Exploring The Product Development and Sa 3

CONFERENCE
PROCEEDINGS
ISSN 2345-8720
8TH NATIONAL BUSINESS
AND MANAGEMENT
CONFERENCE
REIMAGINING THE NEXT NORMAL:
BUSINESS AND MANAGEMENT IN THE PHILIPPINES
DURING TIMES OF UNCERTAINTY
Table of Contents
Employability Skills, Image, and Attitudes of Graduates needed by Ilocos Norte Employers ...... 6
The Art of Goal Programming Model: A Tool for Rebuilding the ‘Next Normal’ in
Outperforming the Philippine Stock Exchange Index .................................................................. 26
The Emergence of the Fourth Industrial Revolution: Mediating Effect of Hyperconnectivity on

the Relationship of Digitalization with Competitive Advantage .................................................. 49
Impacts of Employee Empowerment and Organizational Agility on Employee Productivity: The

Case of Agro-Trade Integrated Ventures Corporation.................................................................. 65
Determining the influence of consumers’ level of involvement on communication message

strategies that affect the consumers’ purchase involvement in Beauty & Personal Wellness
Services ......................................................................................................................................... 80
Understanding the Impact of the Credibility of Filipino Celebrity Endorsers on the Intention of
the Filipino Millennial to Donate to and/or Volunteer with Nonprofit Organizations in the
Philippines..................................................................................................................................... 95
Mindfulness and Moral Identity: Inroads Towards Ethical Decision Making ............................. 96
Collaborative Action Research: Developing the Recruitment Process for POWER LINK
CENTER for Advanced Skills Development Inc. ...................................................................... 109
What Drives Collaboration Among Filipino Freelancers? Assessing the Physical and Social
Elements of Coworking Spaces .................................................................................................. 129
Virtuous Leadership for the New Normal: Identifying Leader Virtues in a Philippine Leadership
Program ....................................................................................................................................... 143
Robotics Process Automation: Adoption in Accounting ............................................................ 155
The Effects of Incivility from Customers on Turnover Intentions: The Moderating Role of
Perceived Organizational Support .............................................................................................. 171
Precarious work: The unsolved problem of contractualization and its effects on contractual
workers in the public sector ........................................................................................................ 185
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Fate of Post-COVID-19 Philippine Hospitals............................................................................. 199
Ethical Perception of Business Students: Does Gender and Age Make a Difference? .............. 207
Organizational Culture: The Influence on Accounting Information System Success and Its
Implication on the Quality of Financial Information .................................................................. 208
Ignatian Pedagogy in Entrepreneurship Courses: Innovations in Content and Delivery............ 227
Impact of Attitude, Subjective Norms, Perceived Behavioral Control, and the Moderating Effect
of Competencies to the Intention of Children to Succeed in their Family Business .................. 236
Linear Model Comparison Table between the Non-Interaction and Interaction Model ............. 246
Enhancing the Performance Management System of Social Enterprises ................................... 249
An Exploration on the Intentions and Behaviors of Consumers from Metro Manila toward Green
Products....................................................................................................................................... 262
Exploring Fresh Food Buying Preferences in Marilao Isolation Facilities Area During the
COVID-19 Pandemic Using Discrete Choice Analysis.............................................................. 290
Critical Thinking Ability and Disposition: Impact on Conflict Management ............................ 305
Gen Z Shopping Behavior during this Pandemic ....................................................................... 314
Total Factor Productivity of Selected Philippine and Malaysian Commercial Banks using
Malmquist-DEA.......................................................................................................................... 328
Can Perceived Values and Addiction Rouse In-app purchase intention? ................................... 329
Online Retail Therapy: A Coping Strategy Affecting Consumer’s Subjective Wellbeing ........ 346
The Diverse Challenges and Impact of Multiculturalism in a Collaborative Online International

Learning (COIL) ......................................................................................................................... 355
Compassion and Social Entrepreneurial Intentions in Times of Covid-19................................. 378
Quo vadis Covid 19? In Search of Macro-variables per Country to Explain its Spread through
Regression and Correlation Analysis .......................................................................................... 396
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Shop ‘Til You Drop: Examining the Impact of Risk and Trust in M-Commerce and its
Subsequent Effects on Consumers’ Future Purchase Intention .................................................. 409
Knowledge Management Model for Implementation and Evaluation ........................................ 428
An Analysis of Key Success Factors (KSFs) of Cooperative Feed Mill Enterprises in Batangas
Province, Philippines .................................................................................................................. 440
Ethical Conduct in Business Organizations: the Perceptions of Senior High School Students.. 455
Academic Entrepreneurship in the Philippines: The Interplay of Absorptive Capacity and

Innovation on University-based Technology Business Incubators ............................................. 466
Posner, B.Z (1992) Person-Organization Values Congruence: No Support for Individual

Differences as a Moderating Influence https://doi.org/10.1177/001872679204500403 ............ 506
Momshies Know Best: The Impact of a Social Media Influencer on the Purchase Intention of
Filipino Moms as Mediated by Consumer Attitude .................................................................... 508
A Neo-Classical Economic Theory: Leveraging Underground Economy ................................. 532
The Influence of Brand Equity To Millennials’ Customer Motivation Toward BPI Credit Cards
..................................................................................................................................................... 544
An Assessment of Recruitment and Selection of Talents in Restaurants of Iligan City............. 554
Sustainable Direction of Sachets and Soft Plastics: A Stakeholder Analysis on Kolek Kilo Kita
para sa Walastik na Maynila ...................................................................................................... 566
Being Fully Human: Reflections on the Journey to Wholeness ................................................ 585
Filipino Consumers’ behavior on CSR-driven marketing efforts: A study on consumers’ buying

behavior driven by the brands’ corporate social responsibility .................................................. 596
Assessment of the food safety culture of the city of Bacoor Food Processing Center ............... 608
System of Rice Intensification (SRI): Farmers’ Awareness, Perceptions and Attitudes in Quezon
Province ...................................................................................................................................... 621
The Insights of Metro Manila Arts Audiences during the Pandemic ......................................... 640
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Understanding the Motivations and Challenges of Early Generation Z College Students While
Establishing Online Baking Businesses Amid the COVID-19 Pandemic .................................. 653
Philippine entrepreneurial framework conditions: A fresh look at the Global Entrepreneurship

Monitor’s National Experts’ Survey ........................................................................................... 668
Exogenous Scarcity in the mind of Filipino Consumers during Covid-19 Pandemic ................ 680
Exploring the impact of COVID-19 on MSMEs in the Philippines: A Case Study ................... 681
The other business aside from showbiz: Effectiveness of celebrity endorsing their own business
venture......................................................................................................................................... 692
Ethics and Digital Marketing: A New Normal Perspective of Filipino Consumers ................... 705
A Market Study to Check the Feasibility of CINA-LEM Mosquito Repellent Oil .................... 712
The Growth of Digital Money during the Community Quarantine Periods in the Philippines: An
Analysis....................................................................................................................................... 721
Regulating the Use of Social Media Data in Employee Selection.............................................. 743
Study on the Impacts of Online Shopping Values, Web Atmospheric Cues, and Electronic Word-
of-Mouth on Young Millennials’ Repurchase Intention ............................................................. 763
Effect of Liquidity, Profitability, and Leverage on Firm Value of Philippine Publicly-listed

Service Companies during COVID-19 Pandemic ...................................................................... 764
Exploring the Product Development and Sales Processes of An Embedded For-Profit Social
Enterprises in the Growth Lifecycle Phase: A Grounded Theory Approach .............................. 776
Impacts of Working Capital Management on the Profitability of Manufacturing Companies ... 791
The Threshold of “Ginhawa:” Implications for Work Motivation and Performance ................. 792
Nascent Academic Entrepreneurs’ Venture Emergence: A Study in Critical Realism .............. 793
Leadership and Conflict Management Styles among Administrators in a Catholic University . 802
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The mediating role of marketing innovation to the marketing competence and sustainable
competitive advantage of the selected small and medium enterprises ....................................... 816
Where lies the competitive advantage of the Pili processors of Camarines Sur, Bicol,
Philippines? ................................................................................................................................. 833
E-commerce: Micro, Small and Medium Enterprise (mSME)s Gateway to Sustainable

Competitive Advantage .............................................................................................................. 834
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Employability Skills, Image, and Attitudes of Graduates needed by
Ilocos Norte Employers
8th NBMC Paper #1
Eric S. Parilla
Northwestern University
[email protected]
Abstract
The study investigates the needed skills, image, and attitudes by Ilocos Norte Employers. There
are four industries for this study that includes food, retail, manufacturing, and other services. These
industries were selected because they are the major industries in Ilocos Norte. The study
participants were the employers of Ilocos Norte, and they were selected using the non-probability
quota sampling technique. The study used a quantitative study design and a comparative research
approach to measure the significant difference in the four industries' needed skills, image, and
attitudes. Using weighted means and One-way Anova, the findings revealed that attitudes such as
loyalty and honesty are more important than skills and image. Furthermore, communications,
leadership, and critical thinking skills are also crucial to Ilocos Norte's employers. Implications,
conclusions, and recommendations were also provided in the study.
Keywords: Skills, employability, attitudes, image
Introduction
The 21st century commands new skills that must be possessed by graduates. Different skills
are necessary to be acquired in order to become employable. Companies nowadays are looking for
appropriate employees to fill in vacant positions in their organizations. Firms partner with higher
education institutions to minimize the gap between what is taught and what is needed by the labor
market. This action is to supply a wealth of graduates with specific skills, images, and attitudes
that best suit their organization. With the vast number of graduates and a minimal vacancy,
especially in the Province of Ilocos Norte, graduates should sustain a cutting-edge competitive
advantage. Companies are no longer pursuing graduates with only academic skills. However, they
are looking for employability skills or generic attributes that educational institutions should
provide to meet the workplace's needs. The danger and risk for the present and the future is not a
lack of jobs but a deficiency of up-to-date skills, attitudes, and image. If there are unmatched needs
of the companies with what the graduates possessed, unemployment and underemployment occur.
Unemployment befalls when there is a lack of jobs available for the labor force. This means
that there are more people in the labor force than unfilled jobs. On the other hand,
underemployment occurs when the necessary skills do not match a person's job. One of the leading
causes of unemployment and underemployment in the Province is occupational immobility, where
graduates' skills and attitudes do not match what is currently needed by the industry. It is detected
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that many students lack the necessary skills and attitudes of an employable individual even after
they graduate. Therefore, universities and colleges have the responsibility to see that they prepare
the students for their graduates' necessary skills and attitudes to be employable.
According to Yorke & Knight (2003), employability is defined as a set of achievements-

skills, understandings, and personal attributes that make graduates more likely to get employment
and be successful in their chosen profession, which aids themselves, the workforce, the
community, and the economy. In other words, employability is the ability of the student to get (and
retain and develop in) a job after graduation. Employability is a group of attitudes, images, skills,
and knowledge that the graduates should possess to ensure they can be useful in the workplace.
Previous studies indicated that graduates should be fortified with necessary employability
skills, including interpersonal skills, teamwork skills, communication skills, problem-solving
skills, and conflict resolution skills. In research by Parilla (2015), having the right personality is
perceived as an essential attribute by employers. This means that having the right attitude also
matters for employers, aside from the necessary skills and knowledge. Students and graduates
lacking these skills and attitudes will not compete and effectively participate in the labor market.
This study's primary purpose is to discover the necessary skills, attitude, and image the
graduates should possess to be employable. This serves as a base line for curriculum development
and what subjects are necessary to be included in universities and colleges' curriculum.
Research Framework and Proposition Development
In research done by STEMNET, European companies employ employability skills that

they look for potential employees. These are communication and interpersonal skills, problem-
solving, initiative and self-motivated skills, and working under pressure skills. They look for
employees to explain what they mean clearly and concisely through written and verbal means. To
listen and relate to some people, and to act upon crucial information and instructions. They also
look for potential employees to understand a problem by breaking it down into smaller parts,
identifying the key issues, implications, and identifying solutions. To apply all the knowledge from
many different areas to solve a task. These are the skills that European companies look for possible
employees.
Moreover, the essential skills that employers look for potential applicants are oral
communication, working with others, improving their learning and performance, and problem-
solving (Dench et al. 1998). It was also found out that employers did not necessarily assume these
to be developed in young applicants but are increasingly looking at ways of recognizing potentials
in their young recruits. Also, grown-up applicants and longer serving employees do not always
have such a good understanding of IT compared to young people and often have fewer IT skills.
On the other hand, the study of Lowden et al. (2011) suggested that companies expect
potential applicants to have technical and discipline competencies from their degrees. However,
force graduates also to prove a range of more comprehensive skills and attributes that include
team-working, communication, leadership, critical thinking, problem-solving, and managerial
abilities. The research also highlighted that employers, students, graduates, and HEI
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representatives value work-based learning (such as placements and internships) as particularly
useful approaches to promote graduates' employability. Chan (2018) revealed that employers seek
good communicators, and graduates must learn solid verbal communication skills to be effective
at their respective workplaces. According to the manufacturing firms interviewed, communication
skills are vital because they are targeted to support operations in the workplace every day to gain
commitment, establish rapport, and be persuasive is highly valued in manufacturing settings.
Communication skills are the most crucial skill to possess by all graduates to compete in the global
market.
In research by Wijarwanto (2019), competencies and skills that must be learned by

vocational students are faith and trust in the Lord, nationality, social and personal character, mental
and spiritual health, literacy, creativity, aesthetics, technical ability, and entrepreneurship. Also,
Fundamental skills consist of communication, managing information, managing numbers, and
solving problems. These are the skills necessary for them to be employable once they graduate.
Husain et al. (2010) conducted a study to explore the importance of engineering graduates'
employability skills through employers' perspectives. Findings of the study revealed that
employers rated the importance of employability skills at a high level. This shows that all
employers, especially employers in civil engineering, electrical and mechanical placing
employability skills, must be owned by all graduates to compete globally.
Business school graduates require specific employability skills. For business graduates, the
competencies usually cited by many kinds of literature are written and oral communication.
Investigating and analyzing skills, planning and organizing skills, negotiating and persuading
skills, cooperation, leadership, and numeracy skills (Packianathan, 2014). This research study has
this proposition: Employers in Ilocos Norte look for specific aspects of attributes, capacities,
appearance and image, skills, and attitudes.
Research Problem
Generally, this research study determined the necessary skills, image, and attitudes needed
by employers in Ilocos Norte. Specifically, they answered the following problems:
1. What college degrees do employers value the most?

2. What are the attributes and capacities employers are seeking at the point of entry to
employment?
3. What are the aspects of appearance and image that are necessary to employers in Ilocos
Norte?
4. What are the necessary skills needed by employers in Ilocos Norte?
5. What are the necessary attitudes needed by employers in Ilocos Norte?
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Figure 1
Proposed Model
Specific Skills,
Graduates Image, Knowledge,
Employability Attitudes Needed by
Ilocos Norte
Employers
Method
The respondents of the study were selected using the quota sampling technique, and they
were the employers of companies in the Ilocos Norte. The designated quota was 80 employers.
Notably, the participants were the owners or HR managers of companies employing at least ten
employees. Out of 150 survey questionnaires floated and 80 respondents required, 134 employers
and HR managers answered entirely and correctly, an 89.33% response rate for employers. The
questionnaires' distribution was done in March, and the answered instruments were retrieved in
May 2020. This was done with the help of the researchers' students.
Table 1
Organizational Profile
Frequencies of Industry
Cumulative
Levels Counts % of Total
%
Food 35 26.1 % 26
whitetail 30 22.4 % 48.5 %
Manufacturing 4 3.0 % 51.5 %
Other Services 65 48.5 % 100.0 %
Frequencies of Years of Existence

Cumulative
Levels Counts % of Total
%
1-5 years 34 25.4 % 25.4 %
6-10 years 20 14.9 % 40.3 %
11-15 years 7 5.2 % 45.5 %
16 years above 73 54.5 % 100.0 %
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Frequencies of Form
% of Cumulative
Levels Counts
Total %
Sole
90 67.2 % 67.2 %
Proprietorship
Partnership 10 7.5 % 74.6 %
Corporation 34 25.4 % 100.0 %
As seen in Table 1, four categories of respondents' industry for this study, food, retail,
manufacturing, and other services such as hotels, education, and BPO. These four industries are
the dominant industries in Ilocos Norte. There are six respondents for the other services such as
hotels, education, and BPO, while 35 are food businesses and 30 are retail businesses. There are
only four manufacturing companies that were surveyed. As to years of existence, 73 businesses
existed from 16 years above, and as to form of business, most businesses (90) are a sole
proprietorship.
The research instrument utilized in the study was a questionnaire. There are two parts to
the questionnaire. For the first part, the organizational profile; and the second part, skills, image,
and attitudes needed by Ilocos Norte employers. The organizational profile consisted of the type
of industry, years of existence, and form of business. On the other hand, the skills, image, and
attitudes needed by employers supply were measured using the researcher's constructs in his
previous research entitled "Skills, Image, and Attitudes Needed by Metro Manila Employer" last
2015. These constructs are attributes, image, skills, and attitudes. All three constructs were
measured using a 4-point Likert scale where 1 means not important l and four as Critical. The
reliability and validity of the said constructs were gauged, as shown in Tables 2 and 3.
Table 2
The validity of the Questionnaire
Factor Loadings
Estima
Factor Indicator SE Z p
te
Courses Business 0.306 0.0611 5.01 < .001
Engr 0.787 0.0848 9.28 < .001
10.3
Teaching 0.755 0.0729 < .001
6
Social 0.678 0.0736 9.22 < .001
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11.2
Natural 0.808 0.0716 < .001
8
10.1
Maritime 0.728 0.0717 < .001
6
11.9
Crim 0.793 0.0664 < .001
4
IT 0.575 0.0862 6.67 < .001
Attributes Education 0.586 0.0634 9.23 < .001
Job Experience 0.519 0.0588 8.82 < .001
Personality 0.231 0.0580 3.98 < .001
Appearance 0.310 0.0715 4.33 < .001
School Grad 0.549 0.0752 7.30 < .001
12.1
Skills Communication 0.479 0.0396 < .001
1
13.0
Critical Thinking 0.493 0.0379 < .001
1
Personal 11.4
0.432 0.0377 < .001
Development 6
10.0
Presentation 0.476 0.0475 < .001
2
Leadership 0.478 0.0492 9.70 < .001
Numeracy 0.425 0.0540 7.88 < .001
IT 0.400 0.0659 6.07 < .001
13.9
Dependability 0.485 0.0349 < .001
2
13.5
Attitude Positive 0.493 0.0363 < .001
5
12.5
Adaptability 0.493 0.0393 < .001
4
11.7
Honesty 0.407 0.0348 < .001
0
12.6
Self-motivated 0.447 0.0354 < .001
2
10.8
Self-confidence 0.460 0.0424 < .001
5
Loyalty 0.359 0.0398 9.02 < .001
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Table 2 revealed that using confirmatory factor analysis. The questionnaire is valid since
all the constructs have a p-value < .001. CFA is a tool that a researcher can use to attempt to reduce
the overall number of observed variables into latent factors based on commonalities within the
data (Atkinson et al., 2011).
Table 3
Reliability Analysis
Scale Reliability Statistics
mean sd Cronbach's α
scale 2.90 0.382 0.908
Table 3 revealed that the questionnaire is reliable using reliability analysis because the
Cronbach’s alpha is equal to .908. An acceptable Cronbach alpha is 0.7 and above to make the
questionnaire reliable.
Data Analysis
A quantitative research design was used in the present study. Moreover, a comparative
research approach was utilized to measure the significant difference among the needed skills,
image, and attitudes of Ilocos Norte employers. The ANOVA was measured to know the
significant difference between employers and the industry of the needed skills, image, and
attitudes. Moreover, a T-test for an independent sample was used to know the difference in the
Ilocos Norte employer's and graduates' perceptions. Lastly, frequencies, percentages, and mean
were used to describe the skills, image, and attitudes needed by the employers.
Results
What college degree do employers value the most?
Table 4
Courses Needed by Ilocos Norte Employers
Industry N Mean SD SE
Business Food 35 3.66 0.482 0.0814
Retail 30 3.73 0.583 0.1065
Manufacturing 4 3.50 0.577 0.2887
Other Services 65 3.38 0.842 0.1044
Engr Food 35 1.97 1.071 0.1810
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Retail 30 2.70 1.022 0.1866
Manufacturing 4 3.00 1.414 0.7071
Other Services 65 2.23 1.086 0.1348
Teaching Food 35 2.14 0.912 0.1542
Retail 30 2.43 0.971 0.1774
Manufacturing 4 2.75 1.500 0.7500
Other Services 65 2.25 0.985 0.1221
Social
Food 35 2.26 1.067 0.1803
Science
Retail 30 2.23 0.971 0.1774
Manufacturing 4 2.75 0.957 0.4787
Other Services 65 2.15 0.888 0.1101
Natural
Food 35 1.89 0.963 0.1628
Science
Retail 30 2.17 1.020 0.1862
Manufacturing 4 2.00 0.816 0.4082
Other Services 65 2.08 1.005 0.1246
Maritime Food 35 1.57 0.917 0.1550
Retail 30 1.93 1.048 0.1914
Manufacturing 4 1.25 0.500 0.2500
Other Services 65 1.80 0.939 0.1164
Criminology Food 35 1.57 0.778 0.1315
Retail 30 2.17 1.020 0.1862
Manufacturing 4 2.00 0.816 0.4082
Other Services 65 1.95 0.943 0.1169
IT Food 35 2.37 1.114 0.1883
Retail 30 3.17 0.834 0.1523
Manufacturing 4 3.25 1.500 0.7500
Other Services 65 2.89 1.002 0.1243
Table 4 discovered that Food businesses require business courses the most with a mean
rating equal to 3.66, with Information technology came as the second that was needed with x =
2.37. Also, retail industry business courses again were the most needed by the employers with a
mean rating of 3.73, and IT came in as the second most needed by the employers with a mean
rating of 3.17. As for the Manufacturing industry, the most needed is again business courses with
a mean rating of 3.50, and the second most needed is again Information technology. Lastly, as for
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other services industry, the most needed is business courses (x=3.38) and second-most needed is
IT (x=2.89).
Table 4.1
One-Way ANOVA (Welch's)
F df1 df2 p
Business 1.962 3 14.4 0.165
Engr 2.774 3 13.8 0.081
Teaching 0.598 3 13.7 0.627
Social 0.492 3 14.0 0.693
Natural 0.445 3 14.4 0.725
Maritime 1.890 3 15.9 0.172
Crim 2.527 3 14.3 0.099
IT 3.371 3 13.7 0.050
This table shows the ANOVA analysis's output and a statistically significant difference
between our group means. Table 4.1 revealed that the p-value of all the courses except for
Information Technology is more than .05, which means that there is no statistical difference.
What are the attributes and capacities employers are seeking at the point of entry to employment?
Table 5
Attributes and Capacities Employers Seek at The Point of Entry
Mea
Industry N SD SE
n
Education Food 35 3.00 0.804 0.1360
Retail 30 3.10 0.712 0.1300
Manufacturing 4 2.50 1.000 0.5000
Other Services 65 3.00 0.771 0.0956
Previous Job
Food 35 2.97 0.785 0.1328
Experience
Retail 30 3.13 0.730 0.1333
Manufacturing 4 2.75 0.500 0.2500
Other Services 65 2.86 0.659 0.0817
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Personality Food 35 3.60 0.497 0.0840
Retail 30 3.67 0.479 0.0875
Manufacturing 4 3.00 0.816 0.4082
Other Services 65 3.31 0.660 0.0818
Appearance Food 35 2.91 0.702 0.1186
Retail 30 2.83 0.791 0.1445
Manufacturing 4 3.25 0.500 0.2500
Other Services 65 2.71 0.805 0.0998
School Graduated Food 35 2.46 0.950 0.1606
Retail 30 2.47 0.776 0.1417
Manufacturing 4 2.50 1.000 0.5000
Other Services 65 2.32 0.868 0.1077
As for the attributes and capacities needed by the food industry, the most needed is a
personality with a mean rating of 3.60. The second most needed by the employers of the food
industry is education (x=3.00), followed by previous job experience (x=2.97) and appearance
(x=2.91). The last they look at is school graduated with a mean rating of 2.46.
As for the retail industry, table 5 indicates that personality is the first thing the employer
looks into, with a mean rating of 3.67. It is followed by previous job experience (x=3.13) and
education (3.10). The retail industry employers are likely to look last at appearance (2.83), and the
school graduated (2.47).
Also, for the manufacturing industry, they look at an appearance with a mean rating of
3.25, followed by personality (x=3.00). They also look at previous job experience (x=2.75), and
last that they will look at will be the education and the school graduated (x=2.50).
Lastly, as for other services, they will primarily look at personality (x=3.31) and
educational background (x=3.00). Other attributes that of importance to them are previous job
experience (x=2.86), appearance (x=2.71), and school graduation (x=2.32).
Table 5.1
F df1 df2 p
Education 0.463 3 13.8 0.712
Job Experience 1.113 3 14.7 0.375
Personality 3.657 3 13.9 0.039
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Appearance 1.479 3 15.1 0.260
School Graduated 0.273 3 13.9 0.844
It can be assembled in table 5.1 that the ANOVA analysis's output revealed that the
significant value in all the attributes and capacities is more than .05 except for personality (p
value=0.039) and, therefore, it is not a statistically significant difference in the mean except for
personality.
What are the aspects of appearance and image that are necessary to employers in Ilocos Norte?
Table 6
Aspects of Appearance and Image Necessary to Ilocos Norte Employers
Industry N Mean SD SE
Age Food 35 2.86 0.772 0.1306
Retail 30 2.80 0.805 0.1470
Manufacturing 4 2.25 0.957 0.4787
Other Services 65 2.77 0.745 0.0924
Weight Food 35 2.23 0.910 0.1539
Retail 30 2.03 0.850 0.1552
Manufacturing 4 2.00 1.414 0.7071
Other Services 65 2.05 0.799 0.0991
Height Food 35 2.09 0.818 0.1382
Retail 30 2.03 0.850 0.1552
Manufacturing 4 1.75 0.957 0.4787
Other Services 65 2.09 0.765 0.0949
Dress Sense Food 35 2.69 0.676 0.1143
Retail 30 2.43 0.858 0.1567
Manufacturing 4 3.00 0.816 0.4082
Other Services 65 2.58 0.808 0.1002
Voice Food 35 2.54 0.657 0.1111
Retail 30 2.30 1.022 0.1866
Manufacturing 4 2.00 0.816 0.4082
Other Services 65 2.45 0.884 0.1097
Physical looks Food 35 2.51 0.658 0.1113
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Retail 30 2.47 0.730 0.1333
Manufacturing 4 1.75 0.500 0.2500
Other Services 65 2.51 0.812 0.1008
Table 6 presents the aspects of appearance and image necessary to Ilocos Norte employers.
As for the food industry, age is the most common aspect necessary to them (x=2.86). They also
look for the graduate's dress sense (x=2.69), voice (x=2.54), and physical looks (x=2.51). The last
two aspects necessary to the food industry are weight (x=23) and height (x=2.09).
The primary considerations for the retail industry are age (x=2.80) and physical looks
(x=2.47). The second aspects of appearance that employers seek from their applicants are dress
sense (x=2.43) and voice (x=2.30). The last aspects that the retail industry employers in Ilocos
Norte are looking for are height and weight (x=2.03).
As for the manufacturing industry, the aspect of appearance that the employers are looking
for primarily dresses sense (x=3.00). There are some aspects, but it seems that they are not given
significant consideration, such as age (x=2.25), weight and voice (x=2.00), and physical looks and
height (x=1.75). For the other services industry such as hotels, education, and electricity, the
primary aspect of appearance that they are looking for is age (x=2.77), dress sense (x=2.58), and
physical looks (x=2.51). The other secondary aspect of appearance that Ilocos Norte employers
are looking for is the voice (x=2.48), height (x=2.09), and weight (x=2.05).
Table 6.1
df
F df2 p
1
Age 0.484 3 13.8 0.699
Weight 0.349 3 13.6 0.791
Height 0.173 3 13.8 0.913
Dress 0.814 3 14.0 0.507
Voice 0.780 3 14.1 0.524
Physical
2.607 3 15.0 0.090
looks
It can be deduced from Table 6.1 that the output of the ANOVA analysis revealed that the
significant value in all the attributes and capacities is more than .05 and, therefore, it is not a
statistically significant difference in the mean. This means that in terms of appearance, in all
industries, they look for the same.
17 | P a g e
What are the necessary skills needed by employers in Ilocos Norte?
Table 7
Skills Needed by Employers in Ilocos Norte
Mea
Industry N SD SE
n
Communicati 3 0.61 0.103
Food 3.46
on 5 1 2
3 0.50 0.092
Retail 3.43
0 4 0
Manufacturi 0.50 0.250
4 3.25
ng 0 0
Other 6 0.57 0.071
3.38
Services 5 8 7
Critical 3 0.56 0.095
Food 3.51
Thinking 5 2 0
3 0.57 0.104
Retail 3.50
0 2 5
4 2.75
ng 0 0
Other 6 0.52 0.065
3.43
Services 5 9 7
3 0.57 0.096
Presentation Food 3.29
5 2 8
3 0.53 0.097
Retail 3.30
0 5 7
4 2.50
ng 0 0
Other 6 0.67 0.083
3.28
Services 5 3 5
3 0.61 0.103
Leadership Food 3.49
5 2 5
3 0.66 0.121
Retail 3.20
0 4 3
4 3.00
ng 6 2
18 | P a g e
Other 6 0.65 0.081
3.38
Services 5 4 1
3 0.71 0.121
Numeracy Food 3.20
5 9 6
3 0.69 0.126
Retail 3.27
0 1 2
4 2.50
ng 0 0
Other 6 0.62 0.077
3.22
Services 5 5 5
3 0.87 0.148
IT Food 2.77
5 7 3
3 0.61 0.112
Retail 2.97
0 5 3
4 2.50
ng 7 7
Other 6 0.82 0.102
2.97
Services 5 9 8
As for the skills necessary to the Ilocos Norte employers, particularly the Food industry,
the primary skills are Critical thinking skills (x=3.51), leadership skills (x=3.49), and
communication skills (x=3.46). The secondary skills that they are looking for are presentation
skills (x=3.29), numeracy skills (x=3.20), and the last is IT skills (x=2.72).
On the other hand, for the retail industry, the primary skills are critical thinking skills
(x=3.50), communications skills (x=3.43), and presentation skills (x=3.30). The other set of skills
they are looking for are numeracy skills (x=3.27), leadership skills (x=3.20), and IT skills (x=2.97).
These skills are deemed necessary for the manufacturing industry in Ilocos Norte:
Communication skills (x=3.25), leadership skills (x=3.00), critical thinking skills (x=2.75) and
presentation skills, numeracy skills, and IT skills (x=2.5). Lastly, for other services industries, just
like BPOs and hotel industries, the primary skills they are looking for are critical thinking skills
(x=3.43), communication skills, and leadership skills (x=3.38). Further, the secondary skills
needed are presentation skills (x=3.28), numeracy skills (x=3.22), and IT skills (x=2.97).
19 | P a g e
Table 7.1
df
F df2 p
1
Communication 0.246 3 14.3 0.863
Critical 2.614 3 14.2 0.092
Presentation 0.753 3 13.8 0.539
Leadership 1.236 3 13.8 0.334
Numeracy 0.676 3 13.6 0.581
IT 1.061 3 14.7 0.395
significant value in all the skills is more than .05 and, therefore, it is not a statistically significant
difference in the mean. This means that different industries need the same skills.
What are the necessary attitudes needed by employers in Ilocos Norte?
Table 8
Attitudes Needed by Ilocos Norte Employers
Mea
Industry N SD SE
n
Dependability Food 35 3.66 0.482 0.0814
Retail 30 3.47 0.571 0.1043
Manufacturing 4 3.25 0.500 0.2500
Other Services 65 3.54 0.533 0.0661
Positive Thinking Food 35 3.63 0.490 0.0829
Retail 30 3.43 0.626 0.1143
Manufacturing 4 3.25 0.500 0.2500
Other Services 65 3.48 0.533 0.0662
Adaptability Food 35 3.54 0.505 0.0854
Retail 30 3.40 0.675 0.1232
Manufacturing 4 3.25 0.500 0.2500
Other Services 65 3.49 0.562 0.0698
20 | P a g e
Self-motivated Food 35 3.71 0.458 0.0775
Retail 30 3.43 0.504 0.0920
Manufacturing 4 3.25 0.500 0.2500
Other Services 65 3.49 0.534 0.0662
Self-Confidence Food 35 3.71 0.458 0.0775
Retail 30 3.27 0.640 0.1168
Manufacturing 4 3.25 0.500 0.2500
Other Services 65 3.46 0.588 0.0730
As for the attitudes needed by the food industry employers, the most needed are self-
confidence and self-motivated (x=3.71). The secondary attitudes that food industry employers
need are dependability (x=3.66), positive thinking (x=3.63), and adaptability (3.54).
Moreover, the table shows that as for the retail industry employers, the attitudes they need
most are dependability (x=3.47), positive thinking, and self-motivated (x=3.43). The secondary
most needed attitude is self-confidence (x=3.27)
On the other hand, the most needed attitudes for the manufacturing industry are all the
attitudes enlisted with a mean rating of 3.25.
Finally, as to other services industries, the most needed attitudes are honesty (x=3.63),
dependability (x=3.54), and loyalty (x=3.52). As for the other attitudes needed, they are
adaptability and self-motivated (x=3.49), positive thinking (x=3.48), and self-confidence (x=3.46).
Table 8.1
F df1 df2 p
Dependability 1.169 3 14.2 0.356
Positive 1.166 3 14.2 0.357

Adaptability 0.558 3 14.2 0.651
Self-motivated 2.518 3 14.2 0.100
Self-Confidence 3.901 3 14.3 0.032
21 | P a g e
significant value in self-confidence (p-value =.032) is less than .05 and, therefore, a statistically
significant difference in the mean.
Table 9
Summary of Skills, Image, and Attitudes Needed by Ilocos Norte Employees
Food Retail Manufacturing Other Services
Skills/Image/ x Description Skills/Image/ Description Skills/Image/ Description Skills/Image/ Description
Attitudes Attitudes x Attitudes x Attitudes x
Self Confidence 3.71 Critical Personality 3.67 Critical Dependability 3.25 Critical Dependability 3.54 Critical
Self-Motivated 3.71 Critical Critical 3.50 Critical Positive 3.25 Critical Adaptability 3.49 Critical
Thinking Skills Thinking
Dependability 3.66 Critical Leadership 3.49 Critical Adaptability 3.25 Critical Self-Motivated 3.49 Critical
Skills
Positive Thinking 3.63 Critical Dependability 3.47 Critical Self-Motivated 3.25 Critical Positive 3.48 Critical
Thinking
Personality 3.60 Critical Communication 3.46 Critical Self- 3.25 Critical Self-Confidence 3.46 Critical
Skills Confidence
Critical Thinking 3.51 Critical Positive 3.43 Critical Personality 3.25 Critical Critical 3.43 Critical
Skills Thinking Thinking Skills
Leadership Skills 3.49 Critical Self-motivated 3.43 Critical Communication 3.25 Critical Communication 3.38 Critical
Skills Skills
Communication 3.46 Critical Presentation 3.29 Critical Appearance 3.00 Important Leadership 3.38 Critical
Skills Skills Skills
Adaptability 3.43 Critical Numeracy 3.27 Critical Leadership 3.00 Important Personality 3.31 Critical
Skills Skills
Presentation Skills 3.29 Critical Self-Confidence 3.27 Critical Previous Job 2.75 Important Presentation 3.28 Critical
Experience Skills
Numeracy Skills 3.20 Important Leadership 3.20 Important Critical 2.75 Important Numeracy 3.22 Important
Skills Thinking Skills
Education 3.00 Important Previous Job 3.13 Important Presentation 2.50 Important Education 3.00 Important
Experience skills
Previous Job 2.97 Important Education 3.10 Important Numeracy 2.50 Important IT skills 2.97 Important
Experience Skills
Appearance 2.91 Important IT Skills 2.97 Important IT skills 2.50 Important Previous Job 2.86 Important
Experience
IT skills 2.72 Important Appearance 2.83 Important Education 2.50 Important Appearance 2.71 Important
School Graduated 2.46 Important School 2.47 Important School 2.50 Important School 2.32 Important
Graduated Graduated Graduated
22 | P a g e
Discussions of Major Findings
The study was primarily conducted to assess the needed skills, image, and attitudes of
Ilocos Norte. For fresh graduates and applicants, possessing the needed skills, image and attitudes
are essential and critical not only to gain employment but, more importantly, to survive in their
jobs.
One interesting finding of this study is that attitudes are critical for Ilocos Norte employers,
particularly self-confidence and self-motivated. This means that employers see it critical that
graduates know how to “sell” themselves confidently. Graduates These findings were also evident
in a study by Wijarwanto (2019) where the significant attitudes needed by the employers and which
vocational students must learn are faith and trust in God, nationality, social and personal character,
mental and spiritual health, literacy, creativity, aesthetics, technical ability, and entrepreneurship.
In an interview with one of the province's employers, he said that "Having a right and positive
attitude will not make you great in the job, but it will change the perceptions of your co-workers.
Having a positive attitude is very infectious." That is why employers would like to work with
optimistic people and possess the right and positive attitude at work. It can be presumed from the
study that attitudes were rated by the employers as more important than skills and image by the
applicants. According to Suarta et al. (2017), communication skills, problem-solving, and
decision-making skills are the critical skills that owners and managers of organizations perceived.
More importantly, the study found out that employers favor hiring in the 21st Century who have
flexible graduates' attributes that see the graduates' degree courses.
Moreover, another striking result of the study is that employers need communication skills,
leadership skills, and critical thinking skills. The research of Lowden et al. (2011) observed the
same findings of the skills needed by the employers. The study suggested that companies expect
potential applicants to demonstrate a range of broader skills and attributes that include team-
working, communication, leadership, critical thinking, problem-solving, and managerial abilities.
In a study by the researcher last 2015, it was revealed that communications and critical skills were
also the skills that employers in Metro Manila look. Another study by Husain et al. (2010) showed
that employers perceived that the most essential is graduates' personal quality, interpersonal skills,
and resources skills.
On the other hand, Ramli et al. (2010) found out that problem-solving and analytic skills,
decision-making skills, organization, and time-management skills are the most critical skills of
graduates that employers look for. Singh's (2013) study revealed that graduates' most critical
attributes are communication skills and integrity and professional ethics. The importance of
employability skills is progressively highlighted in recent times. Currently, employers want to hire
graduates not only with technical skills but also with their employability skills. Graduates’
attributes and skills are more critical than the graduates’ degree courses.
Also, employers do not emphasize the school where the applicant graduated. When the
researcher interviewed several employers, they said that as long as the applicant possessed the
right attitude in work and the necessary knowledge, the school where the applicant graduated just
comes secondary. The same results were observed in the study by the researcher last 2015.
23 | P a g e
Another fascinating finding of this study is that for the retail industry, personality is given
importance. This is because the retail industry deals with selling goods to consumers. Therefore
having the right personality (being pleasant and approachable) is a necessity for this industry.
Finally, this study's findings revealed that the needed skills, image, and attitudes by the
Ilocos Norte employers are almost the same in the four industries under study. This means that the
industries' employers do not have significant differences in the skills, image, and attitudes they
look for graduates.
Management Implications and Future Research Direction
The study is conducted to help administrators of Northwestern University develop and

make their graduates employable. One of the four focal functions of any higher education
institution is productivity, and the rate of employability of graduates measures it. Thus this study
will help the university administrators prepare a curriculum suited to answer the gap of what the
employers need and what the University produces.
Since attitudes are critical for employers, the University may want to include in their
subject offering about Personality and Professional Development (PPD) that would enhance their
students' attitudes. This subject will teach about leadership, negotiating, and dealing with stress
and depression. This PPD subject should be offered to all the students of the University. The
University should strengthen its mentoring program. A mentor's responsibility is to inspire the
personal and professional growth of a mentee through the sharing of skills, attributes, knowledge,
expertise, and experience. The mentoring connection is built on mutual trust, respect, and
communication and includes both parties regularly engaging in exchanging ideas, discuss progress,
and set goals for further improvement. Thus, a stable mentoring program is critical in guiding the
students' development and progress. The University, then, should prioritize the mentoring program
for it will help mold the students' behavior. Lastly, there should be additional programs about
positivity, life, and spirituality, so that the students will develop holistically.
In terms of the skills, the University may first assess its teachers/professors who handle
communication-related subjects. The assessment should ensure that these professors possessed the
right skills and knowledge and are equipped with the latest communications trends. For example,
the teachers of language and communications for the College of Education should be assessed if
they have sufficient knowledge and background about terms and jargon in business and
management. If found inadequate, these teachers must first undergo seminars on business
management terms and jargon before teaching in the College. After the assessment, the University
should add more specialized communication-related subjects such as in the College of Business
Education. A subject about Business Letters and Correspondence should be added to their
curriculum. As for critical thinking skills, it is high time to give an upgraded assessment to the
students and avoid memorization and objective exams. Construct the classes in such a way that it
will entice creativity and developed critical thinking skills.
Further, a fascinating study will compare the needed skills, image, and attitude of
government-owned and controlled corporations and local government units and private employers
to future research direction.
24 | P a g e
Lastly, the researcher recommends the following actions:
1. Establish curricula geared towards the gap of the industry's need and the possessed
skills, image, and attitudes of students.
2. Structure programs in keeping with the local needs.
3. Teachers should make instructional approaches
4. Universities should provide faculty support
5. For employers to develop internal training programs for students.
6. For employers and the University to collaborate and provide learning experiences.
References
Atkinson, T. M., Rosenfeld, B. D., Sit, L., Mendoza, T. R., Fruscione, M., Lavene, D., Shaw, M.,
Li, Y., Hay, J., Cleeland, C. S., Scher, H. I., Breitbart, W. S., & Basch, E. (2011). Using
confirmatory factor analysis to evaluate the construct validity of the Brief Pain Inventory
(BPI). Journal of Pain and symptom management, 41(3), 558–565.
https://doi.org/10.1016/j.jpainsymman.2010.05.008
Chan, Shiau Wei & Ahmad, M.F. & Zaman, I. & Ko, W.S.. (2018). Employers' perception of
important employability skills in the manufacturing industry. International Journal of
Engineering and Technology(UAE). 7. 170-175. 10.14419/ijet.v7i2.29.13311.
Dench, S. et al. Employer's perception of Key Skills. The Institute for Employment Studies. 1998.
Husain, Mohd Yusof & Mokhtar, Seri & Ahmad, Abdul & Mustapha, Ramlee. (, 2010).
Importance of Employability Skills from Employers' Perspective. Procedia - Social and
Behavioral Sciences. 7. 430–438. 10.1016/j.sbspro.2010.10.059.
Lowden, Kevin, et al., Employer's perceptions of the employability skills of new graduates.
Research commissioned by the Edge Foundation. University of Glasgow SCRE Centre and
Edge Foundation 2011.
Parilla, E. S. (2015). Skills, Knowledge, and Attitudes Needed by Companies in Metro Manila.
Asian Journal of Business and Management, 3(4). Retrieved from
https://ajouronline.com/index.php/AJBM/article/view/2778
Ramli, A., Nawawi, R., & Pau Chun, M.P. (2010). Employees’ Perception of Employability Skills
Needed in Today’s Workforce among Physiotherapy Graduates. Procedia Social and
Behavioral Sciences, 7(C) (2010): 455–463.
Suarta, I Made & Suwintana, I Ketut & Pranadi, Fajar & Hariyanti, Ni Kadek. (, 2017).
Employability Skills Required by the 21st Century Workplace: A Literature Review of
Labor Market Demand. 10.2991/ictvt-17.2017.58.
Science, Technology, Engineering, Mathematics Network. Employability skills.
Singh, P., Thambusamy, R., Abdullah, I.H., Ramly, A., & Mahmud, Z. (2013). Perception
Differential between Employers and Instructors on the Importance of Employability Skills.
Procedia Social and Behavioral Sciences, 90(2013): 616 – 625.
Wijarwanto, Fendy & Wijanarka, Bernardus. (, 2019). Employability Skills of Vocational High
School Expertise Mechanical Engineering at Surakarta City. American Journal of
Educational Research. 7. 800-805. 10.12691/education-7-11-7
Yorke, M, and Knight, P.(2006), Embedding Employability into the Curriculum: Learning and
EmployabilitySeries1, Journal of Human Resource and Sustainability Studies, Higher
Education Academy, York
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The Art of Goal Programming Model: A Tool for Rebuilding the
‘Next Normal’ in Outperforming the Philippine Stock Exchange
Index
8th NBMC Paper #2
Arwin S. Layson
Bank of the Philippine Islands
[email protected]
Abstract
This study focuses on a special type of portfolio management, called enhanced index tracking. In
enhanced index tracking, a subset of stocks that comprise a benchmark index was reproduced in
such a way that they generate excess mean returns over the index mean return at a minimum risk
of loss without the need of buying all stocks in the stock market. In this study, results on the stock
composition of the optimal portfolio were obtained using goal programming approach and
compared against the benchmark index using portfolio performance measurement. Specifically,
the output of this study is a model consisting of selected stocks that can outperform the Philippine
Stock Exchange Index. The results of the model output showed positively that the creation of such
an optimal portfolio was possible.
Keywords: benchmark index, enhanced index tracking, goal programming model, mean return,
optimal portfolio, tracking error
Introduction
Portfolio management can be more challenging especially in periods of heightened

volatility and occurrence of extreme events. That is, performance of financial instruments is
significantly affected by increased market uncertainty and multi-dimensional nature of risk.
Performance of portfolio managers are routinely assessed or evaluated on their ability to maximize
returns and mitigate against risk. Finding a balance between optimal returns and minimized risk,
as well as taking a holistic view on portfolio risk becomes imperative.
One perception that has caught the interest of many finance enthusiasts in the field of
portfolio management is the notion of constructing the optimal portfolio to outperform the index.
This has led to various ways and developments that were explored by researchers. A common
concept of portfolio management in stock market index was introduced by Beasley which is
enhanced index tracking. Enhanced index tracking aims to reproduce higher portfolio mean return
than the benchmark index mean return at a minimum tracking error without the need of buying all
the stocks in the stock market (Beasley, 2003). A tracking error is a measurement of risk that is
used to track how closely a portfolio trails an index (Roll, 1992).
26 | P a g e
Because of the dynamic nature of risk, more sophisticated analytical models are being
developed and gaining wider interest nowadays. Specifically, optimization tools are one of the
sophisticated analytical models that offer risk reduction strategies through diversification. Many
variations of optimization models have been examined and developed by different group of
researchers as a strategic decision-making tool in portfolio management (Canakgoz et al., 2008;
Guastaroba et al., 2012; Lam et al., 2015; Meade et al., 2011).
In recent years, Wu et al. (2007) addressed the twofold problem of enhanced index tracking
by using goal programming model in formulating a dual-objective problem; that is, to minimize
the tracking error and maximize the mean return of the optimal portfolio. According to Taha
(2011), goal programming can handle decision problems which include multiple goals.
Hence, this study sought to create an operations research model using the available
Philippine data as inspired by the study conducted by Lam et al. (2016). This study applied goal
programming approach to construct an optimal portfolio that tracked the benchmark index –
Philippine Stock Exchange Index (PSEi). The performance of the portfolio constructed using goal
programming was then analyzed and compared against the benchmark index PSEi.
Despite the recent developments in the field of study regarding outperforming the market
index, there are still many unresolved issues and other areas left unexplored. This study explored
the concept of enhanced index tracking and applied it in the Philippine setting using the weighted
goal programming approach. Specifically, this study presents a model based on the methodology
used in “Strategic Decision Making in Portfolio Management with Goal Programming Model” by
Lam et al. (2016), and sought to address the following questions:
1. Which stocks from the basket of benchmark index constitutes the optimal portfolio?
2. How does one determine whether the results obtained by the model are robust or not?
3. Up to what extent will the optimal portfolio be able to outperform the benchmark index?
Related Literature
History bears record of how portfolio management has evolved over time since the father
of Modern Portfolio Theory (MPT), Harry Markowitz started exploring this topic for his doctoral
dissertation. Markowitz (1952) viewed the concept of modern portfolio theory as an efficient
portfolio derived from two measurements, the expected return and the standard deviation of the
return. He explained that an optimal portfolio can be derived by minimizing the risk for a given
level of expected return or maximizing the expected return for a given level of risk. He further
clarified that it is not enough to look at the expected risk and return of one particular stock. By
investing in more than one stock, an investor can reap the benefits of diversification, a reduction
in the riskiness of the portfolio. In other words, MPT quantifies the benefits of diversification, or
not putting all of your eggs in one basket. Portfolio diversification in MPT was further explored
by Newbould and Poon (1994) and they have found out in their study that there is a minimum
number of stocks needed for diversification. They have summarized all their findings from various
references and tabulated each source recommending the minimum number of stocks in a portfolio.
Eventually, they have come up a proposed recommendation that owning eight to twenty stocks
achieves a risk-efficient portfolio. Wu and Olson (2009) noted that both returns and risks are
27 | P a g e
considered objective functions in Markowitz’s (1952) finance theory. The MPT strongly suggests
that when investors and portfolio managers invest in high-yield financial assets or securities, it
necessarily entails a high level of risk. Corollarily, investing in low-yield financial assets or
securities carries with it a low amount of risk. It is in this context that this study bets on developing
a model that not only maximizes returns and minimizes risk but outperforms the benchmark index
Philippine Stock Exchange Index. This is consistent with the goals of many local equity portfolio
managers, in addition to beating the inflation rate. There are several optimal approaches in solving
a portfolio management problem as introduced by Taha (2011). This paper explored a specific
optimization model as the solution to the equity portfolio managers’ challenge of maximizing
returns and minimizing risk. Although this model has been widely utilized for selecting financial
portfolio based on several attributes, there has been very limited to none that were applied in the
Philippine context.
“Outperforming the benchmark index” has become an important phrase for investors and
fund managers. Beating and outperforming a benchmark index has long become an important goal
or objective among practitioners in the field of index investing (Beasley et al., 2003; Oh et al.,
2005; Corielli & Marcellino, 2006; Maringer & Oyewumi, 2007). Beasley et al. (2003) highlighted
that index tracking is a popular form of passive equity portfolio management strategy and
described it as a process of attempting to track or rather reproduce the performance of an index.
Corielli & Marcellino (2006) also explained that stock index tracking requires building a replica
of pool of stocks whose behavior is as close as possible to that of a given stock index, noting that
fewer stocks should constitute in the replica than in the index.
The Philippine Stock Exchange Index, otherwise known as the PSEi, is the benchmark
index that was used in this study. This index is a basket comprising the common stocks of the top
30 companies listed in the Philippine Stock Exchange (PSE). The companies are carefully selected
to represent the general movement and performance of the stock market in the Philippines. In a
nutshell, PSEi is the benchmark index used to measure and scale the performance of the Philippine
stock market together with its specific industry sectors and all shares index (PSE Academy, 2011).
Some of the criteria used in deciding to include a company as part of the index consist of the
following:
1. Free Float — stock must have a public float or minimum public ownership of at least 12%;
2. Liquidity — stock must belong to the top 25% by median daily value turnover per month
for at least nine out of 12 months; and
3. Full Market Capitalization — stock should be one of the 30 companies with highest-ranked
market capitalization, measured by the company’s stock price multiplied by the number of
shares being publicly traded.
The aforementioned criteria of PSEi composition is regularly reviewed by the Philippine

Stock Exchange twice a year, one in March and the other in September. A stock may be added to
the index if it rises above the 25th position in terms of full market capitalization, replacing the
company that ranks lower (Pinoy Money Talk, 2018).
A type of index tracking called enhanced index tracking was studied vastly in the last two
decades and used to outperform the benchmark while sustaining a low tracking error (Ahmed &
28 | P a g e
Nanda, 2005; Bergstresser et al., 2009; Choi et al., 2010). Fabozzi, Gupta and Markowitz (2002)
suggested that the optimal level of tracking error is between 1.75% to 3.00%. The major benefit in
using this approach is that it provides the investor a return that is approximately equal to the market
return. For example, almost 90% of all actively managed equity mutual funds from 1995 to 1998
was outperformed by the S&P 500 index. It is estimated that investments worth more than US$300
billion were managed in enhanced index portfolios in 2005 (Ahmed & Nanda, 2005) and the
amount has continued to grow (Adams et al., 2010).
Several optimization techniques are considered as the most fundamental tools in analyzing
the portfolio selection processes. In a recent paper by Guastaroba et al. (2016) and Lam et al.
(2017), a different optimization technique was utilized in modelling the enhanced index tracking.
Guastaroba et al. (2016) made use of linear programming model in solving the enhanced index
tracking problem based on the Omega ratio. On the other hand, Lam et al. (2017) made use of two-
stage mixed integer programming model in outperforming the existing model that they used in
their previous study.
In this study, goal programming model is used. Goal programming model was first
introduced by Charnes, Cooper, and Ferguson (1955) and Charnes and Cooper (1961). The main
idea about this model is the grit of the aspiration levels of an objective function and the
minimization of any positive or negative deviations from these levels. Through the years, the goal
programming model has become the most prevalent model in the field of multi-objective
programming. According to Steuer and Na (2003), 69% of the published papers related to the
application of multiple criteria decision-making techniques use the goal programming model and
other multi-objective programming models. Meanwhile, 29% dealt with portfolio selection
problem. Variants of goal programming model have been studied by many researchers in the field
of portfolio management throughout the years since Markowitz (1952) formulated the portfolio
selection problem. Aouni, Colapinto and La Torre (2014) tabulated and summarized the different
variants of goal programming models that have been applied to the financial portfolio selection
problem from the 1970s until 2013. Variants of goal programming model that were discussed in
their paper vastly include lexicographic goal programming, weighted goal programming,
polynomial goal programming, stochastic goal programming and fuzzy goal programming.
Specifically, this study utilized a of goal programming model, called the weighted goal
programming model. Weighted goal programming was first illustrated by Callahan (1973) and
Kvanli (1980) as an investment planning model with profit and risk. Sharma, Sharma and Adeyeye
(1995) were the first researchers to deal with portfolio selection problem. Then, Tamiz, Hasham,
Jones, Hesni, and Fargher (1996) adopted the model of Lee (1972) and provided a weighted goal
programming formulation for the Portfolio Selection Problem with two stages: (1) prediction of
the sensitivity of the shares to specific economic indicators, and (2) selection of the best portfolio
based on the FDM’s preferences. Bravo, Pla Santamaria, and Garcia-Bernabeu (2010) examined a
portfolio selection problem with multiple benchmarks. Cooper, Lelas, and Sueyoshi (1997)
showed a weighted goal programming model for the evaluation of security portfolio and regression
relations. Dominiak (1997) presented an application of interactive multiple goal programming on
the Warsaw Stock Exchange. Pendaraki, Doumpos, and Zopounidis (2004, 2005) applied the
weighted goal programming model to mutual funds selection and composition in the Greek market.
Other applications of weighted goal programming to funds management can be found in Lee and
Sevebeck (1971), Sharda and Musser (1986), Zaloom, Tolga, and Chu (1986), and O’Leary and
29 | P a g e
O’Leary (1987). To cope with asset liability management, weighted goal programming was used
by Kosmidou and Zopounidis (2004) and Tektas, Ozkan-Gunay, and Gunay (2005). Booth and
Bessler (1989) developed two weighted goal programming models, namely, a forecast model and
a duration model, to assist a bank in creating optimal strategies to manage the interest rate risk.
Wu et al. (2007) and Lam et al. (2016) explored, using goal programming model, an
enhanced index tracking problem. They were the first two groups who applied the model across
the ASEAN countries. Specifically, Wu et al. (2007) were able to examine the use of goal
programming model in Taiwan stock market in different time periods. On the other hand, Lam et
al. (2016) made use of goal programming model in the technology sector of Malaysian stock
market to obtain an optimal portfolio that was intended to outperform its technology index.
In summary, modern portfolio theory stems from Markowitz’s insights in the mean-
variance model, which states that an efficient portfolio can be derived from two measurements,
the expected return and the standard deviation of the return. The classic mean-variance theory,
proposed by Markowitz (1952), also addresses the tradeoff between the risk and the return
dimensions. He suggested that an optimal portfolio can be derived by minimizing the risk for a
given level of expected return or maximizing the expected return for a given level of risk. All
portfolios on the efficient frontier have two properties. That is, they have the highest expected rate
of return for each level of variance, and they have the minimum variance for each particular level
of expected return.
The previous discussion and review of related literature have surfaced theoretical and
practical gaps as regards to this topic. In particular, this study has identified the following
theoretical gaps:
1. Portfolio management involves two concepts – return and risk. Generally, the primary goal
of a portfolio manager is to maximize the return and minimize the risk. Notwithstanding
its importance and relevance, the biased focus on this goal has inadvertently resulted to
missing out on other relevant measures such as benchmarking against the stock market
index.
2. The related literature had shown that there is a need to integrate in portfolio management
an assessment on how to benchmark a market index and outperform that index.
3. Studies in the Philippines regarding optimal stock mix using specifically goal
programming is practically unexplored.
The above-mentioned has motivated this study to adopt the model used by similar studies
that focused on neighboring ASEAN countries like Malaysia, and also Taiwan.
Framework
This study is based on the concept of Modern Portfolio Theory (MPT). This theory states
that investors are risk averse and wealth maximizers. Investors seek to maximize expected
portfolio return for a certain level of risk, or minimize portfolio risk for a given level of return.
There is a positive relationship between risk and expected return of financial assets. When the risk
of an asset increases, so does its expected return. An investor willing to take in more risk is
30 | P a g e
expected to be compensated with a higher return. Similarly, an investor aiming to boost the
expected return of an investment is expected to be prepared to take in more risk. This trade-off
between risk and return is essential in constructing international portfolios.
By prudently allocating wealth across different stocks, portfolio risk can be collectively
reduced without affecting return. As long as different stocks are not perfectly positively correlated,
investors can reduce exposure to an individual asset by spreading the risk in other stocks. This
notion of diversification is mathematically formulated in the mean-variance framework developed
by Markowitz (1952). MPT states that the risk for individual stock returns has two components:
1. Systematic Risk – These are market risks that cannot be diversified away. Interest rates,
recessions and wars are examples of systematic risks.
2. Unsystematic Risk – Or "specific risk," which is specific to individual stocks, such as a
change in management or a decline in operations. This kind of risk can be diversified away
as you increase the number of stocks in your portfolio (see Figure 1). It represents the
component of a stock's return that is not correlated with general market moves.
Figure 1
Average Portfolio Risk
(Source: Investopedia)
For a well-diversified portfolio, the risk or average deviation from the mean of each stock
contributes little to portfolio risk. Instead, it is the difference between individual stock's levels of
risk that determines overall portfolio risk. As a result, investors benefit from holding diversified
portfolios instead of individual stocks. It is in this framework to which the study written by
Newbould and Poon (1994) is aligned, “further spreading of the portfolio’s assets is superfluous
diversification and should be avoided” and they eventually recommended a minimum number of
stocks for a well-diversified portfolio.
The schematic diagram in Figure 2 explains that the model adopted for this study’s
operational framework is an Input-Process-Output (IPO) model. This framework is also anchored
on Modern Portfolio Theory (MPT) defined above. Using the returns calculated from the closing
prices of selected stocks as the input data, the portfolio mean return and portfolio tracking error
were obtained using the goal programming method. The optimization model generated an output
of optimal stock mix. Performance analysis of the generated optimal portfolio results were
evaluated using the Information ratio to establish whether the estimates of the model were able to
outperform the performance measurement of the benchmark index.
31 | P a g e
Figure 2
Schematic Diagram of Operational Framework
Methodology
The subject of the research included the top thirty (30) publicly listed companies of the
Philippine stock market index. Listed below in Table 1 are the names of the companies and their
corresponding ticker symbols as of February 18, 2019 (The Philippine Stock Exchange, Inc., n.d.).
Table 1
List of Top 30 Publicly Listed Company Tickers that Comprise the PSEi
1. Ayala Corporation (AC) 16. LT Group, Inc. (LTG)

17. Metropolitan Bank & Trust Company
2. Aboitiz Equity Ventures, Inc. (AEV)
(MBT)
3. Alliance Global Group, Inc. (AGI) 18. Megaworld Corporation (MEG)
4. Ayala Land Inc. (ALI) 19. Manila Electric Company (MER)
20. Metro Pacific Investments Corporation
5. Aboitiz Power Corporation (AP)
(MPI)
6. Banco De Oro Unibank, Inc. (BDO) 21. Puregold Price Club, Inc. (PGOLD)
7. Bloomberry Resorts Corporation
22. Robinsons Land Corporation (RLC)
(BLOOM)
8. Bank of the Philippine Islands (BPI) 23. Robinsons Retail Holdings, Inc. (RRHI)
24. Semirara Mining & Power Corporation
9. DMCI Holdings, Inc. (DMC)
(SCC)
10. First Gen Corporation (FGEN) 25. Security Bank Corporation (SECB)
11. Globe Telecom, Inc. (GLO) 26. SM Investments Corporation (SM)
12. GT Capital Holdings, Inc. (GTCAP) 27. San Miguel Corporation (SMC)
13. Int’l Container Terminal Services, Inc.
28. SM Prime Holdings, Inc. (SMPH)
(ICT)
14. Jollibee Foods Corporation (JFC) 29. PLDT Inc. (TEL)
15. JG Summit Holdings, Inc. (JGS) 30. Universal Robina Corporation (URC)
This research study obtained data purely from secondary sources as stock price data were
readily available and easily accessible. The stock price data used were adjusted closing prices, and
taken from an external source which provided published industry statistical reports. A total of
32 | P a g e
7,998 observations of weekly stock prices of each of the stated companies, and also the Philippine
Stock Exchange Composite Index were collected covering the period from January 2014 until
December 2018. All stock price data were taken from the publications of the Wall Street Journal
(The Wall Street Journal, n.d.). The 5-year stock price data was downloaded on a Microsoft Excel
worksheet to facilitate data wrangling and data management. No variable was manipulated. No
missing data was observed as any missing observation in the data set were filled in by using other
database sources like the Thomson Reuters Eikon system.
The optimization model used in tracking the PSEi in order to construct an optimal portfolio
mix from the dataset of the thirty (30) companies belonging to the index was the goal programming
approach. In portfolio construction with the goal programming model, the decision variables
represent the optimal portfolio composition that was determined by solving the model (Wu et al.,
2007). The returns of the stocks were determined as below (Beasley et al., 2003).
𝑃𝑠,𝑡
𝑌𝑠𝑡 =𝑙𝑛 𝑙𝑛 (𝑃 ) (1)
𝑠,𝑡−1
𝑌𝑠𝑡 is the return of stock s at time t,
𝑃𝑠,𝑡 is the closing price of stock s at time t,
𝑃𝑠,𝑡−1 is the closing price of stock s at time t-1.
The return of the benchmark index was determined as below (Canakgoz et al., 2008).
𝐼𝑡
𝑌𝐼𝑡 =𝑙𝑛 𝑙𝑛 ( ) (2)
𝐼 𝑡−1
𝑌𝐼𝑡 is the return of index at time t,
𝐼𝑡 is the index value at time t,
𝐼 𝑡−1 is the index value at time t-1.
The mean return of the stock j was calculated as below (Gitman et al., 2011).
1
𝑦𝑠 = ∑𝑁 𝑌𝑠𝑡 (3)
𝑁 𝑡=1
𝑦𝑠 is the mean return of stock s,
𝑌𝑠𝑡 is the return of stock s at time t,
N is the number of observations.
In this study, the optimization model with goal programming approach was performed
using both Excel 2016 and its add-in Solver utilities.
Descriptive Statistics. The mean and standard deviation were used to describe the extent
of the stock mix on each stock return. Test of normality was employed as well to validate if the
distribution of the stock return data was normal through the measurement of skewness.
Goal Programming Model. In enhanced index tracking, there are two goals to be achieved,
namely minimization of the tracking error and maximization of the mean return of the optimal
33 | P a g e
portfolio. Wu et al. (2007) proposed the dual objective optimization model for enhanced index
tracking problem which is formulated as follows.
Minimize
𝐸 = ∑𝑁
𝑠=1 𝐸𝑠 𝑤𝑠
(4)
Maximize
𝑌 = ∑𝑁
𝑠=1 𝑦𝑠 𝑤𝑠 (5)
subject to
∑𝑁
𝑠=1 𝑤𝑠 = 1 (6)
𝑤𝑠 ≥ 0 (7)
𝑦𝑠 is the mean return of stock s in the optimal portfolio,
N is the number of stocks,
𝑤𝑠 is the weight of stock s in the optimal portfolio,
𝐸𝑠 is the tracking error of stock s,
E is the portfolio tracking error,
Y is the portfolio mean return,
Equation (4) is the first goal which minimizes the portfolio tracking error. Equation (5) is
the second goal which maximizes the portfolio mean return. Constraint (6) ensures that the total
weights of stocks invested equal to one. Constraint (7) ensures that the weight of each stock j in
the optimal portfolio are positive.
The dual objective optimization model above is solved with goal programming approach
(Wu et al., 2007). Goal programming is able to handle decision problems that involve multiple
goals (Taha, 2011). The goal programming model is formulated as follows (Lam et al., 2016).
Minimize
𝑧 = 𝑑1+ + 𝑑2− (8)

subject to
𝐸 + 𝑑1 − 𝑑1+ = 𝑢
−
(9)
𝑌 + 𝑑2− − 𝑑2+ = 𝑣 (10)
∑𝑁𝑠=1 𝑤𝑠 = 1 (11)
0% ≤ 𝑤𝑠 ≤ 15% (12)
𝑑1− is the extent of underachievement for tracking error,

𝑑1+ is the extent of overachievement for tracking error,
𝑑2− is the extent of underachievement for portfolio mean return,
𝑑2+ is the extent of overachievement for portfolio mean return,
E is the portfolio tracking error,
Y is the portfolio mean return,
34 | P a g e
u is target value for portfolio tracking error,
v is target value for portfolio mean return,
N is the number of stocks,
Equation (8) is the objective function of the model which minimizes the sum of deviations
of all decision goals. Equation (9) is the first goal which minimizes the portfolio tracking error. In
setting the target value for portfolio tracking error, optimal levels of between 1.75% and 3.00%
were used. This is based on the study by Fabozzi, Gupta and Markowitz (2002), where they created
a “tracking error budgeting” methodology. Equation (10) is the second goal which maximizes the
portfolio mean return. In setting the target value for portfolio mean return, the maximum portfolio
mean return of the solution was used. Constraint (11) ensures that the total weights of stocks
invested equal to one. Constraint (12) was incorporated to ensure that the weight of each stock j in
the optimal portfolio are nonnegative with lower bound set to 0.00% and upper bound set to
15.00%, as proposed by the Securities and Exchange Commission (SEC) its recent amendments
in the Implementing Rules and Regulations of the Investment Company Act (ICA Rule 35-1)
issued last June 2, 2017.
Sensitivity Analysis. A process of recalculating outcomes under alternative assumptions

and scenarios (i.e., adjusting the target value for portfolio tracking error within and outside the
range of the optimal level of 1.75% to 3.00%, and adjusting the target value for portfolio mean
return greater than or equal to the benchmark index return) was conducted in order to determine
the impact of a constraint variable to the optimal solution. The use of this process made possible a
test for the robustness of the model. Bounds for each stock weights were further considered in the
analysis and broke down into these following scenarios:
a) Scenario 1: Equally Weighted Stocks

b) Scenario 2: No Upper Bound Constraint
c) Scenario 3: Setting a Lower Bound Constraint
d) Scenario 4: Recalculation of Optimal Stock Mix
Portfolio Performance. Tracking error and mean return of the optimal portfolio are two
elements in enhanced index tracking problem (Wu et al., 2012; Lam et al., 2015). Tracking error
is the standard deviation of the difference between the returns of the portfolio and the returns of
the benchmark index (Lam et al., 2014; Meade et al., 1990). The formula for tracking error is as
follows.
1
𝐸 = √ ∑𝑁
𝑡=1 (𝑌𝑃𝑡 − 𝑌𝐼𝑡 )2 (13)
𝑁
E is the tracking error,
N is the number of periods,
𝑌𝑃𝑡 is the mean return of the optimal portfolio at time t,
𝑌𝐼𝑡 is the mean return of the benchmark index at time t.
35 | P a g e
The mean return of the optimal portfolio is formulated as follows (Lam et al., 2015).
𝑁
𝑦𝑃 = ∑ 𝑤𝑠 𝑦𝑠 (14)
𝑠=1
𝑦𝑃 is the mean return of the optimal portfolio,
𝑦𝑠 is the mean return of stock s in the optimal portfolio.
Excess return is defined as the difference between the portfolio mean return and benchmark index
mean return which is formulated as follows (Wu et al., 2007, 2012).
𝛼 = 𝑦𝑃 − 𝑦𝐼
𝛼 is the excess return, (15)
𝑦𝑃 is the mean return of the optimal portfolio,
𝑦𝐼 is the mean return of the benchmark index.
The performance of the optimal portfolio is measured with information ratio (Wu et al., 2012;
Israelsen, 2005). The information ratio is defined as the ratio of portfolio’s excess mean return to
the portfolio’s tracking error which is formulated as below.
𝛼
𝐼𝑅 =
𝐸
IR is the information ratio,
(16)
𝛼 is the excess mean return of the optimal portfolio over the mean return of
the benchmark index return,
E is the tracking error.
Higher information ratio indicates higher performance of the optimal portfolio (Reilly & Brown,
2012).
Discussion of Results
Descriptive Statistics. Table 2 displays the summary statistics of the stock returns in the
data used for this study.
36 | P a g e
Table 2
Summary Statistics of the Stocks Returns
Stocks Mean Standard Stocks Mean Standard

Deviation Deviation
AC 0.00213 0.03040 LTG 0.00035 0.04630
AEV 0.00011 0.03176 MBT 0.00029 0.03106
AGI -0.00308 0.03855 MEG 0.00141 0.04077
ALI 0.00185 0.03386 MER 0.00156 0.02472
AP 0.00014 0.02428 MPI 0.00025 0.03382
BDO 0.00258 0.02849 PGOLD 0.00036 0.03492
BLOOM 0.00017 0.06930 RLC -0.00007 0.03576
BPI 0.00035 0.02666 RRHI 0.00124 0.03753
DMC 0.00044 0.03588 SCC -0.00025 0.03863
FGEN 0.00135 0.04020 SECB 0.00106 0.03609
GLO 0.00064 0.04425 SM 0.00260 0.03057
GTCAP 0.00060 0.03697 SMC 0.00332 0.03858
ICT -0.00007 0.03403 SMPH 0.00344 0.03341
JFC 0.00206 0.03119 TEL -0.00331 0.04065
JGS 0.00140 0.03888 URC 0.00025 0.03479
As reported in Table 2, SMPH registered the highest mean return at 0.34% while TEL
registered the lowest mean return at -0.33% whereas BLOOM registered the highest standard
deviation at 6.93% and AP registered the lowest standard deviation at 2.43%, respectively.
Skewness of the stock return data was also obtained which is 0.0649. This implied that the
distribution of data is normal since the skewness obtained is between -0.5 and 0.5.
Table 3 was also obtained to see the trend of the annualized mean for each stock price.
Compounded Annual Growth Rate (CAGR) was additionally incorporated in Table 3 to evaluate
how well one stock performed against other stocks in a peer group.
37 | P a g e
Table 3
Annualized Mean of the Stock Prices
As shown in Table 3, the annualized mean price of stocks SMPH, SMC and SM have
increased significantly by a compounded growth rate of 22.05%, 19.10% and 16.39% over the
five-year investment period, respectively. Whereas, the annualized mean price of stocks AGI and
TEL have decreased significantly by a compounded growth rate of 16.76% and 17.25% over the
five-year investment period, respectively.
Goal Programming Model Formulation. The goal programming model is shown as

follows and further set up in Excel worksheet and Solver add-in.
Minimize
𝑧 = 𝑑1+ + 𝑑2−
subject to
𝑇𝐸 + 𝑑1− − 𝑑1+ = 2.3750%
𝑅 + 𝑑2− − 𝑑2+ = 0.2353%
30
∑ 𝑤𝑗 = 1
𝑗=1
0% ≤ 𝑤𝑗 ≤ 15%
38 | P a g e
where
30
𝑇𝐸 = ∑ 𝑇𝐸𝑗 𝑤𝑗
𝑗=1
30
𝑅=∑ 𝑟𝑗 𝑤𝑗
𝑗=1
Optimal Stock Mix. From the model formulated above, Table 4 presents the stock selection
in optimal portfolio which is constructed by solving the goal programming model. It is assumed
in this study that the starting or base amount is Php 1,000,000.00 from hereon.
Table 4
Stock Selection in Optimal Portfolio
Stocks Weights (%) Amount (Php)
1. SMPH 15.00% 150,000.00
2. SM 15.00% 150,000.00
3. JFC 15.00% 150,000.00
4. BDO 15.00% 150,000.00
5. AC 15.00% 150,000.00
6. ALI 15.00% 150,000.00
7. MER 9.83% 98,300.00
8. BPI 0.15% 1,500.00
9. SMC 0.02% 200.00
As shown in Table 4, the list of stocks with positive weights indicate that those stocks are
selected by the goal programming model in constructing the optimal portfolio to track the PSEi.
The optimal portfolio consists of nine (9) stocks with different weights in tracking the Philippine
Stock Exchange Index (PSEi). From Table 4 above, the optimal portfolio consists of AC (15.00%),
ALI (15.00%), BDO (15.00%), BPI (0.15%), JFC (15.00%), MER (9.83%), SM (15.00%), SMC
(0.02%) and SMPH (15.00%). This implies that the optimal portfolio composition are the optimal
solutions of the goal programming model. AC, ALI, BDO, JFC, SM and SMPH are the most
dominant stocks in the optimal portfolio with 15.00% of the allocated fund. On the other hand,
SMC is the smallest stock in the optimal portfolio with 0.02% of the allocated fund.
Sensitivity Analysis. In order to test the robustness of the model derived from above, four
different scenarios were plotted below. In each of these scenarios, stock weights were adjusted
accordingly. Target value for portfolio tracking error was maintained at a level of 2.375%, which
is the average of the optimal levels suggested by Fabozzi, Gupta and Markowitz (2002). Inclusion
of the minimum (1.75%) and maximum (3%) tracking error levels were also tested but did not
yield any optimal solutions. Similarly, tracking error levels below the minimum and maximum
were also simulated and yielded no optimal solutions. Maximum portfolio mean return was
targeted across all scenarios. These scenarios include the following:
a) Scenario 1: Equally Weighted Stocks

b) Scenario 2: No Upper Bound Constraint
c) Scenario 3: Setting a Lower Bound Constraint
39 | P a g e
d) Scenario 4: Recalculation of Optimal Stock Mix
Scenario 1: Equally Weighted Stocks
This type of scenario allots each stock with equal weights of 3.33% which is clearly shown
in Table 5.
Table 5
Stock Selection for Portfolio with Equally Weighted Stocks
Stocks Weights (%) Amount (Php) Stocks Weights (%) Amount (Php)
1. AC 3.33% 33,300.00 16. LTG 3.33% 33,300.00
2. AEV 3.33% 33,300.00 17. MBT 3.33% 33,300.00
3. AGI 3.33% 33,300.00 18. MEG 3.33% 33,300.00
4. ALI 3.33% 33,300.00 19. MER 3.33% 33,300.00
5. AP 3.33% 33,300.00 20. MPI 3.33% 33,300.00
6. BDO 3.33% 33,300.00 21. PGOLD 3.33% 33,300.00
7. BLOOM 3.33% 33,300.00 22. RLC 3.33% 33,300.00
8. BPI 3.33% 33,300.00 23. RRHI 3.33% 33,300.00
9. DMC 3.33% 33,300.00 24. SCC 3.33% 33,300.00
10. FGEN 3.33% 33,300.00 25. SECB 3.33% 33,300.00
11. GLO 3.33% 33,300.00 26. SM 3.33% 33,300.00
12. GTCAP 3.33% 33,300.00 27. SMC 3.33% 33,300.00
13. ICT 3.33% 33,300.00 28. SMPH 3.33% 33,300.00
14. JFC 3.33% 33,300.00 29. TEL 3.33% 33,300.00
15. JGS 3.33% 33,300.00 30. URC 3.33% 33,300.00
Table 6 displays the comparison of performance between the portfolio of equally weighted
stocks and benchmark index PSEi.
Table 6
Performance of the Portfolio with Equally Weighted Stocks and PSEi
Portfolio PSEi (Benchmark) Goal Programming Model

Number of Stocks 30 30
Mean Return (%) 0.0885 0.0772
Excess Return (%) - -0.0112
Tracking Error (%) - 3.1418
Information Ratio - -0.0036
As reported in Table 6, the performance of the portfolio with equally weighted stocks did
not outperform the performance of the benchmark index since the portfolio mean return at
0.0772% did not exceed the benchmark index mean return at 0.0885% and the excess return
reached a negative gap at about 0.0112%. Portfolio tracking error is at 3.1418%, which
exceeded the optimal levels, and information ratio is equivalent to -0.0036, which indicates
that the portfolio performed poorly. In this type of sensitivity analysis, the definition of
enhanced index tracking was not only violated but also implies that this scenario is not
acceptable in this study.
40 | P a g e
Scenario 2: No Upper Bound Constraint
This type of scenario does not set any upper limit in each weight of the stocks. Table 7
presents the stock selection of the portfolio produced in not setting any upper bound constraint.
Table 7
Stock Selection for Portfolio with No Upper Bound Constraint

1. SMPH 61.64% 616,400.00
2. SM 38.36% 383,600.00
Table 8 displays the comparison of performance between the portfolio with no upper bound
constraint and benchmark index PSEi.
Table 8
Performance of the Portfolio with No Upper Bound Constraint and PSEi
.
Mean Return (%) 0.0885 0.3115
Excess Return (%) - 0.2230
Information Ratio - 0.0939
As shown in Table 8, the performance of the portfolio with no upper bound constraints
outperformed the performance of the benchmark index since the portfolio mean return at 0.3115%
exceeded the benchmark index mean return at 0.0885%. However, this portfolio comprises only
of two (2) stocks. The model output contradicts the concept of diversification in MPT even though
the portfolio tracking error is at optimal level and information ratio is high.
Scenario 3: Setting a Lower Bound Constraint
This type of scenario sets a lower limit in each weight of the stocks to about 1% or 2%.
Unfortunately, the software used in this study did not generate a feasible solution since this
scenario violated one of the conditions in the constraints – that is, it failed to generate an optimal
solution where the sum of the weights was equal to 100%.
Scenario 4: Recalculation of Optimal Stock Mix
This type of scenario reruns the model using the generated optimal stock mix. Table 9
presents the stock selection of the portfolio produced in recalculation using optimal stock mix.
41 | P a g e
Table 9
Stock Selection for Portfolio with Recalculation of Optimal Stock Mix

1. SMPH 15.00% 150,000.00
2. SM 15.00% 150,000.00
3. BDO 15.00% 150,000.00
4. AC 15.00% 150,000.00
5. ALI 15.00% 150,000.00
6. JFC 14.88% 148,800.00
7. MER 10.04% 100,400.00
8. BPI 0.08% 800.00
Table 10 displays the comparison of performance between the portfolio with recalculation
using optimal stock mix and benchmark index PSEi.
Table 10
Performance of the Portfolio with Recalculation of Optimal Stock Mix and PSEi

Mean Return (%) 0.0885 0.2353
Table 10 shows that the performance of the portfolio with recalculation using optimal stock
mix outperformed the performance of the benchmark index since the portfolio mean return at
0.2353% exceeded the benchmark index mean return at 0.0885%. This scenario yielded the same
results with the performance of the optimal portfolio. However, this portfolio comprises only of
eight (8) stocks, and more stocks are preferred from the optimal portfolio than this scenario.
Portfolio Performance of the Optimal Portfolio. Table 11 displays the comparison of

performance between the optimal portfolio of goal programming model, as derived from Section
5.2, and market index.
42 | P a g e
Table 11
Performance of the Optimal Portfolio of Goal Programming Model and PSEi

Mean Return (%) 0.0885 0.2353
As reported in Table 11, the optimal portfolio of goal programming model consists of nine
(9) stocks to track the PSEi which comprises thirty (30) stocks. This implies that there is only 30%
of PSEi components required to construct the optimal portfolio. The results that were obtained in
this study are aligned with the framework presented in the previous chapter. That is, nine (9) stocks
are within the recommended range of eight (8) to twenty (20) stocks by Newbould and Poon
(1994). The weekly mean return for the PSEi is 0.0885% based on the study period. The weekly
mean return for the optimal portfolio of goal programming model is 0.2353% which is higher than
the weekly mean return for the PSEi. This implies that the optimal portfolio constructed by the
goal programming model is able to outperform the benchmark index PSEi with weekly excess
mean return 0.1468% at minimum tracking error of 2.3750%. Besides that, the information ratio
0.0618 indicates that the optimal portfolio can generate weekly excess mean return 0.0618% over
the mean return of the PSEi at 1% tracking error. In summary, the optimal portfolio of goal
programming model outperformed the benchmark index PSEi because of higher mean return with
only 30% of PSEi components.
Conclusions
Goal programming model was used to answer the main objective of this paper, which was
to construct a portfolio mix that is able to outperform the benchmark index PSEi. The results of
the model output showed positively that the creation of such a portfolio was possible.
As to which stocks from the basket of the Philippine market index constitute the optimal
portfolio as far as goal programming is concerned, the optimal stock mix constituted the following
company stocks: Ayala Corporation (AC), Ayala Land, Inc. (ALI), Banco De Oro Unibank, Inc.
(BDO), Bank of the Philippine Islands (BPI), Jollibee Foods Corporation (JFC), Meralco (MER),
SM Investments Corporation (SM), San Miguel Corporation (SMC) and SM Prime Holdings, Inc.
(SMPH).
As to the determination of the robustness of the model is concerned, sensitivity analyses

were conducted for four (4) different scenarios. The first sensitivity analysis of equal weights
comprising of all the stocks in the market index showed lesser excess mean returns than the index
itself. The second sensitivity analysis, where no upper bound was imposed, generated an output of
only two (2) stocks. The third sensitivity analysis imposed a lower bound constraint for the weights
of the stock. This did not yield an optimal solution. The fourth sensitivity analysis involved
recalculating of the optimal stock portfolio. It generated a portfolio quite similar to the optimal
43 | P a g e
portfolio mix, but having one less stock in its mix. The results of the search for an optimal portfolio
mix using goal programming model generated a portfolio that proved to be robust.
As regards the extent by which the optimal portfolio was able to outperform the benchmark
index, the optimal portfolio generated a weekly excess return of 0.1468% at a minimum tracking
error of 2.3750% with Information Ratio of 0.0618, consisting of only nine (9) stocks.
Limitations and Recommendations for future research
The study made use of a weekly stock price data starting January 2014 until December
2018, all of which were either sourced from the Wall Street Journal or Thomson Reuters Eikon.
Goal programming, which has been shown to be a suitable method in portfolio analysis, was then
utilized in capturing an optimal stock mix for the weekly stock returns of the specified period.
Goal programming has the capability to generate models with multiple goals or objectives. This
study focused on two objectives, namely, one is to maximize the portfolio mean return and the
other is to minimize the portfolio tracking error. Optimization analysis was performed using the
Solver add-in functionalities of Microsoft Excel software. Note that this study works only for small
portfolio problems.
The mean-variance theory was used in the optimization process, limiting investor
preferences to estimates of risk and return. Investor views on the market were not covered in this
study. The constraints for goal programming optimization involved setting the target values for
both tracking error and portfolio mean return to particular levels. The computed weights have
reflected an optimal portfolio that outperformed the local market index. A sensitivity analysis was
also conducted in order to test the robustness of the model. The generated optimal portfolio was
then evaluated using the Information Ratio.
This paper has derived implications on the findings and conclusions to come up with the
necessary recommendations about the study. With consideration of the preliminary conclusions,
the following recommendations are presented:
1. The significance of this study was able to identify and apply the goal programing model as
a strategic decision-making tool for the fund managers to effectively track the benchmark
index PSEi in the Philippines. Banks or portfolio managers may as well do portfolio
rebalancing using the optimal stock mix obtained in this study for further analyses. They
may also consider adding a goal or objective function in beating the inflation rate.
2. This study will serve as an initial framework and reference for government and other
regulatory bodies, such as GSIS, SSS, Philippine Stock Exchange, etc., in effectively
tracking the PSEi and to which company stocks they should allocate more in investing.
3. In the papers that were studied, results mainly focused on the application of goal
programming model in enhanced index tracking. To those who wish to pursue further
studies on the topic of portfolio optimization, the following problems are recommended to
be explored:
a. The study made use of weighted goal programming approach in addressing the
statement of the problem. Consider the problem of making use other variants of
goal programming approach as well.
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b. Consider adapting other optimization techniques that can be used to an enhanced
index tracking problem.
c. To date, there is no published result yet on adding a goal or objective function to
beat the inflation rate. Investigate the use of goal programming approach by adding
another objective function or setting other constraint, if any.
d. Explore the use of other software such as Python and R base with R Studio.
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The Emergence of the Fourth Industrial Revolution: Mediating
Effect of Hyperconnectivity on the Relationship of Digitalization
with Competitive Advantage
8th NBMC Paper #3
Melvin V. Moraga, Joshua Miguel Avante, Patricia Marie Ibay,

Joe Eric Kung, Paolo Gonzalo Salud
De La Salle University
[email protected], [email protected], [email protected],
[email protected], [email protected]
Abstract
The offshoot of industry 4.0 which combines the physical, digital and biological worlds brings a
paradigm change on industrial organizations inside them as well as on society. With the platforms
introduced by the fourth industrial revolution, it can be questioned whether these platforms are
being maximized by business organizations. To shed light on this, the study seeks to determine
whether hyperconnectivity mediates the impact of digitalization on the competitive advantage of
Company X. To ascertain this, a mixed method research approach was utilized. A total sample size
of 204 managers were surveyed supported and validated by interview with the company CEO
along with a few experts. Baron and Kenny’s four-step model was primarily utilized to identify
mediational hypothesis. The result confirmed a mediating effect of hyperconnectivity between
digitalization and competitive advantage in companies. Major recommendations included are
maintain the use of a data base management system in the firm’s daily operations as it facilitates
the checking of inventory, sales, feedback and the like; integrate more technology in key processes
such as the use of Bluetooth temperature monitoring systems to safeguard food safety and ensure
equipment are operating in good working condition.
Keywords: Digitalization, Hyperconnectivity, Competitive Advantage, Innovations, Service

operations
Introduction
People, institutions, and businesses currently stand on the brink of technological

developments which alters the way of living and work – basically, how each co-exist with one
another. The age of the fourth industrial revolution is knocking on the doors of the current
generation which stem from steam engines, to electrical power, to automated production. Different
platforms have now been introduced in the business and in the market such as Artificial
Intelligence (AI), the Internet of Things (IoT), smart factories, cyber physical systems (CPS),
digital platforms and the like (Schwab, 2016). The introduction of the fourth industrial revolution
or industry 4.0 caused a shift which has extensively affected traditional businesses. These
businesses are faced with new innovative ideas which are called digital frontiers. With
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digitalization, advances in information technologies are within reach, competitive levels of
businesses are propelled which, in turn, helps in increasing their productivity and profits.
The study was conducted at a Filipino-owned company (referred to as Company X) which

is an assortment of cherished and loved brands that have brought delight to the Filipino people
since 1945. Currently, its network has expanded to 673 stores, 91.83% of which are found in the
Philippines. and the rest have reached the global market. In the course of time, the Filipino-owned
firm moves closer in achieving the goal of having over a thousand stores (“Bridging Heritage and
Innovation Annual Report”; 2017)
Research Question
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Guided by the mediation model by Baron and Kenny (1986), the study seeks to address the main
question, “Does hyperconnectivity mediates the impact of digitalization on competitive
advantage?”
Specifically, the study intends to answer the following questions:
1. Does the adoption of digitalization bring about the competitive advantage of the firm?
2. Does the adoption of digitalization contribute to the hyperconnectivity in the workplace of
the firm?
3. Does hyperconnectivity in the workplace helps increase the competitive advantage of the
firm?
4. Does digitalization and hyperconnectivity both lead to the competitive advantage of the
firm?
Careful investigation and analysis of these questions can certainly help management of
organizations to intensify the effects of digitalization through the adaptation of the advancements
brought forth by the digital age and by applying new platforms in order to relay information in an
efficient way through a hyperconnected workspace as it gives birth to productivity and profitability
in the business.
Literature Review
The existing literatures sifted through were confined in different countries in the world and
as clearly seen industries differ from one another. As such, it presents an opportunity to perform a
study in a different setting so that the results can be compared to one another. There are certain
factors that can be a reason for comparing the different practices, culture, strategies, environment,
community, and its stakeholders that may vary from one country to another. The research team
would want to fill in this research gap by conducting a meticulous research that could be compared
to other findings and would contribute to different studies regardless of the variables used.
Digitalization
In the study of Sorescu and Schreier (2019), it confirmed that digitalization has a
significant impact on how the firm collect and share information, compete and transact
with customers. The changes in consumer and the firm’s behavior are based on the
opportunities and challenges that are defining the digital era that includes
hyperconnectivity. Hyperconnectivity is the connection between the use of digitalization
in business, consumers and the systems that ease the way to have an efficient delivery of
services of goods that has a potential to distort the traditional process.
A past study by Son-Allah & Baba (2015) supported that the digitization of business
process enables businesses to improve operational efficiency, reduce operational costs and
increase competitive advantage. Digital integration in the organization among its suppliers
and value chain partners are capable of reducing costs incurred by the company through
the increase in communication, transparency and monitoring (Nwankpa & Roumani,
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2016). As digitalization increases, firms are able to attain improved customer offerings
customer satisfaction, customization and reduce the price of the product. It has been
implied that digitalization can positively influence competitive advantage. To grasp how it
shapes the restaurant industry, presented in Figure 1 is the framework on how digitalization
is adapted in management (“The transformation of the restaurant in the digital age”,
2018).
Figure 1
Digitalization in the Restaurant Industry
Note. From the Transformation of the Restaurant in the Digital Age 2018
Hyperconnectivity
Authors Chung, Park and Lee (2017) suggest that being hyperconnected means that
communication is available anywhere and anytime through the use of handheld devices
and e-mails. With this, consumers and companies are able to access information at a wide
scale. The authors further elaborated that term hyperconnected refers to a civilization or
culture wherein individuals and other groups of individuals, individuals and things, things
and other things, both online and offline are connected through digital technologies. It does
not only mean communication and interaction, but also its impact on both the personal and
organizational behavior (Fredette et al, 2012). Vaskovicova (2014), showed evidence that
certain people feel comfortable with high levels of connectivity; yet it is more likely to
have harmful effects on people’s performance and that it invades the personal time of the
people and at least contribute to giving stress and anxiety to people. A hyperconnected
workplace is where teams and employees get work accomplished by making use of cutting-
edge and advanced communication technologies, collaborative workflows, problem-
solving tools, and data sharing (Balachandran, 2018).
Companies that seeks to gain competitive advantage from the use of smart,
connected processes, products and services that are made possible through the means of
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hyperconnectivity. Hyperconnectivity creates new types of value creation models that
benefits the company to make strategic choices, new ways of creating value and increase
competitive advantage (Lattie, 2016). Figure 2 visually depicts the hyperconnectivity
framework in which the study was ascertained.
Figure 2
Theoretical Framework for Hyperconnectivity adapted from Fredette et al, (2012)
Competitive Advantage
Influential and eminent business thinker Michael Porter (1985) suggests two
questions which motivates competitive strategy. One is if the industries are appealing
enough to become profitable in the long run; and second, what are the factors which
determine it. In order for businesses to thrive in their respective industries, it was
mentioned by Kucukaslan and Ersoy (2007), that there must be continuous effort for them
to progress, innovate and develop more channels for growth and sustainability. On the other
hand, Hakkak and Ghodsi (2015), posits that organizations nowadays turn to any standard
procedure to gain a competitive advantage. The most common definition of competitive
advantage in the field of competitive strategy and in the context of value creation would be
that whatever causes the profit to increase more than the company’s expenses. Also, that a
firm who has the competitive advantage gains a higher economic profit rather than the
average rate of profit in the same market. Figure 3 represents the Competitive Advantage
framework adapted from Thatte, Dhumal & Agrawal (2018)
Figure 3
Theoretical Framework for Competitive Advantage
(adapted from Thatte, Dhumal & Agrawal (2018)
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Conceptual Framework
The key concepts and constructs alongside the connections that capture the whole idea of
the study is visually represented by its conceptual framework. The framework below involves a
list of all the variables of the study namely, digitalization, hyperconnectivity and competitive
advantage which were prudently measured using the constructs adapted from various authors.
Figure 4
The framework shows the relationships of the independent variable, the mediating variable
and the dependent variable of the study.
The independent variable digitalization was measured by using the measurement of AOE,
the leading global service providers of open source-based web portal development, web content
management and e-commerce solutions, based on five dimensions namely development of
organization, building a digital organization, development of digital business models, establishing
agile methods in product development and building a flexible IT infrastructure. Development of
organization is applying the necessary changes in the experience of the stakeholders of the firm
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with the use of information management through the different software platforms available.
Building a digital organization entails a digital change in the company that needs a careful analysis
of implementation, concerned with the outcomes of the abrupt change in the company and it
requires a separate entity or department to fully function. The development of digital business
models is essential to identify problems, new ideas and implementation of solutions. Establishing
agile methods in product development is wherein software releases short and repetitive cycles to
deliver important data quickly. Lastly, building a flexible IT infrastructure is based on the
continuous implementation in the infrastructure to identify what components are lacking and adapt
to the needs of the system.
The mediating variable, hyperconnectivity was measured through collaborative

forecasting, production planning, logistics planning and online ordering. These measures are based
on Fredette et al (2012) research. Collaborative forecasting is based on the information sharing
between one department to another. Production planning is important software tool that helps the
firm in planning and scheduling resources. Logistics planning drives productivity in growth and
the flexibility of the firm. It is important for a firm to have logistics planning to amend costs and
lead times. Lastly online ordering, it entails companies to enhance its interactivity and marketing
strategies to be put at ease. It can increase revenue, average check values, increase sales,
productivity and online accuracy.
Finally, the dependent variable, competitive advantage was measured based on Porter’s
approach to competitive advantage. Thatte, Dhumal & Agrawal (2018) suggests five factors
including price/cost, quality, delivery dependability, product innovation and time to market. Price/
cost mainly focuses on the ‘first mover advantages’ that would set the price of the product. Quality
is based on the quality management practices of a firm to attain competitive advantage. Delivery
dependability is how fast the firm delivers its products to its consumers. Product innovation is how
the company promotes and develops the application of the product to achieve its competitive goals.
Lastly, time to market is the ability of the firm to introduce timely products faster than its
competitors.
Hypothesis of the Study
The study formulated five hypotheses which were designed to address the research
problem.
In their article, Son-Allah & Baba (2015) postulated that the digitization of business
process enables businesses to improve operational efficiency, reduce operational costs and
increase competitive advantage. Digitalization is the deployment of the technology to generate
revenue through the means of the firm’s capability to deliver its products or services that caters to
the needs and wants of its customers. It is essential that businesses should digitize their processes
to repel against competitors or to gain competitive advantage.
H1: Digitalization positively influences the level of Competitive Advantage
Sorescu & Schreier (2019)) found that digitalization has a significant impact on how the
firm collect and share information, compete and transact with customers. New digital technologies
55 | P a g e
have paved the way to innovation in the service industry and expanded the needs of their products
to cater to its customers. The changes in consumer and the firm’s behavior are based on the
opportunities and challenges that are defining the digital era that includes hyperconnectivity.
Hyperconnectivity represents the connection between the use of digitalization in business,
consumers and the systems that ease the way to have an efficient delivery of services of goods that
has a potential to distort the traditional process
.
H2: Digitalization positively influences Hyperconnectivity
Lattie (2016) posits that hyperconnectivity creates new types of value creation models that
benefits the company to make strategic choices, new ways of creating value and increase
competitive advantage. The emergence of hyperconnectivity according to Chung, Park & Lee
(2017), is rapidly taking place by giving firms new opportunities by increasing the accessibility of
the global market and information that could help shape the competitiveness of the firm. The
connection between the company and the consumer will increase. The business model of the fourth
industrial revolution, is based on hyperconnectivity that will revolutionize the existing business
model and would create competitive advantage by rebuilding an innovative process for upgrading
added value (Jung & Lee, 2019).
H3: Hyperconnectivity positively influences Competitive Advantage
In their study, authors Chi, Zhao & Li (2016) underscored that digital business strategy is
one kind of effort in business or in the firm level strategy that can influence the utilization of digital
resources and capabilities. At the same time, hyperconnectivity is in the functional level.
Digitalization strategies is the starting point to execute and develop hyperconnectivity through the
means of digital technologies.
The authors further coagulate that hyperconnectivity can enhance operation performance
and financial performance in the organization. In the fourth industrial revolution era,
hyperconnectivity is one kind of digital capability that utilized digital resources. Moreover,
hyperconnectivity with its stakeholders can improve information sharing and reduce the
coordination cost of the firm. Accordingly, hyperconnectivity will enhance the competitive
advantage eventually (Chi, Zhao & Li, 2016).
H4: Digitalization and Hyperconnectivity positively influence Competitive Advantage

H5: Digitalization mediates the link between Hyperconnectivity on Competitive Advantage
Research Methodology
Research Locale
The study was conducted at Company X which is the largest casual dining
restaurant company in the Philippines. Its portfolio consists of homegrown and
international brands with over 700 outlets local and overseas combined. It also operates
three Metro Manila-based commissaries that service all of its production, distribution and
storage requirements across all brands. The Company also engages global toll
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manufacturers to supply processed requirements for its international business. Its vision is
to be the leading Filipino company with the most loved brands by 2025.
Measurement Instrument
Items of the research instrument were adopted from various literatures including
AOE (2018), Fredette et al, (2012) for hyperconnectivity and Thatte, Dhumal & Agrawal,
(2018) for competitive advantage.
The research instrument contained a brief introductory message of the study and a
short instruction on how the respondents would answer the said survey. The questionnaire
was divided into three parts: digitalization, hyperconnectivity and competitive advantage.
A five-point Likert scale was prepared in gathering the needed data. Development of
digitalization strategy, building a digital organization, development of digital business
model, establishing agile methods in product development and building a flexible IT
Infrastructure are the factors used to measure digitalization. Meanwhile, collaborative
forecasting, production planning, logistics planning and online ordering were the
dimensions used in measuring hyperconnectivity. Finally, price/cost, quality, delivery
dependability, time to market and product innovation are the building blocks of competitive
advantage.
Sampling Design
Homogenous purposive sampling technique was utilized in the study. Purposive

sampling also known as judgmental, selective or subjective type of sampling. It focuses on
the units that are investigated based on the judgment of the researchers. The goal of the
purposive sampling based on Etikan, Musa & Alkassim (2016) is to not randomly select
units from a population to create a sample size, but to focus on particular characteristics of
a population that are useful and interesting that will best answer the research questions. It
is essential for this study since it is a mixed methods research design to incorporate the
homogenous type of purposive sampling since respondents are selected based on their
having similar characteristics or knowledge in the study.
A total sample size of 204 were polled consisting of top and middle managers with
95% confidence level and a 5% margin of error.
Statistical Analysis
Multiple linear regression analysis was conducted to confirm whether or not the
theorized dimensions emerge. Mediation analysis based on Baron and Kenny’s model was
performed to test the existence of mediation hypothesis. The model seeks to determine
whether hyperconnectivity mediates the link of digitalization on competitive advantage.
Regardless of what kind of data analysis used, the steps that are necessary for testing the
mediation are the same. The study also conducted the Sobel and Aroian test in order to
determine the impact of the mediating variable.
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To carefully validate quantitative findings, qualitative data were collected through
interviews with the company CEO and experts from IT and business specialists. The
consistency of the data was analyzed using the Follow-up Explanations Model Adapted by
Creswell (2006), Subsequently, the study applied a pattern-matching method of assessment
to validate the data obtained from both quantitative and qualitative results.
Discussion of Results and Analysis
Sample Demographics
Most of the respondents (31.13%) were age between 41-50; 30.66 percent of the
respondents belong to 31-40 age bracket; 21.23 percent were age between 20-30 and 16.98
percent were in the age group 51 and above. Based on the management, employees between
41-50 years of age are more preferred than other brackets mainly because they believe that
these people are more matured enough to handle work. For instance, they handle criticisms
being thrown at them by their bosses professionally. They also have prior experiences with
work and can be said to be more knowledgeable on how the responsibilities should be
addressed. But for management, employees from these age groups are better informed on
the nature of their jobs and more expressive in terms of exchange of thoughts and
experiences on how to deal with certain tasks.
Inferential Statistics
Upon testing the hypothesis, the findings confirmed that all of the following
hypotheses are proven true:
H1: Digitalization can predict the level of Competitive Advantage

H2: Digitalization significantly influences Hyperconnectivity
H3: Hyperconnectivity significantly influences Competitive Advantage
H4: Digitalization and Hyperconnectivity significantly influence Competitive Advantage
H5: Digitalization mediates the link between Hyperconnectivity on Competitive
Advantage
Digitalization can predict the level of Competitive Advantage
Regression analysis results that the regression model is significant since the p-value
is < 0.05. The coefficient of determination, R2, shows the proportion of variation of the
dependent variable accounted for by the independent variables in the regression model. R2
value of the regression model is greater than 0.15 that can be interpreted as medium effect.
Table 1
Regression Statistics for Digitalization Affecting Competitive Advantage
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This shows that digitalization influences the level of competitive advantage.
According to Koch & Windsperger (2017), the usage of digital technologies into products,
services and operations are important in organizations on how the company can achieve
and sustain competitive advantage. Furthermore, Digitalization changes the nature of
products, the process of value creation and the firm’s competitive environment. According
to the Network Centric View, the firms can achieve competitive advantage by shaping the
digital environment and by value co-creating the interconnectedness of the company in the
digital era.
Digitalization can assess the level of hyperconnectivity
The findings as shown in Table 2 confirmed digitalization is significantly and

positively related to hyperconnectivity with a p-value that is < 0.05. Furthermore, the
correlation coefficient, R2, shows that 0.90 or 90% of the changes in its hyperconnectivity
is due to the Digitalization of the company.
Table 2
Regression Statistics of Digitalization on the level of Hyperconnectivity
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Digitalization in the company leads to hyperconnectivity for it serves as an avenue
towards better communication. It enables the collection and ease of sharing information. It
also allows Company X to be more connected to its consumers, by catering to their needs
and meeting their demands. Hyperconnectivity can be regarded as the connection between
the use of digitalization in business, consumers and the systems that ease the way to have
an efficient delivery of services of goods that has a potential to distort the traditional
process (Sorescu & Schreier, 2019). One way to see how digitalization serves as an avenue
for better communication and understanding customer needs is how they collect customer
feedback, ratings and other comments and suggestions that they have regarding the
performance and products of the company’s brands or restaurants. With this, according to
the company CEO, they are able to alter their operations and the company is more
familiarized in the areas which are in need of improvement.
Hyperconnectivity influences the level of Competitive Advantage
The findings suggest a significant linear regression between hyperconnectivity and

competitive advantage for the company with a p-value that is < 0.05. The coefficient of
determination shows the proportion of variation of the mediating variable accounted for by
the independent variables in the regression model. values of all regression models are
greater than 0.35 that can be interpreted as strong effect.
Table 3
Regression Statistics for Hyperconnectivity on Competitive Advantage
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The study adapted a framework by Lattie (2016) to provide a foundation on the impact of
hyperconnectivity on competitive advantage. This framework puts forward the fact that companies
such as Company X are able to gain competitive advantage by using smart, connected processes,
products and services that are made possible through the means of hyper-connectivity. It was
established in the earlier parts of the paper that as hyper-connectivity is enhanced, it paves the way
for a new level of connectivity that does not only affect those within the organization, but it also
reaches out to its consumers. The effectiveness of hyperconnectivity is evidently felt by improving
communications by those in Company X and its suppliers, customers and the like. Furthermore,
they are able to create strategies and opportunities that strengthens their brand recognition which
is one of the reasons as to why, although they have been present in the industry for many years
now, their products are continuously being patronized.
Digitalization and Hyperconnectivity significantly influence Competitive Advantage
A significant regression equation was found in conducting a multiple linear

regression analysis with Digitalization and Hyperconnectivity as the predictors of
Competitive Advantage since the p-value is < 0.05.
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Table 4
Regression Statistics for Digitalization and Hyperconnectivity on Competitive Advantage
The systems and digital technologies the company would create would be hard for
its competitors to imitate since there are security protocols. A company that has an
automated systems and fast communication enabled in their organizations are well-
managed and well-equipped with the resources that could lead to a firm’s competitive
advantage (Loeser et al, 2017). More so, organizations have to make strategic choices that
would lead to its competitive advantage that allows profitability. Naturally, organizations
operate with limited or strategic resources that involves technological development of the
company that defines a clear and distinct strategic positioning of the company. In a
hyperconnected world, the increasing digital interconnectedness of people and things,
anytime and anywhere leads to the competitive advantage of the firm (Latti, 2016).
Digitalization strategies is considered as the starting point in the execution and
development of hyper-connectivity through the means of these resources.
Hyperconnectivity, in turn, enhances the performance of firms and improves information
sharing with its stakeholders. As this flow is present in Company X, it represents a new
way of collaborating and thinking since sources and information are utilized, enabling them
to differentiate themselves from other incumbents in the industry, increasing their edge
against them.
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Digitalization mediates the link between Hyperconnectivity on Competitive
Advantage
Through mediation analysis, it manifests that all the conditions satisfy the four steps
of Baron and Kenny in establishing mediation. According to the study of Chi, Zhao & Li
(2016), digital business strategy is one kind of effort in business or in the firm level strategy
that can influence the utilization of digital resources and capabilities. At the same time,
hyperconnectivity is in the functional level. Digitalization strategies is the starting point to
execute and develop hyper-connectivity through the means of digital technologies.
Moreover, hyper-connectivity with its stakeholders can improve information sharing and
reduce the coordination cost of the firm. Accordingly, hyperconnectivity will enhance the
competitive advantage eventually (Chi, Zhao & Li, 2016).
Table 5
Summarized Mediation Analysis
b (coefficient) p-value Adjusted R2

Mediation Model
DI → CA 0.02 0.02 0.02
DI → HC 0.80 0.0002 0.90
HC → CA -0.17 0.000181 0.06
DI → HC → CA DI = 0.45; HC = -0.57 0.04 & 0.009 0.05
Key Recommendations
Consistent with the findings of the study, a variety of actionable responses are
recommended to management. First, maintain or upgrade the use of a data base management
system in the company’s operations as it facilitates the checking of inventory, sales, feedback and
the like in its daily business; makes all transactions faster which gives them the edge against other
competitors. Though the use DBS, management can see the level of inventory across all brands
without the managers of the specific branch notifying them. Likewise, decline in sales and
customer feedback can be seen in the said system which is of aid to the head office in making
decisions to solve the said problems instantly.
Another recommendation is to integrate more technology in the firm’s daily operations.

