiling-Calamba-City-Laguna-towards-
Microfinancing.pdf
Olawale Fatoki. (2016). Problems Experienced by Immigrant Spaza Shop Owners in
South Africa. Journal of Economics, 7(2-3), 100–
106.  doi:10.1080/09765239.2016.11907825