I

Chapter I

INTRODUCTION

Background of the Study

In December 2019, the global health crisis caused by the Coronavirus Disease
2019 (COVID-19) pandemic began in China, catching the world unawares and
unprepared and causing significant devastation to business activities, with serious adverse
effects on small businesses. Small businesses are likely to be severely affected, as they
manage to be more focused in sectors that have been directly affected by the COVID-19
response measures and are typically more credit restricted than larger business.
Catarman is one of the towns of Northern Samar. It is frequented by neighboring
towns to market their goods and necessities at home. Many foreigners set up their
businesses here, which is the main source of occupation of the people here. Most of them
are Chinese and Taiwanese businessmen. When the crisis caused by COVID-19
pandemic began, many businesses have been particularly affected. Many closed
temporarily and others went bankrupt. Small businesses have been particularly affected
like entrepreneurs who own fishing boats, small resorts, and small shops. The main
reason for their losses was the restriction of exit of their respective homes and the lack of
resources of money and employment.
In light of covid-19’s fare-reaching impact on all aspects of life, especially on the
economy and the business sector especially in the small town of Northern Samar which is
Catarman, the aim of the study was to investigate the pandemic’s effect on the extent of
operations and the revenues of small businesses in industrial sectors of Catarman, and the
extent to which adjustments or changes were made to business activities in order to
withstand the new challenges of this period. I conclude, researchers need to investigate
the pandemic’s effect on the performance and innovation of different kind of small
businesses in Catarman.

Objective of the Study

This study tries to find out the impact of pandemic on the performance and
innovation of small businesses in Catarman.
Specifically, this study aimed to:

1.Focus on the methods of innovation and different operational procedures that

can be used to increase the small businesses’ performance in regard.
2.Determine the profile of small businesses in Catarman in terms of:
a. The accessibility of their products.
b. Performance of their employees or workers
c. Availability of their products or services based on human needs.
d. Type of consumer or costumer they have
3. out if there is a significant difference between the performance and innovation
of idea and the impact of pandemic.
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4.Find out the significant differences and similarities of consumer and the
products they sell.

Significant of the Study

The finding of this study will redound to the benefit of the society considering
that the main source of the livelihood of almost all people in Catarman comes from the
local small businesses.
This study will benefit the following:
 Citizen of Catarman- this will help in giving information about our local
economy. It will also help in giving idea on what is going on in our
business or livelihood and to our jobs.
 Business owners- this will provide them knowledge of what they can still
do to further grow their businesses despite of the pandemic.
 Employee- this will give them knowledge about what is happening in their
workplaces.
 Aspiring businessman/entrepreneur- this will provide them information
that might help in building up their own businesses despite of the
pandemic.
 Local Government of Catarman- despite of the pandemic, small businesses
is one of the sources of income which grows the economy of Catarman.
This will help the local government in gathering information that will help
in growing Catarman’s ecoomy.

Scope and Limitation of the Study

 Scope
This study focuses on the impact of the pandemic on the performance and
innovation of small businesses in Catarman, the products and services a business
give and the costumers or consumers and business owners. The respondents were
the owners of small businesses, their employees and consumers and workers of
the local government unit of the said area.

 Limitation
The weaknesses of this study might affect the credibility and reliability of
collected data will be the seriousness and truthfulness of the business owner,
consumer, employees of a business establishment, workers of the LGU-Catarman
and other respondents in answering question given via questionnaires or
interview.
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Theoretical Framework
Many of small businesses operate in the retail and service sectors and serve the
end consumer through face-to-face interactions. These sectors were the most adversely
affected by COVID-19 pandemic, due to the restrictions and closures imposed by the
authorities.
As noted, small businesses often operate in niche and highly specific markets and
able to provide something different from standardized products and services offered by
large companies. In the industry sectors particularly, many of them act as specialist
suppliers of parts, components and subassemblies and work as subcontractors to large
industrial companies, which for the most part continued to operate during the COVID-19
period, in view of their status as essential industrial enterprises to the company.

Conceptual Framework
The figure shows the dependent variables are the performance and the innovation
of small businesses in Catarman while the independent variable is the pandemic or the
Coronavirus Disease (COVID-19) pandemic. The arrow symbol connotes the relationship
between the performance and innovation of the business to the Coronavirus Disease
(COVID-19) pandemic while the line symbol signifies the difference between the
performance of the business and the innovation of the business.

PARADIGM

DEPENDENT VARIABLE INDEPENDENT VARIABLE

PERFORMANCE
OF THE
BUSINESS

CORONAVIRUS
DISEASE
(COVID-19)
INNOVATION PANDEMIC
OF THE
BUSINESS
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Hypothesis

H1: the revenue of small businesses in the industry sector of Catarman did not decrease
during the COVID-19 period as compared to the corresponding period last year.
H2: most small business in the industry sector of Catarman have not made changes or
adjustments in their business activity during the COVID-19 period.