This may include the use of Bluetooth temperature monitoring systems to safeguard food safety
and ensure equipment are operating in good working condition.
It is also recommended to generate and distribute a digital weekly schedule to all

employees through optimized schedule makers/scheduling software which is capable of
monitoring sales and staffing budgets to reduce overtime and ensure profitability. It was observed
that restaurants using scheduling software have up to a 2 percent reduction in labor costs.
Finally, equip employees of the firm with the processes of digitalization and
hyperconnectivity the company currently uses. the employees would keep up to date with the
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factors that influence the outputs that they are working for. Specifically, it is necessary that
employees are consistent in opening new modes of products and having a say within the company
about their ideas for the benefit of both the external and internal consumers.
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Impacts of Employee Empowerment and Organizational Agility on
Employee Productivity: The Case of Agro-Trade Integrated
Ventures Corporation
8th NBMC Paper #4
Aenielle, Sebastian Gio V., Continuado, Tristan Angelo S., Pe,

Joseph Andrew L., Ignacio, Jayme C.
[email protected]
Abstract
The study focuses on how employee productivity within Agro-Trade is affected by employee
empowerment and organizational agility. A causal explanatory design was used to determine the
impacts of the independent variables on employee productivity. Interviews and questionnaires
covering the variables were administered to employees and Pearson’s correlation, and multiple
linear regressions were used to analyze the data. The results present that the independent variables
used together have strong positive effects on employee productivity. The company is adequately
functioning in making their employees feel empowered which signifies that they are using the right
form of leadership and is properly administering environmental elements that influence
empowerment. However, the study revealed that employee productivity is significantly affected
more by organizational agility than employee empowerment. Thus, if the company wishes to use
empowerment to increase productivity, it would be imperative to give emphasis on all the sub-
variables of employee empowerment. Meanwhile, organizational agility had a significantly
positive effect on employee productivity. The company showed high potential to become a very
agile organization, showing that its employees are prepared to handle changes and the organization
itself is agile enough to change, adapt and improve to compete significantly.
Keywords: Employee productivity, empowerment, organizational agility
Introduction
Coping up with difficulties in meeting customer demands has always been the challenge
among companies. One of the difficulties is organizational productivity that may be attributed to
several inputs such as labor, machine, capital etc. not to undermine the challenge external
environment poses to the organization as significant matter that has to be considered. The study is
about Agro-Trade Integrated Ventures Corporation that faces difficulty meeting customer
demands amid efforts made to invest on its machinery and operating tools.
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Shekari et al., (2011) identifies organizational factors and individual factors of employee
empowerment that may help an organization. Organizations are beginning to recognize the
significance of implementing employee empowerment practices because of the multiple evidences
that point to the positive effects it brings. One of the factors that was found by previous researchers
to be positively affected by employee empowerment is employee productivity. Employee
empowerment covers social structural characteristics, organizational commitment and servant
leadership. These variables of empowerment accentuates the actions of enriching an employee’s
job, giving power to exercise control, and taking responsibility for the outcomes of their efforts
(Ratnam, 2006, as cited in Sahoo & Das, 2011).
Social structural characteristics are environmental events that impact the task assessment
individuals make, influencing the level of perceived empowerment and thus, influencing behavior
(Thomas & Venthouse, 1990, as cited in Samad, 2007). Through structural empowerment lower
levels of organization are involved and is given access to information and resources (Heller 2003,
as cited in Samad, 2007). Meanwhile, organizational commitment is described as the willingness
of social actors to give their energy and loyalty to social systems (Yagar & Dokme, 2019). Servant
Leadership on the other hand is a holistic approach that engages followers in multiple dimensions,
such that they are empowered to grow into what they are capable of becoming (Eva at al., 2018).
Existing research contributes to the idea that employee empowerment promotes

organizational agility. When individuals feel that they are able to influence the strategic,
administrative, or operating outcomes at work, they are more likely to be agile (Muduli, 2017).
The need for an organization to be agile is growing and is becoming a necessity, especially
in the present where adaptability to the changing times due to the rise and fall of various social
trends. According to Varghese & Bhini (2018), managing the uncertain changes in the market is
one of the important tasks for organizations to function. Because of this uncertainty in the market,
agility is now being deployed in companies to adapt to the evolving needs of the company and to
ensure maximum productivity. Mohammadi et al., (2015) study also revealed that organizational
agility significantly affected employee productivity. Organizational agility is one of the major
strategies in order to improve productivity and performance in the current organizations
(Mohammadi et al., 2015). Uncertainty and change is now becoming common with organizations
working on a dynamic environment, so it is necessary to respond quickly with those factors as it
enables them to survive and stay competitive in the market.
This deals specifically with sub-variables adhocracy culture and agile manufacturing. An
organization with adhocratic culture is one that is most responsive towards the highly turbulent,
and the massively accelerating pace of conditions that embody today’s organizational world
(Cameron & Quinn, 2011). While Agile manufacturing refers to managing the organization’s
transition to a desired future state, the ability to execute and scale new capabilities to affect the
external environment (Baskarada & Koronios, 2017). Organizations are required to restructure the
business process because they not only experience another turn of the business cycle but because
of the changing nature of global competition (Davis, 2009, as cited in Harraf et al., 2015).
Existing literature found organizational agility as a dependent variable to employee

empowerment and no studies were found concerning employee empowerment and organizational
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agility to be used both as independent variables at the same time. Alzoubi et al., (2011) used
employee empowerment as one of the factors of organizational agility for product development.
The results showed that there is a strong relation between employee empowerment and
organizational agility. Crocitto & Youssef (2003) expound that empowerment is one of the factors
that plays a role in forming an organization's agility to the market. Variable on employee
empowerment has a consistent, positive effect and relationship with employee productivity.
Meanwhile, literature found in organizational agility and employee productivity was

proved to have positive effects to employee productivity. Then, research found relating employee
empowerment and organizational agility were consistently linear. Employee empowerment was
used as an independent variable and organizational agility as dependent variable. There were no
studies found using both employee empowerment and organizational agility as independent
variables. Although no studies were found, both variables were used as independent variables
separately to affect employee productivity.
The review summarized four issues; first is that studies available are limited mostly on
manufacturing settings, although there were some found in the manufacturing setting, most studies
encountered by the researchers were conducted in an IT or service sectors. Then, most related
studies are in foreign context presenting different factors such as the culture, standards, social
structure, norms, and behaviors, which might be different from the Philippines. Thirdly, there is a
very little to non-availability of studies about employee empowerment and organizational agility
as independent variables for employee productivity. Apart from this, little to no study has been
found to both cover the independent variables employee empowerment and organizational agility
as factors affecting employee productivity. Both variables affecting employee productivity are
presented separately, but no studies have been found with both as independent variables together.
Lastly, The amount of related studies found may have been enough to support the research, but no
study was found in directly linking all three variables together, enabling this gap to be the main
objective of the study.
The said reviews led the research to find out the effects of the independent variables on
employee productivity within Agro-Trade. The study aimed to:
1. Determine the level of empowerment that the employees experience in Agro-Trade.

2. Identify the level of organizational agility of Agro-Trade in its operations.
3. Determine the relationship and effects of employee empowerment and organizational agility
on Employee Productivity.
The results of the research could be of significant help to Agro-Trade, its employees, and
researchers and to academe, to manufacturing firms and aspiring business owners. The information
would help companies address issues on low productivity such as improving capabilities of
employees and their contributions to the organization. The research would present the relevance
of the variables previously not being studied as factors of productivity and relevance to
manufacturing companies.
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Methodology
The research employed a causal explanatory design to determine the impacts of the
independent variables on employee productivity. Interviews and questionnaires were administered
to regular employees of Agro-Trade handling operations like production, delivery scheduling, and
sales including office personnel from administration. The questionnaire is made with 5-point
Likert scale questions composed of 46 questions comprising 3 sections for each of the variables.
Pre-test was made to check and ensure the instrument’s reliability and validity. Pearson’s
correlation, linear and multiple linear regressions were used to analyze the data and test the
hypotheses.
Results
The study got the following results:
Table 1
Levels of Employee Empowerment and Organizational Agility
Variable Mean STDEV Interpretation

Employee Empowerment 3.94 0.56 High level
Social Structural
Characteristics 4.17 0.58
Organizational Commitment 3.70 0.95
Servant Leadership 3.83 0.72
Organizational Agility 3.82 0.56 High level
Adhocratic Culture 3.92 0.60
Agile Manufacturing 3.77 0.59
The results showed high levels of employee empowerment and organizational agility
within Agro-Trade with mean scores of 3.94 and 3.82, respectively.
Table 2
Correlations of Sub-Variables to Employee Productivity
Variable Coefficient P-Value Interpretation

Employee Empowerment
Social Structural
Characteristics 0.72 0.00 Strong Positive Relationship
Organizational Commitment 0.19 0.01 Weak Positive Relationship
Servant Leadership 0.50 0.00 Weak Positive Relationship
Organizational Agility
Adhocratic Culture 0.76 0.00 Strong Positive Relationship
Agile Manufacturing 0.78 0.00 Strong Positive Relationship
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The sub-variables showed varying positive relationship to employee productivity. For
employee empowerment, both organizational commitment and servant leadership posed weak
positive relationship to employee productivity, while social structural characteristics showed
strong positive relationship. On the other hand, both sub-variables of organizational agility showed
strong positive relationship to employee productivity.
Table 3
Linear Regression of Sub-Variables to Employee Productivity
Variable Coefficient P-Value R Square Significance
Employee
Empowerment
Social Structural 0.45 0.00 0.67 Weak Positive

Characteristics Effect
Organizational 0.09 0.01 0.29 Weak Positive

Commitment Effect
Servant 0.34 0.00 0.58 Weak Positive

Leadership Effect
Organizational
Agility
Adhocratic 0.53 0.00 0.73 Strong Positive

Culture Effect
Agile 0.55 0.00 0.74 Strong Positive

Manufacturing Effect
The sub-variables showed varying positive effects to employee productivity. For employee
empowerment, all sub-variables showed weak positive effects. As for organizational agility, both
sub-variables posed strong positive effects to employee productivity.
Table 4
ANOVA Test Result of Variables to Employee Productivity
Variable P-Value Multiple R R Square Significance

Coefficient
Employee 60.44 60.44 0.00 0.67 Strong

Empowerment Positive
Effect
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Organizational 60.44 60.44 0.00 0.67 Strong
Agility Positive
Effect
Employee 65.48 0.00 0.80 Strong

Empowerment Positive
& Effect
Organizational
Agility
There is an R Square of 0.64 resulting from the test to both variables that means both
variables when combined have strong positive effects to employee productivity.
Analysis
On Levels of Employee Empowerment and Organizational Agility
The research revealed that Agro-Trade manifested both high levels of employee
empowerment and organizational agility. The sub-variables present high level of employee
empowerment within Agro-Trade and that they should pay more attention to organizational
commitment and servant leadership as it resulted a little lower mean score than its social
structural characteristics to instill a very high level of empowerment within the
organization. The same is true with organizational agility as the company posed high level
of agility on both of its sub-variables adhocractic culture and agile manufacturing. For
Agro-Trade to achieve a very high level of agility, it needs to be responsive towards the
high turbulent, and the massive accelerating pace of conditions that embody today’s
organizational world. Also, they should have processes, skills and training that will enable
them to respond quickly to customer needs and market changes while still maintaining cost
and quality.
The Relationship of Variables to Employee Productivity
Though not all had strong positive relationship, all variables showed positive
relationship to employee productivity. These tells that the company should focus more on
the following sub-variables as it showed strong positive relationship to employee
productivity: 1) to its social structural characteristics, to better or empower more its
employee; and 2) to both adhocratic culture and agile manufacturing, to better become agile
and improve productivity.
The Impacts on Employee Productivity
The Multiple R of 0.67 for employee empowerment implied that it has significant
positive effect on employee productivity. The coefficient implied that for every unit of
change in employee empowerment, employee productivity increases by 0.75 units. The
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same goes with the organizational agility with a Multiple R of 0.80, which means that it
has a significant positive effect to employee productivity. Thus, increasing organizational
agility will increase or will have a positive effect on employee productivity.
The R Square of 0.64 as result of regression for both variables together tells that
there is a strong or a significant positive effect on employee productivity. This means that
if Agro-Trade exerts more effort to empower employees and become agile it could have
positive effects and would increase employee productivity.
Conclusion
Since the main issue in this study for Agro-Trade is its inability to cope with high demand
in the market for their products, factors of productivity is very vital. As such, contributors to factors
affecting employee productivity must be determined since the company did not find significant
effects of machines and operating tools as they have largely invested in it.
To summarize the outcomes of the research, the results concluded that employee
empowerment and organizational agility possessed strong positive effects on employee
productivity. However, the study revealed that employee productivity in Agro-Trade is
significantly affected more by organizational agility than employee empowerment.
The company is adequately functioning in making their employees feel empowered which
signifies that they are using the right form of leadership and is properly administering
environmental elements that influence empowerment. Thus, if the company wishes to use
empowerment to increase productivity, it would be imperative to give emphasis on all the sub-
variables of employee empowerment.
Agro-Trade also showed high potential in becoming a very agile organization, showing
that its employees are prepared to handle changes and the organization itself is agile enough to
change, adapt and improve to compete significantly in the market. As mentioned in the analysis,
enhancing adhocratic culture would make the company become more responsive towards the
highly turbulent and accelerating pace of conditions of today’s organizational. An agile
manufacturing would enable the organization to manage its transition to a desired state with the
ability to execute capabilities to affect the external environment. Both of the mentioned factors
would increase employee productivity.
Recommendations
Based on the results and conclusion, the following may be recommended for:
Agro-Trade Management
A. On Employee Empowerment
1. Focus on social structural characteristics (Strong positive relationship but weak

positive effect). The following may be done by Agro-Trade to improve positive effects:
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a. Put an emphasis in providing avenues for self-esteem, power distribution,
information sharing, knowledge, rewards, and good leadership.
b. Allocate more responsibility and information regarding the production processes
and future plans to its middle managers and key operations employees.
c. Set in place organizational arrangements such as rewards systems, knowledge
sharing practices, information sharing policies, and observe social attributes to
achieve this effect.
2. For organizational commitment (Weak positive relationship and weak positive effect).
The company may:
a. Introduce program that would elicit employees’ willingness to give their energy
and loyalty to social systems.
b. Provide more activities that would enable employees to appreciate belongingness
and pride for what they are doing.
3. For servant leadership (Weak positive relationship and weak positive effect)
a. Put ample values to non-managers as members of the organization to positively
contribute to the organization.
b. Develop perception among employees that management must lead with humility,
reliability, kindness, and an inclination to serve.
c. Agro-Trade should continue with their managing style.
d. Montlhy use of the servant leadership research instrument in order to monitor if the
management is positively increasing the perception of servant leadership to allow
possible adjustments if deemed necessary.
B. On Organizational Agility
1. For sub-variables of organizational agility (Strong positive relationship with strong

positive effect)
For adhocratic culture the company should the culture to make the organization
more entrepreneurial, dynamic, original, risk-taking, innovative, aggressive, and
prepared for changes. The culture will enable employees to generate their own ideas
and can also help the management into steering new ideas that can be beneficial in the
long run. Furthermore, adhocracy culture is needed in order to practice attainment of
higher level of responsiveness.
2. For agile manufacturing, the company should:

a. Manage their core competencies effectively to maximize the full potential of their
ability and it will help the organization sustain or increase their level of efficiency.
b. Always take into consideration to bring changes in the organization so that they can
provide innovative, high-quality products or services instantaneously in response
to customer demands. Especially in today’s market, there are changes from the
external environment that is out of the company’s scope of control, hence, it is
better for the company to have a high level of responsiveness.
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Agro-Trade Employees
The results of the study may be shared to its employees so they would be able to see which
factors are beneficial to them and which will enable them to adjust their performance towards
becoming more productive at work as well as improving other factors that may have been
unfamiliar to them.
Researchers and Academe
Make use of the information gathered in this study for other organizations since the
variables presented in the research are not commonly used altogether. There might be other
companies that are facing the same problems where the results may be of help for the researchers.
Just add sample size or variable that can improve the research.
Aspiring Business Owners and To Manufacturing Firms
1. Use the results of the study to have insights on how employees respond on the management to
further enhance and correct the ways of how they should handle employees that could lead to
an improved productivity.
2. Empower more employees and practice agility as it surely helps increase the productivity of
employees.
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Determining the influence of consumers’ level of involvement on
communication message strategies that affect the consumers’
purchase involvement in Beauty & Personal Wellness Services
8th NBMC Paper #5
Eva Regina Buenviaje and Melanie Thea Macarat

[email protected] and [email protected]
Abstract
One of the industries that COVID-19 has gravely affected is Beauty & Personal Wellness Services.
The purpose of this study is to assess the relevance and determine the influence of consumers’
level of involvement on communication message strategies that affect the consumers’ purchase
involvement during COVID-19. The researchers implied three published journals as guidelines to
intercorrelate the relationship and determine the undefined side of the three studies. Firstly, the
questionnaire handed out to the respondents was designed according to Purchasing Involvement
Scale (Slama & Tashchian, 1985) wherein a published journal also existed that identified the
socioeconomic factor as the independent variable which influenced a consumer’s purchase
involvement. Secondly, the researchers relied on Ray et al. (1973) published a journal entitled
Marketing Communications and Hierarchy-of-Effects where it displayed consumer involvement
hierarchies namely High Involvement Hierarchy and Low Involvement Hierarchy (Krugman,
1965). Lastly, to fully complete the idea, the researchers applied marketing communication
message strategies that are supported by the Three-Orders Hierarchy Model developed by Ray
(1973) that helps marketers clarify their objectives in creating a marketing communication
campaign. The study used factor analysis to determine the consistency and the reliability of the
Three-Orders Hierarchy Model to Purchasing Involvement questions, then regression analysis was
subsequently used to determine the significance of the Three-Orders Hierarchy Model to both
types of involvement of a consumer and to purchase involvement. The data results identified
“Cognition” as the only variable that has a significant relationship to both high and low
involvement type of consumers, that significantly affects the consumers purchasing involvement
(p ≤ 0.05). Hence, a suggestion on implying informative and rational advertisements in increasing
the purchase involvement for both high and low involvement type of consumers.
Keywords: Consumers’ Level of Involvement, Cognition-Affective-Conative, Message

Strategies, Purchase Involvement, Integrated Marketing Communications
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Introduction
The threat of COVID-19 led the Philippines’ local government units to change the
dynamics of beauty & personal wellness services. It is an industry that offers hands-on services
wherein the individuals involved are highly vulnerable to the risk of transmission therefore, the
discouragement of engagement from existing and potential customers by the authorities. The
researchers were able to interview the marketing head of a famous franchise chain of beauty &
personal wellness service establishments, wherein the executive stressed how the current pandemic
affected the consumers' response to the company’s marketing efforts. Hence, the researchers to
answer the management's pain points or so-called as the problem statement, “What communication
message strategy/strategies can aid beauty & personal wellness services in boosting the purchasing
involvement of consumers during this time of pandemic?”
Theoretical Frameworks
Consumer Involvement Hierarchies
Consumers having different levels of involvement when shopping is not an old

concept (Katona & Mueller, 1955; Newman & Staelin, 1972). High Involvement Hierarchy
(also known as the “standard learning hierarchy”) shows the significant progression
between consumers and purchase involvement (Shimp & Andrews, 2014). Likewise, Ray
et al. (1973) stated that high level of involvement among consumers is most likely to occur
when buyers are involved with high priced products or alternative products are highly
differentiated.
On the other hand, Low Involvement Hierarchy (Krugman, 1965) showed two types
of low-involvement consumers namely, the “detached consumer” and the “low-low”
involvement consumer. The detached consumer may display low involvement due to other
works, activities, and external factors when purchasing. While the low-low consumer
displays indifference or no interest with a product, brand, or service at all. Under low
involvement, choices are made without any high regard or consideration of product, brand,
or service awareness. Ray et al. (1973) published paper also adopted the Low Involvement
Hierarchy (Krugman, 1965) wherein it was determined that consumers displaying low
involvement towards purchase decisions. It was also associated with the behavior of brand
choice to inexpensive and low-risk products (Lastovicka & Gardner, 1978).
Three-Orders Hierarchy Model
The hierarchy-of-effects model usually consists of levels that determine or

correlates the experience, activity, and involvement of a consumer upon encountering an
advertisement or marketing campaign (Ray et al., 1973). It is a set of stages that consumers
take when making a purchase that aids in clarifying the objectives of marketers when
making an advertisement (Clow & Baack, 2018). An example of the mentioned model
above is the AIDA model that consists of awareness, interest, desire, and action. Another
example would be the levels of awareness, comprehension, conviction, and action also
exist in a form of hierarchy that is considered as an aid in advertising (Colley, 1961). From
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a psychological perspective, the ABC Model of Attitudes (Ostrom, 1969) consists of
affective, behavioral/ conative, and cognitive components. It represents the opinion and
views of a consumer towards a product, brand, or service (Solomon, 2008). It coexists
with the hierarchy-of-effects that are set of stages that leads to the involvement of purchase
(Lavidge & Steiner, 1961).
There are different variants of hierarchy classifications but all these boils down to
the three major components namely cognitive, affective, and conative or also known as the
Three-Orders Hierarchy Model (Ray, 1973). The hierarchy-of-effects is the output of these
three components that are working together (Novack, 2010). The three components are
considered as marketing communication message strategies that affect the perception of a
consumer regarding the product, brand, or service (Clow & Baack, 2018). The cognitive
component consists of attention, awareness, comprehension, and learning. Secondly, the
affective component consists of interest, evaluation, attitude, and feelings. And lastly,
intention, behavior, and action are the main components of conative (Hintzman, 1971;
Deese & Kintsch, 1970; Greeno & Bjork, 1973). Cognitive, affective, and conative indeed
react to marketing communications (Ray et al., 1973).
A supported study is interested in this concept wherein cognitive, affective, and

conative were part of the communication message strategies that are aligned to the nature
and character of a specific need of a consumer that bridges the gap of what kind of message
does the marketers want to convey and the consumers chose to be involved (Laskey et al.,
1989; Taylor, 1999).
Purchasing Involvement
Psychologists defined “involvement” as an interpersonal state motivated by

activated attitude and some factors of self-concept (Johnson & Eagly, 1989). From the
marketing perspective, consumer involvement is interpreted as the motivation in
processing product, brand, or service-related information by the consumer itself (Solomon,
2008). Sherif & Cantril (1947) described the term “involvement” which includes activities,
objects, ideas, and social issues wherein purchasing, as an example of activity, is something
that people would become involved in. Likewise, Slama & Tashchian (1985) identified
purchase involvement as the effect of the consumer’s psychological self-relevance that is
present during the activity of purchase.
Involvement with a product, brand, or service normally influences attitudes and

behaviors that precede it. This ideology is supported by numerous research concepts and
empirical works in both marketing and psychology. There are three factors that influence
searching behavior (Clow& Baack, 2018). This includes involvement, need for cognition,
and enthusiasm for shopping. Hence, it is expected that consumers' involvement with
purchasing can influence the attitudes and behaviors associated with purchasing (Arora,
1982; Belk, 1982; Bloch, 1982; Bowen & Chaffee, 1974; Clarke & Belk, 1979; Debruicker,
1979; Harrel, 1979; Lastovicka & Gardner, 1978; Petty & Cacioppo, 1981; Ray, 1973;
Robertson, 1976; Sereno, 1968; Swinyard & Coney, 1978; Tyebjee, 1979). Slama &
Tashchian (1985) indicated that thereis an interesting area that supports the interaction
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between product, brand, orservice and purchasing involvement. These studies (Clarke &
Belk, 1979; Slama & Tashchian, 1985) indicated that as the consumer’s involvement with
a product, brand, or service increases, the influence on purchase involvement is affected.
A consumer’s involvement plays an important role in marketing (Kotler & Keller, 2011).
A consumer's high and low level of involvement towards a product, brand, or service is an
occurrence wherein the buying behavior is influenced by the hierarchy-of-effects (Ray et al., 1973;
Krugman, 1965). The hierarchy-of-effects model consists of steps that a consumer moves through
when making a purchase (Clow & Baack, 2018). It outlines six steps that start with awareness,
knowledge, liking, preference, and conviction, that lead to purchase involvement (Lavidge &
Steiner, 1961). This makes purchase involvement dependent on a consumer’s level of involvement.
Therefore, making the consumer’s level of involvement the independent variable (IV) and
purchase involvement the dependent variable (DV).
Going back to the hierarchy-of-effects model, it was narrowed the model into three major
components namely cognitive, affective, and conative, otherwise known as the Three-Orders
Hierarchy Model (Ray et al., 1973). It showed the significance between the Three-Orders
Hierarchy Model and the Consumer Involvement Hierarchies. High involvement starts with a
cognitive → affective → conative order or the “learn-feel-do” terminology, while low
involvement goes with a cognitive → conative → affective order or the “learn-do-feel”
terminology (Ray et al., 1973; Raymond, 1976). Therefore, this model states the contributing role
of cognitive, affective, and conative to both high and low levels of consumer involvement. As
Krugman (1965) study suggests that there is a unique connection between consumer involvement
hierarchies and purchase involvement, it is part of the limitations of this research study. Therefore,
as identified, cognitive, affective, and conative as the moderating variable (MV) between a
consumer’s level of involvement (IV) and purchase involvement (DV).
Figure 1
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Advertisements are marketing communication efforts that are classified as either
informational or emotional depending on how marketers want the product, brand, or service be
presented (Laskey et al., 1989). Informational advertisements use a direct form or cognitive
structure of messages while emotional advertisements use affective approach to present
information about a brand (Deighton et al., 1990). Advertisements in a form of affective approach
tend to have an effect on consumers in initiating effective reactions that lead to interaction between
the message and the product, brand, or service (Schwebach, 1994). Affective approach in
advertisements generates effective reaction regarding consumers’ attitude towards a brand (Murry
et al., 1992). This context has been taken into further research by Goldberg and Gorn (1987)
wherein it resulted in a positive effect on consumers’ reactions. High level of affectivity in
advertisements significantly relates to a consumer’s high level of involvement towards product,
brand, or service (Asadollahi et al., 2011). Likewise, a consumer with a high level of involvement
would look for a more emotional and relatable conflict of ideas in advertisements than consumers
with a low level of involvement (Krugman, 1965). With the information outsourced from different
studies, the researchers presume the following hypotheses:
H1: A consumer’s high level of involvement significantly influences affective message strategies
in marketing.
H2: A consumer’s low level of involvement could significantly influence affective message
strategies in marketing.
The use of the conative strategies in advertising seeks an immediate response from a
consumer, while the cognitive strategies use rational arguments or relevant and credible pieces of
information in advertising (Clow & Baack, 2018). According to Asadollahi et al. (2011), it is better
to use strategies that present immediate responses (conative) from consumers than informative or
rational approach (cognitive) when targeting the cooperation of consumers with a high level of
involvement. Also, according to the study of Krugman (1965), it was difficult to find consumers
with a low level of involvement that displays a higher and faster rate of progression in response to
the effectivity of either affective or conative approach in advertising than using a cognitive
approach. Media planners as stated by Ray et al. (1973) are advised to develop communication
strategies that have a significant return from different kind of consumers that has different levels
of involvement. Hence, the generation of the hypotheses below:
H3: A consumer’s high level of involvement significantly influences conative message strategies
in marketing.
H4: A consumer’s low level of involvement could significantly influence conative message
H5: A consumer’s high level of involvement significantly influences cognitive message strategies
in marketing.
H6: A consumer’s low level of involvement could significantly influence cognitive message
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Consumer involvement is manifested in different forms of affective, cognitive, and
conative responses with a product, brand, or service (Hollebeek et al., 2014). They are considered
as marketing communication message strategies that are generated from the hierarchy-of-effects
wherein the consumer displays progression through a set of stages that leads to the purchase of a
product, brand, or service (Clow & Baack, 2018). Purchasing involvement was defined as the
measurement of self-relevance of a consumer during purchasing activities that can influence the
decision-buying process that leads to purchase (Slama & Tashchian, 1985). Likewise, Sherif &
Cantril (1947) described the term involvement in marketing as something that a consumer would
become involved in purchasing. Both the decision-buying process and the hierarchy-of-effects
lead to the involvement of purchase. According to Krugman (1965), consumers display lower
participation in purchase involvement towards a product, brand, or service that uses affective
strategies in advertisements. Also, measurements in the response of a consumer towards purchase
involvement displayed steady progression on both cognitive and conative, but a lesser rate on
affective (Ray et al., 1973). However, Han et al. (2011) concluded that using cognitive and
affective strategies in presenting advertisements are more likely to encourage purchase
involvement among consumers. As well as Hwang et al. (2011) concluded that both cognitive and
affective message strategies indirectly encourage purchase involvements, but the influence of
cognitive is highly evident than affective. Hence, the generation of the hypotheses below:
H7: Affective message strategies in marketing will significantly influence the purchase
involvement of a consumer.
H8: Conative message strategies in marketing will significantly influence the purchase
H9: Cognitive message strategies in marketing will significantly influence the purchase
Methodology
The researchers used the following statistical tools to interpret the data that were collected
from the primary data - Survey. This tool aims to help the study answer the given hypothesis in
pursuit of determining the factors that affect the purchase involvement of consumers. The actual
results generated by these statistical tools are shown and explained in the discussion of results.
Factor Analysis was used by the researchers to properly align and group the questions to
generate a meaningful insight in explaining its relationship to the dependent variable. This analysis
was used to validate the scale construction, in such a way that the dimensions of the questionnaire
are specified upfront. Due to its statistical significance in nature, it is also referred to as
confirmatory factor analysis.
Cronbach’s alpha measures the internal consistency of the designed survey, and how the
questions are related as a group. It was considered as a measure of scale reliability. The respondents
were asked to answer the questionnaire at their convenient time within a specific deadline in order
to manage inconsistency that may cause outlying results. The list of the class was encoded to
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Microsoft Excel and generated through Cronbach alpha SPSS. A total of one hundred (100)
surveys were selected to perform the analysis.
The last statistical tool that was used is Regression Analysis, this tool was used to better
understand the significance of the data with each other. The researchers will be needing to look at
the significance of the independent variables to message strategies, and likewise, the significance
of the message strategies to the dependent variable in order to answer whether the designed
hypotheses are acceptable or not.
Factor Analysis
The first part of the data analysis was to check the internal reliability of results between
Purchasing Involvement and the Three-Orders Hierarchy Model in order to determine the
credibility of findings from the study. Purchasing Involvement Scale (Slama & Taschian, 1985)
are multiple-item measures made up of 6-point Likert-type items strongly disagree (1) to strongly
agree (6). The items are summed to form an overall purchasing involvement score. In other words,
reliability checks whether or not respondents’ scores on any one indicator tend to be related to
their scores on the other indicators (Bryman & Bell, 2007).
The results of the factor analysis conducted in order to determine the appropriate groups
for the survey questions with the required factor loading of at least ± 0.40. Based on the table,
items 39, 38, 13, 36, 28, 25, 12, 34, 18, 31, 42, 15, and 21 are grouped as factor 1 and will be
named as Affective. Items 17, 16, 43, 22, and 24 are grouped as factor 2 and will be named as
Conative. Lastly, items. 33, 41, 29, 40, 14, 20, 19, and 37 are grouped as factor 3 and will be named
as Cognitive.
Table 1
Cronbach Alpha Test
Factors Cronbach Alpha
Affective 0.8709
Conative 0.7558
Cognitive 0.6941
Table 1 shows the Cronbach alpha test in order to assess the reliability of questions within
the group with a required value of at least 0.60. Based on the table, Affective, Conative, and
Cognitive have Cronbach alpha values of 0.8709, 0.7558, and 0.6941 respectively which means
that reliability of items on those factors are acceptable.
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Table 2
Model Summary for Affective, Conative, and Cognitive
Affective Conative Cognitive
R 0.468 0.494 0.623
R-square 0.219 0.244 0.388
F-value 13.596 15.631 30.797
p-value 0.000 0.000 0.000
Table 2 shows the model summary for the regression model of Affective with predictors
as low and high involvement. Based on the table, R has a value of 0.468 and interpreted as a
moderate relationship. R-square has a value of 0.219 thus it can be concluded that 21.9% of
Affective is explained by low and high involvement. Moreover, F-value = 13.596 with a p-value
of 0.000 and since the p-value is less than the significance level of 0.05, therefore the predictors
are significantly related to Affective.
Table 2 shows the model summary for the regression model of Conative with predictors as
low and high involvement. Based on the table, R has a value of 0.494 and interpreted as moderate
relationship. R-square has a value of 0.244 thus it can be concluded that 24.4% of Behavioral is
explained by low and high involvement. Moreover, F-value = 15.631 with a p-value of 0.000 and
since the p-value is less than the significance level of 0.05, therefore the predictors are significantly
related to Conative.
Table 2 shows the model summary of Cognitive with predictors as low and high
involvement. Based on the table, R has a value of 0.623 and interpreted as strong relationship. R-
square has a value of 0.388 thus it can be concluded that 38.8% of Cognitive is explained by low
and high involvement. Moreover, F-value = 30.797 with p-value of 0.000 and since the p-value is
less than the significance level of 0.05, therefore the predictors are significantly related to
Cognitive.
Table 3
Regression Analysis
Unstandardized Coefficients
t Sig.
B Std. Error
(Constant) 1.640 0.401 4.092 0.000
Affective High Involvement 0.082 0.064 1.265 0.209
Low Involvement 0.309 0.059 5.215 0.000
(Constant) 1.854 0.474 3.912 0.000
Conative High Involvement -0.068 0.076 -0.896 0.372
Low Involvement 0.361 0.070 5.151 0.000
(Constant) 3.346 0.259 12.903 0.000
Cognitive High Involvement 0.277 0.042 6.644 0.000
Low Involvement -0.095 0.038 -2.490 0.014
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Table 3 shows the regression analysis for Affective with predictors as low and high
involvement. Based on the table, high involvement has a t-value = 1.265 with a p-value of 0.209.
Since the p-value is greater than the significance level of 0.05, the researchers will not reject H1
and conclude that high involvement has influence on Affective but not to a significant extent. On
the other hand, low involvement has a t-value = 5.215 with p-value of 0.000. Since p-value is less
than the significance level of 0.05, the researchers therefore reject H2 and conclude that low
involvement has a significant influence on Affective. Also, Beta coefficient = 0.309 thus for every
one-unit increase on low involvement, there is a 0.309 significant increase in Affective.
Table 3 shows the regression analysis for Conative with predictors as low and high
involvement. Based on the table, high involvement has a t-value = -0.896 with a p-value of 0.372.
Since the p-value is greater than the significance level of 0.05, the researchers will not reject H3
and conclude that high involvement has influence on Conative but not on a significant extent. On
the other hand, low involvement has a t-value = 5.151 with a p-value of 0.000. Since p-value is
less than the significance level of 0.05, the researchers reject H4 and conclude that low
involvement has a significant influence on Conative. Also, Beta coefficient = 0.361 thus for every
one-unit increase on low involvement, there is a 0.361 significant increase in Conative.
Table 3 shows the regression analysis for Cognitive with predictors as low and high
involvement. Based on the table, high involvement has a t-value = 6.644 with a p-value of 0.000.
Since the p-value is less than the significance level of 0.05, the researchers rejects H5 and conclude
that high involvement has a significant influence on Cognitive. Also, Beta coefficient = 0.277 thus
for every one-unit increase on high involvement, there is a 0.277 significant increase on Cognitive.
Furthermore, low involvement has a t-value = -2.490 with a p-value of 0.014. Since the p-value is
less than the significance level of 0.05, the researchers rejects H6 and conclude that low
involvement has a significant influence on Cognitive. Also, Beta coefficient = -0.095 thus for every
one-unit increase on low involvement, there is a 0.095 significant decrease on Cognitive.
Table 4
Model Summary for Purchase Involvement
R 0.506
R-square 0.256
F-value 11.011
p-value 0.000
Table 4 shows the model summary for the regression model of Purchase Involvement with
predictors as Affective, Conative, and Cognitive. Based on the table, R has a value of 0.506 and
interpreted as a moderate relationship. Also, R-square has a value of 0.256 thus it can be concluded
that 25.6% of purchase involvement is explained by Affective, Conative, and Cognitive. Moreover,
F-value = 11.011 with a p-value of 0.000 and since the p-value is less than the significance level
of 0.05, therefore the predictors are significantly related to Purchase Involvement
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Table 5
Regression Analysis for Purchase Involvement
Unstandardized
Model Coefficients t Sig.
B Std. Error
1 (Constant) 1.645 0.707 2.327 0.022
Affective 0.017 0.115 0.149 0.882
Conative -0.068 0.101 -0.673 0.503
Cognitive 0.714 0.141 5.076 0.000
Table 5 shows the regression analysis for Purchase Involvement with predictors as
Affective, Conative, and Cognitive.
Based on the table, Affective has a t-value = 0.149 with a p-value of 0.882. Since the p-
value is greater than the significance level of 0.05, the researchers will not reject H7 and conclude
that Affective has influence on purchase involvement but not to a significant extent.
Conative has a t-value = -0.673 with a p-value of 0.503. Since the p-value is greater than
the significance level of 0.05, the researchers will not reject H8 and conclude that Conative has
influence on purchase involvement but not to a significant extent. In addition, Beta coefficient = -
0.068 thus for every one-unit increase on Conative, there is a -0.068 decrease on Purchase
Involvement.
Lastly, Cognitive has a t-value = 5.076 with a p-value of 0.000. Since the p-value is less
than the significance level of 0.05, the researchers therefore rejects H9 and conclude that Cognitive
has a significant influence to purchase involvement. Also, Beta coefficient = 0.714 thus for every
one-unit increase on Cognitive, there is a 0.714 significant increase on Purchase Involvement.
Conclusions
This study showed the reliability of Three-Orders Hierarchy with Purchase Involvement
scale and was determined as acceptable. To be qualified as acceptable, the alpha value should have
at least 0.60. The most acceptable factor was the Affective with an alpha value of 0.8709 followed
by Conative at α = 0.7558, then Cognitive at α = 0.6941. Likewise, the researchers also determined
the significant relationship of Three-Orders Hierarchy as predictors to Consumer Involvement
Hierarchies which all rendered a value of p = 0.000; hence, all three components of Three-Orders
Hierarchy Model are significant to Consumer Involvement Hierarchies.
In this research, Three-Orders Hierarchy Model was significant to both consumers with
high and low level of involvement. On consumers with high level of involvement, cognitive was
the most significant followed by affective then conative, with their respective p values of 0.000,
0.209, and 0.372. This concludes that consumers with a high level of involvement prefer a
cognitive approach when it comes to marketing campaigns.
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On consumers with low level of involvement, both affective and conative were the most
significant followed by cognitive, with their respective p values of 0.000, 0.000, and 0.014. This
concludes that consumers with a low level of involvement prefer affective and conative approach
when it comes to marketing campaigns.
However, in finding the significance of Three-Orders Hierarchy Model with Purchase

Involvement, not all are significant. Conative message strategies to purchase involvement the β =
-0.068 was concluded, making conative message strategies inversely proportional to purchase
involvement. In other words, as the application of conative strategies increases, the purchase
involvement decreases by 0.068. On the other hand, affective was also a significant variable with
a p = 0.882 but not to a significant extent. Lastly, cognitive was concluded to be the only variable
that can influence purchase involvement to a significant extent. It had a β = 0.714 and a p = 0.000
making it the most significant component to purchase involvement having a proportional
relationship.
Upon deliberating the three components, the researchers concluded that Cognitive Message
Strategy is the only significant factor in both Consumer Involvement and Purchase Involvement.
Going back to the relationship of cognitive to low involvement, it garnered a β = -0.095 with a p
= 0.014, while in cognitive to high involvement, it garnered a β = 0.277 with a p = 0.000. It shows
that consumers' low and high involvement are inversely proportional to one another. This means
that as high involvement increases, low involvement decreases, or vice versa.
Summarizing all conclusion, if low involvement decreases, high involvement, cognitive

message strategies, and purchase involvement increases. As part of the researchers’
recommendation, marketers should implement a cognitive approach in implementing a marketing
campaign wherein the rate of low involvement decreases so that the rate of high involvement and
purchase involvement increases.
Limitations and Recommendations for future research
Limitations
This research does not state nor identify the level of involvement of the respondents
to avoid bias in the derived conclusions. It indeed determined the reliability of the questions
from the Purchase Involvement Scale to both Consumer Involvement Hierarchies and
Three-Orders Hierarchy Model, but it is solely limited to determining the relationship of
Consumer Involvement Hierarchies to Three-Orders model, and Three-Orders Model to
Purchase Involvement.
This research is concentrated on Filipino salon customers residing in the National

Capital Region (NCR) that belonged to the age group of around 18 to 59 yrs. old. A total
of 100 respondents were asked to participate in this research wherein the researchers were
able to identify the following limitations such as respondents may spend insufficient
attention and time on the survey and may not fully understand or comprehend the survey
questions. While researchers on the other hand may gather a small sample size to conclude
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a valid research result and had limited time to gather information and more relevant data
and articles to support the study.
The questionnaire has been drafted according to the needs of the study to analyze
the purchasing objectives and behavior of the respondents. It was designed after the
Purchasing Involvement Scale (Slama & Tashchian, 1985) that aims to determine how self-
relevance in the event of purchase activity, affects consumer decision processes in availing
services under beauty & personal wellness services. The research study assumes the
accuracy and attainment of 100 surveys and FGD composed of 2 groups with 5 participants
each provided limited time. The research study engaged respondents to participate under
voluntary and comfortable conditions to complete the survey.
Lastly, the data were collected through journal articles, online articles, books, e-
books, surveys, interviews, or focus group discussions (FGD), and other sources that were
presumed to be accurate information and basis for research.
Recommendations for future research
In this research, three theoretical frameworks were combined. This paper can
benefit researchers who want to study on how to implement marketing campaigns that
would yield an effect to purchase involvement primarily in the industry of beauty &
personal wellness services. This paper has gathered data and provided analysis about the
relationship of consumers' level of involvement in marketing communication message
strategies that can affect purchase involvement. It states the behavior and effectivity of
each variable that stated on how consumers perceive promotional tools as a contributing
factor in availing services even during fortuitous events like COVID-19. However, it did
not directly measure the relationship between the consumers’ level of involvement and
purchase involvement. Future research can be done between the two to further give a
refined idea on the behavior of consumers towards purchase involvement, making Three-
Orders Hierarchy Model as the mediating variable to further define the relationship
between high and low levels of consumers’ involvement and purchase involvement.
Another area would be determining the relationship of each component in the Three-Orders
Hierarchy Model.
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Understanding the Impact of the Credibility of Filipino Celebrity
Endorsers on the Intention of the Filipino Millennial to Donate to
and/or Volunteer with Nonprofit Organizations in the Philippines
8th NBMC Paper #6
Alonzo, Julienne Jay; Chamorro, Mary Joyce; Esquierdo, Joey;

Inolino, Lystria Felin; Lopez, Valerie Ann
[email protected], [email protected],
[email protected], [email protected], [email protected]
Abstract
Existing studies results showed that the use of celebrities in advertising has proved to be a highly
successful strategy in capturing the interests of consumers, as well as in achieving brand loyalty,
especially in an incredibly competitive and complicated market (Zipporah & Mberia, 2014).
Furthermore, previous literature has shown that the above-mentioned method can provide a brand
with a return rate of more than 20 times its expense, highlighting the attractiveness of utilizing
celebrity endorsement as an advertising strategy (Hung, 2014). Despite comprehensive literatures
on the effectiveness of the use of celebrity endorser in advertising, relatively limited research has
examined the effectiveness of celebrity endorsement in a nonprofit organization context. In this
study, the researchers presented and tested a conceptual framework that aimed to determine
whether Ohanian’s (1990) attributes of a credible source– Attractiveness, Trustworthiness and
Expertise, affect the Attitude, Subjective Norm, Perceived Behavioral Control and Intention of an
individual to donate to and/or volunteer to nonprofit organizations. Data collection was carried out
through the distribution of an online survey by all members of the group to a group of consumers
living in the Philippines (N=187). Data collected and filtered was analyzed through a statistical
tool, SmartPLS software, using Partial Least Squares-Structural Equation Modeling (PLS-SEM),
for the relationship, reliability, validity, and significance of the constructs. The findings of this
research confirmed that when an individual finds a celebrity endorser Attractive, Trustworthy and
as an Expert, it will have significant relationships with his/her Attitude, Subjective Norm and
Perceived Behavioral Control that directly affects his/her Intention to donate to and/or volunteer
with nonprofit organizations. The researchers recommend the execution of an Integrated
Marketing Communications Plan that focuses on educating the market about Make-A-Wish
Foundation through the use of a Celebrity endorser to boost awareness and convert them to
granting wishes. Make-a-wish Philippines is an affiliate of Make-a-wish Foundation USA, the first
and only non-profit wish-granting organization in the country. We are an affiliate of Make-A-Wish
Foundation® International, the world’s largest and most respected wish-granting organization.
Keywords: celebrity endorsers, nonprofit organizations, source credibility, Filipino millennial,

intention to donate and/or volunteer, brand awareness
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Mindfulness and Moral Identity: Inroads Towards Ethical Decision Making
8th NBMC Paper #7
Miguel Paolo L. Paredes

[email protected]
Introduction
Individuals constantly live their lives through their decisions, actions, and subsequent
outcomes. These are based on many factors such as one’s image of self and his processing of the
world around him. This, in a nutshell is how people make ethical decision making in their lives.
Of course, this area has been tackled numerous times, with studies set on uncovering the various
constructs, aspects and mechanisms which build up the understanding of this seemingly simple
premise. Taking into account the numerous philosophies of looking at ethics which provide
different modes of looking at ethics itself, the volume of discussion on this matter proves daunting.
Decisions in organizations which stem from shareholders, managers, to the rank and file
and external stakeholders all contribute to actions which either lead to improvement, sustainability,
humanistic outcomes or quite the opposite. At any point of the decision-making process, by any
of these individuals, these decisions prove to have a profound effect on ultimate outcomes.
Corporate ethical failures have continued to rise, with billions of dollars in fines paid by companies
for ethical breaches (Carucci, 2016). Corporate scandals, unethical treatment of the workforce,
negative consequences to the environment or society at large all stem from poor or unethical
decision making. So does absenteeism, stealing, harassment, toxic work cultures and many more
that affect the well-being and basic rights of individuals.
I tackle the understanding of ethical decision making by first pronouncing the importance
of the individual faced with the decision. Notwithstanding the various external aspects of an ethical
decision, the lack of awareness of individuals presented with a decision often leads to unethical
choices. It is prudent to explore the processes and aspects which make up an individual’s moral
identity, judgement and subsequent actions.
Awareness which affects our processing of our internal and external environment is a
principal component of the concept of Mindfulness (Brown &Ryan, 2003). It is proposed in this
paper that the fostering of mindfulness, how people’s awareness of his or her current experience
may have a relationship in the cognitive self-schema (moral identity), and the processing of
situations and therefore better equip people to make ethical decisions. Thus said, it is the purpose
of this paper to first identify whether mindfulness and moral identity are correlated by comparing
mindfulness and moral identity scores of individuals.
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Review of Related Literature
The review of related literature will unfold starting with a discussion of ethical decision
making. Specifically, the concept of Moral Identity and it’s place in moral judgement. This will
be followed by the introduction of the concept of mindfulness.
Ethics
Ethical philosophy based on formalism suggests that the individual’s human and
moral will is the driving force in processing ethical beliefs and decisions. This idea is based
on the proposition that human will applies rules based on the point of view of the individual
of universal ethical concepts. This falls under Deontological ethics which owes to a strict
adherence to principles and duties individuals recognize such as Kantian imperatives,
rights, and justice as fairness. Thus said, ethical decision made through the philosophy of
formalism posits that individuals make decisions based on the rightness or morality of the
action, no matter the context or consequences.
In contrast, Consequentialists generally argue that actions that increase overall

“good” are morally right (Kissiah, 2014). This philosophy focuses on the rightness of the
outcomes of individual's actions rather than the actions themselves(Jonsson, 2011).
Deontological ethics, such as that of formalism, focuses on the inherent rightness or
wrongness of our choices and actions. It stresses moral rules of duty and obligation in
guiding proper and just actions. While the two major strands of Ethical philosophies has
differing perspectives, they however share the distinction that whatever philosophical
perspective an individual's reasoning of ethical situations are based on, it will foremost be
based on the personal cognition of the situation and all factors the person may deem
important.
Moral Identity Towards Ethical Decision Making
Rest's model (1986) has served as basis for numerous models seeking to develop
and understand this research area. He proposed a four-component model for individual
decision making and behavior. According to Rest, an individual's processing of reasoning
in relation to ethical issues is initiated by: (1) Moral sensitivity- the interpretation of the
situation in relation to being able to see the rightness of actions from the perspective of
others, (2) Moral Judgement- the ability of the individual to judge which actions would be
right based on his or her personal knowledge of ethical principles, codes of conduct and
other like concepts, (3) Moral Motivation- consideration of likely consequences in relation
to the actions in question, and (4) Moral Character- an individual's sufficient levels of
courage to follow through with his or her intentions (Rest, 1986). Rest's four-component
model is based on a cognitive- development perspective related to ethical decision making
(Vigil, 2008). Moral Identity is a construct which captures commitment to moral principles,
based on a cognitive self-schema of individuals (Hardy, 2010). Moral identity has been
proposed to be a significant driver of moral motivation which leads to better accordance
between an individual's moral principles and actions. (Aquino & Reed, 20012). It has been
presented as a predictor of volunteerism, moral attentiveness and other prosocial behaviors.
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It is argued that moral identity is the best predictor of moral actions and commitments
(Blasi, 1993, cited by Coskun & Kara 2019). Moral identity has likewise been proposed to
have an effect on moral judgement and behavior leading toward ethical decision making
(Reynolds, & Ceranic, 2007). Thus it is prudent to look into this aspect and its part in
ethical decision making, and whether levels of mindfulness traits have a relationship to
levels of moral identity.
This thereby calls our attention to the importance of individual cognition in the ethical
decision-making process. Are individuals with enhanced cognitive traits or abilities better
equipped to make ethical decisions by having higher moral identity?
Figure 1
The Four Components of Ethical Decision Making, Moral Judgement (Rest, 1986)
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Figure 2
The Effect of Moral Identity on Moral Judgement and Moral Behavior
(Reynolds, & Ceranic, 2007)
The Concept of Mindfulness
Decades of medical research has suggested that mindfulness techniques have

resulted in an increase in well-being and a reduction of stress. There has been an increasing
amount of literature regarding mindfulness- over 4,000 scholarly articles (Black, 2015,
Cited by Good et al., 2015). It is evident that mindfulness practice is more or less entering
the mainstream. Kimberly Schaufenbeuel outlines why corporations like Google, Target
and General Mills are investing in openness, reflection and thoughtfulness through
mindfulness meditation. She cites positive benefits on leadership, employees, and on the
bottom line (Schaufenbeuel, 2015). Schaufenbeuel's descriptive study on Target, Green
Mountain Coffee Roasters, Intel, and others proposes that the introduction of mindfulness
to the workplace improves listening and decision -making skills, focus, decreases stress
levels and elevates overall well-being (Schaufenbeuel, 2015). These indicators, suggesting
a relationship in increasing workplace well-being and performance with the practice of
mindfulness by individuals, lead us to next explore the concept of mindfulness itself.
Mindfulness
Mindfulness is a state of awareness in individuals distinguished by enhanced

attention skills, while maintaining a receptive and non-judgmental perspective to internal
and external events (Malinowski & Lim, 2015, Hulsheger et al., 2012). Rich Fernandez,
senior people development lead at Google share that Mindfulness has been seen as a
"practised well-being" wherein calmness, mental clarity, enhanced decision making,
creativity, emotional intelligence and emotional regulation are outcomes of its application
(Rees, 2016). Mindfulness stems from mindfulness meditation, which is a centuries old
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Buddhist mental training method which alleviates suffering while developing compassion,
wisdom, and insight (Silananda, 1990, cited by Janssen, et al., 2018).
Mindfulness involves observing and describing, yet not judging and reacting to
present experiences (Baer et al., 2006, Cited by Geisler et al., 2018). This moment-to
moment awareness of one's experiences without judgement, is considered as a state, and
not a trait (Davis, 2011).While this state may be promoted by certain activities such as
meditation, it should be noted that it should not be mistaken as synonymous (Davis, 2011).
Often associated with traditions, mindfulness has experienced a surge of research activity
across several disciplines including; clinical and counseling psychology, neuroscience,
medicine, and education (Dane, 2013). This interest often revolves around the study of
correlation between mindfulness and psychological and physical well-being (Dane, 2013).
In 1989, Langer and Moldoveanu first introduced mindfulness into the area of
business when they discussed its benefits in managers and workers wherein mindfulness
was associated with increased creativity and decreased burnout. Weick and Roberts, further
pushed the idea of mindfulness in management discourse and literature (Weick & Roberts,
1993, cited by Good et al., 2015). This increasing interest in mindfulness in management
seem to stem from multiple benefits such as positive impact on human functioning and
better workplace functioning- both of potential to the field of management (Good et al.,
2015).
Constructs Related to Mindfulness
In this section, we will discuss most common constructs related to mindfulness,

specifically; organizational mindfulness, mindful organization, and individual
mindfulness. Through the definition of these different concepts, we find contrasts in their
constructs, and ultimately arrive to the mindfulness type of which this study will actively
pursue.
Organizational Mindfulness
In their study of organizational performance which required high reliability in

organizations, Organizational mindfulness has been introduced as a key aspect in
maintaining constant reliability (Weick & Roberts, 1993). In this sense, organizational
mindfulness is defined as "the extent to which an organization captures discriminatory
detail about emerging threats and creates a capability to swiftly act in response to these
details" (Weick et al., 1999; Weick & Sutcliffe, 2001; Weick & Sutcliffe, 2007, cited by
Vogus & Sutcliffe, 2012). Mindfulness in this construct enables organizations to make
reliable decisions in the face of challenges. As this type of mindfulness involves key
decision makers, it's practice is commonly applied to top administrators. Three claims
regarding organizational mindfulness include: (1) it is a top-down process; (2) it creates
context for thinking and action on the front line; and (3) like culture, it is an enduring
property of organization (Ray et al., 1991, cited by Vogus & Sutcliffe, 2012).
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Mindful Organizing
Unlike Organizational mindfulness, wherein the process of mindfulness is

ingrained in the organization’s culture or characteristics, mindful organizing on the other
hand deals with changing processes and situations. In this case, it is more of a dynamic
operation which attend to specific ongoing actions, thus seen as a social process (McPhee
et al., 2006, cited by Vogus & Sutcliffe, 2012). This process is based on extensive real-
time communications between organization members in meetings, collaboration
(Schulman, 1993; Weick et al., 1999, cited by Vogus & Sutcliffe, 2012). This construct
therefore is made up of three claims: (1) it results from a bottom-up process; (2) it enacts
the context for thinking and action on the front line; and (3) it is fragile and needs to be
continuously re-accomplished (Vogus & Sutcliffe, 2012). These two types of mindfulness,
that of organizational mindfulness and mindful organizing trace their roots to Individual
mindfulness. In the proceeding section we focus on this construct and differentiate eastern
and western perspectives.
Individual Mindfulness, State & Trait Mindfulness
Individual mindfulness is largely seen through two perspectives- that of Eastern

and Western persuasions. The often referred to western perspective of mindfulness is
derived from Langer (1989), which posits that mindfulness is a variant of an information-
processing approach (Vogus & Sutcliffe, 2012). Thus stated, it is largely from this
perspective we can derive the notion of mindfulness organizing and organizational
mindfulness- as related in the sense that they form constructs of mindfulness which affect
decision making and social interaction within organizations.
The Eastern perspective of individual mindfulness, on the other hand, is derived

from centuries old Buddhist mental training methods which alleviates suffering while
developing compassion, wisdom, and insight (Silananda, 1990, cited by Janssen et al.,
2018). From this perspective, individual mindfulness is " a receptive attention to awareness
of present events and experience occurring both internally and externally (Brown & Ryan,
2003, cited by Vogus & Sutcliffe, 2012). Individual Mindfulness, while separate from
organizational mindfulness and mindful organization, in itself has different understandings
regarding its' concept and definition. Various literature have referred to individual
mindfulness in different traits, processes, applications, and constructs (Glomb, 2011).
When discussing individual mindfulness, it is often categorized in two separate

perspectives, that of Trait mindfulness and State mindfulness. It has been suggested that
mindfulness levels, or tendencies toward mindfulness vary from person to person. This
implies that people have a trait like tendency towards mindfulness very much like
personality traits (Brown & Ryan, 2003, cited by Glomb, 2011). This Trait mindfulness
though, may be cultivated with training and practice. State mindfulness on the other hand,
refers to the individual moment to moment awareness of one's experience which is distinct
from trait (Davis & Hayes, 2011). State mindfulness therefore, are temporary conditions
which individuals experience after mindful activity.
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The two schools of thought regarding mindfulness, that of Langer (western) and Kabat-
Zinn’s (present-centered mindfulness), while having distinct differences, share that a mindful
individual is engaged in thinking which is more open and engaged, rather than being automatic or
unexamined (Ruedy & Schweitzer, 2010). Mindfulness therefore is hypothesized as to having a
relationship with ethical decision making as the individual is equipped with a trait which gives
him or her a higher level of awareness of self-morals and situations.
H1: Mindfulness levels will have a relationship on levels of Individuals’ Moral Identity
Figure 2
Conceptual Model (Paredes, 2019)
Methodology
This study seeks to serve as a basis for an explorative research to describe whether
levels of mindfulness in individuals are related to levels of moral identity. A self-report
survey will be utilized for a quantitative study. A non-purposive sampling method will be
employed to gather and analyze data. The sampling strategy will be non-probability in
nature, a convenience sampling of at least 100 respondents. It will only be restricted to
people who are currently employed or self-employed, 18 years and above.
Measuring Mindfulness levels in Individuals
Two of the most popular measurement instruments for mindfulness include

Freiburg Mindfulness Inventory and the Mindfulness Attention and Awareness Scale
(Hyland, Lee, & Mills, 2015.) The Mindfulness Attention Awareness Scale (MAAS) was
developed by Kirk Warren Brown and Richard M. Ryan in 2003. It has been regarded as
the most popular scale for measuring mindfulness in positive psychology ("11 Mindfulness
Questionnaires, Scales & Assessments for Measuring", 2017). This scale treats
mindfulness as a trait and has 15 items. It has been found to be psychometrically sound to
recognize those with various degrees of experiences with mindfulness (Hyland, Lee &
Mills, 2015).
The Freiburg Mindfulness inventory, developed by Walach, Buchheld,

Buttenmüller, Kleinknecht, and Schmidt in 2006 focuses more on feelings or beliefs rather
than behavioral aspects (Barajasa & Garrab, 2014). This scale has its limitations as it was
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developed with meditation practitioners and may make it inappropriate for subjects who
do not practice meditation or unaware of mindfulness (Barajasa & Garrab, 2014).
For the purpose of this study, the MAAS was chosen as the primary tool to measure
the level of mindfulness of subjects. This is primarily because it can be administered
briefly, treats mindfulness as a trait and does not require potential subjects to be familiar
with meditation (Barajasa & Garrab, 2014) or mindfulness in general.
Measuring Moral Identity
The Moral Identity Scale developed by Aquino and Reed scores two facets of
morality which is proposed as central to individuals' identities. The first is Internalization
which is more personal as it pertains to the degree of which moral traits are central to self-
concept. The second is Symbolization which a more social aspect of moral identity, as it
focuses on the individual's sense of moral self as a social object whose actions convey to
others that the individual possesses these moral characteristics.
Results and Discussion
Table 1
Mean average scores of Variables Mindfulness Levels
Age Mean SD N Gender Mean SD N
45-49 6.30 NA 1 Male 4.71 1.25 45
55-59 5.90 1.13 2 Female 4.52 0.83 32
50-54 5.00 NA 1
40-44 4.75 1.36 31
25-29 4.61 0.76 8
30-34 4.46 0.59 8
18-24 4.41 0.80 20
60 up 4.20 NA 1
35-39 4.18 1.23 5
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Table 2
Mean average scores of Variables Moral Identity (Internalization)
50-54 7.00 NA 1 Female 6.11 1.06 32
45-49 6.80 NA 1 Male 5.66 1.13 45
30-34 6.55 0.44 8
18-24 6.33 0.70 20
60 up 6.00 NA 1
25-29 5.80 1.33 8
40-44 5.50 1.13 31
55-59 5.30 2.12 2
35-39 4.80 1.39 5
Table 3
Mean average scores of Variables Moral Identity (Symbolization)
60 up 5.80 NA 1 Female 4.33 1.25 32
50-54 4.80 NA 1 Male 4.15 1.43 45
45-49 4.60 NA 1
18-24 4.51 1.26 20
25-29 4.38 1.06 8
40-44 4.21 1.58 31
30-34 4.20 0.85 8
35-30 2.96 1.09 5
55-59 2.80 0.28 2
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Table 4
Test of Relationship
Models Results Interpretation
Mindfulness & Moral Identity r(75)=.19,p=.09 not significant, very weak

(Internalization) association
Mindfulness & Moral Identity r(75)=.24,p=.03 not significant, weak association

(Symbolization)
Discussion
The initial results imply that older respondents exhibit higher levels of mindfulness. This
emulates preceding research which suggest that older adults have a higher degree of emotional
control (Gross et al., 1997), which is a component of mindfulness. Socioemotional theory
(Cartensen et al., 2011) and emotion regulation theory (Diamond & Aspinwall), increased maturity
in individuals become apparent as they become better in coping with their emotions, interpreting
and managing meanings, and overall emotional regulation (Bal & Smit, 2012). The results indicate
that as individuals age, a maturational change occurs which help individuals develop positive ways
of managing their emotions which lead to their being less judgemental about themselves and others
(Alispahic, Hasanbegovic-Anic, 2017).
The concept of Savouring (Sturgess, 2012) is another construct which explains the results
of mindfulness in older individuals. This is because older people have a tendency to savour
moments more, therefore are more mindful (Alispahic, Hasanbegovic-Anic, 2017). This may
generally be true, as people at a certain age are at a different stage in their lives, which most already
have gone through the rat-race, careers and raising families. The less these situations envelop
people, they are left with more opportunities to savour moments.
A seemingly anomalous result which goes against the discussion above regarding
maturation is the result which indicate that individuals aged 35-39 scored lower than their younger
counterparts. A possible explanation of these results may have to do with the tenure curve. The
tenure curve has recently been introduced as a trend in many organizations hoping to understand
employee engagement at different points of tenure (Harris, 2017). The tenure curve suggests that
engagement is U shaped. This means that Mindfulness and Well-being employees are usually at
their highest levels of engagement in the workplace at the less than one year point. This is likely
to be related to the novelty and optimism of a new workplace (Harris, 2017).
This concept of the tenure curve may be adapted in the explanation of lower mindfulness
levels of individuals aged 35-39, and lower scores for 40-45 in relation to the older age ranges.
The tenure curve may be used to metaphorically describe an individual's experiences in the "real
world" of employment, work, and responsibilities. As these new challenges may at first seem novel
to younger people, its novelty wears off when they get older (35-45) as repetition, tasks, and
responsibilities set in.
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Conclusion
As of this study, there is no significant correlation between Mindfulness levels in

individuals and their Internalization Moral Identity, as well as Symbolization Moral Identity. This
may be because the concept of Moral Identity is foremost based on the cognitive self-schema of
the individual of his or her moral characteristics, removed from external situations which involves
awareness of one's environment. As the test of moral identity generally focused on one's
understanding of self, the factor of awareness, inherent in mindfulness was not strongly
represented.
High levels of mindfulness may have implications of how individuals have a better self-
cognition of their moral identity, thus providing more dependable results when responding to the
measurement tools. Mindfulness entails a person to be honest about oneself and to others. Honesty
and mindfulness infallibly arise together (Thien & Tu, 2019). This may help guide strategies in
future research in regards to the dependability of respondent responses. This may have some
implication for strategies in terms of sampling in further studies.
As a preliminary explorative study of the implications of mindfulness to ethical decision

making, the results do have some value in building up strategies for the next step of the study
which will involve moral judgement. Moral judgement includes the individual's processing of
external information aside from his understanding of his own moral identity. This will be the next
step in understanding whether mindfulness will play a part towards making inroads to ethical
decision making.
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Collaborative Action Research: Developing the Recruitment Process
for POWER LINK CENTER for Advanced Skills Development Inc.
8th NBMC Paper #8
Rayan Dui
[email protected]
Abstract
In this action research, I and my collaborators focused on addressing the issue on the lack of a
framework for the recruitment and selection process of their employees for a particular Maritime
training center to which we, HR head, Training Manager, Marketing officers, and the Vice-
President have collaboratively identified. The Manifestation on the lack of this recruitment process
included the feedback from the different employees of the company. Currently there are no clear
guidelines on how the company selects their employees since most of them were simply hired
based on referral by people or the owners of the company. This collaborative action research will
help Power Link come up with a structure in recruiting and selecting the best personnel for a
particular job opening for their planned expansion in the near future. I believe that this activity of
doing an action research brought a lot of positives to me in such that I became a better
communicator, it enhanced my relationship with my colleagues in the organization, and it also
strengthen my relationship with God especially in those instances where we experienced some
resistance to change from the top management with regards to our planned interventions.
Keywords: Action Research, Recruitment, Selection, Collaborative
Introduction
Purpose and Rationale
Power Link Center for Advanced Technical Skills Development Inc. vision is to be
the leading provider of quality training for the development of competent land-based or
sea-based skilled workers who will be the prime contributors to the progress of the nation
and humanity. Our training center may only add a new course if the International Maritime
Organization (IMO) releases a new requirement for a new course or a foreign principal will
ask us to develop a customized training course for their crew.
In August 3, 2015, I started to work with the company as Senior Marketing

Executive. I brought along almost 15 years of experience working for several Maritime
training centers particularly assigned to handle their marketing function. I am normally
responsible in establishing the marketing mixed strategies which includes preparing the
sales target for the team. I am also in charge of gathering client’s needs and requirements
and comes up with recommended training programs for the foreign principal’s
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requirement. Lastly, I am also I responsible in ensuring that client satisfaction in terms of
the result of our training for their seafarers in manifested by their performance when they
work on board the vessels of their foreign principals.
It was in the first quarter of year 2018 when our training center started to
inconsistently hit our sales target. According to our Head Registrar, this might be attributed
to the decrease of seafarers enrolling at our company. Human resource is one if not the
most vital element in an organization. This is why in recent years more and more efforts
and strategies are implemented to further the development of the workforce. Companies
believe that employees drive bottom line results. Thus, management has to ensure that
employees have the right skills and capabilities for them to be able to contribute in
achieving said results. For a lot of organizations, there are a lot of work positions that need
to be filled out by potential job seekers and choosing the right person to do those tasks can
be one of the challenging tasks of the HR function. “It's Not the How or the What but the
Who” (Harvard Business Review Press, 2014) Times have changed where business
environment have become more complex and hyper competitive thus requiring people and
leaders to be more competent and skilled to reach success for their organization. There are
many studies done globally about recruitment and selection process and is currently being
utilized for employee and cost/financial benefits.
As more organizations at present become increasingly competitive, the task of

searching for the best personnel becomes more challenging that results to a more daunting
tasks for the HR function. Skills are evolving and management must be more selective in
choosing. Not being able to recruit the best personnel for the job may result to long-term
negative effects such that it may result to more training and development costs, low morale
of the employee, high turn-over rate, and failure of the organization to attain its goals and
objectives. Hill (2005 as cited by Ullah, 2010) “emphasizes the selection of good
employees for MNCs who not only have the skills required to perform particular jobs but
also ‘fit’ the prevailing culture of the firm” (p.106). What is important for these
organization is that they are able to recruit and select people who are capable of adhering
to their core values and contributing the realization of their mission statement.
During that time, I also observed that some of the employees are not able to perform
their job appropriately. After the marketing group is able to find potential seafarers who
will be enrolling at Power Link, the registration group will be accepting them for
enrollment to the different maritime courses. Their activities include informing the
seafarers about the schedules, room assignment, information about house rule of the
company, and lastly, the amount that they have to pay to the cashier. In one of my
conversation with our cashier when I was asking why there seems to be few enrollees for
the past few weeks, she said, “Sir kasi naman yung mga registrar natin minsan mali mali
ang nailalagay na information sa enrollment form ng seafarer natin kaya marami sa
mga enrollees natin ang nagrereklamo na mali mali ang mga room assignments nila or
yung schedule ng training nila”.
In one of our monthly meeting with the Top management this year, the same
situation was reported particularly by the accounting group. They presented to all of us
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how our sales and net income is starting to show a downward drift. At that particular time,
I saw the face of our President frowning over the financial statements he was holding. Our
Vice President who is currently the Operations head blurted the following statements,
“Saan ba nangagaling ang problema? Marketing pinuuntahan nyo pa ba ng mga
kliyente nyo? Baka naman hindi na kayo nagmamarket? For which I decided being the
head of the marketing group to defend, “Maám halos araw araw po lumalabas ang mga
marketing officer natin. Meron po silang daily performance report na pinapapirmahan
nila sa kliyente nila bilang patunay na pinuntahan at binisita nila ang mga ito.”
At this point, the head of our registrar tried to join the discussion by saying, “Maám
kami po ang kaharap lagi ng mga seafarers na nageenroll before and pagkatapos ng
training. Marami po kaming natatanggap na complaints sa kanila na wala daw sila
natutunan sa mga instructors natin”. This was immediately seconded by one of our
Marketing officers who said, “Maám totoo po yan. Yung isa ko pong client nagsabi na di
muna sila magpapadala kasi nagsusumbong yung mga tao nila na wala daw sila
masyado natutunan sa training nila. Ayusin nyo yung pagtrain sa mga seafarers namin
kasi nagbabayad naman kami”. There was an awkward silence after that which was
followed by a lot of question and answer until we were through with the meeting.
Based from what I observed with regards to the performance of activities of several
employees of the organization, it seems that some of them are not knowledgeable in
performing their tasks or it seems that they are uninterested in what they are doing. At one
point, during one time that I was at the office attending to some matters, I notice how
quickly one instructor dismissed his class. If the MARINA finds out that we are being
negligent and we are not following the proper way to train these seafarers, they can easily
revoke our license to operate and in an instant our company may close down.
One time, I had a random casual interview with one of our seafarers who came to
claim his certificate. Upon completion of their training program, they need to claim their
certificates so that they are able to file it to the appropriate government agency. I ask him
how was his experience with his training at Power Link? I was surprise when he told me
that people from the registration department where nice but some of them are not
knowledgeable in what they are doing. Even the instructors were nice but the problem is
that it seems that they are not satisfied with what they paid to the company particularly in
terms of knowledge gained.
I then discussed all this information that I have gathered to our Vice President of
Operations who was a marketing officer like me before. She knows how frustrating on our
part when our clients tell us that we are negligent of our responsibility to their seafarers
particularly in the area of registration and training. Many of the marketing officers were
left wondering why many of their clients have stopped sending their seafarers for training.
Upon consulting with her, she decided to set an appointment with the head of HR to
pinpoint the root cause of the problem. After meeting, they both agree that there is a need
to re assess the recruitment process and that it was necessary to develop a framework for
the selection of future Power Link employees.
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From there, we collaboratively agreed that our issue was the lack of specific HR
guidelines in recruiting possible candidates for a specific position. Through this action
research, we aim to ensure that we consistently provide the seafarers who enrolled at
Power Link with the best experience in maritime training in accordance with the
requirements of the International Maritime Organization (IMO). It is for this reason
why the company decided to come up with a framework for the recruitment and selection
of future Power Link employees. Most manning and shipping agencies want to make sure
that their seafarers are well-trained and properly taken care of and the only way to prove
them this is through their own evaluation of their seafarers they sent for training with the
company. This Collaborative Action Research hopefully will jump start the company in
developing the appropriate HR policies that will result to an improved recruitment and
selection process of the company’s future employees. According to Shani and Pasmore
(1985: 439 as cited by Coghlan, 2006) “Action research may be defined as an emergent
inquiry process in which applied behavioral science knowledge is integrated with existing
organizational knowledge and applied to solve real organizational problems” (Coghlan,
p.294). This process can be done through collaboration among the employees, owners, and
other members of the organization. This process also tries to bring the best out of the
members of the organization as they are empowered to contribute and use their own
knowledge in trying to address the issues within their company.
Context
Background of the Company

The Philippines continues to be the largest supplier of seafarers in the global labor
market, both for the officers and ratings. According to the Seafarers International Research
Center (SIRC), various challenges as well as opportunities are offered for the Philippine
seafarers. Filipino seafarers are widely recognized for their industry for their dedication,
adaptability, and reliability (Amante, 2014). It is projected that the leading position of
Filipino seafarers in the global labor market will be maintained in the short to medium
term, ensuring general stability in this market. Presently, as countries in the European
Union face a shortage of officers, there are expectations that Filipino seafarers will fill the
gap.
In the Philippines, the Maritime Industry Authority (MARINA) is the Government

agency responsible to overlook for the welfare of the over-all Maritime industry. With
regards to the Maritime training sector, it was assigned to implement the different programs
and model courses as required by the IMO. But since there is a growing market for the
Filipino seafarers, the MARINA is so small that they cannot handle all of these seafarers.
This started the creation of the Maritime training centers whose main objective is to help
MARINA train the seafarers based on the model courses of the IMO. Before these training
centers are duly accredited by MARINA, they have to show evidence that they are capable
of providing these training through the competency of their instructors, employees, and the
applicability of their facilities. They also have to follow the rules and guidelines of
MARINA in the implementation of these courses.
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Power Link Center heeded the call and put up a training center that will cater to
Filipino seafarers. A training that will afford them the best and following the recently
revised STCW’95 amendments. Not one to rest on its laurels, Power Link made use of its
recognition as a World class training by expanding and offering more courses with
corresponding well qualified trainers and instructors in its roster. Power Link represents a
vital element in the chain of associated bodies related by common principles in the skills
training industry. Power Link is a TESDA-accredited training and assessment center and
ISO certified company dedicated in providing competitive training, skills development,
and assessment for various TESDA NC programs. The content of the courses of Power
Link comprehends something that can help the seafarers attain both their short-term and
long-term goals such as being hired by a manning agency to being promoted to the highest
rank possible for a position.
Researcher’s Relative Position in the Situation
In the existing organizational structure, I am the current Marketing head in charge

of all marketing and sales related activities. I am normally responsible in establishing the
marketing mixed strategies which includes preparing the sales target for the team. I am also
in charge of gathering client’s needs and requirements and comes up with recommended
training programs for the foreign principal’s requirement. Lastly, I consolidate and analyze
client’s issues and concerns and recommends appropriate interventions. I directly report to
the president and vice-president of Power Link which is the reason why I am able to
communicate easily with the owners of the firm.
Significance of the Action Research
Personal and Professional Development
Action research was able to help me understand the key issues that our organization
is currently experiencing. It helps me be familiarized with the different tools that I can use
to pinpoint the main issue and how our company can develop and design a concrete plan
in addressing the problem. And through this action research, I was able to strengthen my
relationship with the owners of the firm and it further improved my communication level
with the different functional managers of the company. This study hopefully will help
companies in the maritime industry to rethink and reassess their current HR programs as
far as the recruitment and selection of their future employees. This study could be a start
for them to look this aspect of their organization where it is very important to choose the
right person who has the passion and is motivated to perform his tasks accordingly and
based from what the management expects from him or her.
Statement of HR Issue
No specific HR guidelines in recruiting possible candidates for a specific position
“A successful human resource function is able to identify human resource needs in

the organization” (Kumari, 2012, p.34). Once they are able to identify those needs, the
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process of looking for the best available talent begins to take place. The current problem
with Power Link is that they don't have any human resource function. The responsibility
of deciding on any component of decision-making lies on the hands of the owners
themselves. For this specific activity of recruiting personnel for a specific job, the company
has no clear guidelines in the recruitment and selection of people for a specific position.
Most of the time, the owners themselves refer their own prospective applicants and
sometimes they may even ask their current employees if they know someone that could fit
in for a job position. It shows that anyone can be hired on the basis of his affinity with
anybody in the organization without necessarily having the right skills and behavior
needed. In some instances, the owners will even recommend their own relatives to take on
specific positions which is their prerogative of course. No process is being followed in the
recruitment as mostly it is through word of mouth or through referrals.
Root Cause
Since the company has been operating for two years, the management was not able
to clearly define the job description and specification for each position. Once an employee
is hired, they will just tell the person about the specifics about their job without necessarily
referring to a job description, because they do not have one to begin with. As an insider,
based on my observation it seems that the company was too focused in trying to prepare
all the necessary requirements for the accreditation of additional courses and programs.
The result of which is that they were not able to pursue developing a job description for
each position as a fundamental process. Without any job description, it will be hard for the
organization to identify the job specification necessary for recruiting a potential applicant.
As a consequence, people who were hired by the company has to learn how to adjust to the
current position assigned to them. “Human resource professionals and consultants use job
descriptions and job specifications as basic building blocks for many human resources
(HR) functions, including recruitment and hiring, performance evaluations, and salary
ranges” (Mangaleswaran and Kirthiga, 2015, p.30). Some of the employees who are my
friends as well told me that they are having a hard time executing their tasks because they
lack the knowledge and skills on how to properly do their tasks. In addition, some of them
tend to be absent frequently possibly because they are not motivated to go to the office
while some of them were forced to resign immediately. While on the part of the
management, the outcome of this is a sub-par performance from their employees resulting
to non-attainment of their goals and objectives.
As the head of the marketing function, I am able to observe that several employees
of the company are always reprimanded for not being able to perform based on
expectations. As the insider researcher, I am also able to personally communicate with the
president and the vice-president of the company and they themselves admit and are aware
that several of their employees are not equipped with the right knowledge and skills to
perform their tasks. They even mentioned that if given the chance to turn back time, they
will ensure that they pay attention to the recruitment and selection process of their
employees for a start. The objective of the action research is to make sure that existing and
future employees will understand their role in the organization. Since we are a service
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provider, it is important that the employees are able to do their jobs properly because it will
also reflect on the experience that the seafarers will have when they enroll at Power Link.
Objectives and Goal
According to the president of Power Link, it is important for the firm to develop
and enhance their recruitment and selection process. They want to provide more career
opportunities in their organization and they want to fill it out with competent and qualified
applicants who will be their partners in attaining their goals. With the challenge to increase
profit, sustain current customers and open new accounts, it is also one of Power Link’s
imperatives to ensure employees are able to do their tasks properly. This is especially
because it is a lean organization and employees are considered specialized in their
respective fields. Resignations will surely be costly for Power Link or for any company for
this matter. Recently they are growing more concerned as to how they can make employees
happy, committed and stay long.
The goal and objective here are to ensure that company will be able to attract a pool
of qualified applicants and that Power Link is prepared to select whenever there is an
available job opportunity from the firm. This will result to a more efficient way of finding
potential candidates who are knowledgeable, qualified, and skilled in performing specific
tasks from the organization. This can also result to better efficiency for Power Link as the
framework in recruiting will improve the time frame for looking for personnel. The
company currently has no policies and procedures with regards to the recruitment and
selection of personnel. These policies must already be operational since they are already
planning to make the organization certified by an ISO body.
This Collaborative Action Research hopefully will jump start the efforts of the
company in developing the appropriate Human Resource programs that will result to an
improved recruitment and selection process. According to Shani and Pasmore (1985: 439
as cited by Coghlan, 2006) “Action research may be defined as an emergent inquiry process
in which applied behavioral science knowledge is integrated with existing organizational
knowledge and applied to solve real organizational problems”. (Coghlan, p.294) The aim
of our collaborative action research for Power Link is to bring about possible changes in
their organization particularly with an intention to improve their human resource function
pertaining to the recruitment and selection of their personnel.
Scope and Limitation of the Collaborative Research study (one cycle only)
The area of coverage pertaining to recruitment and selection process will be limited
to positions that the owners have suggested and will be relevant when they decide to expand
their operations next year. These include the positions of the different rank and file
personnel, the marketing officers, and the instructors only. The reason for this is because
the current key managerial positions are already filled out and the recruitment and selection
process for this is reserved to the owner’s decision. The assessment of the recruitment and
selection process is based on the collaborative action research of both the internal and
external researchers with intensive interview and engagement with the owners of the
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company. The number of employees who will be hired by the company is dependent on
future need or requirement of the firm in relation to their planned expansion next year and
their plan of making their company an ISO certified organization. The instructors
mentioned here are those who will teach in-house courses only since courses accredited by
Marina and TESDA have separate job specification for the instructors teaching them.
Lastly, due to limited time, the recruitment and selection framework and all activities after
which will not be part of this paper and will be reserved in the next cycle of the
collaborative action research.
Proposed HR Framework for the Recruitment and Selection Process for Power Link
Figure 1
The Propose Recruitment and Selection Process for Power Link
We will address the issues discussed previously based on the proposed framework of the
recruitment and selection process designed by researchers and the owners of Power Link.
“Recruitment is finding the potential applicants for actual or anticipated organization vacancies.
Thus, it acts as link in bringing together the people with jobs and those seating jobs.” (Naveen and
Raju, 2014, p.60). For Power Link, it is very important that they are able to find the right personnel
to meet the job requirements needed in the performance of their job. This is especially important
since they are also in the service industry where the focus is on training the seafarers. The act of
performing their job responsibilities may have a significant impact in the development and learning
of the seafarers as well.
Before a company is able to design or develop their recruitment and selection process, it is
important to note that the process starts with proper strategic planning from the organization
regarding future positions that needs to be filled or eliminated. As for Power Link, there is already
a planned expansion of their courses and programs that is why they told us that the timing of our
collaborative research with them is perfect as they are able to develop the process of recruitment
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and selection. The owners mentioned to us that by next year, the goal and objective is to add more
maritime courses and assessment certification. As a result of the K12 program of the government,
there is anticipation from the company that there will be an influx of students who will want to
become a seafarer. In order to be competitive in the Maritime training industry, a training center
should also have a complete line of Marina accredited maritime courses.
As a result of this planned expansion, Power Link needs to expand their human resource
by hiring more people to help them in the attainment of their goal. They also need to identify the
composition and the hierarchy of their organization. With regards to the human resource function,
it is imperative that there should be more qualified instructors to handle a particular course, more
assistant staff who will be assigned to support the different organizational functions, and additional
marketing officers who will be in charge of maintaining and expanding their clientele. Once the
company is able to identify the potential positions that needs to be fill out, it is essential that they
are able to come up with a job description and job specification for all existing positions or even
to new positions that is going to be offered by them. When the company has this tasked of hiring
new personnel, it is important that the person in charge of recruiting has a very specific idea on
the type of person to hire. This may include knowing the applicant’s specific knowledge, skills,
and attributes and even their past experiences so that he or she can determine whether the person
can fit the job.
Once they are able to identify these tasks related to the position, they need to understand
the job further by developing the lists of knowledge, skills, and attributes (KSA) necessary in
performing the tasks. Again, they may base it from prior work experience or they may ask experts
which are those critical in performing their tasks. After this, the owners should develop key
selection criteria or (KSC) to help them find a match between the job requirements for a position
and the skills of the applicant. On the part of the applicant seeking for a job, having a clear job
description and job specification for a particular position will enable them to determine whether
their qualification, skills, and experiences is a good fit in the organization.
Once the company is able to identify human capital needs, the management now may start
the recruitment process which includes attracting a large number of potential and qualified
applicants who will take the job if given to him or her. Once Power Link is able to develop a job
description for current and new positions, it will be easier for them to identify the best personnel
that will fit the job. The recruitment process enables the organization to increase the success rate
of the selection process as well. It helps them to be able to identify and prepare potential applicants
for the position they are applying. “It has also been argued that in order for the enterprise to build
and sustain the competitive advantage, proper staffing is critical” (Djabatey, 2012 as cited by
Ekwoaba, et al., 2015).
It is important for an organization to be able attract the attention of individuals to be able

to build a pool of qualified applicants because future employment of these people may affect their
performance. “Recruitment is the process of finding and attracting suitably qualified people to
apply for job vacancies in the organization. It is a set of activities an organization uses to attract
job candidates who have the needed abilities and attitudes.” (Opatha, 2010, as cited by Ekwoaba,
et al., 2015) All possible recommendations made by the owners, their friends, and partners
pertaining to the hiring of a personnel shall undergo the required procedures in applying. Another
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challenge that can be encountered by the organization is to identify whether to look internally
among their employees or to look externally in terms of developing their pool of potential
applicants. If the company plans to recruit internally, they may promote or transfer to another
position an existing employee or they may also entertain referrals from other people. The best way
to advertise the job vacancy is through social media or through their email. Referrals are usually
through word of mouth and may result to less advertising cost on the part of the firm.
The last step in the framework is the selection process. Since the company already has a
pool of qualified applicants as a result of their recruitment process, they are now in the process of
making the choice from the pool the most suitable job applicant that can fill a particular job
vacancy in the organization. Selection is the process by which specific instruments are engaged to
choose from the pool of individuals most suitable for the job available (Ofori & Aryeetey, 2011,
as cited by Ekwoaba, et al., 2015). For Power Link, they may come up with their own metrics in
assessing the qualification of the applicant which can help in the selection process. “Often the
performance of businesses relates directly to the people working within it, meaning the right people
need to be hired to ensure organizational success (Henry & Temtime, 2009 as cited by Ekwoaba,
et al., 2015). It may also result to more efficiency as it is expensive and time consuming to hire
people that can be resulting from employee resignation. This is also a process that enable those job
applicants to move on and to look for other opportunities elsewhere once they are given feedback
that they were not chosen immediately as to not burden their time waiting.
Method of implementation and outcome
Our study is primarily influenced on the model of collaborative management research. This
type of research approach brings together the managers of a particular organization with an
immediate need or a problem that needs to be addressed and the academic scholars who possess
the capacity for research driven innovation or solution which can benefit both parties. (Pasmore,
et al.,) Through the intervention of the researchers the company may benefit from them in such
that they are able to learn new methods, innovations, and techniques that will land them qualified
personnel for any job opening. On the part of the researcher, they will also benefit since they are
able to apply and utilize their learnings to contribute in improving the behavior or an organization
thus increasing their learning curve. In our case, I will be acting as the insider researcher since I
am part of the organization being the head of both the marketing and sales function. My main
tasked is to facilitate employee and management communication and engagement so that we can
gather information that will be important and relevant to our research.
In the current organization structure, as the insider in the company I am currently in charge
of all marketing and sales related activities. I am responsible in establishing the marketing mixed
strategies and the preparation of the sales target for the team. I am also in charge of gathering
client’s needs and requirements and comes up with recommended training programs for the foreign
principal’s requirement. Lastly, I consolidate and analyze client issues and concerns and
recommends appropriate interventions. I am directly reporting to the president and vice-president
of Power Link which is the reason why I am able to communicate easily with the owners of the
firm. AS insider researcher, I will be responsible for providing details regarding issues that
concerns the company’s operations. The other member of the collaborative researcher is my
classmate, a fulltime professor at DLSU and is also pursuing his DBA also from the said institution.
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He will be acting as the external researcher who will be in charge of validating the issues and will
be closely communicating with the owners of the company to be able to recommend how to
improve their current process in their recruitment and selection function and the development of
Power Link’s job description and specification for its existing and future employees.
We will also be using the action research framework of Coghlan and Brannick (2010) that
tells us that an action research consists of different action research cycles. Due to limited time
constraints to realize whether our interventions where manifested and improved the company’s
recruitment and selection process, we were only able to cover one short-term action research cycle.
This include developing the process of stating the job description and job specification of existing
and future employees of Power Link. This was done in collaboration with the owners of the
company. Part of the intervention program is the re-orientation of existing employees pertaining
to their job description. It is imperative for the organization to pursue this activity even though it
should have been done before they recruited and selected the employee.
Figure 2
Spiral Action Research Cycles (Coghlan & Brannick, 2010)
Data generation, data analysis, and implementation
This section presents the methodological process of pursuing this collaborative

action research study. We utilized different related literature (published journals and
articles) used for our qualitative data, both the internal and external researcher engaged and
communicated with the owners of Power Link to determine the manifestations of the
observation of the internal researcher, and to identify other existing issues in their human
resource function. The primary instrument used in the study is a set of questions provided
by the researchers to the owners of Power Link and information gathered from small group
discussion with the other existing employees of the company. The questionnaire focused
on verifying and manifesting the personal observation of the internal researcher with
regards to issue of recruitment and selection.
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The first part of the interview is composed of understanding and knowing the
profile of the organization knowing the history of the firm, the owners and their employees.
The second part focused on asking existing human resource issues that the owners want us
to address. It is through this communication with the owners where we are able to realize
that there indeed is a problem with their recruitment and selection process because it is
already being manifested by the poor performance of some of their existing employees in
performing their job. Possible interventions that will result to an improved recruitment and
selection process of the company is part of the purpose of this research. In order to
triangulate our findings concerning the issues, we tried to gather data from the different
employees of the organization which includes the staff assistants, the instructors, and the
marketing officers. The interview was done by the external researcher to verify and
manifest the issues in recruitment and selection while the insider was in charge of having
small group discussion and gathering of data through interview with the existing employees
of the organization. It took us almost two weeks to be able to gather data pertinent to
attaining a plausible collaborative action research.
Story and outcomes
Lack of job description for the different positions of the organization resulting to
skills not fit to the job
The data we gathered from the different employees which includes the assistant
staff, the instructors, and the marketing officers showed that several of them felt that their
skills does not match the assigned job to him or her. One example is one marketing officer
whose educational background is in BS Biology. She was just referred by a relative of the
owner and was immediately assigned in the marketing department without any idea what
will be her specific tasks and responsibility as a marketing officer because it was not
explained to her when she was hired. According to her, going to different places,
communicating and negotiating with people is not her cup of tea because she is really shy
and introvert. She would rather be involved with doing clerical work or supporting
activities to the supervisors in pursuing their jobs.
Being a marketer requires a person to be aggressive, persistent, sociable, and should

possess good communication skills. Another instance is our communication with one of
our registration assistants. She is an accounting major but have not yet graduated from
college. She was recommended by one of the crewing managers of a manning agency who
is considered a top client of the organization. Since there was a need for a person to be
assigned in the release of certificates, she was given the tasked of printing the certificates
and the release of it to the seafarers who will be claiming it upon their completion of their
training program from Power Link. She mentioned to us that she did not like what she is
doing as she easily gets bored from the routine task.
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Table 1
Summary of the interventions for the lack of job description for the different positions of the
organization resulting to skills not fit to the job and the lack of recruitment process
Intervention Activities Immediate Outcomes
The action researchers will The management is aware The management is aware that
closely interact with the that having no job the issue and there is
owners of Power Link to description and job willingness from them to
establish process of specification may result to resolve it by understanding the
developing job description employees having no idea responsibility for each job
and job specification and about their job and functions position both existing future
(implemented)
The development of a Involves the preparation of Approval of the proposed job

proposed job description and an appropriate job description and job
job specification for current description and job specification for existing
existing and future positions. specification for all assistant employees and future
(implemented) staffs, marketing officers and employees. Includes the
instructors documentation of the job
description and specification
A job orientation for The management will have Approval by the management
existing employees so that one day reserved for the job about the proposed one day
they will be aware of their orientation of their existing activity to be done on a
job description and the employees so that they will Saturday. There will be no
appropriate responsibilities have greater knowledge of training to be conducted on the
that goes with it what is expected from their assigned date.
(implemented) specific position
Appointment of an HR The management of Power Approval of the board

personnel to be in charge of Link will closely coordinate regarding the re assignment of
all activities pertaining to the with one of their training one of the training assistant to
recruitment process assistant and assign her to be focus assistant to focus only on
(implemented) in charge of all HR activities all HR activities
including those related to
recruitment activities of
Power Link
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More exposure pertaining to The assigned training The management recognized
the recruitment and selection assistant who will be in the importance of having a
process charge of all HR function person who will be focusing on
(not implemented) will be asked to attend a particular function of the
seminars and related organization
training programs to
improve knowledge and
understanding of the
function
Proposed HR Interventions
Proposed Job Description for Key positions: As proposed by the external researcher based
on interview and consultation with the President and Vice President of Power Link.
Marketing officer
The marketing people are in charge of sourcing for prospective clients down to the
completion of the training program of each seafarer enrolled. They “sell” and “promote”
Power Link’s training courses and assessment programs to the different shipping and
manning agencies. In addition, the marketing officer’s role is to maintain close
coordination with their clients to monitor their concerns and issues and be able to answer
them the best they can. Currently, the internal researcher is in charge of over-seeing the
performance and work status of the marketing officers under him.
Registration assistant
The registration group is in charge of accepting the seafarers for enrollment to the
different courses offered by the company. The company maintains a database which can
track any relevant information concerning the enrollment such as the availability of course,
reservation, scheduling of courses, etc. They are also in charge of informing seafarers who
enrolled some additional requirements necessary for the completion of their courses and
assessments. In addition to these tasks, they are also in charge in the printing and the release
of certificates to seafarers who were able to pass the program and have submitted all
pertinent requirements to Power Link.
Instructors
Training has always been a requirement for employment particularly for the
seafarers. The main driver of the business of Power Link are the pool of their instructors.
They should be knowledgeable and competent in providing these training programs to the
seafarers. The primary activities of the instructors include giving out introduction about the
IMO and why these courses were developed. Then they level up the expectations with that
of the instructor and the trainees followed by setting out the objectives and what they aim
to achieve at the end of the training session. This if followed by the actual teaching with
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the use of modern equipment to support effective transfer of learning. Finally, they are also
in charge of assessing and evaluating whether the seafarers through examination, case
study, and practicum, is able to pass the course requirement and should be given
certification by Power Link.
Proposed Job Specifications for Key positions:
Marketing officer
● Male or Female
● Must be a college graduate
● Must have pleasing personality
● Must have good communication skills
● Willing to be assigned to different territories
● Must possessed skills in Microsoft word, excel
Registration assistant
● Female
● Must be a college graduate
● Must have a pleasing personality
● Must possessed skills in Microsoft word, excel
● Must have good communication skills
Instructors
● Male
● Must be 25 to 60 years old
● Specific qualification should conform Tesda and Marina guidelines pertaining
to the specific course that the instructor will be teaching. (additional
specification)
● Should have pleasing personality
● Must have good management skills
● Should have prior experience being an instructor / teacher (is an advantage)
The management may also provide their existing employees with re-orientations
for imparting new changes and the reason for the changes. The company’s focus on
continuous product improvement is not sufficient but they should also focus on improving
customer service in the future. This may also include management having individual
dialogue with their employee to get feedback and impart to them their role in the
organization as most of them started with the company without any job description at hand.
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Proposed 1-day Orientation of Job Description for existing employees
Date: 1 Saturday of the Month of August

Goal and Objective:
Re-alignment of Tasks and Responsibilities
Session Outline
● Opening remarks by company president
● Orientation on company’s VMV
● Presentation of newly established job description per position
● Presentation of newly-assigned function heads and their
responsibilities
● Q and A Forum
● Refreshments served
Target Participants:
15 Employees
Facilitator:
Mr. Francis Tajanlangit (President) and Ms. Ruby Tajanlangit (Vice-
President)
Capital Requirement:
P5,000 to cover food and refreshments
Materials:
Company Brochure, Copies of Job description per position
Self-reflection and learning of the collaborative management researchers
Content
In this collaborative research, we learn that it is really important for any

organization to employ effective and efficient personnel who will focus his / her attention
to a specific function. At Power Link, there is no specific employee who oversees a
particular function most of the time, it is always the owner who decides on everything. The
owners do several of the critical tasks themselves. They do multi-tasking from the
development of course manuals, to transactional tasks such as applying for government
permits. This in turn result to inefficiency because the owners are de-focused to doing day-
to-day tasks rather than spending time doing strategic planning work. One critical issue
that was overlooked in this case is that Power Link does not have sound recruitment and
selection process to begin with. This emanated from the lack of job description and
specification for the established positions in the organization. How can an organization
attract a pool of qualified applicants and be able to select the best people if they don’t even
have an idea what the responsibilities and tasks for each position are versus the qualities of
each person occupying each position?
Process
The owners and we as student researchers, are able to witness how employees can become
inefficient in performing their job because of the lack of knowledge and skills to begin
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with. This started with hiring people, without knowing what the requirements and the
description of the role/position itself. We are here for a purpose and this is to help the
management of Power Link establishment their recruitment and selection process. As the
initiators of change, we collaborated with the owners to develop the job description for all
current and future positions at Power Link. This will enable existing employees to
understand better their job assignments. From there the management will be able to identify
the gaps in the employees’ knowledge and skills, where the necessary interventions maybe
implemented. A well-established job description and specification will result to a better
and more efficient recruitment of qualified people. We further learned that true
collaboration happens when there is rich exchange of thoughts between the management
and the external researchers. The owners are our primary source of data and information.
They provided us with their pain points, their thoughts and views as to how they see their
company in the future. The researchers helped the owners process these information and
thoughts to arrive at better interventions for the employees and the organization as a whole.
The external researchers were there to provide support to the company in establishing and
identifying the right framework to anchor the interventions on.
Premise
As research collaborators, we discovered several barriers in attaining our goal of

improving Power Link’s recruitment and selection process. This included the time
interacting and communicating with the owners, the resources needed for change, the
employees’ readiness to adhere to these changes, and finally the time to fully implement
our proposed interventions. Time was a factor since the researchers are also pre-occupied
with a lot of other activities which is the same case for the management of Power Link. It
was hard for us to have a common schedule where we could get vital information from
them to validate and substantiate issues concerning their company. The capital and human
resources might also be a constraint for them as some of our interventions may require
them to hire additional personnel, provide more training programs, purchase certain
materials needed for the activity and other more may require these resources. The existing
employees might also be a barrier because some of them might be hesitant to any changes
in their functions because they were used to it already. “The prevailing organizational
climate concerning new knowledge and skills greatly influences whether the transfer will
be made or not” (Rouiller and Goldstein, 1993; Tracey et al., 1995, as cited by Nikandrou,
et.al., 2008). The management’s role here is to be able to communicate with their
employees through the process of consultation, mentoring, and coaching. They may also
come up with motivational tools that will make them participate in the planned changed
management being pursued by the company.
Extrapolation to a broader context and articulation of usable knowledge
Seafarers play a critical role in any manning agency particularly in performing their job.
Therefore, the competency level of the employees in a Maritime training center should be
translated to a positive performance that will benefit the seafarers when they embark a seafaring
career. From the registration staff, the marketing, and the instructors, it is important that we make
the experience of seafarers- the life blood of our company, very satisfying for them. It is for this
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reason this action research was conceived by the researchers. The importance of having employees
who are knowledgeable and qualified may reflect their performance in doing their jobs. Without
any recruitment and selection process, it will be hard for the company to gauge whether their
people possess those qualities that will make them fit in their role in the organization. One example
is that our instructors should be qualified and competent in providing all these learnings to our
seafarers and it starts by choosing those that match these qualities. It’s tantamount to saying that a
seafarer who is equipped with proper training will enable him to become productive by being both
effective and efficient in what he is doing. The result and output of this assessment will help the
training centers as they look into their current systems and structures to improve their people,
instructors, and work processes, and most especially how all these integrate to develop specific
training programs to enhance seafarer competency and productivity. These are the important
lessons and knowledge that we gain as a result of this collaborative action research:
Importance of Delegation for improved efficiency – enhancing the capabilities of key

personnel heading a function
The owners of Power Link should create a management team in charge of assigning
leaders for a particular functional area, Human Resource function included. Each of the
leaders will be responsible for determining how their function will be able to contribute to
the betterment of the service it provides to its customers. These may enable the leaders to
gather inputs coming from the heads and even with their employees on how they are able
to address certain issues, how they can improve their services, and how to strengthen
management – employee relationship. “Delegation serves as an adaptive organizational
mechanism which is fundamentally rooted in how the organization distributes decision-
making authority and designs an effective division of labor.” (Dobrajska, et al., p. 632) The
main question that pertains to delegation is to up to what extent of the tasks will the
management delegate the authority to their key leaders. “Firms implement delegation of
formal and real decision authority through the charting of responsibilities, where
individuals are assigned specific roles for particular tasks and task related decisions
(Galbraith 1973, p.147; McCann & Gilmore; 1983; Smith & Erwin; 2005; Kendrick 2006,
as cited by Dobrajska, et al., p. 635).
Importance of aligning the tasks versus job description
Since Power Link have been operating for more than two years, it can be observed
that several of their existing employees are already knowledgeable in performing their
tasks. The researcher can even say that what they are doing closely resembles the job
description that were developed by the owners. But what we found out as researcher is that
there are several tasks that a particular employee is still doing that is not part of the job
description resulting to an overlapping of roles from different employees. It was a
significant finding that we were able to discover as a result of the action research. As a
result, all the tasks of a particular employee is aligned to the job description and each
employee may be able to perform their roles accordingly. The relevance of this is that when
the time come that a particular employee will resign, the specific tasks and responsibilities
for a particular position remains. It is only the employee who will leave but the position
remains.
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Bridging the gap between theory and practice
“Understanding the relationship between theory and practice is a persistent and

difficult problem for scholars who work in professional schools, such as business,
engineering, social work, medicine, agriculture, education, public administration,
journalism, and law.” (Van De Ven and Johnson, 2006, p.802) People working from a
diverse background coming from different industries usually have a hard time
understanding on how they are able to apply the theories they learned from the academy
and other business schools to the present working environment. It seems that they cannot
find a match or a relationship between these theories and the actual practice resulting to a
lot of anomalies being discovered by those people working. There are a lot of Management
Scholars in the world who have utmost intention of improving our lives, business practices,
etc. through the research and theories they are able to conceptualize. This is exactly what
the researcher did with the owners of Power Link where we had a collaborative action
research. We went there and helped them in addressing their current issues in the
recruitment and selection of their employee. We provided them a framework in developing
their job description and specification and while doing so, we were able to improve our
own skills and capability in analyzing an organization. “Engagement is a relationship that
involves negotiation and collaboration between researchers and practitioners in a learning
community; such a community jointly produces knowledge that can both advance the
scientific enterprise and enlighten a community of practitioners.” (Van De Ven and
Johnson, 2006, p.809).
Conclusion
The management through its HR function should be able to hire qualified staff and officers
to realize bottom-line results. It is important that they hire the right person for a specific job. Hiring
instructors who are competent and experienced should be one of the top priorities of Power Link.
It will help strengthen the company’s reputation as an organization that provides quality training
for their seafarers and students. The HR function should strictly follow and implement the
guidelines, policies, and procedures pertaining to the recruitment and selection of their employees.
As mentioned before, the company shall select the people with the requisite skills and experience
and may even provide them with further trainings to improve their capabilities. Another important
learning in the collaborative action research is understanding the importance of delegating and
involving people to head the different functions of the organization. This includes allowing them
to decide on important matters relating to their function. Leaders may also want to involve their
employees more by holding meetings and brainstorming sessions whenever there are new
directions, activities/projects that need to be done. Holding these venues is like giving
opportunities to people to be heard, to give their inputs and feedback. We all know that there are
decisions that have to be made at the top most level without the consent of the employee. But
giving them autonomy and making them involved in their respective areas will mean a lot to them
and will ensure their buy in in the long run.
Based on the collaborative action research, we found out that there are no existing
guidelines in the recruitment and selection of employees. It is because even at the start when the
company was founded, there was no human resource employee assigned to be in charge of these
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activities. The roles of existing employees are not clearly defined since there was no job description
and specification for all the positions in the company. With regards to knowing if employees of
Power Link are knowledgeable and qualified for the position they were assigned, through our
interview and communication with several of them, they mentioned that they were having
difficulty adjusting in their position because it was something unfamiliar or new territory for them.
This resulted to some early resignations, tardiness, and not being able to perform their job
accordingly. As we advance in technology and knowledge, there is a growing need for our human
resource to skill-up in all aspects. It is a leader’s role and an employee’s role as well to be
accountable for the latter’s development in his/her current job and future career but is should start
with hiring people who are competent and qualified in the position. Giving opportunities for
employing people is one thing, but laying down the recruitment and selection framework crucial
if a company wants to ensure that these people will help them and become their partners in
attaining their goals and objectives. Leader has to make employees feel that there is a plan for them
to move up in the ladder and develop eventually and that these plans are executed as plans.
Development plans do not just have to be about the current job but also about identifying what
needs to be developed and enhanced for the employees’ future needs.
References
Richardson. (2009). Recruitment Strategies: Managing/Effecting the Recruitment Process,

Government of the Republic of Trinidad and Tobago
Ullah. (2010). A Systematic Approach of Conducting Employee Selection Interview,
International Journal of Business and Management, Daffodil International University
Kumari. (2012). A Study of the Recruitment and Selection process: SMC Global, Industrial
Engineering Letters, Vol 2, No.1
Mangaleswaran and Kirthiga. (2015). Job Description and Job Specification: A Study of Selected
Organizations in Sri Lanka, International Journal of Information Technology and
Business Management, Vavuniya Campus of the University of Jaffna, Sri Lanka
Cunningham, Britanna. (2015). The Relevance of Maritime Education and Training at the
Secondary Level, The World Maritime University
Naveen and Raju. (2014). A Study On Recruitment & Selection Process With Reference To
Three Industries, Cement Industry, Electronics Industry, Sugar Industry In Krishna Dt
Ap,India, IOSR Journal of Business and Management, Vol 15, Issue 5
Ekwoaba, et al. (2012). The Role of Human Resource Planning in Recruitment and Selection
Process, British Journal of Humanities and Social Sciences, British Journals ISSN 2048-
1268
Nikandrou, et.al. (2008). Trainee perceptions of training transfer: an empirical analysis, Athens
University of Economics and Business, Athens, Greece
Pasmore, et al. (2008). Handbook of Collaborative Management Research, SAGE Publication
Van De Ven and Johnson. (2006). Knowledge for Theory and Practice, The Academy of
Management Review, Vol. 31, No. 4
Dobrajska, et al. Delegation of Decision Authority in Complex Task Structures: An Empirical
Investigation of Decentralization, Copenhagen Business School, University of Southern
Denmark
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What Drives Collaboration Among Filipino Freelancers? Assessing
the Physical and Social Elements of Coworking Spaces
8th NBMC Paper #9
Kevin Galvez and Noel Sajid Murad

Abstract
The study makes use of the servicescape framework of Balakrishnan et al. (2016) to examine the
relationship between the physical and social elements of a coworking space and the intention of
customers to use it.
Specifically, the study aims to determine if 1) physical elements such as ambiance, space/layout,
facility aesthetics, functionality, and cleanliness, and 2) social elements such as interaction among
members, the interaction between members and community manager, professional development
activities, and coworking culture practices, have a significant influence on Filipino freelancers in
Metro Manila in their intention to use a coworking space.
The results of the study show that the relationship of each physical element of a coworking space
on the intention to use it was statistically significant with P-value 0.00 for ambiance, space/layout,
facility aesthetics, and functionality, and P-value 0.06 for cleanliness. Furthermore, the
relationship of each social element of a coworking space on the intention to use it was also
statistically significant with P-value 0.00 for interaction among members, the interaction between
members and community manager, professional development activities, and coworking culture
practices. The results provide evidence that for Filipino freelancers, the physical and social
elements of a coworking space are important considerations in the intention to use it.
Moreover, consistent with the findings of earlier research, the social elements of a coworking space
are considered more important than the physical elements, which suggest that more than a physical
space to work, freelancers seek a social context where their need for interaction and collaboration
is fulfilled, support can be gathered from other coworkers, and activities can help in professional
development. The study adds to the existing literature with the context of coworking spaces in the
Philippines explored.
Keywords: Coworking, coworking spaces, coworkingscape, freelancers, collaboration
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Introduction
Coworking Spaces
Over the past years, there have been three major changes in the way people work.
First, laptop computers and emails have created a growth of entrepreneurs and flexible
independent workers. Second, working anywhere and anytime has been made possible by
the introduction of mobile technology and global teamwork. Now, a new change has come
- the boom of coworking spaces that offer the benefit of flexibility and social interactions
(Gandini, 2015). As its name suggests, coworking spaces foster collaboration among its
users. It is an emerging type of workspace that features a physical design of an open floor,
arrangement of tables that enable coworkers to interact, complemented social areas such
as kitchen, meeting rooms, and leisure areas (Merkel, 2015).
In the Philippines, coworking is becoming more popular especially in the central

business districts (CBDs) of Metro Manila. Coworking in the Philippines is a trend
popularized by tech-savvy millennials who comprise the bulk of the metropolitan sector
(Business Mirror, 2020). It is projected that Metro Manila's coworking space sector in
CBDs will grow at least 10% per annum over the next three years due to the following
reasons - 1) the continued rise of micro, small, and medium enterprises, 2) the influx of
multinational corporations, and 3) for freelancers and startups looking for plug-and-play
offices (Colliers International, 2019). In an article by Forbes (2018), the Philippines ranked
sixth in the top 10 fastest growing freelancers’ market in the world with a 36% growth.
This is beneficial for coworking spaces as it means more freelancers will need coworking
spaces where they can not only work, but also network to increase their client roster and
services provided.
Social Isolation Amidst COVID-19
Due to the onset of the COVID-19 pandemic, employees who were accustomed to
working in traditional office spaces now have to adjust drastically to telecommuting or
work from home arrangements (Carnevale & Hatak, 2020). Additionally, those who used
to enjoy remote working conditions are now limited to only working within the confines
of their homes. This has led to challenges in separating work and personal life (Chawla et
al., 2020).
The COVID-19 pandemic is likely to have profound socio-psychological, physical,

and technical effects on employees who are transitioning to remote work arrangements.
According to Raffaele and Connell (2016), social isolation can cause psychological strain
and reduce productivity. The reason why people pay for coworking services is to find a
remedy for professional isolation through experiencing social relationships in the form of
a like-minded community (Bilandzic & Foth, 2013). The term community itself evokes a
sense of social practice. Shared lunches and social events are just some of the community
activities designed by coworking spaces to cultivate trust between coworkers.
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For married employees with children, on top of this transition, the closure of
schools and child-care services has increased the strain on their perceived work-life balance
(Giurge & Bohns, 2020). On the other hand, in drastically altered working conditions,
single and childless employees face a great risk of loneliness, a perceived lack of purpose,
and feelings of social exclusion and isolation (Achor et al., 2018). Kopp (2020) and
Robinson (2020) have suggested that these feelings have become more salient with the
current quarantine protocols, which include social and physical distancing to curb the
spread of the pandemic, thereby affecting their mental health and well-being and overall
employee productivity.
Framework of the Study
Figure 1
Insights from Coworking Spaces as Unique Service Organizations: The Role of Physical and
Social Elements, Balakrishnan et al., 2016
The theoretical framework used in this research is obtained from a book series by Bamini
Balakrishnan, Sivakumaran Muthaly, and Mark Leenders about insights from coworking spaces
as unique service organizations: the role of physical and social elements. This study puts forward
the elements that will influence the behavioral intention of the customers in a coworking space.
Coworking space is one of the growing industries where consumers pay to consume the
environment rather than treating the environment as a facilitator of their purchase of merchandise
or services. They are the type of businesses that offer a physical and social environment for
consumption. These coworking spaces are designed to create a productive physical and social
atmosphere. The authors proposed an enriched framework specific to the coworking industry and
labeled it as 'Coworkingscape.'
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Research Problem
Using the servicescape framework of Balakrishnan et al. (2016), the study aims to
determine if…
1) physical elements such as ambiance, space/layout, facility aesthetics, functionality, and
cleanliness, and
2) social elements such as interaction among members, the interaction between members and
community managers, professional development activities, and coworking culture
practices, have a significant influence on Filipino freelancers in Metro Manila in their
intention to use a coworking space.
Physical Elements of Coworking
By its definition, “coworking space” refers to a physical workspace shared by

working professionals practicing coworking (Uda, 2013). According to Brown (2017),
ambiance can be referred to as a workspace atmosphere or a cornerstone for collaborative
activities. Janneck et al. (2018) found that respondents regarded background noise, poor
lighting conditions, and unpleasant room climate as disturbing factors when using mobile
workspaces. Furthermore, the noise in space may overburden coworkers (Leclerq-
Vandelannoitte & Issac, 2016).
Therefore, the researchers hypothesize the following:
H1. There is a positive significant relationship between the ambiance of a coworking space and
the intention to use it.
Orel and Almeida (2019) observed that the visual and spatial characteristics such as the
layout of the space positively influence coworking space users. Since coworking spaces have a
physical open space, it is attractive to people who are longing to escape the confines of their cubicle
walls, the isolation, and distraction of working at home, or the inconveniences of alternative public
venues. Thus, coworking spaces aim to recreate a physical space that enables to maximize the
productivity of its users by combining physical and social elements (Botsman & Rogers, 2011).
Surprisingly, while coworkers reported the physical proximity of coworking spaces enabled
networking opportunities, there were some concerns on the lack of privacy (Servaty et al., 2018).
Furthermore, Parrino (2015) proposed that knowledge exchange may not necessarily occur as a
result of sharing space and being in physical proximity.
H2. There is a positive significant relationship between the space/layout of a coworking space and
Another physical element is facility aesthetics. Grazian (2019) suggests that coworking
spaces rely on aesthetics, ideology, and style to brand their workspaces to potential members.
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H3. There is a positive significant relationship between the facility aesthetics of a coworking space
and the intention to use it.
Correspondingly, Fassi et al. (2018) state that carefully tailored workspaces and the
functionality of furniture can be shared in a way that is co-used by different members throughout
the day. In return, this will foster a close-knit relationship between users and establish habitual
behavior that ideally leads to collaboration. Coworking spaces provide efficient workplace
attributes such as shared wi-fi, IT security, and consistently available space (Garett et al., 2017).
Servaty et al. (2018) found that some coworkers suggested improvements to ergonomic
furniture, better artificial lighting, better kitchen and heating facilities, temperature level, as well
as quieter areas, especially while they were on confidential phone calls. This supports expert
observations that ergonomic chairs, a bright interior design, and optimal noise levels are
considered important in the concept development of coworking spaces (Servaty et al., 2018).
H4. There is a positive significant relationship between the functionality of a coworking space and
According to Siu et al. (2012), cleanliness is considered as an important element in the

design of the ideal coworking space. Although cleanliness is typically seen as the responsibility of
the coworking operators, in some coworking spaces, members were at liberty to assist with the
cleanliness of their workplace as part of their commitment to space.
H5. There is a positive significant relationship between the cleanliness of a coworking space and
Social Elements of Coworking
Spinuzzi (2012) suggests that individuals work together to seek a formal workplace
with amenities that help with their work, to seek a community where they can avoid the
sense of isolation of working alone, and benefit from knowledge exchange and
collaborations.
Coworking spaces are not just physical workplaces, they also include social
elements that enhance collaboration and community building (Parrino, 2013). In a study
conducted by Assenza (2015), coworking is defined not only as physical space but also as
a social context, and a conceptual space within which production, creation of new ventures,
and social interaction occur. Moreover, coworking spaces give their members the
opportunity to be part of a community and develop friendships with other members as well
to overcome social isolation that is common among freelancers (Garrett et al., 2017). In
addition, coworking space provides an avenue for meeting other "like-minded" workers. It
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opens an opportunity for social support such as coworker contact, networking, and
collaboration (Boboc et al., 2014).
Coworking aims to establish a social atmosphere in which social interaction and

collaboration are prevailing (Moriset, 2014). Social interaction is the process by which
people act and react to those around them in the community offered by the coworking
space. Capdevilla (2015) states that knowledge exchange and the sense of community are
the main differentiators of coworking spaces from sharing offices. In addition, (Capdevila,
2015) cited that coworking spaces play a vital role in micro-scale innovations between
freelancers and firms brought about by the social interactions in coworking spaces that
foster trust, tacit knowledge exchange, and collaborations among collocated firms,
individuals, and other essential members.
Likewise, Bouncken and Kraus (2016) highlight the core of coworking spaces as
dedicated spaces with infrastructure that encourage professional and social interactions
leading to knowledge exchange, creativity, and innovation. Bouncken et al. (2016) suggest
that knowledge exchanges, creativity, and work satisfaction that arises from using
coworking spaces can ultimately lead to increased innovation and entrepreneurship.
H6. There is a positive significant relationship between the interactions among members of a
coworking space and the intention to use it.
Community Managers curate the interpersonal interactions and interconnect regular users
in supportive networks. They aim to establish collective social action amongst coworking space
members (Blagoev et al., 2019). Moreover, Community Managers play an important role in
coworking space development and positioning in the market as they accelerate the rate of formal
or informal social interactions and knitting collaborative relationships between the members
(Bouncken et al., 2018; Gauger et., al, 2020; Gregg & Lodato, 2018). According to Spinuzzi
(2012), a coworking space is seen as a workplace with an emphasis on interaction with other
members as well as community managers.
H7. There is a positive significant relationship between the interactions among members and
community managers of a coworking space and the intention to use it.
The social interactions in coworking spaces and among traditional office spaces were
compared and, in both types, the experience of social support was positively related to the
satisfaction in work performance – hitting objectives and quality of work (Gerdenitsch et al.,
2016). Gerdenitsch et al. (2016) state that social interactions typically in the form of work-related
social support can increase a member's self-efficacy and positively improve the work performance
of the individual. Hence, social support such as receiving critical feedback on projects or ideas
from fellow coworking members is considered one of the main benefits of coworking.
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Coworking also acts as a support system particularly for those who are at the early stages
of their careers (Lloyd, 2004). It offers professional development support in the form of
opportunities for socialization, peer-support/mentoring, professional networking, idea/knowledge
sharing, and collaboration (Clifton et al., 2016).
H8. There is a positive significant relationship between the professional development activities of
a coworking space and the intention to use it.
Furthermore, values-based cultural practices distinguish coworking spaces from traditional

offices. These values are openness, communication, collaboration, accessibility, community, and
creativity (Olma, 2012). Katrini (2018) defines the sharing culture as an exchange of “resources,
time, services, knowledge, and information within a region to achieve a more sustainable,
resourceful, and socially engaging lifestyle.” Moriset (2013) illustrated that daily communal
activities in the coworking spaces, as well as events held here, increased the possibility of
meaningful encounters among coworkers. Gandini (2016) also suggests that social spaces within
coworking spaces such as cafeterias and lounges allow coworkers to network with one another.
H9. There is a positive significant relationship between the cultural practices of a coworking space
and the intention to use it.
The most cited motivations for coworking were for socialization (sense of community,
networking, and preventing social isolation), knowledge exchange, the flexibility of time and
infrastructure, as well as efficiency in terms of creativity, productivity, and motivation (Spinuzzi,
2012; Servaty et al., 2018).
H10. The effects of the social elements of a coworking space will be greater than its physical
elements on the intention to use it.
Methodology
Research Design
The research follows a descriptive and correlational quantitative cross-sectional survey

research design. The researchers chose quantitative research to measure the significance of each
variable on the intention to use coworking spaces. Moreover, quantitative research is more
structured and easier to interpret given the available software.
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Research Participants
A total of 220 respondents answered the online survey. All 220 have read and understood
the consent form, and agreed to participate in the research study.
A cumulative of 45% of the respondents belonged to the age range of 25-29 years old,
37.3% belonged to the age range 20-24 years old, 12.5% belonged to the age range 30-34 years
old, and 4.5% belonged to the age range 35-39 years old. Out of the 220 respondents, 60% of them
are female while 38.2% are male. 17.3% of respondents reside in Quezon City, 14.5% are from
Makati, 14.1% are from Manila, and 8.2% are from Taguig.
Moreover, 80% of the respondents answered that they have a bachelor’s degree while
12.7% have a master’s degree. When asked about their employment status, 82.3% of the
respondents are employed full-time. For the monthly income of the respondents, 31.4% earn Php
20,001-30,000 monthly, 23.2% earn Php 30,001-40,000, and 11.4% earn Php 40,001-50,000.
To further understand the cognitive factors that drive consumer behaviors. The respondents
were asked where they usually work aside from their primary workplace of occupation. 92.7% of
them are working in the comfort of their home, 43.2% of them work at a cafe or coffee shop, 10.9%
work at the library, 6.4% of them work at restaurants/pubs, and 5% work at business centers.
Moreover, 47.7% of the respondents said that they are somewhat satisfied with their
alternative workplace. However, there are challenges that they face with their alternative
workplace. 51.8% of the respondents said that one of the key challenges that they face is the
noise/distractions. This resulted in a lack of productivity to finish their work reported by 29.5% of
respondents. For 48.2% of the respondents, another major concern is the poor internet connection,
while 30.5% reported a poor physical workspace. Furthermore, 26.4% cited social isolation or no
human interaction as a challenge.
Research Instrument
A questionnaire was adopted using the original items from Balakrishnan et al.’s 2016 study,
for the identified social and physical elements of a coworkingscape. Responses were measured on
a 5-point Likert scale, 1 which stands for ‘Strongly Disagree’ up to 5 which stands for ‘Strongly
Agree’. The first part of the questionnaire asked for demographic information. The second part
then asked for the physical and social elements of a coworkingscape.
Data Collection Procedure
The survey was distributed online via Google Forms and also shared to different Facebook
groups such as “Startup PH,” “Startup PH: Community Builders,” “Millennial Startup PH
Community,” “Philippine Tech Startups,” “Filipino Online Freelancers,” “Freelancing
Philippines,” “Freelancer PH,” “Philippine Digital Nomads,” and “coworkingspacesPH,” to gather
responses on the influential factors with emphasis on physical and social elements affecting the
choice of coworking spaces among working professionals.
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Analytical Methods
IBM SPSS Statistics 20 was used to test Cronbach's alpha for scale reliability and
consistency. According to Peterson (1994), an adequate Cronbach alpha value is at least 0.70,
while at least 0.60 is still acceptable in social psychology research (Robinson, Shaver &
Wrightsman, 1991). The questionnaire was pre-tested with 30 respondents and had a Cronbach's
alpha of 0.705, which indicates good inter-reliability as seen in Table 2. Under SmartPLS 3.0,
bootstrapping was used to extrapolate the samples from 220 to 1000 and to determine P-values.
Table 1
Reliability Statistics
Cronbach’s Alpha Based on

Cronbach’s Alpha Standardized Items N of Items
0.705 0.671 9
Table 2
Path coefficients
Original Sample Standard

Sample Mean Deviation T Statistics
(O) (M) (STDEV) (|O/STDEV|) P Values
PE1 -> INT 0.157 0.154 0.015 10.674 0
PE2 -> INT 0.15 0.147 0.016 9.552 0
PE3 -> INT 0.168 0.166 0.013 13.148 0
PE4 -> INT 0.128 0.127 0.02 6.43 0
PE5 -> INT 0.073 0.069 0.027 2.751 0.006
SE1 -> INT 0.212 0.212 0.016 13.317 0
SE2 -> INT 0.222 0.222 0.015 15.21 0
SE3 -> INT 0.209 0.21 0.015 13.967 0
SE4 -> INT 0.206 0.205 0.013 15.263 0
Among the physical elements of a coworking space, the relationship of facility aesthetics
(PE3) with intention had the highest value (Mean = 0.166, Table 2). This was followed by the
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relationship of the space/layout (PE2) and intention (Mean = 0.147, Table 2). The relationship of
cleanliness (PE5) with intention was the lowest (Mean = 0.069, Table 2). Nonetheless, the
relationship of each physical element with intention had statistically significant values (P-value =
0 for ambiance, space/layout, facility aesthetics, and functionality; Table 2). The relationship of
cleanliness with intention was also statistically significant (P-value = 0.06). Therefore, the
hypotheses H1, H2, H3, H4, and H5 are all accepted.
Among the social elements of a coworking space, the relationship of the interactions among
coworkers and community managers (SE2) with intention had the highest value (Mean = 0.222,
Table 2). This was followed by the relationship between the interactions among members of a
coworking space (SE1) and intention (Mean = 0.212, Table 2). The relationship of coworking
culture practices (SE4) with intention was the lowest (Mean = 0.205, Table 2), however, this is
still higher than the strongest predictor among physical elements. The relationship of each social
element with intention had statistically significant values (P-value = 0; Table 2). Therefore, the
hypotheses H6, H7, H8, and H9 are all accepted.
Moreover, the means across the social elements is higher than the means of the physical
elements, hence H10 is also accepted.
Table 3
Confidence Intervals Bias Corrected
Original Sample (O) Sample Mean (M) Bias 2.50% 97.50%

PE1 -> INT 0.157 0.154 -0.002 0.124 0.181
PE2 -> INT 0.15 0.147 -0.002 0.116 0.174
PE3 -> INT 0.168 0.166 -0.002 0.144 0.191
PE4 -> INT 0.128 0.127 -0.001 0.086 0.162
PE5 -> INT 0.073 0.069 -0.004 0.017 0.119
SE1 -> INT 0.212 0.212 0 0.184 0.246
SE2 -> INT 0.222 0.222 0 0.198 0.256
SE3 -> INT 0.209 0.21 0 0.186 0.246
SE4 -> INT 0.206 0.205 0 0.182 0.234
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Discussion and Recommendations
The P-values for each physical and social element of coworking spaces were statistically
significant, which provides evidence that for Filipino freelancers, the physical and social elements
of a coworking space are important considerations in their intention to use it.
Moreover, consistent with the findings of earlier research, the social elements of a
coworking space are considered more important than the physical elements, which suggest that
more than a physical space to work, freelancers seek a social context where their need for
interaction and collaboration is fulfilled, support can be gathered from other coworkers, and
activities can help in professional development. As mentioned by Boboc et al. (2014), a coworking
space not only provides a physical workspace, but also opens an opportunity for social support
such as coworker contact, networking, and collaboration. The study adds to the existing literature
with the context of coworking spaces in the Philippines explored.
In relation to the study of Blagoev et al. (2019) that coworking managers curate
interpersonal interactions and establish collective social action amongst coworking space
members, managers and owners of coworking spaces can be guided with the results of this study
for concept development of existing or new coworking spaces, as well as to further improve
coworkers’ productivity, satisfaction, and retention.
Future researchers may consider replicating the study in Cebu, another central business
district in the Philippines where there has been a boom in coworking spaces owing to the rise of
BPOs in the region. The results can be used to check for regional differences.
Moreover, integrating health aspects to future research will prove beneficial, especially
now that mental health issues such as social isolation are prevailing due to the current COVID-19
pandemic. Studying how millennial Filipino coworkers seek social collaboration amidst social
distancing would make an interesting case.
Additionally, the study’s results may model the behavior of females. Future studies can use
an equal number of males and females so that gender bias can be eliminated. Some studies show
that gender differences can affect actual behavior (Armitage & Conner, 2001).
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Virtuous Leadership for the New Normal: Identifying Leader
Virtues in a Philippine Leadership Program
8th NBMC Paper #10
Aliza Racelis and Maria Adiel Aguiling

University of the Philippines, Diliman and De La Salle University
Abstract
We are living through a global health crisis with no modern-day precedent. What is needed now,
more than ever, is “real leadership” - one that would sharply perceive the needs of the moment,
and allow the much-needed recovery and achievement of goals sooner, more and better. Recently,
relational and values-based leadership models have emerged, and virtuous leadership is one of
these. In Aristotelian ethics, the cultivation of virtuous or good behavior is the key to achieving
happiness or human flourishing. Leaders and followers can find meaning in these ancient
components of the virtue paradigm, which gives central importance to character and moral
excellence. This study generates theories on virtuous leadership by studying a leadership program
of a Philippine foundation that advocates the exercise of virtues in young leader trainees amid the
circumstances of daily life. Four theories were generated. First, in organizations that emphasize
virtues, followers can identify, articulate, and appreciate specific leader virtues. The data shows a
special reference to concern, respect, friendliness, supportiveness, generosity, maturity, and
sincerity. Second, in organizations that instill the habit of social action, the followers value moral
virtues and are more conscious of the need for them to exercise virtues that benefit others. Third,
virtue-oriented programs and the virtuousness of role models, have the potential to influence the
youth trainees’ behavior. Fourth, the virtues of leaders motivate trainees towards higher-level
needs such as self-actualization or the need to realize one’s full potential as a human being.
Virtuous leadership engenders virtues that can help overcome crises.
Keywords: Virtues, Leadership, Virtuous Leadership, Leadership training programs, Philippine

foundation
Introduction
We are living through a global health crisis with no modern-day precedent. The resulting
problems provoke fear, anguish, anger, sadness, and shame while the resilience and skill needed
to address problems are not always at hand (Hogan, 2020). What is needed now, more than ever,
is “real leadership” – one that would sharply perceive the needs of the moment, and allow the
much-needed recovery and achievement of goals sooner, more and better.
Crises are usually characterized by the weakening of human trust, the undercutting of
cooperation, the breakdown of communication, and the disappearance or reduction of joy and
satisfaction (Heorhiadi, Conbere, & Hazelbaker, 2014). Good leadership comes to the rescue in
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these situations as it can nurture a more effective and consistent response to the crisis; build
confidence and courage among followers or citizens; and reinforce their resilience in the face of
doubt, anxiety, and deficiencies (Lang, Ovens, Schull, Rosenberg, & Snider, 2020).
There is a consensus that given leader qualities can uniquely enhance the organizational
environment (Hendriks, Burger, Rijsenbilt, Pleeging, & Commandeur, 2020). Specifically, a
leadership style that is characterized by virtuousness positively contributes to the followers’
overall happiness and life satisfaction (Hendriks et al., 2020). The following section lays out the
concepts of virtue, virtuousness, and virtuous leadership. Thereafter, we describe a Philippine
leadership program that advocates virtuous leadership and explores whether awareness of leader
virtues influences follower’s decisions and behaviors toward good outcomes.
Literature Review
The word virtue is derived from the Greek word “arete” which means excellence, and the
Latin word “virtus” which means strength ( Newstead, Macklin, Dawkins & Martin., 2018; Wang
2011). Aristotle identified two types of virtues: moral and intellectual (MacIntyre as cited by
Hendriks et al., 2020). Moral virtues are a mean between two extremes -a vice of deficiency and a
vice of excess, a state of human character that leads to good actions, and voluntary actions (Wang,
2011). Intellectual virtues are voluntary actions that reflect the reasoning and apprehension of truth
(Wang, 2011). Persons acquire moral virtue through repetitive practice, and intellectual virtues
through learning and experience (Wang, 2011). Virtues are acquired dispositions and deliberate
actions that instill the strength of character and stability of personality (Havard, 2007; Hendriks et
al., 2020). Practicing virtues enable people to achieve internal goals which in turn drives the
attainment of external goals such as prestige and profit (Wang, 2011).
Newstead et al. (2018, p. 446) defined virtue “as the human inclination to feel, think, and
act in ways that express moral excellence and contribute to the common good.” Virtue, as a
construct, is composed of discrete virtues such as loyalty and courage (Newstead et al., 2018).
These scholars differentiated virtue, virtues, virtuous, and virtuousness under a Critical Realist
lens. They explained that virtue goes beyond observable behavior. Virtue possesses internal
(inclination or desire) and external (observable) features. A person who is seen to possess virtues
may not be true. What is true is what gives rise to what is sensed as virtuous. Guided by a stratified
layer of reality, Newstead et al. (2018) developed a deep ontology of virtues. They elaborated that
virtues are seen or felt in the empirical domain. The knower makes a subjective interpretation of
virtuous behaviors and characters. Virtuousness is experienced in the actual domain. The knower’s
interaction with the actor brings about events of virtuous behavior and character. Virtue is the
causal mechanism in the real domain. The actor’s virtue or inclination to do good gives rise to
events. Thus, virtue as a generative mechanism causes virtuous behaviors or virtuousness which
reside in the actual domain, which is then subjectively experienced as virtues in the empirical
domain.
Research studies have discussed and analyzed the concept of virtue particularly within the
sphere of virtue ethics (Hackett & Wang, 2012). Scholars and practitioners have become more
interested in the impact of virtue ethics on business leadership and society (Preti, 2015). There has
been a build-up of arguments that support the need for virtues to attain ethical business leadership
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(Preti, 2015). One of the basic premises of Aristotelian virtue ethics is that practicing virtues guides
people to behave and decide ethically (Hacket & Wang, 2012; Wang, 2011). The virtue approach
to ethics highlights the need to cultivate good habits that promote human flourishing or well-being
referred to as eudaimonia. (Preti, 2015; Racelis, 2014). These virtues lead to improved institutions
and society. (Preti, 2015).
Virtue ethics—which focuses on people’s character as critical to being a good person—

fills the gap between an overemphasis on behavior and an overblown focus on free will and
personal autonomy. One should instead consider whether an action is in line with being a virtuous
person. The literature on virtue ethics wishes to propose virtue theory as an improved paradigm of
ethics especially for business and management. For instance, an accounting and finance
professional should exercise the virtue of courage when undertaking certain transactions that may
be unjust to certain parties. The employee’s habituation towards what is good and fair should cause
him to conduct himself well and take prudential action. Overall, virtues usually play an important
role in promoting the well-being of persons, and thus managers should add an attention to virtues
of human character in their policies and decision making (Racelis, 2014).
“Understanding oneself as strongly committed to the virtues” (Jubilee Centre for Character
and Virtues, 2017, p.8) is what is referred to as virtue identity. The Jubilee Centre for Character
and Virtues has likewise developed a new Virtue Identity Measure, designed to test adolescents’
identification with four virtue types—civic, intellectual, moral, and performance. The literature on
virtue identity suggests that as the person prioritizes moral values over other values, he or she
exercises virtuous and moral actions (Taylor-Collins, Harrison, Thoma, & Moller, 2019).
Moreover, persons who have the habit of social action think they are more similar to exemplars of
moral and civic virtues, would like to be similar to the moral and civic virtue exemplars, and say
that their friends identify them to be similar to the moral and civic virtue exemplars (Taylor-Collins
et al., 2019).
Leader virtues
Leader virtue is a character trait or disposition that a leader learns and maintains
through continuous practice, and expresses through intentional actions (Hacket & Wang,
2012). Consequently, leader virtue provides the moral foundation for action and conduct
(Hacket & Wang, 2012).
The four cardinal virtues of prudence, justice, temperance, and fortitude are deemed
essential for business leadership (Preti, 2015). Wang (2011) added to the four cardinal
virtues the virtues of humanity and truthfulness as essential to leadership. Humanity
symbolizes the Confucian virtue Ren (humanity) and the Aristotelian virtue friendliness. It
refers to the character trait of caring and showing concern for others and sympathizing with
others (Wang, 2011). Truthfulness, on the other hand, denotes the Confucian virtue Xin
(truthfulness) and the Aristotelian virtue truthfulness. It refers to the character trait of a
leader to keep promises and tell the truth. (Wang, 2011).
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Virtuous Leadership and Effectiveness
Virtuous leadership is the first systematic and holistic approach to leadership from
the point of view of aretology, which is the science of the virtues developed by the Ancient
Greeks (Havard, 2007). Various studies underscore the roles of different virtues in
particular leadership styles (Hendriks et al, 2020).
To Wang (2011), virtuous leadership consists of three key components 1) leader

virtues, 2) leader virtuous behaviors, and 3) their context for the expression. Likewise, it
has two underlying processes 1) a perceptual process wherein followers perceive a leader
to be virtuous due to the latter’s actions, followed by 2) a modeling process, in which
followers adjust or alter their behaviors to imitate the leader (Wang, 2011).
Studies have shown a positive association between virtuous leadership and

followers’ perceptions of ethical leadership and leader effectiveness, and virtuous
leadership with followers’ ethical behaviors and performance as evaluated by leaders
(Wang, 2011). Some scholars have found the effectiveness of leaders who motivate and
inspire followers, as they provide meaning to the latter’s work. (Bass and Riggio as cited
by Wang, 2011).
Virtuousness can guide leadership in times of confusion, instability, and high-speed

change (Cameron, 2011). This is so since virtuousness constitutes goodness which is
universal in all societies and cultures (Cameron, 2011). Also, virtuous behavior is
associated with favorable outcomes. For example, some studies have shown that
“organizations with higher virtuousness scores had significantly higher productivity,
quality, customer retention, and lower employee turnover than other organizations”
(Cameron, 2011, p. 31).
Research Question and Methodology
This study’s objective is to draw out theoretical propositions for the virtuous leadership
model, by studying the case of a Philippine leadership program that advocates virtuous leadership.
In a sense, this study is an attempt to apply to the Philippine setting the virtuous leadership
paradigm of Wang (2011) as consisting of the components of leader virtues, leader virtuous
behaviors, and their context for expression, and underlying perceptual and modeling processes.
This research study takes on a critical realist research philosophy and follows Newstead et
al’s deep ontology of virtues. Critical realism purports that reality is stratified into three levels 1)
the empirical, or that which is observable, 2) the actual, which refers to events that may or may
not be observed, and c) the real or deep level referring to causally efficacious powers (Kempster
& Parry, 2011; Saunders, Lewis & Thornhill, 2016). Critical realists posit that reality is
independent of the knower. The knower captures what is sensible or empirical though what is
sensible may not capture the entire reality. A critical realist looks for the bigger picture. Critical
realism validates the move to draw out meaning from the testimonies of respondents. The
researchers wish to relate the young trainees’ statements on virtues and leadership with the intent
of the program leaders.
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In particular, a grounded theory methodology is being employed. The survey responses
and statements by leadership trainees are coded and analyzed, to seek evidence of youth leaders
becoming aware of leader virtues in their program managers and coaches, and whether they can
reflect these in their statements, behaviors, and projects.
Grounded Theory approach
Given that leadership is a social influence process, quantitative research

methodologies have not been very successful in theorizing about the nature of these
processes (Parry, 1998). The phenomenon of leadership appears to have a variety of
attributes, viz. the emphasis on social, contextual, processual, and relational aspects of
leadership (Kempster & Parry, 2011). Leadership research must include the different
variables that affect the social influence process and that consider the longitudinal aspect
of change in the leadership process (Parry, 1998). Some scholars argue that the qualitative
method is the preferred approach for leadership studies (Kempster & Parry, 2011).
Grounded theory analysis seeks to produce a social theory of a phenomenon based on the
relational experiences of participants (Kempster & Parry, 2011). Grounded theory, a
qualitative approach that aims at theory generation rather than theory testing, provides a
methodological way to make sense of and explain the manifestation of contextualized
leadership (Kempster & Parry, 2011).
Coding and Memoing
Coding is the fundamental process used by the researcher to analyze the data. Open
coding interprets the phenomena reflected in the data and provides fresh insights to the
analysts. (Corbin & Strauss, 1990). In the beginning, the researchers select as many people,
situations, and documents as possible to obtain data that correspond to the scope of the
research question. Thereafter, the researcher seeks data that will confirm or modify the
categories of the theory that have already been developed (Corbin & Strauss, 1990).
The authors strove to code based on the following chief sources of data: (1)
responses by the youth leadership trainees to a questionnaire survey asking them to identify
specific virtues exhibited by the program managers and their mentors, and (2) statements
and pronouncements made by selected student trainees on KALFI LEAD videos found
online.
Exploring the Case of a Philippine Foundation
Kalinangan Youth Foundation, Inc. (KALFI) is a non-profit and non-stock

foundation registered with the Securities and Exchange Commission in 1983 (Kalinangan
Youth Foundation, Inc., 2019). Moreover, it was recognized by the Bureau of Internal
Revenue in the same year and certified by the Philippine Council for NGO Certification as
a donee institution in 2003 (Philippine Council for NGO Certification, 2020). KALFI
complements the training given in the home and school with the purpose of the holistic
development of young women. In 2011, KALFI established KALFI LEAD, a leadership
platform for young university women to serve and become change-agents of society.
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(KALFI, 2011; Racelis, 2020). Regularly, the young leadership trainees engage in social
service projects and academic tutorials that service the poor and marginalized (KALFI,
2011; Racelis, 2020). The KALFI LEAD trainees design and organize the service projects
which they carry out annually (Racelis, 2020). Young professionals, faculty volunteers
collaborate actively as mentors, program managers, and staff to make these projects a
reality (Racelis, 2020).
The overall KALFI LEAD program management conducts regular meetings,

workshops, and conversations with the program managers and mentors of the different
KALFI centers. They discuss and exchange views on how to reinforce their mission to
develop and train future servant leaders (KALFI, 2019). The program managers and
mentors cultivate in the trainees, different aspects of the feminine genius and support them
with compassion in their journey to serve from the heart (KALFI, 2019). One of the goals
that KALFI seeks to achieve is that the young leadership trainees attain virtues -especially
excellence and service- amid the circumstances of daily life (Racelis, 2020). KALFI
promotes servant leadership which revolves around the idea of leaders leading through
service (Racelis, 2020).
Findings and Discussion
The results of the survey questionnaire were tabulated. Table 1 below summarizes the
virtues identified as being espoused by managers and mentors while Table 2 shows the chief leader
virtues that the respondents wish to see in those managers and mentors. The next section discusses
the main categories drawn out from the data and the theoretical explanations for them.
Table 1
Top virtues being modeled by managers and mentors
Concerned Friendly Generous Sincere

Respectful Supportive Mature
Table 2
Top virtues considered desirable leader traits
Care and concern Sincere Achievement-oriented

Open-minded Competent Youthful
The intention of managers and mentors to cultivate, support, and lead the trainees’ to be
servant leaders, correspond to the virtue of managers and mentors in the real domain. Based on an
abstraction of concepts and categories drawn from the process of coding the statements of trainees,
the following are the paper’s theoretical propositions:
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In organizations that emphasize virtues, followers can identify, articulate, and appreciate
specific leader virtues.
The youth trainees of KALFI LEAD observed and identified the virtues exercised
by program managers and articulated them accordingly. They gave special reference to
concern, respect, friendliness, supportiveness, generosity, maturity, and sincerity. They
were able to explain how the program leaders manifest the virtues. For instance, a trainee
exclaimed, “Her generosity (is shown) in every little aspect of the program ...making sure
that we as KALFI leaders get the best experience, guidance, and support.” Another trainee
identified the program manager to be generous, leading, hardworking, and said “I
appreciate these the most because they are virtues essential to a leader who gets the job in
the most excellent way possible while caring for her peers and leading by influence.”
This supports the argument of Newstead et al. (2018) that virtue is composed of
discrete virtues. It likewise supports the scholars’ deep ontology of virtue. The leaders’
virtues, such as concern, respect, friendliness, supportiveness, generosity, maturity, and
sincerity, are the trainees’ subjective interpretations of reality in the empirical domain. The
leaders’ virtuous behaviors were experienced by trainees in events that lie in the actual
domain. The leaders’ virtuous behaviors or virtuousness are caused by the virtue of the
managers and mentors which pertain to reality in the real domain. The managers and
mentors, nurtured by the organizational culture, have the sincere inclination to help trainees
be good moral individuals who will lead and serve their community and society. It is the
true virtue that gave rise to virtuous behaviors, and which in turn led followers to sense the
leaders’ virtues.
This is also evidence for Aristotelian virtue ethics which identifies the essence of
virtues in community leadership and business activities. According to Aristotle’s
Nicomachean Ethics, virtue is the mean between extremes reflecting a state of human
character and is expressed through voluntary actions which are neither coincidental nor
compelled by external forces (Racelis, 2020; Hackett & Wang, 2012).
Furthermore, this provides evidence of Wang’s virtuous leadership. The leader

virtues were manifested through virtuous behaviors in concrete situations. Accordant with
the perceptual process, the trainees perceived the leaders to be virtuous based on the
leader’s actions (Wang, 2011). Based on the findings, the followers identified their leaders’
concern and friendliness which are aligned with Wang’s leadership virtues of humanity,
and their sincerity which is aligned with Wang’s leadership quality of truthfulness (Wang,
2011).
In organizations that instill the habit of social action, the followers value moral virtues and
are more conscious of the need for them to exercise virtues that benefit others.
The youth trainees expressed appreciation for the virtues of managers that impact
society. They shared insights that leadership goes beyond the organization, and its
members should be oriented towards the good of society. As one said, “All other virtues
would make no sense for a leader if she does not want to include the society in her plans.”
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Another respondent expressed that the leader should be connected to society and should
know what society needs. “The program influenced me a lot: it has opened my eyes to the
poverty around me and has encouraged me to share my talent and treasure to the children
whom we visited,” remarked another young leader.
The reflections of trainees at different moments show that the interest and habit of
social concern are being embedded in their behavior. One leadership trainee said: “I had a
great time with everyone! So happy that we were able to spend our Christmas by living out
its true meaning, i.e., sharing things with others as a way of thanking God.” Another said:
“Oftentimes, we tend to indulge ourselves in the everyday pleasures of life that we forget
that there are people who deserve attention as much as they truly need them. The visit to
the sick children at the public children’s hospital served as an eye-opener to me and my
fellow KALFI LEADers.”
Other youth trainees also shared, “Through classes, hands-on outreach, initiatives,
and constant one-on-one mentoring, we undergo youth training that enables us to be more
aware of and sensitive to the needs and sufferings of the vulnerable people in our midst.”
This is empirical evidence of virtue identity. In the study of Taylor-Collins et al.

(2019), those with the habit of social action identify themselves with moral and civic
exemplars and like to imitate the behavior of the moral and civic exemplars. The trainees
who participated in KALFI Lead’s socio-civic activities acknowledged the moral and civic
virtues of their managers and mentors, the social value of the program, and the
corresponding influence on them. Their leaders and programs have instilled in them the
need to practice sensitivity and generosity in giving themselves to those in need.
Virtue-oriented programs and the virtuousness of role models have the potential to influence
the youth trainees’ behavior.
A respondent expressed her satisfaction with how her mentor contributed to her
personal development. She said “I am better guided on what to do with my life and how to
plan my life well in order for me to become more effective. Her leadership has also inspired
me to lead others, especially those I meet in school, the same way.” Another young
leadership trainee relayed “Her friendliness, supportiveness, and openness ... inspire me to
be more cheerful and connected with the people I encounter daily. These virtues also
allowed me to relate with her more and grow as a leader.”
This can be explained by the fact that virtuousness through organizations

encourages and perpetuates virtuous behaviors (Cameron, 2003). The virtuousness of role
models and in programs drove the trainees to take steps to improve their behavior, for
example, in order, social relations, and leadership.
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The virtues of leaders motivate trainees towards higher-level needs such as self-actualization
or the need to realize one’s full potential as a human being.
A respondent expressed: “the achievement-oriented trait of the director motivates

me to accomplish my tasks.” Another remarked “(My mentor is) achievement-oriented,
reliable, socially responsible, leading, controlling, open and sympathetic. These somehow
motivated me to become a human… sensitive to others. Still, another shared, “Her
achievement-orientedness and her being supportive inspire followers to work hard in
reaching their goals.” Moreover, one trainee communicated, “She really pushes me to do
better. We both know the importance of growth not only academically but also spiritually.”
And another young leadership trainee communicated, “What KALFI LEAD requires really
helps me grow as a person.” The foregoing manifest that virtuousness is associated with
concern for human flourishing.
The idea that the youth leadership trainees needed the motivation to emulate the
mentors’ virtues harks back to motivation theories, such as those by Abraham Maslow.
Motivational processes uplift morale and cause varied virtuous actions among different
persons. Psychologist Abraham Maslow proposed that all people seek to satisfy a hierarchy
of five basic needs: physiological needs, safety needs, belongingness needs, esteem needs,
and self-actualization needs (Hopper, 2019). He argued that the lowest-level needs must
be met before seeking to strive for higher needs in the hierarchy, such as esteem needs
(Green & Burke, 2007). Esteem needs refer to the need of feeling good about oneself,
recognition, respect, and appreciation from others (Jones & George, 2015; Green & Burke,
2007). Self-actualization needs refer to aspiring to the realization of the fullness of one’s
humanity (Jones & George, 2015). In the data, we find that the youth trainees appreciate
role models who are supportive, concerned, and friendly, and these virtues motivate them
towards higher-level needs such as self-actualization. This can be translated to the need for
personal growth, the need to do what one ought to do and be what one ought to be. The
leader virtues motivate followers to be their best and to do what is best for others (Green
& Burke, 2007; Hopper, 2019).
On the other hand, self-actualization can be impeded by certain actions that are not
conducive to good performance, for example, the mentor’s trait of being “controlling.”
Sample statements by the youth leadership trainees include “I believe that each individual
is unique and has their own way of doing things. A controlling nature, at its worst extent,
may stifle one's ingenuity and lessen their interest and excitement to participate in the
program.” Leaders ought to be aware of these “de-motivators”, and strive instead to exhibit
motivational behavior.
Conclusions and Recommendations
In organizations that give premium to virtues, followers can identify and appreciate specific
leader virtues, and articulate its manifestation through virtuous behaviors. The top virtues
identified were concern, respect, friendliness, supportiveness, generosity, maturity, and sincerity.
The findings reinforce Newstead et al.’s deep ontology of virtue and the scholars’ claim that virtue
(the inclination toward the good) constitutes discrete virtues. This also provides evidence for
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Aristotelian virtue ethics which underscores that virtues are carried out knowingly and voluntarily.
This likewise supports Wang’s framework of virtuous leadership.
Moreover, in organizations that instill the habit of social action, followers value moral
virtues and are more conscious of the need for them to exercise virtues that benefit others. Aligned
with virtue identity, the prosocial programs lead the trainees to be sensitive and generous to others.
Furthermore, the virtues possessed by role models have the potential to influence the
trainees' behavior. This supports the claim of Cameron (2003) that virtuousness perpetuates
virtuousness. This likewise reflects virtuous leadership as a leader-follower relationship wherein
a leader’s illustration of virtues -borne of true virtue- causes followers to “a) perceive their leader
as virtuous, and then (b) learn and practice these behaviors modeled by the leader” (Wang, 2011,
p. 98).
Finally, the virtues of role models motivate trainees towards higher-level needs,
such as self-actualization. Leaders who motivate and inspire, provide meaning to their followers’
ideals, goals, work, and life.
Thus, virtue is an ever-active strength that enables us not only to reach human
excellence but also to function efficaciously as human persons. Virtue activates one’s passion to
lead oneself and others towards excellence in character. It makes one an effective human being
since it helps him or her be conscious of the needs of others, bring out the best in them (Havard
2007), and serve the common good.
Virtue, which supersedes any form of individualism and self-interest, conveys a message
of hope. And the integration of virtue in leadership requires commitment, and practice in an
appropriate context. Virtuous leadership entails a process and a series of interactions among
organizational leaders, followers, and different stakeholders (Taylor-Collins et al., 2019; Flynn,
2008). The presence of personal morality of leaders on one hand and organizational ethics on the
other hand facilitate effective virtuous leadership.
Virtuousness in programs, leaders, and role models serves as a promising feature for
trainees to possess strength in character as well as to practice effective virtuous leadership. Indeed,
virtuous leadership is real leadership that allows one to spot and act towards the needs of the
moment. Virtuous leadership engenders trust, courage, maturity, and generosity which can help
overcome crises. It is recommended that managers and leaders of organizations consider more
seriously a vision for a new world order based on virtue. Greater efforts should be exerted to teach
and promote this leadership model in our schools and public institutions, as well as in for-profit
and non-profit organizations.
Areas for Further Study
More primary data, such as responses to unstructured interviews with trainees, could be
gathered. Also, accounts and statements made on social media posts of those young leader trainees
can be coded and analyzed. Such data currently exist, but given time limitations and the private
nature of most of those posts, this paper has not managed to include this source of data. Interviews
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with program managers and mentors could have also reinforced the reality of virtue in the real
domain. The survey and study can be extended to other organizations, in the Philippines and
beyond, that strive to exercise virtues and promote virtuous leadership. Finally, further research
can be undertaken to consider the influence of religion and spirituality, national culture, the role
of government and institutions, and other determinants of virtuousness.
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Robotics Process Automation: Adoption in Accounting
8th NBMC Paper #11
Prince Joy T. Mappala and Michael B. Pasco

San Beda University
Abstract
Adoption of robotics process automation is important to perform tasks efficiently and recently to
keep social distancing as way to prevent spread of COVID-19. In addition, technology plays a vital
role to be competitive in today’s market. One of the technological advancements that is gaining
popularity is Robotic Process Automation (RPA). However, because of its early development,
there are limited studies to predict and analyze RPA in accounting. The researchers sought the
effects of innovation adoption attributes on the acceptance of users and adoption of robotic process
automation in accounting. The levels of perceptions of the Certified Public Accountants from
Tuguegarao City, who performed various accounting processes in their respective industries, were
taken. The researchers also utilized quantitative and causal methods with randomly selected
respondents in the study. Backward stepwise multiple regression was utilized to determine the
relationship between the variables. Guided by Rogers’ diffusion of innovation theory, the
conceptual framework about the attributes of adoption namely, relative advantage, trialability,
compatibility, complexity, and observability, was formed. Compatibility, complexity and
observability measurement items were combined after pre-testing to measure user-friendly
attributes in the operational framework. Results showed that only user-friendly had significant
relationship with RPA adoption and was then noted as the highest predictor. Further studies
recommended were on the analysis of each attribute of users’ acceptance upon implementation of
Robotic Process Automation by an organization.
Keywords: robotic process automation, adoption, accounting, innovation, user-friendly
Introduction
Robots accomplish physical tasks related to logistics, disinfection, provide COVID-19

information to people, and reduce the threat of infections (Zhanjing et al., 2020). The impacts of
COVID-19 drive further research in robotics to address risks of infectious diseases. “But without
sustained research efforts, robots will, once again, not be ready for the next incident” (Yang et al.,
2020, p. 2). Zhanjing et al. (2020) argued that COVID-19 drives robotic adoption to increase the
efficiency of work, the quality of services, and reduce the financial costs. During the COVID-19
pandemic, robots helps to maintain social distancing. Accounting functions are not spared from
the need for adoption of robotics.
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Typically for companies, what matters most is the end figure of the statement of financial
performance for the year-end. A net income means favorable growth, well-managed cost or
substantial increase in sales or revenue. A net loss signals the management to revise its strategy on
pricing, costing and focus on areas of development. Decade-old companies watch how the market
grow and develop throughout the years. Planning is never the same for the managers and business
executives, and one aspect that is on constant monitoring its technology. (Shenhar, Dvir, Levy &
Maltz, 2001)
Technology evolves from a luxury to “a must have” to gain a competitive advantage

(Marks & Bell, 2006). A promising technological advancement is the introduction of Robotic
Process Automation (RPA). The problem, however, is that this technology is only in its early stage.
Brussel and Theyssens (2017) state that innovation in an early stage of development is hard to
track.
Robots and Industries
Robots also reduce the amount of wasted material used due to their accuracy and
precision. Robots save companies money in the long run with quick ROIs (return on
investment), fewer workers. less injuries or accidents, and less utilization of materials
(Singh et al., 2013). In 1942, Isaac Asimov developed the “Three Laws of Robotics.” The
first law is, a robot may not injure a human (or Humanity), or, through inaction, allow a
human (or Humanity) to come to harm. The first industrial robot was introduced to the U.S.
in the 1960s. Different industries jump on the path of robotics to find a way to improve on
every possible part on how humans do what they do (Sellappan & Kumaradhas, 2013).
Accounting Function
Accounting is both an art and a process. Accounting provides three important

activities in the accounting process, namely: identifying, measuring, and communicating.
The ultimate purpose of accounting is classified into two categories: control and decision-
making. Financial reports provide information about the entity’s economic resources,
claims against the entity and the effects of transactions and other events and conditions that
change those resources and claims. (Zimmerman, 2000, as cited in Taipaleenmaki &
Ikaheimo, 2013)
Robotics Process Automation
Robotic process automation (RPA) is a software-based approach of process

automation by capturing, interpreting and coordinating the actions of existing applications
and processes. Basically, it is a software that operates as a virtual workforce and replaces
the human movements and interventions in repetitive and recurrent tasks. It interacts with
the existing applications, without change in the current IT-landscape, and is used in a wide
range of industries like finance, accounting, banking and insurance (Brussels & Theyssens,
2017).
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Research Problem
This study investigates among the accountants in Tuguegarao City: What are the
innovation attributes (Roger, 1995), that affect adoption of robotic process automation
(RPA)? The research objectives are intended to determine the following:
a) the effect of relative advantage on RPA,
b) the effect of trialability on RPA, and
c) the effect of user-friendly attributes (compatibility, complexity and
observability) on RPA.
Research Gaps
This study focuses on the readiness to adopt RPA to bridge the gap between RPA
and the perceived adoption and implementation of RPA to provide a framework for
companies to successfully implement RPA (Gullkvist, 2011). Attributes of adoption and
acceptance of potential users provide a successful entry of technology. The contextual
limitations of reviewed literature led to investigate the effects of the attributes of innovation
on the adoption of RPA in accounting. The research limitations also pave way to address
the research problem: What are the effects of the attributes of innovation on the robotic
process automation adoption in accounting?
Theoretical Framework
Technologies enable digital accounting that were regarded innovations. In line with Rogers
(1995), the idea, thing, procedure, or system were regarded as innovations when it was perceived
to be new by whoever was adopting it.
Diffusion of Innovation Theory
Rogers (1995) regarded the diffusion of innovations as a social process that

communicated perceived information about a new idea; it produced an alteration in the
structure and function of a social system, thus producing social consequences (Rogers
1995). According to Rogers (1995, as cited in Gullkvist, 2011), the diffusion effect was the
increasing, cumulative pressure from interpersonal networks to adopt or reject innovation.
Attributes of Adoption
The perceived relative advantage consists of financial, social or other types of

outcomes perceived as gains by the adopter while better innovation is the faster adoption
process (Straub, 2009 as cited by Juntunen, 2018). Compatibility refers to the degree to
which innovation is regarded as being consistent with the potential end-users’ existing
values, prior experiences, and needs. Attributes of compatibility impact the decision to use
new technology because technology often requires establishments to change their existing
business practices and operations to increase the benefits of using the technology
(Mndzebele, 2013). Complexity is the end-users’ perceived level of difficulty in
understanding innovations and their ease of use. It is suggested that high complexity tends
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to create frustration among individuals and has negative association with adoption
(Juntunen, 2018). Trialability refers to the degree to which innovations can be tested on a
limited basis. It reflects how easily individuals can experiment with the innovation and
high trialability tends to lower the perceived risk and uncertainty experienced by the
individuals. (Kee, 2017) Observability is the degree to which the results of innovations are
visible to other people (Lee et al., 2011, Stieninger& Nedbal, 2014, Zhang et al., 2015,
Gullkvist, 2011, Al-Jabri & Sohail, 2012, and Yoon, Ghosh & Jeong, 2014). Often,
observability construct is combined with visibility and communicability constructs and
together and separately are perceived to increase the likelihood for adoption (Kee, 2017).
Diffusion of Innovation Theory (DOI) served as a fundamental theoretical lens of

innovation adoption research in many disciplines, including sociology, communications,
marketing, and education (Yoon, Ghosh & Jeong, 2014). Several studies continued to
utilize DOI theory and other acceptance model to analyze adoption of technological
innovations that disrupt different industries. One application of DOI was established by
Al-Jabri and Sohail (2012) as they attempted to study mobile banking adoption as shown
in Figure 1. The operational framework highlighted the variables to be investigated in this
research, as shown in Figure 2.
Figure 1
Conceptual Framework: Attributes of Innovation Adoption
Source: Rogers (1995)
Assumptions
The researchers assumed that the accounting personnel in Tuguegarao City

provided relevant insights and perceptions about the innovation characteristics or attributes
that influenced acceptance and adoption of robotic process automation. There would be no
revision on Philippines Accounting Standards and Philippine Financial Reporting Standard
within the next 15 years involving automation on Finance and Accounting. The researchers
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also assumed the urgency for understanding this research topic because within the next 10
years, there would be a law to be passed by Congress of the Philippines regulating the
application of robotic process automation in finance and accounting. The research model
offered that the five attributes of adoption (relative advantage, trialability, compatibility,
complexity and observability) contributed to adoption of RPA in Accounting. In addition,
it showed which attributes were the best predictor of adoption of RPA.
Figure 2
Operational Framework: Innovation Adoption of RPA in Accounting
Source: Mappala & Pasco (2020)
There are 11 measurement items for the adoption of RPA (Al-Jabri & Sohail, 2012). All
variables were measured with 5-points Likert scale: 5-strongly agree, 4-agree, 3-neither agree nor
disagree, 2-disagree, 1-strongly disagree, and were tested reliable.
Table 1
Operational Measurement of Variables: Innovation Adoption of Robotic Process Automation
Variable Measurement items

Q1: You explicitly accept RPA in the accounting processes related to your
job.
Q2: The features and capabilities are important for RPA Adoption and
implementation of accounting processes.
Adoption of Q3: Trained by users
Robotic Process Q4: Working with client’s user interface
Automation Q5: Undertake structured, repeatable, computer-based tasks
Q6: Works flawlessly with multiple systems
Q7: Works with different electronic formats like MS Excel
Q8: Performs checks and takes in consideration validations points
according to a predefined set of rules
Q9: Identifies easily exceptions
Q10: Works 24/7 and during holidays and weekends
Q11: Logs are stored inside the program
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Q1: Economic profitability
Q2: Low initial cost
Q3: Decrease in discomfort
Relative Advantage
Q4: Social prestige
Q5: Savings of time and effort
Q6: Immediacy of reward
Q1: Free downloads
Trialability Q2: Trial versions
Q3: Prototypes
Q1: Social/cultural values and beliefs
Q2: Previously introduced ideas
User-friendly Q3: Fit with the way I like to gather information at work
(Compatibility,
Q4: Easiness of use
Complexity and
Q5: Require a lot of efforts
Observability)
Q6: Clear and understandable
Q7: Results and benefits easily visible by potential users
Equal weighted means of each measurement item were used to measure each variable of
interest in this research (Miller, 2014; Heinz et al., 2018).
Hypotheses
This research tested the following null hypothesis at 5% significance level and were aligned
with the research objectives:
H01. There is no significant relationship between relative advantage and robotic process
automation adoption. According to Rogers (1983), relative advantage is the degree to which an
innovation is perceived as being better than the idea it supersedes (Lee et al., 2011), Stieninger and
Nedbal (2014) and Al-Jabri and Sohail (2012) identified relative advantage with positive effect in
the adoption of users. When users perceive relative advantage or usefulness of a new technology
over an old one, they tend to adopt it (Rogers, 1995).
H02. There is no significant relationship between trialability and robotic process

automation adoption. According to Rogers (1995), trialability is the degree to which an innovation
may be experimented with on a limited basis. Also, potential adopters, who are allowed to
experiment with an innovation, feel comfortable with it and are more likely to adopt it. Lee et al.
(2011), Stieninger and Nedbal (2014), and Al-Jabri and Sohail (2012) hypothesize that trialability
has positive effect on innovation adoption and acceptance of users.
H03. There is no significant relationship between user-friendly attributes and robotic

process automation adoption. User-friendly was composed of compatibility, complexity and
observability in this research, and was confirmed reliable with pre-testing. According to Rogers
(1995), compatibility was a vital feature of innovation as conformance with user’s lifestyle can
propel a rapid rate of adoption. Past research found that organizations would be more than willing
to adopt technology if innovations were compatible with the environment and work practices.
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Complexity, according to Rogers (1995), was the degree to which an innovation is perceived as
relatively difficult to understand and use. Mndzebele (2013) stated that complexity is positively
correlated with each of the e-commerce variables. Observability, according to Rogers (1995), was
the degree to which the results of an innovation are visible to others. Past research had concluded
that observability had a significant effect on adoption. In addition, Lee et al. (2011), Stieninger
and Nedbal (2014), and Al-Jabri and Sohail (2012) identified compatibility, complexity and
observability to have a positive effect on innovation adoption and acceptance of users.
To determine the factors that influence adoption by users, the researchers used the
quantitative causal research methods. Causal method determined the cause and effect relationships
and was also called explanatory research (Brains et al., 2011).
The research philosophy that guided this research was positivism- a

progression of empiricism. Positivism accounted that facts could be proven while
reality was the same for each person. The observations and measurement pointed to
reality is. There are 4 characteristics of positivism, namely: phenomenalism – only
knowledge confirmed by the sciences is genuine knowledge, deductivism theory
generated hypotheses that can be tested for provable laws, and objectivity in which
science must be value-free, and inductivism as knowledge was gained by gathering
facts that provided the basis for laws. (Ryan, 2018, p. 41)
The research was a cross-sectional study.
Research Participants
Tuguegarao City had been consistently producing CPAs over the past 5 years. In
2013, it gained fame when University of Saint Loius, Tuguegarao (USLT) produced
another 1st placer in the CPA board examination with an average of 93.86%. According to
the Bureau of Internal Revenue, there were 100 accredited tax accounting professionals
composed of CPAs and non-CPAs rendering bookkeeping and accounting services within
Cagayan and Isabela. The research participants were finance and accounting professionals,
public practitioners and partners of accounting firms in Tuguegarao City. The assumptions
before running a multiple regression were made. Kaiser-Meyer-Olkin (KMO) was utilized
to test the adequacy of the sample for each variable in the model. Kaiser-Meyer-Olkin
MSA Statistics showed .657 (more than .600) and was determined to be adequate (Al-Jabri
& Sohail, 2012, Miller, 2014).
Sampling Design and Research Instruments
Random sampling was utilized in the conduct of the research. Random sampling
was selected because it was a fair way of selecting sample from a given population which
gave every member an equal opportunity to be selected (Graveter & Forzano, 2011). It was
stated that “the logic behind simple random sampling was that it removed bias from the
selection procedure and should result in representative samples” (Graveter & Forzano,
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2011). In performing an unbiased selection of the respondents, the researchers assigned a
number to every CPAs identified within Tuguegarao City. Assigned numbers were chosen
through a draw-lot method to maintain the randomness of the sample.
The data gathering instruments that were applied were survey questionnaires and
interview (Al-Jabri & Sohail, 2012. Questionnaires regarding RPA characteristics were
adopted from the characteristics identified by Anagnoste (2018) and factors that influenced
adoption and acceptance by the users were lifted from the study of Aizstrauta et al. (2015)
which merged innovation diffusion theory and the other was the technology acceptance
model. In addition, the researchers used interview guide to clarify unclear responses and
support the data gathered from the questionnaire (Al-Jabri & Sohail, 2012). A pre-testing
for first 30 respondents was conducted to test the reliability of the questionnaire using the
Cronbach’s Alpha. Cronbach’s alpha - all item results for each variable were: relative
advantage (.7568), trialability (.7651), user-friendly- compatibility, complexity and
observability (.7572), and robotics process automation adoption (.7546). The internal
consistency of the research instruments supports the analyses of this research (Wessa,
2019).
Research Procedures and Ethics
Questionnaires were developed for an initial understanding on how the respondents

perceived RPA adoption in accounting. To facilitate data gathering, random sampling was
utilized to select the respondents. After clarifying the information on the first 30
respondents, questionnaires were distributed both manually and through google survey
form. Questionnaires were given to 150 respondents and only 100 answered. Collected
questionnaires were checked for completeness and editing process was undertaken by
reviewing illegible, inconsistent, and ambiguous responses (Al-Jabri & Sohail, 2012).
Ethical practices were observed by the research during the conduct of this research. Ethical
concerns regarding the protection of human subjects in research can be traced to the
development of the Nuremberg Code in 1947 (Boxall & Ralph, 2009). Informed consent
was being presented to the head of office prior the floating of manual of the Internet, which
had made opportunities for international publishing and viewing of visual data much more
widely available (Boxall & Ralph, 2009). Descriptive statistics and “Backward Stepwise
Multiple Regression” at 5% level of significance helped the researchers in determining
factors influencing RPA adoption in accounting using the factors determined by Rogers’
Innovation Diffusion Theory. Backward elimination, which involved starting with all
candidate variables and testing them one by one for statistical significance, deleting any
that were not significant, deleting the minor significance of studentized t- values of the
variables statistically not significant (Telmo et al., 2010). Beta coefficient, generated by
multiple regressions, were measurements of relationships or cause and effects between
independent variables and a dependent variable, and determined greatest predictors of RPA
adoption, as well (Heinz et al., 2018).
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Results and Discussions
This section presented, interpreted and analyzed the data gathered through the
questionnaires, interview guide and analysis of the characteristics that influence adoption of
robotic process automation (RPA). The applications of RPA identified by the respondents were in
bank, credit and payments, balance sheet reconciliation, revenue recognition, variance analysis,
cost allocations, journal entry, controls verification, inventory management, and amortization and
depreciation.
Descriptive Statistics
The researchers focused on Certified Public Accountants (CPA) because they were
directly involved in accounting functions and would be the users upon adoption of RPA.
Majority of the research participants were from government agencies, as shown in Table
2.
Table 2
Demographic Profiles of Respondents, n=100
Profiles f % Profiles f %
Gender Male 74 74% Job Position Accountant 16 16%
Revenue
Female 26 26% Officer 84 84%
Civil Status Single 89 89% Job Sector Private 16 16%
Married 11 11% Government 84 84%
As shown in Table 3, the descriptive statistics of the independent variables (relative

advantage, trialability and user-friendly) and dependent variables (Acceptance for Use and RPA
Adoption). Mean scores were based on a five-point Likert Scale where 1 was strongly disagree, 3-
neither agree nor disagree, and 5 was strongly agree. Result showed that respondents agreed that
relative advantage, trialability, compatibility and observability as attributes that are perceived in
RPA adoption.
Table 3
Descriptive Statistics of Independent and Dependent Variables, n=100.
Standard Confidence Level

Variables Mean Mode
Deviation (95%) +-
Relative Advantage 4.23 0.46 3.85 0.092
Trialability 4.31 0.50 4.00 0.099
User-friendly (Compatibility, 4.25
4.26 0.36 0.071
Complexity, Observability)
RPA Adoption 4.42 0.39 4.63 0.078
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Assumptions Tested for Multiple Regression
Using Shapiro Wilk’s Test for Normality, relative advantage (W=.8976, p-

value=0.000), trialability (W=.9151, p-value 0.000), user-friendly attributes (W=.9808, p-
value= .0154), as well as adoption of robotic process automation (RPA, W=.7978, p-value
0.000) did not satisfy normality based on the Shapiro Wilk’s Tests. The researchers
transformed the variables using natural logarithm (ln). With Breusch Pagan Godfrey’s test
for homoscedasticity. the residuals of the variables have equal variance with F= 4.570, p-
value =0.055. The variance inflation factor (VIF) as test for multicollinearity, as shown in
Tables 3 and 4, the variables have VIF of less than 5 that showed no multicollinearity
(Miller, 2014).
User-friendly (beta=.327, p-value of studentized t-test =.001) showed significant

relationship to RPA adoption at 5% significance level. Therefore, user-friendly attributes
of innovation affect adoption of RPA. The beta of relative advantage and trialability
showed slope which is equal or close to 0. Thus, both relative advantage and trialability
have no significant relationship to RPA adoption.
Table 4
Regression Coefficient of Independent Variables with Robotic Process Automation Adoption
t- p-
Variables beta B VIF
value value Summary
0.02 0.01 no significant
Relative Advantage 0.206 0.837 1.024
0 8 relationship
0.14 0.11 no significant
Trialability 1.382 0.170 1.177
3 9 relationship
User-friendly (Compatibility, 0.32 0.38 with significant
3.424 0.001 1.000
Complexity, Observability) 7 4 relationship
Accordingly, the requirements of the personnel in accounting on relative advantage,

trialability, and user-friendly (compatibility, complexity and observability) were perceived to be
high. Moreover, RPA Adoption was identified to be agreed and accepted by respondents. As seen
in Tables 4, the results of regression analysis between the effect of relative advantage, trialability,
and user-friendly were summarized. RPA prevented direct contact of accountants and people
through social distancing.
Ho1: There is no significant relationship between relative advantage and robotic process
automation adoption. Based on the results in Table 3, beta (.020) had p-value = .837 that was
greater than .05, the 1st null hypothesis was not rejected at 5% level of significance. Therefore,
there is no significant relationship between relative advantage and RPA adoption. The results, as
seen in Table 3 also implied that user’s adoption of RPA and was not affected by its relative
advantage. RPA was categorized as a new trend that could disrupt accounting process; however,
users were not aware of its capabilities. Also, accounting techniques had not changed over the
years, users were finding it relatively difficult to accept a technology despite its advantages. In
164 | P a g e
addition, RPA was rather a new concept and started to gain acceptance in different industries. The
respondents did not perceive it as better than other systems with the mingling of technology and
accounting professionals created a fear due to changes in the work processes encountered.
Microsoft office tools together with manual tools were dominantly used by respondents in
executing their tasks, but respondents did not explore use of other open sources in big data
management like in Hadoop, other software and programs. Also, RPA focused more on the
expertise of information technology (IT) professionals while respondent described their
accounting process less on technology systems and IT system support process. It was observed
during the conduct of research that some CPAs did not participate in the study because they thought
that RPA was not included in their line of expertise and function. They perceived RPA could be
properly answered by IT professionals. These are different from the research conducted by Lee et
al. (2011), Stieninger & Nedbal (2014) and Al-Jabri & Sohail (2012) which stated that relative
advantage had a positive effect on adoption of technological advancement in their respective
studies. These mentioned studies focused on e-learning system, mobile banking, cloud computing
and precision agricultural technologies. Meanwhile, this result was affirmed by Mndzebele (2013)
which stated that relative advantage was not a predictor of e-commerce adoption in the hotel
industry. These prior studies all utilized Rogers’ Diffusion of Innovation Theory as the based
framework.
Ho2. There is no significant relationship between trialability and robotic process

automation adoption. As seen in Table 3, the beta (.143) with studentized t-test p-value = .170 on
the resulting slope, was greater than .05. The effect of relative advantage on adoption of innovation
was not evident. The 2nd null hypothesis was not rejected. Therefore, there is no significant
relationship between trialability and adoption of RPA. This result was different from research
conducted by Lee et al. (2011), Stieninger & Nedbal (2014) that trialability affects RPA. However,
the results were similar to the findings of Jabari & Sohail (2012) who studied adoption of mobile
banking. With the big data or volume of transaction and processes involved in accounting, users
gave more importance on eliminating constraints identified in performing their tasks like
unavailability of information and correcting data errors. From few of the respondents, the
unavailability of information was determined as the biggest constraints on performing accounting
process. There was a lag on the accounting process because information that would be used
required ample time to be recorded and summarized as well as transfer of information from
different department of a company would also cause delay of information (Krumwiede, 2016). In
addition, users focused more on accomplishing their tasks based on the need of management, thus
exerting more time and effort on processes that needed their attention. This would mean that they
have fewer time to navigate features of new systems presented to them. This was supported by the
time spent by respondents on job-related training in accounting.
Ho3. There is no significant relationship between user-friendly attributes and robotic

process automation adoption. Results showed beta (.327), studentized t-test with comparison of
slopes has p-value = .001, and was lesser than .05 level of significance, considering the effect of
user-friendly on adoption of RPA by users. Similarly, beta (.210) has p-value = .001 which was
lesser than .05 on the effect of user-friendly on adoption of innovation; thus, the 3rd null hypothesis
was rejected. Therefore, user-friendly composed of compatibility, complexity and observability
attributes of innovation has significant relationship with adoption of RPA innovation in accounting
in the selected accountants in Tuguegarao City. This implied that adoption of RPA was affected
165 | P a g e
by user-friendly. This result has similarities with the research of Lee et al. (2011), Stieninger &
Nedbal (2014) and Al-Jabri & Sohail (2012 who explained that compatibility, complexity and
observability had a significant relationship on the adoption of innovation. It can be inferred that
since users of RPA would encounter different accounting process, they would be considering
RPA’s compatibility to fit well with the different accounting process and the timing of execution
of reports. Majority of the accounting processes were performed on a daily and monthly basis
according to the respondents. Krumwiede (2016) suggested that accounting processes that were
commonly performed on a monthly basis would have the opportunity for more automated and
continuous accounting. In addition, since majority of respondents were from 22-24 years old.,
There would be no hindrance on the acceptance and adoption of new technology despite its
complicated features and interface. Being clear, understandable and fit with the way users gathered
information at work, would be considered by companies on implementing RPA at work. User-
friendly attributes also explained why Microsoft-based software were widely used in accounting,
as noted by respondents.
Proposed Model
With the results, the researchers proposed a model to explain RPA adoption, as
shown in Table 5 and Figure 3.
This theory served as a platform in analyzing adoption of different innovations.

Yet, every innovation in a specific industry of function within an organization had different
implications and results. Relative advantage and trialability of RPA have no significant
effect on acceptance for use and adoption of innovation. With the different introduction of
technologies, users have found it difficult to appreciate the advantages of these systems
offered to them.
Table 5
Regression Coefficient of Independent Variables with Robotic Process Automation Adoption.
Variables Beta B t-value p-value VIF Intepretation

User-friendly
with
(Compatibility,
0.327 0.384 3.424 0.001 1.000 significant
Complexity,
relationship
Observability)
Figure 3
Proposed Equation on the Adoption of Robotic Process Automation.
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Although RPA’s relative advantage and trialability offer economic profitability, low initial
cost, decrease in discomfort, social prestige, and savings of time and effort, respondents’ exposure
to different technologies (ranging from 22-24 years old, and mostly are BIR revenue officers) have
affected how they adopt RPA, user-friendly attributes of RPA have significant effect on adoption
of robotic process automation. User friendly is also the highest predictor of acceptance of users.
Prior researches with regards to acceptance of innovations has indicated compatibility as the
highest predictor because adoption is more likely to happen when the innovation is compatible
with the organization (Juntunen, 2018; Al-Jabri & Sohail, 2012). Also, respondents emphasized
that the biggest constraints in executing accounting process was the unavailability of information,
thus RPA’s user-friendly attribute significantly affected how users gather information at work,
being clear and understandable.
Summary and Research Limitations
User-friendly was the most significant predictor of RPA adoption in accounting.