H3a: most small businesses in the industry sector of Catarman have not reduced their use
of open innovation tools during the COVID-19 period.

H3b: most small businesses in the industry sector Catarman have not reduced the extent to
which sharing processes were taking place in the business and to the extent to which
there was a change in the cultural processes implemented in the business during COVID-
19.

H4a: the rate of revenue from the subcontracting work among businesses, whose revenues
grew or remained unchanged during the COVID-19 period, is higher than the rate of
revenue from subcontracting work that experienced a revenue drop during this period.

H4b: there is a negative relationship between the rate of revenue from subcontracting work
and the change in revenue during the COVID-19 period, such that businesses with a high
rate of revenue from subcontracting work displayed revenue growth or unchanged
revenues during the pandemic.

H5a: the rate of revenue from subcontracting work among businesses that changed or
adjusted their business activity during the COVID-19 period id lower than the rate of
revenue from the subcontracting work among businesses that made no changes or
adjustments during that time.

H5b: there is negative relationship between the extent to which changes or adjustments
were made in the business activity and income from subcontracting work such that
businesses with a high rate of revenue from subcontracting work show lower levels of
change or adjustment in business activity.
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CHAPTER II
REVIEW OF LITERATURE

CORONAVIRUS DISEASE 2019

COVID-19, which was announced a worldwide pandemic by the World Health
Organization (WHO), has now infected more than 504 million persons and caused more
than 6.2 million deaths. The desperate effort to reduce the human-to-human transmission
of COVID-19 led to a lockdown of communities and business closures.
In the wake of this global health crisis and to avoid shutdown of economic
activities, the use of technologies that were not considered essential by small businesses
became important to avoid a shutdown of the global economy. Many businesses in all
sizes have since implemented technologies such as Zoom virtual meetings and other
methods. These technologies became one of the survival techniques during the lockdown
of the communities by different levels of the governments meant to contain the spread of
the COVID-19 pandemic and enable the management of operations and projects
remotely, or conduct business meetings without physical contact among employees.
Businesses in certain sectors that were allowed to continue their activities under
restrictions like maintaining distance between employees. Yet, it is unimaginable how
things would have gone had the technologies currently in use by businesses during this
global health pandemic not been as pervasive.
On the other hand, the epidemic and the resulting lockdown have accelerated and
magnified the impact technology can have on some organization’ business models. Many
small businesses have also been able to utilize new techniques to adapt and improvise
their business models. Notable example, include personal training, tutoring and client
consulting, using virtual video platforms like Zoom and restaurants that have turned to
take away delivery options backed by online meal ordering.

ADDRESSING INNOVATION IN SMALL BUSINESSES

According to the OECD or Organization for Economic Co-operation and
Development, innovation is distinguished as the introduction of a new or considerably
enhanced product or the enactment of a new process, marketing method or organizational
method in business practices, workplace organization or external relations.
According to European Union (EU) Commission, small businesses are
distinguished as businesses that employ up to 50 employees and are often characterized
by limited regional activity and relatively small market share. Small businesses often
operate in niche and highly specific markets and are able to provide something different
from standardized products and services offered by large companies. In industry sectors
particularly, many small businesses act as specialist suppliers of parts, components and
subassemblies, and many large companies are using small businesses as subcontractors to
incorporate specialized skills and to perform tasks that are not part of their core business.
Small business are perceived as an important growth driver in the economy, and
in the ever-changing economic environment, their advantages are expressed in flexibility,
rapid response, adaptability to market changes and quick decision-making. Harel et al.
point out that despite the difficulties small businesses face in promoting innovation, a
substantial part of small businesses in industry sectors are actively engaged in various
types of innovations are relatively minor.
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OPEN INNOVATION
The changes that have taken place worldwide have led to changes in the
innovation concept from a closed model based on internal resources to an open
innovation (OI) model characterized by going beyond the business borders.
OI can be conveyed in the accession of technology proficiency, the use of
networking, cooperation with external entities for product design, etc. the OI model
enables businesses to employ both internal and external pathways and, concurrently, to
acquire knowledge from external sources. Using the OI model enables small businesses
to become part of the innovation landscape because only a small number of them have
sufficient ability to manage the entire innovation process independently, and they need to
collaborate with other entities.
Harel et al. differentiated between OI tools aimed at acquiring knowledge in a
unidirectional manner from external open sources of information, like internet searches
for professional information or attending professional conferences, and OI tools aimed at
obtaining knowledge by interacting with other factors in the business ecosystem.
Lee et al., Radziwon and Bogers and Van de Vrande et al. also argue that small
businesses need to find ways to benefit from economies of scale and therefore must
develop external relationships in order to find the resources they lack for innovation.