Commercial researches discussed that accounting would be perfect application of RPA because of
the volume of transactions and big data needed to be processed in every accounting task. However,
accountants’ primary issue was on how they would gather information in a clear and
understandable manner. This implied that RPA’s features must focused on how to facilitate the
ease of data gathering for the users to be compatible with their accounting processes. Further, RPA
should be adjusted on data management to compensate for the volume of transaction handled by
the users. The contextual limitations were focused on the analyses of innovation characteristics of
robotic process automation and their influences on users’ acceptance and adoption. Research
participants were limited to accounting professionals, public practitioners and accounting firms
located in Tuguegarao City. Research participants came from different government sectors and
industry.
Conclusion and Recommendation
Conclusion
Users adopt RPA with user-friendly and easy to understand features and
capabilities. User-friendly is therefore the most important innovation attribute that affects
RPA in accounting Tuguegarao City. that highlights physical tasks, is in its beginning stage
and can help prevent spread of diseases through social distancing. Introduction of new
accounting techniques ensures further advancement of RPA towards its adoption. Faced
with large volume of transactions and big data, adoption of RPA in accounting is triggered
by the unavailability of information, urgency of reports and managing data errors, and
pandemics. RPA providers align their technology on how users perform their accounting
process. This ensures that accounting is being improved to cope with changing standards
and frameworks applicable to every industry. Accounting is a language of business. CPAs
and accountants speak of reports, cost, and forecast that seem to be confusing to other
department and functions within the organization. RPA benefits accounting on data
management and information gathering. To ensure RPA adoption, users need RPA to be
compatible with accounting processes.
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Recommendation
Implications for Managers
From management perspective, the aim is to properly identify if the organization

fits with the application of RPA. Examination of the organization’s vision and mission
must be done to align the strategy with the benefits of RPA in the company. RPA has high
initial costs of implementation so management must properly identify the items for capital
budgeting decision that needs proper evaluation. Once RPA is implemented in the
organization, managers need to establish a performance measure to critically assess RPA
and to identify if RPA provides operational flexibility. Also, RPA implementation has a
possible effect on the employees. The perceptions of employees that they are replaced by
hardware that works 24/7 may result to a dilemma within the organization. Management
needs to properly conduct series of consultation and gather feedbacks from employees on
how they perceive working together with RPA. Big data management and technologies
other than application of Microsoft Office are opportunities for deployment.
Implications for Future Research
Because RPA is only implemented by few large companies, further research on

companies already implementing RPA or planning to implement RPA need to analyze
users’ acceptance. Because the study dwells only on the persuasion stage of the decision
process model, of mostly revenue officers, mostly single in early to middle part of career,
further research can advance the model on the decision, implementation and confirmation
stage with the results obtain from this study. The model can be tested further, and the
variables can be expanded to other group of respondents from IT and other relevant
personnel. The setting of the study was only centered at Tuguegarao City. Further research
can examine users’ acceptance from different province and different region and across
different industries to expand the context of this research. Furthermore, the accounting
process from one industry is different from another industry. The measurement technology
readiness of respondents is a research opportunity. While researchers develop artificial
intelligence (AI), business intelligence (BI), cloud computing, digital accounting, and
remote sensing, and other accounting software, this study dwells on the attributes of
adoption of robotic process automation in accounting.
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The Effects of Incivility from Customers on Turnover Intentions:
The Moderating Role of Perceived Organizational Support
8th NBMC Paper #12
Patrick R. Hariramani, Alyssa Martina Q. Kagaoan,

Rina Flor C. Mutiangpili, and Gabrielle Kaye Valenzuela
Abstract
Incivility from Customers has been commonly defined as the act of “treating the employee in an
uncivil manner (i.e. rudeness, speaking in a disrespectful or insulting manner)” (Van Jaarsveld,
Walker, & Skarlicki, 2010, as cited in Bani-Melhem et al.,2019). These incidents are common in
the service industry, due to the high levels of exposure in social interactions and have been proven
by numerous studies to negatively affect employees in various ways. This study aims to determine
whether incivility from customers affects the intention of employees to leave the organization, as
moderated by perceived organizational support. In order to test this relationship, self-administered
questionnaires were distributed to the front-line employees of The Chicken Factory Inc. (Frankie’s
New York Buffalo Wings or Frankie’s). The questionnaires were divided into three parts to
measure the levels Incivility from Customers, Turnover Intentions, and Perceived Organizational
Support, which are the independent, dependent, and moderating variables of the study. Out of the
146 survey forms that were distributed to the different branches, only 136 of these surveys were
accomplished and duly returned to the researchers. Furthermore, only 118 of these surveys were
successfully answered and considered for the different statistical tests performed. Once the
correlation, linear regression, and moderation analyses were ran using the variables in the study,
it was revealed that Incivility from Customers affects the employees’ Turnover Intentions in The
Chicken Factory, Inc. However, Perceived Organizational Support did not moderate the
relationship between these two variables.
Keywords: Customer Incivility; Perceived Organizational Support, Turnover Intention;

Moderating Regression
Introduction
The food industry remains to be one of the largest growing sectors of the service industry
in the Philippines. In 2017, a total of 28,932 establishments in the service sector are engaged in
food service activities. After two years, over 3,000 more establishments opened, increasing the
year-end revenue to an average of P616 billion. The food service sector includes fast-food chains,
food kiosks, bars, cafés, and take-out and delivery establishments (Marasigan, 2019). More
employment opportunities emerge given the growing size of the food industry. In fact, almost 68%
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of the total number of employees work for restaurants, majority of which are front-line employees
(Philippine Statistics Authority, 2019).
Front of the house employees, particularly those who have direct interaction with the
customers, “play a pivotal role in face-to-face service encounters because they can affect customer
perception of service quality, and value” (Mascio, 2010). Unfortunately, one of the common
challenges these employees face are episodes of customer incivility. Oftentimes, the interactions
that these employees experience are uncivil; thus, contributing to one of the stressors that they
encounter in the workplace on a daily basis (Sliter, Sliter, & Jex, 2012, as cited in Grandey et al.,
2004). Such engagements are referred to as customer misbehaviors which include rudeness (e.g.,
rolling eyes; talking loudly) and disrespect. (Andersson & Pearson, 1999; Porath & Pearson, 2009;
Sliter & Jones, 2016; van Jaarsveld et al., 2010 as cited in Zhu et al., 2019).
Understanding the vital role front-line employees play in the restaurant industry,
companies must take measures to prevent employees from leaving the organization as a result of
customer incivility. It is costly on the part of the organization when these valued employees decide
to resign. High turnover rates “increases the cost of recruitment, training and retention of
mistreated employees” (Wen, 2018). In determining the effects of customer incivility, there still
proves to be a gap on whether perceived organizational support has a role in mitigating the
detrimental effects of customer incivility on turnover intentions. Perceived organizational support
helps assess whether company initiated measures can aid employees deal with the stress and
pressures of working in the front-lines in the service industry.
Statement of the Problem
In this study, the researchers aim to answer the main problem research problem:
“What are the effects and impact of incivility from customers, while being moderated by
perceived organization support, on the level of turnover intentions in The Chicken
Factory Inc.?” The research aims to understand the effects of incivility on the front-line
employees as well as the company in order address such problem.
In the course of the study, the researchers aim to answer the following research questions:
● How does incivility from customers due to customer psychological aggression, customer
injustice, general psychological strain and job specific strain significantly influence
turnover intentions of frontline employees at The Chicken Factory Inc.?
● How does incivility from customers due to customer psychological aggression influence
turnover intentions of frontline employees of The Chicken Factory Inc.?
● How does customer injustice affect turnover intentions of frontline employees in The
Chicken Factory Inc.?
● How general psychological strain influence turnover intentions of employees in The
Chicken Factory Inc.?
● How does incivility from customers due to job specific strain affect turnover intentions of
frontline employees in The Chicken Factory Inc.?
● What is the effect of procedural justice in the relationship between incivility from
customers and turnover intentions of service employees of The Chicken Factory Inc.?
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● Does distributive justice moderate the relationship between incivility from customers and
turnover intentions of frontline employees of The Chicken Factory Inc.?
● Does inclusion moderate the relationship between incivility from customers, and turnover
intentions The Chicken Factory Inc.?
● How does perceived organizational support influence the level of turnover intentions of
frontline employees of The Chicken Factory Inc?
Overall, this research is deemed beneficial for The Chicken Factory Inc., as this
will aid the company in implementing practices that would decrease the likelihood of
turnover intentions in the organization. The company may also gain a better understanding
as to how incivility from customers affects their employees. This research is also relevant
to the cultivation on knowledge regarding Customer Incivility as there are only a few
literature regarding it in the Philippine context.
Literature Review
Link between Customer Incivility and Turnover Intentions
Jobs in the service industry involve high level of interaction with customers. This
gives the employees an opportunity to experience positive or negative treatment from the
people whom they are expected to deal with utmost patience. Sliter, Sliter, and Jex (2012)
posits that when service employees assist customers, they tend to anticipate appreciation,
as they provide a needed service. When the opposite is inflicted upon them, employees feel
that their resources, whether physical, mental, or emotional, are threatened or drained. In
order to restore these resources, employees are said to resort to withdrawing from work.
Numerous studies proved that customer incivility indeed negatively affects employees in
various ways.
The most studied negative consequence of customer incivility is emotional

exhaustion; increased emotional exhaustion is closely associated with personal and
organizational outcomes, such as stress, decreased job satisfaction, withdrawal behaviors,
and general declines in mental health. These effects were corroborated in the results of
Sliter et al.’s (2012) study, which presented that incivility, regardless of its source, largely
influences performance, tardiness, and absenteeism among employees. The authors’
findings indicate that customer incivility, in particular, have a significant impact on the two
types of employee withdrawal, absenteeism and tardiness, and employees’ performance.
Furthermore, Ben-Zur and Yagil (2005) found that burnout indicators, such as emotional
exhaustion and depersonalization, were extremely related to high levels of aggression.
Thus, customer incivility, in the form of interpersonal aggression by customers, leads to
service worker burnout as mentioned in prior literature.
Link between Incivility from Customers and Perceived Organizational Support
The study of Miner et al. (2012) explores the buffering effects of emotional and
organizational support on incivility experienced in organizations. Two studies involving
property management company employees and undergraduate students were conducted to
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determine whether emotional and organizational support act as moderators of the
relationship between incivility and workplace outcomes such as physical illness, job
satisfaction, and job stress. The findings show that incivility was negatively related to job
satisfaction and positively related to job stress, indicating that stronger or higher levels of
incivility through deviant behaviors, which harms or hurts the individual, decreases the
level of his or her job satisfaction. When organizational support is considered, the levels of
job satisfaction remains high even in high levels of incivility. These results indicate that
organizational support indeed mediates or buffers the effects of incivility to an employee
(Miner et al., 2012).
Link between Perceived Organizational Support and Turnover Intentions
Maertz et al., (2007) examined the mediating effects of Perceived Organizational

Support (POS) and Perceived Supervisor Support (PSS) on Turnover Intentions. Through
their study, the authors discovered that Perceived Organizational Support (POS) had
significant and positive effects on retention. In addition to the author’s findings, POS was
observed to give employees the impression they are obligated to reciprocate the support
that the organization provides by performing well or staying in the company (Maertz et al.,
2007; Sheridan, 1992).
Shah & Asad (2018) examined the mediating role of Perceived Organizational
Support (POS) on the relationship of intrinsic and extrinsic motivation on employee
retention using the data of 342 banking sector employees. The results of their study
revealed that motivated employees have positive thoughts towards the organization and
their job; thus, these motivated employees tend to display higher levels of retention.
Moreover, the role of POS also plays an important mediating role between motivation and
employee retention, as retention differs depending on each employee’s perception about
the support they get from the organization (Shah & Asad, 2018). Based on the results of
the authors’ study, employees who are intrinsically and extrinsically motivated would opt
to stay in the organization, especially when they perceive that their organization provides
them with support.
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Framework
Figure 1
Operational Framework to Determine the Influence of Incivility from Customers on Turnover
Intentions, with the Moderating Variable of Perceived Organizational Support
The figure depicts the link between customer incivility, turnover intentions, and perceived
organizational support, as well as the elements used to measure the variables in the study. From
the theoretical frameworks reviewed, specific factors were selected under each variable which
were deemed most necessary in assessing the effect of Incivility from Customers to Turnover
Intentions with the intervention of Perceived Organizational Support as the moderator.
Hypothesis of the Study
Ho1: Incivility from customers due to customer psychological aggression, customer injustice,
general psychological strain, and job specific strain does not significantly influence turnover
intentions.
Ho1A: Incivility from customers due to customer psychological aggression does not significantly
influence turnover intentions.
Ho1B: Incivility from customers due to customer injustice does not significantly influence
turnover intentions.
Ho1C: Incivility from customers due to general psychological strain does not significantly
influence turnover intentions.
Ho1D: Incivility from customers due to job specific strain does not significantly influence turnover
intentions.
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Ho2A: Procedural justice does not moderate the relationship between incivility from customers
and turnover intentions.
Ho2B: Distributive justice does not moderate the relationship between incivility from customers
and turnover intentions.
Ho2C: Inclusion does not moderate the relationship between incivility from customers and
Ho2D: Recognition does not moderate the relationship between incivility from customers and
Ho3: Perceived organizational support does not significantly influence turnover intentions.
Methodology
This study covered descriptive, correlational, causal, and explanatory approaches as its
research design. Moreover, this study aimed to determine and describe the effects of incivility from
customers, through perceived organizational support, on turnover intentions in The Chicken
Factory Inc (Frankie’s). Correlation, regression, and moderation analyses were also conducted to
analyze the relationship between the 3 variables.
Only the Front of the house employees of Frankies were considered as the population of
this study, as these employees experience the most interactions with customers; thus, they are more
susceptible to experiencing incivility from customers. Furthermore, total of 118 respondents
answered the self-administered questionnaire distributed to the front-line employees in all the nine
(9) branches of the restaurant chain between July and August of 2020.
A 5-point Likert scale was used throughout the survey, with 5 being the highest (strongly
agree/always) and 1 as the lowest (strongly disagree/never). As mentioned in the previous section,
the research group was able to retrieve a total of 118 surveys; those of which, were successfully
answered and considered for this study. Majority of the respondents were Team Members, ages 20
to 22, college graduates, and had a tenure of 1 to 12 months within the organization. Moreover,
the survey’s results show that the gender demographic are relatively equal regarding the Male and
Female respondents.
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Table 1
Summary of Area Means and Interpretation of Results for Turnover Intentions, Incivility from
Customers, and Perceived Organizational Support
Total Mean
Interpretation
Score
Level of Turnover Intention is
Turnover Intentions 1.52
very low
Incivility from Customers 1.47
Customer Psychological Aggression 1.19
Level of Incivility from
Customer Injustice 1.26
Customers is very low
General Psychological Strain 1.20
Job-Specific Strain 1.46
Perceived Organizational Support 3.68
Procedural Justice 3.52 Level of Perceived
Distributive Justice 4.00 Organizational Support is quite
Inclusion 3.76 high
Recognition 3.44
The cumulative mean response for turnover intentions, due to customer incivility of the
employees, of The Chicken Factory was found to be very low, with a mean response of 1.52 (See
Table 1). This result is consistent with the findings of Lim et al. (2008), in which the authors found
that increased levels of incivility experienced leads to high levels of turnover intentions. In addition
to these findings, the survey results reflect very low levels of incivility experienced by the
customers, which would urge them to leave their current job. Moreover, the mean responses on
the different areas of incivility from customers appears to be very low with an area mean score of
1.47. However, there are notable outliers under incivility from customers, returning a relatively
higher mean response compared to other questions in this section of the survey. The item
“Customers grumbled to me about how slow service during peak hours.” has a mean score of 2.97,
while “Customers made gestures (eye rolling, sighing) to express their impatience.” has a mean
response of 2.66. These survey items pertain to customer incivility experienced during peak hours
or hectic conditions. These factors are notable for the company to look into and address, because
the study of Cortina et al. (2002, as cited in Cortina & Magley, 2009) found that targeted
individuals of incivility show higher job-related stress, psychological distress and decrease in job
satisfaction. Despite the relatively high mean scores in some areas, the overall level of incivility
from customers is still very low. The results show that despite experiencing these events, the front
of the house employees were able to control their mood and continue serving their customers to
the best of their ability. Furthermore, the overall level of Perceived Organizational Support and its
dimensions were quite high, with a total area mean of 3.68. Among all the dimensions, distributive
justice had the highest mean score of 4.00, meaning employees in The Chicken Factory see that
the justice brought on by the procedures of the company is fair in terms job responsibilities,
experience, effort, good performance, education, and training.
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Table 2
Summary of the Variables’ Pearson correlation coefficient and Interpretation of Results
Pearson’s r Interpretation
(Turnover
Intentions)
Incivility from Moderate positive
0.472
Customers relationship
Perceived
Weak negative
Organizational -0.171
relationship
Support
Based on the correlation tested from the 118 respondents in this study, there is a 47.18%
moderate positive linear relationship between turnover intentions and incivility from customers
(See Table 2). This result indicates that as the incidents of customer incivility experienced by
employees increases, their level of turnover intention also increases. Furthermore, this finding also
implies that the customers’ treatment towards the employees is a contributing factor to their
intention to stay in the company. Moreover, there was a 17.11% weak negative relationship
between turnover intention and perceived organizational support. This weak relationship between
the 2 variables means that the relationship between employee’s perceived organizational support
and turnover intention is indirectly proportional to each other. Furthermore, its weak relationship
signifies that perceived organizational support does not largely affect the employees’ decision to
leave the company. It can be inferred that there could be external factors that affect turnover
intentions more significantly than perceived organizational support.
Table 3
Summary of the Variables’ Pearson correlation coefficient and Interpretation of Results
Hypotheses P-value Results

Ho1: Incivility from customers due to customer p-value < 0.05 Reject null hypothesis,
psychological aggression, customer injustice, general (6.94739E-08) Accept the alternative
psychological strain, and job specific strain does not
significantly influence turnover intentions.
Ho1A: Incivility from customers due to customer p-value < 0.05 Reject null hypothesis,
psychological aggression does not significantly influence (0.021550) Accept the alternative
Ho1B: Incivility from customers due to customer injustice p-value > 0.05 Do not reject null
does not significantly influence turnover intentions. (0.32595) hypothesis
Ho1C: Incivility from customers due to general p-value < 0.05 Reject null hypothesis,
psychological strain does not significantly influence (0.00068) Accept the alternative
Ho1D: Incivility from customers due to job specific strain p-value < 0.05 Reject null hypothesis,
does not significantly influence turnover intentions. (2.5E-05) Accept the alternative
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Ho2A: Procedural justice does not moderate the p-value > 0.05 Do not reject null
relationship between incivility from customers and turnover (0.102) hypothesis
intentions.
Ho2B: Distributive justice does not moderate the p-value > 0.05 Do not reject null
relationship between incivility from customers and turnover (0.149) hypothesis
intentions.
Ho2C: Inclusion does not moderate the relationship p-value > 0.05 Do not reject null
between incivility from customers and turnover intentions. (0.053) hypothesis
Ho2D: Recognition does not moderate the relationship p-value > 0.05 Do not reject null
between incivility from customers and turnover intentions. (0.069) hypothesis
Ho3: Perceived organizational support does not p-value > 0.05 Do not reject null
significantly influence turnover intentions. (0.063881) hypothesis
Based on the hypothesis testing conducted, it was evident that among the dimensions under
incivility from customers, only customer injustice did not have a significant impact on employees’
turnover intentions (p-value = 0.33). In contrast, customer psychological aggression, general
psychological strain, and job specific strain appeared to have significant effect on the employees’
intention to leave the company. In addition to these findings, all the dimensions under Perceived
Organizational Support (POS) did not moderate the relationship between incivility from customers
and turnover intentions; procedural justice, distributive justice, inclusion, and recognition had p-
values greater than 0.05, indicating its insignificant impact as a moderating variable. The impact
of POS on turnover intentions was also tested and it was found that it does not influence the
decision of employees in The Chicken Factory to leave the company.
Conclusion
1. How does incivility from customers due to customer psychological aggression, customer
injustice, general psychological strain and job specific strain significantly influence turnover
intentions of frontline employees at The Chicken Factory Inc.?
Based on the results of the study, the front of the house employees of Frankie’s experienced
very low levels of Incivility from Customers. Upon analyzing the data, the researchers found that
a few respondents stated that they experience high levels of incivility from customers, but low
levels of Customer-Adapted Workplace Aggression, Customer Injustice, General Psychological
Strain, and Job Specific Strain. These results may indicate that even though employees experience
incidents of customer incivility, they do not let these experiences affect them. Correspondingly,
many of the qualitative responses show that the respondents are aware that these incidents
regularly occur in the hospitality industry and are equipped with the skills and mindset needed to
deal with these types of customers. Furthermore, many respondents use these incidents as
opportunities for self-improvement; for instance, one respondent stated, “when you’re at work, it’s
normal na you’ll be affected/get emotional, but at the end of the day, you have to (be) professional
and take it as a challenge.” In contrast, there were also respondents who indicated that they were
negatively affected by these incidents, which is an abundant finding in literature (Kim & Qu, 2019;
Porath & Pearson, 2012; Schilpzand et al., 2014). One respondent indicated, “Nawawala na ko sa
pokus sa kadahilan minsan ko ng mura sa ating customer,” which conforms with the literature
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stating that individuals on the receiving end of customer incivility experience emotional
exhaustion, lower positive affect, and lower affective trust (Schilpzand et al., 2014).
The results of this study have also found that the levels of Turnover Intentions of the front
of the house employees working in The Chicken Factory Inc. were low. The respondents indicated
that their intentions of staying within the organization is due to their satisfaction with their jobs,
commitment towards the organization, attachment to their constituents, belief that there are
opportunities to grow within the organization, difficulty in finding alternative jobs, and their need
to stay in the organization to support themselves and their family. Moreover, these findings were
similar to those of Hausknecht et al. (2009), which identified job satisfaction, advancement
opportunities, constituent attachments, lack of alternatives, nonwork influences, and
organizational commitment as indicators of Employee Retention. In contrast, those who indicated
that they have had intentions of leaving the organization indicated that they did this in order to find
alternative jobs which will provide them with better opportunities for growth and greater income
to support themselves and their family; for instance, one respondent indicated, “humanap ako ng
ibang alternative na work ... para sa sarili ko to grow [and receive] more income.”
Increases in the experiences of incivility from customers by the frontline employees of The
Chicken Factory Inc. (Frankie’s) have a parallel effect on their turnover intentions. This study
found that the factors, Customer Psychological Aggression, General Psychological Strain, and Job
Specific Strain, were found to have significant influences on Turnover Intentions, while Customer
Injustice did not. Environments with high customer interaction are susceptible to aggression
between the employee and the customer, because of the aphorism, “the customer is always right.”
This aphorism was mentioned in prior literature as well as the qualitative results of this study as a
reason behind the employees’ and customers’ response during incidents of customer incivility
(Grandey et al., 2004). When employees frequently experience these situations, they may
experience general and job-specific strains; these strains have detrimental effects on the
employee’s psychological and physiological health, job performance, and productivity.
Ultimately, the aggressive environment and its effects on employees were found to lead to the
employee’s intention of leaving the organization, making it essential for organizations create
strategies to prepare their employees on how to handle cases of incivility from customers.
2. How does Perceived Organizational support, in the form of procedural justice, distributive
justice, inclusion, and recognition, moderate the relationship between incivility from
customers and turnover intentions of frontline employees of The Chicken Factory Inc.?
Contrary to the researchers’ presumption, the proposed moderating effect of perceived

organizational support, in the form of procedural justice, distributive justice, inclusion, and
recognition, to the relationship of customer incivility and turnover intention is not supported in
this study. It was seen from the data that the level of support provided by The Chicken Factory
Inc. as perceived by the employees is quite high, but it was found that the support given does not
significantly affect the decision of its employees to leave the organization when exposed to uncivil
interactions with the customers. Based on the analysis conducted, it was found that the support
given by The Chicken Factory Inc., does not significantly affect the decision of its employees to
leave the organization when exposed to uncivil interactions with the customers. Although previous
researches suggest that perceived organizational support had significant and positive effects on the
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employees’ decision to stay in the company (Armstrong-Stassen & Ursel, 2009; Dawley et al.,
2010; Iqbal & Hashmi, 2015; Shah & Asad, 2018), the results of this study proved otherwise.
Maertz et al., (2007) and Sheridan's (1992) studies claiming that the support the organization
provides would give the impression to the employees that “the employees have an obligation to
reciprocate the support by performing well or staying in the company” could not be validated.
Recommendation
Food industries should consider implementing organization-wide programs to facilitate

civil and respectful ways in dealing with uncivil customers as well as decrease the possibility of
turnover. These programs should begin once employees are hired in the organization, to orient and
set expectations regarding customer interactions, and should continue through different training
programs designed to develop the employee’s conflict management skills (e.g. employee
personality workshops, customer empathy training, mindfulness or burnout training), throughout
the duration of their stay in the company. To highlight the importance of these orientations and
trainings, one respondent stated, “… [na] train po kami in how to handle guest[s] even galit sila,
we make way para maging maayos po in that way po nagiging maayos yung pakikitungo nila;”
considering that the results of the study imply that employees are able to handle cases of incivility
from customers emotionally and professionally, it is advisable for similar industries to adapt
similar strategies as well.
In order to ensure that Frankie’s maximizes the length of their employees’ stay within the
organization, it is essential that managers account for their needs. The survey results show that
some respondents look for alternative jobs to receive greater income for themselves and their
family as well as to enhance skills and acquire new learnings. Thus, the company should look into
improving their retention strategies, specifically those addressing extrinsic rewards as well as
career planning and development. Through the implementation of these strategies, employees
would have the opportunity to earn more income to provide for their families as well as seek
continuous growth, interest, and engagement in their current job. Furthermore, not only will these
strategies benefit employees, but the company as well, since extrinsic rewards will only be
distributed in order to recognize high performers; thus, employees will be more willing to increase
their productivity in order to increase their earnings.
Frankie’s should also look into maintaining its current levels of job satisfaction and
organizational commitment, since these were frequently mentioned by respondents with no
intentions of turnover. To maintain the levels of these two factors, the company should provide
challenging work, equitable rewards, and ensure that employees are given the status and reputation
they deserve. Through implementing these strategies, not only will the company be able to
maintain its current levels of job satisfaction and organizational commitment, but also improve the
levels of turnover intentions, as mentioned previously. Despite the results of POS showing no
significant impact on the relationship between Incivility from Customers and Turnover Intentions,
it is still important for Frankie’s and similar industries to create strategies to enhance it, since it
can increase the employees’ emotional bond with the organization as well as their efforts to meet
the organization’s goals. Specifically, Frankie’s should focus on increasing the levels of inclusion
and recognition to enhance the feeling of trust and provide recognition for high performers. In
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order to achieve this strategy, the company must ensure that their efforts are equitable and should
be done out of good-will to ensure that the strategies will be effective.
Given that the instances of customer incivility are often encountered in the hospitality
industry, it is recommended that constituents of this industry conduct similar studies to understand
and address this potentially unhealthy work experience. Furthermore, this study was developed to
respond to the unique needs of The Chicken Factory, Inc. (Frankie’s). All recommendations are
based on the survey results, which measure front liner feedback regarding the three variables. Thus,
other industry players or businesses would benefit from conducting studies specific to their
business operations in order to ascertain that the strategies that they will develop are relevant to
their needs.
Future researchers are recommended to reconduct similar studies on restaurants and similar
establishments after the pandemic. Reconducting the study or survey in the post-pandemic or new
normal setting will revalidate the response on turnover intentions of employees due to customer
incivility. A comparison can be made for experiences of customer incivility, as well as levels of
turnover intentions of employees between during a pandemic and under normal circumstances.
Furthermore, future researchers should also consider looking into additional variables that
contribute to turnover intentions. In this study, perceived organizational support, in the form of
procedural justice, distributive justice, inclusion, and recognition, appeared to have insignificant
moderating impact on the relationship of customer incivility and turnover intention. Thus,
exploring more dimensions under perceived organizational support and testing other moderating
variables should be considered in future research. In addition to exploring different moderating
variables, other measures of customer incivility affecting turnover intentions are recommended to
be included in order to test the variables.
Future researchers are also recommended to apply the study in other genres of the food and
restaurant industry to better understand the customer behavior in the different genres of the dining
industry. The study can also be applied in other sectors of the service industry such as the
telecommunications industry, transportation, healthcare among many others to see and compare
the degree and experiences of incivility in other aspects of the service sector.
Limitations of Research Findings
Although results of our study ran contrary to the study of (Maertz et al., 2007), Shah &
Asad (2018), and Iqbal, Sehresh & Hashmi (2015), who tested Perceived Organizational Support
as a moderator of Customer Incivility as well as the study of Miner et al. (2012) that used the same
to moderate turnover intentions, it is believed that the results are inconsistent due to several other
factors. Primarily, these studies that were able to successfully use Perceived Organizational
Support to moderate Incivility from Customers and Turnover Intentions used different sectors
under the service industry, such as social workers, higher education institutions and financial
institutions. Moreover, these case studies have different environments, locations, and services
compared to The Chicken Factory Inc. (Frankie’s). The researchers believe that these
modifications, together with number of respondents, branches, and location play a key role in
determining the relationship of the said variables utilized in this study. Therefore, it can be inferred
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that the use of Perceived Organizational Support (POS) as a moderating variable of Customer
Incivility and Turnover Intentions vary per area in the service industry.
Hence, future researchers are recommended to find other establishments under the food
industry to test and apply these variables. Moreover, looking into other sectors of the service
industry to further apply and test the moderating role of POS on turnover intentions and customer
incivility is highly encouraged to better understand the applicability of the said variables in the
different areas of the service industry
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184 | P a g e
Precarious work: The unsolved problem of contractualization and
its effects on contractual workers in the public sector
8th NBMC Paper #13
Edgar Allan L. Pamis and Divina M. Edralin

Abstract
Precarious work refers to “forms of work characterized by atypical employment contracts, limited
or no social benefits and statutory entitlements, high degrees of job insecurities, low job tenure,
low wages and high risks of occupational injury and diseases” (Evans and Gibb see also in Edralin,
2013). From a workers’ point of view, it is related to uncertain, unpredictable, and risky
employment. In the Philippines, contractualization can be described as precarious work wherein
employment is pegged for a definitive short time, and this type of employment is popularly known
as “Endo” or “5-5-5.” Contractualization does not only exist in the private sector. This mode of
employment has been a problem of the public sector as well, since time immemorial. This study
aims to provide literature on contractualization of employees in the public sector, to describe the
impact of precarious work practices in the public sector concerning contractual employees, and to
recognize the problem of precarious work in the public sector, and be able to provide
recommendations to address this problem. To achieve these objectives, a survey was conducted in
three different government agencies in the Philippines employing contractual workers. These three
government agencies are located within Metro Manila. A total of sixty (60) valid responses from
contractual workers were used for the data analysis. The effects of precarious work on the
contractual workers include non-unionism, procuring of multiple jobs, stressful and hazardous
working conditions on health, decreased quality of life, non-receipt of full regular employment
benefits, high unemployment rate, additional government expenditure on health and social
services, a perception that the current tax system is a burden to contractual employees, and the
desire to amend laws to prohibit contractualization.
Keywords: Precarious work, Contractualization, Labor, Human Resource Management, Public

Sector, Humanistic Management
Background of the Study
The issue of “endo” practices in government is not new in the Philippines. More than half
a million government workers are either classified as job orders or under a contract of service.
However, the literature on government contractualization is not as immense as those in the private
sector. Recent studies on contractualization focus on defining contractualization, understanding its
effects, particularly on the everyday life of Filipino workers, the possible economic consequences
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of ending contractualization, the effects of globalization, and the policies that need to be
formulated and implemented to address contractualization, especially in the private sector. DOLE
initiate campaign for consultations and communicating with workers and employers where
illegitimate contractualization and ‘endo’ practice is most common even President Duterte wanted
to put an end to ‘endo’ and other forms of illegitimate contracting and the government is now
implementing some initiatives to deal with the problem. The government initiate three-pronged
action plan to implement strict enforcement of labor laws during inspection, assessment, and
observance visit and review policy of the existing Rules and Regulations, particularly on
contracting and subcontracting; and amendment of the Labor Code provisions on contracting and
subcontracting and security of tenure. While several of these studies see “endo” practices as evil,
other experts suggest the formulation of a sound policy in dealing with contractualization. The
authors seek to contribute to the discussion on contractualization, particularly in government and
see the need to review related literature to further understand contractualization, the effects of
“endo” practices not only in the private sector but principally in government, and propose policies
faithful to the concept of social justice. The study is ought to be conducted considering that the
focus of addressing contractual employment is more focused on the private sector and little efforts
have been made by the government to address contractual employment in the public sector.
Related Literature
Contractual work practices of other countries and other global companies
The prevalence of contractualization as an employment regime is felt worldwide

(Cristobal & Resurreccion, 2014). Contractual employment exists in Canada, the United
States, Japan, Colombia, and Pakistan, to name a few. In Canada, “part-time, contract and
temporary work, as well as self-employment, now corresponds to around one-third of the
Canadian workforce nationally” (Evans and Gibb, 2009 see also Edralin, 2013).
Meanwhile, in the United States, “the US Government Accountability Office (GAO) has
reported that the number of ‘contingent’ workers who are independent contractors,
temporary workers, subcontracted and leased workers and part-time workers stood
approximately 31% of the total workforce” (Evans and Gibb, 2009 see also Edralin, 2013).
Global companies like Coca-Cola also practice outsourcing. In one Coca-Cola plant in
Bogota, Colombia, 70% of the operating staff and 85% of the distribution staff are now
outsourced, contracted through labor cooperatives, employment agencies or considered
independent contractors (International Labor Rights Forum, n.d see also in Edralin, 2013).
Contractual work practices in the public and private sectors
Contractualization, however, does not only exist in the private sector but also exists
in the public sector. The total number of job-order and contract of service employment in
government agencies, departments, and instrumentalities, according to the Philippine
Statistics Authority is 628,655, as of July 2016. That is more than half a million contractual
workers in government alone. This is the same government whose primary function is to
promote the welfare of the people. It has failed in protecting the interest of its workers and
more importantly, it failed to promote the principle of social justice. Social justice, in the
words of Justice Laurel in Calalang v. Williams, means the “humanization of laws and the
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equalization of social and economic forces by the State so that justice in the rational and
objectively secular conception may at least be approximated. Social justice means the
promotion of the welfare of all the people, the adoption by the Government of measures
calculated to ensure the economic stability of all the competent elements of society,
through the maintenance of a proper economic and social equilibrium in the interrelations
of the members of the community, constitutionally, through the adoption of measures
legally justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of Salus Populi est suprema
lex.” The government’s failure to adopt measures to curb contractualization and promote
social justice is evident in the amendments made in the Labor Code and the department
orders issued by the Department of Labor and Employment (DOLE) in recent years.
Despite the persistent violations and circumventions of the law, many employers
remain unpunished. Worse, they remain unnoticed. Section 3 of Article XIII of the
Constitution states that “the State shall afford full protection to labor xxx and promote full
employment and equality of employment opportunities for all”. The full protection of labor
demanded by the Constitution is intended to be broad enough to cover those who are left
unprotected by the precarious nature of their employment (Cristobal & Resurreccion,
2014). Full protection of labor must, therefore, include government contractual workers.
For indeed, job order and contract of service workers are involved in precarious work. It
must be noted that there are already proprosed legislations to address contractualization in
the private sector but not too much attention is given for the protection of labor in the public
sector.
Department Order No. 174: A superficial attempt to abolish contractualization
Recently, the DOLE issued Department Order No. 174 on March 16, 2017. The
department order provides rules implementing Articles 106-109 of the Labor Code, but
these rules fail to adhere to the concept of social justice in the labor sector. First, Section
3(l) of DO No. 174 provides that “substantial capital” refers to paid-up capital stocks/shares
of at least P5 million (P5,000,000) in the case of corporations, partnerships, and
cooperatives, and a net worth of at least P5 million in the case of single proprietorship.
This is an upgrade from the previous P3-million requirement. Nevertheless, given the
present time, this amount of capital can be easily raised by many businesses. Hence, the
increase in substantial capital does not deter contractualization, making the implementing
rules inutile. This does not prevent the proliferation of manpower agencies as long as these
agencies are capable of putting up the required capital. The department order also prohibits
only “in-house” cooperatives, which refer to cooperatives that are “managed, or controlled
directly or indirectly by the principal or one where the principal owns/represents any share
of stock, and which operates solely or mainly for the principal.” Thus, there is no
prohibition for other cooperatives to practice contracting and subcontracting. Lastly, the
department order bluntly provides in Section 8 instances of permissible contracting or
subcontracting arrangements. This section automatically obliterates the guiding principle
provided in Section 1, which states that “non-permissible forms of contracting and
subcontracting arrangements undermine the Constitutional and statutory right to security
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of tenure of workers. Section 8, therefore, is brutal disobedience to the presidential mandate
to abolish all forms of contractualization.
A brief on contractual work in the Philippines
The Labor Code provides for three kinds of employees: (1) regular employees or
those who have been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer; (2) project employees or those whose
employment has been fixed for a specific undertaking, the completion or termination of
which has been determined at the time of the engagement of the employer or where the
work or service to performed is seasonal in nature and the employment for the duration of
the season; and (3) casual employees or those who are neither regular nor project
employees. The law grants these employees security of tenure, which simply means that
they cannot be dismissed without just or authorized cause, and after the strict observance
of procedural due process (Philippine Export, 2016). The law provides security of tenure
for these kinds of employment, but some argue that “it does not guarantee permanent or
lifetime employment” (Philippine Export, 2016).
While employers, through legal advice, are made aware of distinctions among
different types of contracts, employees are not able to easily distinguish these specialized
types of contracts allowed by law. The trend has been to dilute the distinctions into only
two categories: regular and contractual (Cristobal & Resurreccion, 2014). Regular
employees are those granted security of tenure, employment benefits, and bonuses. These
benefits, in the Philippine setting, include PhilHealth, SSS, Home Development and
Mutual Fund (HDMF), 13th-month pay, paid sick leaves, paid vacation leaves, service
incentive leaves, meal and rest periods, housing and housing plans, expense account,
company-sponsored vehicle, and educational assistance (Asiapro Multi-Purpose
Cooperative). Contractual workers, on the other hand, are not granted these benefits.
Contractual workers are under an employment regime known as contractualization, which
is “a form of employment known internationally as ‘precarious work’” (Cristobal &
Resurreccion, 2014). Precarious work is defined as a “form of work characterized by
atypical employment contracts, limited or no social benefits and statutory entitlements,
high degrees of job insecurities, low job tenure, low wages and high risks of occupational
injury and diseases” (Evans & Gibb, 2009 see also Edralin, 2013).
The International Labor Organization (ILO) stated that precarious work is

characterized by a combination of factors, such as (1) a limited duration or a high
probability of the worker’s losing the job; (2) little or no opportunity for workers to control
the working conditions; (3) absence of benefits or social security provisions; and (4) a low
income in tandem with poverty (Edralin, 2013). Precarious workers are those who fill
permanent job needs but are denied permanent employee rights (International Labor Rights
Forum, as cited in Cristobal & Resurreccion, 2014, p. 348). Apart from the disparity in
benefits between permanent employees and those who are engaged in precarious work, one
of the major obstacles encountered worldwide through the use of this employment regime
is the inability of precarious workers to form and join unions and participate in collective
bargaining (Cristobal & Resurreccion, 2014). Precarious work includes outsourcing,
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contracting-out or subcontracting of services, fixed-term or “5-5-5” contracts, temporary
workers, casual workers, seasonal employees, and probationary employees.
On the employee side, it was reported that, from 14% to 15% between the years
1990 - 1994, the share of contractual workers in enterprise-based employment had jumped
to 21.1% as far back as 1997 (Center for Women’s Resources, 2013 see also Cristobal &
Resurreccion, 2014). In 2010, the Department of Labor and Employment (DOLE) reported
that 10.4% of firms engaged particularly in contracting-out work (Cristobal &
Resurreccion, 2014). As of 2012, the Philippine Statistics Authority estimated that there
are 489,315 agency-hired workers employed in various business establishments in the
Philippines and the top three sectors that engage the services of contractual workers are:
(a) manufacturing (31.2%); (b) wholesale and retail trade (19.9%); and (c) real estate,
renting, and business activities (11.1%).
Objectives of the study
There is a massive literature on contractualization in the private sector. However,

contractualization in the public sector is rarely tackled. It is with the aim of this study to acquire
more information and contribute to the body of knowledge on precarious employment concerning
contractual employees in the public sector. Specifically, the objectives of the study are focused on
the following:
1. To provide literature on contractualization of employees in the public sector;
2. To describe the impact of precarious work practices in the public sector concerning
contractual employees in terms of;
a. Economic Development
b. Employment Relationship
c. Social Development
3. To recognize the problem of precarious work in the public sector and be able to
provide recommendations to address this problem.
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Figure 1
Operational Framework
Economic
Developme
Employment
Relationship
Social
Development
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Methodology
In order to complete the study, the researcher used descriptive and quantitative research
design. Moreover, in the data gathering, the use of survey questionnaire was done. Descriptive
research describes the phenomenon, condition, and situation (Bustos, 2014). Moreover,
quantitative research method uses the systematic empirical investigation of observable phenomena
using statistical, mathematical, or computational techniques (Labaree, 2014). Using a descriptive
research design, a survey was conducted in three agencies of the government which employ
contractual employees. These government agencies are located within Metro Manila. These
government agencies were selected considering that they employ a number of contractual
employees. The participant employees are selected randomly by requesting the Human Resource
Department of the Agencies to distribute the questionnaires to their contractual employees. A total
of 60 valid responses from government contractual employees were used for the data analysis.
A content analysis of government publications such as the statistical data of the Civil
Service Commission on contractual government employees in the Philippines by region was
utilized to realize the extent of contractualization in the government.
Findings
A brief on contractualization in government agencies in the Philippines
According to the Confederation for Unity, Recognition, and Advancement of

Government Employees (Courage), a national center of government employees in the
Philippines, the government contractualizes for the following reasons and practices:
1. To depress wages. Contractualization aims to remove workers’ benefits and

right to negotiate for it, like Collective Negotiation incentives, meal allowances,
medical benefits, leaves, among others.
2. There is no employer-employee relationship. This is declared so that the agency
does not need to honor guarantees for laborers enshrined in the Constitution.
3. Corruption. Contractualization is often part of a scheme for high government
officials for systemic corruption.
4. Patronage politics. Contractualization is a way among local and national
politicians and high government officials to remove or position cronies or loyal
employees that would be subservient to the politician’s interests. (COURAGE,
2014, as cited in Guda, 2014)
The Department of Social Welfare and Development (DSWD) had 12,000

contractual workers—most of all government agencies (COURAGE, 2014, as cited in
Guda, 2014). Courage (Guda, 2014) also reports that the Metro Manila Development
Authority (MMDA) has a record of 4,000 contractual workers, the National Food Authority
(NFA) has 1,000, and PTV-4 has 284.
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Statistical Profile of Contractual Employees in the Government
Table 4.1
Total Number of Job-Order and Contract of Service (Disaggregated by Sex) as of July 1,2016
Types of Employment
Job-Order Contract of Service
Region M F M F Total
1 8,754 5,034 2,858 2,213 18,859
2 14,141 11,176 5,315 3,479 34,111
3 23,643 11,614 4,730 3,357 43,344
4 45,489 26,145 6,309 5,411 83,354
5 20,445 12,729 2,898 2,320 38,392
6 21,803 14,187 3,579 3,960 43,529
7 24,955 16,510 2,957 2,659 47,081
8 20,003 12,595 1,981 2,323 36,902
9 11,603 5,709 2,556 1,710 21,578
10 16,841 10,658 861 1,083 29,443
11 19,460 10,054 5,838 2,264 37,616
12 13,187 6,687 2,135 2,074 24,083
NCR 39,127 37,965 25,789 18,662 121,543
CAR 6,145 4,672 2,740 1,941 15,498
CARAGA 11,706 8,678 3,014 2,557 25,955
ARMM 3,107 1,198 1,792 1,270 7,367
TOTAL 300,409 195,611 75,352 57,283 628,655
In this data provided by the Civil Service Commission (CSC), there are 628,655 contractual
employees in the government as of July 01, 2016. The data provided by CSC was disaggregated
by sex. As seen in the table, the National Capital Region (NCR) has the biggest number of
contractual employees in the government. This can be attributed to the fact that NCR has more
government agencies located within the region as compared to other regions. On the other hand,
the Autonomous Region of Muslim Mindanao (ARMM) has the lowest number of contractual
employees in the government. The table also shows that there are more male contractual employees
(375,761) than female contractual employees (252,894).
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Survey Results
Table 5.1
Contractual and Non-Union Members (%)
Y N
E O
S 1
Union
- 0
members
0
In the survey conducted, sixty (60) of the respondents who are all contractual employees
are non-union members. Even though the Constitution guarantees the right to association,
contractualization weakens unionism.
Table 5.2
Contractual workers resorting to sideline work(%)
YES NO
Sideli 9 1.
ne 8. 6
3 7
When asked whether the contractual workers have sidelines or additional jobs outside their
contractual employment, 98.33% answered in the affirmative. From this result, it can be inferred
that contractual employees in the government feel the need to have additional jobs to meet their
needs. Thus, they tend to overwork themselves and often lead to health risks attributed to stress.
Table 5.3
Obligated to work under hazardous conditions (%)
YES NO
Hazardouswork 61.7 38.3
Safetyequipment 100 -
Of the 60 contractual employees, 61.66% are required to work for more than he or she is
required, worse, they are obligated to work under hazardous conditions. All of these workers are
obligated to work under hazardous. However, the respondents are given safety equipment that they
need in performing their jobs like gloves and other safety gear.
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Table 5.4
Benefits received (%)
YES NO
Health and social security
benefits 1 -
According to the respondents, contractual employees in the government are given health
and social security benefits. However, they are not entitled to other full benefits that regular
employees usuallyenjoy.
Table 5.5
Stressful work affecting family life (%)
YES NO
Stress and familylife 46.7 53.3
According to the majority of the respondents (53.33%), their job as government contractual
employees is not very stressful and does not affect their family life. However, a significant number
of them believe that their job is stressful and affects their family life.
Table 5.6
Quality of life as a contractual employee versus regular employee (%)
YES NO
Quality of life 26.7 73.3
Making ends meet 60 40
Concerning the quality of living, 73.33% of contractual employees feel like the quality of
their lives is not at par with the kind of life regular employees have. The majority (60%) of the
respondents feel that they are having a hard time making ends meet because of the measly sum
they receive as government contractual employees.
The government contractual employees believe that precarious employment has primarily
resulted in the declining living standards of the workers and it is contributing to the rising poverty
in the country. When workers have small and less income, which is even below the minimum
wage, they are not able to afford even the minimum requirements of quality living which includes
decent shelter, clothing, to eat three times a day, access to good education, private health care; and
simple recreation. Therefore, precarious work creates insecurity and leads to increases in inequality
and poverty.
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Table 5.7
Role of contractual employees in the economy (%)
YES NO
Helping the Countri 7 3
economy es 0 0
Despite the precarious nature of their jobs, the majority (70%) of the contractual employees
believe that they are helping the country’s economy by being contractual employees.
Table 5.8
Contractual employment and unemployment(%)
YES NO
Contractualization
contributing factor to high 83.3 16.7
Unemployment rate
According to the majority (83.33%) of the respondents, contractualization is a factor

contributing to the high unemployment rate. This is because contractual employees are bound to
lose their jobs after the fixed temporary period they are hired. After termination of the period,
they are left with nothing, and this is the time that they find difficulty looking for a new job which
leads to unemployment.
Table 5.9
Taxes (%)
YES NO
Contractual taxed by the
government 60 40
Current tax systems

burden to contractual workers 50 50
The majority (60%) of the respondents said that they are taxed by the government while
the minority (40%) said that they are not taxed by the government. As to the question of whether
the current system in the Philippines is a burden to them being contractual employees in the
government, 50% of the respondents answered yes and 50% of the respondents answered no.
Hence, the respondents are equally divided on the perception of whether the current Philippine
tax system is a burden to government contractual employees.
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Table 5.10
Health and social services for contractual employees as an additional expense by the
government (%)
YES NO
Health and social services
as additional expense 76. 2
67 3.
In a question asked in the survey whether they think that government expenditures on
health and social services increased due to them, the majority (76.66%) of the contractual
government employees believe that government spending on health and social services
increased. On a macro level, lower or no income on the part of government contractual
employees means no tax collections and revenue for the government which is used to finance
government expenditures for education, health, social protection, and other social services
necessary to keep a stable and afloat economy. Thus, leading to increased expenditure on health
and social services.
Table 5.11
Abolishing contractualization (%)
YES NO
Should it be abolished? 100 -
Should contractualization laws be
amended to prohibit employment 100 -
agencies?
Should there be law

prohibiting contractualization? 70 3
About the question of whether contractualization should be abolished, 100% of the

respondents answered a resounding yes. They also agreed that laws should be reviewed and
amended to prohibit employment agencies. On the other hand, the majority (70%) of the
respondents agree that there should be a law prohibiting contractualization. Although the
majority of the respondents agreed on the abolition of contractualization, a few of them (30%)
do not want to abolish contractualization. We can infer that this minority of respondents only
depend on their contractual jobs as a source of their income.
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Conclusion
Contractualization has been a controversial issue in our country for quite some time.
This type of employment does not exist in private sectors only. As of the present time, there are
more than half a million contractual employees in the government. Findings revealed that
precarious employment is undermining worker rights, the scope, and coverage of collective
bargaining, as well as wages and working conditions in the public sector. In the case of
vulnerable workers who are exposed to low and unstable income, they suffer greatly whether
the economy is up or down. Therefore, there is an urgent need to combat the rising incidence
of precarious work in the government. The overall goal is to ensure that precarious work does
not become the dominant feature of the working relationship between workers in the
government sector. The problems actually lie not within the work arrangement but with the
abusive practices that accompany it. Filipino workers, especially the younger ones, don’t care
about tenure. What they care about is the salary, benefits, and better treatment. If companies
still exploit or deprive employees of their rights to basic benefits like healthcare and Social
Security, it might create an unhealthy, demotivated, and unproductive workforce, which within
the end of the day might be something that kills businesses. While there are major steps being
undertaken to place an end to endo, the scheme remains putting underemployed Filipinos. It
allowed companies to tread the morally ambiguous waters of contractualization and has
propagated a culture of money over people.
Intensifying the enforcement powers of the Labor Law Compliance Officers (LLCOs)
through capacity building programs, like training needs assessment, will help enhance the
enforcement powers of the LLCOs to help minimize the cases of circumvention in contracting
arrangement (Villena, 2015). Vigilance in the implementation of labor laws is particularly
important in a country where many firms see that running the risk of getting caught and paying
a fine (or a bribe) for violating labor laws is a cheaper alternative to paying workers the proper
wages and benefits as provided by law (Villamil & Hernandez, n.d. see also Cristobal &
Resurreccion, 2014). A comprehensive review of the proposal on a definite and indefinite
period of employment in a contracting arrangement must be undertaken (Villena, 2015). If a
policy is implemented specifying the definite period of employment in contracting
arrangements, contractual workers will be given a chance to acquire a regular status
employment (Villena, 2015). As we develop labor laws that do offer protection to precarious
workers, it must be remembered that “it is only through effective labor inspection that abusive
use of precarious employment can be eliminated” (Malentacchi see also Cristobal &
Resurreccion, 2014). It is only upon the synergy of progressive social policy through legislation
and the full brunt of State enforcement that the specter of contractualization can be subdued for
the benefit of all (Cristobal & Resurreccion,2014).
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References
Asiapro Multi-‐purpose Cooperative (n.d.). All You Need To Know About Contractualization.
201727-‐July Retrieved fromhttp://asiapro.coop/contractualization-‐all-‐need-‐ know/
Babas et.al v. Lorenzo Shipping Corporation. (2010). G.R.No.186091. Retrieved from
https://www.projectjurisprudence.com/2018/06/case-digest-babas-et-al-v-lorenzo.html
Christian, Neil. (2015). Seasonal Employment. Josefina Benares vs.
JaimePancho,G.R.No.151827.Retrieved from
http://www.prohealthlaw.com/2015/02/seasonal-employment-made-simple.html
Cristobal, M.A. & Resurreccion, E.I. (2014). De-‐Confusing Contractualization: Defining
Employees engaged in Precarious work in the
Philippines.PhilippineLawJournal,342-‐374
Edralin, D.M. (2013). Precarious work: The unionized hotel workers' experience. Center for
Business Research & Development
Guda, K.R. (2014). INFOGRAPHIC: Worsening contractualization in Gov't alarms state
workers. Retrieved from http://pinoyweekly.org/new/2014/07/infographic-‐
worsening-‐contractualization-‐in-‐govt-‐alarms-‐ state-‐workers
Philippine Export. (2016). Contractualization: The Employer's Perspectives. Retrieved from
http://www.philexport.ph/c/document_library/get_file?uuid=655fac91-bb50-4aba-a1e8-
5ffeefbff2f7&groupId=12752
Villena, I.C. (2015). Examining the 5-‐5-‐5 Arrangement in Contractualization: A Study on the
Repeated Hiring Practices of Firms in Selected Industries. Policy Brief Institute of
Labor Studies
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Fate of Post-COVID-19 Philippine Hospitals
8th NBMC Paper #14
Allan P. Quijano
[email protected]
Abstract
The recent COVID pandemic is the quintessential black swan that most companies did not factor
in in their business plan and budgets for 2020. This is the first time that the entire country was put
on a 225-day lockdown to buy time for the government to beef up its mass testing capacity and to
prevent further spread of virus which still does not have commercially available vaccines. To date,
about 4% of the population have been tested (RT-PCR) with close to 380,000 confirmed cases (as
of end October 2020). At the center of this perfect storm is the healthcare sector particularly the
hospitals and the past 225 days have shown the weaknesses of the current hospital system and how
fragile the business models of private hospitals are (with close to 300 hospitals on the brink of
being closed down because of COVID’s financial impact).
Contrary to what the public might think, the pandemic would most likely result to financial losses
of private hospitals for two simple reasons – lower revenues and higher costs. Lower revenues
because non-COVID patients (and even some doctors) were afraid of going to hospitals unless it’s
a life-and-death situation (resulting to lower patient census) and most elective procedures have
been deferred until the ECQ gets lifted. In terms of expenses, hospitals are charged an arm and a
leg by suppliers for PPEs and they have to carry additional costs to provide transportation, lodging,
food and hazard pay to the front liners. A combination of low topline and higher burn rate is not
exactly what hospital managers budgeted f but this is the reality that they have to face not just in
2020 but probably for the next few years.
This paper will discuss the evolution of business models of private hospitals in the country as well
as signals in relation of hospital business models here and abroad. A discussion of the history of
hospital management in the Philippines from pre-Spanish times to present also served as a
springboard for the possible scenarios on how hospitals will operate in the next few years taking
into consideration the impact of the pandemic as posited by various theories in relation to changes.
Keywords: hospitals, business model, COVID-19
Introduction
According to DOH (2020), as of the beginning of 2020, there are only 1,264 hospitals in
the country (108,360 beds for a population of about 100 million). Sixty six percent of these
hospitals are classified as private but they only have 55% share in number of beds (indicating that
on average private hospitals have smaller bed capacity versus government hospitals).
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Major players in the hospital segment now are mostly multi-branch hospitals - the Metro
Pacific Group (MPIC), Unilab Group (Mt. Grace Hospitals), Ayala Group (Qualimed), The
Medical City Group and St. Luke’s Medical Center (two existing branches in Quezon City and
Global City). The first three groups mentioned above also have a network of outpatient clinics
which are usually located in malls since Filipinos love to go to the malls. There is also a
proliferation of other outpatient labs and dialysis centers and even cosmetic surgery centers which
compete for the business which before were being cornered exclusively by hospitals (think Hi-
Precision and Belo Medical Clinic).
The most recent major legislation that was passed in relation to hospitals is the Universal
Health Care Law which in a nutshell enrolled all the Filipinos to Philhealth. This law is good for
the Filipinos but a closer look at its implementing rules and regulations will tell us that the burden
of healthcare costs could be passed on largely to the private hospitals as they have to accept patients
even if they have no capacity to pay and hospitals will only be paid partially by Philhealth (this
could result to increase in hospital bad debts which could eat up their razor-thin margins given the
high amount of investment entailed in buying new machines to keep up with the new technology).
The unclear guidelines requiring patients to go through primary care screening first going to
hospitals could also drastically affect the inflow of patients in private hospitals. This law, coupled
with the entrance of new players (foreign and local alike) in the hospital industry and the COVID
pandemic could serve as impetus for hospitals to rethink the way they do business post-COVID.
History of Hospital Management in the Philippines
Pre-Spanish
Before the arrival of the Spaniards, early Filipinos were already very superstitious
and attributed sickness to their gods being angry for something bad that they did. As such,
the person they usually went to when they were sick is also their priestess – the babaylan.
But apart from the “faith healing” of the babaylans, the early Spanish colonizers also saw
that Filipinos already have a variety of cures which were derived from medicinal plants
such as Anonas, Sambong, Tangan-Tangan, Balconag, Pepita and many others. However,
there is no mention on the existence of hospital-like facilities during the pre-colonial period
except for the house of the babaylans where the rituals were usually done. It is only during
the Spanish era when the first hospitals were built (DOH, 2014).
Spanish Period
The friars who went with the Spanish expeditions were also among the ones who
set-up and ran the first hospitals in the country. The first one is named Hospital Real which
was established in Cebu in 1565 but was later on relocated to Manila when the seat of
government was transferred. It only catered to the needs of Spanish navy and army (they
are not open for Indios not even for half-bred Spanish mestizos) who were wounded in
skirmishes or were afflicted with tropical diseases. Other hospitals ran by religious orders
(which explains the religious-sounding names) were put up during the early part of Spanish
colonization for the public (mostly built with simple structures using bamboo and
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nipa)such as Hospital de Naturales, San Lazaro Hospital (which for a time catered to
lepers), Hospital San Juan de Dios, Hospital De La Misericordia, Hospital of San Gabriel
(for Chinese) and a few more outside of Luzon. Epidemics that Spanish officials have to
contend with during their rule were smallpox (for which vaccination was first used in the
Philippines), cholera and beriberi (DOH, 2014).
American Period
The public enjoyed better access to healthcare during the American Period with
more hospitals and the establishment of the Bureau of Health. They also mandated mass
vaccination for smallpox by giving shots to 25 million Filipinos. Special attention was
given to leprosy with passage of the Leper Law paving the way for the establishment of
institutions like Tala Leprosarium and the Culion Leper Colony in Palawan. However,
despite the improvement in access to healthcare, the era was still plagued with pandemics
the largest of which was the cholera pandemic (1902-1905) which claimed 200,222 lives
(3% of the Philippine population at that time). The premier hospital at that time was the
Philippine General Hospital which was established in 1910 with 350 beds. Tuberculosis
was another disease that merited the attention of the government paving the way for the
establishment of institutions like the Quezon Institute (with the assistance of proceeds from
the PCSO). (DOH, 2014)
Japanese Period
This brief period was characterized by scarcity in food and medicine and outbreaks
of malaria and tuberculosis. Most of the hospitals were used by Japanese for their wounded
soldiers and the public were worse compared during the American period during this time
in terms of access to healthcare. Combined impact of poor healthcare and the war itself
decimated the population of the country by 5% (1 million death out of 18 million
population). (DOH, 2014)
Post-Liberation
After the liberation, the government started to put up more hospitals in the
provinces. President Marcos had an ambitious plan of making Quezon City the center for
healthcare during his 30-year regime hence the establishment of specialty hospitals around
the QC circle (Philippine Children’s Medical Center, Philippine Heart Center, Lung Center
of the Philippine and National Kidney Institute). He is also credited for the passing of the
Philippine Medicare Act of 1969 which provided hospitalization, surgical and medical
expenses benefits for Filipinos. (DOH, 2014)
Various private hospitals started entering the hospital market with the establishment
of Makati Medical and The Medical City. St Luke’s Medical Center also has become a
hospital during this time, tracing its roots from an outpatient clinic in Tondo, Manila in
early 1900s.
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Signals of the Future
A review of the history of hospitals in the country will point to three major drivers of
changes in its landscape – pandemics, legislations and to some extent the church. Pandemics that
have brought hundreds of thousands of deaths have forced the authorities to try novel methods to
address contain them such as vaccination, quarantine (i.e. Culion Leper Colony) and establishment
of healthcare facilities (for instance, Quezon Institute for TB). Legislations (or royal decrees during
the Spanish period) helped ramp-up the construction of new facilities along with the support of the
men of cloth who were not only the spiritual successors of the babaylans but apparently also their
descendant in terms of taking care of the health of Filipinos in the Spanish era. President Marcos
also established a number of specialty hospitals in the country (mostly in the Quezon City circle
area) to elevate the quality of healthcare among Filipinos.
Hospital business models in the country is substantially the same as it was since the 1960’s
when more private hospitals started their operations until the 1990s. Many of these hospitals were
owned by doctors who pooled their money to put up building and buy machines. Over time, with
increasing patronage from affluent patients they got to expand their bed capacity, buy even more
advanced machines which will fuel a virtuous cycle. These doctors will usually have children who
are also MDs who eventually took the reins after the retirement of the parents. The parochial way
of managing hospitals was the norm pre-1990s given the unsophisticated requirements of the
Philippine market which was mostly comprised of people who are more than happy to line up in
government hospitals given its cheap services. However, 1990s onwards we have seen gradual
shift in professionalization of hospital management which was evidenced by putting non-MDs at
the helm of major private hospitals like St. Luke’s Medical Center and Makati Medical Center.
Big conglomerates have also started dipping their toes in the market with the entry of Metro Pacific
(now with 16 hospitals) and Unilab (17 hospitals). TMC now has five hospitals while Qualimed
of Ayala has four.
Overseas hospital business models are diverse as countries have different healthcare
systems. But one market that is comparable to ours is that of India where major players like Apollo
(71 hospitals), Narayana (23 hospitals) and Healthcare Global (21 centers) follow a different kind
of business model which is akin to the good old hub and spoke model. Certain hospitals are
designated as hubs where smaller spokes are connected. The hubs are situated in areas that the
hubs cannot reach so they get to see and refer patients who will need services from the hubs (which
are more specialized). This model has worked in India which is very price-sensitive and is need to
accessible healthcare for its more than 1 billion people. This kind of set-up is also observed in
other countries like Thailand (Bangkok Dusit Medical), Singapore (SingHealth) and even the US
(Mayo Clinic). This model allows hubs to increase their utilization of resources from higher
referral from spokes (which captures hitherto untapped market segment) by serving as the gateway.
The spokes require minimal investment compared to putting up a small hospital as they are mostly
equipped with diagnostic equipment (as all the expensive therapeutic machines are usually in the
hubs). After the complex procedures in the hubs, the patients can continue with the follow-up
consult in the spokes (through telemedicine which connects the spokes to the hubs). The hubs
also get to offer standardized patient care as they all follow the same clinical pathways and
treatment protocols ensuring better clinical outcomes.
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Size matters scenario
Market Theory posits that post-COVID, hospitals in the Philippines will move towards
further consolidation which would result to better economics, better clinical outcomes and increase
in terms of market reach. The adverse effects of COVID 19 to hospital finances are significant –
lower revenues and higher expenses. It is not unlikely that smaller private hospitals might fold up
and eventually get bought out by the bigger hospitals groups who might go on a buying spree post-
COVID (more than 300 hospitals are already on the verge of closure due to financial problems).
Increase in the size of hospital networks could help them exploit economies of scale advantage by
avoiding duplication in expensive CAPEX for machines and turning each hospital member into
specialty hospitals (ala private version of Pres. Marcos’ specialty hospital network in Quezon
City). The smaller outpatient healthcare facilities are even at greater risk of folding up and they
could also become targets for acquisition of bigger hospital networks so they can serve as “spokes”
that can feed more patients to the hubs. This set-up is expected to result to better economics,
improve clinical outcomes (if hospital network members will adhere to similar standards and
clinical pathways) and can reach more people who before would not even go the hubs for treatment
(Harvard Business School, 2007).
Small is better scenario
Following the Cycle Theory, we can surmise that despite the presence of large hospital
networks, the Philippine market will still be better off in reverting to the good old business model
of single-site hospital managed usually by a doctor. The problem with hospitals that are run by
non-MDs is that they tend to focus on generating financial returns which oftentimes go in conflict
with the main tenets of the Hipporactic Code which the MDs have sworn themselves to. The
recently-passed Universal Healthcare Law adds a layer for triaging of patients through primary
care physicians who may be influential in the decision of patients on where to go for their
furtherance tests and procedures (UHC IRR, 2019). This is similar to the old practice of patient
going to local neighborhood clinics to the get checked up by a respected doctor in the community.
These MDs usually do not have affiliation with the bigger hospitals (because if they do, chances
are they would be spending more time in their hospital clinics than in the neighborhood clinics)
and they can direct the patients to hospitals where the patients can get the highest quality of
healthcare for the amount that they can afford to pay (most likely not to the bigger hospital
networks). Eventually, the investors in the bigger hospital groups will realize that the returns that
they are getting (if any) are not enough to entice them to continue investing more funds. MPIC for
instance tried to exit the healthcare market recently (as their highly-leveraged investments in
hospitals are producing sub-par returns) but they just so happened to found a foreign investor
(KKR) which was willing to invest in the Philippine market. Bigger hospital networks are also
more at risk of incurring higher bad debts as the increase in Philhealth coverage from the UHC
might cause the spillover of patients to go to private hospitals who may not be compensated
sufficiently by Philhealth for the indigent patients who will go to them. Stand-alone hospitals
managed by a family of MDs who pass on management from one generation to the next could still
be very much in the market amidst the presence of the bigger hospital networks because of their
smaller exposure to bad debts (since they have smaller bed capacities). Also, what they lack in
capital and reach is compensated by their personalized and family-like atmosphere which is felt
not just by their staff and MDs but most especially by their patients.
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Toys for the big boys scenario
Technology Theory posits that hospitals which are quicker to adopt innovations in their
operations and conduct of patient care could be in a better position to get more market share (which
means that bigger hospital networks will not necessarily be the winners). Various advances in
healthcare provision (i.e. toys for the big boys) are being experimented on at present and these
could eventually be the norms in the near future post-COVID. Examples of these innovations are
as follows (Time, November 2019 Issue)
1. For instance, instead of the usual daily insulin injection for diabetes patients, a possible
alternative would be a small implantable device that can do the work of the insulin without the
injections.
2. Ultrasound devices that are pocket-size and up to 50 times cheaper than the usual ultrasound
machines can help make radiology procedures available even to far areas (or at home) at a
lower cost.
3. Reading of laboratory and imagine test results can eventually replace pathologists and
radiologists with the use of big data and AI which could churn out test results at a statistically-
significant higher accuracy level and yet lower costs (since you do not pay the readers for each
reading that they do).
4. Robots can eventually replace nurses in carrying out patient care (the success of robotics
surgery could actually be a proof of concept for this) and this could be a cheaper alternative in
the long-run (no OT pay, no union strikes, no restriction on the number of shifts, no health
benefits and retirement pay).
5. A network of top healthcare institutions in the US are working together to identify and remove
obstacles to innovation in traditional research to allow them to get major clinical trials of the
ground in weeks rather than years. This could have been useful for COVID 19 vaccines.
6. Using of VR for both patients (for instance physical rehab patients) and training of MDs (using
VR to simulate conduct of surgery so they can practice without the risk of killing humans).
A cursory review of business history will show us that the bigger companies are not
necessarily the ones who will embrace these innovations because they are benefiting from the
status quo (Jim Collins wrote a whole book about this – How the Mighty Fall). It is usually the
more agile and more risk-averse players who are more open to adopting these things and
integrating them to their operations. If this will also hold in the hospital industry, the billions of
dollars that both MPIC and Unilab group have spent (or are willing to spend) would go to waste if
they will suddenly see smaller yet nimble players generating much better financial returns despite
their lack of scale compared to the two conglomerates.
Strongman rule scenario
Power Theory supposes that there is no certainty as to which hospital business models will
best work in the Philippines because at the end of the day the ones ruling the country have the final
say on who are the winners and the losers. Dating back from Spanish times, the government has
played a major on role on establishing hospitals, on who gets treated and what to be done in case
of pandemics (vaccination, quarantine, build more hospitals). After the hospital building spree of
President Marcos during this three decade-rule, the baton was passed on to the private sector to
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expand the healthcare capacity of the country. At present, Pres Duterte’s landmark UHC law may
have made the people happy but it kept the private hospitals in limbo at they know that they will
have to absorb its impact. The bigger they are the bigger they get hit. At present, a number of
hospitals are already complaining about non-payment of Philhealth (take the case of UST Hospital
which included non-payment by Philhealth as a reason for retrenching some of their employees).
Prior to COVID, a number of conglomerates earned the ire of Pres. Duterte including the Lopez
Group, MPIC and the Ayalas, the last two being major players as well in the hospital industry. The
Lopezes were not granted a franchise renewal for their TV and radio networks, as if sending a
signal to the other tycoons on what Duterte can do them if they stay on his bad side. If a similar
crackdown will be made to big hospital conglomerates because of the whim of the strongman, then
no matter how well-though off their business plans and how advanced their technologies are, the
president can just take everything away given the hospitals are highly-regulated by the government
as evidenced by the number of permits that they have to secure and inspections they have to pass
on a regular basis just to keep operating. The strongman rule could still be at play even in the 21st
century. Those hospitals or hospital networks who will be on the good side of the administration
will be in a better position to survive the post-COVID tide.
Coopetition scenario
A quick scan of the hospital competitive environment seems to show that the prevailing
framework being used by the players is still the Five Forces Model by management guru Michael
Porter. With the use of the aforementioned framework, the existing players actions led to higher
barrier of entry for new players, lower bargaining power for both suppliers and customers,
lowering the threat of substitutes and one-upmanship current players. Over time, the overall
profitability in the industry will go down thereby making the it less attractive not just for new
players and probably even for existing players. (Porter,1979)
A lesser known framework introduced by Michael Porter is the so-called “Diamond

Framework” which posits that co-opetition is another model which can be applied by various
industries (Porter, 1990). A shift from competition to coopetition in healthcare could potentially
reduce the healthcare costs and the same time significantly improve the quality of care for patients
(Porter and Teisberg, 2006).
Currently, many private hospitals invest a significant amount of capital especially for
medical equipment. As such, the tendency for these hospitals is to operate as general hospitals
catering to all types of cases (even if they do not necessarily have expertise to handle all types of
cases). The duplicating capital expenditures for machines results to overcapacity in certain
geographic areas (which raises cost of healthcare provision) while functioning as general hospitals
result to less than ideal experience curve and consequently suboptimal level of care. By shifting to
the diamond model, local hospitals can start a virtuous cycle by being specialty hospitals (instead
of functioning mostly as general hospitals). With this, hospitals can reduce their CAPEX and other
operating expenses by tailor-fitting their org structure and medical equipment line-up to the
requirements of the specialization they are catering to. Having specialization can also result to
steeper learning curve as specialization can attract more patients and further improve the capability
and clinical outcomes of hospitals. In other words, by cooperating with each other, hospitals can
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all benefit from the shift and can improve not only their profitability but more importantly the
clinical outcome of patients.
CONCLUSION
These scenarios are not necessarily mutually exclusive as it is very much possible that a
combination of two or three scenarios can happen simultaneously or sequentially in the near future.
I am personally not sure which of the five scenarios will most likely happen but definitely the
future will lie somewhere in between the spectrum of these scenarios and hospitals should be better
prepared to fight for their survival not only for their financial benefit but to enable to them to
continue fulfilling their mission of providing healthcare to the Filipinos in this post-COVID world.
Ultimately, I am hoping for a future where the patient wins and one way for that to happen private
hospitals should be able to operate laissez faire with the private players trying to outdo themselves
through offering better quality of healthcare at the lowest cost possible for that level of healthcare.
Government on the other hand should provide access to healthcare to as many people as possible
without unduly burdening the private sector by providing a more market-rate-compatible level of
reimbursement from Philhealth to private hospitals.
References
Hub and Spoke Health Care Global and Additional Focused Factory Models for Cancer Care,
Harvard Business School Case (2012)
SingHealth: Winning the War Against Diabetes, Singapore Management University Case (2017)
Narayana Hrudayalayav Heart Hospital: Cardiac Care for the Poor, Harvard Business School Case
(2011)
Aravind Eye Care System: Providing Total Eye Care to the Rural Population, Richard Ivery School
of Business Case (The University of Western Ontario), 2011
Apollo Hospitals - First World Health Care at Emerging-Market Prices, Harvard Business School
Case (2007)
A Legacy of Public Health, The Department of Health Story, Second Edition (2014)
How the Mighty Fall, Jim Collins (2009)
https://www.bworldonline.com/kkr-gic-complete-investment-in-metro-pacific-hospital-unit/
https://www.mphhi.com.ph
https://www.mtgracehospitals.com.ph/homepage
https://www.themedicalcity.com
https://www.stlukes.com.ph
https://hfsrb.doh.gov.ph/?page_id=154
https://www.doh.gov.ph/sites/default/files/health_magazine/UHC-IRR-signed.pdf
https://hbr.org/1979/03/how-competitive-forces-shape-strategy
https://hbr.org/1990/03/the-competitive-advantage-of-nations
Porter, M. & Teisberg E. (2006), Redefining Healthcare: Creating Value-Based Competition on
Results. Harvard Business Review Press.
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Ethical Perception of Business Students: Does Gender and Age
Make a Difference?
8th NBMC Paper #15
Gemma U. Reyes
University of the Philippines Los Baños
[email protected]
Abstract
This study aimed to 1) assess how business students perceive ethically questionable issues both in
the academic and professional setting, 2) determine if there are differences in their ethical
perceptions based on gender and age, and 3) propose recommendations that could enhance the
moral integrity among business students. Based on a review of literature, the research results are
mixed on whether there are significant differences in the ethical perception between males and
females. This study attempted to provide further evidence on whether gender plays a role in ethical
perception. As for the age, a number of studies have shown that older employees are more ethical
that younger ones. These studies were conducted among working professionals. This study sought
to verify if the same results apply to higher education students. Moreover, results of the study can
be useful in designing programs related to influencing ethical behavior among students if indeed
gender and age are significant factors. A 5-point Likert-type online survey was conducted among
currently enrolled undergraduate and graduate business students of a Philippine university. To
protect their identity and to encourage candid responses, the students’ names were left optional.
A total of 198 students participated in the study. The study showed that generally, these students
still upholds academic and professional integrity. However, a sizeable percentage found nothing
wrong with some of the unethical statements. Furthermore, the study found that females had
significantly higher ethical perceptions than males in 12 out of the 26 items and that there are no
significant differences in the ethical perception of undergraduate and graduate business students
except for 1 item. Recommendations were made as to how to contain potential academic
dishonesty that could arise due to the unethical perceptions of a number of students.
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Organizational Culture: The Influence on Accounting Information
System Success and Its Implication on the Quality of Financial
Information
8th NBMC Paper #16
Antonino Jose Laluz Bayson

[email protected]
Abstract
Business industries are growing and increasing in numbers. Correspondingly, technology is

waving its name to businesses where effectiveness and efficiency can be attained. This research
aims to determine the influence of organizational culture on the accounting information system
success of which implication to the quality of financial information is further identified. With
accounting employees as research participants, primary data are gathered through the use of a
modified standardized questionnaire and two-stage least square regression analysis was employed
to answer the objectives of this study. Overall, this research concluded that organizational culture
is statistically significant which signifies that this factor influences the accounting information
system success. Likewise, this research reveals that accounting information system success is
statistically significant to the quality of financial information. The need for attention to give
confidence to the members of the organization can create improved and harmonious relations
which will not just result to a more competent and able member but will lead to advance the quality
of accounting information system as well as the quality of financial information.
Keywords: organizational culture, accounting information system success, quality of financial

information, regression analysis
In the recent years, business industries in the country are continuously growing and
undeniably increasing in numbers. Different sectors are also at their peak of making new and
diverse business strategies in order to achieve organizational goals and objectives. Similarly,
technology is waving its name to businesses where effectiveness and efficiency can be achieved.
With the help of the fast-changing technology, businesses learned that this can affect not just the
quality of their performance as a business but the quality of their position inside the organization.
Moreover, businesses utilize accounting as a system which creates immense impact in making
future economic decisions. Through accounting, management of the business can decide whether
to shut down or to continue the operation if financial information provided within specific and
relevant period are of great influence to make these decisions. To enhance utilization of accounting
information, different accounting information systems are used by management in accordance with
their specific needs and requirements.
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Accounting information system is a management control tool which is useful in decision
making related to corporate transactions (Mitchell, Reid, & Smith, 2000). Also, it is a system to
collect, record, store, and process data to produce information relevant to internal and external
users. Furthermore, accounting information system is considered a collection of resources, such as
human and equipment, which is designed to alter financial data and other related data into a
meaningful information that can be further communicated to potential users and decision makers.
By utilizing accounting information system, financial information are expected to be of its good
quality. According to Baltzan (2012), information must be relevant, accurate, complete, consistent,
timely, and unique to be of good quality of which these qualities will benefit decision makers. As
long as the information has the ability to influence users in making economic decisions,
information is meeting its requirement of superiority. With the financial information produced
through the use of accounting information system, it is viewed to influence internal users as they
are considered primary users. In their large participation, quality of the financial information can
be affected and can further contribute in economic decisions and possibly determine the firm’s
likelihood of success or failure. Evidently, internal users as part of the organization are the great
contributors of the so-called organizational culture.
In connection, as internal users of accounting information systems take part in the

organization, organizational culture can be observed as it is a big factor that shares huge influence
to business growth and stability. Likewise, organizational culture is viewed as a structure which
reflects the distribution of responsibility, authority, and accountability throughout the
organization. According to Newstrom (as cited in Wisna, 2015), organizational culture is a concept
of shared values, symbols, meaning, beliefs, assumptions, and expectations which organizes and
integrates group of people who work together. With that, in relation to accounting information
system, organizational culture is believed to influence the quality of financial information as
implementation, utilization, and management of the system take place inside and in relation to the
people who work together which are viewed as the internal users.
Overall, with organizational culture, the researcher views the variable as linked and
connected in order to determine the significant influence on the accounting information system
success and its further implication on the quality of financial information. That is, with quality
financial information, business organizations will be able to come up with a sound economic
decision.
Based on the background discussed, this research aimed to answer the following questions:
(1) How organizational culture influence the perceived accounting information system
success of the accounting employees?
(2) How accounting information system success can affect the perceived quality of
financial information of the accounting employees?
Objectives of the Study
This research aimed to identify the (1) organizational culture in terms of power culture,
task culture, role culture, and person culture (Handy, 1993). Likewise, this aimed to identify the
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(2) accounting information system success which includes integration, flexibility, accessibility,
and formalization (Rapina, 2015) as well as the (3) quality of financial information in terms of
accuracy, relevance, completeness, and timeliness (Rapina, 2015). This research also aimed to
determine the (4) influence of organizational culture on the accounting information system
success; and the (5) influence of accounting information system success on the quality of financial
information.
Theoretical Framework of the Study
The Technical - Rational and Behavioral Perspective. Basically, the technical-rational

perspective views people as machines. In example, the job of an individual in an organization is
to keep the machine runs smoothly and in relation with all the other machines. That is, one must
be responsible in creating an administration that keeps the machine well-oiled and fixes any broken
parts. According to Henri Fayol’s classic theory of management, an individual within an
organization must perform five distinct functions: planning, organizing, coordinating, deciding,
and controlling. With this, in order to fulfill each of these functions, an individual must
communicate. Organizationally, one must create a good environment and culture to make things
inside and outside the organization effectively and efficiently. That is, performance and culture of
an individual greatly affects the goals and objectives and will eventually affect the results and
outcomes of the organization as whole and in the long run. On the other hand, behavioral
perspective views about the role of an individual in assisting the organization in continually
changing and adapting to its environment. This management theory gives an insight into the use
of information systems to enhance the effectiveness and efficiency of the organization. In
conclusion, an individual has a powerful influence on the field of information systems
(International Institute of Management & Technology Studies, 2013).
Fred Fiedler’s Contingency Theory. Fiedler’s contingency theory is one of the

contingency theories that states effective leadership depends not only on the style of leading but
on the control of an organization over a situation. That is, an organization needs to have a good
leader-member relations, a task with clearly defined goals and objectives, and an ability of the
organization’s leader to hand out rewards and punishments. With the lacking of these
characteristics, in the right context and combination, an organization will lead into a failure
(Leadership Central, 2010). In this regard, having said that this theory is dependent upon the
organization’s situation, it is apparent that factor relating to employees’ behavior, specifically their
culture, is a great contributor to achieve the goals and objectives of the organization. Also, when
it comes to financial information, as employees are directed and supervised by their superior in its
high state of management, quality of financial information will be positively affected.
Factors Influencing the Design of Accounting Information System. An accounting

information system consists of people, procedures, data, software, and information technology
infrastructure. In order to create an effective accounting information system, different factors must
be considered. With accounting information system, organization will be able to collect and store
data about activities and transactions. In addition, organization will be able to process data into a
meaningful information that is useful for making sound and economic decisions. In this regard,
designing, selecting, and implementing accounting information system must show great
considerations and importance. In designing accounting information system, factors including
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organizational culture, strategy, and information technology are involved (Romney & Steinbart,
2009).
Theory of Accounting Information System Quality on Accounting Information

Quality. The company’s decision making, whether good or bad, comes from a quality accounting
information. Whereas, to generate highly qualified accounting information, good quality
accounting information system is vital and necessary. Accordingly, quality information is observed
to significantly improve decision making and may directly increase profit for the organization.
However, the quality information will not automatically guarantee any good decisions because
given the fact that decision makers are human beings, all is susceptible to human error (Baltzan,
2012). In the information systems field, information quality and use have played an important role
in defining success of various information systems. That is, there is no quality accounting
information without a quality accounting information system. Consequently, entities utilize
accounting information system to generate reports specifically to meet the information needs of
investors, creditors, government agencies, managers, and workers. In relation, accounting
information system aims to present financial statements that are designed for external users and
internal users. Moreover, it is clear that it is not easy to build a system of accounting information
because many factors associated with the success of the construction of information systems must
be developed using different and appropriate methods, techniques, and principles (Whitten &
Bentley 2007; Susanto, 2013). That is, if the information is not qualified, the accounting
information becomes useless.
Operational Framework of the Study
Given the theories and principles and considering the works of notable scholars and
researchers, this study sought to determine how culture influences the accounting information
system success. Hence, the researcher came up with an operational framework presenting the
relationship between variables which was utilized in this study (Figure 1) to provide relevant
results for interpretation.
Figure 1
Operational Framework of the Study
ACCOUNTING QUALITY OF
ORGANIZATIONAL INFORMATION FINANCIAL
CULTURE SYSTEM SUCCESS INFORMATION
(Power, Task, (Integration, Flexibility, (Accuracy, Relevance,
Role, & Person) Accessibility, & Completeness, &
Formalization) Timeliness)
Relative to organizational culture, Handy (1993) discussed four constructs which include
power culture, task culture, role culture, and person culture. For accounting information system
success, Rapina (2015) identified indicators which include integration, flexibility, accessibility,
and formalization. In relation to the quality of financial information, qualities include accuracy,
relevance, completeness, and timeliness (Rapina, 2015). As organizational culture places great
effects and values to the organizational goals and objectives, these variables were used to
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determine the influence on the accounting information system success and its implication on the
quality of financial information.
Hypotheses of the Study
Given the factors influencing accounting information system success and its implication to
the quality of financial information in consideration of interrelated theories and concepts, the
following hypotheses were formulated. These hypotheses include:
Ho1 Organizational culture in terms of power culture, task culture, role culture, or person
culture did not significantly influence the quality of accounting information system success.
Ho2 Accounting information system success has no implication to the quality of financial
information.
Assumptions of the Study
With the objective of determining the influence of organizational culture on the accounting
information system success and its further implication to the quality of financial information, the
following assumptions were established.
(1) The perceived organizational culture matters of the research participants are reasonable
and within the scope of their understanding relative to the constructs of culture.
(2) The information provided for the accounting information system success covering the
integration, flexibility, accessibility, and formalization of the system reflect the information system
utilization and comprehension of the research participants.
(3) The information relative to the quality of financial information including accuracy,
relevance, completeness, and timeliness are reliable and faithfully represented by the research
participants.
(4) The research, in all cases, did not consider other factors that may influence the
accounting information system success such as, leadership and management style, self-esteem and
self-efficacy, emotional stability, and other variables.
Scope and Limitation of the Study
For this study, the researcher only focused on the organizational culture of the research
participants. For organizational culture, only relative to power culture, task culture, role culture,
and person culture (Handy, 1993) were employed. Indicators utilized by Rapina (2015) were also
used in determining the accounting information system success and the quality of financial
information. Moreover, the research participants were limited only to the accounting employees,
regardless of their position inside the organization, of the chosen business industries in the
Municipality of Carmona, Cavite. The business industry to participate was also within the context
of an organization utilizing accounting information system. Additionally, the length of service or
tenure of the participants was considered to appropriately identify their culture. However, the type
of the accounting information system used by the organization were not considered as some
companies during the initial gathering that they will not disclose their system. All in all, the
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accuracy and reliability of the study only relied on the information provided by the research
participants.
Significance of the Study
Evaluating and analyzing the influence of organizational culture to the accounting

information system success and its implication to the quality of financial information will provide
valuable insights and considerations to various individuals. In particular, these groups include the
organization’s management, workforce – accountants and staffs, financial advisors, academicians,
other researchers, and other stakeholders.
Organization’s Management. The management of the organization includes the

supervisors and managers. More specifically, in relation to the financial information, accounting
supervisors are involved. It will be beneficial to them as they will be more aware about the culture
of their subordinates and employees towards the attainment of goals and objectives of the
management. Also, it will help them improve their leader-member relationship as they will create
a healthy working environment. That is, with improved relationship, efficiency and effectiveness
will be achieved as well as the quality of the service they provide as a whole. Furthermore, this
study can help the organization’s management, particularly the human resource department, to
pinpoint which dimension of organizational culture has great effect on the performance of their
employees – whether it results in a positive or negative way. All in all, the effective and efficient
application of the accounting information system will encourage improvements in the daily
operations and will improve the quality of decision making of the organization which is a major
component in the creation of the organization’s financial performance.
Workforce – Accountants and Staff. For the purpose of this study, the general workforce,
including the accountants and staff, will be benefited as they will be more knowledgeable about
their culture towards the organization more specifically, in the attainment of its goals and
objectives. Likewise, awareness will be created as culture, to some extent, will influence their
work effectiveness and efficiency. That is, as one positively takes part in a healthy working
environment, outputs will be positively affected as well. Also, as one significantly identifies his or
her behavior towards his or her organization, one will be able to exert considerable effort and will
have a strong desire to maintain membership in the organization.
Financial Consultants. Financial consultants include management experts and

accountants who provide services for a fee. They render professional advises when it comes to the
management of the organization’s finances and other related business matters and concerns.
Through this study, financial consultants will have more confidence to provide advises and
guidance especially when it comes to the organizational culture of the organization’s employees.
Academicians. This study will increase literature wherein academicians may use the
results as additional knowledge and learning for discussions and consultations, and as a reference,
in the conduct of their specific field, for further research and improvement of the profession.
Other Researchers. This study may serve as an eye opener to other researchers. They may
conduct further studies regarding the other factors affecting the quality of financial information or
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expand the research participants for a wider range and scope of study. Also, they may propose in
a different perspective with regard to the findings and recommendations of this study.
Methodology of the Study
Research Design. For the purpose of this study, a descriptive-causal research design was
employed and utilized since it involved collection of primary data necessary in making description
of the different factors under investigation. Particularly, these factors include the organizational
culture (power culture, task culture, role culture, and person culture) as well as the perceived
accounting information system success and quality of financial information of the research
participants. In addition, this study used a causal approach as it determined the influence of
organizational culture to the accounting information system success leading to the determination
of implications to the quality of financial information.
Population and Sampling Design. Given the scope of the study, the research participants
were accounting employees who are involved in the utilization of accounting information system.
The study also focused on the chosen business industries in the province of Cavite specifically in
the municipality of Carmona wherein they have utilized the functions of accounting information
system. Natures of the industries include manufacturing, real estate, wholesale and retail trade,
transport and storage, and other community, social and personal services activities. These
industries also range from micro to large industry classification.
Given the unknown population parameter as to the number of accounting employees, the
z-score formula was used to determine the number of sample to participate in the conduct of this
study. With 5 percent margin of error and 1.96 z-score, 384 sample size was computed. In relation,
to answer the research objectives, homogenous purposive sampling technique was applied as
research participants include selected accounting employees only who can and are willing to
provide the information by virtue of their knowledge or experience. Also, purposive sampling
involves identification and selection of individuals or groups of individuals that are proficient and
well-informed with a phenomenon of interest. In addition to the knowledge and experience, the
importance of availability and willingness to participate as well as the ability to communicate
experiences and opinions in an articulate, expressive, and reflective manner are necessary.
Relatively, the accounting employees are within the organization of the chosen business industries
utilizing accounting information systems. More specifically, the length of service or tenure of the
accounting employees to participate was considered of which one year of service or more was the
benchmark. With this factor, a clear picture of the organizational culture was provided.
Data Analysis. With the use of different statistical tools and data treatment, general and
specific objectives will be answered. In this study, appropriate statistical treatment was utilized for
the management and analysis of the primary data gathered from the research participants.
Particularly, the data gathered were employed to determine and analyze the influence of
organizational culture to accounting information system success of which implication to the
quality of financial information was identified. Relative to the variables, organizational culture
was measured using the power culture, role culture, task culture, and person culture indicators
(Handy, 1993); accounting information system success was measured using indicators relative to
integration, flexibility, accessibility, and formalization (Rapina, 2015); and quality of financial
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information was measured using accuracy, relevance, completeness, and timeliness indicators
(Rapina, 2015). Furthermore, the reliability of the questionnaire used for the purpose of this study
was computed for each variable which signifies the internal consistency of how closely related sets
of items are as group. Overall, the questionnaire of this study resulted to a scale reliability
coefficient which ranges from 0.7538 to 0.8289 (14 items for organizational culture; 8 for
accounting information system success; and 8 for quality of financial information). The
coefficients suggest that the items have relatively high internal consistency and are acceptable.
Given the rationale and objectives of this study, descriptive statistics was employed. In
identifying the organizational culture, mode was utilized through frequency count of the choice of
the research participants (choice A for power culture; choice B for role culture; choice C for task
culture; and choice D for person culture). Weighted mean scores were applied in identifying the
accounting information system success and the quality of financial information. For the influence
and correlation between variables, two-stage least square regression analysis was employed. As
defined, two-stage least square regression analysis is a statistical technique that is used in the
analysis of structural equations. Likewise, this technique is the extension of the ordinary least
square method, that is, it is used when the dependent variables are correlated and associated with
the independent variables (Statistics Solutions, 2019). More specifically, dummy variables were
constructed for organizational culture which were further used in the first stage regression. After
utilizing the dummy variables and weighted averages for regression, predicted values were
computed in relation to accounting information system success. These values were then employed
for the second stage regression to the quality of financial information. Table 1 presents the variable
description utilized in the study while Table 2 displays the descriptive interpretation for each
variable.
Table 1
Variable Description
VARIABLE DESCRIPTION
Organizational Culture
Dummy Variable for Power Culture
DuV_A
Power = 1; if Role, Task, Person = 0
Dummy Variable for Role Culture

DuV_B
Role = 1; if Power, Task, Person = 0
Dummy Variable for Task Culture

DuV_C
Task = 1; if Power, Task, Person = 0
Accounting Information System Success
Weighted Average of AIS Success
WAAISS 4 – Strongly Agree; 3 – Agree;
2 – Disagree; 1 – Strongly Disagree
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Estimated Value of WAAISS based on
ESTWAAISS DuV_A, DuV_B, DuV_C, and WACOM
(for second stage least square regression)
Quality of Financial Information
Weighted Average of QFI
WAQFI 4 – Strongly Agree; 3 – Agree;
2 – Disagree; 1 – Strongly Disagree
Table 2
Descriptive Interpretation of the Variables
INTERPRETATION
ACCOUNTING
SCORE QUALITY OF FINANCIAL
INFORMATION SYSTEM
INFORMATION
SUCCESS
3.26 – 4.00 Very High AIS Success Very High Quality
2.51 – 3.25 High AIS Success High Quality
1.76 – 2.50 Low AIS Success Low Quality
1.00 – 1.75 Very Low AIS Success Very Low Quality
Descriptive Statistics – Organizational Culture. Based on the results, task culture

obtained the highest percentage followed by role culture with 34.52 percent of the total responses;
person culture with 19.20 percent; and power culture with 8.20 percent (Table 3). This reveals that
members of the organization are job oriented of which employees work as a team to address
organizational conflict and problem. Particularly, the result of this study is aligned with the
observation of Brown (1995) that task culture is the most preferred form of organization.
Table 3
Descriptive Statistics - Organizational Culture
ORGANIZATIONAL PERCENTAGE
FREQUENCY
CULTURE %
Power Culture 441 8.20
Role Culture 1,856 34.52
Task Culture 2,047 38.08
Person Culture 1,032 19.20
TOTAL 5,376 100.00
*14 questions x 384 participants = 5,376 responses
Accordingly, task type of culture has a democratic leader who is capable of being
influenced and has a self-motivated subordinate who is willing to contribute his or her best and is
open to ideas. Individual who does well in the organization is also observed to be effective and
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competent with a strong commitment to his or her work. Likewise, work is performed out of
personal commitment to the task or goal of which individuals, as part of the organization, work
together when their joint contribution is needed to perform the task (Handy, 1993). Relative to the
accounting sector, Kalish (2019) mentioned that this sector has a task type of culture which
requires the members to develop and expand a set of skills. Teams are formed to take advantage
of the individuals’ expertise at particular aspect of solving a common problem, whether it is
internal or external. Likewise, independence, innovation, and critical thinking are necessary as
well as the ability to work with lots of different people on demanding projects with tight deadlines.
Given these, firms invest and spend a lot of time and money on employee education as individual
skills are considered vital. In particular, some firms offer and require members to take courses to
extend their expertise.
Descriptive Statistics – Accounting Information System Success. Based on the results,

it is revealed that integration has the highest mean score of 3.1003 (0.38 standard deviation)
followed by formalization with a mean score of 3.0964 (0.44 standard deviation), accessibility
with a mean score of 3.0898 (0.41 standard deviation), and flexibility with a mean score of 3.0495
(0.46 standard deviation). Overall, the scores are represented with the grand mean of 3.0856 (0.33
standard deviation) which reflects that the research participants perceived high accounting
information system success (Table 4).
Table 4
Descriptive Statistics – Accounting Information System Success
STANDARD
INDICATOR MEAN REMARKS
DEVIATION
Integration 3.1003 0.38 High AIS Success
Flexibility 3.0495 0.46 High AIS Success
Accessibility 3.0898 0.41 High AIS Success
Formalization 3.0964 0.44 High AIS Success
GRAND MEAN 3.0856 0.33 High AIS Success
Accordingly, the accounting information system is observed to facilitate the acquisition of

information from different functional areas; to integrate components of the system; and to adapt
to environmental changes and to the needs of the users. Likewise, the use of the computerized
systems is flexible and there is an ease of accessing information from the existing system.
Additional types of information needed also do not change the system of which the system
facilitates formal communication. In the study of Fitriari and Mulyani (2015), it discussed that the
accounting information system success also has a very high score which signifies that employees
have a belief that the use of accounting information systems is easy as they can save time in
completing the work and to do other things to improve performance. Given that the organizations
have committed employees in general, Fitriari and Mulyani (2015) further stated that the high
score is because of the high confidence of the employees towards ease of use, usefulness, and
usage of the information system.
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Descriptive Statistics – Quality of Financial Information. Based on the results, it is
revealed that timeliness has the highest mean score of 3.1315 (0.47 standard deviation) followed
by relevance with a mean score of 3.1042 (0.46 standard deviation), accuracy with a mean score
of 3.0781 (0.40 standard deviation), and completeness with a mean score of 3.0495 (0.48 standard
deviation). Overall, the scores are represented with the grand mean of 3.0926 (0.35 standard
deviation) which reflects that the research participants perceived high quality of financial
information (Table 5).
Table 5
Descriptive Statistics – Quality of Financial Information
STANDARD
INDICATOR MEAN REMARKS
DEVIATION
Accuracy 3.0781 0.40 High Quality
Completeness 3.0495 0.48 High Quality
Relevance 3.1042 0.46 High Quality
Timeliness 3.1315 0.47 High Quality
GRAND MEAN 3.0926 0.35 High Quality
Relatively, the research participants perceived that the financial information is appropriate
to the existing situation and condition and the information needed is in accordance with what is
generally accepted. In addition, the information is available when required and is easily accessible
to make decision in time. Also, the information given is complete in accordance with the needs
and additional type of information needed does not change the information system. According to
Nicolaou (2000), the quality of information is related to the success of the information system.
That is, effective information system produces information that can be used to control and to make
decisions in the field of accounting and management. Thus, this study displays the same result as
high accounting information system success resulted to high quality of financial information.
Similarly, Sajady, Dastgir, and Nejad (2012) mentioned that effective accounting information
system results to enhanced financial information.
First Stage Regression Analysis. Based on the results, organizational culture has a
significant influence on the accounting information system success. That is, the norms, values, and
beliefs shared by the members within the organization impact the quality of the accounting
information system. In particular, power culture (DuV_A) and task culture (DuV_C) are
significant at 1 percent level of significance while role culture (DuV_B) is significant at 5 percent
level of significance. Accordingly, if the organization portrays power culture, it has 0.2922 effect
higher than person culture on accounting information system success. Likewise, if the organization
portrays role culture and task culture, it will have 0.1275 and 0.1763 effect respectively higher
than person culture on accounting information system success (Table 6). All in all, Ho1 is rejected
as the result of the regression shows significant values.
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Table 6
First Stage Regression Analysis
STANDARD
WAAISS COEFFICIENT T P>|t|
ERROR
DuV_A 0.2922 0.0976 2.99 0.003**
DuV_B 0.1275 0.0515 2.48 0.014**
DuV_C 0.1763 0.0502 3.51 0.001**
Intercept 2.3647 - - -
*p < 0.01 **p < 0.05 ***p < 0.10
Structurally, the regression equation for the first stage regression represents: WAAISS =
β0 + β1DuV_A + β2DuV_B + β3DuV_C + β4WACOM + ε. After data processing, the results
reveal a regression equation, as follows: WAAISS = 2.36 + 0.29 DuV_A + 0.13 DuV_B + 0.18
DuV_C + ε. This regression equation was utilized to predict the estimated values of accounting
information system success. Specifically, the equation illustrates that every increase of the degree
of the organizational culture will enhance the degree of accounting information system success
respectively by 0.29 (power culture), 0.13 (role culture), 0.18 (task culture), with a constant value
addition of 2.36. Further, these values were employed to determine the implication of the
accounting information system success to the quality of financial information.
Conforming to the literature, the result of this study is aligned with the study of Rapina
(2014) and Rapina (2015) wherein organizational culture affects the quality of accounting
information system. That is, increased employee participation and empowerment are factors that
can further influence and affect the quality of work in an organization specifically the quality of
accounting information system. Consequently, Kuraesin (2017) stated that culture has a very
strong influence on the overall success of the information system as it is considered one major
component of the organization. Meiryani and Supriyanto Ilyas (2016) also mentioned that the
perceptions formed on the basis of experiences shape the culture in the organization which further
influenced the information systems considerably and substantially. Similarly, Napitupulu (2015)
pointed that organizational culture can bridge systems’ problems and conflicts resulting to a quality
information system. On the other hand, Syaifullah (2017) reviewed that there are still numbers of
problems and weaknesses to address in terms of the culture and the implementation of the
accounting information system. However, the author mentioned that the literature really shows
great influence of this factor to the success of information systems.
Second Stage Regression Analysis. Based on the results, the predicted values of
accounting information system success in consideration of organizational culture are statistically
significant to the quality of financial information at 1 percent level of significance (Table 7). That
is, the success of accounting information system considerably impacts its output of which the
quality of information generated from information system is an important matter to organizations.
As organizations are engaged with number of transactions and activities, good quality and reliable
information are required. In particular, one unit increase to the level of success of accounting
information system has a positive effect of 1.1665 on the quality of financial information. Hence,
based on the regression result, there is enough evidence to reject Ho2.
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Table 7
Second Stage Regression Analysis
STANDARD
WAQFI COEFFICIENT T P>|t|
ERROR
ESTWAAISS 1.1665 0.1804 6.47 0.000**
Intercept -0.5067 - - -
*p < 0.01 **p < 0.05 ***p < 0.10
In line with the literature, the study of Fitriari and Mulyani (2015) concluded that
accounting information system success has positive influence on accounting information quality
which is the same with the result of this study. Authors including Rapina (2015), Fitrios (2016),
Fardinal (2013), and Nicolaou (2000) also concluded in their studies that successful
implementation of accounting information system affects the quality of financial information. That
is, there is no quality information without a quality information system. Correspondingly, the
effectiveness of an accounting information system is related to the activities of data collection,
processing, and storage of which right and efficient application of the system will result to high
quality information. Likewise, as mentioned by Salehi, Rostami, and Mogadam (2000), accounting
information system success may enhance the accuracy of financial information and reports which
will accelerate corporate transaction processes.
Moreover, in consonance with the results of this study, McLeod and Schell (2006) stated
that accounting information system success has significant influence to the quality of financial
information. Wherein, the use of accounting information system will provide a competitive
advantage for the company as an effective accounting information system will provide quality
information. Likewise, Gelinas and Dull (2008) pointed out that the successful application of the
accounting information system encourages improvements in the daily business operations and the
quality of decision making of organizations which are major component in the creation of the
company’s financial performance.
All in all, the decision to adapt information system does not only concern certain parties
which exist in the organization. Wherein, organizational system which involves the cooperation,
norms, and behavior of all the participating members are necessary. Additionally, the success of
the implementation of information system needs the close relationship among the organizations
involved to encourage the participation of all the members. With all these, it can be expected that
overall performance will be affected positively more specifically, in relation to accounting
information system, the financial information that are required in forming economic decisions for
the organization’s long term success.
Recommendation
Given the conclusions of this study, other researches can be proposed to examine other
variables that can affect the quality of accounting information system since not all of the variables
were considered in the conduct of this study. These factors may include environmental uncertainty,
leadership and management style, and internal control. In addition, in relation to the organizational
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culture, companies need to further create harmonious relationship between employees as this study
revealed the positive impact of this variable to the quality of accounting information system.
Specifically, conducting team training and activities, and providing incentives, rewards, and
appreciations are some matters companies need to consider in order to appraise the value of
organizational culture within the organization. Considerably, creating an environment of openness,
comfort, and appreciation is also suggested to obtain a better framework of building good
relationship in the organization. Additionally, embracing transparency and creating a collaborative
environment to improve culture at work is proposed.
Furthermore, this study recommends to improve communication linkages to create good

working conditions, and to form the attitude of the members in the act and behave in keeping their
words to give good examples to the other members. These will further increase the likelihood of a
good culture and highly committed members which in effect will improve the quality of accounting
information system and financial information. Moreover, organizations may revisit their existing
rules and regulations in consideration of the needs and demands of the members that affect their
working conditions and capabilities.
In relation to the information system, organizations may provide relevant trainings and
enhancement programs on how to effectively manage and utilize the system to continually develop
high quality accounting information system. Upgrading the system to align the organization’s need
with the fast changing technological advancement is also suggested. These may require costs for
the organization but long term success is expected if applied and operated accordingly. Likewise,
benchmarking is recommended to other successful organizations in their implementation of
information systems to which this aspect will help them assess their strengths, weaknesses, threats,
and opportunities. With this, organizations will be more effective and efficient in turning their
corporate missions and visions to reality.
Overall, addressing the importance of knowing these considerations is indeed a challenge

in order to achieve organizational goals and objectives. Wherein, fundamental functions of
accounting information system which include capturing and processing data, storing and
organizing the data for decisions, and providing controls to safeguard resources must be effectively
considered and incorporated. Also, the need for attention to give confidence to the members of the
organization is a must as this can create improved relations which will not just result to a more
competent and able member but will lead to advance the quality of financial information, yielding
to a sound economic decision.
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Ignatian Pedagogy in Entrepreneurship Courses: Innovations in
Content and Delivery
8th NBMC Paper #17
Ruth Love V Russell1, Toni Rose T Tahil2, Estela S Ganas3

Xavier University- Ateneo de Cagayan, Cagayan de Oro City, Philippines
Abstract
The changes in the Philippine educational landscape resulted to educational shifts in the tertiary
level. Given these changes, the challenge for the tertiary level to upgrade the content and delivery
of its programs became eminent. Utilizing the university’s framework of Ignatian pedagogical
paradigm, the paper then aimed to assess the breadth of its utilization in the new tertiary
institutional entrepreneurship curriculum. The objective was to come up with bases for innovation
in content and delivery of the said courses. Descriptive method, augmented by student
conversations, was employed in this study. The quantitative data was augmented by qualitative
data particularly from student conversations. A total of one hundred seven students (n=107) that
have completed the entrepreneurship program of the new curriculum were the respondents of the
study. The findings showed that the elements of the Ignatian paradigm were evident in the courses.
Further, the courses had instigated the culture of reflection and action among the students.
Nonetheless, content could be more interdisciplinary in nature while delivery could be enhanced
by making it more engaging, transforming and interesting.
Keywords: Entrepreneurship, Ignatian Pedagogical Paradigm, Teaching Innovations
Introduction
The changes in the Philippine educational landscape brought about by the educational
paradigm shifts and the inception of the qualifications framework around the region and the globe
have posed a challenge in the tertiary level. (ASEAN, 2019; Manila Times 2013;
officialgazette.gov.ph, 2013; Philippine news, 2013). In the article “transition in higher
education”, the new K+12 curriculum consequently impacts both institutional curricula and
organizational manpower. As the profile of the new tertiary clientele changed, it is therefore,
imperative for higher education institution to consciously innovate or re-engineer its curriculum
to significantly promote higher-order critical thinking skills and the competencies now valued in
college education. (Camba, 2016; Rivera, 2011).
Following the concept that planning for the future involves the ability to foresee the effects
of the current actions in the long run and attempts to control or mitigate the events (Kukreja in
Ganas, 2020), the educational changes instigated a preliminary review of a Jesuit institution’s
entrepreneurship courses in the old curriculum with the intent to deepen the entrepreneurial
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journey of the new cohort tertiary students expected to utilize the new curriculum. This, with the
end goal of producing a more insightful and impactful entrepreneurs (Degen, 2012). The first stage
of the study was conducted in 2018. It was a review on the breadth of usage of the institutional
teaching framework- Ignatian Pedagogical Paradigm - in the old curriculum. The stages in the
entrepreneurship courses, then include: the business writing stage and the implementation stages
1 and 2. The findings of the said study were used in the innovations for the new entrepreneurship
curriculum. Although the entrepreneurship stages remained the same, newer content and delivery
modes were added. Further, innovations were also implemented in the classroom. Now, after the
first cycle of implementation of the new entrepreneurial courses taken by the first batch of the
tertiary students- who had senior high school background - the business school administrators
would like to do another round of assessment of students’ entrepreneurial journey. Therefore, this
present study looked into how the students have assessed the institution’s entrepreneurial courses
in the new curriculum. This, with the aim to refine farther the content and approaches of the
institutional entrepreneurship courses for new cohort of college students. Specifically, this looked
into the breadth of utilization of the Ignatian Pedagogical Paradigm in the new entrepreneurial
courses of a school of business and management. The Ignatian Pedagogical Paradigm, as it is
commonly known as IPP, is the teaching framework of the institution, thus, the curricula, teaching
strategies and classroom activities hinge on IPP.
The Ignatian Pedagogical Paradigm
The Ignatian Pedagogical Paradigm (IPP) is a practical teaching framework consistent with
the Ignatian values and world view. Faculty, regardless of discipline, can utilize this approach so
that their teaching is academically sound and practically meaningful. It is a paradigm applicable
to all curricula and to students of all ages and background (Duminuco, 2000). Further, it is a
learning process that emphasizes five steps: context, experience, reflection, action and evaluation
commonly known as CERAE. It is contemplative in nature and a significant differentiator in
methodology. Several researches have been conducted that utilized the Ignatian Pedagogical
Paradigm in the enhancement of various courses: accounting and accounting ethics courses,
business ethics, social entrepreneurship and managerial decisions (O’ Connor and Myers, 2018;
Warner, Lieberman and Roussosos, 2016; Mauri, Figueiredo and Rashford, SJ, 2015; VanHise,
Koeplin and Whitty, 2013; VanHise and Massey, 2010).
CERAE as Ignatian Pedagogy Paradigm
In 1986 the International Commission on Apostolate of Jesuit Education (ICAJE)

published The Characteristics of Jesuit Education. This document took a broad scope that efforts
to make those characteristics more accessible and practicable for teachers in the classroom led to
the publication of Ignatian Pedagogy: A Practical Approach. This document introduces and
discusses the “Ignatian pedagogical paradigm” – a paradigm quite explicitly linked to the Spiritual
Exercises (Mountin and Nowacek, 2012).
A distinctive feature of the Ignatian pedagogical paradigm is that, understood in the light
of the Spiritual Exercises of St. Ignatius, it becomes not only a fitting description of the continual
interplay of experience, reflection and action in the teaching learning process, but also an ideal
portrayal of the dynamic interrelationship of the teacher and learner and the latter’s journey of
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growth in knowledge and freedom. (ICAJE,1993)
The elements of Jesuit education embrace Ignatian pedagogy as its heart of teaching and
learning. The continual interplay of context, experience, reflection, action and evaluation provides
the educators with a pedagogical model that is relevant to the cultures and times. It consistently
maintains the importance and integrity of the interrelationship of teacher, learner and subject
matter within the real context in which they live. It is comprehensive and complete in its approach.
Most importantly, it addresses the realities as well as ideals of teaching in practical and systematic
ways while, at the same time, offers the radical means they need to meet their educational mission
of forming young men and women for others (International Commission on the Apostolate of
Jesuit Education, 1993). A discussion of the elements include:
Context or “personal care and concern” for the individual is the hallmark of Jesuit
education. Context requires the teacher to adapt the content and delivery of lessons to reflect the
conditions of the students’ lives. It has two dimensions. First, it talks about the student’s personal
life situation coming into the classroom. Second, it talks about the larger context that surrounds
the student: classroom, institution, local, national, and global issues. Additionally, the authors
highlighted that the ultimate aim of this pedagogy is to help students move beyond a preoccupation
with individual context and become responsive to larger social contexts especially on the needs of
others (Mountin and Nowacek , 2012).
Experience for St. Ignatius meant “to taste something internally”. This includes
“instructional activities involving students in doing things and thinking about what they are doing.”
It encourages the use of the imagination, feeling, and mind in experience which involves the
affective and cognitive dimensions of the person. In all these cases, however, experience dwells in
the student’s encounter with people, places, events, and texts that stretch them past their prior
knowledge and experiences (Mountin and Nowacek, 2012; Kolvenbach in Drost, 2001 ). When
engaging in the experience process, the task of the teacher is to impart conditions whereby students
gather and recollect the material of their own experience in order to extract what they understand
already in terms of facts, feelings, values, insights and intuitions they bring to the subject matter
at hand. Later the teacher guides the students in assimilating new information and further
experience so that their knowledge will grow in completeness and truth (Duminuco, SJ, 2000).
“Experience” might be portrayed through cases and other class activities but more deeply these
are activities beyond the four corners of the classroom such as: community service, service-
learning, on the job trainings, field trips, doing research in the science laboratories, encoding in
the computer labs, or even brainstorming in the libraries.
Reflection involves “a thoughtful reconsideration of some subject matter, experience, idea,

purpose or spontaneous reaction, in order to grasp its significance more fully”. It is the key element
that distinguishes Ignatian pedagogy from more traditional learning models. Further, it is a
formative and liberating process that help shape the consciousness of students --their habitual
attitudes, values and beliefs as well as ways of thinking-- thus the students are impelled to move
beyond knowing that is to undertake action (Pranoto, 2014). Here, the teacher lays the foundations
for learning how to learn by engaging students in skills and techniques of reflection. Memory,
understanding, imagination and feelings are used to grasp the essential meaning and value of what
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is being studied, to discover its relationship to other facets of human knowledge and activity, and
to appreciate its implications in the continuing search for truth.
Action is the desired outcome of the learning experience. Action refers to the students’
internalization of beliefs that, in turn, drive them to act in a manner consistent with those beliefs
(Duminuco, 2000). It is then the role of the teacher to see that the opportunities provided will
challenge the imagination and exercise the will of the students to choose the best possible course
of action to flow from and follow up on what they have learned. What they do as a result under
the teacher's direction, are small educational steps toward the global goal of justice, peace and love
(Korth, 2008).
Evaluation does not only refer to evaluating students’ proficiency in the subject area. The
teacher should also be attuned to the students’ moral growth and maturation. Daily quizzes, weekly
or monthly tests and semester examinations are familiar instruments to assess the degree of
mastery of knowledge and skills achieved. However Ignatian pedagogy, aims at evaluation that
goes beyond academic mastery, rather, the learners’ holistic growth. Observant teachers will
perceive indications of growth or lack of growth in class discussions and in students’ generosity
in response to common needs (Korth, 2008).
The relationship of the five elements of CERAE is depicted below:
Figure 1
Components of Ignatian Pedagogical Paradigm
The continual interplay, then, of experience, reflection and action in the teaching-learning
dynamics of the classroom lies at the heart of an Ignatian pedagogy. This set of Ignatian
differentiators is essential in the formation process that prepare students to recognize who they
are, what they value, and how to use their strengths in any situation; provide a compass that
enables students to adapt to unknown situations because they know that they value and what they
want to achieve; equip students with critical thinking skills to discern what needs to be done
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regardless of their role in the organization and encourages self-understanding, self-management
and a lifetime of evolution through discovery (McCallum & Horian in O Connor and Myers,
2018).
Methodology
The study utilized the quantitative approach augmented by student conversations. A total
of 107 students who had finished the new entrepreneurship courses in the institution answered a
self-made questionnaire. The instrument had Cronbach’s Alpha of 0.90. Using the survey, the
respondents had assessed the breadth of usage of IPP in the said courses. The data from the survey
were interpreted based the following:
Score mean, range and interpretation
Score Mean Range Interpretation

4 4.00-3.25 IPP concept is highly evident in the course
3 2.51-3.24 IPP concept is evident in the course
2 1.76-2.50 IPP concept is fairly evident in the course
1 1.00-1.75 IPP concept is not evident at all
A total of one hundred seven participants (n=107) took part in both survey and
conversations. The data were then analyzed and utilized.
Table 1 shows the students’ assessment of the breadth of usage Ignatian Pedagogical
Paradigm in the new institutional entrepreneurial courses.
Table 1
Evidence of IPP in entrepreneurial courses
IPP Dynamics Mean SD Interpretation

Context 3.10 0.36 IPP is evident in the course
Experience 3.07 0.47 IPP is evident in the course
Reflection 3.14 0.47 IPP is evident in the course
Action 3.06 0.46 IPP is evident in the course
Evaluation 3.11 0.45 IPP is evident in the course
Total 3.10 0.043 IPP is evident in the course
3.25-4.00 highly evident; 2.51-3.24 evident; 1.76-2.50 poorly evident; strongly disagree 1.00-1.75 not evident
Table 1 reflects that the dynamics of the Ignatian pedagogical paradigm were evident in
the institutional entrepreneurial courses with an overall mean of 3.10. Specifically, the IPP
elements that include context (3.10), experience (3.07), reflection (3.14), action (3.06) and
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evaluation (3.11) were also evidently present in the said courses. The highest mean among the
indicators in the survey were “I recognized the value of the entrepreneurial courses to my college
degree”, “my personal experience” and “the teachers are credible to teach the courses”. Each has
a mean of 3.21. These were indicators under the reflection and context respectively. A
consolidated report of the students’ synthesis of the course validated the value of the courses had
of them. The common themes of their synthesis include: gratefulness, deep understanding of one’s
role in the entrepreneurship dynamics that propelled for growth and development not only for the
benefit of the self but also of others in the community.
Reflection and context are hallmarks of Jesuit education. Particularly reflection, it is the
key element that distinguishes Ignatian pedagogy from more traditional learning ones (Connor,
2014; Pranoto, 2014). In this process, students are guided by the teacher to learn from their
experience and eventually obtain meaning from that experience for the benefit beyond the self.
This is where the human conscience is triggered to synthesize, then, prompts the learners to
reflective action.
On the other hand, the three items with the lowest mean in the instrument were “there were
case analysis and readings that aided me in understanding the courses” (2.87). “I experienced
solving entrepreneurial case studies that enhanced my critical thinking” (2.91) and “the teacher
gives updated assessment methods that measures our degree of mastery of the subject” (2.93).
Although they had the lower means the interpretation were still these were evident in the courses.
When the quantitative results were triangulated with student conversations, a repetitive theme
revealed that students want more meaningful, challenging at the same time interesting experiences.
Blended experiences that deepen their understanding and knowledge of the subject matter.
A detailed discussion on the utilization of the elements in IPP in the entrepreneurial courses
show:
Context. As the hallmark of Jesuit education, context involves the art of adapting the
content and delivery of the lessons to reflect the conditions in students’ lives (Mountin and
Nowaceck, 2012). A sound interplay among the student, the teacher and the curriculum is
important for the courses to be successful. Context has an overall mean of 3.10 which showed that
it had been evidently seen in the entrepreneurial courses. Specifically, the participants of the survey
exhibited that the following were evident: the teachers’ competency and credibility . Such
competence had resulted to offering sufficient activities that promote or encourage
entrepreneurship. Also, the teachers displayed cura personalis- personal care and concern for the
students that such helped the students in preparing their mind and focus for the challenges of the
courses. Further, the school’s infrastructure had enabled the simulations more fitting
Experience. Experience for St. Ignatius meant “to taste something internally” -
“instructional activities involving students in doing things and thinking about what they are doing.
When engaging in the experience process, the task of the teacher is to impart conditions whereby
students gather and recollect the material of their own experience in order to extract what they
already understand that they enrich the subject matter at hand. Further, the teacher guides the
students in assimilating new information and farther the experience so that their knowledge will
grow in completeness and truth.
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The students’ assessment in this area focused on the classroom atmosphere and
experiences. The teacher created an atmosphere “that enabled students to gather their feelings,
values and insights”, to “enjoy their entrepreneurial journey ” and “to gain sufficient experiences
from the courses”. Kolvenbach in Drost (2001) and Duminico (2000) said that synthesizing is an
art that requires the teacher’s ability extract from the students their own feelings, values and
insights and to assist them in assimilating new information thereby facilitating further experiences
so that their knowledge will grow in completeness and truth.
Reflection. Reflection is the key element that distinguishes Ignatian pedagogy from more
traditional learning ones. It is a formative and liberating process that shapes the consciousness of
students --their habitual attitudes, values and beliefs as well as ways of thinking-- that they are
compelled to move beyond knowing; to undertake action (Pranoto, 2014). Reflection was evident
in the course, in fact among the five elements, it had the highest mean of 3.14. The results displayed
that the students recognized the value of their courses to “their college degree” ; “their personal
growth” ; “their community”; and “to the discovery of truths in relation to realities of life .
The student conversations had revealed a deep insight on self- discovery in terms of one’s
potential and one’s attitude and behavior towards others; gratefulness and appreciation for the gifts
of opportunity of experience, of team mates and of adversities during the implementation phase
of the business. Through these, growth in several aspects- emotional, intellectual- had occurred.
Action. This refers to the students’ internalization of beliefs which, in turn, drive them to
act in a manner consistent with those beliefs. It is the role, then, of the teachers to compel students
to move beyond knowledge- that is to action (Korth, 2008; Duminuco, 2000). In terms of IPP
element, the participants exhibited that they were “able to launch and operate their own business”,
thereby, “practicing their entrepreneurial skills through the subjects”, and as a result, they felt
they were able to “somehow contribute to the community.
Evaluation. Evaluation, in the context of Ignatian pedagogy, aims at evaluation that goes
beyond academic mastery rather those that focus on the learners’ well-rounded growth. Observant
teachers are expected to perceive indications of growth or lack of growth in class discussions and
students’ generosity in response to common needs much more frequently and be able to address
such (Koth, 2008). The participants of the survey concluded that it is evident that their “teachers
provided them with the opportunity for holistic growth”, “teachers that practice magis (more) –
encouraging the extension of self- growth to others especially of contribution to the community in
terms of resources and expertise” and more importantly, the acceptance of “responsibility and
accountability for any action”.
Ignatian pedagogical paradigm as the heart of Jesuit education is evident in the

institutional entrepreneurship courses. It had propelled students to move beyond the self and mere
knowledge. It had instigated among them the culture of reflection and action. Nonetheless, the
student conversations reflected on ways to move forward especially in ways to enhance their
learning potential. It was reported that content can be made more interdisciplinary, meanwhile,
delivery could include an alleviated experiential activities in order to produce more meaningful
and deeper experiences; more engaging trainings and seminars that include actual networking with
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local and national entrepreneurs and more importantly, entrepreneurial activities that promote fun.
Students placed a premium on enjoying while learning.
Implications
All the indicators of the Ignatian pedagogical paradigm are evident in the institutional
entrepreneurial courses. Further, the synergy among the teacher, the student and the curriculum
had brought among the students a deep realization of self, the self in relation to others and the
community. Nonetheless, a more engaging, transforming and interesting (fun) entrepreneurship
program is important to the new cohort of tertiary students.
Engaging. A consolidated report showed that there is a need for the entrepreneurial
experience to be more hands on. It is suggested that more interactions with seasoned entrepreneurs
would be given emphasis throughout the course. Through this, initial networks can also occur.
Further, it is envisioned the program is interdisciplinary in nature. The Business program can exert
more effort to connect with other units to strengthen its entrepreneurship program.
Transforming. Given the Jesuit philosophy of “going the frontiers”, it is a challenge to

enable the entrepreneurial journey to be a transforming experience. The transformation can work
both ways- the students and its beneficiaries. Thereby, it is necessary to review and restructure
the current element of the syllabi which is dubbed as “corporate social responsibility (CSR)” and
consider ways of weaving it with service learning program of the unit or the institution.
Interesting (fun). The words interesting and fun had been repeatedly mentioned during the
student conversations. Another way of loading in fun in the program is by making it
interdisciplinary. The need for it being interdisciplinary had come out in the conversations.
Making it interdisciplinary would involve different specializations in the university. Nonetheless,
it is also imperative then to continuously converse with the students to acquire more specific ways
to make the entrepreneurial journey fun and interesting for them.
Accordingly, something for the institution to consider is making the coverage of business
unit’s entrepreneurship programs wider, thus, making it institutional cover an institutional
entrepreneurship program.
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Impact of Attitude, Subjective Norms, Perceived Behavioral
Control, and the Moderating Effect of Competencies to the
Intention of Children to Succeed in their Family Business
8th NBMC Paper #18
Patrick R. Hariramani
[email protected]
Abstract
The purpose of this research is to study the impact of Attitude, Subjective Norms, Perceived
Behavioral Control to the Intentions to Succeed in the Family Business while being Moderated by
the Effect of Competencies. The data was gathered from November 2018 until March 2020. During
the span of data gathering there was a total of 332 participants. Data was analyzed using R and
Microsoft Excel. Based on the data analysis Attitude, Subjective Norm and Perceived Behavioral
Control has a significant relationship to Intentions. In addition to this Personal Entrepreneurial
Competencies moderates the relationship of the Independent variables to the Dependent variable.
The study suggest that family business owner should integrate their children in their business
during summer breaks in order for them to know the value and importance of the business. There
are other suggestions as well that could increase the Subjective Norm and the Perceived Behavioral
Control of an individual. Finally, in order to strengthen the intention of the children there should
be interventions so that they will not change. These interventions may be coming from their
respective families, friends, school, and government.
Key Words: Family Business Management; Theory of Planned Behavior; Moderating Regression;
Personal Entrepreneurial Competencies; Succession in Family Business
Introduction
Family Businesses here in the Philippines dates to the mid-1800s. However, there are only
a handful of prewar family businesses survived and still operates today. Those firms have lasted
for about a century have retained the family influence, but the organizational structure changed
along with the times. Most of them have become corporations but still retain a portion for their
family. A clear example is the Ayala-Zobel-Roxas clan. 150 years ago, the Ayala-Zobel-Roxas
clan started as a distillery partnership and currently spreads out to diverse businesses, with each
branch of the family carving a name for itself. Another notable family business is the Aboitizes,
who engaged in abaca hemp trading at the turn of the century, now own a conglomerate whose
holding company is publicly listed.
The Spanish influence on the economy is understandable, given 300 years of a Spanish
regime. The two-family businesses are of Spanish descent. However, in studying local family
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business, one cannot discount the influence of the Chinese community. (Palanca, 1995) Observes
that overseas Chinese families and their businesses are intertwined, as the business is another way
of preserving the family. The Chinese presence in the Philippine business community is so
ingrained that then Philippine President Fidel V. Ramos named six Chinese taipans as those
expected to spur the country’s economic growth via Asia’s Emerging Dragon Corporation
(Palanca, 1995). Chinese trading in the Philippines can be traced back to the 1500s. For three
centuries, the Chinese were an abused minority, leading to uprisings in the 1900s. With the advent
of American rule following World War II, the Spanish influence diminished as American influence
began to take over. The shifting influence allowed Chinese business groups to emerge and Chinese
families to proliferate. The descendants of the more prominent Chinese businessmen at that time,
a majority of whom became naturalized, continue to play a dominant role in the Philippine
economy.
With the growing number of Family Businesses in the Philippines and its contribution to
the Philippine Economy, new challenges are appearing on how family business could continue and
sustainably grow. A Family Business can be considered as a legacy of a family, however due to
the individual differences of family members the challenge of having a sustainable growth and
business continuity is being affected (Cho, Okuboyejo, & Dickson, 2017). Business Continuity
has a lot of factors but in this research, it focuses on the Intentions of Children to succeed in the
Family Business.
Family Businesses are an integral part of society. It is imperative that we give attention to
this topic. In doing so the researcher would like to study: What is the Impact and Relationship of
Attitude, Subjective Norms and Perceived Behavioral Control while being Moderated by Personal
Entrepreneurial Competencies to the Intention of Children of the Owners of Family Businesses
succeeding in their respective businesses?
Literature Review
Definition of Family Business
The definition of a family business varies from study to study. (Dyer, 2006) Suggest two
versions of such definitions. The first one is subjective, defining a family firm as one whose
management is controlled by the family members who own it. In this case, outside persons are not
involved in the management and there is strict family ownership/management. The second
definition is more objective, considering a firm to be a family business if it meets certain criteria
such as the family’s ownership percentage or the number of family members holding directorships
or filling key management posts. (Nkam Micheal Cho, 2017)
Theory of Planned Behavior
To understand the behavior of people, Ajzen (1991) developed the ‘Theory of Planned
Behavior’ (hereafter TPB). The TPB of Ajzen (1991, see figure 1) helps to understand how we can
change the behavior of people. The central factor in Ajzen (1991) TPB is the individuals’ intentions
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to perform a specific behavior. Intentions are assumed to be the motivation to certain behavior.
Thus, the stronger the intention to perform certain behavior, the more likely it will be performed.
Ajzen (1991) explains three factors, which are crucial in changing the intention and the
actual behavior. First, the belief and attitude somebody has toward the behavior. A student could
for instance have a positive attitude toward entrepreneurship because one of the parents is an
entrepreneur. Other factors influencing the attitude in the entrepreneurial situation are e.g.
willingness to take risks, locus of control, need for independence, etc. (Krueger, 2000). The second
factor is a social factor termed subjective norm. This factor refers to the social pressure from the
environment on the individual to perform or not to perform the behavior, e.g. parents who
encountered negative experiences with entrepreneurship, could pressure their children not to start
their own business. The third factor influencing intention is the perceived behavioral control. This
factor distinguishes the model from previous behavioral models. The idea is that the actual
behavior does not only dependent on the motivation or intention to perform certain behavior, but
also on the perception of the difficulty of performing the behavior.
Personal Entrepreneurial Competencies
(Alusen, 2016) states that Competency among entrepreneurs plays a critical role in
achieving excellent performance to ensure a continuous growth and success of a business amongst
competitive enterprise environments. During the past few decades, the importance of
entrepreneurial competency and the human factor played by the entrepreneur himself have
constantly increased. The entrepreneur is the one who shoulders both the risk and success of a
business and the standard needed to carry on his business successfully is called his competency.
To be able to outline the attitude and behavior of entrepreneurs, a set of qualities has been
created and developed by a behavioral scientist and is collectively called as Personal
Entrepreneurial Competencies (PEC‘s) (Alusen, 2016). McClelland, the researcher, categorizes 14
personal entrepreneurial competencies characterizing the behavior of a successful entrepreneur.
The study also found out that the PEC surpasses both culture and continent. A lot of studies have
been made to characterize entrepreneurial personalities and even though there is no particular set
of traits that can assure success, some identified behaviors are found common in most successful
entrepreneurs. A well-known research on human behavior is done by McClelland and McBer and
is able to identify 10 behavioral patterns grouped into three general clusters: the achievement,
planning, and power clusters. The entrepreneurial qualities, more known as the Personal
Entrepreneurial Competencies (PECs) are as follows: (1) Opportunity Seeking, (2) Persistence, (3)
Commitment to Work Contract, (4) Risk-taking, (5) Demand for Efficiency and Quality, (6) Goal
Setting, (7) Information Seeking, (8) Systematic Planning and Monitoring, (9) Persuasion and
Networking and (10) Self-Confidence. These PEC‘s are considered correlated to entrepreneurial
skills. PEC’s are transformed into actions by individuals and do not remain as mere passive traits.
Family Bonds
Families who value family unity, as evidenced by their constant togetherness, are likely to
work toward smooth leadership transitions (Santiago, 2000). Succession in a family business is
greatly influenced by the family (Santiago, 2000). Some Filipino values enhance leadership
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transitions. One such value is the preservation of the family unit, which is considered the highest
value for Filipinos. The dedication to the family drives family members to seek closer emotional
ties. For Filipino Families, the members are proud of maintaining intimate relations and, thus, are
unafraid to express most of their thoughts and feelings. Moreover, families whose lives are closely
intertwined view themselves similarly. They believe they are stronger together than apart.
Consequently, the more solid the family, the greater the desire to share the responsibility of
perpetuating the business as a tribute to the earlier generation. The frequency and regularity of
family meetings in and outside the business contribute to the cohesiveness of the family. Such
meetings allow family members to get to know each other better and understand how they think
and feel. Listening skills are further enhanced. In all likelihood, the frequent meetings of family
members reassure external stakeholders that the family is capable of working together. (Santiago,
2000)
Business Beliefs
Santiago (2000) Believes that Families who consider their family business as a legacy to
be passed on to future generations are more inclined to overcome short-term conflicts for the
benefit of the long-term survival of the firm. Families who are committed to their business view
the family business as a legacy that should be passed on to succeeding generations. Family
members are more willing to sacrifice personal concerns for the benefit of the long-term survival
of the business. There is an effort to accommodate siblings to enhance the family unity. Thus,
families who would like to perpetuate their businesses are likely to resolve differences immediately
and in the most amicable manner. In this way, the new leadership is able to propel the business
rather than be tied down to resolving family conflicts (Santiago, 2000)
Social Pressure
Peers influence individuals in both negative and positive ways and serve as a reference
group that sets values, beliefs, and standards for behavior (Festinger, 1954; Hallinan & Williams,
1990; Steinberg & Morris, 2001). The peer environment is the nested level of influence closest to
the individual and may therefore exert influence over goal content (Bronfenbrenner, 1979).
Tremendous research has established that peers influence adolescents’ behaviors (e.g., Allen,
Porter, & McFarland, 2006; Barry & Wentzel, 2006; Dishion, McCord, & Poulin, 1999; Gardner
& Steinberg, 2005; Prinstein, Boergers, & Spirito, 2001; Shi & Xie, 2012). Using a social cognitive
perspective (Bandura, 1989, 2001), if goals are assumed to drive behaviors, then it is likely that
peers may be influencing youth’s goals which then manifest as behavior changes.
Family’s Opinion on Family Business
Family business scholars generally agree that successors need to be willing, capable, and
committed to taking over the family business (Handler, 1994; Sharma, Chrisman, & Chua, 1997).
In most cases, family business owners are interested in having their businesses outlive them and
be managed by their descendants (Santiago, 2000). Santiago (2000) states that family’s that have
mutual respect and understanding with each family member has high leadership transition rate.
This characteristic is reflected in parents who treat their children as adults and who allow them to
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contribute to family business decision making. Such treatment builds confidence and develops
healthy relations that encompass trust and support.
Figure 1
The effect of Attitude, Subjective Norm and Perceived Behavioral Control to Intention to Succeed
in the Family Business while being Moderated by Personal Entrepreneurial Competencies
The operational framework shows the independent variables with their respective
dimensions that would be used in order to explore its relationship and effect to Intention to Succeed
in the Family Business. Azjen’s (1991) Theory of Planned Behavior measures Intention by
determining the Attitude, Subjective Norms and Perceived Behavioral Control of a person. To
further understand how Intention to Succeed in the Family Business is developed, sub variables
are added and Personal Entrepreneurial Competencies.
Attitude is measured by Family Bonds and Business beliefs (Santiago, 2000). According
to Santiago Family Bonds is a critical factor in a succession and an attitude of a person towards
his or her family affects his or her decision to succeed in the business. Business Beliefs also
strengthens the succession of a successor to the family business. A person’s attitude toward a
business will help show if he or she is willing to succeed in the family business. If a person values
the business there is a big possibility that person will succeed in the business.
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Subjective Norms is defined by Azjen as social pressure from the environment on the
individual to perform or not to perform the behavior; e.g. parents who encountered negative
experiences with entrepreneurship, could pressure their children not to start their own business. In
this study it is measured by Social Pressure or Peer Influence. According to Axelrod (1986)
adolescents may be compelled to hold similar values or goals as their group mates so that they
engage in supportive interactions. Further, adolescents may be influenced by their peer groups’
norms. Each peer group has its own norms which are patterns of accepted attitudes or behaviors
(Axelrod, 1986). In addition, Individuals may change their perceptions, beliefs, or behaviors in
order to be consistent with the group’s norms (Forgas & Williams, 2001; Kameda, Takezawa, &
Hastie, 2005). Another sub variable to measure Subjective Norms is Family’s Opinion on Family
Business. (Santiago, 2000) states that family’s that have mutual respect and understanding with
each family member has high leadership transition rate. This characteristic is reflected in parents
who treat their children as adults and who allow them to contribute to family business decision
making. Such treatment builds confidence and develops healthy relations that encompass trust and
support.
Perceived Behavioral Control is measured thru Entrepreneurship Education. According to

Velasco, (2013) Entrepreneurship Education is important to help students practice and learn about
entrepreneurship. This measurement will help the researcher see if a person who has knowledge
about entrepreneurship will have a greater Intention to Succeed in their Family Business.
Personal Entrepreneurial Competencies are measured by Opportunity Seeking, Persistence,

Commitment to Work Contract, Risk-taking, Demand for Efficiency and Quality, Goal Setting,
Information Seeking, Systematic Planning and Monitoring, Persuasion and Networking and Self-
Confidence.
Hypotheses
H1: There is no significant relationship between Attitude and Intention to Succeed in

the Family Business.
H2: There is no significant relationship between Social Norms and Intention to Succeed
in the Family Business.
H3: There is no significant relationship between Perceived Behavioral Control and
Intention to Succeed in the Family Business.
H4: There is no significant relationship between Attitude, Social Norms and Perceived
Behavioral Control to Intention to Succeed in the Family Business
H5: There is no significant relationship between Attitude, Social Norms and Perceived
Behavioral while being mediated by Personal Entrepreneurial Competencies to Intention
to Succeed in the Family Business
H6: There is no significant impact between Attitude and Intention to Succeed in the
Family Business.
H7: There is no significant impact between Social Norms and Intention to Succeed in
the Family Business.
H8: There is no significant impact between Perceived Behavioral Control and Intention
to Succeed in the Family Business.
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H9: There is no significant impact between Attitude, Social Norms and Perceived
Behavioral Control to Intention to Succeed in the Family Business
H10: There is no significant impact between Attitude, Social Norms and Perceived
Behavioral while being mediated by Personal Entrepreneurial Competencies to Intention
to Succeed in the Family Business
Methodology
This study covered descriptive, correlational, causal, and explanatory approaches as its
research design. Moreover, this study aimed to determine the Impact and Relationship of Attitude,
Subjective Norms and Perceived Behavioral Control while being Moderated by Personal
Entrepreneurial Competencies to the Intention of Children of the Owners of Family Businesses
succeeding in their respective businesses.
Correlation, regression, and moderation analysis were conducted to analyze the

relationship and effects between the variables. The respondents for this study are children of
Family Business Owners that are in Metro Manila. There is a total of 332 respondents in the survey
that was administered thru Google Forms which was collected from November 2018 to March
2020.
The most frequently observed category of Gender was Female (n = 181, 55%) and the most
frequented observed category of Age Group was 26 - 30 (n = 87, 26%). The most frequently
observed category of Education was College (n = 194, 58%).
A Pearson correlation analysis was conducted among ATT_T, SUB_T, PBC_T, PEC_T,
and IS_T. Cohen's standard was used to evaluate the strength of the relationships, where
coefficients between .10 and .29 represent a small effect size, coefficients between .30 and .49
represent a moderate effect size, and coefficients above .50 indicate a large effect size (Cohen,
1988).
The correlations were examined using Holm corrections to adjust for multiple comparisons
based on an alpha value of 0.05. A significant positive correlation was observed between ATT_T
and SUB_T (rp = 0.39, p < .001). The correlation coefficient between ATT_T and SUB_T was
0.39, indicating a moderate effect size. This correlation indicates that as ATT_T increases, SUB_T
tends to increase. A significant positive correlation was observed between ATT_T and PBC_T (rp
= 0.58, p < .001). The correlation coefficient between ATT_T and PBC_T was 0.58, indicating a
large effect size. This correlation indicates that as ATT_T increases, PBC_T tends to increase. A
significant positive correlation was observed between ATT_T and PEC_T (rp = 0.57, p < .001).
The correlation coefficient between ATT_T and PEC_T was 0.57, indicating a large effect size.
This correlation indicates that as ATT_T increases, PEC_T tends to increase. A significant positive
correlation was observed between ATT_T and IS_T (rp = 0.51, p < .001). The correlation
coefficient between ATT_T and IS_T was 0.51, indicating a large effect size. This correlation
indicates that as ATT_T increases, IS_T tends to increase. A significant positive correlation was
observed between SUB_T and PBC_T (rp = 0.32, p < .001). The correlation coefficient between
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SUB_T and PBC_T was 0.32, indicating a moderate effect size. This correlation indicates that as
SUB_T increases, PBC_T tends to increase. A significant positive correlation was observed
between SUB_T and PEC_T (rp = 0.35, p < .001). The correlation coefficient between SUB_T and
PEC_T was 0.35, indicating a moderate effect size. This correlation indicates that as SUB_T
increases, PEC_T tends to increase. A significant positive correlation was observed between
SUB_T and IS_T (rp = 0.64, p < .001). The correlation coefficient between SUB_T and IS_T was
0.64, indicating a large effect size. This correlation indicates that as SUB_T increases, IS_T tends
to increase. A significant positive correlation was observed between PBC_T and PEC_T (rp = 0.55,
p < .001). The correlation coefficient between PBC_T and PEC_T was 0.55, indicating a large
effect size. This correlation indicates that as PBC_T increases, PEC_T tends to increase. A
significant positive correlation was observed between PBC_T and IS_T (rp = 0.46, p < .001). The
correlation coefficient between PBC_T and IS_T was 0.46, indicating a moderate effect size. This
correlation indicates that as PBC_T increases, IS_T tends to increase. A significant positive
correlation was observed between PEC_T and IS_T (rp = 0.49, p < .001). The correlation
coefficient between PEC_T and IS_T was 0.49, indicating a moderate effect size. This correlation
indicates that as PEC_T increases, IS_T tends to increase. Table 1 presents the results of the
correlations.
Table 1
Pearson Correlation Results Among ATT_T, SUB_T, PBC_T, PEC_T, and IS_T
Combination rp Lower Upper p
ATT_T-SUB_T 0.39 0.30 0.48 < .001
ATT_T-PBC_T 0.58 0.50 0.64 < .001
ATT_T-PEC_T 0.57 0.49 0.64 < .001
ATT_T-IS_T 0.51 0.43 0.59 < .001
SUB_T-PBC_T 0.32 0.22 0.41 < .001
SUB_T-PEC_T 0.35 0.25 0.44 < .001
SUB_T-IS_T 0.64 0.58 0.70 < .001
PBC_T-PEC_T 0.55 0.48 0.63 < .001
PBC_T-IS_T 0.46 0.37 0.54 < .001
PEC_T-IS_T 0.49 0.41 0.57 < .001
Note. The confidence intervals were computed using α = 0.05; n = 332; Holm corrections used to
adjust p-values.
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A linear regression analysis was conducted to assess whether ATT_T, SUB_T, and PBC_T
significantly predicted IS_T. The 'Enter' variable selection method was chosen for the linear
regression model, which includes all the selected predictors. The results of the linear regression
model were significant, F(3,328) = 116.56, p < .001, R2 = 0.52, indicating that approximately 52%
of the variance in IS_T is explainable by ATT_T, SUB_T, and PBC_T. ATT_T significantly
predicted IS_T, B = 0.40, t(328) = 4.31, p < .001. This indicates that on average, a one-unit increase
of ATT_T will increase the value of IS_T by 0.40 units. SUB_T significantly predicted IS_T, B =
0.68, t(328) = 11.94, p < .001. This indicates that on average, a one-unit increase of SUB_T will
increase the value of IS_T by 0.68 units. PBC_T significantly predicted IS_T, B = 0.28, t(328) =
3.83, p < .001. This indicates that on average, a one-unit increase of PBC_T will increase the value
of IS_T by 0.28 units. Table 2 summarizes the results of the regression model.
Table 2
Results for Linear Regression with ATT_T, SUB_T, and PBC_T predicting IS_T
Variable B SE CI β t p
(Intercept) -1.71 0.34 [-2.38, -1.05] 0.00 -5.09 < .001
ATT_T 0.40 0.09 [0.22, 0.58] 0.21 4.31 < .001
SUB_T 0.68 0.06 [0.56, 0.79] 0.50 11.94 < .001
PBC_T 0.28 0.07 [0.14, 0.43] 0.18 3.83 < .001
Note. CI is at the 95% confidence level. Results: F(3,328) = 116.56, p < .001, R2 = 0.52
Unstandardized Regression Equation: IS_T = -1.71 + 0.40*ATT_T + 0.68*SUB_T + 0.28*PBC_T
Moderation analysis was conducted to assess if PEC_T moderated the relationship between
TPB_COMBI and IS_T. Mean centering was used for TPB_COMBI and PEC_T. In the first step,
a simple effects model was created using linear regression with IS_T as the outcome variable and
TPB_COMBI as the predictor variable. In the second step, a non-interaction model was created by
adding PEC_T to the predictor in the linear model in step 1 (simple effects model). In the third
step, an interaction model was created by adding the interaction between TPB_COMBI and
PEC_T to the predictors in the linear model in step 2 (non-interaction model). Assumptions for
linear regression analysis were conducted for the step 3 model (interaction model).
For moderation to be supported, two conditions must be met (Netemeyer et al., 2001). First,
the causal predictor variable, TPB_COMBI, must significantly predict IS_T in the simple effects
model (step 1). Secondly, the interaction model (step 3) must explain significantly more variance
of IS_T than the non-interaction model (step 2). If either of these conditions fail, moderation is not
supported. These regressions will be examined based on an alpha of 0.05. TPB_COMBI
significantly predicted IS_T, B = 1.40, t(330) = 17.74, p < .001. Therefore, the first condition was
met, and the second condition was checked. A partial F-test was conducted to determine if the
interaction model explained more variance in IS_T than the non-interaction model. The partial F-
test, F(1,328) = 4.17, p = .042, indicated that the interaction model explained significantly more
244 | P a g e
variance compared to the non-interaction model based on an alpha of 0.05. Therefore, the second
condition was met. Since TPB_COMBI significantly predicted IS_T in the simple effects model
(condition 1) and the interaction model explained significantly more variance of IS_T than the
non-interaction model (condition 2), then moderation is supported. The results of the simple, non-
interaction, and interaction models are presented in Table 3. Table 4 presents a comparison of the
non-interaction and interaction models. PEC_T significantly moderated the effect TPB_COMBI
had on IS_T based on an alpha of 0.05, B = -0.38, t(328) = -2.04, p = .042. This indicates that on
average, a one-unit increase of PEC_T will cause a 0.38 decrease in the slope of IS_T on
TPB_COMBI. In order to visualize the moderation analysis, PEC_T was dichotomized into High
and Low categories using a median split. The High category indicates all observations of PEC_T
above the median, and the Low category specifies all observations of PEC_T below the median.
Figure 11 shows the regression lines for IS_T predicted by TPB_COMBI for the High and Low
categories of PEC_T.
Table 3
Moderation Analysis Table with IS_T Predicted by TPB_COMBI Moderated by PEC_T
Predictor B SE β t p
Step 1: Simple Effects Model
(Intercept) -1.91 0.33 -5.82 < .001
TPB_COMBI 1.40 0.08 0.70 17.74 < .001
Step 2: Non-Interaction Model
(Intercept) -2.43 0.41 -5.94 < .001
TPB_COMBI 1.27 0.10 0.63 12.80 < .001
PEC_T 0.25 0.12 0.11 2.12 .035
Step 3: Interaction Model
(Intercept) 3.91 0.05 80.83 < .001
TPB_COMBI 1.23 0.10 0.61 12.14 < .001
PEC_T 0.22 0.12 0.09 1.84 .067
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TPB_COMBI:PEC_T -0.38 0.19 -0.09 -2.04 .042
Table 4
Linear Model Comparison Table between the Non-Interaction and Interaction Model
Model R2 F df p
Non-Interaction 0.50
Interaction 0.50 4.17 1 .042
Figure 2
Regression lines for IS_T predicted by TPB_COMBI for the High and Low categories of PEC_T
Discussions of Findings
Family Businesses is an integral part of our society. Most of the businesses in the
Philippines can be categorized as a family business in nature. This is one of the primary reasons
why Intention to Succeed in the Family Business is crucial in this era. If the children of the family
business owners do not succeed in the business, this will pose a big problem for the business. The
business might stop operating, close or even file for dissolution. This can happen due to numerous
reasons. Based on the model and data that was used in this study, children of family businesses
have intentions to succeed in the family business.
Based on the study that was conducted all the Independent Variables are predictors for
Intentions of children to succeed in their family business. In addition to this Personal
Entrepreneurial Competencies moderates the relationship of the Independent variables to the
Dependent variable.
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Conclusions
Family Business is an integral part of the Philippines Economy and 80% of the businesses
here in the Philippines are family owned. Based on the statistic Attitude, Subjective Norm and
Perceived Behavioral Control has a significant relationship to Intentions.
Family’s Opinion on Family Business plays a key part in molding the intention of the
children of the business owner to succeed or be part of the business. Findings number 6 of Santiago
(2000) states that when families consider their business as a legacy it has a high tendency to
overcome short-term conflicts for the benefit of the long-term survival of the firm. This also shows
that if a family does not have a high regard for the family business. Their children may not have
the intention to pursue the family business.
This may be the case for the respondents of this study because all of the respondents are
inclined in business that is why they view business highly and has high regard for it. If a son or
daughter of a family business owner has friends that thinks business is a legacy, that a family
business is important or if a family business will help that person grow then most likely the
individual will have an intention to pursue the family business. But if that individual has friends
that does not think that joining the family business will do good for him or her then that individual
will have less intention to join the family business. The attitude of the person is also relevant in
making sure that he or she succeed in the management of the family business. If they are train as
early as possible, shown the benefits of being in a family business or knows the value of
entrepreneurship and his or her education is aligned in managing a family business, this successor
will surely succeed in the management of the family business.
Finally, in order to strengthen the intention of the children there should be interventions so
that they will not change. These interventions may be coming from their respective families,
friends, school and government. Business Owners can ask their children to work in their
businesses during summer breaks and impart to them the importance of the business. Friends
should be supportive to their friends’ businesses and push their friends to pursue a role in the
business. In addition, the school can also intervene by creating more courses geared towards family
business and stress the importance of the family business. The last one is the Government. The
Government should think of ways on how to help family businesses by creating an agency that
will formally study and propose different laws that will benefit the survival of the family
businesses.
References
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Netemeyer, R., Bentler, P., Bagozzi, R., Cudeck, R., Cote, J., Lehmann, D., McDonald, R., Irwin,
J., & Ambler, T. (2001). Structural Equation Modeling. Journal of Consumer Psychology,
10(1/2), 83-100.
Nkam Micheal Cho, S. O. (2017). Factors Affecting the Sustainability of Family Businesses in
Cameroon: An Empirical Study in Northwest and Southwest Regions of Cameroon.
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always test. Practical Assessment, Research & Evaluation, 8(2), 1-9.
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enterprise in Asia, 197-213.
Razali, N. M., & Wah, Y. B. (2011). Power comparisons of Shapiro-Wilk, Kolmogorov-Smirnov,
Lilliefors and Anderson-Darling tests. Journal of Statistical Modeling and Analytics, 2(1), 21-
33.
Santiago, A. L. (2000). Succession Experiences in Philippine Family Businesses. Family Business
Review, 13(1).
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Enhancing the Performance Management System of Social
Enterprises
8th NBMC Paper # 19
Catherine P. Coñales and Jimbo A. Fuentes

Bukidnon State University and Xavier University
Abstract
This study aimed to craft programs to improve performance management of social enterprises.
Specifically, this study answered the following questions: What is the performance management
of social enterprises based on COOP PESOS dimensions? Using quantitative research design, the
research participants composed of three (3) cooperatives. The results showed that the overall
performance management of social enterprise is fair. However, challenged is seen on the following
PESOS dimensions: efficiency and structure of assets. Recommendations formulated to improve
the performance management of the social enterprises include: improvement of collection
strategy, enhancement of service delivery, reduction of delinquency, conduct of training and
development for the staff and the promotion of cooperative education regularly.
Keywords: performance management, social enterprises
Introduction
Social entrepreneurship is a multifaceted field which is interesting to study as it is

prominently the heart of every development policy (Young & Lecy, 2014). In developed countries,
social enterprise is a regional development strategy which creates social value from the optimal
use of under-utilized resources. Meanwhile, in developing countries, it is perceived to offer
sustainable development through market improvement and reduction of aid dependency (Lyne,
2017). The Philippines, as one of the developing countries, considers social enterprise as an anti-
poverty strategy (Philippine News Agency, 2015). In fact, growing vibrant in the country are
different social enterprises.
During periods of economic difficulty, the emerging role of social enterprises becomes
vital as they achieve their social mission with the generation of profits from their commercial
activities (Prakash & Tan, 2014). They are progressively recognized as essential contributors to
the country’s economic development (Kadir & Sarik, 2016; Staples, 2016), by conducting vital
social function such as employing social groups that are disadvantaged or at risk of social exclusion
(Palacio, Climent, & Suanes, 2013).
The productivity of social enterprises influences local and regional development by

creating jobs, developing assets, and restoring solidarity in the community (Kim & Lim, 2017).
These significant contributions of the social enterprises require a performance management system
249 | P a g e
tool which is multifaceted in order to effectively evaluate its worth, sustainability and success
(Whitelaw & Hill, 2013). Measuring performance and managing outcomes should be at the core
of its operations to sustain livelihoods and promote well-being (Midgley, 2013).
There are several types of social enterprises. The study of Dacanay (2013) mentioned that
social enterprises include social cooperatives, microfinance institutions, associations, trade fairs
organizations, trading and development companies and new generation enterprise. In the
Philippines, majority of the social enterprises are cooperatives. Social cooperatives are those
whose members and majority owners are generally the poor and marginalized sectors, such as
farmers, fishers, vendors, agrarian reform beneficiaries, women, and persons with disabilities.
In spite that the Philippines is one with the strongest growth prospects, having a continuing
growth rate of around 6%, a large chunk of population has not fully benefited from the strong
economic performance of the country. Poverty and inequality remain high (IMF, 2016). Reports
have also shown that the highest poverty incidences are consistently with farmers, fishermen and
children (PSA, 2017). During the first semester of 2015, Bukidnon, Philippines ranked 6th among
the poorest provinces in Mindanao with 58.7% poverty incidence. It is therefore important to
strengthen the social cooperatives in the Philippines especially in Bukidnon as it continually assists
the famers in the area with their livelihood.
In connection, this paper looks into the performance management of social enterprises.
Specifically, answered the following questions: What is the performance management of social
enterprises based on COOP PESOS dimensions? The output of the study is a performance
management program that would essentially help the social enterprises to improve their operations.
Scope and Limitation
The social enterprise being referred in this paper is the cooperative. Cooperatives follow
an internationally accepted standards for Philippine Cooperatives which is the COOP PESOS. It
stands for compliance for administrative and legal requirements. Organizational structure and
linkages, operation, plans and programs. On the other hand, the second indicator is the financial
aspect- PESOS. It stands for portfolio quality, efficiency, stability, operations and structure of
assets. The COOP PESOS becomes the bases of the performance management review.
Methodology
This study employed the quantitative approach to research. These approach allows some
in-depth investigations on the field being studied (Lee, 2014). The respondents of the study
included both the social cooperative enterprise and its stakeholders. There were three (3)
cooperative enterprises. The actual performance management of the social enterprises was
examined through the use of the COOP PESOS. Criteria have been set to make it easier for the
researcher to select the social enterprises. First, the respondents should be cooperatives that are
medium to large category in terms of capitalization and conduct annual general assembly. Second,
they should have good standing and are five years and beyond in operation. Third, the cooperative
shall at least offer credit services to the members. The study covered three years’ performance
250 | P a g e
rating (2016-2018) of the social enterprises to obtain their average COOP PESOS rating. The data
on COOP PESOS were acquired from the three different cooperatives.
This section deals with the presentation, analysis and interpretation of data gathered.
Problem 1: What is the Performance Management System of Social Enterprises based on the
following COOP dimensions: Compliance with administrative and legal framework;
Organizational structure and linkages; Operation and management and Plans and programs.
Table 1 presents the mean distribution of the social enterprise’s COOP dimension ratings
from 2016-2018. This contains dimensions on compliance with administrative and legal
framework which is part of evaluating the performance management system of the social
enterprises.
The figures in table are related to COOP dimensions which are concerned with how the
social enterprises comply with the regulatory requirements. This specifically covers the
management part of the social enterprises that represents 20 percent of the overall performance
rating. In the table, the presentation of the performance management rating is categorized based
on the size of the social enterprises as large and medium which shows that there were little
variations on the ratings per year.
The large social enterprises have a strong performance on its COOP dimension in which
Plans and Programs has the highest rating, 100.00; followed by Operation and Management, 99.17;
Organizational Structure and Linkages, 96.15; and Compliance with Legal and Administrative
Requirements, 95.83.
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Table 1
COOP Rating (2016-2018) of Social Enterprises/Cooperatives
LARGE MEDIUM Overall

2016 2017 2018 Mean 2016 2017 2018 Mean Mean
C 97.50 95.00 95.00 95.83 95.00 95.00 100.00 96.67 96.25
O 96.15 96.15 96.15 96.15 100.00 100.00 100.00 100.00 98.07
O 98.75 98.75 100.00 99.17 90.00 90.00 90.00 90.00 94.58
P 100.00 100.00 100.00 100.00 92.86 92.86 92.86 92.86 96.43
Legend:
Range Qualitative Qualitative Interpretation
Statement
96-100 Very Good The social enterprise has strong performance that consistently
(VG) provides safe and sound operations.
90-95 Good The social enterprise shows satisfactory performance that
(G) consistently provides safe and sound operations.
80-89 Fair The social enterprise’s performance is flawed to some degree and is a
(F) supervisory concern.
70-79 Poor The social enterprise has poor performance and is of serious
(P) supervisory concern.
Below 70 Very Poor The social enterprise has satisfactory performance and is in need of
(VP) immediate remedial attention.
For the medium social enterprises, Organizational Structure and Linkages obtained the
highest rating, 100.00; Compliance with Legal and Administrative Requirements, 96.67; Plans and
Programs, 92.86; and Operation and Management, 90.00.
Based on the overall mean, it can be inferred that the social enterprises/cooperatives have
strong performance that consistently provide safe and sound operations. A closer look at the
findings reveal that among the COOP dimensions, Organizational Structure and Linkages has the
highest rating (98.07); followed by the Plans and Programs (96.43); then the Compliance with
Administrative and Legal Requirements (96.25); and Operation and Management (94.58).
The social enterprises have significant organizational structure, governance and linkages
with the other cooperatives and institutions. An established organizational structure helps an
organization to have an effective communication system which boosts cooperative understanding.
Good governance influences decision-making of the organization that ensures the survival of the
organization.
The social enterprises/cooperatives ensured gender integration on officers and staff, loan
borrowers, and depositors; capital build-up and savings mobilization; the conduct of general
assembly and membership education. The audited financial statements of the social enterprises are
accepted by the general assembly including the approval of the developmental plan and adoption
of proper procedures for the board of directors’ election.
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The result of the study also indicated that partnership with the government and other
organizations provided a solid support for the operation of the social enterprises/cooperatives. This
is supported by the study of Lee (2014) that organizational capabilities are improved by
establishing strategic linkages with other organizations. They conducted community services and
participated actively in the federations’ activities and programs. Through these connections, social
enterprises are updated with information on how to effectively manage the organization.
Plans and Programs dimension included the presence of organizational vision, mission, and
goals, and the use of business plan, development plan, and approved annual plan and budget. The
study of Dokovic, Pejanovic, Mojsilovic, Bolijanovic, Dordevic & Plecic (2017) supported the
importance of having a vision, mission, and development strategy as direction for the daily
activities of the organization. If there is a clear direction for the productive activities, the
enterprises can effectively implement their plans and programs. This dimension is also concerned
with performance review vis-à-vis projections. The actual performance of the enterprises are being
reviewed to identify if they are able to achieve their projections. The process can help them
formulate strategies to efficiently utilize the available funds for their operations.
Adherence to the regulatory requirements is indispensable for the existence and operation
of the social enterprises/cooperatives. In the study of Esayas and Mahler (2015); Nieva (2015);
and Hojnik (2017), compliance with regulatory frameworks is considered a challenge to the social
enterprise. On the contrary, the result showed that social enterprises have strong performance on
compliance with legal and administrative requirements. This could be explained by the strong
partnership of the social enterprises with the public institutions from whom they need to comply
with the requirements such as the Cooperative Development Authority, Bureau of Internal
Revenue, Local Government Unit, and Department of Labor and Employment.
The data further showed that the social enterprises/cooperatives have robust performance
on their Operation and Management composed of manual of operational policies, board of
directors and management. The manual of operational policies has specific provisions on
membership, loan, savings/time deposit, financial management, and human resource development.
The study of Sorensen and Neville (2014) confirmed that formulation of policies, procedures and
system will greatly help the management to monitor efficient utilization of the organizations’
resources. To improve policies, the social enterprise conduct benchmarking activities with other
organizations having similar business operations.
The board of directors and committees conduct meetings with updated minutes of
meetings, committee reports, and perform periodic review of policies. The directors and
committees are elected by the general assembly in which their roles are vital for the decision-
making process of the entity to attain the double bottom lines on financial and social goals. They
are concerned with guiding the affairs of the enterprises to ensure protection of the stakeholders’
interest by formulating the long-term goals of the organization. It is vital for them to be responsive
to the changing needs of the stakeholders as they set the organizational objectives and generate
new ideas through participation in various training programs.
Aside from the existence of the board and committees, the social enterprises have full-time
qualified managers and personnel file and succession program. They possess business acumen
253 | P a g e
which is necessary for the effective management of the social enterprises/cooperatives, especially
that it has been emphasized by the literature that in order to attain its social objectives, the
enterprises shall ensure the realization of its financial objectives.
As presented in the study of Maricic, Skoric, & Radenkovic (2018), it is a challenge to

apply proper management style to improve competitiveness of the organization. The challenges
that could be confronted by the management of the social enterprises is attaining a balance of its
dual mission of financial and social matters. However, based on the study of Linzalone and Lerro
(2014), they postulated that management challenges are helpful in driving competitive growth for
the social enterprises. The role of the manager is to implement the policies being set by the board
of directors and articulate short-term goals to achieve the long-term aims of the board.
Problem 2: What is the Performance Management System of Social Enterprises based on the
following PESOS dimensions: Portfolio quality; Efficiency; Stability; Operations; and Structure
of assets?
Table 2 presents the mean distribution of the social enterprises’ PESOS dimension ratings
from 2016-2018. PESOS is another dimension in evaluating the performance management of the
social enterprises.
Table 2 shows the data related to the PESOS dimensions which specifically covers the
financial performance of the social enterprises/cooperatives. In accordance with the COOP
dimension, the PESOS part is also presented based on the size of the social enterprises as large
and medium.
Findings of the study reveal that the social enterprises/cooperatives are challenged in their
ability to manage and leverage assets. Generally, in the PESOS dimensions, the social
enterprises/cooperatives have poor performance and this is a serious supervisory concern.
In terms of the size of the social enterprise, the large ones have the highest rating on
Portfolio Quality (89.33); followed by Efficiency (86.00); Operations (76.67); Stability (75.67);
and the lowest rating is on Structure of Assets (49.33).
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Table 2
PESOS Rating (2016-2018) of Social Enterprises/Cooperatives
LARGE MEDIUM Overall

2016 2017 2018 Mean 2016 2017 2018 Mean Mean
P 100.00 88.00 80.00 89.33 88.00 80.00 84.00 84.00 86.67
E 73.00 90.00 95.00 86.00 45.00 80.00 65.00 63.33 74.67
S 77.00 87.00 63.00 75.67 100.00 93.00 93.00 95.33 85.50
O 80.00 75.00 75.00 76.67 100.00 100.00 100.00 100.00 88.33
S 77.00 38.00 33.00 49.33 47.00 33.00 33.00 37.67 43.50
Legend:
Range Qualitative Qualitative Interpretation
Statement
96-100 Very Good The social enterprise has strong performance that consistently
(VG) provides safe and sound operations.
90-95 Good The social enterprise shows satisfactory performance that
(G) consistently provides safe and sound operations.
80-89 Fair The social enterprise’s performance is flawed to some degree and is a
(F) supervisory concern.
70-79 Poor The social enterprise has poor performance and is of serious
(P) supervisory concern.
Below 70 Very Poor The social enterprise has satisfactory performance and is in need of
(VP) immediate remedial attention.
For the medium social enterprise, the highest rating is on Operations (100.00); followed by
Stability (95.33); Portfolio Quality (84.00); Efficiency (63.33); and Structure of Assets (37.67).
The indicator with the highest rating for the large social enterprises is the portfolio quality
in which they have standardized loan operations which minimizes collection deficiency of the
entities. For the medium enterprise, the highest rating is on operations which do not rely only on
providing credit services but are generating more income being a transport cooperative. Borrowing
from banks helped the medium enterprise finance their business expansion. The large and medium
enterprises have the same indicator with the lowest rating which is the structure of assets. They
are both challenged in managing their asset structure to improve the enterprises’ activities.
Based on the overall rating, among the PESOS indicators, Operations has the highest rating
(88.33); followed by Portfolio Quality, (86.67); Stability (85.50); Efficiency (74.67); and Structure
of Assets (43.50) with the lowest rating.
The Operations indicator is rated as “Fair” which means that the social
enterprises/cooperatives are flawed to some degree and is a supervisory concern. This dimension
determines the performance of change in membership vis-à-vis target and the percentage of change
in external borrowings. The social enterprises’ target for the increase in membership is indicated
in their development plan, and found out that they have reached the target. Ochieng (2018) stated
that increasing membership size is significant for the improvement of the financial performance
255 | P a g e
of an entity. The social enterprises can generate more capital and savings from the members to
finance for additional productive activities. For the external borrowings, in order to obtain
sufficient capital for its operation, they borrow from banks, especially in financing business
expansion. More access to finances will help the enterprises to conduct more economic activities
to create social and financial value for the stakeholders.
The Portfolio Quality indicator is concerned with the monitoring and the level of risk of
the loan portfolio. Specifically, it measures the risk of default and the adequacy of the allowance
for expected losses on loans. The rating of the portfolio quality indicator indicates a “Fair” result
in which the performance of the social enterprise is flawed to some degree and is a supervisory
concern. This may be because of the nature of its operation which is not solely dependent on the
returns of loan for the social enterprises but also the retail operations that generate greater return
for the organization. One of the social enterprises mentioned that they only offer little amount for
their loan services because they found out that they have weak collection system. The focus then
is on the other business activities.
In terms of Stability dimension, the rating is also “Fair” just like the Operations and
Portfolio Quality indicators. This shows that the social enterprises/cooperatives are flawed to some
degree and there is a supervisory concern. Stability indicator measures the degree of protection
that the social enterprise/cooperative has for member savings and shares in the event of liquidation
of the organization’s assets and liabilities. It is also concerned with the ability to service the
members’ deposits on time, and the level of institutional capital after subtracting the losses. The
results imply that the social enterprises remain solvent, have increased their institutional capital,
and at the same time able to maintain enough liquidity. The result finds support in the study of
Muscettola (2014) which presented that liquid organizations extend more credit to the clients and
rely less on borrowings.
The Efficiency factor is rated as “Poor” which means that the social
enterprises/cooperatives have poor performance and is of serious supervisory concern. This
indicator measures the ability of the social enterprise’s assets to generate income and sustain its
operations. Efficiency is also concerned with measuring the earning power of the members’ share
capital, evaluating how profitable the loan portfolio is by managing the said portfolio and its assets.
The findings suggest that the social enterprises are not that efficient in managing its loan portfolio
and assets. This outcome find support in the work of Bhatt and Bhatt (2013) which reported that
the efficiency of cooperatives was not very high due to some factors like lack of skilled staff and
poor recovery of loans.
The data also show that Structure of Asset dimension got the lowest rating as “Very Poor”.
This means that the social enterprises/cooperatives have unsatisfactory performance and are in
need of immediate remedial attention. The Structure of Asset indicator measures the percentage of
total assets that are not producing income, percentage of total assets financed by deposits,
percentage of total assets invested in the loan portfolio, and the percentage of total assets financed
by members’ share capital. The results imply that the social enterprises have lower percentage of
total assets which are financed by deposits and the members’ share capital. Some assets are not
producing income for the enterprises which may affect the rating of this indicator.
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The findings of the study revealed that the overall performance management rating (2016-
2018) of the social enterprises/cooperatives is Fair (79.85) which is qualified as flawed to some
degree and is a supervisory concern. This is computed based on the overall rating on COOP (96.33)
dimension which represents 20% of the rating and the PESOS (75.73) indicators which is 80%.
The systematic measurement of performance will support decision-making of the social enterprises
and guarantees accountability to the stakeholders. The result of the study explains that among the
COOP PESOS indicators, the part which needs supervisory concern is on the PESOS dimensions.
Conclusions
Cooperatives need a supportive policy framework to be sustainable in developing

economies since it creates a large and vibrant cooperative sector (Mwanja, Marangu, Wanjere,
Kuria, & Thuo, 2014). They further add that it is not known how non-compliance with the bylaws
and other policies affects performance. The committee should therefore be inventive in devising
policies and practices that can provide vital support for effective social performance. To this
support, Kobia (2011) observes that governance guidelines in cooperatives include: authority and
duties of cooperative members as shareholders, role/function and responsibilities of the
management committee, values and strategies, cooperative communication, and monitoring
performance of management committee. In addition, Mwanja et al. (2014) content that policy
compliance can play a pivotal role in paving the way for the development of an independent
cooperative movement.
Additionally, policy compliance brings about guidelines that are followed when making
decisions for the well-being of the members, and ensures that the utilization of society funds is
compliant with the policies set in the society. Policy adjustment helps in introducing new methods
of offering quality services to members (Kobia, 2011). Cooperatives continue to cope with the
high cost of achieving and sustaining compliance with a variety of regulations whereby executive
committees are considering new ways to reduce costs, strengthen decision-making capabilities,
and therefore improve social performance (KPGM, 2008). Many have found that a strong
governance, risk, and compliance discipline can enable cooperators to integrate inefficient,
isolated processes and systems into effective and efficient cooperative societies.
To further drive value, cooperatives are implementing controls with monitoring tools that
can help them align strategic initiatives which serve as documentation sources, and support
ongoing compliance, monitoring and reporting, and thus promote social performance. According
to Kipanga (2007), cooperatives should integrate compliance- and business-control requirements
into a single control framework to achieve social performance. In this regard, for many
cooperatives, however, the propagation of regulation in recent years has prompted a much greater
focus on compliance and the integrity of controls. Therefore, economic pressures are prompting
cooperatives to address these challenges, specifically by leveraging compliance investments to
improve social performance.
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Performance Management Program
Collection Strategies
Collection is a strategic process that is key to generating good habits and a payment
culture among clients. During the collections process, institutions receive feedback on
policies and activities within each sub- process of the lending cycle: promotion, evaluation,
approval, and disbursement.
How to Avoid Delinquency during the Process?
#1 – Adopt Proactive Strategies to Suppress Delinquency Before It Starts

#2 – Improve Internal Productivity of the Collections Area
#3 – Ensure Quality Information Gathering and Management
#4 – Develop Well-Defined Strategies for Collections of Delinquent Loans
Strategies for Successful Delinquency Management
Institutional culture. Develop a culture that enforces zero tolerance towards

nonpayment of loan on due date. Staff orientation. Training of staff to discourage any kind
of delinquency will be effective. Client orientation. Clients are to be given proper
orientation about the about the loan repayment schedule, procedure and penalties involved.
Rescheduling or refinancing. Rescheduling a loan refers to extending the loan term or
changing the payment schedule whereas refinancing is providing an amount of loan in
addition to the original loan amount.
Institutional Mechanisms to Reduce the Risk of Loan Delinquency
Proper client selection. When granting a loan, proper procedures, rules and
regulations necessary in the selection of the best client must be followed. Credit analysis
of potential borrowers should be carried out in order to judge the credit risk with the
borrower and to reach a lending decision. Bad loans can be restricted by ensuring that loans
are made to only borrowers who are likely to be able to repay, and who are unlikely to
become insolvent. Monitoring of clients. Loan repayments are to be monitored and
whenever a customer delays, action shall be taken. Loan appraisal. This process of
appraising the client will help the officer to assess the ability of the borrower to utilize the
loan effectively. Regular review of lending policies and procedures. If the financial
institution is sensitive to business development, it can revise its own credit policies and
loan procedures as well as advising its customers. Use of third party guarantee. Financial
institutions are assured by third parties to receive their repayments in the event of
delinquency. Loan provisions. If it is probable that the institution will face loan
delinquency, setting aside some resources to provide for delinquency is a way to reduce
the risks associated with late repayments. Training of management. Another stage in the
lending process which is critical to minimizing default is the disbursement stage.
Reasonable interest rates. Loan disbursement lag and high interest rate can significantly
increase borrowing transaction cost and can also adversely affect repayment performance.
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For lenders to control repayment performance reasonable interest rates should be charged
in order to reduce transaction costs. This will enable clients to be able to meet repayment
deadlines. Adequate loan sizes. Loans given out shall commensurate with the size of the
borrower’s operations that is bigger businesses should be granted bigger loans and smaller
businesses shall be granted smaller loans. Flexible repayment terms. Lending institutions
may have fixed and or flexible repayment terms. Repayment terms shall not be rigid
depending on the nature, size, and complexity of the client’s business, for example seasonal
farming business is expected to repay after the farming season after production has been
done. Group lending. Giving out loans to a group is a strategy to control delinquency.
Incentive system. Establish an incentive system that uses both financial and non-financial
incentives to encourage on time repayments. Clients must value the credit service. Loan
products shall suit clients’ needs, the delivery process needs to be convenient, and clients
shall be made to feel that the organization respects and cares about them. Use of credit
rating agencies. Credit rating agencies collect information like debt and credit suppliers,
current indebtedness and court issues on business. Portfolio information systems. It is vital
to develop systems that provide information to field workers that enable them to conduct
effective and timely follow-up of loans and to manage their portfolios efficiently.
Institutional image and philosophy. The lending firm shall create an image and philosophy
that does not consider late payments acceptable. Costs-benefits of late repayment. Lending
institutions shall ensure that the benefits of on time repayment and costs of late repayment
far outweigh the benefits of late repayment and costs of on-time repayment from the
borrowers’ perspective. 5 C’s of credit. These include the analysis of character, capital,
collateral, capacity and conditions (economic). SWOT analysis. This involves the
evaluation of the strengths, weaknesses, opportunities and threats of the client’s business.
Management evaluation. The success or failure of the lending system largely depends on
the efficiency of management since it is involved in the planning, organizing, leading and
controlling of lending program.
Enhancing Service Delivery.
To be competitive in today’s market place, firms have to care about the

quality of their services since this quality is considered the essence or core of strategic
competition in most industries. Service quality is simply defined as the extent to which a
service meets customers’ needs or expectations while customer satisfaction as customers’
overall experience to date with a product or service provider.
Revisit The Policies, Systems And Procedures.
The enterprise shall have clear and effective credit or lending policies and
procedures and must be regularly reviewed. The credit supervisor needs to check with
credit officers daily to ensure that policies are followed and the supervisor must respond
quickly to solve credit officers’ problems. It makes no sense to have strong policies on
paper that are not followed in the field.
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Training and Development.
Training and development is at the heart of an organization that seeks continual

growth and improvement. It is a process of learning provided to new and existing
employees acquiring knowledge and technical skills and developing attitudes of behavior
in order to be more effective in their jobs.
Cooperative Education.
Improving operational performance has been among key targets by various

organizations globally including cooperatives. Among the major strategies to improve
performance of various kinds in organizations is the provision of education and training to
enable implementation of daily activities. The initiated co-operative education and training
system has served as an empowering tool to build capacity of co-operatives to reach desired
end, including better provision of services to satisfy members. Education and training was
found to contribute to improved customer care, loan collection, reduced bad debts, better
accounting system, improved financial management and time service provision.
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An Exploration on the Intentions and Behaviors of Consumers from
Metro Manila toward Green Products
8th NBMC Paper # 20
Denielle Hana Rellosa, Karla Denice Rellosa, Patrick Adriel Aure, and Maricel Balatbat
Abstract
The negative side effects of capitalism have raised many environmental concerns that need
immediate solutions (United Nations Organization, 2019). These concerns have led to the creation
of the green movement. Two examples of which are the green movement that is commemorated
on Earth Day (Earth Day Organization, n.d) and the emerging demand for sustainable products.
Nowadays, more consumers research about the effects that a product has towards the environment,
a behavior that has become a factor in their consumption of a product. (Yan, Yeow, Yazdanidard,
& Rashad, 2014) These consumers are called green consumers. This study aims to investigate the
intentions and behaviors of green consumers and the factors that influence their green purchase
decisions by using the theories and frameworks of Theory of Planned Behavior and Green
Perceived Value. The research will have two phases for its data gathering. Phase I will concentrate
on questions that reflect the green intentions of Filipinos from Metro Manila, as well as their
attitudes and behaviors toward green products, while Phase II will focus on whether or not their
green intentions led to actual green consumption behavior within the span of 1 to 2 months. For
the purpose of this research, the same respondents will be used during the two data collection
phases. By conducting these two phases, the researchers were able to confirm the direct
relationship of purchase intentions and purchase behaviors of consumers residing in Metro Manila.
This study gathered a total of 459 respondents for its Phase I data gathering and 131 respondents
for Phase II. By conducting the two phases of data collection, this research was able to confirm
the relationship of green purchase intentions towards green purchase behavior of consumers
residing within Metro Manila towards green products.
Keywords: green purchase intentions, green actual purchase, green products, green buying
decision, green buying intentions, Theory of Planned Behavior
Introduction
The rise of capitalism and continuous non-green consumption added a lot of pressure on
industries to create products faster without considering the detrimental effects of this towards the
environment (United Nations Organization, 2019). The mass production of goods and services
which began during the Industrial Revolution (The Editors of Encyclopedia of Britannica, 2019)
are still prevalent today. Health hazards such as air and smoke pollution were caused by chemical
pollutants and carbon emissions from the coal consumption of factories. The negative effects of
environmental degradation have become the driving force of environmental organizations and
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activists to make a defiant stand against environmental pollution and climate change. Before that,
there was no regard for the environment. (United Nations Organization, 2019; Jowit, 2008). By
2030, it is expected that the global crisis will have limited the resources available to all species on
the planet (Jowit, 2008).
In 1970, there was a massive oil spill that occurred in Santa Barbara, California (Earth Day
Organization, n.d) that led to the creation of Earth Day by then U.S. Senator Gaylord Nelson. This
catastrophe paved the way for awareness towards environmental protection. In the present climate,
the green movement is globally established with its mission of building and raising awareness on
environmental conservation and sustainability efforts among the next generation, before it is too
late.
However, several studies (Haron et al., 2005; Bhaskaran et al., 2006; Mostafa, 2007; Paço
& Raposo, 2009, 2010) have shown there is an existing gap between consumers’ positive attitudes
and their actual purchasing behavior. It was found that many consumers have a positive attitude
towards green products, but only a few actually buy them. In a research conducted by Hughner
(2007), it showed that 67% of consumers displayed a positive attitude towards the purchase of
organic food products, but only 4% of them actually bought these products. In another study
conducted in the UK, 30% of the consumers had concerns about the environment; however, it also
did not translate to a purchase of a green product (Joshi & Rahman, 2015). Given these situations,
it further affirms the inconsistency between the consumer’s positive attitude and behavior toward
eco-conscious products – that is, the actual purchase of such products. It shows that there is a
discrepancy between the intention and purchasing when it comes to environmentally friendly
products (Chen & Chai, 2010; Wheale & Hinton, 2007). One might assume that a consumer’s care
and concern for the environment would translate into the consumption of products that are eco-
friendly, but that is not the case. Because of this, there is a need to investigate and determine the
factors that drive green purchasing, as well as the factors that hinder it. Such a study will be able
to address and understand the intention-behavior gap in purchasing eco-friendly products.
Statement of the Problem and Research Questions
This research will focus on the attitudes and behaviors of green consumers, and the factors
that influence their purchase decisions. It will be guided by the Theory of Planned Behavior
(Azjen, 1991) and Green Perceived Value (Oliver & Swan, 1989; Zhuang, Cuminskey, Xiao, &
Alford, 2010). This Theory of Planned Behavior has become the basis and framework for
understanding human behavior, while Green Perceived Value will delve into their evaluation of
ethical products. With these theories, this research will be gathering data to answer these questions:
1. Do attitudes towards a green product affect a consumer’s purchase intention?

2. What are the factors that influence purchase intentions towards green products?
3. Do green purchase intentions lead to the purchase of a green product or not?
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The hypotheses were based on previous studies by Woo & Kim, (2018) and Chen & Deng,
(2016). Both journals focused on the purchase intentions of consumers when it comes to green
products.
H1– H7: Functional value, conditional value, social value, emotional value, environmental value,
moral value, and novelty value — is positively associated with the attitude toward purchasing
green products.
H8 – H10: Attitude toward performing the behavior, subjective norms, and perceived behavioral
control — toward purchasing green products is positively associated with green purchase
intention.
H11: Green purchase intention has a positive effect on actual purchasing behavior towards green
products.
Research Objectives
The purpose of this research is to dissect the attitudes, beliefs, intentions, and behaviors of
consumers towards ethical products. This study aims to understand the correlation between
consumer purchase intentions and consumer purchasing behaviors when it comes to green
products. This aims to investigate if the factors of attitudes of consumers lead to purchase
intentions and if this leads to purchasing behavior. Overall, it will investigate the factors that drive
consumers to purchase green products.
This research will focus on the following objectives: To explore the green purchase
intentions of consumers in relation to green products, to identify the attitudes affecting green
intentions and green behaviors, To assess the behavior of consumers towards green products, To
identify if the above-mentioned factors impact green purchase behavior, and, lastly, To confirm
the applicability of the Theory of Planned behavior and Green Perceived Value in determining
purchase behaviors of green consumers.
The threat of global warming has paved the way for environmental issues to be given their
rightful importance. According to a report from the (Jowit, 2008), it was calculated that humans
were depleting 30% more resources than the Earth can replenish each year, thus leading to
deforestation, degradation of soils, pollution of air and water, and extinction of different kinds of
species. Jowit (2008) stated that this had led the report to predict that by 2030 if nothing changes,
mankind will need two planets to sustain its lifestyle. In a report by the Guardian (Jowit, 2008):
90% of the emissions attributed to the top 20 fossil fuel firms in the world was from the
use of their products, such as petrol, jet fuel, natural gas, and thermal coal. One-tenth came from
extracting, refining, and delivering the finished fuels (Taylor & Watts, 2019).
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As reported by NASA (2019), the adverse effects of climate change are already palpable
across the board, as manifested by the continuous rise of temperatures and sea levels (IPCC) as a
result of greenhouse gases from human activities. Therefore, there is a need for today’s generation
to act upon the consequences of mankind’s errors by creating a more sustainable environment. It
is a legitimate threat not just to humanity, but to all living creatures. The pressing need to keep the
global masses informed on green awareness and reformations on how nations practice their
livelihood is the radical solution for the damaged ecosystem to survive and rehabilitate itself in
time for the incoming generation. Thus, environmentally friendly behavior is increasing among
consumers (Haron et al., 2005; Bhaskaran et al., 2006; Mostafa, 2007; Paco et. Al, 2013). Now,
they are far more likely to take action by making the switch to consuming green products or
adopting more sustainable practices (Joshi & Rahman, 2015).
Presently, the reality of environmental degradation is apparent and cannot be ignored by

humans. There is a shift in purchasing behavior and thus businesses are adopting ‘Green
Marketing’ and developing ‘Green Products’ to meet the demands of consumers (Yan, Yeow,
Yazdanidard, & Rashad, 2014). Consumers are understanding that there is a need to favor eco-
friendly products over their non-green counterparts (Tseng & Hung, 2013; Chaudhary, Tripathi,
& Monga, 2011). This is likewise evident in the Philippine market (Euromonitor, 2018a). There
has been an emergence of green brands such as Sora, Sip PH, and Rags2Riches that sell sustainable
products, indicating that Filipinos also want to participate in going green with their consumption
and purchasing. In that aspect, there is a need to understand the attitudes and behaviors of Filipino
consumers towards green products. This research will be able to provide answers to whether or
not Filipinos have the intentions and behavior of green purchasing.
Environmental marketing is a relatively new marketing philosophy that ensued from the
rising demand of consumers for eco-friendly or ethical products (Paco et al., 2013). Natan Reddy,
an intelligence analyst at CB Insights, believes that brands will not go green on their own. Reddy
thinks that a lot of sustainability is going to be driven by consumer demand. Sustainability is
becoming more and more relevant to the market as firms have noticed the increasing demand for
environmentally responsible products. Countless industries should aim to task their respective
research and development teams to devise practical and viable solutions that companies can
immediately adapt to, given the urgency required to reduce carbon emissions. Innovations in
technology and sustainable practices are highly adoptable by different industries. Indeed, other
firms are already developing new technologies to lessen their impact on the environment, and all
must follow suit.
Scope & Limitations
This research will only cover respondents within Metro Manila. The researchers will rely
on the convenience sampling method for their data collection; thus, it is not a reflection of the
whole population of the country. This study will only focus on the factors leading to intentions and
behaviors of consumers toward specific green products.
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Research Gap
This research will delve into the relationship between purchase intentions and purchase
behavior that may or may not necessarily translate to purchase. It is called the intention-behavior
gap. There is a bias that because the intention to purchase a product exists, it is automatically
assumed that behavior follows suit. Prior studies discuss the intentions of consumers to purchase
a product or service (Chen, 2010), but do not further examine the outcome of the intentions, hence
the reason this research intends to continue the studies on purchase intentions to the extent of
purchase behaviors among consumers. The research will contribute to confirming whether there is
consistency in the information that purchase intentions do lead to purchase behavior. Many of the
research with the topic of green products or green consumers only observe or study the purchase
intentions, and only some went further by also studying the purchase behaviors of these consumers.
There is a need to probe into understanding the purchase behaviors of green consumers since
intentions do not necessarily lead to an actual purchase (Testa, Sarti, & Frey, 2018).
In the Philippines, there has been no formal research done about the determinants of
purchase intentions and behavior towards green products. The only research that has been
conducted is the study of Gregorio (2013), which examines the behaviors of Filipino consumers
towards green products. In that study, it was confirmed that Filipino consumers are willing to
spend more for eco-products; however, it did not discuss the motivations and factors of their
purchase behavior (Gregorio, 2013).
Review of Literature
Green Purchase Intentions
The intention to purchase eco-friendly products or services stems from a person’s

responsibility to the environment (Chen, 2011). By opting to go sustainable, the consumer
can lessen his carbon footprint and satisfy his inner desire for protecting the environment.
Green purchase intentions are described as an individual’s willingness and preference in
consuming green products (Chen, 2011; Aman, Haeun & Hussein, 2012). Relative to
research, despite intentions being present it does not necessarily immediately lead to
purchase action (Pickett-Baker & Ozaki, 2008; Ottman, Stafford & Harmann, 2006). Some
of the factors that influence green purchase intentions are environmental awareness, social
influence, environmental attitude, price, and quality (Adjaino & Isibor, 2019).
Green Purchase Behavior
Green purchase behavior considers products that will not harm the environment.
These are products that will not become a pollutant to the environment, that can be reused,
conserved, or recycled, and will not deplete the earth of its natural resources (Shamdasani
et al., 1993). With these considerations in mind to be consciously green, the products
should be non-polluting, sustainable, biodegradable, reusable, or recyclable (Mostafa,
2007). In relation to green purchase behavior, consumers that purchase environmentally
friendly products exhibit a green purchase behavior. Green purchase behavior is also
known as a variety of terms, such as pro-environmental behavior, sustainable purchase
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behavior, eco-friendly purchase behavior, and environmentally responsible behavior.
These terms are interchangeable with each other (Mostafa, 2007; Kim and Choi, 2005;
Tarkiainen & Sundqvist, 2005).
Consumers are driven by their social responsibility to protect the environment.