PROCESSES FOR SHARING AND UTILIZING KNOWLEDGE IN THE

BUSINESS
Previous studies have shown that organizational culture is an important resource
for promoting innovation and contributes greatly to business performance and growth.
Organizational culture is defined as a framework of shared valued and beliefs for
employees at all levels of the organization that are reflected in its characteristics, and
organizational culture that encourages innovation includes behavior that demonstrates am
appreciation of creativity, risk-taking, freedom, teamwork, communication, trust and
respect. Developing such organizational culture is an integral part of the innovation
process.
Each organization has elements of leadership, skills, and infrastructure, value,
culture, and processes, and the challenges to adapt these components to an innovation
framework that is compatible with the organization and its objectives. The creation of a
suitable organizational culture that encourages communication and knowledge sharing
will make it available for use by the entire organization.
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CHAPTER III
METHODOLOGY

LOCALE OF THE STUDY

This study was conducted in the industrial areas of Catarman, this place was
selected for knowing the efficiency of the study in determining the impact of the
pandemic to the performance and innovation of small businesses in Catarman. This study
will get respondents from selected small businesses owners, employees of selected
business establishments and selected consumers.
This study will use all the population of the following:
 Small businesses owners
 Employees of selected business establishments
 Selected consumer
 Employees of LGU-Catarman

RESEARCH DESIGN
In this study, researchers use descriptive research design to collect data, analyzing
and prepares collected data. Researchers are required to gather data relating to the
impacts of the pandemic on small businesses in Catarman. This research design suits in
this research in the reasons the aim of the researchers is to obtain data or information to
systematically describe the phenomenon or the research problem. This research design
helps in answering the what, when, where, and how of the questions regarding the
research problem.

THE VARIABLE
In this study, respondents are small business owners owing a business for a year
or two with age between 35-60, employees of selected business establishment with the
age between 25-40, consumers with the age of less than or equal 60 and workers of LGU-
Catarman with the ages .

POPULATION AND SAMPLING

In this study researchers are suing random sampling. This will help in getting
random answers from the population. This means that researchers might choose
respondents in equal chances. This will give equal and pair result or data.

RESEARCH INSTRUMENT
In this research, survey was used because it involves respondents and
questionnaires to provide the exact result this study. A survey consists of predetermined
set of questions that is given to a sample. With a representative sample, that is, one that is
representative of the larger population of the interest, one can describe the attitude of the
population from which the sample was drawn. Further, one can compare the attitudes of
different population as well as look for changes in attitude over time. A good sample
selection is needed to generalize the findings from the sample population to enable us to
draw accurate conclusions.
In this study, researcher will use surveys and questionnaires in getting data for the
research topic. Surveys and research questionnaires will be answered by respondents and
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the data will collected and analyze by the research. From this collected data, result will be
formulated and the study will be beneficial for the readers or user.

SCORING AND INTERPRETATION

Age. This refers to the actual age of the owners and employees respondents
Gender and Gender expressions. This refers to the gender and gender expression of the
respondents.
Civil status. This refers to the actual civil status of the respondents.

SCALE RESPONSE RATING

5 Highly impact 4.21-5.00
4 Reasonable impact 3.41-4.20
3 Moderate impact 2.61-3.40
2 Bare impact 1.81-2.60
1 Low impact 1.00-1.80

VALIDATION OF RESEARCH INSTRUMENT

The research instrument used is surveys and questionnaire. This is a standardized
research instrument for research. In this study, this research is validated and useful to the
study.

DATA GATHERING PROCEDURE

In this study, researcher will use surveys and questionnaires in getting data for the
research topic. Surveys and research questionnaires will be answered by respondents and
the data will collected and analyze by the research. From this collected data, result will be
formulated and the study will be beneficial for the readers or user.

STATISITCAL TREATMENT
In this study, researchers use arithmetical average of numbers or arithmetical
mean. This suits the research because researchers use counting, dividing and summing up
the data that has been collected.
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CHAPTER IV
PRESENTATION,ANALYSIS AND INTERPRETATION OF DATA

Age

Table 1.1 presents the distribution of the respondents according to age. The data
revealed that 34 or 29.57 percent were 20 – 30 years old, 62 or 53.91 percent were 31 –
40 years old, 15 or 13.04 percent were 41 – 50 years old and only four (4) out of the 115
total respondents were 51 years old and above. This means that majority of the
respondents were on their family ages.