Their drive influences them to purchase a green product over a non-green product and to
participate in nature-related activities. They are motivated to do what they can to contribute
to the sustainability practices of firms. Mostly, their purchase patterns lead to choosing
ethical products over their counterparts (Kumar & Ghodeswar, 2015). Given the demand
for green consumers for environmentally friendly products, companies have begun shifting
their practices to a more sustainable approach by innovating their production and
packaging processes, as well as removing the toxic substances in their ingredients. When
eco-conscious consumers become aware of the green changes the firm has undergone, they
are more inclined to support the company and purchase their products (Kumar &
Ghodeswar 2015).
The Intention-Behavior Gap
Based on the research of Joshi & Rahman (2015), the intention-behavior gap is
termed as green purchasing inconsistency or green attitude-behavior gap. There is an
inconsistency behind the positive attitude of consumers and the actual purchase behavior
of green products. Many of the consumers, despite being concerned about the environment,
do not end up purchasing eco-conscious items. This proves that contrary to common belief,
a consumer’s positive attitude towards a green product does not automatically translate to
actual purchase. This phenomenon is referred to as the “green purchasing inconsistency”
or “green attitude-behavior gap”.
Indeed, numerous studies have observed that even if individuals are

environmentally aware, this consciousness does not guarantee actual green purchasing. It
cannot be assumed that a positive green attitude will lead to green behavior (Bamberg,
2003; Nordlund & Garvill, 2002). Despite one’s eco-consciousness, Rokka & Uusitalo
(2008) claimed that product attributes, ecological perspectives, and situational factors are
still the driving force behind a consumer’s decision for purchasing.
Theoretical and Conceptual Framework
The theory that this research will be anchored from are the Theory of Planned Behavior by
Azjen (1991) and the Green Perceived Value (GPV). Both frameworks will provide this study the
variables and determinants it needs to distinguish the intentions and behaviors of consumers
regarding green purchasing. The Theory of Planned Behavior, created by Azjen in 1991, explains
why individuals behave in the manner that they do. It explains behavior through three factors:
Attitude toward performing the behavior, Subjective Norms, and Perceived Behavioral Control. A
visual presentation of the Theory of Planned Behavior is shown on the next page, Figure 2. The
Green Perceived Value was defined by Patterson & Spreng (1997) as the “overall evaluation of
the net benefit of a product or service based on the consumer’s appraisal”. It is the overall perceived
value of a product that ultimately dictates whether the benefit received matches a customer’s green
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expectations and green needs. It also must meet the level of expectation regarding its ability and
reliability in terms of product performance (Ganesan, 1994; Hart & Sounders, 1997). With that,
Green Perceived Value has eight values: functional value, conditional value, accessibility value,
social value, moral value, environmental value, and novelty value. Both the Theory of Planned
Behavior and Green Perceived Value will be used by the study to investigate the inconsistency of
consumer’s intentions and behaviors towards green products.
Green Perceived Value
Perceived value originated from the Equity Theory by Oliver & Swan (1989), and
they postulated that “satisfaction exists when consumers perceive their output or input as
being fair. In short, consumers’ perceived value is the consumers’ evaluation of a product
and of whether or not it was able to meet their needs and expectations. Consumer perceived
value influences purchase intentions and customer trust (Zhuang, Cuminskey, Xiao, &
Alford, 2010). With regards to green perceived value, it is defined by Chen & Chang (2012)
as “a consumer’s overall appraisal of the net benefit of a product or service between what
is received and what is given based on the consumer’s environmental desires, sustainable
expectations, and green needs”. It was also said to have an influence on trust and purchase
intentions (Chen, 2010).
The Green Perceived Value concentrates on the consumer’s perception of a

sustainable product or service. The concept gives a deeper understanding of one’s value
which would drive his green consumption. It will allow the researchers to delve into the
different factors controlling what a person considers valuable (Woo & Kim, 2018). Green
Perceived Value includes 4 types of Value: Functional, Social, Conditional, and Emotional.
With the values from Green Perceived Value, additional values will be discussed such as
moral value, environmental value, and novelty value as well. When it comes to purchasing,
consumers prefer to gain the most value they possibly can from a product, a quality that
will yield the item a greater perceived value (Grimmer & Wolley, 2014).
Many companies have realized the importance of perceived value, since the main
driver of consumer’s interest in purchasing a product is its high perceived value. It was
also noted by Chang & Chen (2008) that if consumers consistently reap the benefits of a
product’s high perceived value, they will continue to want to buy the product. This is also
the case when it comes to green perceived value, as there is a positive correlation with the
green perceived value and the purchasing of a green product (Chang & Chen, 2008). With
Green Perceived Value, consumers consider many values when deciding if they intend to
purchase a product. The different values to be considered will be discussed below.
Functional Value
Functional value is an aspect that can impact the perceived conception of

consumers towards goods and services regarding eco-conscious products. According to
Sangroya & Nayak (2017) to be able to market these items for a positive consumer
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response, the product or service must have an attractive price, quality, and convenience.
Although additional costs can make the product more trustworthy, because some
consumers may believe the costs incurred are due to quality control (Gottschalk & Liestner,
2013). With this, value for money is a significant factor in consumer’s attitudes when it
comes to green products (Liang, 2016).
Conditional Value
Conditional value is present when there is a discount, promotions, or incentives

bundled with the product. May it be a price reduction or a buy one, get one free promotion,
such things affect a consumer’s behavior when it comes to purchasing. When it comes to
consumer’s green behavior, conditional value still plays a role in influencing their purchase
behavior in a positive manner. Usually, resulting in them purchasing environmentally
friendly products (Caird et al, 2008). In conditional value, the accessibility of products is
also a consideration for this value. As explained by Joshi & Rahman (2015), accessibility
comes in where the products or services are made available to their consumers. As with
ethical products being relatively new to the market, it may not be accessible everywhere
compared to non-green items sold. Consumers generally do not want to encounter an
inconvenience given their unwillingness to spend time in searching for unavailable
environmentally friendly products (Padel & Foster, 2005). While, if sustainable products
are readily available, consumers will have a positive relationship with green purchasing
(Tarkiainen & Sundqvist, 2005).
Social Value
According to Sangroya & Nayak (2017) and Sweeney & Soutar (2001), “social
value consists of a social image, expression of personality and social self-concept, and this
value is related to interactions between individuals apart from those associated with
individual recognition by choosing goods and services”. Having such a definition, social
value relates to a consumer’s self-expression through his purchases. An example of this is
when a consumer is purchasing food. This consumer matches the food’s image to his own
self-image and thus affecting his choice of food item that he will purchase (Hall &
Winchester, 2001). Social value is said to allow consumers to develop a certain attitude to
a product which in turn, leads to their purchase behavior (O’Cass & Frost, 2002).
Emotional Value
According to Joshi & Rahman (2015), emotional value pertains to consumer’s

emotions and feelings towards products. It usually includes favorite feelings and/or
affective states and it can be said that feelings of comfort and pleasure are the common
emotional value (Shet et al., 1991; Sweeney & Soutar, 2001). Emotional value includes
positive feelings such as excitement, happiness, and confidence and negative feelings such
as anger, nervous, and fear (Shet et al., 1991). It was said in literature that consumer’s
psychological emotional needs would be the top indicator of a consumer’s attitude toward
green products. It said that it is also an indicator of behavior intention towards green
products (Sangroya & Nayak, 2017). Consumers who feel a strong sense of concern
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towards the environment are more inclined to support purchasing products and services
that are environmentally friendly (Ozaki & Sevastyanova, 2011).
Moral Value
Joshi & Rahman (2015) mentioned that the value of morality is described as an
individual’s way of discerning right from wrong. Moral value has a big impact on purchase
intentions and the actual purchase of a green product (Arvola et al., 2008, Gleim et al.,
2013). Their beliefs on different social issues such as environmental conservation will
affect their emotions either positively or negatively. May it be for individualistic or
altruistic reasons, both have been found to positively affect the purchasing of green
products (Kystallis & Vassallo, 2008; Magnusson et al., 2003).
Environmental Value
Environmental value refers to the significance or worth a group or population

places on goods or services produced in an ethical manner (Environmental Value, n.d.). It
is a purchasing behavior wherein consumers avoid buying products that would harm the
environment (Tilikidou, 2001). It was found in a study that consumers who believe in
preserving the environment, actively buys eco-products therefore exhibiting green
purchase behavior (Dagher & Itani, 2012). This is because consumers understand the
impact of their purchasing behaviors towards the environment.
Novelty Value
Novelty is describing an element of doing or experiencing something new

(Williams & Soutar, 2009). Consumers are willing to spend on a new product to participate
to what is relevant at the moment (Sheh et al, 1991b). There is an existing need for them
to satisfy their curiosity or their desire for new products (Weber, 2001; William & Soutar,
2009). In the present market, green products are not the norm and have only recently been
available or introduce, this is an opportunity for companies or sellers to use this their
advantage and cater to consumers who tend to purchase items for the “novelty” of it
(Mentorphile, 2018).
The Theory of Planned Behavior
The Theory of Planned Behavior (TPB) is a framework created by Ajzen, but it was
developed and derived from the Theory of Reasoned Action (TRA) (Ryan & Carr, 2010).
It is a theory meant to explain how an individual’s intentions lead one to perform a certain
behavior. Ryan & Carr (2010) stated that TPB is “based on the premise that individuals
make logical, reasoned decisions to engage in specific behaviors by evaluating the
information to them”. The theory explains all types of behaviors of individuals and their
ability to exert self-control. When performing a behavior, the individual’s intention is
influenced by the value perception of the behavior and the perception that it is under his
control. The theory differentiates the three types: attitude toward performing the behavior,
subjective norms, and behavioral control (Ajzen, 1991).
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Attitude Toward Performing the Behavior
Attitude toward performing the behavior is formed by positive and negative

outcomes of a certain action. It is separated into two: Affective and Instrumental attitude.
Affective Attitude pertains to the emotional feelings the individual has towards the action;
for instance, feelings such as enjoyment or displeasure are common. Meanwhile,
Instrumental Attitude is the harm or benefit of the action (Ajzen, 2002).
Subjective Norms
Subjective norms refer to the beliefs that are widely accepted by people. These refer
to behaviors that are recognized as normal and acceptable. Because subjective norms are
highly influenced by one's peers or society at large, it follows, then, that before an
individual engages in a behavior, he or he will first seek approval from others (Gupta &
Ogden, 2009). In subjective norms, there is this “group effect” wherein social groups
influence or even pressure an individual to act in a certain way. The “group effect” could
be a predictor of how an individual would behave when it comes to green purchasing
(Dotson & Hyatt, 2000).
Perceived Behavioral Control
Ajzen (1985) defines perceived behavioral control as the perception of the difficulty
or ease of enacting a behavior. The idea asserts that the strength of one’s attempt to engage
in the behavior and the amount of control the individual has over the behavior are
influential to his engagement of the behavior. The perceived behavioral control can be
deconstructed into two parts: self-efficacy and controllability. In self-efficacy, the
individual must have the capability and confidence to perform an act. On the other hand,
controllability is the control an individual has over an action (Ajzen, 2002).
In the conceptual framework, as seen in Figure 1, the research uses the Theory of Planned
Behavior and Green Perceived value in one framework. With Attitude Toward Performing the
Behavior, individuals are more likely to have green purchase intentions if they have emotional
value (i.e., feeling enjoyment or happiness from buying a green product) or moral value (i.e., the
consumer having a sense of discernment of right and wrong and taking this as a consideration
when purchasing). Meanwhile, Subjective Norms would motivate consumers to purchase green
products if it has social value, novelty value, or environmental value. All those values have one
commonality: trends. Consumers are most likely to purchase items when there is a trend; that is to
say, when their peers are also purchasing and consuming green products. Perceived Behavioral
Control pertains to the functional value (i.e., the green product works as it should), conditional
value (i.e., there is a promo or a discount that could attract consumers to buy the product), and
accessibility value (i.e., the product is readily available to be purchased). Once the consumer has
the intention of purchasing a green product, this will either translate into an actual purchase or no
purchase. The hypotheses are as follows:
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H1 – H7: Functional value, conditional value, social value, emotional value, environmental
value, moral value, and novelty value — is positively associated with the attitude toward
purchasing green products.
H8 – H10: Attitude toward performing the behavior, subjective norms, and perceived
behavioral control — toward purchasing green products is positively associated with green
purchase intention.
H11: Green purchase intention has a positive effect on actual purchasing behavior towards
green products.
Figure 1
Methodology
Research Design
Data primarily came from a convenience sampling method. There were two phases
of data collection. Phase I focused on the attitudes and behaviors of Filipinos toward green
products and whether or not they intend on purchasing green products, while Phase II
focused on whether the same respondents ended up purchasing green products. Phase II
was conducted one to two months after the initial survey, for the purpose of affording the
respondents significant time to purchase a green product. This study gathered their data
through an online form using Google surveys, as well as through physical forms of the
survey in Tagalog. The surveys used the Likert Scale wherein respondents were asked to
rate each item on a 7-point scale, where 1 denoted strongly disagree and 7 denoted strongly
agree. Due to accessibility and availability reasons, the study focused on the following
green products – reusable straws, bamboo toothbrushes, reusable utensils, and water bottles
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or tumblers. By narrowing the scope of products, the questionnaire will be clear and
defined when describing which green products the survey pertains to. In addition, there is
also an emerging trend in the Philippines of reusable items to combat plastic usage. These
objects were also included, given the rise in interest and of their sales, and because these
products are affordable and easy to purchase, granted that many of them are available in
both retail and online stores.
Data Analysis
Descriptive Analysis
The researchers were able to gather a total of 459 respondents for Phase I and 131
respondents for Phase II. The respondents had to fit the criteria of being residents of Metro
Manila with ages of 20 – 45 years old.
For Phase I data results, 50.5% of the respondents were female and 49.5% were
male. Many of the respondents were aged 22 and 23 years old at 20% and 16.3%,
respectively; furthermore, 85.6% of them are bachelor's degree holders. The data also
shows that most of the respondents reside in Quezon City (19.8%) and Pasig City (17.9%)
and 37.3% of the respondents earn a monthly income that falls between PHP 15780 to PHP
31560.
Phase II data results, meanwhile, are comprised of 50.4% male respondents and
49.6% female respondents. It is in Phase II that shows that more than half of the
respondents – specifically, 52.7% – did not purchase any green products. As it happened,
only 47.3% of the respondents bought a green product.
Regression Models
The research ran three regression models for its data results – two of which used
linear regression and one used binomial regression. Tables 1 and 2 display the results of
the Determinants of Theory of Planned Behavior. Meanwhile, Tables 3 and 4 show the
regression results of the Determinants of Green Purchase Intentions, and Tables 5 and 6
show the regression results of the Determinant of Green Purchase Behavior.
Determinants of Attitude Performing the Behavior
In determining the correlation of the Green Perceived Values to Theory of Planned

Behaviors’ Attitude Towards Performing the Behavior, the researchers conducted a
regression analysis, since it is a tool used to determine the relationship between the
variables (Douglas Montgomery, Peck, & Vinning, 2012). This analysis aims to determine
if the covariates have a significant effect on the changes of the dependent variable, which
is the Attitude Toward Performing the Behavior.
Generally, the R-squared value determines the rate in which the changes in the
dependent variable can be attributed to the independent variables. Because of this, it is best
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to garner a high R-squared value, since it signifies that the independent variables have a
significant effect on the changes in the dependent variable.
Table 1 displays the model fit measures of the regression results of the Green
Perceived Values in relation to the Theory of Planned Behavior’s Attitude toward
Performing the Behavior. Here, the model was able to obtain an R score of 0.787%,
displaying the correlation of the predicted values and the observed values. It also garnered
an adjusted R-squared value of 0.613%, a figure that explains the changes in Attitude
Towards Performing the Behavior – changes that were prompted by the independent
variables, which are the Functional Value, Conditional Value, Social Value, Emotional
Value, Environmental Value, Moral Value, and Novelty Value. In addition, the Overall
Model Test for the p-value is at less than 0.001, which means that the results of the
regression are statistically valid, being that the figure is less than 0.05 p-value.
Table 1
Model Fit Measures for Green Perceived Values
According to the table below, four of the independent variables, namely, Functional
Value, Conditional Value, Social Value, and Novelty Value, acquired p-value scores of
more than 0.001 and 0.05. The remaining independent variables garnered p-value scores
of 0.02, 0.073, 0.282, and 0.122, respectively. Because these figures are higher than the
acceptable p-value of 0.05, it can be said that these values are not statistically significant
in accounting for the changes in the dependent variable that is Attitude Towards
Performing the Behavior. The values that were statistically significant are the following:
Emotional Value (<0.001), Environmental (<0.001), and Moral Value (<0.001). These are
the values that can answer for the changes in Attitude Towards Performing Behavior. In
terms of estimates, Moral Value scored the highest in the Estimate, receiving a score of
0.2981. Meanwhile, Emotional Value followed close behind, with a score of 0.2308. These
variables are the best predictors of the change in Attitude Towards Performing the
Behavior.
Reading into the confidence interval of the table, Moral Value’s effect on Attitude
Towards Performing the Behavior can be as low as 0.214 or as high as 0.382, while
Emotional Value’s effect can be as low as 0.157 or as high as 0.305. As for Conditional
Value, Social Value, and Novelty Value, they have proven to be statistically unreliable,
because the lower value they received is negative, while the upper value is positive, which
is essentially no different from zero.
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Table 2
Regression Results for Green Perceived Values
Determinants of Green Purchase Intentions
In order to determine the relationship of Theory of Planned Behavior’s Attitude

Towards Performing the Behavior, Subjective Norm, and Perceived Behavioral Control
towards Green Purchase Intentions, linear regression was conducted. For this model, the
independent variables are Attitude Towards Performing the Behavior, Subjective Norm,
and Perceived Behavioral Control, while the dependent variable is the Green Purchase
Intentions.
Table 3 shows that the independent variables have an R-Squared Value of 0.580%
and an adjusted R-squared value of 0.577%. These percentages determine how the
independent variables can account for the changes in the dependent variable that is the
Green Purchase Intentions. About 0.577% or 0.580% of changes in Green Purchase
Intentions are attributed to Attitude Towards Performing the Behavior, Subjective Norm,
and Perceived Behavioral Control. As for whether or not the regression results of this table
are statistically valid given that the p-value is less than 0.001, which is less than the
acceptable p-value of 0.05.
Table 3
Model Fit Measures for Theory of Planned Bheavior
As for the regression results of the variables of the Theory of Planned Behavior in
relation to the dependent variable of Green Purchase Intentions as demonstrated in Table
4, the variable of Subjective Norm is not statistically significant, given that it received a p-
value of 0.182, a figure that is more than the acceptable p-value of 0.05. Attitude Towards
Performing the Behavior and Perceived Behavioral Control, however, are statistically
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significant, given that they received p-value scores of <0.001. These two variables can
elucidate the changes in Green Purchase Intentions. In addition, Attitude Towards
Performing the Behavior received the highest Estimate score, with a 0.673 value, as well
as a lower value of 0.5958 and an upper value of 0.750, further demonstrating its effect on
the dependent variable.
Table 4
Regression Results for Theory of Planned Behavior
Determinant of Green Purchase Behavior
In determining if Green Purchase Intentions can be attributed to the changes in

Green Purchase Behavior, this study conducted a binomial regression to observe the two
variables. Table 16 shows the R-squared results, which show the correlation of the two
values. In the case of Green Purchase Intentions and Green Purchase Behavior, it can be
noted that the two variables are correlated to each other since they received an R-squared
value of 0.374 or 0.292, as seen in Table 5. Also, the p-value resulted in <0.001 so the
results are deemed to be statistically significant and within the acceptable range. This
means that Green Purchase Intentions can be accounted for the changes in Green Purchase
Behavior. Also, Green Purchase Intentions received an estimate score of 1.40, as seen in
Table 6, and because it is a positive estimate, it is leaning towards a yes, which indicates
that Green Purchase Intentions could lead to Green Purchase Behavior.
Table 5
Model Fit Measures for Green Purchase Behavior
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Table 6
Regression Results for Green Purchase Behavior
Results and Conclusion
Results
Green Perceived Values and the Results
The Green Perceived Values concentrates on a consumer’s perception of a

sustainable product or service, which gives a deeper understanding of one’s value that
would drive his green consumption. It will allow the researchers to delve into the different
factors controlling what a person considers valuable (Woo & Kim, 2018). When it comes
to purchasing, consumers would like to get the most value they can from a product, which
will yield them a greater perceived value (Grimmer & Wolley, 2014). With Green
Perceived Value, consumers consider the different values that shape their attitude towards
green purchase intentions and green purchase behavior. The values that were discussed and
tested in this study were the following: Functional, Conditional, Social, Emotional,
Environmental, Moral, and Novelty. However, with our results, the only values that were
deemed to be significant were Environmental Value, Emotional Value, and Moral Value.
With such results, these 3 values are what determines the Theory of Planned Behavior’s
Attitude Toward Performing the Behavior. Hence, these are the values that would influence
a consumer’s attitude toward purchasing a green product.
Environmental Value is defined as the significance or worth a person places on

goods or services produced in an ethical manner (Environmental Value, n.d.). Out of the
several reasons why consumers opt for green products, environmental concern is the main
reason. Many of our respondents from Phase I and Phase II attribute their intention and
actual purchasing of a green product because of this value. Furthermore, majority of the
respondents said that their reason for buying a green product were due to their concerns for
the environment and because they hoped to contribute to the preservation of the planet and
its resources.
With Emotional Value resulting in having statistical significant, this is in-line with
the results of the study by Woo & Kim (2018). In their study, emotional value leads to
attitudes toward purchasing green products. Consumers, who felt a strong sense of concern
towards the environment, are more inclined to support purchasing products and services
that are environmentally-friendly (Ozaki & Sevastyanova, 2011). This is confirmed by the
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results gathered, most of the respondents' main reason for buying a green product is because
they are concerned about the environment.
As for Moral Value, it is described as an individual’s way of discerning right from

wrong (Joshi & Rahman, 2015). Moral value has a huge impact on purchase intentions and
the actual purchase of a green product (Arvola et al., 2008, Gleim et al., 2013), this is in-
line with the data results collected. According to the results of the survey, Moral Value
significantly influences the attitude towards purchasing a green product. Moral Value was
stated to be one of the reasons why some of the respondents decided on buying a green
product. One stated that “I bought a green product for the betterment of the world”.
Theory of Planned Behavior and the Results
The Theory of Planned Behavior (TPB) is a theory meant to explain how an

individual’s intentions lead one to perform a certain behavior. The theory explains all types
of behaviors of individuals and their ability to exert self-control. The theory differentiates
the three types: attitude toward performing the behavior, subjective norms, and behavioral
control (Ajzen, 1991). Attitude toward performing the behavior is formed by positive and
negative outcomes of a certain action. It is separated into two: Affective and Instrumental
attitude. Affective Attitude pertains to the emotional feelings the individual feels towards
the action. Feelings such as enjoyment or displeasure are common to this. While,
Instrumental Attitude is the harm or benefit of the action (Ajzen, 2002). Subjective norms
refer to the beliefs that are accepted by people. It would be behaviors that would be seen
as normal and acceptable. With subjective norms, it is highly influenced by others so before
an individual engages in a behavior, he or he will first seek approval before performing the
action (Gupta & Ogden, 2009). Ajzen (1991) defines perceived behavioral control as the
perception of the difficulty or ease of enacting a behavior. The idea is the strength of his
attempt to engage in the behavior and the amount of control the individual has over the
behavior are influential to his engagement of the behavior (Ajzen, 2002).
The 3 constructs of Theory of Planned Behavior were meant to be indicators of

purchase intentions however, our regression results showed that only Attitude Toward
Performing the Behavior and Perceived Behavioral Control were indicators of Green
Purchase Intentions. Subjective Norm resulted in being insignificant in influencing Green
Purchase Intentions. ATB and PBC had positive effects on consumer’s purchase intentions
towards green products. Our results for ATB confirms other studies (Lee & Yun, 2015;
Magnusson et al., 2003) that ATB is a predictor of an individual’s intentions towards
purchasing a green product. The same goes for PBC in that it does influence green purchase
intentions. Both are deemed to result in consumers intending to buy green products.
Results of Green Purchase Intentions towards Green Purchase Behavior
As for the relationship between Green Purchase Intentions and Green Purchase
Behavior, they are positively related and so Green Purchase Intentions does lead to Green
Purchase Behavior. Given that the relationship between green purchase intentions and
green purchase behavior is statistically significant, it would mean that the likelihood of a
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consumer to buy an eco-product is very high. According to the data results from the
surveys, the results show that the actual purchasing behavior is positively influenced by
the intention to buy green products. This study confirms that green purchase intentions do
lead to green purchase behavior. In simpler terms, consumers who intend on buying a green
product are most likely to buy.
Hypotheses Testing
As can be seen in Table 8, which of the hypotheses are deemed to be acceptable or

insignificant according to the regression results of the data. The following hypotheses were
found to be without statistical significance towards Attitude Toward Performing the
Behavior: H1, H2, H3, and H7. Meanwhile, H4, H5, and H6 were proven to have statistical
significance towards Attitude Toward Performing the Behavior. Then H8 and H10 were
accepted while H9 was null towards affecting green purchase intentions. Lastly, the result
for H11 is also accepted due to its statistically significant p-values and estimates. We accept
the following hypotheses statements:
H4: Emotional Value is positively associated with the attitude toward purchasing green
products.
H5: Environmental Value is positively associated with the attitude toward purchasing
green products.
H6: Moral Value is positively associated with the attitude toward purchasing green
products.
H8: Attitude Performing the Behavior toward purchasing green products is positively
associated with green purchase intention.
H10: Perceived Behavioral Control toward purchasing green products is positively

associated with green purchase intention.
H11: Green Purchase Intentions has a positive effect on actual purchasing behavior
towards green products.
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Table 8
Summary of the Hypotheses
In conclusion, this study explored the green purchase intentions of consumers

concerning green products by using the framework of the Theory of Planned Behavior in
testing the statistical significance and correlation of the seven identified values. It was
established that the values of Emotional, Environmental, and Moral have statistical
significance on the purchase intentions of consumers although they are not automatic
predictors of green purchase behavior. In Table 9, it can be seen the identified constructs
that influence and predict green intentions and green behaviors. By assessing the behavior
of consumers towards eco-friendly products, it was confirmed that Attitudes towards
Performing the Behavior and Green Behavioral Control affected on the consumer’s
purchase intentions. The results imply that a positive attitude toward purchasing a green
product and a high perceived behavioral control will increase the intentions and likeliness
of a consumer to opt-in purchasing green products. Additionally, according to the data
results, it confirms the positive relationship of purchase intentions and purchase behaviors
of green products which are aligned with the TPB framework.
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Table 9
Summary of Research Questions, Hypotheses, and Results
Research Questions Hypothesis Tested Summary of Results

RQ1: Do attitudes towards a H1, H2, H3, H4, H5, H6, H7 Model: Emotional Value,
green product affect a Environmental Value, and
consumer’s purchase Moral Value (p <0.001)
intention significantly influence
Attitude Towards Performing
the Behavior.
RQ2: What are the factors H8, H9, H10 Model: Attitude Towards
that influence purchase Performing the Behavior (p
intentions towards green <0.001) and Perceived
products? Behavioral Control (p
<0.001) significantly
influence Green Purchase
Intentions.
RQ3: Do green purchase H11 Model: Green Purchase
intentions lead to the Intentions (p <0.001)
purchase of a green product significantly influence Green
or not? Purchase Behavior.
Conclusion
This research investigated Filipino consumers from Metro Manila and their intentions and
behaviors towards eco-products. It was able to confirm that these consumers have a positive
attitude towards purchasing green products and a high purchase intention for such products. Many
of the respondents stated that they do intend on purchasing eco-friendly items because they want
to participate in helping the environment, believe it is the right thing to do, and feel strongly about
environmental issues. Having this outlook proves to positively affect their attitude towards
purchasing green products. This affirmative attitude, coupled with a high perceived behavioral
control, result in green purchase intentions that then translate to the actual purchase of eco-
products. This behavioral change is confirmed by the study’s data wherein the respondents said
“yes” when asked whether or not they intend on purchasing green products. Indeed, about half of
the same respondents bought an eco-product within the span of one to two months, many citing
that they bought the green product on account of their environmental concerns.
The data results of this study identified which of the seven values of Green Perceived
Values influence one’s attitude towards purchasing an eco-product. As it happens, the most pivotal
of the seven are Moral Value, Environmental Value, and Emotional Value. These three values
were found to be statistically significant in positively influencing one’s attitude. These findings
are in line with other studies that confirm that an individual’s sense of environmental responsibility
does affect green purchase intentions (Chan & Lau, 2000; Makatouni, 2002; Woo & Kim, 2019).
Meanwhile, the studies of Paco et al. (2013) and Young et al. (2010) mention that consumer guilt
and generativity motivate consumers' green purchase intentions and behaviors. The findings of this
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research showed that Attitude Toward Performing the Behavior and Perceived Behavioral Control
are statistically significant, which confirms the positive relationship of the two constructs towards
green purchase intentions, thereby proving its consistenty with other studies (Awuni et. al, 2016;
Han, Hsu and Sheu, 2010; Maichum et. al, 2017). The results also found that green purchase
intentions and green purchase behaviors have a positive relationship with each other; thus,
consumers who intend on investing in a green product are most likely to do so. This is further
affirmed by other studies that had the same results (Ajzen, 1991; Han, Hsu and Sheu, 2010;
Vazifehdoust et al., 2013).
Overall, the study was able to fulfill the objectives set, as well as the questions asked by
this research. Most importantly, it was able to confirm the likeliness that green purchase intentions
ultimately translate to green purchase behavior. By conducting the data gathering of Phase I and
Phase II, the researchers were able to investigate the intentions and behaviors of green consumers
and the factors that influence their green purchase decisions. The research was able to identify
which constructs in Green Perceived Value influence TPB’s Attitude Towards Performing the
Behavior, and was also able to determine which of TPB’s constructs influence Green Purchase
Intentions.
Recommendation & Management Implications
Recommendations
This research has several management recommendations. It briefs companies,

marketers, and policymakers of the key predictors of a consumer’s green purchase
intentions and purchase behavior. Companies and marketers may use the findings to
indicate which variables are relevant in influencing a consumer’s purchase intention and
purchase behavior toward a green product. The data results showed which values
consumers are sensitive to, as well as which factors are responsible for the attitude shifts
that impact their purchase intentions and purchase behavior. Marketers may develop and
implement their marketing strategies effectively based on the findings of the study.
Companies could switch to more sustainable methods of doing their businesses and create
a culture of practicing sustainability within the company as well as focusing on innovations
and technologies that will allow them to lessen their carbon footprint. Consumers must
continue to purchase and support companies that sell green products so that other
companies notice the increasing demand for eco-friendly products and cater to their needs.
The researchers drafted a marketing proposal that companies and marketers may use as a
reference in marketing their green products. Policymakers should design an
environmentalism curriculum in the education system to instill in citizens to be
environmentally aware and concerned. Policymakers should impose a regulatory policy for
their companies to adhere to and make it mandatory to operate sustainably. Academic
institutions may use this study as additional research in the field of marketing, while other
researchers may supplement this further. Active participation and initiatives with
environmental organizations must be prioritized to inform the student body of
environmental conservation.
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Management Implications
The researchers proposed this marketing strategy as a suggestion for companies

who are interested in employing green practices into their marketing strategies. They may
implement this strategy if they want to appeal to consumers who are going green. The
proposed strategy was conceptualized on the basis of the survey results of this study. The
findings of the regression results are that only 3 values from the 7 values of Green
Perceived Values resulted in being significant. Those were Emotional Value,
Environmental Value, and Moral value. While for the Theory of Planned Behavior, only 2
constructs were significant in predicting Green Purchase Intentions. Those were Attitude
Toward Performing the Behavior (ATB) and Perceived Behavioral Control (PBC). Also,
Green Purchase Intentions is confirmed to result in Green Purchase Behavior according to
this study’s data results. With that, the researchers are proposing a marketing strategy
following the model of 6Ps of Marketing and with the consideration of this study’s
regression results in creating the statements below.
Proposition: Help and contribute to the preservation of the environment by purchasing

eco-friendly products.
For the proposition, the researchers recommend incorporating the Environmental

Value into the messaging. That is why it focuses on being able to contribute to the
preservation of the environment. This is coming from our regression results that
Environmental Value has a positive effect on attitude towards purchasing a green product.
Product: Reusable Straws, Reusable Utensils, Bamboo Toothbrush, and Reusable Water
Bottle.
These items were chosen to be the eco-products that the study will focus on given
that these items are easily accessible & available (in-stores and online) and for its
affordability. Also, these are the items that are popular and purchased by consumers when
it comes to green products.
Packaging: Should be reusable, biodegradable, plastic-free, or recyclable.
As a green product, it follows a strong protocol on being biodegradable, sustainable,

and environmentally friendly, which reflects both values of moral and environmental.
Environmental in the sense that the green product was produced in an ethical manner that
considers the carbon footprint and using sustainably-sourced materials to create the
product. As for the moral value, the manufacturers practiced sustainability over minimizing
cost on their operations. By considering such practices, the statement is able to contain the
moral and environmental value to its messaging.
Price: According to the survey, price is not a factor and green consumers have no issue
purchasing a green product with a higher price, which has the same usage of a non-green
product.
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The consumers would be willing to spend more to support green products (Biswas
& Roy, 2015) as long as they resonate with the emotional, environmental, moral values.
Also, relating it to the regression results for Perceived Behavioral Control, since PBC
resulted in being significant it would mean that a consumer will choose to purchase a green
product if he has the resources, time, and willingness. However, since the price is not a
factor, it is recommended for marketers to strongly use the three values instead: Emotional
Value, Moral Value, and Environmental Value, in their promotions to attract more
consumers in purchasing green products.
Place: Availability in accessible locations (i.e. groceries, malls, online stores).
With the availability of the products, this is an important factor in convincing

consumers in intending or buying a green product according to Perceived Behavioral
Control. To this extent, a consumer will choose to purchase a green product if it is available
and accessible. It is important that green products are available in accessible locations such
as online stores and retail stores.
Job to be Done (JTBD): Get Male and Females with ages of 20-45 who are
environmentally aware or eco-conscious to switch to purchasing green products.
The job-to-be-done statement was written with the perspective of the marketer or
manager that would employ this marketing strategy with the intention of having consumers
opt for buying green products instead of non-green products, which is why the statement’s
messaging focused on convincing consumers to switch to purchasing green products. On
the other hand, if coming from the viewpoint of a consumer, according to our survey
results, the important values that they consider to be the reasons that would influence their
attitude on purchasing a green product is attributed to Environmental, Emotional, and
Moral Value. Even so for the consumers, they will choose to purchase a green product
when it relates to their environmental and moral beliefs and if the marketing
communications resonate with consumers on an emotional level. The sample statement is,
“To contribute to the environmental solutions, it is only right to practice sustainability and
a zero-waste lifestyle by opting to buy and use only green products so we may preserve our
planet for my children’s future”.
Moreover, it is also important to note that a positive Attitude Towards Performing

the Behavior (ATB) and Perceived Behavioral Control (PBC) would highly result in Green
Purchase Intentions which would most likely lead to the actual purchase of a green product.
With that, it is important to incorporate ATB and PBC in job-to-be-done to ensure Green
Purchase Behavior. ATB can be incorporated by convincing the consumers that the
products are favorable and that it is a good idea to purchase one. As for the PBC, consumers
would be convinced if they are confident that it is better to purchase a green product rather
than a non-green product, if he or she has the resources, time, and willingness, or if the
green product is available and accessible.
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Exploring Fresh Food Buying Preferences in Marilao Isolation
Facilities Area During the COVID-19 Pandemic Using Discrete
Choice Analysis
8th NBMC Paper # 21
Virgilia J. Arispe
[email protected]
Abstract
The spread of Covid-19 pandemic all throughout the globe has caused many challenges and
disruptions to food businesses. Owners of food establishments were forced to close their
businesses temporarily. While fresh food purchases became a major activity, not much is known
about the behavior of fresh food shoppers amidst the coronavirus pandemic that is characterized
by health risks, lockdowns, social isolation, and gradual economic reopening. The proposed study
seeks to conduct an online survey to elicit buyers’ preferences in terms of the following attributes,
namely, purchasing methods, time windows, minimum order requirements, and payment methods.
Three COVID-19 pandemic scenarios will be considered: an increasing, decreasing, or constant
number of new cases within a given observable period. The participants in this study were the
academic and medical staff, faculties and students of the Covid-19 isolation facility in Marilao,
Bulacan. The study’s results are envisioned to contribute to the body of knowledge on food buying
behavior in general, and fresh food buying behavior in particular especially under periods of
uncertainty and disruptions. Furthermore, the information that will be gathered will be significant
to fresh food retailers. It will help them know the buyers’ preferred attributes on fresh food
purchases, and manage their businesses accordingly as they navigate new market realities.
Keywords: Fresh Food Retail, Buyer Preferences, Pandemics, Random Utility Theory,
Conditional Logit
Introduction
As the Covid-19 pandemic has spread regional, national and global, both people’s
lives (jobs) and economic activities (businesses) were compromised, one major example
are the staple food retailers which play an important role in the society. Shoppers anticipate
that these retailers should pay attention in providing them their daily need for food but at
the same time keeping it safe and healthy. In the report of McKinsey & Company (2020),
it mentioned that new survey results proposed that “Food retailers in Asia might rethink
their businesses in the wake of COVID-19. They should safeguard the health of employees
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and customers, maintain business continuity, set up nerve centers to manage their
organizations’ work on the COVID-19 crisis, and manage demand to align with supply-
chain capacity — for example, by reducing the assortment of offerings, rethinking
promotions, or introducing new products” (Kuijpers, Wintels, & Yamakawa, 2020).
Supported in the study of Obal & Gao (2020), they proposed that it is important during this
time to reassess business relationships of companies as a whole and that a pandemic may
present opportunities for establishing new relationships with other companies to address
urgent short-term needs and to capitalize on significant long-term opportunities in relation
to the coronavirus outbreak, and offer potential steps forward for firms. Needless to say,
food retailers should take into account the factors which characterize the modern consumer.
Furthermore, for many entrepreneurial ecosystem players, particularly startups, the

lockdown of large sections of society and of the economic life has come as an exogenous
distress. Rapid response research integrating qualitative research design called for an
analysis of policy interventions, that serve as an inspiration for developing support
initiatives to protect entrepreneurs from the implications of the current lockout and mitigate
the effects of future crises (Kuckertz et al., 2020). Moreover, The Food Industry
Association support consumers by providing key recommendations during the pandemic
period such as, increasing ecommerce, shop-by-phone, where it is feasible and prepare to
deliver to customers where it is not feasible, but convey about steps to protect both the
consumer and worker health and safety, prepare to improve self-checkout where it is
available, and proper packing of foodservice items from wholesaler or warehouses going
to retailer to meet the need for bulk buying (FMI. Org, 2020)
The way people make decisions or exhibit preferences can be strongly influenced
by the set of alternatives available, also called the set of choices. In addition, there are
typically heterogeneous interests, either within small groups at an individual level or within
large group subpopulations. There are now several models that capture this behavior in
order to make accurate predictions, provided the availability of choice data, but there is
little work to understand how explicitly modifying the choice set can be used to impact a
collection of decision-makers' preferences (Tomlinson & Benson, 2020). In this study,
discrete choice modeling will be used to construct an optimization system for several group
control issues for such interventions, namely optimizing agreement or disagreement and
promoting a specific choice.
A significant difference exists between behavioral theory and models of discrete

choice. Due to the driving forces behind the two disciplines, the difference exists: while
independent choice modelers concentrate on mapping inputs to the decision, behavioral
researchers seek to understand the essence of how decisions are made, or the decision-
process itself. (Walker, 2001). Discrete Choice experiments (DCE) have been mentioned
in many literatures and widely used in field like health economics, environmental
valuation, and other discipline where consumers decision was observed but very limited
for fresh food area.
This topic has high current relevance, and it would like to explore on the
relationship of the fresh food shopper’s behavior to the different situations during the
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coronavirus era. It would like to examine how this product attributes would impact the
consumers preference under three different scenarios of Covid-19 pandemic. It would like
to sought also, how under the three different scenarios the shopping preferences among the
fresh food consumers changed given the different product attributes. This will help in
assessing the fresh food retailer owner-shopper sustainable business environment
considering this time of Covid-19 pandemic. As the importance of the above issues is still
fragmented in the literature, attention by the researcher is focused on understanding both
retailer and consumers’ perspective.
Research Objective
The main research objective of this study is to examine buyer preferences for fresh
food purchasing attributes under increasing, decreasing and constant active case scenarios
during the period of the COVID-19 pandemic.
Research Question
1. The study specifically seeks to answer to the following research questions:

a. Which product attributes affect fresh food buyers’ preferences?
i. purchasing methods
ii. time windows
iii. minimum order requirements
iv. payment methods
2. What are the similarities and differences in the fresh food buyers’ preferences under
three COVID-19 pandemic scenarios?
a. Increasing number of active cases
b. Decreasing number of active cases
c. Constant number of active cases
Theoretical significance. First, this research highlights the theoretical importance

of integrating random utility theory by looking through the fresh food buyers’ perspective.
This will illustrate the value of using random utility theory in analyzing fresh food buyers’
preferences for health and safety concerns, purchasing channels, value for money and
locations and availability under three pandemic scenarios. By considering these
intervening constructs, this research will explore buyers’ preferences for purchasing fresh
food products through an integrated buyer-consumer choice model.
Fresh Food Retail Store Owner/Manager significance. This study can be an

important tool for fresh food retailers, especially in this time of pandemic as address
shoppers’ preferences during period of uncertainties and disruptions.
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Scope and Limitations
This research is a pilot study which focuses on the buyers’ preferences when
purchasing fresh food products, namely purchasing methods, time windows, minimum
order requirements, and payment methods during the Covid-19 stages: increasing,
decreasing, or constant number of active cases within a given observable period. As the
research will include pandemic events, purchase attributes, buyer profiles, food business
environment, and other related factors, the study will focus on buyers’ preferences for fresh
food purchases during a limited observable period.
Researches indicates the challenges face by entrepreneurs as a result of the crisis and
potential risks for businesses (Kuckertz A, et. al, 2020). In the study of (Pookulangara et al.,
2011), it was mentioned that “retailers have to expand their horizons and be more creative in their
offerings if they want to keep their consumers throughout the shopping process, regardless of the
channel”. In addition, the authors concluded in their study that retailers can retain customers by
tracking their behavior in the three retail channel choices such as brick-and-mortar stores
(physical), catalogues (menu), and the internet (online). The authors also supported the ideology
that even with the growth of online sales, physical stores will still play an important role in the
retail industry, with consumers wanting both the touch-and-feel aspect and convenience of
shopping in a brick-and-mortar store.
In addition, in the food purchasing networks, respondents in most nations report a 30 to

70% decline in their preference for dine-in spending and an increase in grocery shopping and
ready-made food purchases in grocery stores, which customers tend to favor rather than restaurant
meal delivery. Across countries, we see a rise in the frequency and proportion of online food
spending by between 16% and 70%, and customers indicate that they plan to continue shopping at
this new pace online (Kuijpers et al., 2020).
However, in the study of Dannenberg, Fuchs, Riedler, & Wiedeman (2020), it was
concluded that COVID-19 is not a secure system configuration that provides actors a safe and
stable environment for their activities. The rapid onset and unpredictability of the event restricted
the expansion of online food retail and the conceivably limited timeframe of 'Stay at home'
methods acted as a barrier to development. Therefore, the window of opportunity provided by 'stay
at home' offered only minimal room for innovation and exploring new strategies, such as local
retailers' efforts to support each other. In order to meet the increasing consumer demand, 'stay at
home' practices have generated high pressure. This study shows that digitalization does not
necessarily help to address spatial inequalities with respect to digitalization in space. Also,
according to Zhu, et al. (2018) at present, retailers are currently widening their business networks
to make the most of their establishments and create a sustainable shopping experience for
customers who are already accustomed to shopping in a multi-channel environment. And that
many current literatures concentrate on the effects on retailers of new online platforms, but a very
limited literature explores the effect of introducing both new online / offline channels to the
traditional business channels of retailers and the perceived advantages they provide for customers.
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Online food ordering and delivering services firms are creating huge profits but
simultaneously consumers are becoming unknowingly disloyal. There may be several factors like
delay in delivery time, freshness and purity of food, User interface of websites and mobile apps,
better offers and discounts from rivals, etc. Companies should be more focus on analyzing attitude
and perception of consumers. Consumer engagement is also important to keep consumers updated.
User interface of mobile and websites also pays a vital role as these are the platforms from where
orders are placed.
Moreover, in the study of Baker, Farrokhnia, Meyer, Pagel, & Yannelis, (2020), they
explore how household consumption responds to epidemics, utilizing transaction-level household
financial data to investigate the impact of the COVID-19 virus. As the number of cases grew,
households began to radically alter their typical spending across a number of major categories.
Initially spending increased sharply, particularly in retail, credit card spending and food items.
This was followed by a sharp decrease in overall spending. Households responded most strongly
in states with shelter-in-place orders in place by March 29th. We explore heterogeneity across
partisan affiliation, demographics and income. Greater levels of social distancing are associated
with drops in spending, particularly in restaurants and retail (Baker, Farrokhnia, Meyer, Pagel, &
Yannelis, 2020).
McKinsey & Company, (2020), mentioned that consumers think that this pandemic will
get harder as people worries about their income. Also, survey result said that, “In most countries,
between 30 and 40 percent of consumers are worried about being able to make ends meet; in
Thailand, 70 percent of consumers say so. Furthermore, consumers are willing to forgo future
spending. Up to 50 percent of Chinese consumers surveyed say they were planning to give up a
future purchase because of uncertainty related to COVID-19”. To handle these shifts, food
retailers should take safety measure in handling their marketing spending, like use only when
needed to accelerate demand, for postcrisis essentials like fresh food products to meet people’s
imploring value for money (Kuijpers et al., 2020).
Sustainable Retailer-Consumer Environment in the New Normal
Robust and secure relationships with the supply chain are crucial to improving resilience
in the supply chain. Collaborative buyer-seller partnerships create confidence and flexibility
among supply chain partners in reacting to unexpected demand changes or unanticipated supply
disruptions. After The COVID-19 pandemic has many policy consequences and, in due course, a
lot of time will be dedicated to unpacking what we can learn from the epidemic (Hobbs, 2020).
The coronavirus recession is unlike anything business owners have experienced before, with many
businesses plunged into crisis and extreme uncertainty overnight. Unfortunately, many businesses
won’t survive this crisis, but for the ones that do, there are always opportunities in crisis (Micciche,
2020). And many of such retailer’s economy are turning to digital solutions for growth and to
overcome the country’s longstanding supply and distribution challenges. They are also finding that
improving their digital knowledge and skills help them better run and manage their businesses
(Azubuike, 2020).
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Framework of the Study
Random utility theory (RUT) will be used as the theoretical framework of the
choice experiment in this study, adopting the works of Kelvin J. Lancaster (1966), an
Australian mathematical economist who wrote the New Approach to Consumer Theory.
In line with the consumption theory analysis, the assumption is that the goods possess, or
bring about multiple characteristics in static proportions and that it is these characteristics,
on which the consumer's preferences are exercised and not on goods themselves.
The theory was modeled under the following assumption:
1. The good, per se, possesses characteristics, and these characteristics give
rise to utility.
2. In general, a good will possess more than one characteristic, and many
characteristics will be shared by more than one good.
3. Goods in combination may possess characteristics different from those
pertaining to the goods separately.
The author regarded an individual good or a collection of goods as a consumption

activity and. associate a scalar (the level of the activity) with it. We shall assume that the
relationship between the level of activity k, yk' and the goods consumed in that activity to
be both linear and objective, so that, if xj is the jth commodity we have…
xj = ∑ ajk yk’
k
…the vector of total goods required for a given activity vector is given by x = Ay
Since the relationships are assumed objective, the equations are assumed to hold
for all individuals, the coefficients ajk being determined by the intrinsic properties of the
goods themselves and possibly the context of technological knowledge in the society.
It also assumed that each consumption activity produces a fixed vector of

characteristics and that the relationship is again linear, so that, if zi is the amount of the ith
characteristic
zi = ∑ bik yk’
k
or
z = By
Again, it was assumed that the coefficients bik are objectively determined for some
arbitrary choice of the units of zi .
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The theory implied that the individual possesses an ordinal utility function on
characteristics U(z) and that he will choose a situation which maximizes U(z). U(z) is
provisionally assumed to possess the ordinary convexity properties of a standard utility
function. In the model, the relationship between the collections of characteristics available
to the consumer, the vectors z, which are the direct ingredients of his preferences and his
welfare, and the collections of goods available to him, the vectors x, which represent his
relationship with the rest of the economy, is not direct and one-to-one, but indirect, through
the activity vector y.
The standard choice situation becomes
Maximize U (z)
subject to Px < k
with z = By
x = Ay
x,y,z > O.
Specifying the Discrete Choice Framework
In this study, it will try to examine the utility-maximizing behavior of the fresh food
shopper/household, who is the rational decision-maker characterized by its socio-economic
status (e.g. Age, gender, income, household size, employment). The random utility model
(RUM) provides a framework on how a decision maker makes a utility maximizing choice
over a discrete set of alternatives: purchasing methods, time windows, minimum order
requirements, and payment methods. Specifically, the shoppers then select the alternative
that provides the greatest utility during the three COVID-19 scenarios: increasing,
decreasing, or constant number of new cases. The decision rule is the utility maximization.
Specifying the Random Utility Model
From Decision Maker Perspective Model: Utility maximization (Ben-Akiva, 2008)
1. Decision maker n selects the alternative i with the highest utility Uin among
Jn alternatives in the choice set Cn.
U
in =Vin + εin
Vin =Systematic utility: function of observable variables
εin =Random utility
● Choice probability:
P(i|Cn ) = P(Uin Ujn, ∀j Cn)
= P(Uin -Ujn, 0, ∀j Cn)
= P(Uin = maxj Ujn,∀j Cn)
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Hypothesis
The researcher hypothesizes that the change in consumer behavior is driven partly by
different set of alternatives and characteristics.
Research Design
The discrete choice experiment will be used for this study to analyze consumers’
preference for fresh food products, intending to identify the main insights of consumer
behavior towards these products, the most used attributes for this type of experiments and
to discuss and compare certain common attributes (Cantillo et al., 2020).
In economics, discrete choice models, or qualitative choice models, describe, explain, and
predict choices between two or more discrete alternatives (McFadden, 1973), and in this
study techniques such as conditional logit method will be used for empirical analysis of
discrete choice attributed to the groundbreaking work of Daniel McFadden. His Nobel
Prize in 2000 was attributed to establishing the theoretical basis for discrete choice.
Conditional logit will be the technique use in analyzing the data on the potential variability
in fresh food buying behavior under various scenarios of the COVID-19 pandemic. The
framed experiment method consists of the four food purchasing choices of attributes and
the manipulating factor is the trend in the number of new COVID-19 active cases scenarios:
1.) Increasing number of active cases; 2.) Decreasing number of active cases; 3.) Constant
number of active cases. In addition, the framed approach is intended to consider the
dynamic character of the COVID-19 pandemic as the average number of new cases
changes on a daily basis.
Taking into account recent literature on retail food shopping (Grashuis, Skevas, &
Segovia, 2020; Kuijpers et al., 2020; Nguyen, Leeuw, Dullaert, & Foubert, 2019), this
study comprises the four product attributes with the following levels:
1. Purchasing Methods. Three levels of fresh food shopping methods

preference. (1) In-store pick-up – where the customer made a pre-ordering
of the fresh food products then goes to the store and pick up the items. (2)
Curbside pick-up – where the customer also made the pre-ordering of the
products through messages or text or email, but wait outside the store while
a store staff places the order in the customers’ vehicle. (3) Home delivery:
Somebody delivers the ordered fresh food products to the customer home
2. Time Window. Customers preferred time when picking up or receiving the

fresh food products: (1) 4 to 12 hr. window, (2) 12 to 24 hr. window), and
(3) more than 24 hr. window.
3. Minimum order requirement. According to Department of Trade and

Industry or DTI there are limits in purchasing food items. These are the
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Three levels: (1) ₱500 to ₱1000 minimum, (2) ₱1000 – ₱2000 minimum,
(3) ₱2000 and up minimum.
4. Payment Method. Among the three purchasing channels, in-store pick-up,

curbside pick-up and home delivery, the three levels are: (1) Cash on
delivery - COD, (2) Credit Card/Debit Card, (3) E-Wallet/bank transfer
online payment.
There were four product attributes with 4 levels for purchasing channels and 3
attribute levels for time window, minimum order, and payment method. Thus, the full
factorial design is composed of 81 (3*3*3*3) unique product profiles. The fractional
factorial design is half that number or 40. At 2 product profiles per choice scenario, it will
be a design with 20 choice scenarios. The result is 4 blocks of five choice scenarios each
with each respondent evaluating 10 choice scenarios or 2 blocks (Kuhfeld, 2005). A DCE
using all the existing combinations is known as a full factorial design.
Research Sampling and Procedure
The respondents who were employed for this pilot study were the eligible fresh
food buyer, primary grocers in their household, aging 18 years old and above, from the
localities of Marilao, a town in Bulacan found to be one of the leading towns with a high
number of Covid-19 cases sometime in April, 2020. Specifically, from the 84 consumer-
respondents from Covid-19 patients’ isolation area which is originally a local community
college building, participants consist of the medical staff assisting the isolated patients,
employees from that college building and some students as well. The experiment will
begin with a short introduction and explanation of the choice experiment and with the use
of the “cheap talk script” with a dynamic Opt-Out Reminder (OOR) which can be an
effective and improvement in an effort to remedy certain types of hypothetical bias that
potentially continue to invalidate Choice Experiment surveys as recommended in literature
to help mitigate hypothetical bias in results (Ladenburg & Olsen, 2014). In the online
surveys. After the “cheap talk script”, respondents will receive information about the
COVID-19 pandemic, including the treatment scenario in terms of the average number of
new cases in their area (i.e., increasing, constant, decreasing). Respondents will then be
asking to imagine the next time they will purchase their fresh food products while
responding to the ten choice scenarios.
Research Instruments
The discrete choice experiment was administered through online survey,

questionnaire contains three parts: The first part is an introduction to the topic and the
eligibility of the decision maker, this is important to make respondents understand what
they are responding to, why are they doing that, and how to do it correctly. The second
part is the most important one, the DCEs for each COVID-19 scenario itself. In this
section, respondents decide on a choice attribute alternative from different imaginary
scenarios. These choice tasks are known as ’choice sets’, and they contain 3 alternatives
each. The main components of the choice sets are attributes and levels (Johnson et al.,
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2013). And thirdly, the descriptive characteristics of the decision-maker. This section
includes socio-demographic questions (like income, age, education, and gender), which
may be important in analyzing respondent’s decisions. This study addresses an
optimization technique to obtain the maximum possible information from our design. To
determine if the survey instrument will not have problem like measurement error and if
respondents are interpreting the questions correctly and will not be burden or being
influence in their answering, a questionnaire pretest was conducted to selected experts of
the field. And for the analysis of the results, data were run in SPSS software was used. It
is a software that can be use in Multinomial Logit analysis.
Table 1
Discrete Choice Scenario Example
Purchasing Option 1 Option 2 Option 3 Option 4

Attributes
Purchasing In-store pick up Curbside pick Home delivery Neither of the
Channels up options
Time Window 1 to 3 hours 4 to 6 hours 7 hours or More
Minimum Order ₱500- ₱1000 ₱1000- ₱2000 ₱2000 and up
Payment Method Cash on Credit/Debit Online
Delivery Card payment
Choose one only o o o o
Results
Table 2
Demographic Characteristics of Sample Respondents
Characteristics Mean Std. Dev. 95% Perc.
Buying Frequency 1.8415 0.74485 3.0000

Daily
Once a week
Once every Month
others
Family Role 2.6585 0.91920 4.0000
Father
Mother
Daughter/Son
Help
Other
Gender 1.5976 0.51782 2.0000
Male
Female
Prefer not to say
Age (20-56) 28.598 9.6082 49.000
Civil Status 1.8780 0.67385 3.8500
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Married
Single
Single Parent
Widow
others
Occupation 2.6585 1.4335 5.0000
student
professional
employed
unemployed
other
Educ. Attainment 3.9390 0.83662 5.0000
elementary
high school
vocational
college degree
masters degree
doctoral degree
Mo-Hsehold-Income 13.293 10.212 33.850
(5k-70k)
Household Size (1-12) 4.5854 2.0181 8.0000
Table 2 shows the demographic characteristics of the participants. There was a total of 84
primary household buyer respondents, buying fresh food products once a week for their family
probably considering restrictions in going out during pandemic. Majority were female at 59%,
typically very common in the Philippines that women are the one who buy things for the
household. Also, majority of the participants are single with an average age of 29 (participants
age-range is 20-56), possibly considering also the government policy and guidelines during the
Enhance Community Quarantine or ECQ on age limit when going out of home and naturally those
who are single and probably younger and in good health will be sent to buy fresh food in the
market. On the other hand, consumer-respondents are employed with an average monthly
household income of approximately ₱13,000.00 considering they are in suburban area and most
of them are at least a four-year college degree holder, hence adept in decision-making.
Table 3
Discrete Choice Multinomial Logit Results
Attribute/Level Treatment 1 Treatment 2 Treatment 3

Increasing Decreasing Constant
Purchasing Channels
In store pickup 0.892 0.359
<0.039 **
Curbside 0.079 0.924 0.767
Home Delivery 0.191
<0.001 *** <0.001 ***
Neither of the 0.079 NA NA
choices
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Time Window
1 to 3 hours < 0.001 *** < .001*** < .001***
3 to 6 hours 0.390 0.139 0.326
7 hours and more < .001 *** 0.27 0.057
Minimum order
₱500 - ₱1000 0.973 0.989 0.952
₱1000 – ₱2000 < .001*** < .001*** < .001***
₱2000 and up < .001*** < .001*** < .001***
Payment Method
Cash on Delivery 0.039** 0.892 0.359
Credit/Debit
0.079 0.924 0.767
Card
Online payment < .001*** 0.191 < .001***
N 84 84 84
Table 3 shows the buying preference of the fresh food consumer during the three scenarios
of Covid-19 period. The utility for the in-store pickup level of the purchasing channel attribute
was not expected, getting a p-value of 0.039 at the increasing active cases scenario of pandemic.
It means, household buyer chose to pick up the fresh food products in-store amidst the increase in
active cases of Covid. Though, in the study of Pookulangara et al., (2011), it concluded and
supported “the ideology that even with the growth of online sales, physical stores will still play an
important role in the retail industry, with consumers wanting both the touch-and-feel aspect and
convenience of shopping in a brick-and-mortar store”. Most of the respondents are young, single
and female who may want to touch and see the fresh food products that they were buying. On the
other hand, Curbside purchase channel attributes has no significance across all the pandemic era
(p = 0.079 – increasing; p = 0.924; p = 0.767), it could be that they are not sure of the safety of
ordering through call or messaging and then waiting outside the store while a store staff places the
order in the customers’ vehicle. This is consistent with the purchase preference for in-store pick-
up by some buyer. Subsequently, home delivery attribute also got an expected utility which is
significant at p-value of 0.001 for both the increasing and constant scenario of Covid cases. It
means, there are also those who are concern with safety who would prefer their fresh food
delivered at home during the increasing and even during the constant no. of cases scenario.
Supported by Kuijpers et al., (2020) concluding that cross countries, we see a rise in the frequency
and proportion of online food spending by between 16% and 70%, and customers indicate that
they plan to continue shopping at this new pace online during this time of pandemic.
As for the time window alternative during the increasing scenario, both the 1 to 3 hours
and 7 hours and up are the acceptable time window for pick-up of fresh food for the household
buyer. Remember that most of the respondents are employed and college degree level, most of
them want to pick up the fresh food fast before going to work or prefer the later pick up after their
work. And as for the decreasing and constant scenario, it was the 1 to 3 hours also which is
significant with a p-value of 0.001.
For the utility in the minimum fresh food order attributes, the ₱1000 – ₱2000 and 2000 and
up got a significant value of 0.001 respectively, on all of the scenarios. Respondents were from
301 | P a g e
suburban area not that near in the local market in addition to that majority of them go to the market
once a week only, they might as well buy fresh food in that price range good for slightly big family,
sos as to avoid many trip to the market as well. And for the payment method, most of them prefer
cash on delivery and online payment which got a significant p-value 0.001during the increasing
period and also during the constant active cover. Household buyer are aware about the possible
spread of virus through human to human contact.
Conclusion and Implications
The researcher assumed that the trend in the number of new COVID-19 cases also
influences fresh food shopping preferences and not only by the consumer attributes and
characteristics.
The findings also assume to have several implications for practitioners and policymakers:
First, following the four attributes preference results, firm competitiveness may change
according to their (in)ability to maximize time windows, purchasing method, order requirements
and the price.
Second, significant differences in the fresh food shopping preferences of consumers who
face increasing, decreasing, and constant rates of new COVID-19 cases may indicate opportunities
for food retailers to adapt to the new normal business strategies for all the scenarios.
Third, Policymakers may consider the result of this study, specifically in the purchasing method,
if the goal is to control and mitigate the spread of the coronavirus, and what fresh food delivery
strategy will cause a positive shift in consumer behavior.
Academically, this study hope to demonstrate the effect of coding to facilitate

interpretations of reference levels and intercepts and enable to estimate preferences for purchasing
methods, time windows, minimum order requirements, and payment methods, much more research
is possible and necessary to shed light on the behavior of fresh food shoppers as the pandemic
continues to affect the global community.
Limitations
The study is conducted only in one municipality thus the consumer behavior may not be
carried out well. The questionnaire is in online form, thus those who are not knowledgeable on
technology and google app may not be able to answer the questionnaire fully and well.
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Critical Thinking Ability and Disposition: Impact on Conflict
Management
8th NBMC Paper # 22
Maria Dinna P. Avinante

Centro Escolar University Malolos
[email protected]
Abstract
The study aimed to investigate the critical thinking ability and disposition and its impact on
conflict management . A total of N=399 millennial employees participated in the study. Critical
thinking as a 21st century skill was found to have an impact in avoiding and resolving
conflict.Regression analysis of critical thinking ability and conflict was determined using .05
level of significance. The data revealed that critical thinking ability which is a beginning thinker
has no significant influence or impact on conflict management. However an improvement in the
CT skill will also improve the conflict management of an individual and the organization.
Keywords: Critical Thinking, Ability, Disposition, Conflict Management
Introduction
Companies look for graduates equipped with managerial and leadership skills in order to
stay in a complex business world (AMLE, 2012). The skills required which involve both the
cognitive and the non cognitive are crucial in managing an organization (Irafami et al., 2018).
Cognitive is the use of critical thinking which aims at achieving the best possible outcomes in any
given situations (skillsyou need.com, 2018). While the non cognitive is the disposition which is
affective, attitudinal and behavioural in nature , which distinguishes a person based on his
behavior or action to events and situations. Critical thinking as the 21st century skill became one
of the graduate attributes and employability skill that most companies are looking for to manage
their organizations. In addition, CT which serves as a tool for HR’s to strengthen its employee
career enhancement and development as well as in managing both intergenerational and
organizational conflicts.
Conflicts are inevitable. The interaction, communication and existence of multiple

generations because of cultural and social background may differ from one another. Such
multiple generations in a workplace creates diversity (Urick, 2017), which induces learning but
is also a potential source of conflict. According to studies, conflict resulting from cultural
differences can be damaging to the individuals and the organizations (Sirias et al., 2007 as
cited by V. Srinivasan, 2012).
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Millennials represent the biggest part of the workforce today with the largest age cohort in
most businesses in the Philippines. The millennials who either manage an older generations, or
vice versa. The social, environmental and technological factors with internet, smartphones, and
other techno devices influenced the desires in life of many millennials ((HRPA, 2016) including
the manner of decision making and management styles while at work. . Millennials in their jobs
have many other concerns aside from the usual compensation packages offered by employers. A
study in 2010 said that , 41% of the millennials turned down offers from employers and 64.1% of
those employed are leaving their employers faster than other generations (HRPA, 2016). Further,
millennials are looking for promotions, work-life balance, flexible hours, leadership skills, and
career advancements, according to HRPA survey. As a result, the different interests of this group
frequently resulted to certain types of conflict with their co-workers in the organizations.
The demographic and psychographic differences of millennials in the workplace, labor

laws, merger and acquisitions, including leadership problems, mismatch, high turnover rate and
ever changing HR policies (Urick. et al. 2017) create imbalance in a workplace. That is why the
significance of conflict resolution using critical thinking approaches is heightened by its important
role in enhancing employee engagement, performance and trust. Using CT which purpose is to
uphold the right values of people will help avoid conflict, thus, achieve the individual and
organization goals , performance metrics and analytics.
To address the issue, the study probed the influence of critical ability and disposition in
resolving and managing conflict in an organization..
Methodology
The study utilized a descriptive correlation to describe individual variables as they exist
naturally (Gravetter et al., 2009). A correlational design is appropriate for this study because it
allows two variables to show if they have positive or negative relationship. Further quantitative
research method was used to determine the impact between an independent variable which is the
critical ability and critical thinking disposition and the dependent variable which is the conflict
management within a population. Moreover, the design helped in exploring the effects of critical
thinking ability and disposition on conflict management. The CEU-Lopez CT Test and The
Critical Thinking Disposition Inventory were used to get the primary data for the study.
Respondents of the Study
The study targeted 42 selected industries in Bulacan and Pampanga with a total population
of 1,600 employees. Slovins formula was used in order to get the sample size. Industry types are
those in manufacturing and services like banks , insurance, realty, academic institution , BPO’s,
hotels and restaurants, telecoms, and others. Of the total population of 1,600 , there were 400
respondents as sample size age ranges from 22 to 37 years old and presently employed. There was
only 1questionnaire which was not able to retrieved by the researcher.
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Instruments of the Study
Critical Thinking Ability Test
The CEU-Lopez Critical Test was used as the instrument of the study. The CEU-
Lopez Critical Thinking Test is a multi-aspect is validated and tested with five dimensions
of critical thinking skills instrument listed under General-Content, Multi-Aspect Critical
Thinking Test in the English-Language Critical Thinking Tests as the Critical Thinking
Organization across the Discipline, U.S.A. (Lopez, 2012). The test consists of 87 item test
with the following placement as shown in the table below.
Table 1
Placement of Critical Thinking Abilities
Aspects of Placement Total
Critical Thinking Number of Items
Deduction 1-19 19
Credibility 20-36 17
Assumptions 37-52 16
Induction 53-68 16
Meaning 69-87 19
Total 87
Source: CEU-Lopez, Critical Thinking Manual
While the CCTDI (California Critical Thinking Test Disposition Inventory)

instrument was composed of two parts. The first part elicits information on the perceived
disposition by the respondents while the second part draws information on the demographic
profile of the respondents which is needed for profiling purposes. The Reliability for the
seven individual scales in the CCTDI sample ranged from .71 to .80. The alpha reliability
of the overall instrument measuring the overall disposition of CT was .91. While the
validity of the seven scales of the CCTDI were composed of nine to twelve items.
The 7 scales of CT Dispositions are truthseeking, open mindedness,

analyticity, systematicity, self-confidence, inquisitiveness, maturity
Kilman Conflict Test
Kilman Conflict Test on the otherhand was the third instrument used in this study.
Kilman with the 5 conflict handling modes such as accommodating,competing,
collaborating, compromising and avoiding were measured. Kilman was a test modified
for its suitability purposes. The test has a reliability alpha of .96 and validity of which was
made by experts and other researches who expressed their level of agreement in each item
of the Kilman Conflict test. A 4-pt Likert was used likewise from “very high” to “very
low” in each item test for the five modes of handing conflict.
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Data Processing and Statistical Treatment
The data collected were tabulated and processed using Statistical Packages for the
Social Sciences (SPSS). In order to analyze and interpret the data gathered, the following
statistical measures was used such as frequency, mean, percent and regression analysis.
1. The level of critical thinking ability was processed using weighted means
and analyzed using the following dimensions of critical thinking ability
such as deduction, credibility, assumption, induction and meaning and
fallacies
2. Likewise for the critical thinking, disposition was processed using

weighted means and analyzed using the 6pt Likert scale of “ to a very
large extent” to “no extent” for the truth seeking, openmindedness,
analyticity, systematicity, confidence, inquisitiveness and maturity.
3. On how may the conflict management of the respondents be described in

terms of critical thinking ability such as deduction, credibility,
assumption, induction and meaning and fallacies were processed and
analyzed using the 4 pt Likert scale of “ Very High” to Very
Low”.
4. On how may the conflict management of the respondents be described in

terms of critical thinking disposition such as truth seeking,
openmindedness, analyticity, systematicity, confidence, inquisitiveness
and maturity were processed and analyzed using the 4 pt Likert scale
of “ Very High ” to ‘ Very Low”.
5. Regression Analysis was used in determining the influence of critical

thinking in resolving conflict.
Influence of Critical Thinking Ability on Conflict Management
The critical thinking ability was measured in terms of its significant influence on
conflict management with its different dimensions such as deduction, credibility,
induction, assumption and meaning and fallacies. The magnitude of influence of the
predictor variables on conflict management was obtained using regression analysis.
Results of the correlation analysis indicate that all the five dimensions of critical thinking
ability were correlated with conflict management. The nature of relationship is positive
which means that the higher the critical thinking ability of a person, the better the conflict
management. Conversely, the lower the critical thinking ability, the lower the conflict
management.
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Further, the obtained coefficients of the five dimensions of critical thinking ability
showed the meaning and fallacies was the best predictor of conflict management. It
accounts to about (.306) followed by assumption with (.221) and credibility with (0.157)
which results may contribute positively on conflict management. In addition, the
magnitude of impact of the predictor variables on conflict management was determined
using regression analysis revealed that for every unit increase in meaning and fallacies and
assumption, conflict management could generate an increase of .021 and .018 respectively.
In the same vein, the unit increase in credibility , induction and deduction would result to
a corresponding increase of 0.014, 0.002 and 0.001 on conflict management.
The results of the analysis of variance of the regression of critical thinking ability
on conflict management revealed an F ratio of .626 which was found non significant at .05
alpha. This means that the five variables did not have impact on the five modes of conflict
management. Furthermore, the results indicate that respondents must enhance their critical
thinking ability in order to enhance the conflict management. As beginning thinkers in
CT ability, conflict management skill may not exhibit a significant impact because of little
or almost no knowledge in evaluating the arguments and principles of critical thinking
criteria.
Table 3
Regression analysis of Critical Thinking Abilities on Conflict management
Unstandardized Standardized
Variables Coefficients Coefficients
B Std. Error Beta t Sig.
(Constant) 3.369 0.197 17.068 0
Deduction 0.001 0.015 0.016 0.073 0.943
Credibility 0.014 0.021 0.157 0.639 0.531
Induction 0.002 0.018 0.024 0.108 0.915
Assumption 0.018 0.02 0.221 0.889 0.385
Meaning and
Fallacies 0.021 0.016 0.306 1.36 0.19
R-squared = .141
F-value = .626
p-value = .682
alpha = 0.05
Influence of Critical Thinking Disposition on Conflict Management
The critical thinking disposition was measured in terms of its significant influence
on conflict management with its seven variables such as truthseeking, open-mindedness,
analyticity, systematicity, confidence, inquisitiveness and maturity. The magnitude of
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influence of the predictor variables indicate a unit increase in truthseeking, systematicity
and openmindedness, conflict management could generate an increase of (2.382) , (0.906)
and (0.768) respectively. In the same vein, the unit increase in confidence, maturity ,
analyticity and inquisitiveness would result to a corresponding increase of (.567),
(0.131) ,(0.19 )and (0.11) on conflict management. This finding also revealed that critical
thinking disposition does not exert a significant impact on conflict management, however,
the positive result means that the higher the level of critical thinking disposition, the higher
the impact on conflict management.
Further, the results of the analysis of variance of the regression of critical thinking
ability on conflict management revealed an F ratio of .324 at .05alpha. This means that the
seven variables jointly influence the conflict management but not to a significant extent.
Analysis of the obtained Beta coefficients would indicate that of the seven
significant variables, confidence is the best predictor of conflict management with
confidence ( 1.063) followed by truthseeking (1.018) . The result is positive value
however, impact to conflict management is not to a significant extent.
Table 4
Regression Analysis of Critical Thinking Disposition on Conflict Management
Unstandardized Standardized
Variables Coefficients Coefficients
B Std. Error Beta t Sig.
(Constant) 13.639 17.878 0.763 0.585
Truth seeking 2.382 3.197 1.018 0.745 0.592
Open-
mindedness 0.768 1.841 0.786 0.417 0.748
Analyticity 0.019 1.646 0.02 0.012 0.993
Systematicity 0.906 1.403 0.934 0.646 0.635
Confidence 0.567 0.731 1.063 0.776 0.58
Inquisitiveness 0.11 4.777 0.11 0.023 0.985
Maturity 0.131 3.476 0.117 0.038 0.976
R-squared = .694
F-value = .324
p-value = .878
alpha = 0.05
All of the critical thinking dispositions have shown non significant influence on conflict
management, however, with the increase in the level of critical thinking disposition, may also
increase influence or impact on conflict management The findings therefore also suggest that
Critical thinking disposition is non significant factor in resolving and managing conflict in
organization.
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As beginning thinkers, respondents have a limited understanding on the application of

Critical Thinking in resolving conflict. Critical thinking disposition on the other hand is affective,
attitudinal and behavioral skills which respondents’ disposal of thoughts were based on
experiences and life challenges. Respondent’s accommodating as conflict mode means handling
every situations with care.
Since the level of critical thinking ability of the respondents are beginning thinkers, it is
important that the critical thinking ability and disposition becomes part of employee development
program. Both critical thinking ability and disposition were competencies that are encourage not
just for curriculum and syllabi enhancements but for employee development in the context of
work and interpersonal relations. Engaging in critical thinking encourages a person to be reflective,
and sensitive to persons and situations. In addition, respondents disposition is motivational in
nature that recognition is important to continuously engage employees to work effectively,
conscientiously and happily in a workplace.
Further, CT which may be useful for HR to improve employee performance and in

managing and resolving conflict would also minimize social and economic costs in reducing
streamline processes, (TrainingFolks, 2018) . Employees’ utilizing critical thinking skills instead
of their emotions can build a better understanding of the many complexities of business alongside
with personal issues in life. Critical thinkers are more focused and clearer in its mind setting.
Therefore, a conflict management in organization using critical thinking as a tool will help protect
the welfare of the employees and the organization as whole.
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Gen Z Shopping Behavior during this Pandemic
8th NBMC Paper # 23
Mary Julie V. Balarbar

[email protected]
Abstract
The COVID-19 pandemic has significantly impacted Philippine retail—the effects thereof
carrying the possibility of lasting for years. With lockdowns and quarantine, the shopping
experience has been redefined by changing consumer behavior, shifts in retail platforms, and
adherence to new protocols. Both businesses and consumers are adjusting to the “new normal”.
This study focuses on Gen Z particularly ages 21-24 years old both male and female. This
descriptive study aims to discuss the behavior of Gen Z regarding shopping during this pandemic.
A survey was conducted and a total of 180 qualified responses were gathered last October 2020.
Huge majority (70%) went out during the lockdown with more females (58%) but only up to 5
times. Most purchased food and medicines with family members (76%).
Half of the respondents said their online purchases increased by 20-30% while a third increased
by 50-70%. Their top 3 purchases are food and grocery items, gadgets, clothes. There was
significant increase in skin care products. The preferred mode of payment was cash on delivery
and next was GCash and Paymaya. Shopee topped the survey (90%) followed by Facebook (56%)
and community market places (28%). The top 3 criteria for shopping is price, reviews and quality.
Now that malls have opened, 60% have gone out and 40% have not. They still go out with family
members (90%) and very few (9%) have gone out with friends. As for predictive behavior, more
than half are not confident in going out to shop or eat and most only go out when necessary. The
holiday season is near and more than half will remain to shop online. Most are likely to enjoy
malling only when a vaccine is found. So Gen Zs are likely to stay home and continue shopping
online.
Keywords: shopping behavior, Gen Z, pandemic shopping behavior, online shopping
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Introduction
The COVID-19 pandemic was a financial crisis and a health crisis with unprecedented
impacts on society and business. And it comes at a time when massive shifts in purchasing and
media consumption behaviors were already occurring in response to the technology disruptions of
recent years. For these reasons, we can expect the pandemic to have more significant impacts on
consumer behaviors than previous crises did, amplifying the impacts of marketers’ responses and
enabling winners to emerge more strongly and rapidly than ever before.
The Covid-19 crisis will cost the Philippine economy P2.2 trillion in losses this year as
firms shed profits while millions of workers lose their jobs and income. The effect is not only on
the economy but more on the people. Covid-19 has truly changed our lives and behavior. It forced
us to alter daily actions and the effect will likely be long term. As Covid-19 spread to the
Philippines and evolved into an outbreak, the whole country, including Metro Manila, was placed
under strict quarantine lockdown in March 2020 and today the city is under general community
quarantine until end of 2020. Despite this, the number of cases in the Philippines continues to rise.
Changes in Philippine Retail during the Covid-19 Pandemic
The Covid-19 pandemic has significantly impacted Philippine retail —the effects
thereof carrying the possibility of lasting for years. With quarantine and social distancing
regulations being implemented, the shopping experience has been redefined by changing
consumer behavior, shift in retail platforms, and adherence to new enforcements. Both
businesses and consumers alike are adjusting to the “new normal” brought about by the
Covid-19 pandemic.
In-person shopping has taken a dip as mobility and physical modes of selling have
become limited. Real estate organization Colliers Philippines expects a 12 percent increase
in retail space vacancy for 2020 (Bondoc, 2020). This is largely attributed to a steep decline
in consumer traffic as a result of lockdowns and physical distancing measures. To soften
the blow of the COVID-19 pandemic to physical retail stores such as malls and shopping
centers, these establishments have been conducting measures to regulate foot traffic, create
safe and contactless retail options, and social distancing markers (CNN Philippines Staff,
2020). Despite the safety measures being implemented by physical retail stores, shoppers
still feel apprehensive to go back to their normal shopping routines. A study released by
Kantar involving consumers from Singapore, Indonesia, Philippines, Korea, Japan, and
Thailand showed that 46 percent of consumers are fearful that they might contract the
disease. As a result, 59 percent of consumers opt to travel less to ensure their safety
(Philippine Retailers Association, 2020).
Despite the downfall being experienced by malls and shopping centers, food
retailers are on the better end of the spectrum. The United States Department of Agriculture
(USDA) has expected a 20 percent increase in food retail sales as consumers turn to
supermarkets and grocery stores to purchase their needs. Mom and pop shops as well as
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wet markets are also thriving as lower-income consumers still prefer purchasing food
products from these stores due to its price, convenience, and accessibility. The boost in
food retail sales can be largely attributed to a preference of home cooking among
consumers to avoid dining out (CNN Philippines Staff, 2020).
Online retailers are also winners in the COVID-19 pandemic as the business scene
shifts from physical retail stores to e-commerce (de Vera, 2020). Even large store formats
such as supermarkets and grocery stores have partnered up with e-commerce platforms
such as Shopee and Lazada to offer deliveries to consumers who fear for their health and
safety when they shop. Around 20 to 30 percent of shoppers have shifted to online
platforms to conduct their shopping routines (CNN Philippines Staff, 2020). This shift has
led to a 35 percent increase in shoppers in digital platforms (Philippine Retailers
Association, 2020). In addition, the COVID-19 pandemic has caused consumers to spend
more time online, with older age groups (51 years old and above) spending ten hours on
social media and younger age groups (21 to 30 years old) spending three to six hours on
social media. As such, retailers have become aggressive in social media marketing
practices to appeal to digital consumers (Bondoc, 2020). The retail industry has been one
of the most affected industries since the virus outbreak. Consumers have been more
conscious of their spendings, and usually just use their money to buy essential goods.
Because of this, people frequent supermarkets and grocery stores more than the malls,
causing a significant decrease in the sales of physical retail stores.
However, recent reports showed that people in the Philippines have started visiting
the malls again, but certainly personal and community safety will still be prioritized, which
means social distancing and other safety protocols for employees, clients, and vendors will
continue to be observed. Additionally, due to the new preference of contactless payments
and minimal to no touch points between the sellers and the consumers, most businesses
have at least increased their online presence, or have even shifted from brick and mortar to
online platforms. This trend has been going on since the community quarantine started, as
the growth of e-commerce has been highlighted during the pandemic. Technological
adaptation across all stakeholders might be the new normal, and will be the normal practice
for quite some time. Although the existence of e-commerce platforms have been
established pre-pandemic, a significant growth has been evident during the pandemic, as
online platforms prove to be the best avenue for entrepreneurs to keep their businesses
afloat. As stated by Mallorca (2020), due to the lack of access to traditional shopping
channels, retailers and consumers have flocked online platforms and delivery courier
services. In 2020, it is all about bringing the experience in the comfort of the customer’s
home, which is why a lot of businesses have transitioned online in order to cater to their
target market. Furthermore, this shift has challenged online sellers to step up their game
and improve their services in order to keep up with the rising number of competitors, and
to assure positive feedback from customers. This change has also caused sellers to
collaborate with their partner channels in order to upgrade their products and services, and
exceed the expectations of the consumers.
This article is all about the key findings of Visa, the world’s leader in digital
payments, regarding the spending habits of Filipinos during the pandemic. The spending
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and consumption habits of Filipinos have changed as retailers and consumers adapt to the
so-called ‘new normal’. According to Adobo Magazine (2020), in terms of payments, a
trend can be seen wherein majority are now leaning towards online shopping and digital
payment methods, and intend to stick with it even after the global emergency.
Furthermore, the people have expressed their concerns regarding their financial
security and stability, which makes them realize the importance of financial planning. Due
to the pandemic, a more digital approach for both the retailers and consumers has been
adopted, and this shift should be a game changer for all sectors to establish partnerships
and collaborations with different entities in order to enhance the customers’ online
shopping experience.
According to the report conducted by iPrice Group’s Map of e-commerce, the usage
of shopping applications by the Filipinos increased the highest in Southeast Asia (Cahiles-
Magkilat, 2020). It showed that there was a 53 percent increase in the second quarter in
comparison to the first quarter of this year. The results gave insights to the businesses how
the Philippine consumer behavior changed during the pandemic. The study also showed
how the industry and e-commerce were adapting to the sudden shift of shopping protocols.
Moreover, the Philippines alone generated a total of 4.9 billion sessions in shopping
applications. Filipino consumers are now spending about P1,311 per month on average on
the iPrice platform alone. As expected, fashion retail sites’ web traffic are decreasing each
day. They have become the least priority of the people staying at home. On the other hand,
electronics sites gathered a 59 percent increase.
Shopee, one of the biggest online shopping platforms in the Philippines, gave
insights on how e-commerce suddenly changed since March of this year. Martin Yu,
Shopee Philippines Associate Director, stated that not only in the metropolis they have
seen an increase in usage of the platform but rather nationwide (Villanueva, 2020). This is
probably due to the fact that Filipinos are looking for alternatives to get their basic
necessities and needs. With this information, it can be seen that there is an increase in
demand for personal hygiene products and necessities such as groceries and diapers. Yu
also said that in their recent study, it showed that about 95 percent of Filipino consumers,
in order to help small businesses recover from the pandemic, will purchase more from local
retailers. In addition, 77 percent of Filipino consumers believe that local retailers must have
an active online presence.
Nielsen Philippines conducted a study to show the current trend of the Filipino
consumers and retailers during the COVID-19 pandemic. It was concluded in the study that
(1) home improvements; (2) increased purchase of branded snacks; and (3) self-gifting
were the major changes in consumer behavior in the Philippines (Campos, 2020). The study
differentiated an “insulated shopper” and “constrained shopper” from each other. Insulated
shoppers are those who did not lose their jobs to the pandemic and were able to maintain a
stable income. Constrained shoppers on the other hand, are workers who lost their jobs and
are facing financial difficulties brought about by the pandemic. Results of the research also
showed that insulated shoppers contributed in the rise of consumption of branded fast
moving consumer goods. Other constrained shoppers can still afford to buy small things,
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however, it is only for their kids. Furthermore, despite the increase in traffic on online
shopping platforms, offline channels are still the preferred mode of transaction. In addition,
most small business transactions take place on Facebook. These are mostly done by live
streaming, seller to consumer exchanges or door to door delivery.
Effect of Pandemic on the Retail Industry
There have been a number of epidemic outbreaks in the past such as Ebola, SARS,
Dengue fever, swine flu, and MERS. These outbreaks gave a prominent impact, especially
on consumer behavior.
According to Vader, Martin & Qian (2020) , there are five key areas to focus on in
the highly-fluid social, economic, and healthy environment. The first key is managing
demand fluctuations wherein the majority of physical stores in a virus exposed area are
shutting down except for groceries. With that being said, groceries are now tussling with
out-of-stock on certain products which consumers see as essentials such as toiletries,
alcohol, canned goods, and many more. The second key is shoring up the cash reserves. In
order to protect a business financially, retailers can work on some ways to cut some
unnecessary expenses, since there would be a large drop-down of consumer spending, they
can consider controlling the employees in stores. The third key is to protect the people.
Since the pandemic began, several businesses were forced to shut down and quarantine,
some have even closed permanently. For those who are still operating their businesses
during the quarantine period, they must be aware that they should plan and provide safety
precautions to their employees to ensure their safety even under different situations. Fourth,
think about the longer-term supply changes. Meaning, retailers should know how to
manage their supplies given that they are frequently experiencing consumer panic buying
and out-of-stocks during this time. Lastly, talking to customers. Simply checking up on
them and making sure they are okay during this awful time to ensure you sustain their trust
in your brand, products, and services.
E-Commerce Industry during the lockdown
The imposition of lockdowns has not only greatly challenged the profitability and
existence of numerous businesses, but also inflicted a ruthless blow on the country’s
economy (Venzon, 2020). However, despite its detrimental effects on the economy and the
various industries, the implementation of the city-wide lockdowns have actually benefited
the industry of E-Commerce (De Vera, 2020). Electronic commerce or e-Commerce is
defined as the buying and selling of goods or services on the internet (Moore, n.d.). It
simply refers to the sale of physical goods online, as well as the commercial transactions
facilitated through the internet. In addition, through e-commerce, businesses get to offer
their products 24 hours a day, along with their added services such as customer service
(Sharma, 2018).
According to Ye and Bin (2020), as cited in De Vera (2020), since the lockdown
and quarantine protocols reduced the mobility of the consumers, online e-commerce
activities have further increased as more individuals pivot towards online shopping. In
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accordance to a Statshot report, according to Hootsuite and We Are Social (2020), as cited
by Arreola (2020), people of all nations and ages, specifically in the Philippines have
revealed a sudden increase of 64% of internet users who are spending more time on social
media, with 23% indicating an increased activity towards online shopping. Thus, with the
current pandemic that the world is experiencing, E-Commerce is now considered a
fundamental tool and strategy for businesses (Davis & Toney, 2020). Given the shift of
consumers towards online shopping, numerous business owners and entrepreneurs were
somehow forced to re-evaluate their current strategies and adopt e-commerce platforms in
order to continue their operations despite the restrictions caused by the pandemic (Rappler,
2020). Koe (2020) further stated that businesses are shifting to digital platforms as a means
to counter the disruptions brought by the pandemic, such as the reduced foot traffic and the
difficulties in transportation of goods.
Currently, businesses such as the small, medium, and micro-enterprises, as well as

large and established retailers are also expanding their online strategies and pairing up with
digital platforms to develop and provide a quality shopping experience to their customers
(Bondoc, 2020; Cahiles-Magkilat, 2020). With technological innovations, the growth of e-
commerce has not only made purchasing products and services convenient for the
consumers but also provided generous business opportunities for both domestic and
international businesses (Hallikainen & Laukkanen, 2017).
Customer Buying Behavior during the lockdown
The pandemic has changed the way people conduct purchases given the rules and
limitations set in place to prevent the spread of the COVID-19 virus. In the United States,
online food and grocery purchases and delivery have been the trend. Numbers show that
there was an increase in the downloads of applications related to these activities (Amzy,
2020). The same can be said in the Philippines as Cerezo (2020) reported that the total
visits of Filipinos to online shopping applications increased to around 4.9 billion and
shopping application usage and online spending in the country increased to 53% and 57%,
respectively. According to various sources, goods that are being prioritized by Filipinos
during this pandemic are basic grocery food, medicines, fresh and frozen food, personal
care products, household goods (Ho-Torres, 2020; Dagooc, 2020), and personal house
items such as loungewear and slippers and houseware (CNN Philippines, 2020). In
addition, there has also been an increase in purchase of electronic devices given the work
from home setup and online classes (Cerezo, 2020). On the opposite side, items that are
least purchased are said to be fashion and beauty items. With the changes in buying
behavior, consumers have also begun to adopt e-commerce channels in dealing with their
finances and purchases (CNN Philippines, 2020). According to Cerezo (2020), these
changes have become an avenue for the digital industry of the Philippines to keep up with
other Southeast Asian countries since cashless transactions are more prominent nowadays.
In a Nielsen (2020) article, there are six threshold levels that indicate changes in
the spending pattern of consumers given the current situation. First, proactive health-
minded buying tackles the interest of consumers in products relating to improvement and
maintenance of health and wellness. Second, reactive health management which covers
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buying of products needed to combat the virus and for health and public safety such as face
masks and shields. Third, pantry preparation wherein consumers stock food products that
have a longer shelf life and health-safety products. Fourth threshold is the quarantined
living preparation wherein consumers have shifted into online shopping as the virus
situation worsens. Fifth is the restricted living threshold which limits the physical shopping
opportunities for consumers. Lastly, the living new normal, this level envisions the changes
in consumption and buying to be more or less permanent and to which practices that people
would have to adapt in the future.
The present changes in consumer behavior are most likely to be brought and
adapted into the future. Dagooc (2020) stated in his report that the shift in the behavior of
consumers when it comes to buying will continue even after the pandemic. Bakhtiari
(2020) also said that the pandemic may develop among consumers, especially those in the
new generation, the likelihood to spend their money on products that provide a return on
investment. Nowadays, consumers have become more conscious of most of their
purchases. This is evidenced by a survey conducted by Accenture that shows that half out
of 3,000 of the surveyed consumers from countries around the world expressed that they
have been shopping more health-consciously and 64% also said that they are limiting food
waste produced (Dagooc, 2020).
In addition, it was also reported that the pandemic has transformed consumers into
conscious ones as they now consider the health and environmental impacts of their
purchases. Furthermore, the current situation has sparked a sense of community as
consumers are beginning to look into the prosocial behavior exhibited by companies
(Bakhtiari, 2020). Given these, the challenge for companies with the changing
consumption and buying behavior of consumers is to be relevant and adapt to the change
in the needs and demands of consumers.
Shopping behavior of Generation Z consumers during the ongoing COVID-19

pandemic
In a study conducted by Jiahui and Looi (2020), it seeked to find out what is the
impact of social media and psychological effects of COVID-19 to Gen Z consumers that
are residing in Hubei, China. It is known that during early 2020, the virus has spread out
fastly in China that affected numerous individuals both physically and mentally.
Additionally, Gen Z is the largest population in China and they tend to use social media
often as to why the researchers thought it is essential to know the shift of the sample’s
consumer buying behavior during a pandemic. In the study, a total of 125 respondents,
between 18-25 years old in Hubei, China were gathered. With the use of multiple
regression, the results showed that social media is the most relevant factor that influenced
the safety-seeking behavior of these Gen Z’s. With this, it showed how the priorities of
these consumers are purchasing goods that are mostly necessities in order to survive or
objects that would help them avoid the virus.
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Factors that affect purchase behavior of generation Z during the ongoing COVID-19
pandemic
According to Kim (2020),a lot of consumers decided to reduce their spending limit
since the pandemic started. Usually, consumers tend to purchase necessities like groceries,
vitamins, or household items. With this, a study conducted by Yuliantoro, Goeltom,
Juliana, Bernarto, Pramono, and Purwanto (2020) decided to focus on what are the factors
that influence purchase buying behavior in the millennial generation during COVID-19.
Specifically, they focused on the retail milk tea businesses to discover what factors affect
purchase consumption of the product. The researchers were able to gather 285 respondents
with the use of convenience sampling. With this, they used the Partial Least Square-
Structural Equation Modelling and found out that brand image, food quality, and perceived
value of a product are relevant factors that influence the satisfaction and purchasing
intention of these millennial consumers during the ongoing COVID-19 pandemic.
Behavior of generation Z towards online shopping during the ongoing COVID-19

pandemic
Due to the COVID-19 pandemic, it limited and restricted consumers to go out of

their houses more often to avoid getting the virus. With this, it is in no doubt that it affected
the day to day operations of businesses. Hence, Kim (2020) conducted a study that had the
purpose of understanding the impact of COVID-19 on consumers in shifting digitally in
terms of buying necessities, conducting work, and basically the everyday life of an
individual since almost everyone is adjusting on how to continue with life despite the
ongoing pandemic. The researcher also mentioned that in a survey conducted, results show
how approximately 11% of Gen Z consumers had bought something online for the first
time since the pandemic started while 66% of Gen Z are already used to the online shopping
setting especially with the rapid increase of people buying through E-commerce websites
due to the pandemic. Furthermore, it is forecasted that online shopping would still be
relevant even after the pandemic since it is deemed more convenient and economical. With
this, it shows how individuals currently prefer purchasing items online-- despite having to
wait for a few days to receive the order, since it is safer than going out and having risks of
being infected with the virus.
Research Framework and Methodology
Anne-Sophie Cases (2007) focused on the appearance of new kinds of risk and new risk-
relievers in electronic buying situations. According to Cases, apart from the traditional risks of
Financial, Performance and Privacy – Security, Confidentiality and Credibility are perceived as
the strongest risks. Precisely for credibility, consumers tend to seek more information, follow
family and close friends' (word-of-mouth) recommendations, use well-known brands, respect
company's image and reputation, value assurances, warranties and money-back guarantees, and/or
take their past experience into account, to mention just a few examples of common risk handling
tactics. This was used as a guide in this study.
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A quantitative descriptive study was conducted last October 2020 among Gen Z (ages 21-
25) in Metro Manila. Gen Z (people born after 1995) is the biggest population in the Philippines.
Kantar reveals that this segment is 40 million in number in the country. A survey was done and
disseminated online to meet the objectives of the study. Purposive sampling was conducted. The
survey and data gathering was conducted by DLSU Markrtl K31 class.
Research Objectives
1. To determine the effects of the Covid 19 pandemic on the online shopping behavior of Gen
Z during the strict lockdown, general community quarantine and coming Christmas season.
2. To determine the online shopping behavior of Gen Z during this GCQ and coming
Christmas season.
3. To determine factors that Gen Z consider when shopping.
4. To give marketing recommendations on how to market to Gen Z during this pandemic.
Findings and Analysis
Profile of Respondents
A total of 180 qualified respondents were gathered. Fifty three percent

(53%) were female and forty seven percent (47%) were male. From the 180 respondents,
more than half (61%) were working and the rest were students. Most (78%) were located
in Metro Manila and belonging to social class B and upper C (84%).
During the Lockdown
From the period of March to August, during the strict lock down, more than
half (57%) revealed that they went to physical stores to shop, while the rest (43%) did not
go to any physical store to shop. A lot of them (57%) went out once a month either on their
own or with a family member. It should also be noted that most were the designated buyer
for the household. Of those who went out, almost everyone (93%) visited supermarket,
groceries and drugstores. As such, the top purchases were groceries, food, supplies,
essentials and medicines. The second category of purchase was gadgets (53%). The reason
is Gen Zs were all shifted to either studying online or working from home during this
period. The third category of purchase is self-care. These items include skin care,
athletic/sports related products, hobbies, arts and crafts. This related to what is called self-
gifting.
Gen Zs are law abiding. If not necessary, they remained at home. They
consolidate purchases for a once a month in-store shopping. The increase in grocery
shopping was caused by more households cooking at home which was also mentioned in
the secondary data.
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During the GCQ
Now that the restrictions have been relaxed to some degree, there was a slight
increase (65%) of Gen Zs who have gone out and shopped in store. Despite all malls
opening, this did not translate to Gen Zs going out. They still go out only once a month
and continue to going out alone or with a family member and are still tasked as the family
shopper. Despite having that chance to meet up friends, Gen Zs did not do so, in fact only
few (6%) of them did. From those who have gone out, the top 3 categories are
food/groceries, gadgets and service. The third category changed. Most availed of services
like hair cut, repairs of gadgets, medical and dental (which they postponed during the
lockdown), and eating at restaurants.
When asked about malling, more than half (56%) have visited malls. They also
went to the supermarkets in these malls (64%), but quite a number (35%) went to
clothing/shoe retailers and specialty stores. Almost everyone (91%) are not confident
about going to malls or eating out and more (95%) will only go back to their old malling
habits only when there’s a vaccine. Only a number (5%) will be convinced if there is
significant decrease in Covid19 infections. Most (83%) still go to mall only when necessary
versus the few (17%) who have gone out for recreation and almost the same number (85%)
said that despite implementation of safety protocols, they are scared that they will be
infected when they go malling. Only a few (7%) Gen Zs said they will definitely go to
malls during this holiday season, a bigger number (33%) said they might but more than
half (56%) said they would rather purchase online. Thus, similar to the milk tea study done
in Hubei among Gen Zs, Filipino Gen Zs also exhibit safety seeking behavior.
Online Purchase
Thirty five percent (35%) of Gen Zs increased their purchase by as much as 30%
and twenty eight percent (28%) increased their purchase by as much as 50%. It can be
concluded that a huge majority (86%) increased their online purchase. This can also be
explained by data saying that people were spending more time online. Spending more time
online exposes one to more shopping sites.
During the extreme lockdown, Gen Zs (57%) were constantly purchasing online
like 3-4 times a week and some (32%) purchased for like 5-7 times a week. Currently,
almost 43% said they purchase 1-2 times a week and half (51%) still purchase 3-4 times a
week. The decrease can be attributed to the slight increase of Gen Zs going out. However,
the trend is strong towards a continues online purchase.
The top three online sites where Gen Z shop are Shopee (92%),
Facebook/Instagram sellers (87%) and Community Market places (including Viber) (76%).
And most pay thru Cash on Delivery (81%), online payment platforms like Gcash (65%),
PayMaya (53%) and bank transfers (57%). Credit card transactions was minimal at 37%.
Regarding online purchase the top three factors they consider are Price (93%),
Quality (89%) and Recommendations (84%). These factors are consistent with Cases
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(2007) wherein she said word of mouth recommendations is important. She mentioned
that consumers tend to seek more information and in this case, Gen Zs appreciate
comments, photos and videos posted by other buyers. They mentioned that they are
inclined to shift to another seller if they see even a single negative comment. Business
Insider also reports that price is indeed the most important factor even saying that Gen Z
are fiscally pragmatic and practical with their money. This is also why quality is the 2nd
most important factor. They want value for their money.
Cases (2007) mentioned risks such as Financial, Performance, Privacy, Security,

Confidentiality among others. But aside from this, a new kind of risk is present now – and
that is safety risk. This is different from privacy or security or confidentiality which can
be seen as safety risks before for online transactions. This risk is physical in nature. Gen
Zs use online shopping because they deem it safer than in-store shopping and this will
likely continue for an extended period of time.
Conclusion and Recommendations
Kantar studies in 2019 said more than half (67%) of Gen Z prefer to shop in-store. This
has significantly changed during this pandemic because more than half (56%) are likely to continue
shopping online despite the opening up of malls and retailers. Clearly, for Gen Z the behavior has
shifted online. True the percentage of those who have gone out has slightly increased but the
overall behavior is that safety seeking behavior. This generation will not risk going out for fear
that they will get infected.
Based on the results of this research, it explains why the respondents' attitude towards retail
after lockdown was shifted from the preference of purchasing from a physical store in the old
normal to purchasing from an online store during and even after lockdown restrictions have been
lifted. A previous study reported that Gen Z prefer to shop at actual ecommerce platforms that
provide a much safer environment than social media websites because the former provides a more
transparent process and reliable customer service than the latter (Alamsyah et. Al, 2018). This is
not shown on the results of the study as community market places was where they would buy.
Moreover, the survey results show that the respondents easily adapted to the "new normal"
environment and have shifted to online platforms for their purchases (necessities and shopping
goods).
With this shift, retailers should be able to maintain or increase their online touchpoints with
Gen Zs. A lot of retailers are now more active online, on social media and selling platforms. And
they should continue to do so. This generation is also into live selling so that is something that
retailers can explore. It would also be better if they have authorized distributors/sellers on
community marketplaces as Gen Zs shop on this platform. Retailers should also accept COD (cash
on delivery) as this is the preferred payment method. Gen Zs are not so keen on what delivery
companies they use, what is important is that the goods get delivered.
Food is the most purchased goods for Gen Z. Thus, restaurants should make sure they are
available online. Before the pandemic, ramen could not be ordered for take-out. During this
pandemic, ramen places created ramen kits for people to continuously enjoy it even at home. Even
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Korean grill places offereing samgyupsal created home experiences. Famous restaurants like
Manam, 8 Cuts, Rico’s Lechon offered frozen variants of their food in supermarkets.
Apart from food, Gen Zs are into self-gifting. Retailers can capitalize on this and make
their products meet this need. Also, self-care is also huge for this generation. Thus, retailers can
make their products be part of self-care. An example is make-up – you need to still take care of
how you look even when you are just at home.
The word essentials expanded for Gen Z. Essentials does not only mean food, but it also
includes products related to health, wellness, hobbies and even beauty. If retailers can transition
their products into essentials, their sales would definitely increase.
Because Gen Zs are very conscious of their safety, risk relievers addressing safety should
be a focus of retailers. An example is Sunnies who have come out with their eye glasses vans.
These vans go into villages, offering eye check-up and prescription glasses within a few hours.
They clearly show the buyers how their items are sanitized and their staff clearly practice safety
protocols. A lot for retailers have created videos showing how they are complying with safety
protocols and even big malls like SM and Robinsons have also done so.
There is a universal law of consumer behavior. When an existing habit or a necessity is

given up, it always comes back as a recreation or a hobby. The pandemic made people rediscover
hobbies such as planting, hence the term plantita/plantito, baking, hence baked sushi, cooking.
So will shopping in stores become an hobby or a form of recreation?
The study clearly shows modified and new habits. Previous habits of grocery shopping
and delivery will be modified by the new guidelines and regulations such as wearing masks, face
shields and keeping the social distance. New habits will also be enforced like checking of
temperatures, testing for the virus among others in compliance with safety protocols. The services
industries particularly personal services like salons, spas, fitness places will likely impose new
rules. Parks, recreational centers, concerts, social events and even movie watching will also do
the same.
As for future research, this study can be done on other generations like the Millennials or
the Gen X. It would be interesting to note similarities and differences on how the pandemic
affected their online purchase behavior as compared with the Gen Z. Apart from studying other
generations, Gen Zs from other countries like US, Europe and other Asian countries can also be
the subject of the study.
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Total Factor Productivity of Selected Philippine and Malaysian
Commercial Banks using Malmquist-DEA
8th NBMC Paper # 24
Ralph David S. Esteban, Catherine Ianna N. Cruz, Jessi Mae G. Co Shu Ming,
Kyle Vincent B. Imperial, Liberty S. Patiu, and Tomas S. Tiu
[email protected], [email protected], [email protected], and
[email protected]
Abstract
The role of banks in the financial system is continuously evolving throughout the years. If not
maintained, banking inefficiency can lead to systemic crises, making it essential for these financial
intermediaries to stay efficient. The study aim to explore the total factor productivity of the top 10
commercial banks in the Philippines and Malaysia during the period 2011 to 2018. The study also
seeks to measure technological efficiency, technical efficiency, pure technical efficiency, and scale
efficiency of each Decision-Making Unit. Malmquist-DEA was utilized to measure the efficiency
of the top 10 commercial banks. To determine how much inputs or outputs are required for a DMU
to be efficient, the study used the slack-based method. The results of the study suggest that among
the twenty banks examined, eleven of these banks were considered efficient in terms of total factor
productivity, while the remaining nine were inefficient. Furthermore, the banks from the
Philippines were relatively more productive than the banks located in Malaysia during the period
of study.
Keywords: Efficiency, Commercial banks, Malmquist-DEA, DMU, Total Factor Productivity
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Can Perceived Values and Addiction Rouse In-app purchase
intention?
8th NBMC Paper # 25
Angelique C. Blasa-Cheng
De La Salle University-Manila
[email protected]
Abstract
Despite the growing use of mobile game applications, revenue in-app mobile game purchases
remain relatively small in percentage. Little information is available on the motivation of mobile
game players to spend in-game applications. This paper explores the determinants of in-app
purchase intentions using the perceived value model in mobile game applications. The study
utilized the response of 212 mobile game players who are students from a university. The
mediating model was used to determine the relationships of perceived values (playfulness, access
flexibility, connectedness, good price, rewards) and addiction to in-app purchase intentions.
Results showed that addiction good price, rewards, and addiction predict in-app purchase intention.
Moreover, addiction partially mediates good price and rewards to in-app purchase intentions.
Keywords: Mobile games, in-app purchase intention, purchase intentions, addiction, perceived
values
Introduction
The Internet has changed our way of living from personal, social, economic, and political
aspects. It is one of the fastest evolving technologies. In 1990, the estimated number of internet
users was around 44 million (Roser et al., 2019). The number of users exponentially grew to an
estimated 4.54 billion users worldwide (Kemp, 2019). Moreover, an average of six hours per day
is spent by users on the Internet.
Coupled with increasing internet users, mobile phone users have reached 5.1 billion users
by January 2019, describing a 67 per cent penetration (more than two thirds) in the total population.
With more than two-thirds of the population owning mobile devices, smartphones have dominated
mobile technologies. They can perform day to day tasks with simple finger taps coupled with an
internet connection. Around 5.5 billion smartphones worldwide, growing the mobile application
industry (Kemp, 2019). Typical applications used in smartphones are emailing, communicating,
web browsing, social networking, and online gaming. Online gaming can be defined as a video
game that can be played through the Internet or computer network. Online games are played
through personal computers, game consoles, and mobile phones by more than 2.5 billion gamers.
The increasing players worldwide generated $152.1 billion, a 9.6 percent increase year on year.
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They have the most massive revenue accounting for 45 percent of the global market (Wijman,
2019).
Mobile games are preferred by many because they are convenient to use, portable to access,
and affordable to buy. More than 90 percent of the Google Playstore and Appl App Store apps are
free (Chen & Dubinsky, 2003b). App stores generate most of their revenues from paid application
downloads, advertisements, and in-app game purchases (Balakrishna & Griffiths, 2018). In 2019,
there are around 70.7 million mobile phone internet users in the Philippines, and the trend will
likely grow to 89.48 million by 2025 (Sanchez, 2020). Based on the study of Pew Research Center
in 2020, around 94 percent of the 18 to 29-year old Filipinos use the internet or sometimes use the
internet (Gonzales, 2020).
Freemium is the combination of the word for "free" and "premium." It is a business model
that offers customers free use of the basic features of the product but can upgrade to extended
features at a cost (Gu, Kannan, & Ma, 2018). Online games allow users to play for free but may
attract them to buy additional items to provide them with an advantage during the game. With the
potential growth of mobile games, smartphone and gaming addiction is also a growing research
area. Internet gaming addiction (IGA) is defined in the American Psychiatric Association's
Diagnostic and Statistical Manual of Mental Disorders (APA, 2018). Mental health professionals
use DSM-5 in diagnosing mental health problems. Symptoms of IGA include withdrawal when
gaming is unavailable, tolerance for spending more time in the game, failure to quit several times,
loss of interest in other activities, lying to others on the hours spent on gaming, or endangering
relationships or tasks (Griffiths, 2010). These factors have affected mostly males, especially in
Korea and China (Lee & Kim, 2017; Tian et al., 2019). Mobile games are addictive when they are
challenging users (Balakrishnan & Griffiths, 2018b, 2018a). Mobile game addiction has been
linked to depression, social anxiety, and loneliness (Wang et al., 2019).
Mobile games create 64.5 percent of their revenue from the in-app purchase intention,
which comes from ten percent of paying players. Despite the popularity of mobile games with the
freemium business model, only 1.6 percent of active players made an in-app purchase intention in
2018, which is lower than the 1.9 percent in 2017 (Swrve Monetization Report, 2019) to the
majority of users do not bring revenue to the business. The opportunity to convert more players to
become spenders brings an exciting research topic that will help game developers and marketing
companies to design strategies to increase the revenue of the company through in-app purchase
intentions and, at the same time, looking at their social responsibility in encouraging responsible
online mobile gaming.
The main objective of the study is to determine which among the perceived values of the
mobile game players are mediated by addiction that will lead to purchase intention. By identifying
which perceived values are not mediated by addiction, marketers and game developers can design
business models and strategies that can increase purchase intention but still upholding the
responsibility to its consumers.
This research utilized a survey that covered a period between January to April 2020,
targeting students playing mobile games. The study is limited to identifying the variables that
influence in-app purchase intention and game addiction and cannot measure or correlate to actual
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actions. The results of the study are not representative of the whole mobile game players. Thus,
further research employing more advanced statistical techniques is needed. The research mainly
uses cross-sectional data.
Figure 1
From the five values, the functional value was seen as having a significant effect on
consumer behavior choice. The functional value may also refer to the qualities of the product in
terms of reliability, durability, and price (Sheth et al., 1991). Sweeny and Soutar (2001) further
expanded the functional value by developing a multiple scale item of consumer perceived value
(PERVAL). The PERVAL model evaluates consumers' perception of the value of durable goods
at the brand level. It includes four value aspects: emotional, social, quality/performance, and
price/value for money. With new affordable smartphone brands, mobile games continue to
dominate the gaming industry and the increasing penetration of the Internet. Online games are
increasingly becoming popular because it provides a system for social interaction leading to
pleasant experiences (Choi & Kim, 2004; Feijoo et al., 2012). But with this growing avenue for
in-app purchase intentions in online mobile games, gaming addiction becomes a concern. Game
developers and marketers aim to increase revenue through identifying factors that can increase
purchase intention leading to loyalty and purchase behavior of online mobile game players.
However, with the concerns for gaming addiction sparks for the need to do responsible marketing
encouraging purchase but avoiding addiction among consumers. Currently, game developing
companies or firms do not have the services to provide support for customers regarding game
addiction. Van Rooij et al., in 2010, provided recommendations for video game companies in
practicing their responsibility to their consumers. First, companies should inform consumers about
the risks involved in playing video games. Second, they should have proper channels that will
provide customer care, especially for those who are addicted to the game.
Perceived value is the customer's complete evaluation of the utility of a product or

a service, depending on the customer's perception of what is obtained and given (Zeithaml,
1988). Several studies on perceived value as a function of purchase intention were done.
For example, the perceived value in e-commerce or online shopping highlighted the
relationship of the valence of the shopping experience, perceived product quality, risk, and
price to perceived value (Chen & Dubinsky, 2003a). Wang and Chang (2013) identified
the perceived availability of free substitutes as a negative mediator of perceived value and
purchase intentions. Satisfaction plays a role in purchase intention, especially for app users
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(Hsu & Lin, 2015). Hsiao and Chen (2016) investigated the constructs' perceived value in
in-app purchase intention in mobile games, considering game loyalty as a mediating
variable. Other constructs can be explored to strengthen in-app purchase intentions,
especially for online mobile games. The conceptual framework is based on the theory of
perceived value to determine the interrelationships between the identified constructs.
Emotional Value. Hsiao and Chen (2016) defined playfulness as the affective state
of emotional value. The more players derive enjoyment in playing online games, the
stronger their motivation, such as loyalty and payment intention (Wei & Lu, 2014). The
more enjoyment the users derive from using the application, the stronger their loyalty in it.
This situation positively affects their intention to purchase (Choi & Kim, 2004; C. Hsu &
Lin, 2015). Similarly, enjoyment may be associated with frequent and uncontrolled playing
leading to addiction. Thus, the following hypotheses are derived.
H1a: Perceived playfulness positively affects in-app purchase intention in mobile

games.
H1b: Perceived playfulness positively affects game addiction in mobile games.
H1c: Addiction mediates perceived playfulness to in-app purchase intention.
Social value refers to the social interactions and feelings of closeness experienced
by mobile game users. The optimal experience of the user can be achieved if users have
significant interaction in the system and congenial interaction with other people in the
network (Choi & Kim, 2004). Balakrishnan & Griffiths (2018a,b) described the friendly
element of the game makes it addictive. Connectedness is the feeling of closeness felt by
the user to whom he or she is playing. Establishing interactions with other people allows
higher purchase intentions. Nevertheless, connectedness can lead to having the user play
uncontrollably due to the social interaction that the game provides, which may lead to
addiction.
H2a: Perceived connectedness positively affects in-app purchase intention in

mobile games.
H2b: Perceived connectedness positively affects game addiction in mobile games.
H2c: Addiction mediates perceived connectedness to in-app purchase intention.
Performance/Quality Value. Performance refers to the perceived quality and the

expected performance of the mobile game. In this research, it refers to access flexibility
where a user can engage in the mobile game anytime without constraints of time or space
(Wei & Lu, 2014). Past research indicates that accessibility affects purchase intention.
However, the price still plays a stronger role in purchase intention (De Carvalho at el.,
2016). Moreover, convenience has been discovered to influence mobile use engagement
(Mclean, 2018). This easy access will allow increase purchase intention in mobile games.
For example, limited edition events that may constrict the user to participate at a given time
would enable users to increase their purchase intentions to catch up with the offers. Since
the event will only happen in a limited time, users will have a higher intent to purchase as
they cannot avail of the event anymore if the schedule has lapsed. Simultaneously, this
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access flexibility will also lead to addiction, as users will be encouraged to play
uncontrollably.
H3a: Access flexibility negatively affects in-app purchase intention in mobile

games.
H3b: Access flexibility positively affects game addiction in mobile games.
H3c: Addiction mediates access flexibility to in-app purchase intention.
Price and Rewards. Price is referred to as the sacrifice the customer experiences
in exchange for a product/service. Customers mentally refer to a standard fee profound to
them (J. C. Wang & Chang, 2013). Customers may have a different perception of price
based on their willingness to pay (Wei & Lu, 2014). Good price refers to the amount the
user is willing to sacrifice in exchange for the product or service they will receive in the
game. It may be in the form of virtual currencies leading to increasing intention to in-app
purchase intentions. While rewards refer to the benefits that the user may obtain or go
through while playing the mobile game. Usually, the longer the user plays the game, the
higher the virtual rewards. Rewards can be in the form of game points or virtual money.
These rewards provide a better playing experience for the user, resulting in increased
satisfaction and loyalty to the game. This perceived value for money can encourage users
to play the mobile game more, leading to addiction.
H4a: Good price positively affects in-app purchase intention in mobile games.
H4b: Good price positively affects game addiction in mobile games.
H4c: Addiction mediates good price to in-app purchase intention.
H5a: Rewards positively affects game addiction in mobile games.
H5b: Rewards positively affect in-app purchase intention in mobile games.
H5c: Addiction mediates rewards to in-app purchase intention.
Game addiction was described as 'excessive, obsessive and compulsive use of

videogames which creates behavioral problems. This addictive behavior is related to
salience, tolerance, mood modification, relapse, withdrawal, conflict, and other issues
(APA, 2018; Lemmens et al., 2009). Balakrishnan & Griffiths (2018) studied the effect of
addiction to purchase intention. Game addiction has a significant relationship with loyalty
and in-app purchase intention. Wang et al. (2019) found that mobile game addiction was
positively associated with anxiety, depression, and loneliness as players perceive getting
more value in their engagement to mobile games, they intend to purchase in-app. But this
perception in value may also lead to game addiction, making more players hooked to
continue playing the game, affecting their lives. As addiction overcomes a user, so as his
or her intention to in-app purchase intention.
H6: Addiction positively affects purchase intention.
Control Variables. Demographic profiles such as age, gender, playtime hours, and
mobile game experience are added to the model to verify its effect on the in-app purchase
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intention, behavior, and game addiction (Hsiao & Chen, 2016; C. Hsu & Lin, 2015; Lee &
Kim, 2017).
Table 1
Cronbach's Alpha Comparison
Table 2
Demographics
Table 3
Age and Game Experience of Respondents
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In this study, the data were collected via an online field survey. This research targeted
university students who often play mobile games. Usually, these students are the Gen Zs or
Millenials who in-app purchase intention in mobile games means to spend a certain amount to
buy virtual currencies or special items to gain an advantage during the game (i.e. buying limited
edition items or player costumes or unlocking special level or character). Continuously playing the
game offers rewards to players, encouraging them to log-in or play often. Survey questionnaires
were distributed online (via Google Forms) from June 2019 to August 2019 to students (both
graduate and undergraduate) of a private university. Due to incomplete responses and duplicates,
only 212 surveys out of 313 were considered valid. Most of the respondents were males with an
average mobile game experience of almost five years and an average playing time of 2.33 hours.
The most popular online game Tables 2 and 3 summarize the demographic profile of the
respondents.
The questionnaire consisted of demographic information and personality questions related

to the independent variables identified. A five-point Likert scale with the extent of agreeing
(1=strongly disagree; 5=strongly agree) was used in the survey questionnaire. Appendix A
provides the questionnaire items representing each construct. The PERVAL constructs were
adapted from Hsiao & Chen (2016). While those related to addiction were from Shibuya et al.
(2019). The researcher ran the survey through a Cronbach alpha test to look at the reliability of the
questions. Table 1 compares the Cronbach alpha of the reference papers to this study. The
Cronbach alpha of all the constructs is above 0.6 which indicates an acceptable level of reliability.
Most values are above 0.8 which specifies a good reliability level. Generally, Cronbach values
between 0.6 to 0.7 indicate an acceptable level of reliability (Ursachi et al., 2015).
Results and Discussions
Jamovi (Version 1.2.16.0) was the tool used to analyze the different statistical requirements
and models. The total responses from the survey distribution were 313, but only 212 were
considered valid and focused on Gen Z’s and Millenials. A summary of the demographic profile
is found in Tables 2 and 3. Most of the respondents were males with an average age of 19.5 years,
average playing years of 4.6 years, and the average playing time of 2.33 hours per day. Most of
the respondents play Mobile Legends: Bang Bang, which one of the most popular mobile games
in the Philippines (Esports News, n.d.). This study focused on the six variables, which are the
antecedents to In-app purchase Intention (APINT) such as Playfulness (APLAY), Access
Flexibility (AACCESS), Connectedness (ACONNECT), Good Price (APRICE), Rewards
(AREWARD), and Gaming Addiction (AADDICT). Each variable was given a composite score
by averaging the results of their particular questions from the responses. Table 4 summarizes the
statistics of each variable. The researcher obtained the mean of each item that was relating to the
other variables per respondent. Based on the central tendency shown in Table 4, playfulness has
the highest instance and lowest standard deviation, although some of the indexes were moderately
agreeing in terms of the antecedents of purchase intention. Mobile game players have relatively
high perceptions of playfulness, connectedness, price, and reward. However, for purchase
intention and addiction, there is a low agreement between the respondents.
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Table 4
Correlations Analysis. The purpose of the correlation analysis presented in Table 5 was
to understand the movement of the relationship between two variables. All of the correlation values
are positive suggesting the same movement of the variables except for access flexibility to
addiction. All of the constructs tested display a very weak to a weak positive correlation with in-
app purchase intention except for addiction having a moderate positive correlation. The
relationships between the variables support the results of the regression.
Table 5
Correlation Matrix
Regression Analysis. The analysis was used to determine the contribution of the
independent variable which is playfulness, connectedness, access flexibility, price, and
rewards to in-app purchase intention. The mediating variable considered is addiction.
Jamovi was used to test the conceptual framework. Four models were considered to check
the effects of independent variables with the control and mediating variables on the
dependent variable.
Model 1 discusses the direct effects of the independent variables on in-app purchase
intention. Table 6 summarizes the regression results with variables playfulness,
connectedness, Access Flexibility, good price, rewards, and in-app purchase intention. The
results indicated that the predictor explained 31.1% of the variance (R2 = .336, F(8,203) =
12.9, p < .001). It was found that good price (β = .398, p <.001) an rewards (β = .396, p
<.001) significantly predicted in-app purchase intention with the model as follows:
In-app purchase intention = -1.179 + .145Playfulness + .148Connectedness

– .051Access Flexibility + .398Good Price + .396Rewards + .223GenderMale
– .008Mobile Game Experience + 0.082Playtime Hours.
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Model 2 additionally considers Addiction as a predictor of in-app purchase
intention. Table 7 shows the regression results including the mediating variable gaming
addiction. The results indicated that the predictors explained 40.8% of the variance (R2
= .433, F(9,202) = 17.2, p < .001). It was found that good price (β = .291, p=.003) and
rewards (β = .310, p =.002), and Gaming Addiction (β = .487, p<.001) significantly
predicted in-app purchase intention, with the model below:
In-app purchase intention = -1.3351 + .089Playfulness + .062connectedness

+.038Access Flexibility + .291Good Price + .310Rewards + .121GenderMale
– .019Mobile Game Experience + 0.039Playtime Hours + 0.487Game Addiction.
Model 2 verifies the result of Model 1 retaining good price and rewards and
includes Addiction as significantly affecting in-app purchase intention. Moreover, the
adjusted R2 has increased significantly due to the addition of another predictor which is
addiction.
Table 6
Model 1 Coefficients
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Table 7
Model 3 summarizes the regression results of perceived values and gaming

addiction. The results indicated that the predictors explained 22.7% of the variance (R2
= .257, F(8,203) = 8.76, p < .001). It was found that connectedness (β = .177, p <.035),
Access Flexibility (β = -.1829, p =0.026), good price (β = .225, p=.006) and rewards (β
= .178, p=.035) significantly predicted in-app purchase intention. Moreover, control
variable playtime has a significant effect on addiction. The regression equation for the
model is as follows:
Gaming Addiction = .320 + .116Playfulness + .177connectedness – .189Access

Flexibility + .222Good Price + .178Rewards + .209GenderMale – .022Mobile Game
Experience + 0.089Playtime Hours.
Model 4 explains the mediating role of Game Addiction to perceived values and
Purchase Intention. The independent variables are the identified perceived values, the
mediating variable is gaming addiction, and the dependent variable is the in-app purchase
intention. The results showed that gaming addiction partially mediates good price and
rewards leading in-app purchase intention in mobile games. Players become more addicted
as mobile games promise more rewards and promote good price for in-app purchase
intentions. Figure 5 summarizes the significant relationships of the independent and
mediating variables to in-app purchase intention intention.
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Table 8
Models 1 considers good price and rewards as significantly influencing in-app purchase
intention. This supports the study of Hsiao and Chen (2016) on good price and rewards
significantly affecting the in-app purchase intention. Good price has a higher impact on purchase
intention. Good price as part of the perceived value variables means worthy of value for money.
Players increase their intention to purchase especially due to on-going promotions that offer good
value for money. Promotions include discounts, limited edition items, and other advantages that
in-app purchase intention currency. But price whether objective or relative attracts in-app purchase
intention as long as the players perceive the value worthy of money (Tung-Zong & Wildt, 1994).
Rewards encourage players to access the game more often leading to increased in-app purchase
intention. Due to the rewards provided when frequently playing the mobile game, players become
more exposed to the surrounding offers of the game. This creates an opportunity for the game to
advertise and encourage in-app purchase intentions, similar to how good price increases purchase
intention. But despite the significant relationships, good price and rewards provide a weak
percentage of variance explained which means that such variables can effectively enhance in-app
purchase intentions. Moreover, the mobile game experience can also influence in-app purchase
intention. Players who have more experience in mobile games tend to increase their purchase
intention as they are more familiar with the game (i.e. mechanics, system and game requirements,
and events and promotions. Playfulness does not significantly affect game addiction as playfulness
focuses on the enjoyment derived from the game for some time on using the game. The result
contrasts with Hussain et al.'s (2015) findings on enjoyment linking to game addiction. People use
mobile games to be distracted and enjoy them for a short period. Similarly, access-flexibility and
connectedness, which the mobile game offers to users, do not affect the players' intention to
purchase. They can utilize the game even without paying, and they can play the game anytime they
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want. Players can use the mobile game anytime and anywhere they like, and they can connect with
their friends and peers even without payment access. The study of Hsu & Lin supported this result
(2015) as they have discovered that app-users are very much concerned with value for money.
Table 9
Model 4 Indirect and Direct Effects
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Figure 2
Analysis Results
Model 2 includes gaming addiction as part of the predictor of in-app purchase intention.
The results show that gaming addiction, together with good price and rewards significantly
influence in-app purchase intention. The result supports the result of Balakrishnan and Griffiths
(2018) where gaming addiction increases the likelihood of purchase intention. Mobile game
addiction can rouse in-app purchase intention. Addicted players exhibit characteristics of
withdrawal, creating conflicts, or excessive spending (Shibuya et al., 2019). The addition of
addiction in the independent variables has significantly increased to 40.8% from 31.1% in Model
1.
Model 3 treats addiction as the dependent variable. Results show that all of the perceived
values (connectedness, access flexibility, good price, and rewards) except playfulness significantly
influence addiction. Games that require multiple players such as Mobile Legends create
connectedness among players. The feeling of closeness when they often play the game with others
especially with friends, allow the players to frequently or excessively play the mobile game.
Similarly, the flexibility of the mobile game to provide access to play anytime, anywhere can lead
players to excessive playing. The convenience offered by the mobility of the game allows the user
to patronize the game, which can lead to addictive gaming. Moreover, by playing the game, players
receive promotions, offered discounts, and given rewards. These entice the players to frequently
play the game which can lead to excessive playing. Similarly, playtime hours influence gaming
addiction. The longer the time spent on playing the game, the players develop loyalty leading to a
degree of addiction (Choi & Kim, 2004).
Model 4 explores addiction as a mediating variable. The results show that addiction
partially mediates good price and rewards to in-app purchase intention. As verified in Model 1 and
Model 2, these two values perceived as value for money has a strong influence on in-app purchase
intention. Among the constructs of perceived value, only good price and rewards significantly
affect the in-app purchase intention of mobile game players. This suggests the perceived value for
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money (good price and rewards) is the most important consideration for in-app purchase
intentions. Users highly utilize the freemium model of the mobile game. In-app purchase intentions
are deemed unnecessary as they can use the game for free without spending.
Conclusion
This study explored the perceived value of mobile game players to in-app purchase
intentions. The mediating role of addiction was investigated with the perceived values of players.
Addiction only partially mediates the good price and rewards. Playfulness, access flexibility, and
connectedness can be enjoyed and experienced by the player even without spending. Although
access flexibility and connectedness remain non-influential to in-app purchase intentions.
Researchers are continuously looking for ways to understand and prevent online gaming addiction.
Still, marketers and game developers design money-spinning features that create continuous
engagement to players and allowing them to spend more money.
With the growing use of mobile games, serious ethical questions were raised by many
scholars. Similar to the controversial industry sectors such as tobacco, alcohol, and gambling,
mobile game firms must recognize their social responsibility. They are doing well but creating
harmful impacts on the consumers.
Controversial firms, according to Cai et al. (2012), still consider corporate social
responsibility even though their products can cause harm through overuse. Nevertheless, Room,
2011 suggested having personal responsibility is one solution to addiction by individualizing the
responsibility in handling it. For example, looking after children or driving a car requires focus,
not becoming distracted by mobile games. It is up to the individual consumer to handle it.
Moderated use may be the key to solving such addiction problems. But aside from looking at
personal responsibility, gaming companies should also look after their consumers who become
addicted to their products not only as part of social responsibility but also for revenue-related
government intervention. Game developers and marketers can enhance to looking at offering value
for money to the players as these factors can strongly influence in-app purchase intentions. Most
of the perceived values except playfulness can encourage addiction. These factors should be
considered with caution by gaming firms especially in trying to gain more players. Firms should
always inform players through warnings and notices during screen time on the effects of excessive
or abuse of the game. This will keep a constant reminder for players to be conscious of the time
and effort they spend on playing. Moreover, they should help players who seek professional
guidance on abuse of the mobile game.
Recommendations for Further Studies
This study assimilated perceived values and mobile-game related factors in in-app purchase
intentions, which provided an understanding of perceived values relationships with only rewards
identified as significant to purchase intention, including the mediating role of addiction. This study
sees the determinants of the in-app purchase intention of Filipinos and found similarities with the
results of the study of Hsiao & Chen (2016). With limited determinants in the perceived values,
game developers and marketers can think of other strategies to maximize revenue for the freemium
business model. Still, minding the adverse effects mobile games may have, especially if it leads to
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addiction. With the limitation of time, the study can be improved further by adding moderating
variables and restrictions on the types of mobile games—a more systematic sampling method from
more diverse samples.
Moreover, studies leading to in-app purchase intention behavior can also provide a more
in-depth analysis of the effects of addiction. Different mobile games also have different levels of
playfulness and connectivity that relates to purchases and their application in the mobile game. It
will be helpful for future researchers to explore other types of mobile games. Moderating variables
such as personality or level of achievement in the game may also be a good path for study. Perhaps
culture with different income and lifestyle also affects the determinants of purchase intention,
particularly in countries whose population is actively playing mobile games. It may also be
possible to look at populations who are at risk of getting addicted and do a consultation on how
mobile game companies show responsibility when addiction overtakes the players. As mobile
game players become engaged, they make mobile games playing a part in their daily activities,
leading to addiction. It may also be interesting to investigate the ethical issues in marketing
strategies that lead to an increase in in-app purchase intentions and, at the same time, addiction to
mobile games.
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Online Retail Therapy: A Coping Strategy Affecting Consumer’s
Subjective Wellbeing
8th NBMC Paper # 26
Ana Czarina C. Viaña

[email protected]
Abstract
The COVID-19 pandemic has posed threats that affected not only the public health but also the
economy of different countries, including the Philippines, resulting in heightened stress levels of
Filipinos. Different studies focused on various coping strategies, however, a very few investigated
the power of consumerism as a type of coping strategy especially for the stress caused by the
pandemic stressors. This study uses the Transactional Model of Stress and Coping by Lazarus and
Folkman to discuss online retail therapy as a possible coping strategy affecting consumers’ moods
and emotions and subjective wellbeing. The purpose of this study is to help the online retail
business owners in engaging with consumers by creating campaigns that highlight the therapeutic
advantages of online shopping and implementing marketing communications based on the findings
of the study.
Keywords: online retail therapy, consumerism, consumer psychology, COVID-19, pandemic,

subjective wellbeing, affect, stress, coping, Transactional Model of Stress and Coping
Introduction
The COVID-19 pandemic has posed threats that affected several countries in a span of eight
months from December 2019 since its outbreak that started in Wuhan, China (World Health
Organization, 2020), and these threats caused economic uncertainties (Baker, et al., 2020),
financial vulnerability, insecurity and difficulties (Fernandes, 2020; Mogaji, 2020; Kazlauskas &
Quero, 2020), unemployment (Baker et al., 2020; Fernandes, 2020; Mogaji, 2020; Kazlauskas &
Quero, 2020), and public health and safety uncertainties that began to take toll on general
population’s mental health problems in terms of heightened stress and anxiety levels among others
(Torales et al., 2020). To minimize the effect of these stressors, several studies proposed different
coping strategies such as positive coping strategies (Huang et al., 2020; Restubog et al., 2020;
Guan et al., 2020), even negative coping strategies (Savitsky, 2020).
Despite this, the research on the power of consumerism as type of coping strategy, particularly
consumption device as coping mechanism, was limited (Kang & Johnson, 2011). With this, the
concept paper will study a certain type of behavior using consumerism called retail therapy, a
consumer behavior that relieves stress and repairs negative feelings (Lee, 2015) and negative
moods (Kang & Johnson, 2011), and improve sense of wellbeing (Lee, 2015), as a possible coping
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strategy for the COVID-19 related stress. The paper will also measure its effect on consumers’
affect and his or her subjective wellbeing.
The concept and constructs of retail therapy have been studied by different researchers yet
only a few studies discussed and measured the therapeutic effects of the shopping through online
platforms in a middle of a pandemic, particularly COVID-19 (Santhiya & Elavarasan, 2020). This
concept paper will discuss, explore, and measure the online retail therapy as an emotion-based
approach coping strategy to perceived stress, as well as a coping strategy affecting the moods and
emotions and subjective wellbeing of Filipino consumers.
To address this, related literature and studies were integrated, and the conceptual framework
that would show the relationships of the constructs and variables were created. Finally, the
conceptual framework is discussed and developed for future research about the topic.
Literature Review
The literature and other studies were synthesized and reviewed based on the theoretical
framework of Transactional Model of Stress and Coping (Folkman & Lazarus, 1984). The
keywords were set in addition to the theoretical framework’s original constructs and variables.
These were searched using Google Scholar and De La Salle University’s electronic databases
which contained different journal articles from various field of studies. The keywords used to
filter the articles and set the parameters were ensured to be relevant to the topic. These keywords
were retail therapy, online shopping, perceived stress, coping strategy, COVID-19, affect and
subjective wellbeing. Articles were narrowed down by identifying the relationship between two
or more keywords or topics and relevant articles were finally chosen by the following restrictions:
1. The articles must be written or published in English from 2018 to 2020; and
2. The articles must show definite or concrete relationships between two or more
keywords.
Theoretical Background
The theoretical framework of Lazarus and Folkman’s Transactional Model of Stress and
Coping (Folkman & Lazarus, 1984) focuses on the notion that an individual assesses stressors to
appraise a degree of opportunity or threat in relation to his or her wellbeing (Goh et al., 2010;
Parker et al., 2012; Ben-Zur et al., 2019). This framework also shows the possible responses of
an individual to the threat or harm to diminish the distress or coping (Carver & Connor-Smith,
2010), and any factor that affects the initial primary and secondary appraisals are called
reappraisals. The theoretical framework is also similar to Stress and its Management Model where
the level of stress is considered a factor in active coping and where an unsuccessful active coping
leads to reappraisals (Michie, 2002). The proposed conceptual framework is based on this theory,
particularly on the perception of stress caused by the COVID-19 pandemic in the Philippines, the
online retail therapy as a coping response to manage this stress, and the effect of this emotion-
based coping strategy to the subjective wellbeing of the Filipinos.
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Perceived Stress
The level of perceived stress depends on the intensity, frequency and severity of
stressors (Pryss et al., 2019). It can depend on demographics and psychographics as well
(Gazzaz et al., 2018; Zinurova & DeHart, 2018). In COVID-19, the stressors such as
lifestyle and economic disruptions are considered predictors of stress (Shanahan et al.,
2020), for instance, disruption of routine (Shanahan et al., 2020; Cao et al., 2020; Shapiro
et al., 2020) and lost income source (Cao et al., 2020) are considered stressors.
Retail Therapy
Retail therapy is a coined term by the popular press. The motivation of the
individual to take a shopping therapy is the alleviation of his or her mood (Kang & Johnson,
2011; Burke, 2018), and amelioration of sadness (Irwin, 2018). It is associated with
positive effects such as motivation and repair of moods (Burke, 2018; Tanase, 2018; Irwin,
2018). Despite this, some researchers argue that retail therapy is highly associated with
negative effects such as maladaptive practice (Irwin, 2018), impulse buying behaviors,
overconsumption, and compulsive buying behaviors (Kang & Johnson, 2011). It uses two
approaches – the compensatory consumption behavior and mood-alleviative consumption
(Kang & Johnson, 2011). Furthermore, studies showed that the motivations of consumers
to buy were classified into two: the hedonic motivations which was more emotive in nature,
and the utilitarian which was more practical in nature (Cai et al., 2018). Individuals with
hedonic motivations enjoyed shopping that were emotionally satisfying (Cai et al., 2018),
while others were grounded with distress or sadness (Burke, 2018; Tanase, 2018; Irwin,
2018). Another construct was highly associated with maladaptive coping in shopping
addiction (Kirezli & Arslan, 2019). However, it also reinforced a positive mood by means
of gratification (Gupta et al., 2020) which made shopping therapeutic by reinforcing sense
of achievement and enjoyment (Lee & Byun, 2016).
Affect and Subjective Wellbeing
Subjective wellbeing was be divided into three components – positive affect,

negative affect, and life satisfaction (Sonnentag, 2015) – all of which showed dynamism
of their relationships. Because wellbeing was subjective, it was said to be affected by
biased judgment processes, momentary mood effects, time periods (Diener et al., 2018).
Some studies showed that active coping strategies was related to subjective
wellbeing, however, other researchers mentioned that coping strategies had little to no
effect on subjective wellbeing (Zacher & Rudolph, 2020).
Given these variables, hypotheses were created:
H1: Perceived stress (PS) affects the therapeutic shopping motivation (TSM).
H2: Perceived stress (PS) affects the negative mood reduction (NMR).
H3: Perceived stress (PS) affects the positive mood reinforcement (PMR).
H4: Perceived stress (PS) affects the therapeutic shopping outcome (TSO).
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The degree and the intensity of the appraised stressors, or the perceived stress
would determine the coping strategies to be used. In a study, it was mentioned that a person
only actively coped with only stressful events or situations that are perceived to be
demanding or threatening, and if he or she has insufficient resources to cope (Cohen et al.,
1994). Another study showed that online compulsive buying which was linked with retail
therapy (Kang & Johnson, 2011), was positively associated with perceived stress (Zheng
et al., 2020).
H5: Therapeutic shopping motivation (TSM) affects negative affect (NAF).

H6: Therapeutic shopping motivation (TSM) affects positive affect (PAF).
H7: Negative mood reduction (NMR) affects negative affect (NAF).
H8: Positive mood reinforcement (PMR) affects positive affect (NAF).
H9: Therapeutic shopping outcome (TSO) affects negative affect (NAF).
H10: Therapeutic shopping outcome (TSO) affects positive affect (PAF).
The four constructs of retail therapy, namely therapeutic shopping motivation,

negative mood reduction, positive mood reinforcement, and therapeutic shopping outcome
have strong positive correlation but were still distinctive, enough to be used as different
constructs (Kang & Johnson, 2011). All of which constructs affected the moods and
emotions of individuals as the motivation was from feeling of emotional distress (Irwin,
2018).
In addition, impulsive spending and compensatory behavior were both linked to

retail therapy (Kang & Johnson, 2011) and these two constructs were said to be associated
to positive and negative affect. It was hypothesized that impulsive spending is associated
with positive affect while compensatory behavior is associated with negative affect
(Matthews, 2018).
H11: Negative affect (NAF) affects subjective wellbeing (SWB).

H12: Positive affect (PAF) affects subjective wellbeing (SWB).
Research studies also claimed that affect or moods affect subjective wellbeing. An
earlier research argued that subjective wellbeing is maximized by higher ratio of positive
affect to negative affect (Bradburn, 1969). Meanwhile, hedonic wellbeing or subjective
wellbeing was subjected to the experience of positive affect, the experience of low levels
of negative affect and high levels of satisfaction (Sonnentag, 2015).
Figure 1 shows the proposed conceptual framework of the study based on the
hypotheses formed.
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Figure 1
Conceptual framework of the study
Discussion and Conclusions
The proposed conceptual framework in Figure 1 shows the relationships of perceived stress
to coping strategy, and coping strategy to emotions and subjective wellbeing in general. In the
proposed framework, it is assumed that stress from the COVID-19 pandemic is already perceived
and it was assumed that the individuals had already appraised the stressors and already considered
or recognized the stress brought about by the pandemic. The testing should be done through an
online survey in addition to secondary data that were gathered online through academic journals,
online books, official websites, and others reliable and valid sources. At the same time, the
questions in the survey, except the respondent profile, will be taken from reliable and validated
scales. Table 1 shows validated scales based on questions from Perceived Stress Scale or PSS
(Cohen et al., 1994), Retail Therapy Four Factor Scale (Kang & Johnson, 2011), Negative Affect
Positive Affect Scale or NAPAS (Joshanloo, 2017; Watson et al., 1988), and Temporal Satisfaction
with Life Scale (Pavot, 1998).
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Table 1
Validated scales with Cronbach’s Alpha
The proposed concept would be helpful, as the pandemic has caused stress and anxiety to
the consumers not only due to the potential health hazards from the COVID-19 outbreak but also
due to the unfortunate events in the economy and public health that came along with the pandemic.
The “new normal” was implemented by different countries, particularly the Philippines, which
included the usage of the online platforms to order different items, products, and services. This
resulted in increase in online trade (Dannenberg et al., 2020). Some retail stores engaged in selling
through digital and online platforms, adjusting to accommodate the current situation. Therefore,
a coping strategy that focuses on consumerism, particularly online retail therapy, will be very
beneficial to engage the consumers with the online businesses. Furthermore, online retail therapy
as a coping strategy does not only alleviate, manage, and improve the emotional state and
wellbeing of the Filipino consumers. It also will mostly help the retail industry, particularly those
that engage in online retailing. Online retail business owners can create campaigns that emphasize
and highlight the therapeutic benefits and advantages of online shopping, since several researchers
have already recognized the wellbeing as a desirable outcome for business (Falter & Hadwich,
2020).
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The Diverse Challenges and Impact of Multiculturalism in a
Collaborative Online International Learning (COIL)
8th NBMC Paper # 27
Alice Katherine Tenorio

[email protected]
Abstract
The transition to online classrooms due to the pandemic leads to new challenges and opportunities
for teachers. This study provides an in-depth understanding of multiculturalism in a Collaborative
Online International Learning (COIL). Collaborative Online International Learning (COIL) is an
online pedagogical teaching method that develops inter-university collaboration between
academic institutions in different countries. The author participated and completed a 6-week
program that involved 40 Filipino and 18 Brazilian undergraduate students from De La Salle
University Manila and Universidade La Salle Brazil in October 2020. This study aims to provide
a comparative analysis of intercultural online learning behavior, differences, development, and
challenges that the students encountered in completing an online collaborative final project in both
universities. The research was conducted in a literature review, open-ended survey, and direct and
in-depth interviews of both Filipino and Brazilian students who completed the collaborative
project. The data obtained were processed and analyzed qualitatively.
Keywords: intercultural, collaborative learning, online learning, pedagogical teaching,

multiculturalism
Introduction
When the Covid-19 pandemic hit the world, the universities immediate response was to
transition to online or distance learning. E-learning has become the mandatory solution all over
the world during the lockdown. (Sathishkumar et. al, 2020) This also transitioned the faculty
members to explore different online teaching components to provide effective teaching method
and bring out the productivity and participation of students.
One popular innovative teaching method that provides internationalization strategies is the leading
international organization, Lasallian Teaching Network -- Collaborative Online International
Learning. (COIL) A program that gathers different Lasallian faculty members across the world.
The vision of a global Lasallian community is to connect and collaborate by promoting
development of La Salle universities. (International Association La Salle Universities, 2020).
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The COIL teaching model
The author, a faculty member in De La Salle University Manila participated and

completed a 6-week training of International Collaborative Teaching Program with the
COIL model provided by Universidad La Salle Mexico. Partnered with a professor from
Universidade La Salle Brazil, this represented the institution in a worldwide groups of
teachers to link two cultural settings in one course and collaborate two sets of students from
two different countries. COIL model creates equitable team-taught learning environments
where professors from two cultures work together to develop a shared syllabus,
emphasizing experiential and collaborative student learning. (COIL Consult, 2017).
This study aims to:
1. Analyze the students’ intercultural online behavior from both universities when completing
the collaborative project.
2. Explain the relationship of multiculturalism in online distance learning;
3. Describe the impact, challenges, and development of both Filipino and Brazilian
undergraduate students who participated in the teaching program;
4. Explore the effects of collaborative online international learning approach as teaching
technique.
Methodology
Presenting an exploratory nature of the study, a qualitative methodological approach was

used to fully understand the students’ online learning behavior, the impacts, challenges, and
progress as participants. To gain experiential and collaborative student learning insights, the
research revolved with an in-depth interview and open-ended survey of participants from both
countries, Philippines and Brazil. 40 Filipino undergraduate students taking up Marketing
Fundamentals, and 18 Brazilian undergraduate students taking up International Marketing
Strategies, participated in the collaborative program that required a final marketing project
highlighting both cultures. All students were grouped into 8 with 7-8 members each—5 Filipinos,
3 Brazilians. Each group submitted a collaborative marketing plan as the final requirement of this
program.
Participants
The Filipino students’ demographics are aged 18-20 years old, while the Brazilian
students are mostly senior college students aged 25-35 years old. Most Filipino students
who participated were freshmen and sophomores, while the Brazilian students were mostly
young professionals, currently employed while continuing education. Out of 58 total
students who participated, 50 were able to provide insights regarding the collaborative
program. They also answered open-ended survey to share their experience in completing
the project.
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Participants personality profiling
67% of Brazilian participants stated that they are in between of being a loner and
joiner while the Filipinos assessed themselves as joiner.
Majority of the Brazilian students are more reserved, while the Filipino students
shared that they are outgoing.
Both students from both countries said they are trusting rather than suspicious.
All Brazilian students assessed themselves as more open-minded, while the

Filipinos confessed of being critical minded.
All of the participants from both countries assessed themselves as conscientious

rather than careless. Half of the students who participated in both countries stated that they
are creative while the other half recognized themselves as conventional.
These personality profiling differences were individually assessed by the author to

understand the impact of personality and diverse differences in a multicultural setting in
online teaching. For many online learning students, irrespective of background, the distant
mode of study can cause differences in behavior that affect the work output. (Forman et. al
2002).
Interview format
Interviews were focused on research questions stated below. An informal interview

guide was also used to acquire personal insights and point of views from the participants.
Both professors did the online interviews and open-ended survey, using the online
platforms—Zoom and Google Form. The author interviewed the Filipino students under
her class, and the partnered Brazilian professor interviewed the Brazilian students in his
class. Allowing flexible conversation for more accurate data to keep the tone open-ended,
students were allowed to write their personal experience, preferences, and understanding
in a multicultural scenario. Hence, a recording was prohibited for privacy and some
confidential comments.
Research Questions
The research questions were developed to have a full understanding on a

multicultural online method when working in one collaborative project. These were
designed to have better findings and discussion of multiculturism as a knowledge process
for students. These explores into cultural differences that are most likely to impact the
learning process. (Parrish 2010).
RQ 1: To what extent do you think that working with students from other country
had an impact on your learning and expectations in this course?
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RQ 2: What were some of the intercultural experiences met by this collaborative
online international project?
RQ 3: What were the challenges you encountered in working with different

cultures?
RQ 4: What have you personally achieved in participating in this multicultural

teaching method?
RQ 5: After this collaborative project, what made you more interested to know
about Brazil or Philippines?
Analysis
The transcripts were analyzed using open and axial coding, a method that allows to
develop a certain category which is the category of “challenges and impact of multicultural
collaborative online learning to students.”
The first step analyzed was the open coding, which the data was dissected into parts
comparing the similarities and differences. The author worked with substantive coding,
working with data directly and analyzing it. (Holton 2010). For the emergence of a core
category and related concepts, open coding was carefully analyzed.
Literature Review
Understanding multiculturalism in collaborative online learning
The growth of online learning across the world has created a need to design and
develop an innovative multi-cultural learning process. Multiculturalism requires equality
and simply be defined with focal meaning of “involving others.” (Moaward et. al 2017). It
is the proper way of responding to cultural diversity, integrating cultural minorities into
societies. Multiculturalism helps establish a cross-cultural knowledge.
With belief that all race and citizen are equal, multiculturalism in collaborative
online learning has grown significantly to promote unity in all aspects. This maintains the
people’s integrity to their culture and beliefs. Collaborative online learning brings the
world together by connecting more people in more nations. Cultural views can be
influenced by educators and students’ cultural values. As we build our identities around
our culture, this also shows how one can interact with a diverse environment, which can be
easily accessible and done in distance learning.
Communication and culture are connected on how each person knows himself. This
appears to be the basis for most research on intercultural communication. Both students
and professors in online learning setting strive for effective communication that can
express their different perspectives and preferences. This also set the standards in a
collaborative online learning to gather more ideas and come up with the collaborative
output.
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Multiculturalism in collaborative online learning expresses interests in diversity,
remains sensitive to differences, and teaches a culturally designed curriculum. (Parrish et.
al 2010). This teaching guide to students accommodates and sets diverse expectations. It
does not, however determine educational abilities.
Intercultural impact to personal growth and knowledge through collaborative online

teaching method
Intercultural can be defined as communities with deep understanding and respect

for all cultures. The mutual exchange of ideas in a intercultural society in an intercultural
communication. (Marotta 2014). The advancement in technology and learning
management systems contributed to the innovative distance learning environment. The use
of collaborative learning in education is more enhanced and promoted now. Studies have
shown the advantages of collaborative learning over individual learning. (Johnson et. al
1989). Collaborating with different cultures is one innovative teaching method that
educators are trying to include in educational materials to address one sustainable goals
which is diversity and inclusion. Cultural diversity constitutes worldviews as a constitutive
element of sustainability goals. (Opstal et. al 2013). Teaching culturally diverse students
supports the commitment for providing equal education in awareness, knowledge and skills
for all students. Multicultural competence requires the development of these three levels
of understanding according to Sue, Arredondo, and McDavis, (1992). It enhances the
students’ understanding of what cultural diversity is, and how important it is to impart this
in their personal and social growth. It influences the students to share this experience and
knowledge to their social groups and even to their future generation.
With the gained awareness, knowledge and skills in a multicultural set-up, teachers
and students’ perceptions change toward encouragement and acquired confidence for a
multicultural experiences in online classes. This connects the students to a different cultural
realization that make them more cultured and well-educated. This also removes the set
barriers to educational discrimination and policies. As educators prepare for the learning
materials to engage students to a non-biased teaching process, it also reflect one’s personal
motivation and belief that eliminate biases and discrimination. To effectively prepare and
meet the challenges of a multicultural collaborative online teaching, a systematic program
is designed to understand each student’s progress in fully immersing into the project.
One personal growth and knowledge that can be attributed as the impact of an
intercultural collaborative online teaching method is the intercultural communication, that
provides excellent opportunity. It draws a phenomenological, psychology, and philosophy
to tackle the cultural situation. (Montouri, et. al 2004). With this, an adaptive capacity can
be a long-term personal growth for the culturally experienced students guided by the
educators through a collaborative online learning teaching method. Research reveals that
student and teachers learn a significant amount in terms of personal, global, intercultural
and professional competence by a collaborative experience programs. (Cushner 2002).
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Students and professors’ challenges and differences in working with cross-cultural online
collaborative learning
Cultural gap is one factor that can be ascribed as challenges in working with cross-
cultural online collaborative learning. However, whether there is a cultural gap in student
perceptions of online collaborative learning it changes over time due to actual involvement.
Students and professors’ individual culture dimensions may prove influential in achieving
overall learning outcomes. (Damary, et. al 2017). By enhancing the awareness of the
cultural impacts in social interaction, it also ensures high quality standards of social
engagement in online learning. Culture-determined differences are also great challenges
that professors encounter when accommodating different ideas from the diverse set of
students. Even learning approach and styles of every country’s background and culture can
affect the work output in a collaborative learning. Culture plays a significant role even in
the preference and motivation of students and professors in an online class. A multi-cultural
online collaborative teaching program or project can test each student’s performance in
developing an idea, communicate it others, and collaborate with different learning styles.
Cultural clashes cannot also be avoided especially with language differences and different
social and emotional beliefs. Research in cultural clashes in online learning or teaching
program was expanded further. Studies show the impact of national culture exercises on
learning styles. (Damary, et. al 2017).
With every race’s right, duty, and responsibility to share knowledge and opinion,
one more significant challenge with cross-cultural collaborative online learning is great
difficulty in participating in collaborative activities. However, there has been inadequate
research findings on the effects of cultural diversity in an online collaboration. Technically,
every student is encouraged to learn not only for individual progress, but to share in the
group’s performance.
Key Findings and Discussions
Five (5) relevant open codes were analyzed in this step of data analysis based from 50
interviews, both from Filipino and Brazilian students who completed the project. This allowed
recurring ideas and feedback to share and analyze. The feedback or insights shared for open codes
were individually asked and coded, so not to influence other answers. To emphasize the dynamic,
the use of axial coding was created. This is to develop the connection of the open codes.
Selective coding, where the results of the open and axial coding can be interpreted as
creating new theory for further research that can be included in the future research of the author.
(Kulp 2007).
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Impact on learning and expectation
30 students mentioned how excellent this experience was and how it gave them
different learnings in the marketing course they are taking. 18 said it had fair to satisfactory
effect, while only 1 rejected the idea of this multicultural experience.
Most of the students’ feedback were: “It was a fun yet challenging experience.”
Some students who participated wanted more projects like this in their other courses to be
more familiar with the multicultural setting in online classes. “The project piqued my
interest, and I would be more than inclined to participate in such projects again in the
future. Although considering that this is the first of its kind, there are understandably areas
within that need addressing and refinement.” Both Filipino and Brazilian students learned
to adjust in the multicultural setting that added to their personal experiences in a diverse
culture.
Intercultural experiences
Online instructors need to design courses in such ways that potential cultural
barriers can be addressed. (Liu et. al 2010). Philippines as one of the most colonized
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countries in Asia has been open to diversity not just in population but in culture. Diversity
in the Philippines can also be attributed to ethnicity as many tribes of indigenous people in
the country are very much recognized. Minority groups also involved Chinese and Koreans
who play important role in the country’s economy. (Boquet 2017).
Cultural practices in Brazil are vastly emerging. Rich in cultural history same as
Philippines, multicultural education generates equal academic access for students in Brazil.
(Ramalho 2011).
41 students who participated said understanding how to interact with people and
gaining a different perspective on different culture were the intercultural experiences that
they have learned in this collaborative project. Majority also said that they have learned
and understood other ways of seeing the world and other cultures, equipped now with new
knowledge when it comes to culture and working ethics of the partnered country. However,
the least intercultural experiences met by this project was the increased ability to
communicate to a foreign language. There was also very little impact on their self-growth
awareness.
Challenges in working with different cultures
“Foi ótimo se envolver com outra cultura, porém o fuso horário e o idioma foi o
mais complicado para se comunicar.” (It was great to get involved with another culture,
but the time zone and language was the most complicated to communicate.), said one of
the Brazilian participant. 98% of the participants raised the concern of the 11-hour time
difference in Brazil and Philippines that contributed as the most challenging factor in
completing the project. 43 out of 50 participants said they encountered language barrier
since English is not the second language in Brazil like Philippines. Half of the participants
also highlighted the differences in work ethics since the age segment of both students are
different. Filipino undergraduate students who participated were mostly freshmen in
college while the Brazilian students were mostly seniors and already employed. This
affected their work standards and expectations.
There are empirical studies that show the differences in the effectiveness of
synchronous and asynchronous online classes. (Bulu 2008). Due to the time difference in
Philippines and Brazil, both professors cannot combine the classes and do a synchronous
class. The flexible and independent learning are essential for creating collaborative and
cooperative distance learning. (McIsaac 1996). With this, both classes partnered with the
students from the other country relied on independent learning practice using the
asynchronous guide and module. This also affected the interpretation of each student from
2 countries of the project guidelines that can still be contributed to the language barrier
factor and working ethics.
Personal achievement in multicultural online teaching method
“The COIL Project was challenging, as it allowed me to get out of my comfort zone
and explore things that I am not familiar with. The COIL Project also allowed more people
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to get to know different cultures, which can be considered an achievement, considering
doing this in the time of the COVID-19 pandemic. It was a good experience and it definitely
made us more aware of the current situation, especially in other countries.”, one feedback
from the Filipino student. 75% of the participants from both countries learned how to adapt
to new situations and surrounding especially in this online teaching method. 35 students
said they personally has growth in working with multicultural teams, while 31 students
expressed their growth in professional maturity as they embarked in this international
project. Half of the participants personally achieved intellectual simulation and
development in working in this project. This enhanced their interest and attention into
collaborative online teaching method.
Interests in other countries and cultures
With the constant increase of online enrollees due to worldwide lockdown, it also
brings online learning environment with different perspectives of cultural, educational and
social experiences. (Kumi-Yebaoh et. al 2019). Mittelmeier, Héliot, Rienties, and
Whitelock (2016) stated that:
Sociocultural factors like cultural background and social network diversity

influenced participation when students worked online with peers from other countries, and
diverse academic content is an important component of a successful ‘internationalized’
curriculum.
After completion of this collaborative project, majority of the participants acquired

interests in learning more about the other partner country. Their interest inspired in
understanding more about the other country’s culture, lifestyle, food preference, and the
people. 20 participants said they are also very much eager to learn the language of the other
country as this has been the most challenging factor in completing this project. Brazil’s
main language is Portuguese, while Philippines is an English-speaking country.
Conclusion
This study aims to identify the intercultural online behavior of the participants in both
universities from different countries—Philippines and Brazil. The personality of each student from
participant profiling stated above, and how they participate in online mode of teaching affected
their contribution to the collaborative project. It also contributed to the challenging factors that the
participants raised while completing the project.
The relationship of multiculturalism in online distance learning helps to develop and gain
knowledge in cultural diversity, social and systematic inequities. Diversity continues to be a
complex matter that needs to be addressed to engage diverse learners in online environments.
(Goold et. al 2007). With this international collaborative online learning method, the author who
is also the professor of one of the participating class, was able to identify the multiculturalism as
one learning or knowledge construction process that needs to be included in online educational
materials.
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There are still the language barriers and cultural differences that the participants
encountered which can be attributed with different background and history of each country.
Overall participants from both countries had completed the collaborative project by meeting the
expectations with excellence. This can be contributed to the stated interests in learning more about
different cultures and deeper understanding on multi-cultural learning set-up.
The collaborative online international learning (COIL) teaching method is one technique
not just to acquire students’ utmost participation in distance learning, but also an educational
strategy to connect, communicate, and collaborate to the growing cross-cultural world. Connecting
and communicating to different cultures is becoming more proficient in multi-cultural awareness,
emerging as the key in cultivating the students’ cross-cultural knowledge and competence. (Yang
et. al 2014).
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Students’ educational experiences, program resources
and students’ retention in private schools
8th NBMC Paper # 28
Mary Ian D. Dichosa1, Jimbo A. Fuentes2

1
Golden Heritage Polytechnic College and 2Xavier University – Ateneo de Cagayan
[email protected]; [email protected]
Abstract
The study examined the components of students’ educational experiences and the provision
of program resources on students’ retention of private schools in Region X, Philippines. The
components of students’ educational experiences are presumed to be the following: a) enrollment
services and procedures, b) finance services and procedures, c) academic integration, d) social
integration and e) institutional commitment. On the other hand, the components in the provision
of program resources are: a) faculty, b) classroom resources, c) library resources, d) instructional
media resources, e) laboratory facilities, f) student services and g) budgetary allocation (for school
infrastructures). The study used descriptive research design using an adapted survey questionnaire
supplemented by focus group discussion. This research consisted of 190 participants. Based on the
findings, all of the components in the Students’ Educational Experiences and Program Resources
have an influence on students’ retention.
Keywords: Students’ educational experiences, program resources, students’ retention
Introduction
The Philippines has an extensive and highly inclusive system of education, including
higher education. Dropping out is a serious problem because it denies individual students their
fundamental human right to education (Orion Jr., Forosuelo and Cavalida, 2014). In the
Philippines, the dropout rates in college revealed an alarming 83.7 percent which means that the
country is producing 2.13 million dropouts annually (Manila Bulletin, 2012).
For the many years of restructuring the country’s educational system that led them to the
K to 12 Basic Education Reform Program, enrollment data from Commission on Higher Education
(CHED) show that between Academic Year 2015 – 2016 and 2016 – 2017, undergraduate
enrollment dropped to 13 percent. For and A.Y. 2017 – 2018, the dropout rate grew to 17 percent.
However, enrolment recovered in A.Y. 2018 – 2019 with an increase of 8 percent when the first
batch of senior high school graduates enrolled in higher education. According to Education
Secretary Leonor Briones, the first batch of senior high school students who graduated in A.Y.
2017 – 2018 reached over 1.2 million (Philstar, 2018). This situation is true, particularly, in
Cagayan de Oro City. In fact, enrollment data from the Commission on Higher Education (CHED)
Region 10 showed that among the private higher education institutions offering Bachelor of
Science in Business Administration (BSBA), retention rate is approximately 73 percent enrolled
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in the 2nd year college of school year 2019 – 2020 out of the 1st year college of school year 2018 –
2019 which means 27% is the attrition rate.
This interest in retention and attrition rates is brought about by the fact that schools ought
to be knowledgeable of their retention and attrition rates because it speaks of both of its reputation
and of its business aspect especially for the private schools. It could be that the students patronize
the school for its competent faculty, updated facilities and equipment, good student services and
school climate conducive to learning. The business aspect can be explained in a way that when
there are more students that persist in a particular school would also mean income for the
institution. This current research is the first for two specific institution under study. Further, this
will greatly help the administrators in understanding the strengths of the institution and the areas
where it can improve itself.
The research assumed that student retention is influenced by students’ educational

experiences and school’s provision for its program resources. This assumption was previously
studied and discussed by Segismundo in 2016 which had theoretical underpinnings from Tinto’s
Student Integration and Institutional Departure Models. Further, it is indicated that when students
in college come from different backgrounds: family, individual academic characteristics including
their initial disposition and intention in reference to college attendance and life goals (Cubin in
Segismundo 2016).
On the other hand, the model of institutional departure states that student retention was
clearly and highly dependent by the student’s institutional experiences. Theoretically, higher
retention rates are guaranteed from clearer perceptions about the institution and a healthier much
between the institution and the student and that greater integration leads to higher graduation rates
(Tinto, Kahn and Naura in Segismundo, 2016). In the local scenario, Segismundo (2016)
elaborated Tinto’s models and other literatures by studying on an institution’s holding power over
its students by looking into their program resources, students’ overall educational experiences and
its retention. Specifically, for student’s overall educational experiences were grouped according
to: Enrollment Services and Procedures, Finance Services and Procedures, Academic Integration,
Social Integration, and Institutional Commitment. On the other hand, the research looked into
Faculty, Classroom Resources, Library Resources, Instructional Media Resources, Laboratory
Facilities, Student Services and Budgetary Allocation (for school infrastructures) under provision
for program resources.
Methodology
This study used the descriptive method. According to Stangor (2011), using the descriptive
research provides a relatively complete picture of what is occurring at a given time and allows the
development of questions for further study. This follows a logical process from data collection to
quantification, statistical treatment, analysis and interpretation. The quantitative data were
augmented by interviews among some school administrators and a focus group discussion of some
of the respondents. After which data were tabulated and analyzed, the results were supplemented
by key informant interviews of some school administrators and focus group discussions of
students. For this particular study, the researcher adapted a questionnaire from Segismundo (2016).
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A pilot test was carried out. The reliability value was 0.891 for the Students Educational
Experiences; 0.951 for the Program Resources; and 0.845 for Students’ Retention.
Inclusion and Exclusion of respondents. In this study, the fourth-year college students,
officially enrolled in degree courses for the First and Second Semester of A.Y. 2019 – 2020 in
both private schools in regions X. In addition, these students should have been enrolled in the same
institution during the entire school year in A.Y. 2016 - 2017, A.Y. 2017 - 2018 and A.Y. 2018 -
2019. In short, they were supposed to have spent their four years in college in the same institution.
The respondents were enrolled in the following courses: BS in Business Administration, BS in
Office Administration, Bachelor of Elementary Education and Secondary Education and BS
Criminology. These courses were chosen based on the criterion that these are the courses the same
in both institutions under study. Excluded were those who were transferees, those who spent a
portion of their college years in another school
Respondents. Given the inclusion criteria, there were only 190 students in the universe.
So, the researcher did a census. All the 190 were given a survey questionnaire wherein the
distribution of respondents is shown below:
Respondents per School

School Number of Students (N) Percentage
School A 140 73.68
School B 50 26.32
Total 190 100.00
Problem 1. What is the present state of the selected schools in terms of: 1.1 Enrollment
data of the degree programs of Schools A and B for Academic Year 2016 – 2017 until 2019 –
2020; 1.2 Retention data of the degree programs of Schools A and B for Academic Year 2016 –
2017 until 2019 – 2020?
Table 1.1 presents the enrollment data of schools A and B for the period A.Y. 2016 - 2017,
to A.Y. 2019 – 2020. The figures represent all students in institutions A and B. As shown in the
table, there were 658 First-Year college students enrolled in School A and 185 for School B in
2016. These students were those graduated from high school prior to 2016 or who failed to
complete their undergraduate degree. In cognizant with K to12 full implementation, these students
were highly encouraged to enroll their degree courses by A.Y. 2016 – 2017 to 2017 – 2018, as a
“last chance to go to college using the old curriculum, subject to the policies of their respective
higher education institutions (CHED, 2015). This is the probable reason why there was a surge of
enrollment for that year.
There was an overall decrease of 57 percent from the First Semester to Second Semester
of A.Y. 2016 – 2017 for the School A and 45 percent overall decline for School B. Most of the
respondents enrolled in both schools were working students. There were several dropouts. Some
of the common reasons stated are financial problems, transfer of residence, transportation
problems (living in rural areas), and conflict in working hours, family commitment/problems, poor
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secondary school preparation, health problems, demotivating school environment and others.
Based on the Registrar’s Office dropping forms, the most common reason is the financial problem.
On the other hand, table1.2 presents the retention data composed of the students who persisted
with the school since their first-year in college in the First Semester of A.Y. 2016 – 2017 until
their fourth-year in A.Y. 2019 - 2020 for schools A and B. The table shows that there were 286
(43 percent) who remained in the Second Semester of A.Y. 2016 – 2017 out of 658 enrollees in
the First Semester in School A while 101 (55 percent) remained out of 185 for School B. Overall,
from the 658 enrolled in A.Y. 2016 - 2017 only 21 percent of these have remained in School A;
for School B, out of the 185 students only 27 percent remained.
Table 1.1
Present State of the Two Schools in terms of Enrollment Rates
School A.Y. 2016 – 2017 A.Y. 2017 – 2018 A.Y. 2018 – 2019 A.Y. 2019 – 2020
First Year Second Year Third Year Fourth Year
1st 2nd Variance 1st Variance 2nd Variance 1st Variance 2nd Variance 1st Variance 2nd Variance
Sem Sem Inc (Dec) Sem Inc (Dec) Sem Inc (Dec) Sem Inc (Dec) Sem Inc (Dec) Sem Inc (Dec) Sem Inc (Dec)
A 658 286 (372) (57%) 219 (67) (23%) 215 (4) (2%) 187 (28) (13%) 163 (24) (13%) 150 (13) (8%) 140 (10) (7%)
B 185 101 (84) (45%) 72 (29) (29%) 62 (10) (14%) 56 (6) (10%) 50 (6) (11%) 50 0 0 50 0 0
Table 1.2
Present State of the Two Schools in terms of Enrollment Rates
School A.Y. 2016 – 2017 A.Y. 2017 – 2018 A.Y. 2018 – 2019 A.Y. 2019 – 2020 RETENTION
First Year Second Year Third Year Fourth Year RATE
1st 2nd Retention 1st Retention 2nd Retention 1st Retention 2nd Retention 1st Retention 2nd Retention 2016 – 17
Sem Sem Rate Sem Rate Sem Rate Sem Rate Sem Rate Sem Rate Sem Rate 2019 - 20
A 658 286 43% 219 77% 215 98% 187 87% 163 87% 150 92% 140 93% 21%
B 185 101 55% 72 71% 62 86% 56 90% 50 89% 50 100% 50 100% 27%
Problem 2. What is the students’ perception of their educational experiences and program
resources?
The students’ educational experiences were assessed in terms of: enrollment services and
procedures; finance services and procedures; academic integration; social integration and
institutional commitment, meanwhile, the program resources include: faculty, classroom, library
and instructional media resources, laboratory facilities, student services and budgetary allocation
for school infrastructures.
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Table 2 depicts the students’ perception of their educational experiences, assessment of program
resources and retention.
Table 2
Students’ Educational Experiences and the Institution’s Program Resources
Students’ Educational Experiences

Enrollment Services and Procedures 2.56 Very Satisfactory (VS)
Finance Services and Procedures 2.83 Very Satisfactory (VS)
Academic Integration 3.23 Excellent (E)
Social Integration 3.11 Very Satisfactory (VS)
Institutional Commitment 3.47 Excellent (E)
Overall Mean for Students’ 3.04 Very Satisfactory (VS)
Educational Experiences
Program Resources
Faculty 3.28 Excellent
Classroom Resource 2.52 Very Satisfactory (VS)
Library Resources 3.06 Very Satisfactory (VS)
Instructional Media Resources 2.85 Very Satisfactory (VS)
Laboratory, Facilities 2.55 Very Satisfactory (VS)
Student Services 2.83 Very Satisfactory (VS)
Budget Allocation (for school 2.48 Very Satisfactory (VS)
infrastructures and other facilities)
Overall mean for program Resources 2.79 Very Satisfactory (VS)
Students’ Retention 3.04 Likely to stay
Ranges: 3.26 – 4.0; 2.51 – 3.25; 1.76 – 2.50, 1.00 – 1.75
Enrollment Services and Procedures. The data revealed that the average mean of the
respondents’ perception of their educational experiences in terms of enrolment services and
procedure is 2.56 or interpreted as “Very Satisfactory”. This means that the schools often provide
proper enrolment procedure services and follow a certain system or procedure to cater to the needs
of the students. Thus, if there is proper system of enrolment in the school it will lead to higher
demand for students to stay and finish their academic track in the school (Kabubo-Mariara and
Mwabu, 2017). Additional staff to cater to the needs of the students in the area od enrollment
services was the highlight of the suggestions of the fourth-year students during the FGD.
Finance Services and Procedures. The data reveal that the average mean of the
respondents’ perception of their educational experiences in terms of Finance Services and
Procedures is 2.83 with an interpretation of “Very Satisfactory”. This means that the school often
provides proper Finance Services and Procedures in order to maintain the harmonious condition
of the school and students’ enrolment payment system. Finance Services and Procedure is very
important for the students’ satisfaction especially in financial matters (Chung, 2015).
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Academic Integration. The data revealed that the average mean of the respondents’
perception of their educational experiences in terms of Academic Integration is 3.23 or
“Excellent”. This means that the schools always provided opportunities for students to be
competitive with their classmates in their different courses. Thus, they gain a sense of
accomplishment believing that college has helped them develop intellectually and academically
(Clark, Middleton, Nguyen, and Zwick, 2014). A good attention is advised to school on class size.
Students rated the item “I find the class size as conducive to learning” (2.77) lowest among the
indicators. In the FGD the students revealed that the students perceive that although the schools
try to control class size, still the students feel that the class size should still be lowered.
Social Integration. The data revealed that the average mean of the respondents’ perception
of their educational experiences in terms of Social Integration is 3.11 with a description of “Very
Satisfactory”. This means that the schools provide opportunities for students to meet in some
activities to make them feel that they are part of the school community. If the students influence
and interact with other students, they are likely motivated to graduate from the same school.
(Kumar and Nanda, 2018). However, the students rated lowest the item “I have been involved
in the activities of the school’s student organizations”. The students try their very best to join in
school activities since they want to be part of the school, they want to belong. However, their being
working students prevents them from participating fully in these activities (Deil-Amen, 2015).
Institutional Commitment. The data showed that the average mean of the respondents’
perception of their educational experiences in terms of Institutional Commitment is 3.47 which
means “Excellent”. During the focused-group discussion, it was mentioned by the students that
they were very thankful to the school management they were able to study and work at the same
time because of the class schedule that is program for the working students including the
reasonable and affordable school fees. They did not even notice how time flies so fast that they
were already about to finish in their respective courses. Overall, the components of the Students
Educational Experiences are very satisfactory (3.04).
With regard to program resources, the overall mean in the components of the Program
Resources is 2.79 or interpreted as “Very Satisfactory”. The details are reflected below:
Faculty. The table showed the average mean of the perception of the program resources in
terms of Faculty is 3.28 interpreted as “Excellent”. This means that the faculty are efficient in
providing new knowledge. They are effective in their classroom instruction, thus equipping them
with the knowledge and skills required of them. Faculty is very important since they impart new
knowledge and ideas to the students. This encourages them to stay in the school until graduation
(Jeżewska-Zychowicz, 2014).
Classroom Resources. The data exemplify that the average mean of the students’
perception in terms of Classroom Resources is 2.52 which interpreted as “Very Satisfactory”. This
means that the students are impressed with the maximization of classroom resources. The
classroom resources provide students a diverse collection of lessons and web resources for them
to learn many new things and ideas which they can make use of in the higher levels and even in
their future world of work. (Toetenel, 2014).
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Library Resources. The data reveal that the average mean of the students’ perception in
terms of Library Resources is 3.06 or “Very Satisfactory”. This means that the students are
impressed with the adequate books in the library with regards to their courses/subjects. Although
it is also found out that the school needs to update its computer facilities in the library as reflected
in their assessment.
Instructional Media Resources. The data showed that the average mean of the students’
perception of the program’s resources in terms of Instructional Media Resources is 2.85 or “Very
Satisfactory”. This means that the students experienced the availability of visual aids and
instructional materials to stimulate and help them in their studies. Instructional media materials
encompass all the materials and physical means an instructor might use to implement instruction
and facilitate students' achievement of instructional objectives. This may include traditional
materials such as chalkboards, hand-outs, charts, slides, overheads, real objects, and videotape or
film, as well as new materials and methods such as computers, DVDs, CD-ROMs, the Internet,
and interactive video conferencing. These may help the students develop their growth in the school
institution (Rodgers & Withrow-Thorton, 2015)
Laboratory Facilities. The data reveal that the average mean of the students’ perception
of the program’s resources in terms of Laboratory Facilities is 2.55 or interpreted as “Very
Satisfactory”. This means that the students are satisfied and contented with the availability of
laboratory facilities in the school. The students make the most of the laboratory facilities. These
laboratory facilities help to encourage deep understanding in students and it allows them do the
laboratory activities and experiments (Davis, Shokouhian, Sharma, & Minami, 2015). The students
further claimed that the schools need to modernized or update laboratory facilities. This report
coincides with the results on updating some library technologies. It is important the schools need
to pay attention to these student observations since this has been repeatedly cited.
Student Services. The data exhibited that the average mean of the students’ perception of
the program’s resources in terms of Student Services is 2.55 or interpreted as “Very Satisfactory”.
This means that the students are contented and satisfied with the campus grounds, lounge, canteen
services and others. This means that the students are just satisfied about the support that the student
services section offers to them (Stantchev, Colomo-Palacios, Soto-Acosta, and Misra, 2014).
During the focus group discussion, the students suggested that the school administration should
hire additional staff for the utility to take charge of the cleanliness of grounds and comfort rooms
to accommodate the number of students, most especially during Saturdays and Sundays, which
comprise the class schedule for the working students.
Budgetary Allocation (for school infrastructures). The data showed that the average
mean of the students’ perception of the program resources in terms of Budgetary Allocation (for
school infrastructures) is 2.48 which means “Satisfactory”. The students feel that there is a need
for the school to allocate funds for new buildings and classrooms. Budget allocation is very
important for the students’ retention in the maximization of school facilities (Cobb-Clark and Jha,
2016). As stated by the students during the focus group discussions, the school should have more
budgetary allocation intended for the improvement of the school buildings and the campus.
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The data on student retention show that students are likely to stay in the institutions (3.04).
The students claim that they stay in school because they would like to support their family, friends,
peers and the education after they finish their program (Knight et al., 2012). Specifically, the item
“The faculty members are highly competent possessing knowledge, skills and attitude essential for
effective learning” got the highest mean of 3.29 meaning that the students perceive that the
teachers possess knowledge, skills and attitude essential for effective learning towards the
development of the students in a holistic way. This is very important for them (Hagay, Baram-
Tsabari, & Peleg, 2013). The item “The classrooms are well-ventilated, thereby conducive to
learning” has rated with the lowest mean of 2.50 or interpreted as “Moderately Important Reason”.
This means that even the school was not able to provide adequate ventilated classrooms, this is
just moderately important to them since there are also many important things to consider. Thus,
this item requires improvement and intervention as this coincides also with the findings on
program resources.
Problem 3: What are the components of Students’ Educational Experiences and Program
Resources which may be considered as significant predictors of Students’ Retention?
Table 3 depicts the components of Students’ Educational Experiences and Program Resources
which may be considered as significant predictors of Students’ Retention.
Table 3
Multiple Linear Regression Analysis of the components of Students’ Educational Experiences and Program
Resources may be considered significant predictors of Students’ Retention
Independent Variables Beta T-value Sig.

Students’ Educational .264 2.237 .005
Experiences
Program Resources .507 2.237 .000
Dependent Variable Students’ Retention

Constant .907
Adjusted R² 0.59
F-value 35.85
Significance 0.000
Model:
Students Retention = .907 +.264 Students’ Educational Experiences + .507 Program Resources
Table 3 illustrates the Multiple Linear Regression Analysis of the students’ educational
experiences and program resources as main variable may be considered significant predictors of
students’ retention. The data revealed that student educational experiences and program resources
are predictors towards student retention. Thus, per unit change of student educational experience,
there is an increase of .264 student retention and per unit change on program resources, there is an
increase of .507 on students’ retention. Simply, students’ experiences influence roughly 50 percent
of students’ retention while program resources influence students’ retention by 26 percent. The 24
percent gap in the results can be attributed to other components or areas. Given the Multiple Linear
Regression results, hypothesis of this study which is the perceived quality of Students’ Educational
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Experiences and Program Resources does not significantly influence the Students’ Retention
among selected schools is not accepted. Further, this study will serve as a tool in assisting the
school administration in understanding the strengths of the institution and the areas that needs
improvement.
Implications
Indeed, the study found out that student educational experiences and program resources
influence retention. It is important for the school management to look closely the components for
each variable mentioned, pay attention to the areas of concerns and improve in giving the students
a wholesome educational experiences and satisfaction in the provision of program resources in
order to increase students’ retention.
Based on the findings of the study, the following are recommended to the school
administration:
Students Educational Experiences
Enrollment Services and Procedure

• The school administration should require the Registrar’s office to render enrollment reports
per semester specifically on retention data.
• There should be a clear orientation of students in the enrollment process and procedure.
• Enrollment records should be accurate and efficient by means of enrollment system.
Finance Services and Procedure
• The school management through the finance department should provide a clear and
detailed explanation with regards to school charges to the parents and students.
• The parents and the students must be informed of the schedule of payment for the school
fees in order for them to be prepared for such payment.
Academic Integration
• School management has to work out the curriculum goals and a whole-school curriculum
plan aligned with the school overall aims. The goals of the curriculum should be broad
enough to achieve total development and enable students with diverse needs to develop
their potential to the fullest.
• Learning opportunities should be provided for students to develop and reflect on their
values and attitudes using events relevant to their daily life.
Social Integration
• The school should promote cooperative and collaborative learning among students to
remove the feeling of failure.
• Provide students the opportunities to experience learning beyond the confines of the
classroom through extra-curricular activities.
Institutional Commitment
• The school should extensively provide the students with the wholesome educational
experiences in the institution in order for the students to become loyal and institutionally
committed to the school.
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• The school management together with the faculty and staff should first become
institutionally committed towards the school’s mission, vision and goals in giving the
students the quality of learning they need.
Program Resources
Faculty
• The school must develop an overall plan for faculty development and performance
management in line with the school’s mission, vision and goals.
• Faculty members are expected to meet their professional and institutional commitments in
school which includes teaching, research, academic advising and various kinds of school
activities.
Classroom Resources
• The school should have enough classrooms that can accommodate the number of students
enrolled per semester of an academic year.
• The classroom size should be spacious that can accommodate a maximum class size of 50
students.
• The classrooms should be well-ventilated, well-lighted, well-arranged, clean and dust-free.
Library Resources
• The academic library must conform with the standards set by the Commission on Higher
Education (CHED).
• Library space should able to accommodate 15% to 20% of student population in one
setting.
• The library should be well-ventilated, well-lighted, well-arranged, clean and dust-free.
• The library should be a quiet place.
• Librarians together with assigned staff must be attentive and meticulous with the inventory
of these instructional materials.
Instructional Media Resources
• The instructional media resources should always be available for faculty and students use.
• The assigned staff must be attentive and meticulous with the inventory of these
instructional materials.
• Instructional materials must be well-maintained and upgraded.
Laboratory Facilities
• Laboratory classes should not be more than 30 students to maintain a sufficient level of
quality teaching/learning based on CHED standards.
• Laboratory should have adequate space for worktables, movable chairs and elbow room
for students doing production work at the same time.
• Laboratory facilities should be well-maintained and upgraded.
• Laboratory room must always be well-ventilated, well-lighted, well-arranged, clean and
dust-free.
• Laboratory in-charge must be attentive and meticulous with the inventory of the facilities.
Student Services
• The school must develop and overall plan for staff development and performance
management in line with the school’s mission, vision and goals.
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• The school must have a customer’s feedback box to be commented by the students with no
name and course for the anonymity in order to get an honest feedback from them with
regards to student services.
• Setting out criteria and procedures in handling student services concern should be known
to the concerned student services staff like guidance office, library, clinic, canteen and
utility.
Budgetary Allocation (for school infrastructures)
• The school management should come up with a budget allocation for the priority
development areas of the school.
• In exercising discretion in financial matters and monitoring the school finance, school
management should always ensure that the interest of the students come first and the
expenditure is for educational purposes.
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Compassion and Social Entrepreneurial Intentions in Times of
Covid-19
8th NBMC Paper # 29
Junnell E. Guia
De La Salle – College of Saint Benilde
[email protected]
Abstract
The emergence of social entrepreneurship has been undeniably observant all over the world. Its
existence has been studied and explored in several scholarly literature. The failure of profit-seeking
companies to produce the goods and services, because many people are willing but unable to pay
for what they want and need (Seelos & Mair, 2004), gives an opportunity to social enterprises to
cover the unmet needs and social goals, specifically in developing country like the Philippines.
However, a major catastrophe, the threat of Covid-19, had reshaped the way everyone, even social
entrepreneurs, do business. The rise of more complicated social problems has been felt more than
ever. Prior studies suggest that compassion and perceived feasibility encourage the likelihood of
an individual to take part in social enterprises, and these studies have been the theoretical
foundation of the study. Its aim is to determine effect of compassion on social entrepreneurial
intentions (SEIs); and the mediating effect of perceived feasibility in the relationship of
compassion and social entrepreneurial intent in times of Covid-19. The research design of the
study is quantitative, descriptive and causal explanatory. An online questionnaire was distributed
among 191 business students taking their capstone project as they are considered nascent
entrepreneurs. Structural Equation Modelling and SmartPLS 3.0 were used in data analysis. The
findings of the study exposed that compassion positively affects social entrepreneurial intentions,
and perceived feasibility has partial mediating effects on the relationship of compassion and social
entrepreneurial intentions. The study contributes to the social entrepreneurship and traditional
entrepreneurial intent literature by introducing compassion as a predictor of social intent. Future
researchers may explore other prosocial motivation constructs.
Keywords: Compassion, Social Entrepreneurial Intentions, Perceived Feasibility, Social

Entrepreneurship, Covid-19
The rise of more complicated social problems, the economic breakdown, and the global
threat of COVID-19 pandemic crisis are expected to change the way social entrepreneurs do
business. Social entrepreneurs are considered to be the key players in addressing the basic needs;
essential services and opportunities; and employing innovative, cost-efficient, and often
technology-driven business models (Tiwari, Bhat and Tikoria, 2017) to solve societal and
economic difficulties. Several countries have instigated certain initiatives and efforts to
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promulgate the concepts and implementation of entrepreneurship practice. This is evident in the
presence of business incubators, accelerators, technological parks, and co-working spaces aimed
to support social and commercial startups. Private and public sectors, the government and higher
education institutions (HEIs) also play a significant role in shaping social entrepreneurs with the
optimism that these social innovators would create a huge leap toward social development and
economic growth. Together with the international organizations such as Organization for
Economic Cooperation and Development (OECD, 2014), the World Bank (WB, 2017), the United
Nations Organization for Education, Science and Culture (UNESCO, 2014) and the World Health
Organization (WHO, 2017), social entrepreneurship is viewed as fundamental for the sustained
development of population by addressing the social and economic challenges through innovation
(Tapia, Gonzalez-Betanzos, Vargas-Garduno, and Lozano, 2020), and in restoring the world to the
new normal.
If entrepreneurship plays a significant role in a country’s economic growth and

development, entrepreneurial intent increases the probability of a person’s determination to start a
venture. Forming an entrepreneurial intent is the initial phase in beginning a business (Jovanov,
Cabuleva and Mitreva, 2020). It is also considered as the most critical aspect prior to the
entrepreneurial activity. It is defined as a degree of commitment toward some future actions, which
is targeted at launching an undertaking (Krueger, 1993). Bird (1988), one of the first authors who
emphasize the importance of intention in theorizing entrepreneurial behavior, further described
entrepreneurial intent as a mental orientation that leads an individual towards conception and
implementation of unique commercial concepts (Bird, 1988). The link between intention and
behavior is very well explained in social psychology (Mair and Noboa, 2006), and the link between
intention and entrepreneurial antecedents is established in several scholarly literature.
Social entrepreneurial intent has been a growing concern in several literature nowadays.
The intent of an individuals to start a venture to solve social problems of communities experiencing
poverty, discrimination, economic deprivation, and others is a significant predictor of human
behavior, whether the person will do it or not do it. It is central to understanding the entrepreneurial
process (Bird, 1988; Katz and Gartner, 1998; Krueger Jr., 1993; Krueger and Reilly, 2000). So,
the higher the intent to start a social venture, the higher probability for social enterprise creation
(Mahfud, Triyono, Sudira, and Mulyani, 2020).
“Social entrepreneurship is exercised where some person or group: (1) aim(s) at creating
social value, either exclusively or at least in some prominent way; (2) show(s) capacity to
recognize and take advantage of opportunities to create value; (3) employ(s) innovation, ranging
from outright invention to adapting someone else’s novelty, in creating and/or distributing social
value; (4) is/are willing to accept an above-average degree of risk in creating and disseminating
social value; and (5) is/re unusually resourceful in being relatively undaunted by scarce assets in
pursuing their social venture” as defined by Paredo and McLean (2006). Social entrepreneurs are
game changers and agent of change, and they are expected to adapt in different fast-changing
market situations. Indeed, social entrepreneurship research has graduated from simply defining the
term and it is far beyond descriptive anecdotal cases with qualitative methods (Mair and Noboa,
2006; Bacq and Jansen, 2011; Dacin, Dacin, and Tracey, 2011). However, there are still very few
empirical studies on the understanding of the antecedents of social entrepreneurial intent
(Hockerts, 2017).
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Entrepreneurial Event Model by Shapero and Sokol (1982) is essentially an early intention
model on entrepreneurship. The model is consisting of three elements that affect intention:
displacement, perceived desirability, and perceived feasibility. It explains that displacement, could
either be positive or negative, is the triggering factor that precipitates change in behavior. This
means that the person scan and assess the best opportunity, and this translates to intention based
on his or her perceived desirable and feasible action. The person’s perception of desirability is
affected by personal attitude, values and feelings resulted from the environment such as family,
education and community surrounding (Shapero and Sokol, 1982). On the other hand, the person’s
perception of feasibility is influenced by available resources such as financial, human resources
and related knowledge (Shapero and Sokol, 1982).
The entrepreneurial potential model of Krueger and Brazeal (1994) is an offshoot of

Shapero and Sokol’s (1982) Entrepreneurial Event Model, and Ajzen’s (1991) Theory of Planned
Behavior. The theory explains that a person starts a commercial undertaking due to their planned
behavior dictated by intention. This intent is affected by perceived desirability to attitude toward
behavior and subjective norm, perceived feasibility to perceived behavioral control. Attitude
toward behavior and subjective norm corresponds to each other in which personal perception of
behavior is also influenced by perception of other people who are close to the person (Ayob, Yap,
Sapuan and Rashid, 2013). Krueger and Brazeal (1994) integrates the concept of self-efficacy into
perceived feasibility affecting a person’s intent.
Most of the social entrepreneurial intent theoretical concepts originated either from the
entrepreneurial model (Shapero and Sokol, 1982) or the theory of planned behavior (Ajzen, 1991).
There are even successful attempts of scholars to merge and relate the two models, and further
refine it. These resulted to well-known theories: social entrepreneurial intent model (Mair and
Noboa, 2006), compassionate theory (Miller, Grimes, McMullen, and Vogus, 2012), and social
entrepreneurial antecedents scale (Hockerts, 2015). Mair and Noboa (2003) used individual
variables such as empathy, moral judgment, self-efficacy, social support, perceived feasibility,
perceived desirability and behavioral intention. Mair and Noboa (2003) identified the cognitive-
emotional constructs namely empathy and moral judgment, which affect the individual perception
of desirability to start an undertaking. On the other hand, the self-oriented and others-oriented
enablers are self, efficacy and social support, respectively. These enablers affect the individual’s
perception of the feasibility to set up a venture. Perceived feasibility and perceived desirability
affect the intention to begin a social enterprise.
Existing theories are so limited to self-oriented lens of traditional entrepreneurship models

(Miller, Grimes, McMullen, and Vogus, 2012), so the attempt of Miller, Grimes, McMullen, and
Vogus (2012), which uses compassion as other-oriented mechanism and emotional connection that
encourage social entrepreneurship, is a breakthrough in social entrepreneurship research. Moon
and Koh (2015) contend that compassion is just an affective explanatory variable that affects
prosocial motivation, which is responsible for the cognitive processes and lead to social enterprise
creation. However, several scholars agree with Miller, Grimes, McMullen, and Vogus (2012) that
compassion is both compelling prosocial motivator and an emotional connection the sufferings of
others (Davis, 1998, 2007; Fowler, 2000; Atkins and Parker, 2012; Goetz et al., 2010). It is a
predictor of entrepreneurial activity (Engel, Ramesh, and Steiner, 2019), and it motivates social
entrepreneurship (Dees, 1998). In addition, Cecen (2008) claims that perceived social support is
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consisted of three components namely: family, friends, and special persons/partners. Family is the
most significant source of social support. Therefore, a person’s perceived social support influences
his or her perceived feasibility of establishing a social enterprise.
Compassion is also an affective motivator. As Davis (1980) states, empathic concern refers
to the affective tendency such as feelings of warmth, compassion and concern for others. The
different levels of empathic concern: (1) first level is higher than just cognitive motivator because
it has emotion and feeling for others; and (2) second level is more than the emotion and feeling for
others, the individual is moved by other suffering and wanting to help (Lazarus, 1991: p. 289).
Emotional empathy is vicarious sharing of other’s feeling (Smith, 2006; McDonald and Messinger,
2010). Both emotional and cognitive empathy complement each other in which emotional empathy
drives prosocial vision (Smith, 2006). Due to dispositional affect, compassion is regarded as
broader (Nussbaum, 1996) than empathic concern which is emotional empathy. The second level
empathic concern is known as compassion or compassionate empathy. More so, empathy refers to
sharing the emotional state of others while compassion refers to altruistic emotion (Lazarus, 1991;
Moon and Koh, 2015). Miller, Grimes, McMullen and Vogus (2012) proposes the compassionate
theory whereas compassion-driven cognitive and affective prosocial motivators may directly or
may not directly affect individual motivations to establish social enterprise (Moon and Koh, 2015).
Most of the research studies on compassion and social entrepreneurship are conceptual
frameworks or empirical research with qualitative methods (Moon and Koh, 2015; Dacin, Dacin
and Tracey, 2011; Hoogendorn et al., 2010; Mair and Marti, 2006; Short et al., 2009;
Weerawardena and Mort, 2006). Qualitative studies like those are often limited to their suggestion
of generalizable results (Short et al., 2009). The courage of Moon (2015) to quantify and highlight
the role of compassion and prosocial motivations in increasing the likelihood of establishing a
social enterprise, is supported and guided by the compassionate theory of Miller, Grimes,
McMullen and Vogus (2012). Like Miller et al. (2012), Moon (2015) suggest that relationship of
compassion and the likelihood of social enterprise creation is mediated by prosocial motivator of
cognitive and affective processes. Compassion as an emotion could be transformed into the choice
of establishing a social venture or not, depending on its the antecedents (Bacq and Alt, 2018).
Indeed, the definition of compassion is often confusingly muddled even in various ancient
and modern literature. Though compassion is being thought as a source of action (Goetz et al.,
2010), nevertheless, entrepreneurship literature is still unclear whether compassion can be induced
for an individual to launch a social enterprise. Dees (1998) suggests that compassion motivates
social entrepreneurship but the mechanisms by which it does so remain poorly understood (Short,
Moss, and Lumpkin, 2009; Zahra, Gedajlovic, Neubaum, and Shulman, 2009). This paper bridges
the gap in recent literature for using prosocial motivator such as compassion as a predictor of social
entrepreneurial intent. Furthermore, scholars have emphasized the need for social entrepreneurship
research in Asia to provide a better picture about the concepts in various cultural-geographical
places and in both internationally and locally embedded situations (Chell, Spence, Perrini, and
Harris, 2016; Liang, Chang, Liang, and Liu, 2017).
In essence, the lack of agreed definition and adequate measures of compassion in

psychology and entrepreneurial literature make it difficult to assess compassion in empirical
research (Strauss, Taylor, Gu, Kuyken,, Baer, Jones, and Cavanagh, 2016). The scholars have
381 | P a g e
synthesized existing concepts and integrates common elements and propose a definition of
compassion: (1) recognizing suffering; (2) understanding the universality of human suffering; (3)
feeling for the person suffering; (4) tolerating uncomfortable feelings; and (5) motivation to
act/acting to alleviate suffering. It’s recommended for future work to test the validity of the five-
element definition of compassion (Strauss, Taylor, Gu, Kuyken,, Baer, Jones, and Cavanagh,
2016), and to build on the effect of compassion to the drivers of social enterprise creation intention
and behavior (Moon and Koh, 2015).
To this end, there are still very few empirical studies on the understanding of the
antecedents of social entrepreneurial intent (Hockerts, 2017). The need to explore social
entrepreneurship studies, particularly in the Asian context has been highlighted by several
researchers (Lacap, Mulyaningsih and Ramadani, 2018), to provide a comprehensive picture about
the concept in various cultural-geographical locations in both local and international (Chell,
Spence, Perrini, and Harris, 2016; Liang, Chang, Liang, and Liu, 2017). Most literature available
originated from Europe and other Western countries, despite the fact that most of the renowned
social enterprises work are in the South Asia (Tiwari, Bhat and Tikoria, 2017). In addition to this,
social entrepreneurship is especially significant in developing country to fill in the gaps in terms
of social development and economic discrimination (Chell, 2007). In the Philippines, this
phenomenon is thriving, and youth leadership is also emerging (British Council Philippines, 2015;
Lacap, Mulyaningsih and Ramadani, 2018). It is still an understudied topic with limited research
studies that usually short of empirical data.
Statement of the Problems
Main Problem
“What is the effect of compassion on social entrepreneurial intentions in times of

Covid-19 as perceived by business students?”
Sub-Problems
1. What is the mediating effect of perceived feasibility to the relationship of

compassion and social entrepreneurial intentions in times of Covid-19 as
perceived by business students?
2. What is the relationship of compassion on social entrepreneurial intentions
in times of Covid-19 as perceived by business students?
3. What is the relationship of compassion on perceived feasibility intentions
in times of Covid-19 as perceived by business students?
4. What is the relationship of perceived feasibility on social entrepreneurial
intentions in times of Covid-19 as perceived by business students?
5. What is the extent of compassion in times of Covid-19 among business
students?
6. What is the extent of social entrepreneurial intentions in times of Covid-19
among business students?
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Frameworks
Figure 1
Ho1: Compassion has no significant positive effect on social entrepreneurial intentions.

Ha1: Compassion has a significant positive effect to social entrepreneurial intentions.
Ho2: Compassion has no significant positive effect on perceived feasibility.

Ha2: Compassion has a significant positive effect on perceived feasibility.
Ho3: Perceived feasibility has no significant positive effect on social entrepreneurial

intentions.
Ha3: Perceived feasibility has significant positive effect on social entrepreneurial intentions.
Ho4: Perceived feasibility has no mediating effect on the relationship between compassion
social entrepreneurial intentions.
Ha4: Perceived feasibility has mediating effect on the relationship between compassion social
entrepreneurial intentions.
Methodology
The research design was quantitative, descriptive and causal explanatory. The population
used was the total number of business students in a specific program, enrolled in their capstone
project. The characteristics of the respondents used in the study qualified as nascent entrepreneurs,
which was the recommended respondents for intention models as per Krueger (1993). The students
are deemed to be nascent entrepreneurs because they are taking their capstone project and about
to graduate few months from the date of the implementation of the study. This is also in
consideration of several lockdowns due to the pandemic. Moreover, students are the most common
respondents for intention models.
Census is used in the study because the entire population of students enrolled in the
capstone project of the specific business program is very small. The link to the online survey was
electronically distributed to 191 students. 191 responses were collected, resulting in a response
rate of 100%. The questionnaire was written in English, and it has compassion, perceived
feasibility, and social entrepreneurial intentions parts. Compassion has adopted the five-element
383 | P a g e
proposed by Strauss, Taylor, Gu, Kuyken, Baer, Jones, and Cavanaugh (2016): (1) recognizing
suffering; (2) understanding the universality of human suffering; (3) feeling for the person
suffering; (4) tolerating uncomfortable feelings; and (5) motivation to act/acting to alleviate
suffering; while for perceived feasibility and social entrepreneurial intentions, the questionnaire
was adopted from Linan and Chen (2009).
For compassion, the respondents were asked “How well do the following statements
describe you?”. It has 4 questions, and a 5-point likert scale is used. On the other hand, for social
entrepreneurial intentions, the respondents were asked “How strongly you disagree or agree with
the following statements about yourself?”. It has 6 questions, and a 6-point likert scale is used.
To test the validity of the questionnaire prior to its actual distribution, a pretest was done.
Respondents with the same characteristics as the identified population for this study were used. It
resulted to above 0.70 Cronbach’s Alpha and the Composite Reliability for all constructs, which
means that the measures of internal consistency in scale items are considered good for the
indicators. Table 1 shows the results of the pretest.
Structural equation model was used to analyze the causal relationships between variables,
and SmartPLS 3.0 was also utilized.
Data Analysis and Presentation
Table 1
Gender of the Respondents
Gender Number Frequency

Male 136 71.58%
Female 54 28.42%
Total 190 100.00%
Sample descriptives included the gender of the respondents, history of

entrepreneurship in the family and past volunteering experiences. The gender of the
respondents is shown in Table 1. Out of 63 respondents, 136 (71.58%) were male and 54
(48.42%) were female while 1 respondent did not specify his/her gender. In the past social
entrepreneurship studies, males are more likely to start a social enterprise, and male
entrepreneurs outnumbered female entrepreneurs in some countries (Urban and Galawe,
2019).
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Table 2
History of Entrepreneurship in the Family
History of
Entrepreneurship Number Frequency
in the Family
Yes 140 65.10%
No 50 26.32%
Total 190 100.00%
Table 2 shows the history of entrepreneurship in the family of the respondents. Out
of 191 respondents, 140 (65.10%) revealed that they have history of entrepreneurship in
the family, and 50 (26.32%) has no history of entrepreneurship in the family while 1
respondent did not history of entrepreneurship in the family.
Table 3
Past Volunteering Experience
Past Volunteering
Number Frequency
Experience
Yes 105 55.26%
No 85 44.74%
Total 190 100.00%
36 (57.10%) of the respondents has past volunteering studies, and 27 (42.9%) has
no volunteering experience while 1 respondent did not disclose past volunteering
experience. As identified by Ip, Wu, Liu and Liang (2017), prior volunteering experience
facilitates the generation of social problem awareness which leads in forming a social
undertaking.
Mean Responses
Table 4 illustrates the mean responses of compassion indicators: C1 = 3.68; C2 =

3.73; C3 = 3.72; and C4 = 3.86. As shown in Table 5, a mean of 3.71, 3.60, and 3.87 implies
that the respondents are being described.
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Table 4
Mean Responses of Compassion Indicators
Compassion Mean Responses
1. I am being moved by another’s suffering and I want to help. 3.68
2. I have an openness to the suffering of others with a commitment to
3.73
relieve it.
3. I am being touched by the suffering of others, opening one’s awareness
3.72
to other’s pain and not avoiding or disconnecting from it.
4. I have feelings that arises in witnessing another’s suffering and that
3.86
motivates a subsequent desire to help.
Table 5
Scoring Index for Compassion Indicators
Mean Responses Interpretation

4.20 – 5.00 Describes me very well
3.40 – 4.19 Describes me
2.60 – 3.39 Neutral
1.80 – 2.59 Does not describe me
1.00 – 1.79 Does not describe me very well
The mean responses of perceived feasibility are shown in Table 6. The mean
responses are the following: PF1 = 3.72; and PF2 = 4.01. The mean responses mean that
the respondents agree to all the descriptions enumerated. The scoring index for perceived
feasibility is shown in Table 7.
Table 6
Mean Responses of Compassion Indicators
Perceived Feasibility Mean Responses
1. I know enough to start a social venture. 3.72
2. I am determined to create a social entrepreneurial venture in the future. 4.01
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Table 7
Scoring Index for Perceived Feasibility

4.20 – 5.00 Strongly Agree
3.40 – 4.19 Agree
2.60 – 3.39 Neutral
1.80 – 2.59 Disagree
1.00 – 1.79 Strongly Disagree
The mean responses of social entrepreneurial intentions are shown in Table 8. The
mean responses are the following: SEI1 = 5.63; SEI2 = 5.86; SEI3 = 5.68; SEI4 = 5.82;
SEI5 = 5.43; and SEI6 = 5.57. The mean responses are between 5.43 – 5.86 which means
that the respondents agree to all the descriptions enumerated. The scoring index for social
entrepreneurial intentions is shown in Table 9.
Table 8
Mean Responses of Social Entrepreneurial Intentions Indicators
Mean
Social Entrepreneurial Intentions
Responses
1. I am ready to do anything to apply my business skills to have a significant
5.63
impact in reducing social inequities.
2. My professional goal is to work in a setting where I can use my business skills
5.86
to craft solutions to social problems.
3. I felt that I made a positive difference in the lives of the people that I helped. 5.68
4. I will make every effort to use my business acumen to bring about social
5.82
change
5. I have very seriously thought of working in a social enterprise. 5.43
6. I have the firm intention to start a social enterprise someday. 5.57
Table 9
Scoring Index for Social Entrepreneurial Intentions Indicators

6.16 – 7.00 Strongly Agree
5.30 – 6.15 Agree
5.30 – 6.15 Somewhat Agree
3.58 – 4.43 Neutral
2.72 – 3.57 Somewhat Disagree
1.86 – 2.71 Disagree
1.00 – 1.85 Strongly Disagree
387 | P a g e
Table 10 illustrates the mean responses and interpretation for compassion and social
entrepreneurial intentions. Based on the scoring indexes, the questions on compassion with
a mean = 3.74 describe the respondents well; perceived feasibility mean = 3.58 means the
respondents agree that the statements describe them; and the respondents agree with the
questions on social entrepreneurial intentions with a mean = 5.66.
Table 10
Mean Responses and Interpretation
Mean Interpretation
Variables
Responses
Compassion 3.74 Describes me
Perceived Feasibility 3.58 Describes me
Social Entrepreneurial Intentions 5.66 Agree
Construct Reliability and Validity
Table 11
Construct Reliability and Validity
Cronbach's Composite Average

rho_A
Alpha Reliability Variance
Compassion 0.832 0.864 0.887 0.664
Perceived Feasibility 0.677 0.823 0.800 0.574
Social Entrepreneurial
0.884 0.885 0.912 0.634
Intentions
The traditional criterion for internal consistency is the Cronbach’s alpha which
provides the reliability based on the internal correlations of the constructs. All constructs
across categories reaped values ranging from 0.677 to 0.884 which deemed to be
satisfactory. The 0.677 was the result after removing question numbers 2 and 5. The
Cronbach alpha < 0.6 indicated a questionable remark. However, Cronbach alpha is said
to be sensitive in number of items in the scale and generally underestimate the internal
consistency reliability. For exploratory research, 0.60 to 0.70 are acceptable. Composite
reliability is more reliable for path modeling, so the construct is maintained. The composite
reliability values of all constructs across categories scored values > 0.800 anyway, which
means that the constructs have near perfect correlations
Outer Loading
Higher outer loading means that the constructs are associated so much with the
indicators. Generally, an outer loading with 0.70 or higher is acceptable and below 0.70
should be carefully examine for removal. As for the results, only 1 scored below 0.70,
which is the first question in perceived feasibility. The outer loading of P1 = 0.675 is the
highest score the construct got after removing some questions. In addition, its deletion does
388 | P a g e
not increase the composite reliability and content validity of construct, so the reflective
indicator is retained.
Table 12
Outer Loadings
Compassion Perceived Feasibility
Intentions
C1 0.740
C2 0.873
C3 0.844
C4 0.797
P1 0.675
P3 0.713
P5 0.870
SEI1 0.726
SEI2 0.791
SEI3 0.793
SEI4 0.861
SEI5 0.783
SEI6 0.816
In compassion (C1, C2, C3, C4), the indicators reliability achieved values >= 0.70
which means that the indicators have so much in common. Its values were ranging from
0.740 (C1) to 0.873 (C2); perceived feasibility values were between 0.675 (P1) and 0.870
(P2); while the outer loadings of social entrepreneurial intentions were (SEI1) 0.726,
(SEI2) 0.791, (SEI3) 0.793, (SEI4) 0.861, (SEI5) 0.783, and (SEI6) 0.816. All the
indicators, except for P1, achieved values >=0.70 which means that the indicators are so
much in common.
Discriminant Validity
The extent to which a construct is indeed different from other constructs by

empirical standards is discriminant validity. Its assessment ensures that the reflective
constructs have the strongest relationships with its own indicator. The two approaches used
in this study were the Cross Loadings and Fornell-Lacker criterion:
1. Cross-Loadings
389 | P a g e
Table 13
Cross Loadings
Compassion Perceived Feasibility
Intentions
C1 0.740 0.160 0.321
C2 0.873 0.369 0.464
C3 0.844 0.302 0.326
C4 0.797 0.231 0.381
P1 0.116 0.675 0.297
P3 0.123 0.713 0.290
P5 0.400 0.870 0.572
SEI1 0.440 0.479 0.744
SEI2 0.437 0.341 0.791
SEI3 0.377 0.484 0.816
SEI4 0.418 0.396 0.846
SEI5 0.270 0.437 0.764
SEI6 0.265 0.510 0.778
Table 13 illustrates the analysis of two latent variables: compassion measured by 4

indicators; perceived feasibility measured 3 indicators; and social entrepreneurial
intentions measured by 6 indicators. The indicator outer loadings were highlighted in each
row, and all were higher than its cross loadings. This means that the discriminant validity
has been established.
2. Fornell-Lacker Criterion
Fornell-Lacker criterion compares square root of the AVE values with the latent
correlations. Therefore, the square root of each construct’s AVE should be greater than its
highest correlation with any other construct. If this is the case, it means that the construct
shared more variance with its associated indicators than with any other construct. As seen
in Table 14, the square root of each construct’s AVE was higher than any other: 0.815 for
compassion; 0.758 for perceived feasibility; and 0.796 for social entrepreneurial intentions.
Table 14
Fornell-Lacker Criterion
Social
Perceived
Compassion Entrepreneurial
Feasibility
Intentions
Compassion 0.815
Perceived Feasibility 0.340 0.758
Social Entrepreneurial Intentions 0.466 0.560 0.796
390 | P a g e
T-Statistics and P-Values
The path coefficient of compassion and perceived feasibility is t=3.953 and

p=0.001; compassion and social entrepreneurial intentions is t=4.688 and p=0.001; and
perceived feasibility and social entrepreneurial intentions is t=8.898 and p=0.001 as shown
in Table 15.
Table 15
T-Statistics and P-Values
Original Sample Standard T Statistics P

Sample Mean Deviation (|O/STDE Valu
(O) (M) (STDEV) V|) es
Compassion -> Perceived Feasibility 0.340 0.344 0.086 3.953 0.001
Compassion -> Social Entrepreneurial
0.312 0.323 0.067 4.688 0.001
Intentions
Perceived Feasibility -> Social
0.453 0.455 0.051 8.898 0.001
Entrepreneurial Intentions
R Square and R Square Adjusted
R2 value < 0.3 is generally considered a none or very weak effect size; R2 value 0.3
< r < 0.5 is considered a weak or low effect size; R2 value 0.5 < r < 0.7 is considered a
moderate effect size; and R2 value > 0.7 is considered strong effect size (Moore and Flinger,
2013). Table 16 shows the R2 and R2adj the model. The R2 and R2adj values were 0.115 and
0.111; 0.399 and 0.393 respectively, which means that model has very weak and weak
effect. In general, the higher the R2, the better the model fits. However, for a field that
attempts to predict human behavior, the typical results of R2 values are lower.
Table 16
R Square and R Square Adjusted
R Square R Square Adjusted
Perceived Feasibility 0.115 0.111

Social Entrepreneurial Intentions 0.399 0.393
Path Coefficient
The path coefficient of compassion and social entrepreneurial intentions is 0.534.