AGE DISTRIBUTION PROFILE OF THE RESPONDENTS

TABLE 1.1
AGE FREQUENCY PERCENT

20-30 34 29.57
31-40 15 53.91
41-50 62 13.04
51 and above 4 3.48
TOTAL 115 100

Gender
Table 1.2 present the distribution of the respondents according to gender. This
data revealed that 42 or 36.52% of the respondents are male, 55 or 47.82% of the
respondents are female and 18 or 15.65% of the respondents are comes from the other
preferences.

GENDER DISTRIBUTION PROFILE OF THE RESPONDENTS

TABLE 1.2
GENDER FREQUENCY PERCENT
Male 42 36.52
Female 55 47.82
Other 18 15.65
TOTAL 115 100

We get this data in the people that we asked or survey, in the table 1.1 Age
distribution profile of the respondent That’s means the respondent is by age only
and for the 20- 30 age the frequency is 34, how we get this? That is 34 × 100 ÷ 115
and the total is the percent that is 29.57 And the second is 31 and 40, to get this data
you need to multiple the frequency in 100 means 15 × 100 and then the total is you
need to divide it to 115 and the equal is the percent which is 53.91.
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And the rest. And for the gender distribution profile of the respondent gender in the
male respondent the frequency is 42 multiply to 100 and divide it into 115 and the
equal is the percent that is 36 . 52 (42×100÷115 = 36.52)and for the female gender
the frequency is 55 multiply to 100 and divide it to 115 and equal is the percent that
is 47.82 (55×100÷115 = 47.82)

NS, IMPLICATIONS AND RECOMMENDATIONS

SUMMARY
The present study empirically investigated the COVID-19 pandemic’s impact on
the scope of operations and revenues of small businesses in industrial sectors as
compared to the same period the previous year. It also looked at the extent to which
businesses made adjustments or changes to their business activity in order to cope with
the new challenges posed by the pandemic. We also looked at the relationship between a
business’ rate of revenue from subcontracting work/export sales and its change in
revenue/the extent of business activity changes or adjustments that the business had to
make during the COVID-19 period.

Moreover, in order to assess the impact and future implications of COVID-19 for these
businesses, the study asked whether, and to what extent, there were changes in the
utilization of open innovation tools and in the implementation of sharing and cultural
processes that could potentially promote innovation within the business and, accordingly,
business performance.

CONCLUSIONS AND IMPLICATIONS

The aim of the study was to empirically examine the COVID-19 pandemic’s impact
on the revenues of small businesses in the industrial sectors and the extent to which these
companies made changes in business activity, the utilization of open innovation tools and
the implementation of various managerial processes. The study also looked at the
relationship between revenue from subcontracting work/export sales and changes in
revenue/the extent of changes or adjustments in business activity during the pandemic.

The findings showed that, despite the far-reaching impact of COVID-19 in all areas
of life, and especially on the economy and the business sector, the revenues of most small
businesses in the industrial sectors were not harmed during the pandemic, and most of
these businesses made no changes or adjustments to their activity, or in the extent to
which they utilized OI tools or implemented sharing and cultural processes.

The findings pointed to a relationship between change in revenue/extent of change

or adjustments in business activity during the pandemic and revenue from subcontracting
work. Those businesses whose rate of revenue from subcontracting work was relatively
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high did not suffer a decline in revenue and were not obliged to make many changes to
their activities during this period. As mentioned, large businesses in certain industrial
sectors that were defined by the authorities as essential for continuing economic conduct
were allowed to continue their activities under some restrictions. Small businesses that
served as subcontractors to those businesses were also allowed to continue their work.
In addition, these small businesses continued to conduct their business activities
without physical contact with their customers, even during the lockdown periods.
From this, we may conclude that small businesses in the industrial sectors that
served as subcontractors and, in particular, had long-term contracts with big customers,
were likely to cope better during periods of economic distress and uncertainty.
Businesses whose sales were based primarily on other businesses (B2B) and did not serve
private end customers (B2C) through face-to-face interaction coped better with
restrictions and unanticipated situations.
The findings also pointed to a relationship between revenue from export sales and
the extent of the changes or adjustments made to business activities during the pandemic.
The findings showed that businesses active in the international market, whose rate of
revenue from export sales was relatively higher, succeeded to a greater extent in making
changes to their business activity and adjusting that activity to the changes underway and
to the varying requirements of customers around the world, in accordance with the trade
restrictions instituted by different countries.
The present study’s theoretical contribution consists in its focus on small businesses
in the industrial sectors, with an emphasis on the work strategy of subcontracting and
international activity as a factor that enables businesses to cope with difficulties and
conditions of extreme economic uncertainty.
The study findings also make a practical contribution by suggesting that, given the
significant contributions of production subcontracting and international activity to small
businesses in the industry sectors, these strategies deserve development and policy
support.
Such support will help these businesses survive and become stable, while fostering
their ability to thrive in the future, thereby also promoting the economy’s resilience in
crisis situations and enabling it to flourish.