Estimated path coefficient close to +1 represent strong positive relationship; -1 represent
strong negative relationship; and the closer to 0, the weaker the relationships. The path
coefficient analysis revealed that the constructs have moderate positive relationship.
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Table 17
Path Coefficient
Social
Perceived
Compassion Entrepreneurial
Feasibility
Intentions
Compassion 0.340 0.312
Perceived Feasibility 0.453
Intentions
Hair et al. (2014) states that in most settings, researchers choose a significance level of 5%
that implies that the p < 0.05 in order to render the relationship under consideration as being
significant. The greater the T value, the greater the evidence that is against the null hypothesis.
Thus, high T values indicate significant influences. P values indicate how well the sample data
supports the null hypothesis. It measures how compatible the data are to the null hypothesis. Thus,
a low P value is needed to prove that the alternative hypothesis is true.
Table 17
Summary of Hypothesis
Hypothesis
Ho1: Compassion has no significant positive relationship on social entrepreneurial
reject
intentions (SEIs)
Ho2: Compassion has no significant positive effect on perceived feasibility. reject
Ho3: Perceived feasibility has no significant positive effect on social

reject
entrepreneurial intentions (SEIs).
Ho4: Perceived feasibility has no mediating effect on the relationship between
reject
compassion social entrepreneurial intentions (SEIs).
In this study, we sought to examine the effect of compassion to social entrepreneurial

intentions (SEIs), and we have proven that it has significant effect. The students surveyed generally
responded positively that compassion leads people to the intention of establishing a social
enterprise. This supports the Miller, Grimes, McMullen and Vogus (2012) study that compassion
increases the likelihood of a person to engage in social undertaking. Findings of the study further
confirmed that compassion has positive relationship with social entrepreneurial intentions.
In addition, perceived feasibility was found to have a positive and partial mediating effect
on the relationship of compassion and social entrepreneurial intent. The respondents believed that
the perceived feasibility of establishing an enterprise positively and partially mediate compassion
392 | P a g e
and the intent of social enterprise creation. This supports prior entrepreneurial studies on the effect
of perceived feasibility on intention of social enterprise creation.
Based on the study findings, educational institutions efforts should be made to embed
social entrepreneurship in various business courses. This can be helpful in developing students’
intention to engage in business and helping others. In doing so, these institutions will be able to
produce socially responsible businesspersons which is very much needed in developing countries
like the Philippines specially during and after this difficult time. The national and local
policymakers should also be involved in formulating laws that support social entrepreneurs and
their cause. This will encourage more students and startups to venture into social undertaking.
Laws and regulations that promote social entrepreneurship will also help in solving social
problems. The major catastrophe that the students experienced due the Covid-19 pandemic may
differ from various studies which has been done prior to this research. Another practical
implication of the study is it is the first study done in the Philippines that presents compassion and
social entrepreneurial intentions in the time of Covid-19. In addition, the paper serves as a basis
for succeeding study on compassion and social entrepreneurial intentions (SEIs). The data may
serve as secondary information for other researchers.
In addition, the study contributes to social entrepreneurship and traditional

entrepreneurship literature in so many ways. First and foremost, the extension of prior social
entrepreneurship framework by introducing compassion as a predictor of social entrepreneurship
intent. Its framing is considered one of the first concepts to include compassion as a construct in
entrepreneurship literature. The delineation between compassion and empathy can be further
explore by future researchers in the context of entrepreneurship. Furthermore, study on prosocial
motivations as predictors of social entrepreneurial intent is recommended.
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Quo vadis Covid 19? In Search of Macro-variables per Country to
Explain its Spread through Regression and Correlation Analysis
8th NBMC Paper # 30
Dennis L. Berino
[email protected]
Abstract
Covid19 has caused disruption in all facets of every day life. Governments world-wide scrambled
with emergency actions including social distancing measures, public awareness programs, testing
and quarantining policies, and income support packages to contain its spread. As of 8 Nov. 2020,
49.9 million cases world-wide were recorded with 32,6M recoveries and 1,243K deaths. The top
20 countries in terms of cases accounted for almost 80% of the total cases world-wide. As volumes
of studies have been done in a short span of time to understand what contributes to the number of
cases, this research surfaced two variables in the 20 countries studied with significant impact on
its spread: air transport passengers carried and population. There is a continuing need to limit
movement of people using air transport to avert the spread. There is also a continuing need to
observe safety protocols among the general population at large since a bigger population base is
fertile ground for the spread of the virus. Work from home, online and modular learning, non-
face-to-face intervention and other digitally enabled processes can help in minimizing people
contact as a good means to mitigate its spread.
Keywords: Covid19, social distancing, air transport passengers carried, work from home, non-
face-to-face intervention, digitally enabled processes
Introduction
What is Covid19?
“Coronavirus disease (COVID-19) is an infectious disease caused by a newly

discovered coronavirus. Most people who fall sick with COVID-19 will experience mild
to moderate symptoms and recover without special treatment. The virus that causes
COVID-19 is mainly transmitted through droplets generated when an infected person
coughs, sneezes, or exhales. These droplets are too heavy to hang in the air, and quickly
fall on floors or surfaces. You can be infected by breathing in the virus if you are within
close proximity of someone who has COVID-19, or by touching a contaminated surface
and then your eyes, nose or mouth.” (Covid19 cases world-wide, n.d.).
It was first documented in China in Dec. 2019 and has since spread world-wide into
a pandemic. It has affected 216 countries and territories out of the total of 251 for an 85%
penetration rate (How many countries in the world, n.d.), registering 49,900K cases as of
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8 Nov. 2020 (Covid19 cases world-wide, n.d.). There were 1,243K reported deaths for the
same period for a 2.5% death rate with 32,645K recoveries for a 65.4% recovery rate
(Covid19 cases world-wide, n.d.).
Covid19 has caused disruption in all facets of every day life. Governments world-
wide “scrambled with emergency actions including social distancing measures, public
awareness programs, testing and quarantining policies, and income support packages”
(Asraf, 2020). It has strained capacities of medical professionals and the hospital industry
to handle the volume of cases. “A baseline global pandemic scenario sees gross domestic
product fall by 2 percent below the benchmark for the world, 2.5 percent for developing
countries, and 1.8 percent for industrial countries” (Potential impact of Covid19, 2020).
There is no end in sight of the pandemic as the scientific community is still hard at work
right now to develop a vaccine for the virus.
Browsing through the Web is a veritable researcher’s dream as there are so many
sources with Covid19 data and information, up-to-the minute news and updates as well as
various research papers and articles all discussing the subject. This paper is a small
contribution to the wide range of research effort on the subject. It took a look at macro-
variables per country and how they may contribute to the number of Covid19 cases in
countries.
One particular study “suggests that the sex ratio of the population, population
density and disposable income are crucial for the number of cases” (Yaylali, 2020) while
another talked about “linking weather conditions and air pollution to Covid19 outbreaks”
(Do environmental factors, 2020). Another paper tried to “identify and categorise the
climatic, socio-biological factors that influence the global super-spread of the epidemic”
(Priyadarsini, 2020). And another one studied several variables like socio-economic
factors, weather characteristics, population outflow and geographic proximity on its
transmission (Impacts of social and economic, 2020).
The author focused his study on identifying macro-variables which was a mix of
demographic, economic, medical, education, travel and climate factors which may have an
impact in the number of Covid19 cases in countries selected for the study.
Framework
Taking a leaf from some of the studies mentioned, the author initially identified 12
variables which from his assessment may have an impact on the number of Covid19 cases in the
countries selected.
Demographic variables. Two demographic variables were considered: population and

population density. The assumption was higher population and population density contributes to
the cases.
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Economic variables. Three economic variables were identified for inclusion: GNI per
capita, unemployment rate and stocks traded as percent of GDP. The author took the view that
with higher GNI per capita and stocks traded, there are more movement of goods and services
which necessitates movement of people which may influence the spread of the virus. Higher
unemployment rate was assumed to have lower impact on cases since unemployed individuals tend
not to travel as much compared to employed individuals.
Medical variables. Mortality rate, number of doctors and number of hospital beds and
health expenditure as a percent of GDP were chosen as indicators for the cases. It was assumed
that higher mortality rates will lead to more cases since it meant countries were susceptible to more
deaths as indicated by the statistic. On the other hand, more doctors and hospital beds as well as
higher health expenditure should contribute to lower number of cases since they indicate capacity
to handle cases that will develop.
One education factor was included – literacy rate which the author inferred should
contribute to lower cases since a more educated population will have a better understanding about
the dangers of the virus and should be better able to follow the rules of containment and social
distancing.
One travel measure – passengers carried through air transport, was part of the variables
since it was assumed that air travel is a potent way of spreading the virus.
Lastly, since there were initial discussions about colder and temperate countries being
more susceptible, the general climate of the countries involved was included categorizing them
either as temperate or non-temperate countries (those with higher temperature conditions).
Positive impact – seven variables. Variables hypothesized with positive impact on number
of Covid19 cases were the following: population, population density, GNI per capita, stocks traded
as percent of GDP, mortality rate, passengers carried through air transport and temperate countries.
Inverse impact – five variables. Variables assumed to have a negating impact to the number
of cases were: unemployment, number of doctors and hospital beds, health expenditure as percent
of GDP and literacy rate.
There is a definition of the variables used in the study in the glossary portion of the paper.
Methodology
The data per country on the identified and discussed variables in the Framework section
were gathered from various web sources. As specified in the Introduction portion, the number of
Covid19 cases was as of 8 Nov. 2020. The top 20 countries with Covid19 cases were selected
since they accounted for almost 80% (79.9%) of the total cases world-wide.
Regression and correlation analyses were conducted on the variables with the dependent
variable being Covid19 cases while twelve independent variables were as specified in the
Framework section.
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Regression is a statistical method used in finance, investing, and other disciplines that
attempts to determine the strength and character of the relationship between one dependent
variable (usually denoted by Y) and a series of other variables (known as independent variables)
(Beers, 2020). Regression is a forecasting technique to determine the expected change in a
dependent variable given a change in the independent variable associated with it.
“Correlation analysis is a statistical method used to evaluate the strength of relationship

between two quantitative variables. A high correlation means that two or more variables have a
strong relationship with each other, while a weak correlation means that the variables are hardly
related. This technique is strictly connected to the linear regression analysis that is a statistical
approach for modeling the association between a dependent variable, called response, and one or
more explanatory or independent variables” (Franzese & Juliano, 2019). Correlation values can
range from +1, a strong direct relationship and -1, a strong inverse relationship. The values are
referred to as correlation coefficients or r-values.
A correlation matrix was computed for the variables to determine which among the
independent variables had a strong relationship with the dependent variable. Test of significance
was done through ANOVA (analysis of variance). “An ANOVA test is a way to find out if survey
or experiment results are significant. In other words, they help you to figure out if you need to
reject the null hypothesis or accept the alternate hypothesis” (Anova, n.d.).
After identifying variables with significant relationship with Covid19, the dependent
variable, a stepwise regression was done to determine which of the significant variables will be
included in the final model.
Results
Covid19 cases. Table 1 details the 20 countries included in the study arranged in terms of
number of Covid19 cases. The USA had the most cases with 9,960k followed by India with 8,510k
and at third was Brazil with 5,650k. These top 3 countries accounted for 48% of the total Covid19
cases world-wide. As already mentioned, the top 20 countries accounted for 79.9% of the cases.
The country where the first Covid19 cases were reported – China, had 92,000 cases ranked
at 59 while the Philippines had 396k ranked at 25.
Geographic location. In Table 2 are the details about the distribution of the countries by
geographic location. Majority of the cases at 9 were located in Europe (45%).
Income group. Table 3 shows the distribution of the country by income group. There were nine
each from the high-income and upper-middle-income groups. Only two in the top 20 came from
the lower-middle-income group.
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Table 1
Basic data about the variables
Table 2
Country location by continent
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Correlation matrix. Table 4 shows the computed correlation coefficients of the variables.
The primary purpose of the matrix was to determine which independent variables had a significant
relationship with Covid19 cases. The secondary purpose was to identify which independent
variables were related to each other which should lead to only one of the related variable to be
used to avoid multicollinearity. Multicollinearity is the occurrence of high
Table 3
Country by income group
intercorrelation among two or more independent variables in a multiple regression model (Hayes,
2020). This may affect the dependability of the result.
In Table 4, the correlation coefficients with numbers under them, ie either 0.01 or 0.05,
indicate that those variables were significantly related at either 0.01 or 0.05 level of significance.
This was determined through simple regression analysis with ANOVA evaluation. Majority of
those related were significant at 0.01.
Again from Table 4, we can see from the first row labelled “Covid cases” that there were
three independent variables with significant relationships with Covid cases. The one with the
highest correlation coefficient was “Air transport, passengers carried”(ATPC) with an r-value of
0.784 and significant at 0.01. It was closely followed by population with an r-value of 0.736 also
significant at 0.01. The only other variable with a significant relationship was “Stocks traded as %
of GDP” (STPG) with an r-value of 0.516 significant at 0.05.
All the other 9 variables had lower r-values in relation to Covid cases which were not
significant.
It made sense that ATPC was significantly correlated with Covid cases since a highly
mobile population represented by air travel is an effective means of transporting the virus across
territories. That is the reason why all forms of mass transport, not only air transport, in many
countries were disallowed during the initial stages of quarantine. This is also consistent with a
study done which mentioned that population outflow is factor for Covid19 transmission (Impacts
of social and economic, 2020).
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Population characteristics was mentioned by Yaylali (2020) as crucial for the spread of
cases and the result of this study has contributed to this assertion.
The third variable with a significant impact on Covid cases was STPG. High level of traded
stocks may mean higher level of economic and business activity in countries. This will lead to
higher level of movement of goods and services as well as movement of population to support
higher economic and business efforts. This may be the reason why STPG had a significant impact
on Covid cases.
Multicollinearity. To avoid multicollinearity, we examined the r-values of the three

independent variables with each other and this is summarized in Table 5.
Table 4. Correlation matrix with significant p-values
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Table 5
Multicollinearity of significant variables
The table shows that ATPC with population and population with STPG had low r-values
which were not significant. ATPC with STPG however had a significant r-value which can lead
to multicollinearity. This will be material in the stepwise regression discussion.
Stepwise regression. The stepwise regression process required coming up with a regression
model using first the independent variable with the best r-value. In this instance, it is Covid cases
with ATPC and the model output can be seen in Figure 1. As already pointed out, the r-value was
at 0.784 and the model was significant at 0.01. The coefficient of determination, r-squared, showed
that 61% of the changes in the number of Covid cases can be explained by ATPC. The regression
line also showed that as you increase ATPC by one (1), the number of Covid cases will increase
by an average of 0.011. This means 100 ATPC will result to an increase of one Covid case.
After the initial simple regression, we included the next variable with the second highest r-
value with Covid cases and that is population. The regression model with the two independent
variables ATPC and population can be seen in Figure 2. The r-value of this combined model went
up to 0.948 and was significant at 0.01. The r-squared value revealed that 89% of the changes in
Covid cases can be explained by the combined impact of ATPC and population. The regression
line also showed that an increase of one (1) in ATPC will
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Figure 1
Regression model with Covid cases and one independent variable – ATPC
result to an average increase of 0.009 in Covid cases holding population constant while an increase
in one (1) in population will result to an average increase in Covid cases by 0.005 holding ATPC
constant. In other words, for every 1,000 ATPC, Covid cases will increase by an average of nine
(9) and for every 1,000 population, Covid cases will increase by an average of five (5).
The third significant independent variable – STPG was inputted into the regression model
for a multiple linear regression model with three independent variables – ATPC, population and
STPG. The results are in Figure 3. You can see from the results that the r-value stayed at 0.948.
It is still significant but the addition of STPG did not contribute to the improvement of the
correlation coefficient. This can be traced to the significant relationship between ATPC
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Figure 2
Regression model with Covid cases and two independent variables – ATPC and population
and STPG as shown in Table 5. This means we can exclude STPG from the model since ATPC
on its own can sufficiently explain increase in Covid cases
Hence, based on the foregoing, the final regression model was the one with two
independent variables – ATPC and population seen in Figure 2.
Figure 3
Regression model with Covid cases and three independent variables – ATPC, population and
STPG
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Conclusion
The objective of this study is simple – for the author to contribute to the volume of studies
already undertaken about the Covid19 pandemic and add to better understanding of the
proliferation of cases.
Of the 12 variables considered, only three had a significant r-value with Covid cases: air
transport passengers carried (ATPC), population and stocks traded as a percent of GDP (STPG).
The final regression model considered however just included ATPC and population since the
inclusion of STPG did not increase the overall r-squared value. ATPC and STPG also had a strong
correlation which means only one can already be a sufficient predictor. We used ATPC since it
had a higher r-value with Covid cases.
Governments can consider looking at policies and procedure to minimize the impact of
spreading Covid19 through air transport passengers. Among other measures, it can limit the
passenger capacity of aircrafts, conduct test among both departing and arriving passengers, the use
of face masks and face shields as mandatory, limiting air travel to important destinations for the
time being that we are trying to control the spread of the virus.
The general movement of population should continue to be controlled and monitored to

curtail the virus’ spread. Limiting movements to identified industries where work from home may
not be practical can be prioritized. Non-essential travel and social activities can be limited. Online
and modular learning should be the norm as long as an effective vaccine has not been developed
to protect the young population. Non-face-to-face processes and other digitally enabled
intervention should be continued. Cooperation among the general population is needed to control
the virus’ spread.
The study can be expanded to include the next twenty countries to provide more expanded
viewpoint in terms of experience of spread of Covid19.
Variables other than those considered here can be looked at so we can have better
understanding of the multi-dimensional factors which contribute to its spread.
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References
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and-statistics/hypothesis-testing/anova/
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pandemic: International evidence from financial markets. Journal of Behavioral and
Experimental Finance.
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Franze, M. & Juliano, A. (2019). Correlation analysis.
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How many countries and territories in the world? (n.d.).
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Impacts of social and economic factors on the transmission of Covid19 in China. (n.d.).
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the-transmission-of-coronavirus-disease-2019-covid-19-in-china
Priyadarsini, S. & Suresh, M. (2020). Factors influencing the epidemiological characteristics of
pandemic COVID 19: A TISM approach.
https://www.tandfonline.com/doi/full/10.1080/20479700.2020.1755804?af=R&
The Potential Impact of COVID-19 on GDP and Trade: A Preliminary Assessment. (2020).
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global20pandemic%20scenario,1.8%20 percent%20for%20industrial%20countries
Yaylali, A. (2020). Factors Affecting the Number of COVID-19 Cases and the Death Rate:
Empirical Evidence from the German States.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3617986.
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Shop ‘Til You Drop: Examining the Impact of Risk and Trust in M-
Commerce and its Subsequent Effects on Consumers’ Future
Purchase Intention
8th NBMC Paper # 31
Grecia Nicole A. Alcera, Azriel Cais T. Baluyut, Jackelynn Anne T. Chiu, Jacob Jonah F. Ferrer,
and Ruth Angelie B. Cruz
De La Salle University-Manila
Abstract
This study examines the impact of Risk and Trust on consumers’ Future Purchase Intention whilst
focusing on the antecedents of the former in an attempt to explain how and why the aforementioned
variables interact in the way they do. Several moderating variables that reflect phenomena specific
to the Philippines M-Commerce market have also been employed to measure its impact on the
overall model. The data for this study was obtained using a survey instrument distributed to M-
Commerce users within Metro Manila using a Snowball Sampling procedure. Results of this
survey were then subjected to a regression analysis in order to measure the basal impact of Risk,
Trust, and its antecedents on consumers’ Future Purchase Intention. In lieu with this, a Moderated
Mediation Regression Analysis was employed in order to quantify the impact of the study’s
moderating and mediating variables on the overall model. Results of this process revealed that all
the moderating variables employed in this study were found to be invalid moderators, thus
implying a non-significant effect on the relationship between Risk, Trust, and its respective
antecedents. Risk and its antecedents were also found to have a non-significant effect on the
consumers’ Future Purchase Intention, whilst Trust and its antecedents were found to exhibit the
opposite. While the latter is an outcome that was expected from the study, the non-significance of
Risk and its antecedents oppose the researchers’ a priori expectations, which can be attributed to
the volatility of the economic environment of the Philippines while the survey instrument was
being distributed. As such, the in-depth results to this study can provide notable insights on the
workings of the Philippine M-Commerce industry, as well as a clearer portrait of the typical
Filipino M-Consumer, supplying reasons behind their purchasing behaviors during tumultuous
periods in time.
Keywords: Mobile Commerce, M-Commerce, Perceived Risk, Trust, Purchase Intention,

Consumer Behavior, Mobile Shopping, Smartphone
Introduction
Today, one may notice society’s dependence on their smartphones. Manual affairs are
simply a thing of the past; consumers would rather partake in such behind the convenience of their
screens, exerting little to no effort whatsoever. According to the Mobile Internet Retailing Report
of Euromonitor International (2019), it is said that 63% of the Philippine population is in possession
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of smartphones and connected to the internet, putting the country in the 12th place in the world in
the rankings for the highest number of internet users. The Philippines also boasts a growing market
for internet retailing, being forecasted to consume a heaping PHP 145.9 billion by 2023 from
Electronic Commerce providers. Due to developments in the Philippine landscape, prominent
“Mobile Commerce” players such as Shopee and Lazada have been led to penetrate such markets
as a means of capitalizing on the rise of smartphone users in the country. For these major M-
Commerce players to continue their strides within the country’s digital markets, it is of utmost
importance to investigate the factors that have an impact on the behavior of their consumers.
Recent developments in the study of M-Commerce include investigating the factors that
would positively affect a consumer’s purchase intentions. Studies by Natajaran, et.al. (2017) and
Wei, et.al (2009) point towards risk and anxiety as some of the factors discouraging repurchases
in M-Commerce platforms, yet were not able to delve deeper in lieu with such. The researchers
have found it necessary to supplement what has been left underdeveloped in this field of study in
order to spearhead the growth of the Philippine M-Commerce market. By identifying and
investigating the antecedents of Risk and Trust, this paper aimed to develop a narrative of the
aforementioned variables’ relationship with a consumer’s future purchase intention. Doing so has
provided a clearer insight on what a typical Filipino M-Consumer looks and acts like, helping the
Phillipine M-Commerce industry develop specific strategies for the market. The researchers have
produced recommendations grounded on analyses that would not only benefit existing players, but
also the actors deliberating on entering the M-Commerce industry.
Literature Review
Perceived Risk and Its Subsequent Antecedents in Mobile Commerce
Due to the implicit uncertainty of transactions and interpersonal nature of online

transactions, risk is inevitable in the E-Commerce landscape. Dachyar and Banjarnahor
(2017) considers perceived risk as an important factor due to having the likelihood of it
affecting a consumer’s behavior. There are six original dimensions of risk established by
Cunningham (1967), namely financial, performance, psychological, physical, social and
time risk. However, Jacoby and Kaplan (1972) recognised the redundancy of the physical
and social risks in the online environment and omitted it. Therefore, academic literature
measures risk based on the four dimensions as proven by Jacoby and Kaplan (1972).
Financial Risk
Financial risk is the aspect of risk that represents potential financial risk due
to fraud which may be caused by things such as lack of security, such as the security of the
payment process (Featherman and Pavolu, 2003). Marriott and Williams (2018) found that
financial risk has a significant impact on the overall risk perception observed from a sample
size of 435 individuals in the United Kingdom when using M-Shopping services. With that
being said, by assuring customers about financial loss protection policies and anti-fraud
protection technology, financial risk can be lessened therefore reducing the risk perception
of customers and potential customers.
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Time Risk
Time risk represents the time lost when making bad purchasing decisions or time
wasted researching and making the purchase, learning how to use a product or service only
to have to replace it if it does not perform to expectations (Featherman and Pavlou, 2003).
As people value time, it can play a factor in their decision making. Furthermore, time risks
may also include problems which may arise due to the nature of M-Commerce, being the
purchase and delivery process. It takes time to deliver an item, and should the item end up
being defective it can cause even more time to be wasted in the return and refund process,
as pointed out by Bezes (2016).
Psychological Risk
Psychological risk pertains to psychological factors that one may face when
using a service, such as personal tension or anxiety. Bezes (2016) defines this as the
“probability of anxiety or loss of self-esteem when buying a product on the website or in a
store. According to Laroche et al. (2004), psychological risk may occur due to web sites
capturing personal information. This may cause some form of paranoia in an individual,
knowing that their actions and information may be being monitored, which can also be
applied to sites needing you to provide payment information such as through credit cards,
leading to psychological risks that stem from having to surrender such information. Bezes’
(2016) study shows that psychological risk impacts only website purchases, but not
physical store purchases. This was attributed to the relative novelty of M-Commerce
compared to in-store shopping, with regards to people becoming indecisive when using
this new service that they are not too familiar with as compared to simply walking into a
store and buying off a shelf. In Marriott and Williams’ (2018) study, it was also found that
psychological risk was third most significant antecedent of overall risk along with financial
and psychological risks.
Performance Risk
Luo et al. (2010) defines performance risk as “the possibility of the product
malfunctioning and not performing as it was designed and advertised and therefore failing
to deliver the desired benefits”, focusing on the actual performance of goods and services
purchased. Marriott and Williams (2018) use both the product and medium aspect of
performance risk incorporated in their study on M-Commerce, in which they asked
respondents if products purchased on mobile were likely to be defective or not meet
expectations, if the shopping process is likely to have something go wrong when shopping
on a mobile device, or if the mobile device itself may have faults specifically when
processing online payments, which was shown to be a significant predictor of purchase
intention, coinciding with Bezes (2016) study, which implied that the risk of products and
services as well as the medium of purchase malfunctioning in the online environment is
higher. Products being unsatisfactory or defective can be attributed to M-Commerce being
mostly non-physical, as individuals will only be able to inspect the quality of goods only
when received.
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Overall Trust and Its Subsequent Antecedents in Mobile Commerce
Despite the potential that M-Commerce presents to businesses and consumers alike,
trust is a major obstacle in both its adoption and development (Siau et al., 2004). According
to Kim et al., (2008), Consumer trust may even be more important in electronic or cyber
transactions in comparison with that of “real world” transactions, due to the fact that
customers are considered to be blind, with there being no contact between business and
consumer. Monetary transactions also occur instantaneously in most cases, while deliveries
of the product itself are non-instantaneous, which may lead to consumers becoming
concerned as to whether or not the sellers will send over the product and complete the
transaction.
M-Device Trust
Mobile device or M-Device trust is the trust that an individual has for the
mobile device that they use and the fear that they may not be properly equipped to deal
with transaction processing (Marriott and Williams 2018). This covers aspects such as the
trustworthiness of their device of choice, with regards to the current integrity of the device
and previous experience with handling it, or the level of trust that an individual has on the
brand of a mobile device to produce competent products. M-Device trust might also not be
limited solely to the performance of the mobile device, but could also stem from the level
of competence an individual has when using said technology.
M-Service Trust
Mobile service or M-Service trust is the general trust that consumers have
towards the M-Shopping medium. Marriott and Williams (2018) define this as “favorable
attitudes towards M-Shopping websites or applications that facilitate efficient and effective
shopping, purchasing and delivery”. It is also explained that a consumer may choose not
to engage in online shopping would be due to lack of trust in electronic transactions.
M-Vendor Trust
Mobile vendor or M-Vendor trust is the trust that consumers have to the M-
Vendor itself. M-Vendor behavior would be the main driving force behind this indicator.
Marriott and Williams’ (2018) study explains that if consumers find M-Vendors to be
opportunistic and unpredictable, it would be harder to trust them. Lee and Turban (2001)
list variables such as the perceived ability, integrity, and benevolence of internet merchants
in their study. All of these variables can be linked to contributing to an M-Vendor’s
reputation, and within the study, ability and integrity were tested, however only integrity
was shown to be significant, implying that in order to improve consumer’s trust in the M-
Vendor, online merchants must improve their image of integrity in the minds of
consumers.
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Disposition to Trust
Disposition to trust is representative of how likely an individual is to trust

another person. Marriott and Williams (2018) define this as “the general inclination which
people show faith or belief in humanity and adopt a trusting stance towards others”. When
put in the context of M-Commerce, it would be how likely an individual is willing to trust
systems and vendors, most especially where there are no prior experiences to base
decisions on. The results of this study show that disposition to trust has shown to be
significant in impacting overall trust. However, it is also important to note that even
without a high disposition to trust, other trust antecedents may also convince individuals
to trust M-Shopping through other antecedents, such as people who think more practically
and decide based on hard facts rather than their tendencies.
Future Purchase Intention
The term “purchase intention” has been mentioned numerous times across varying
studies regarding E-Commerce and M-Commerce. Purchase intention is defined as the
intention of buyers to engage in the exchange relationship at shopping websites, such as
sharing information, maintaining business relationships, and creating business transactions
(Zwass, 1998, Dachyar and Banjarnahor, 2017). In a study conducted by Lin and Lu
(2010), which investigated the influence of varying factors on purchase intention, they
defined such as being the possibility for consumers to be ‘‘willing’’ to consider buying a
product, what a person ‘‘wants’’ to purchase or avail of in the future, and, the decision of
a consumer to purchase a company’s product again. Based on the literature, the researchers
can infer that purchase intention represents a consumers’ interest in purchasing something
in the relative future, thus coining the term “future purchase intention”.
Research Gap
There are vast amounts of past literature that provided information regarding E-
Commerce, more specifically for the field of M-Commerce. However, since the majority
of the literature on M-Commerce mainly tackled the technicality and acceptance in
technology of consumers, there were only a number of studies which emphasized on the
risk and trust antecedents in an M-Commerce perspective. More so, a lack of these studies
in the Philippine setting may be considered a research gap as behaviour, perspective and
findings can differ from previous literature. With regards to the variables in our study, past
literature may have given some clues on future purchase intention, but determining future
purchase intention through the factors that affect consumer behavior have not been
discussed by prior studies related to these variables. Another gray area would be the lack
of studies that cover the measures to gauge the specific amount or level of trust that a
consumer has in an M-Vendor. Furthermore, utilizing advancement in technologies
specified by the moderating variables incorporated in our study have not yet been taken
into consideration in the previous studies. There were also little to no studies on the long-
term financial effects that a consumer may experience while shopping on an M-Commerce
platform. In addition to such, there seemed to be little to no articles or reports regarding
the level of activity that prominent M-Commerce players like Shopee and Lazada have in
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the Philippines with regards to Filipino M-Commerce shoppers. Going forward, while
future researchers may look to delve deeper regarding these topics to aid major M-
Commerce players, our study will be able to humbly contribute to the developing literature
on the topic of Philippine consumer behaviour on an M-Commerce medium.
Operational Framework & Hypotheses
Upon a thorough review of literature, the researchers decided to adopt the framework used
in the research of Marriott & Williams (2018) as a theoretical basis. The aforementioned paper
assessed the effect of Risk and Trust antecedents on a consumer’s purchasing intention amongst
English consumers, in which the researchers replicated in the context of the M-Commerce industry
of the Philippines. Such framework has also been refined in order to reflect variables that may
have an effect on the Philippine M-Commerce industry such as the presence of Payment Methods
and the use of User Ratings and Reviews on an M-Commerce platform. As such, both of the
aforementioned variables were then employed as some of the moderating variables in the presented
Operational Framework.
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Figure 1
Framework of Risk, Trust, its antecedents, and Future Purchase Intention.
* p < 0.05
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The following hypotheses will also either be validated or invalidated in the upcoming sections:
Moderating Variables
H0_MR_i: The relationship between Financial Risk/ Psychological Risk/ Performance Risk/ M-
Device Trust and Overall Risk/ Overall Trust/ Future Purchase Intention is moderated by Payment
Methods/ Technological Self Efficacy/ User Ratings & Reviews/ Reputation of Devices.
HA_MR_i: The relationship between Financial Risk/ Psychological Risk/ Performance Risk/ M-
Device Trust and Overall Risk/ Overall Trust/ Future Purchase Intention is not moderated by
Payment Methods/ Technological Self Efficacy/ User Ratings & Reviews/ Reputation of Devices.
Antecedents
H0_ANT_i: Financial Risk/ Psychological Risk/ Performance Risk/ and Time Risk or M-Vendor
Trust/ M-Service Trust/ M-Device Trust/ and Disposition to Trust has a significant impact on
HA_ANT_i: Financial Risk/ Psychological Risk/ Performance Risk/ and Time Risk or M-Vendor
Trust/ M-Service Trust/ M-Device Trust/ and Disposition to Trust has no significant impact on
Mediating Variables
H0_MED_i: Overall Perceived Risk/ Overall Trust has a significant impact on Future Purchase
Intention.
HA_MED_i: Overall Perceived Risk/ Overall Trust does not have no significant impact on Future
Purchase Intention.
Methodology
Data Collection and Sample Demographics
In order to execute the above mentioned framework, the researchers chose to gather
data from M-Commerce users aged 18 to 40 within Metro Manila. This particular area of
the Philippines was chosen to be investigated for the study due to the logistical constraints
which plague the researchers. However, it was found that a majority of online activity can
be traced back to users within the said area. Several studies have also revealed that
demographic profiles of users influence the adoption of the internet and M-Commerce in
particular, therefore it is important to choose respondents that would best represent the
industry at scrutiny (Teo, 2001; Liebermann and Stashevsky, 2002). Given these findings,
the researchers chose to focus on younger users as they tend to adapt to mobile technology
at a much faster rate than older users, whilst still being price sensitive and awarding a
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higher value for the convenience that M-Commerce brings (Dai and Palvia, 2008; Gitau
and Nzuki, 2014; Fenech, 2007; Jih, 2007; Jih and Lee, 2003).
The researchers were able to obtain a total of 273 respondents for the survey. Of
the respondents, 188 (69.12%) were predominantly female. Majority of which were
Millennials and Generation Z with 260 (95.59%) of the respondents who are currently
attending school 122 (44.85%) or may have just graduated from university (52.94%).
Aforementioned statement can also be seen by respondents’ primary location of internet
access home 102 (37.50%) of the respondents and a combination of home and school at 94
(34.56%) of the respondents. Therefore, respondents between 18-29 years old have a
monthly income, possibly from salaries or allowance between the range of PHP 5,000 -
PHP 15,000 with 130 (47.79%) of the respondents. As M-Commerce shoppers, most of the
respondents have an average daily internet usage of greater than 8 hours with 130 (47.79%)
responses. Most of the sample respondents spend less than PHP 5,000 with 214 (78.68)
respondents on mobile shopping in a month (Table 1).
Table 1
Demographics Sample
Variable Group Frequency Percent

Gender Female 188 69.12%
Male 81 29.78%
Prefer not to say 3 1.10%
Age 18-29 260 95.59%
30-40 12 4.41%
Educational Attainment High School 122 44.85%
Bachelor's Degree 144 52.94%
Master's Degree 6 2.21%
Grand Total 272 100.00%
Annual Income Less than 5000 PHP 73 26.84%
5000- 15,000 PHP 130 47.79%
15,001- 25,000 PHP 38 13.97%
Greater than 25,000 PHP 31 11.40%
Grand Total 272 100.00%
Primary Location of Internet Home 102 37.50%
Access Statistics Home, Friends or Neighbor 2 0.74%
Home, School 94 34.56%
Home, School, Friends or Neighbor 5 1.84%
Home, School, Public Library 7 2.57%
Home, School, Public Library, Friends 3 1.10%
or Neighbor
Home, Work 20 7.35%
Home, Work, School 28 10.29%
Home, Work, School, Friends or 5 1.84%
Neighbor
Home, Work, School, Public Library 2 0.74%
Home, Work, School, Public Library, 3 1.10%
Friends or Neighbor
School, Friends or Neighbor 1 0.37%
Average Daily Internet 2- 5 hours 30 11.03%
Usage Statistics 5-8 hours 112 41.18%
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Greater than 8 hours 130 47.79%
Frequency of Mobile Less than 3 times 130 47.79%
Shopping (in a month) 3-5 times 100 36.76%
6-10 times 26 9.56%
Greater than 10 times 16 5.88%
Estimated Money Spent on < PHP 5000 214 78.68%
Mobile Shopping in a month PHP 10,001- 15,000 7 2.57%
(in PHP) Statistics PHP 15,000 < 2 0.74%
PHP 5001- 10,000 49 18.01%
Survey Instrument
The data for this study was gathered using a survey instrument (Appendix A) that
was disseminated through the means of the internet, utilizing the services of the website
Google Forms for a more effective manner of data collection. The questions that were
utilized in the said instrument were adapted from the study of Marriott & Williams (2018),
with additional items that were crafted in order to measure the moderating variables of the
study. To ensure the reliability of the instrument, Cronbach’s alpha was utilized after
preliminary testing to determine if the above mentioned survey questions are adequate to
measure the variables to be tested in this study. Results for each test item (Table 2)
indicated by α for Cronbach’s alpha was run through Stata application. A threshold value
of at least 0.7 Cronbach’s alpha must be obtained for the research instrument to be
considered acceptable.
Noting that such was executed throughout the months of May to July of the year
2020, in which the Philippines was under an Enhanced Community Quarantine Period, due
to the breakout of the COVID-19 pandemic. As such, the researchers recognize the possible
impact this may have on the results of this survey.
The two methods the researchers utilized in order to analyze the gathered data are
Descriptive Analysis and Regression Analysis. For the study’s Descriptive Analysis,
Descriptive Statistics have been utilized in order to calculate for the individual means and
standard deviations of each item in the questionnaire. Column means, together with the
grand means of the independent, dependent, moderating, and mediating variables have also
been accounted for. The resulting values were then interpreted using an Improvised Scoring
Index which would tell of the consumers’ stand for a particular survey question or variable.
On the other hand, a Moderated Mediation Regression Analysis was utilized for the study’s
Regression Analysis (Table 3 & 4). This was done in order to test the moderated-mediation
relationship between the independent and dependent variables by investigating and
comparing the beta coefficients and p-values of the following models as per the moderated
mediation analysis procedure of Hayes, which was based on the findings of Baron & Kenny
(1986).
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Table 2
Validity and Reliability of Variable
Variable Item Factor Loading α
Overall Perceived Risk OPR1 0.7837 0.8032
OPR2 0.8163
OPR3 0.6604
OPR4 0.6466
OPR5 0.7764
Financial Risk FR1 0.6629 0.8705
FR2 0.6006
FR3 0.8278
FR4 0.8429
Psychological Risk PsyR1 0.7361 0.9003
PsyR2 0.8791
PsyR3 0.8588
Performance Risk PER1 0.7394 0.702
PER2 0.6975
PER3 0.679
Time Risk TR1 0.8109 0.728
TR2 0.8606
TR3 0.5788
Payment Method PM1 0.6166 0.711
PM2 0.713
PM3 0.7305
Technological Self Efficacy TSE1 0.2588 0.739
TSE2 0.695
TSE3 0.7364
TSE4 0.6483
User Ratings URA1 0.7189 0.879
URA2 0.7982
URA3 0.7227
User Reviews URV1 0.7444 0.784
URV2 0.7986
URV3 0.6993
Overall Trust OT1 0.6734 0.7098
OT2 0.8103
OT3 0.7221
M-Vendor Trust VT1 0.6994 0.886
VT2 0.8189
VT3 0.7438
VT4 0.7743
VT5 0.7886
VT6 0.7184
M-Service Trust ST1 0.6745 0.838
ST2 0.7407
ST3 0.7729
M-Device Trust MDT1 0.7099 0.713
MDT2 0.7419
MDT3 0.8276
Disposition to Trust DT1 0.7548 0.824
DT2 0.6535
DT3 0.7595
DT4 0.7879
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DT5 0.7178
Reputation of Device ROD1 0.718 0.840
ROD2 0.6431
ROD3 0.8153
Future Purchase Intention FITP1 0.7742 0.890
FITP2 0.8048
FITP3 0.8366
FITP4 0.8283
Regression Results
This study uses a five step moderated mediated regression in order to observe the
interactions between variables. The first step observes the direct effect of independent variables
and should the regression show a significant p-value and beta coefficient then there is indication
of a moderated and mediated relationship. The second step tests the impact of independent
variables to moderating variables in which an insignificant p-value would provide the green light
to proceed to the next step. The third step observes the relationship between the moderating
variable to the mediating variable in which a significant p-value would be indicative of a
moderated-mediation relationship. Once all of these steps are satisfied, the fourth step will proceed
in which an interaction variable between the independent variable and its respective moderators
are obtained through the cross factor X*Mo. The fifth step uses this interaction variable and
regresses this to the mediating variable. Should the result be significant, the interaction variable
will then be used in the mediated regression against the original dependent variable in place of the
original independent variable. Should the results show an insignificant outcome, then this
interaction variable is ignored and the mediated regression proceeds using the original independent
variable.
Table 3
Regression results with independent variable and related moderators and cross factors to
respective mediating variables
Independent Variable Variable Coefficien p-

t value
Financial Risk 0.5167 0.0000
Financial Risk *
Payment Method -0.1084 0.0646
Cross Factor -0.1232 0.0409
*
Psychological Risk 0.3776 0.0000
Psychological Risk *
Technological Self- 0.0181 0.7722
Efficacy
Cross Factor 0.0671 0.3042
Performance Risk 0.5252 0.0000
Performance Risk (User Ratings *
moderator) User Ratings -0.0751 0.2832
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Performance Risk 0.5165 0.0000
Performance Risk (User Reviews *
moderator) User Reviews -0.0157 0.8344
Time Risk Time Risk 0.1658 0.0012
*
M-Vendor Trust M-Vendor Trust 0.6271 0.0000
*
M-Service Trust M-Service Trust 0.4129 0.0000
*
M-Device Trust 0.1778 0.0362
M-Device Trust *
Reputation of Device 0.2932 0.0007
*
Cross Factor -0.0306 0.6862
Disposition to Trust Disposition to Trust 0.3379 0.0000
*
*Significant at a 0.05 level
Table 4
Regression results of mediation to moderator and its corresponding independent variables
Independent Variable Variable Coefficient p-value

Financial Risk Financial Risk 0.0225 0.7566
Overall Perceived Risk -0.1098 0.2025
Psychological Risk Psychological Risk -0.2423 0.0040*
Overall Perceived Risk 0.0402 0.6227
Performance Risk Performance Risk -0.0586 0.4863
Time Risk Time Risk 0.0519 0.3627
M-Vendor Trust M-Vendor Trust 0.2660 0.0015*
Overall Trust 0.3623 0.0000*
M-Service Trust M-Service Trust 0.3659 0.0000*
M-Device Trust M-Device Trust 0.3265 0.0000*
Disposition to Trust Disposition to Trust 0.3024 0.0000*
*Significant at a 0.05 level
Analysis & Discussion of Results
The researchers utilized a 5-point likert scale in order to measure the degree of each
respondent’s agreement towards the statements and questions posed in the survey instrument.
Normality tests such as Skewness and Kurtosis have also been utilized in order to determine if the
results of the survey have been heavily influenced by a particular group. Results of the said
normality tests reveal that the gathered data reflect the views of certain demographics, such as
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respondents aged 18 to 29, female M-Commerce shoppers, consumers operating with a lower
income bracket, consumers who are technologically proficient, inexperienced M-Commerce users,
and modest M-Commerce consumers. This is supported by measured of skewness which amount
to 4.46 for Age, 1.05 for Gender, 0.67 for Average Monthly Income, -0.60 for Average Daily
Internet Use, 1.10 for Frequency of Mobile Shopping, and 2.32 for Money Spent of Mobile
Shopping, all interpreted under the acceptable range of -1 to +1.
For the antecedents of Overall Perceived Risk, the overall weighted means are reported to
be 3.17 for Financial Risk, 2.18 for Psychological Risk, 3.54 for Performance Risk, and 3.67 for
Time Risk. These values imply that consumers generally experience an average level of Financial
Risk, a below average level of Psychological Risk, and an above average level of Performance
Risk and Time Risk.
Overall Perceived Risk’s moderators, on the other hand, report overall weighted means of
4.40 for Payment Method, 3.76 for Technological Self Efficacy, 4.44 for User Ratings, and 4.45
for User Reviews. Such values imply that Filipino M-Consumers possess a very high level of
confidence when their preferred Payment Method is offered, have an above average level of
Technological Self Efficacy, and place a very high importance on User Ratings and Reviews.
High values similar to the former cannot be celebrated for Overall Perceived Risk, which
has an overall weighted mean of 2.89, and can be translated to Filipino M-Consumers experiencing
an average level of Overall Perceived Risk. The opposite rings true for the mediating variable of
Overall Trust, which reports an overall weighted mean of 3.78. This implies that Filipino M-
Consumers possess an above average level of Overall Trust.
With regards to the antecedents of Overall Trust, these report overall average means of
3.50 for M-Vendor Trust, 4.03 for M-Service Trust, 3.79 for M-Device Trust, and 3.40 for
Disposition to Trust. These findings imply that Filipino M-Consumers experience above average
levels of all the antecedents of Overall Trust. Similar can be said for the latter’s lone moderating
variable, which reports an overall weighted mean of 3.64. This can be interpreted as that Filipino
M-Consumers possess an above average level of trust in the Reputation of their Devices.
As for the possible impact of the moderating variables present in the study, the results of
the Moderated Mediation Regression Analysis (Table 5) indicate that all moderating variables
were found to have an insignificant effect on the entire model with p-values amounting to 0.0646
for Payment Method, 0.7722 for Technological Self Efficacy, 0.2832 for User Ratings, and 0.8344
for User Reviews. While Reputation of Device had a p-value of p<0.0007, the cross factor had a
p-value of 0.6862 rendering it insignificant.
As for the antecedents direct effect on their respective mediating variables, it was found
from the results of the Moderated Mediation Regression Analysis (Table 5) that all antecedents
have a direct effect Overall Perceived Risk and Overall Trust. This can be seen in their respective
p-values, which amount to p<0.0001 for Financial Risk, Psychological Risk, Performance Risk,
M-Vendor Trust, M-Service Trust, M-Device Trust, and Disposition to Trust, and a p-value of
0.0012 for Time Risk. These are all found to be significant under a 95% confidence interval.
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As for the extent of the influence of the antecedents of Overall Perceived Risk and Overall
Trust on a Filipino consumer’s intention to purchase products in the future, the results of the
Moderated Mediation Regression Analysis (Table 5) indicate that Psychological Risk is the lone
significant predictor for the antecedents of Overall Perceived Risk, with a p-value of 0.0004. The
other antecedents were deemed to be insignificant under a 95% confidence level, with p-values
reporting to 0.7566 for Financial Risk, 0.4473 for Performance Risk, and 0.3627 for Time Risk.
The antecedents of Overall Trust, on the other hand, were all found to be significant predictors of
Future Purchase Intention under a 95% confidence level, with p-values amounting to 0.0015 for
M-Vendor Trust, and p<0.0001 for M-Service Trust, M-Device Trust, and Disposition to Trust.
Conclusions
In summary, the results (Table 5) show that none of the moderators passed the regressions
with Payment Method, Technological Self-Efficacy, User Ratings, User Reviews, and M-Device
Trust were shown to not pass all three steps for checking the validity of moderators. As such, none
of the independent variables were moderated by their respective moderators.
With regards to the mediated regression analysis, it is shown that financial risk,
performance risk, and time risk were insignificant when regressed against future purchase
intention. However, psychological risk, M-Vendor trust, M-Service trust, M-Device trust, and
Disposition to trust are all shown to be significant. Psychological risk understandably has a
negative coefficient as lower risk would encourage consumers to purchase more. On the other
hand, the trust related independent variables have a positive coefficient as more trust would
encourage people to purchase.
The results also show that all of the independent variables are statistically significant when
regressed against their respective moderators signifying that while not all of them may have
significant impacts on future purchase intention, they do have an impact in their specific areas of
overall perceived risk or overall trust.
Finally it is shown that overall perceived risk was not statistically significant in any of its
related regressions and as such, it does not explain any mediating effects. On the other hand
however, overall trust is shown to be statistically significant in all of its related regressions and as
such signifies that it does have a mediating effect in its related relationships.
Table 5
Summary of Hypotheses Results
Hypothesis Beta p-value Accept or Interpretation

Coefficient Reject
HMR_1 -0.1084 0.0646 Reject The relationship between Financial Risk and Overall Perceived
Risk is not moderated by Payment Methods
HMR_2 0.0181 0.7722 Reject The relationship between Psychological Risk and Overall
Perceived Risk is not moderated by Technological Self Efficacy
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HMR_3 -0.0751 0.2832 Reject The relationship between Performance Risk and Overall
Perceived Risk is not moderated by User Ratings
HMR_4 -0.0157 0.8344 Reject The relationship between Performance Risk and Overall
Perceived Risk is not moderated by User Reviews
HMR_5 0.2932 0.0007 Reject The relationship between M-Device Trust and Overall Trust
is not moderated by Reputation of Device
HANT_1 0.0225 0.7566 Reject Financial Risk does not have a significant impact on Future
Purchase Intention
HANT_2 -0.2423 0.0004 Accept Psychological Risk has a significant impact on Future Purchase
Intention
HANT_3 -0.0586 0.4863 Reject Performance Risk does not have a significant impact on Future
Purchase Intention
HANT_4 0.0519 0.3627 Reject Time Risk does not have a significant impact on Future Purchase
Intention
HANT_5 0.3024 p<0.0001 Accept Disposition to Trust has a significant impact on Future Purchase
Intention
HANT_6 0.2660 0.0015 Accept M-Vendor Trust has a significant impact on Future Purchase
Intention
HANT_7 0.3659 p<0.0001 Accept M-Service Trust has a significant impact on Future Purchase
Intention
HANT_8 0.3265 p<0.0001 Accept M-Device Trust has a significant impact on Future Purchase
Intention
HMED_1 -0.1098 0.2025 Reject Overall Perceived Risk does not have a significant impact on
HMED_2 0.3708 p<0.0001 Accept Overall Trust has a significant impact on Future Purchase
Intention
*M-Device is rejected a moderating variable because its cross factor was deemed to be
insignificant
Recommendations
To the existing companies in the Philippine M-Commerce market, the researchers

recommend the following:
Implement more forms of security within respective platforms to reduce the amount of
financial risk experienced by consumers. The data collected suggests that M-Commerce shoppers
have an above average level of financial risk when shopping on M-Commerce platforms,
connected to being put at risk of fraud while shopping on online markets. In addition to such, some
respondents have stated that they have been scammed while shopping on these platforms, which
can be attributed to the lack of financial security options presented.
Implement a system that will decrease the amount of vendors who participate in fraudulent
or swindling acts. According to Pavlov et al., (2007), online shopping is facilitated by information
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technology, and a sufficient amount of security should be implemented to provide customers with
a sense of security. By implementing a system that identifies vendors who are scamming their
consumers, M-Commerce platforms may be able to eliminate the risk of fraud on their platforms.
Market stand-out features of their respective M-Commerce platforms so consumers will be

more informed and make better purchase decisions. Based on the qualitative data collected, mobile
shoppers possess a very high level of confidence when their preferred payment method is offered
by an M-Commerce platform.
To the prominent M-Commerce platforms that are looking to branch out into the Philippine
Market, the researchers recommend the following:
Implement a user friendly interface within the application to ease the consumer experience.
Having a user friendly interface may also have the potential to attract more users to the platform
itself.
Make it a point to implement a rating system for M-Vendors selling products on the
application. By making sure there is a rating system, M-Commerce consumers will be able to see
who the reputable sellers are amongst all sellers posting items for sale. M-Commerce consumers
must be able to trust these sellers to make their purchase decisions easier.
To the customers and consumers that purchase items from these M-Commerce online
markets, the researchers recommend to be more mindful when purchasing items from M-
Commerce platforms. Based on the qualitative data collected from the survey, most respondents
checked the ratings, reviews, and comments before following through with a purchase on these
online markets.
To the Academe, the researchers recommend expanding the current curriculum of the E-
Commerce related courses for Business Management Students in the Ramon V. Del Rosario
College of Business. According to Javalgi et al., (2005), the Asia-Pacific Region is growing in E-
Commerce adoption despite a global economic slowdown. With that being said, in lieu with the
recent boom of M-Commerce in the Philippines, the DSI department should broaden the scope of
the courses like ECOMMER and TECNEUR to introduce students to the potential business
opportunities that M-Commerce has to offer.
To future researchers, the researchers recommend looking into an expanded model that
deals with variables that mediate or moderate the relationship of risk and trust with the future
intention to purchase on M-Commerce platforms. The researchers tested an iteration of the model
done in the study of Baron and Kenny (1986), which studied the relationship of the aspects of risk
and trust on a consumer’s decision to purchase products in the future, along with the moderating
variables of payment method, technological self-efficacy, user ratings and reviews, and reputation
of device. Future researchers can potentially extend this study by looking into additional variables,
such as income of an individual that may moderate the relationship of risk and trust to future
purchase intention.
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Managerial Implications
Based on the findings of the study, the researchers can concur from the data collected that
our respondents possess an above average level of performance risk while shopping on M-
Commerce platforms. With that being said, to combat the above average level of performance risk,
managers of M-Commerce platforms can implement internal measures within their logistics hubs
to ensure the quality of products that go out to their customers. When products from vendors arrive
at their respective logistics hubs before sending out to consumers, employees located at the hubs
can do a form of final checking before the products go out to consumers.
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Teo, T. (2001). "Demographic and motivation variables associated with Internet usage activities".
Internet Research, 11(2), 125-137. https://doi.org/10.1108/10662240110695089
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infrastructure to electronic marketplaces. Thousand Oaks CA: McGraw-Hill.
http://www.mhhe.com/business/mis/zwass/ecpaper.html
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Knowledge Management Model for Implementation and Evaluation
8th NBMC Paper # 32
Bobby M. Olarte
[email protected]
Abstract
This qualitative study proposes an improved model for knowledge management (KM) to guide
implementation and evaluation. KM is the system that enables organizations to generate, organize,
share and utilize knowledge to achieve organizational goals. Researchers on sustainable
competitive advantage assert that “knowledge is the only factor that provides the firm a
competitive edge” (Prusak, 1996). This view is held by the Ateneo de Manila University Graduate
School of Business (n.d.) in the description of its KM certificate course that can be found at
https://cce.ateneo.edu/program-calendar/knowledge-management, which considered KM as “the
only sustainable source of competitiveness for organizations” (emphasis mine). Studies also found
that KM gives organizations resilience that enables them not only to survive but also to thrive even
during times of uncertainty.
While knowledge has always been essential in decision-making, the formal philosophy of
managing knowledge in the organization is rather new. As a relatively new discipline, it is
characterized by divergent views of what it is exactly and how to implement it. This study, by
proposing a conceptual framework for KM implementation and evaluation, contributes to
promoting KM adoption in Philippine business practice.
The grounded theory approach utilized a large data set from KM evaluation reports published by
the United Nations (UN), informed by other KM models in literature, as well as observations and
insights by the author who is a long-time KM practitioner. The iterative inductive process produced
a parsimonious framework, styled as the KM Hexagram, featuring three elements (product,
platform, and people), that are involved in three processes (creation, sharing and utilization) that
are, in turn, moderated by a set of enablers (culture, leadership and norms). The resulting construct
was further operationally defined into a single measurable variable, the KM Index. It is proposed
as an indicator of the level of KM implementation in the organization.
Keywords: knowledge management, strategic management, best practices, organizational

performance, staff engagement, innovation, organizational resilience
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Introduction
Knowledge management (KM) is the system that enables organizations to identify,

generate, acquire, organize, share, and utilize knowledge to achieve organizational goals. While
seminal works by management theorists have existed earlier, KM emerged prominently as a
formally applied discipline in management in October 1996 when then World Bank (WB)
president James Wolfensohn announced a new corporate vision that characterized the WB as the
“Knowledge Bank.” He urged, “We need to invest in the necessary systems, in Washington and
worldwide, to enhance our ability to gather development information and experience and share it
with our clients” (Wolfensohn, 2005). He shifted the focus of the WB from loans to “knowledge”
as the key driver of global development. In similar vein, Cesar Purisima, then Chairman of the
Asian Development Bank’s Board of Governors, called for socio-economic growth that must be
“green, inclusive, and knowledge-driven” (Mallari, 2012).
While KM has gained acceptance in management practice, there remains a divergence of

views on what constitute it. As such, when the United Nations conducted an evaluation in 2007 of
the practices of its agencies, it found that “the concept of ‘knowledge management’ was perceived
differently by different organizations” and that “there was no common approach, either conceptual
or practical, to adopting a conscious and systematic knowledge management policy within any
given organization or in the United Nations system as a whole” (Dumitriu, 2016). When the issue
was revisited with another evaluation about a decade after the earlier one, it was conceded that
“the issues of understanding and perception remain key notions in the review.” In its 2016 review,
the UN used a “preparedness framework” seeking to find how prepared is the UN in implementing
KM and an open-ended approach of identifying features of KM that worked in the UN agencies.
However, it used neither a framework that defined what constitutes KM nor one that measured the
level of KM implementation.
Research objective
In the present study, this researcher wanted to know what KM practices are salient
at the UN. Can these various practices be arranged logically into a KM model that can be
utilized to define KM and guide its implementation not only for the UN but also for other
business organizations?
In addition to building a KM construct, this study also investigated operationally

defining KM into a variable that can be used for empirical studies as an antecedent of
organizational performance. How may one measure the level of KM implementation in the
organization? The paucity of operational definitions in the literature posed difficulties to
deductive research. Deductive research tended to forgo creating an integrated KM
construct and used individual KM practices or success factors as stand-alone explanatory
variables. This is not an optimal way of looking at KM because each element in the KM
construct is co-dependent with the other and essential for a functioning KM. The better
assumption to make is that KM has interlocking elements that need to work together.
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Research philosophy
With the above conceptual challenge as a starting point, this research employed an
inductive approach to formulate a conceptual framework that integrates the salient KM
practices. It used the grounded theory methodology, based on data collected and published
by the UN. The iterative conceptual thinking was triangulated with insights from other
proposed KM models, such as the Belardo’s Matrix described by Crnkovic, J., Belardo, S.,
& Asoh, D. A. (2005). The synthesis is facilitated by the researcher’s more than ten years
of experience as a KM adviser and team leader in implementing KM for a UN agency.
In doing this qualitative research, the author leverages his pragmatic philosophy
with strong subjectivist leanings. The research has a subjective view of trying to understand
what are considered as important by KM experts and other stakeholders and hopes that this
understanding will benefit the general business community. In terms of epistemology, there
is a balanced preference in looking at facts and observable phenomena while giving equal
value to opinions and attributed meanings.
Significance of the study
This study contributes to an area of management that is relatively new and less
studied, particularly in the Philippines. It proposes a model that could help Philippine
business organizations in understanding what need to be considered in implementing KM.
The same model can be used in empirical research in the country. In reviewing the literature
for research in the Philippines, the researcher found a dearth of published papers. Thus far,
researchers in the country have studied small and medium-sized enterprises (Roxas, B. &
Chadee, D., 2016); firms in the food manufacturing, automotive and business process
outsourcing sectors (Quimba, F.M., Albert, J.R., & Llanto, G., 2017); three private
universities in CALABARZON (Agawin, M., Muya, G. & Gonzales, K.D., 2019); local
government units in Aurora province (Grefalda, L. et al., 2020); and case studies on the
Department of Health (Talisayon, S., 2008) and the Department of Information and
Communication Technology (Development Academy of the Philippines, 2020). They
found that KM positively impacted on work performance of staff (Boom, D., Talisayon,
S., & Afable, N. M., 2020); on organizational innovation (Roxas, B. & Chadee, D., 2016);
and on income and other organizational outcomes (Fiscal, R., 2019). While Philippine
studies on KM were few and inductive studies fewer still, more research will drive wider
and faster acceptance of KM.
On the claim that KM is the only source of sustainable competitiveness that was
cited in the introduction, Davenport and Prusak (2005) explained that “competitors can
almost always match the level of quality and price of a market leader’s product or service.
“By the time that happens though, the knowledge-rich, knowledge-managing company will
have moved on to a new level of quality, creativity, or efficiency.”
The COVID-19 pandemic caused significant changes in Philippine business

environment, forcing organizations to adapt or perish. The crisis brought about the
realization that organizational resilience is crucial if business organizations are to survive
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and flourish in uncertain times. It is therefore a contribution of this study to raise awareness
that KM is a tool for building organizational resilience. It is important to point out that
studies by Godwin, I. & Umoh, E.A. (2013) and by Mafabi, S., Munene, J. & Ntayi, J.
(2012) found that KM creates organizational resilience.
Methodology
In this inductive study, there are two specific tasks - building the KM construct and
operationalizing it. The KM construct is complex and multidimensional. It arranged logically the
elements, processes and enablers of knowledge management. The data set used for this research
was the one collected and published by the Joint Inspection Unit of the United Nations (JIU) for
its evaluation of the KM practice of the United Nations system in 2016 and 2007. As explained
earlier, the available data and report were used to identify the many salient KM practices.
The JIU is the “only independent external oversight body of the United Nations system
mandated to conduct evaluations, inspections and investigations system-wide.” Its 2016 evaluation
covered 37 major UN agencies and departments and 6,634 survey respondents. It also conducted
interviews at all levels of the organization. The evaluation earned for the unit the Knowledge
Management Award 2017 that was given by the Knowledge Management Academy of Austria for
the work done “in the process of inspecting, reviewing, mobilizing and advocating for Knowledge
Management in the UN System.”
The evaluation was descriptive with the purpose to “identify best practices.” It was “not
intended to impose a model, but rather to provide examples and appeal to United Nations system
organizations to introduce and implement knowledge management strategies and policies based
on existing practices in the United Nations system.” It neither sought to measure the impact of KM
on the UN work nor adopted a conceptual KM framework to define it.
Findings
To illustrate the nature of the data, these are among the salient KM features that the JIU found (and
percentage of respondents who indicated their existence).
● Knowledge products -
o Tacit knowledge is generated (45%)
● Norms -
o KM policies (76%)
o KM as a staff competency (89%)
o KM strategy would be useful (96%)
● Processes
o Knowledge generation - community of practice (65%)
● Culture
o KM culture promoted (72%)
o Knowledge sharing encouraged (46%)
● KM drivers or motivators
o Peer guidance, presence of good practice in other agencies (31%)
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o If managers think it is important (29%)
o Leadership or personal vision of the agency head (24%)
● Electronic platforms and their orientation
o Intranet (100%)
o Internal networking and dialogue platforms (84%)
o External networking and dialogue platforms (68%)
● JIU Recommendations
o Training of staff on KM
o Sharing of knowledge with external stakeholders
o Units and personnel dedicated to KM
o Incentives and symbolic rewards to promote KM
o Communities of practice
o KM metrics and impact assessment should be studied
Discussion and Results
KM Elements
Sifting through the data, looking at which elements are essential and merging them
into distinct categories, this research found three KM elements. An element is the most
fundamental component of the system and whose presence is essential. These are
knowledge products, platforms, and people -- or the three P’s of KM. There are other
elements, whose presence are not essential but moderates KM success, thus they were
classified as enablers.
Figure 1
KM Elements - the 3 P’s of KM
Knowledge product or knowledge itself is the quintessential element. It is best

defined as “a fluid mix of framed experience, contextual information, values and expert
insight that provides a framework for evaluating and incorporating new experiences and
information” (Davenport, T. & Prusak, L., 2005). Literature identifies two types of
knowledge - explicit and tacit. Explicit knowledge is knowledge that is readily codified
(written or recorded) stored and retrieved. Knowledge databases, be they online or
physical, are the most visible and most emblematic examples of explicit knowledge. They
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are a necessity in running the organization. While explicit knowledge is important, it was
the second type of knowledge - tacit knowledge - that was of particular interest to the JIU.
The systematic effort of identifying and trying to harness tacit knowledge is what makes
KM an innovative management discipline. Tacit knowledge is best defined for what it is
not -- it is not something that is easily captured and written down, thus making it
particularly challenging. Mohajan, H.K. (2017), citing multiple sources, described it this
way:
• It resides in human minds and also in relations.

• It is acquired by sharing experiences, observation and imitation.
• It is difficult to learn: learnt through personal experience, practice,
apprenticeship, observation, imitation, and reflection.
• It is rarely documented, highly individual, personal and hard to formalize.
• It is transferred through conversation, storytelling, discussions, analogies,
and demonstrations.
He added, citing another theorist, that about “90% of knowledge in any

organization is embedded and synthesized in tacit form.”
Platform, the second KM element, refers to how knowledge is captured, stored,

organized or shared. In current practice, this refers to electronic platforms, thus KM is
mistaken for an Information and Communication Technology (ICT) initiative. That is
unfortunate as it mistakes one type of solution as the entire discipline. Tacit knowledge
acquisition, while can be supported by electronic platforms, tends to work best in face-to-
face setting, such as in communities of practice, knowledge fairs, after-action reviews, peer
support, etc.
People is the third element of KM. This refers to actors from whom knowledge
originates, is shared with, or is consumed by. Prominent management theorist Peter
Drucker characterized our current society as a “knowledge society” where “people
generated more value with their mind than with their muscles” (Wartzman, R., 2014).
Drucker added that increasing the productivity of knowledge workers is the “most
important contribution management needs to make in the 21st century.”
KM Processes
KM processes can be described as a sequential or cyclical set of activities, in which

the KM elements are involved in, and whose contribution to KM is not measured by their
presence but by their dynamism - effectiveness and efficiency. You will note that the
model, as shown, situates each process between two elements.
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Figure 2
KM Elements and Processes
Knowledge creation is the first process in the KM cycle. It sits between people and
product, implying that it enables people to capture and store their knowledge. When
knowledge is acquired externally, the corresponding term is acquisition. Knowledge
creation/acquisition is difficult as people claim that they do not have the time, motivation,
or ability to capture their knowledge. It is important to build knowledge-creation time into
a project or the day-to-day routine of staff. Knowledge creation processes are aided by
standardized templates and guides. There is the issue of quality control in knowledge
creation. Organizations experiment with using either the traditional vetting process or using
social media feedback as quality indicators.
Knowledge sharing is the quintessential process, and the term is used

interchangeably as the name for KM itself. A key issue here is access, with relevance to
ethics and power dynamics. Do people feel included in knowledge-sharing initiatives?
Another issue is searchability. In an age where people do not lack but have to deal with an
overwhelming flood of information, the search results must be relevant. Staff complain that
in-house relevant knowledge is not as easy to use as external search engines such as
Google. Finally, there is the issue of velocity. Spacey, J. (2016) defined it as the speed in
which knowledge is disseminated and used. He noted some metrics used to measure it, all
associated with how often the knowledge products are accessed.
Knowledge utilization is the third process and one that directly impacts on
organizational performance. The Dutch Research Council (2020) defined it as the “process
of orienting KM towards social impact. Imagining a set of concentric circles, KM can be
directed to impact first on staff performance, then on organizational performance, and,
finally, on societal good. At staff level, employees feel empowered when they can access
knowledge to help them in their work. Helpdesks, operations manuals, training materials
and handover notes are examples of knowledge to empower staff. At the next level, KM
informs organizational strategy and delivery of organizational services. In the development
industry and in many professional organizations, one type of knowledge is particularly
prized: the best practices and lessons learned. Documenting good practices allows
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successes in one part of the organization to be quickly disseminated throughout. This effect
helps explain why KM has been found to strongly impact on organizational performance
through organizational innovation (López-Nicolas, C. & Meroño-Cerdan, A., 2011).
Finally, at its farthest extent, KM can be directed to impact on society. Enlightened
organizations involved external stakeholders in generating and sharing knowledge. This
was implied in the speeches by the World Bank president and the ADB Chair cited earlier.
KM Enablers
Figure 3
The KM Hexagram: elements, processes and enablers
At the center of the finished model are the KM enablers. The JIU data hinted at
knowledge culture as the most important. Culture can be defined through its two key
dimensions -- leadership and norms. Leadership refers to the articulation of the KM vision
and how Management at all levels promotes it. Norms refer to policies and other documents
that guide personnel of the organization and other stakeholders how KM is being
implemented, monitored and assessed. Thus, we have finished the KM construct.
The KM Index
The next step is operationalizing the construct into a measurable variable. The KM
Index is the proposed operational definition of the level of KM implementation. It measures
the elements, processes and enablers, giving scores for each and summing up all scores to
produce the index score. The total index score ranges from 0 to 100, where 100 corresponds
to the opinion that KM is operating at the highest level. To conduct this scoring, a KM
Index Scoring Guide is proposed in the following table. The guide questions are illustrative
as a full evaluation may ask more questions to examine the specific KM aspect.
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Table 1
KM Index Scoring Guide
Element, Aspect Sample Guide Question Score

Process or 0 = none
Enabler 1 = low
3=
moderate
5 = high
Element
Product Needs identified Has the organization identified the types of
knowledge products needed and available?
Explicit Does the organization have explicit
knowledge knowledge products that are documented in
hard copy or electronic form?
Tacit knowledge Does the organization have a scheme to
capture and share experiential knowledge
that is not as easily converted into written
form?
Platform Online repository Does the organization have an online
repository of knowledge available to staff?
Internal Does the organization promote and conduct
online and face-to-face discussion among
staff for generating, vetting and sharing
knowledge?
External Does the organization co-create and share
knowledge with external stakeholders such
as customers, external experts and the
public?
People Aware Are the organization’s personnel aware of
KM, its benefits to them and how to access
it?
Enabled Is there a systematic way to enable personnel
to use the KM system effectively?
Engaged Do the organization’s personnel regularly use
KM in their work and make it a normal part
of their job?
Process
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Creation Guidance provided Is there a policy and guidance in knowledge
generation, acquisition and storage?
Mainstreamed into Has the organization made KM not as an
work add-on but mainstreamed it into the standard
work processes of the organization?
Quality control Is there a system to ensure that the
knowledge products are valid and of good
quality, and a system by which users know
which are important and of high quality?
Sharing Access What percentage of personnel can access and
contribute to organizational knowledge?
Search How easy is it for staff to access relevant,
timely and quality knowledge when needed?
Velocity How fast is new knowledge able to spread to
relevant parts of the organization?
Utilization Staff orientation Is the organization KM system able to meet
the staff’s knowledge needs?
Organizational Does KM inform the organizational strategy
orientation and operations? Does the organization
evaluate KM’s impact?
Societal Does KM include co-create and share
orientation knowledge publicly to benefit society?
Enabler
Culture Leadership Does top management and the staff member's
direct supervisor encourage the use of KM?
Norms Are there policies, strategies, SOP’s, training
programs and staff accountability
mechanisms to encourage adoption of the
KM initiative?
Total 0 - 100
Conclusion
This study was able to extract salient KM practices from a large data set and arranged them
into a KM construct. The construct depicted as the KM Hexagram showed KM elements,
processes and enablers. Furthermore, this study was able to operationally define the construct into
one variable, the KM Index, that can be scored from 0 to 100, using the proposed template with
illustrative guide questions.
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Recommendations
These are the recommendations for further research and improvements to KM practice:
The proposed KM Hexagram and KM Index may be used in empirical research to measure the
relationship between KM and organizational performance, such as resilience. An illustrative
nomological network is shown in the following chart.
Figure 4
Illustrative construct for KM and organizational resilience
1. A sector-wide phenomenology can be done to examine the KM practice in specific sectors

of the Philippine economy. Similarly, a case study or an action research on KM
implementation in a business firm or government department can be pursued, using the
tools proposed here. An identified weakness can become a focus of an action research.
2. The KM Index Scoring Guide may serve as an evaluation tool for an organization wishing
to assess their KM implementation or to monitor its progress. It may be used by an industry
group or academic organization in evaluating the KM practice of business
organizations. Based on the evaluation, a KM Award may be given to deserving
organizations, thus providing recognition and spurring greater adoption of KM.
3. A KM practitioner may use the KM Hexagram and Index as a checklist in implementing
KM in his/her organization and monitoring its progress and success.
4. The KM Hexagram may serve as an outline to guide the curriculum development for a
university course and/or professional certification program on KM.
References
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educational institutions in the Philippines. NOCEI Journal, 3(1), 46-63.
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https://cce.ateneo.edu/program-calendar/knowledge-management
Boom, D., Talisayon, S., & Afable, N. M. (2020). Towards a framework for measuring the impact
of knowledge management solutions applied to work processes. Knowledge Management
for Development Journal, 15(1), 26-42.
Crnkovic, J., Belardo, S., & Asoh, D. A. (2005). Exploring the knowledge management index as
a performance diagnostic tool. Systemic Cybernetics and Informatics, 3(2), 27-33.
Davenport, T. & Prusak, L. (2005). Working knowledge: How organizations manage what they
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Development Academy of the Philippines (2020). DICT knowledge management system.
https://www.dap.edu.ph/coe-psp/innovation_lab/dict-knowledge-management-system/
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Dutch Research Council (2020). Knowledge utilisation.
https://www.nwo.nl/en/documents/nwo/policy/knowledge-utilisation/leaflet-knowledge-
utilisation
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R.J., Gevaña, D. & Inoue, M. (2020). Building institutional resilience in the context of
climate change in Aurora, Philippines. Environmental Research, 186.
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and performance. International Journal of Information Management, 31(6), 502-509.
Mafabi, S., Munene, J. & Ntayi, J. (2012). Knowledge management and organisational resilience:
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Roxas, B & Chadee, D. (2016). Knowledge management view of environmental sustainability in
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An Analysis of Key Success Factors (KSFs) of Cooperative Feed
Mill Enterprises in Batangas Province, Philippines
8th NBMC Paper # 33
Maria Noriza Q. Herrera, Dinah Pura T. Depositario, Arlene C. Gutierrez,

and Dia Noelle F. Velasco
University of the Philippines Los Baños
[email protected]
Abstract
In the Philippines, animal feed milling is dominated by commercial companies. However, a unique
business model exists in the province of Batangas, the cooperative feed mill enterprises. A study
on the analysis of the key success factors (KSFs) of cooperative feed mill enterprises in Batangas
province was done with the following specific objectives: 1) describe the external (macro and
micro) environment of the feed mill industry; 2) present the internal environment of the selected
cooperative feed mill enterprises; 3) analyze the key success factors of the selected cooperative
feed mill enterprises; and 4) recommend solutions for the selected cooperative feed mill
businesses.
A descriptive type of research was employed in the study of the three cooperative feed mill
enterprises which represented three scales of operation. These cooperative feed mill businesses
were the following: Batangas Bestfeed Multi-purpose Cooperative (BBFMPC), Agro-industrial
Cooperative of Mataas Na Kahoy (AICOM) and Sorosoro Ibaba Development Cooperative
(SIDC). The study on the cooperative feed mill enterprises in Batangas found that the key success
factors (KSFs) were the following: degree/level of vertical integration, technological capabilities,
geographical/market area coverage, adequate and sound financing and professional management.
A high degree or level of integration and wider geographic market coverage was shown by SIDC.
Meanwhile, partial integration and limited geographic market coverage were exhibited by AICOM
and BBFMPC.
It was recommended that SIDC should continue implementing its current strategies that involve
expansion initiatives i.e. putting up larger warehouse facility and establishing feed mill plants and
aggressive contract growing (CG) arrangement for yellow corn. Moreover, it is recommended that
AICOM should divest its feed mill operations due to high accounts receivables and decreasing
number of backyard swine and poultry farms in Mataas Na Kahoy municipality where majority of
its members are situated. Lastly, BBFMPC is suggested to implement a market penetration
strategy.
Keywords: Philippine feed mill industry, cooperative feed mill enterprises, key success factors
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Introduction
Animal feed production is an important agribusiness intermediate industry supporting the

livestock, poultry and aquaculture sectors worldwide. In 2018, the global feed tonnage grew by
2.76% with feed production of 1.103B MT valued at $540B (Alltech, 2019). In the Philippines, an
average growth per annum of the feed mill industry was between 5.5-6% (Esplana and Soliaban,
2004) producing 27,000MT with an estimated value of $540M (Reyes, 2018). One of the major
drivers of growth in the feed mill industry is the continuous increase in population since humans
depend on animal protein. Between 2020-2050, it was projected that an additional 1.305MmT of
grains should be manufactured, of which 40% would be intended for livestock feeds (FAO, 2013).
Globally, the top 10 feed producing countries are China, USA, Brazil, Mexico, Spain,
India, Russia, Germany, Japan and France (Alltech, 2018). These countries contributed 86% to the
total feed production predominantly for livestock (swine, ruminants), poultry and aquaculture
(Alltech, 2017). The Philippines, though a small island, ranked 21st among the top 30 feed mill
producing countries in the world. The first feed production occurred in the National Capital
Region (NCR). In early 1950s, foreign breeds of livestock and poultry were imported that
necessitated the importation of mixed feeds until a number of Filipino entrepreneurs invested in
the Philippines to put up feed mills in NCR (Sison, 1996). Over the years, proliferation of feed
mill plants occurred in nearby provinces such as Batangas and Bulacan. The feed mill industry has
evolved into becoming a multi-billion peso worth of industry valued at Php 45B in 2001 (dela
Cruz). It is also one of the biggest industries in the country with the swine and poultry as its largest
markets (Sison, 2014).
In the Philippines, the top 10 commercial feed mill players are the following: San Miguel
Foods (B-meg), Charoen Pokphand Foods Philippines Corporation (CPF), Cargill, Sunjin,
Universal Robina Corporation (URC), Unahco, CJ, Pilmico, General Milling Corporation (GMC)
and Philippine Foremost Milling Corporation (PFMC), of which majority are Filipino-owned.
These companies capture an estimated of more than 50% of the market share from the total
domestic production. All of them are also members of the Philippine Association of Feedmillers,
Inc. (PAFMI), an association responsible for ensuring production of affordable feeds to swine,
poultry and other livestock sectors (Reyes, 2018).
Moreover, the Bureau of Animal Industry (BAI) in 2018 recorded a total of 486 feed mill
businesses nationwide. The Luzon feed millers manufactured majority of the animal feeds
contributing more than 84% of the total mixed feed produced in the country. About 94% of this
come from NCR, Batangas, Bulacan, Cavite, Laguna and Quezon feed mill plants (Sison, 2014).
Regions IV-A and III dominated the feed mill industry with 155 and 126 feed mills, respectively.
The dominance of feed mill enterprises in the said regions is attributed to the high number of
commercial and backyard swine and poultry farms present in the area. Figure 1 shows the regional
distribution of the commercial feed manufacturers in the Philippines (BAI, 2018).
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Figure 1
Regional Distribution of Registered Commercial Feed Mill Companies in the Philippines
(as of 2018)
Source: BAI, 2018
Among all provinces in CALABARZON, Batangas recorded the highest number of feed
enterprises. There are currently 89 feed mill plants registered in Batangas: 81 are commercial
businesses while 8 are under the cooperative model. The reason for prevalence of feed mill
enterprises in Batangas is due to the high number of commercial swine and poultry farms as well
as backyard farms. In 2016, Batangas remained as the top swine and poultry producer in
CALABARZON (PSA, 2017). The province is the top layer producer in the country accounting
for 27.51%. Layers are good sources of chicken eggs. Hence, the province has been dubbed as the
“egg capital” of the Philippines. It was estimated that about 75% of total chicken egg production
come from commercial layer farms (Sison, 2014). Moreover, Batangas is the 4th top broiler
producer in the country accounting for 5.78% (3, 609, 587 birds). The province is also a home to
1, 481 commercial swine farms with a total farm capacity of 695, 520 (PSA, 2017).
Despite the dominance of the commercial feed mill companies in the country, a unique
model exists only in Batangas, the cooperative business model. Hence, a study on the analysis of
the key success factors (KSFs) of the cooperative feed mill enterprises was conducted. The specific
objectives of the study were to: 1) describe the external (macro and micro) environment of the feed
mill industry; 2) present the internal environment of the cooperative feed mill enterprises; 3)
analyze the key success factors (KSFs) of the selected cooperative feed mill enterprises in Batangas
province, and; 4) recommend solutions for the selected cooperative feed mill businesses.
Three (3) cooperative feed mill enterprises, representing three scales of operation, were
focused on in this study: Batangas Bestfeed Multi-purpose Cooperative (BBFMPC), Agro-
industrial Cooperative of Mataas Na Kahoy (AICOM) and Sorosoro Ibaba Development
Cooperative (SIDC). SIDC is the second oldest cooperative feed mill enterprise which was
established in 1987 and is currently the known market leader among cooperative feed mill
enterprises in the province and the whole country. On the other hand, BBFMPC started operating
in 2008 while AICOM was established in 1991.
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Studies related to the key success factors (KSFs) of cooperatives were reviewed as part of
this research. In 2003, Castillo conducted a study on the 4 successful cooperative feed mill
enterprises in Region IV-A, namely: LIMCOMA, Sorosoro Ibaba Development Cooperative
(SIDC), both based in Batangas province. CAFFMACO in Cavite province and Luntian in Quezon
province. The Lipa City Multi-purpose Cooperative (LIMCOMA) is the oldest known cooperative
feed mill enterprise founded on 25 March 1970. LIMCOMA attributed its success to technological
advancement and high asset and inventory turnover. In 1994, LIMCOMA was the first cooperative
feed mill business to utilize the automated and computerized feed mill system.
Furthermore, although the Sorosoro Ibaba Development (SIDC) was established in 1969,
the cooperative only started to produce animal feeds in 1987. The success of SIDC is attributed to
great leadership as exemplified by its founder, Mr. Victoriano Barte who dedicated his time, talent
and treasure along with the Board of Directors (BOD). The officers, employees and members’
continuous patronage, cooperation and unity in carrying out all activities contributed to what SIDC
is right now (Castillo, 2003). On October 1989, PADECO operated its feed mill in a lot donated
by its founder Alejandro Reyes. It struggled during the first few years but managed to earn Php
2,579,291 by the end of 1991. Meanwhile, the Cavite Farmers and Feedmillers and Marketing
Cooperative (CAFFMACO) started to produce animal feeds in 1970s. CAFFMACO attributed its
success to the concerted efforts of the pioneers, members, officers and management staff. The
cooperative has good leadership and is composed of committed employees. Other success factors
were the continuous education and training program, transparency and competent and dedicated
directors and employees (Castillo, 2003). Lastly, the Luntian Multipurpose Cooperative (Luntian
MPC) located in Quezon was established in 1995. It attributes its success to the good selection
process of members. Members with good track record, with integrity and with capital became part
of the cooperative. In another study, Castillo and Mendoza (2006) summarized the success factors
for the cooperative business operations under these categories: 1) sound management; 2) sufficient
volume of business; and 3) adequate and sound financing.
Meanwhile, Bruynis et. al. (2001) studied the key success factors among 52 emerging
agricultural marketing cooperatives in the United States. The independent variables were
longevity, member business growth, profitability and member satisfaction. The change in
probability of success attributed to the independent variables was determined. Different variables
such business volume, total equity, financial statement, marketing agreement, board experience,
management training, management person and feasibility study were also considered.
Further, Baseman (2012) conducted an internet survey to find globally a consensus

response on the question regarding cooperative success. He found 175 success factors and grouped
them according to 13 categories. These 13 categories were the following: supportive environment,
sound advance planning, real economic benefits for members, skilled management, belief in
cooperative concepts, grassroots development and leadership, financially self-sustaining,
innovation and adaptation, effective structure and operations, networking with other cooperatives,
communications, common member interests and education.
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On the other hand, Pefindo (2018) asserted that the key success factors for animal feed mill
companies and husbandry were: market position, vertical integration, diversification, operating
management, financial policy, capital structure, cash flow protection and liquidity and financial
flexibility.
The above studies related to the key success factors (KSFs) among cooperatives were
general. So far, no studies yet had been conducted specific to the KSFs among cooperative feed
mill enterprises and this is the area where this study hopes to make a contribution to.
Methodology
Research Design
The study employed a descriptive research design. It described and analyzed the
macro and micro environment of the animal feed mill industry, and the internal
environment of the selected cooperative feed mill enterprises in Batangas province.
Methods of Data Collection
Key informant interviews (KIIs) were conducted among the production manager
and key staff of the selected cooperative feed mill enterprises. The list of the cooperative
feed mill enterprises in Batangas were obtained from the provincial planning and
development office (PPDO) in Batangas City and the Cooperative Development Authority
(CDA) Region IVA- Extension office in Calamba City, Laguna. Moreover, KIIs were done
among various stakeholders- animal nutritionists, sales manager and government
employees of the key institutions in-charge of the feed mill business, the director of the
Bureau of Animal Industry (BAI) and also some staff from the Cooperative Development
Authority (CDA). Meanwhile, secondary data came from the internal such as operating
manuals of the cooperatives, their financial statements and other related documents.
Meanwhile, external sources such as graduate and undergraduate theses and/or special
problems were also utilized.
Methods of Data Analysis
The primary data from the interview with cooperative feed mill enterprises’
production manager, general manager and employees helped in providing information on
the internal environment and data on the status of the Batangas feed mill industry.
Meanwhile, the collected secondary data from various reference materials and the key
informant interview (KII) conducted among feed industry practitioners and government
agencies such as BAI, CDA, PPDO were helpful in the assessment of the external
environment. The information, aided in the external environment analysis (i.e., politico-
legal, economic, socio-demographics, technological and environment/natural (PESTE).
The key economic dominant forces of the Batangas feed mill industry such as the growth
rate, existing cooperative feed mill enterprises, distribution channel, customers and
suppliers were also discussed. The matching of the internal and the external assessment led
444 | P a g e
to identification of the key success factors (KSFs). In analyzing the key success factors
(KSFs), a scoring was performed between 1 to 3 with the score of 3 being the highest.
Macro-environment Analysis
Politico-legal Aspect
The Philippine laws identified to have the most impact on the operations of feed
mill enterprises are the Livestock and Poultry Feeds Act (Republic Act 1556) and the
Philippine Cooperative Code of 2008 (RA 9520). As for the environmental laws, the clean
water act of 2004 (RA 9275), clean air act (RA 8749), solid waste management act (RA
9003) and hazardous waste management act (RA 69696) govern the feed mill industry,
whether commercial or under the cooperative business model. Certifications and Quality
standards were also found to have a significant effect on feed mill enterprises. Quality
standards and certifications such as ISO 9001:2008 and ISO 9001:2015 (Quality
Management System), ISO 22000-2005 (Food Safety Management System), HACCP/
CODEX Alimentarius Commission, Good Practices for the Feed Industry and Good
Manufacturing Practices (GMP) are included. These certifications and quality standards
were set to ensure the production of good quality feeds that can greatly affect the quality
of meat from the livestock and poultry.
Economic Aspect
The inflation rate in the Philippines during June 2018 reached 6.7%, the highest for
the past nine years (PSA, 2018). The inflation had a domino effect in increasing prices of
all commodities, particularly the prices of yellow corn and other feed ingredients for the
feed mill industry. This led to an increase in the cost of production among feed mill players,
influencing the increase in the selling price of feeds. Along with the inflation, was the
occurrence of typhoon Ompong (Mangkhut) that occurred in September 2018 damaging
about Php 8B worth of yellow corn investment in Luzon. This jacked up the yellow corn
price from Php 13.50/ kilogram to Php 22/kilogram, which was almost doubled.
Consequently, yellow corn farmers in Mindanao, the source of yellow corn among
Batangas-based feed millers, declined to plant the crop due to the changing climate. This
contributed to low volume of yellow corn produced. As such, feed mill companies were
forced to import more feed wheat which was priced higher. Feed wheat is a close substitute
to yellow corn but is not comparable to the latter in terms of nutritive value. As a result of
the low supply of yellow corn from local producers, feed millers planned to import
2.6MmT of feed wheat by June 2019 (Miraflor, 2018).
Socio-demographic/ Cultural Aspect
Swill feeding or feeding of livestock (pigs) with leftover food is still being practiced
mostly by backyard farm owners to reduce expenses from buying animal feeds (Tomacruz,
2019). However, it is not advisable to practice swill feeding because the animals will not
445 | P a g e
reach the desired market weight. In addition, they will be more prone to diseases and other
complications. In the case of swine, diseases like foot-and-mouth and the African Swine
Fever (ASF) will likely occur. The Philippines has been very vigilant because of the ASF
outbreak that started in 2018.
Technological Aspect
The animal feed industry is highly connected to its backward linkage, the yellow
corn industry. The use of GM (genetically modified) corn is widely adopted domestically
and globally to withstand the negative climate effects such as droughts, typhoons and
incidence of pests and diseases.
On the other hand, commercial feed mill plants in the Philippines are utilizing
automated feed mill system. Improved process technology and precision feeding can lead
to cost efficiency and effectiveness in the long run as exhibited by developed nations. The
use of computer-aided “least-cost” formulation and shift to customization process led to
the growing demand for swine and poultry sectors. Furthermore, precision feeding can
provide wide options and specifications of different feedstuffs and substitutes that can
exactly target the nutritive requirements of certain animals. There will be lesser wastes
utilizing the least-cost method. Nevertheless, small and medium feed producers in the
country are still utilizing the traditional hammermill and machineries due to high cost of
adopting the automated feed mill system.
Natural/Environment Aspect
Some of the factors that beset the feed mill industry related to natural or
environmental factors are the changing climate, waste management and quality standards.
Feed mill industry needs to comply especially the waste water treatment and reduction of
noise and air pollution. There is also a growing concern to decrease environmental footprint
from producing yellow corn, wheat, soybean and other grains as major feed ingredients.
Reduction of environmental footprint from feed crops can only take place by decreasing
the greenhouse gas (GHG) emission by lowering fertilizer and pesticide use. This is utterly
difficult especially that high yielding varieties/ GM crops rely heavily on inorganic
fertilizer and pesticides. The use of GM feed crops is inevitable since it is more sustainable.
However, there is a trade-off between economics and the environment. Reduction can
ecological footprint can be mitigated through precision agriculture (PA).
Microenvironment Analysis
Moreover, the microenvironmental factors found most relevant to the Batangas

feed mill industry were: growth rate, existing cooperative feed mill enterprises, market
distribution channel, customers and suppliers.
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Growth rate of Batangas feed mill industry
Batangas feed mill industry has a steady growth (Figure 2) since it started in 1970
but most of the new feed mill enterprises were established between 2000-2009 due to the
perceived lucrativeness of the industry. Between 2010 to the present, only 10 feed mills
were established. The continuous increase in costs of inputs and threats of laws and policies
related to animal feed milling are the major reasons for the slow growth in the industry.
Despite the challenges, the Batangas feed mill industry is still positively growing at a rate
of between 5-7% per annum with the increase in production capacity of existing feed mills
and establishment of new feed mill plants (Reyes, 2018). The growth in the provincial feed
mill industry took place due to the dominance of commercial poultry and swine farms with
toll partnership from the giant companies like San Miguel Corporation, Sunjin among
others (Reyes, 2018).
Figure 2
Number of Feed Mill Enterprises Established in Batangas in Different Time Periods
PPDO, 2018
Cooperative feed mill enterprises and relative size
From among the 89 feed mill plants registered in Batangas: 81 are commercial
businesses while 8 were cooperatives. The cooperative feed mill businesses are categorized
according to its size: 4 small (0-25MT/8hr operation); 2 medium (25-50MT/8hr operation),
and; 2 large (>50MT/8hr operation). Small and medium feed mills still employ the manual
hammermill and mixer machineries. In 2017, it was recorded that the total rated capacity
(Table 1) per day of the 8 registered cooperative feed mill enterprises in Batangas was
524.5MT (8-hr operation) which is 13% relative to the total rated capacity of the
commercial feed mill enterprises in the province. Its monthly average corn utilization is 4,
615.60MT. At present, among all cooperative feed mill businesses in Batangas, SIDC has
the highest utilization rate of 96% since it employs the automated feed mill system. At
present, SIDC and LIMCOMA are still the biggest producers of animal feeds in Batangas.
447 | P a g e
Table 1
List of Cooperative Feed mill Enterprises in Batangas with Corresponding Daily Rated Capacity
and Corn Utilization in a Month’s Time, 2017
Cooperative Rated Capacity (MT) Estimated corn

per 8-hr shift utilization (MT)
per month
1 Buklod Unlad Multi-purpose Cooperative 10 88
2 Batangas Bestfeeds Multipurpose 12 105.6
Cooperative
3 Batangas City Federation of Cooperative 12.5 110
Federal
4 Lobo Agro-industrial Development Multi-
purpose Coop (LADEMCO) 20 176
5 Agro-industrial Cooperative of Mataas Na
Kahoy
6 Brilliant Multi-purpose Coop 25 220
7 LIMCOMA multi-purpose cooperative 195 1,716
8 Sorosoro Ibaba Development Cooperative 225 1,980
TOTAL 524.5 4,615.60
PPDO, 2018
Customers
Cooperative feed mill enterprises in Batangas employ capture marketing in which

members of the cooperative are usually the customers for the animal feeds produced. The
cooperative members are usually engaged into backyard poultry and swine farming. With
the reduction of backyard animal farms, cooperative feed mill enterprises need to identify
other geographic markets for its animal feeds aside from Batangas. As of the moment,
SIDC and LIMCOMA are the only ones serving other geographic markets outside
Batangas province. It is foreseen that the growth in the Batangas feed mill industry will be
for large players. For the past decade, structural changes in the swine and poultry farms are
taking place favoring the establishment of more commercial farms. This trend will continue
to happen in the coming years, thus, reducing the number of backyard farms. It is foreseen
that the feed mill operations will continuously be integrated to the animal farms.
Market distribution
The cooperative feed mill enterprises marketing and distribution channel

framework is shown in Figure 3. From the cooperative feed mill processing plants, the
cooperative members either pick up the animal feeds or being delivered to the members.
For the large cooperative feed mill enterprises such as SIDC and LIMCOMA, the
cooperative brings the finished goods to the market outlets located mostly in Regions IV-
A.
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Figure 3
Marketing and Distribution Channel of Cooperative Feed Mill Enterprises in Batangas
Herrera et.al., 2019
Suppliers of yellow corn and other raw materials
An estimated monthly average of 4, 615.60 MT of yellow corn is needed to supply

the cooperative feed mill enterprises in Batangas. Yellow corn production in Batangas only
contributes 1% (12, 354MT) relative to other 8 crops planted in the province since
sugarcane is highly prioritized. The feed mill establishments in Batangas usually deal with
the consolidators/ traders to meet the desired volume, cost, good quality and timeliness.
About 80% of the yellow corn needs in the province, both for the commercial and
cooperative feed mill businesses come from Isabela while 15% from Mindoro. The
remaining 5% of yellow corn is sourced from other areas
From the macro and micro environmental analysis, the identified key success
factors (KSFs) in Batangas feed mill industry were summarized according to: degree/ level
of vertical integration, technological capabilities, geographic market coverage, adequate
and sound financing and professional management. SIDC, AICOM and BBFMPC were
evaluated based on the identified KSFs.
Degree/ Level of Vertical Integration
A feed mill enterprise can be successful in the industry if it has a high level/ degree
of vertical integration. This is demonstrated by gaining control of the key participants in
the supply chain. Sexton and Iskow (1996), Castillo (2003), Pefindo (2018) and Bhasin
(2018) found that a highly vertically integrated organization reduce its costs by being
closely linked to its suppliers and its end-users. A high vertical integration (Figure 4) is
exhibited by SIDC. Hence the score of 3. About 15% of SIDC’s total yellow corn needs
are procured from the farmer-members from Aklan, Bicol and Palawan. The remaining
85% from the consolidators. Inclusivity has been manifested via the contract growing (CG)
agreement with the farmer-members. On the other hand, SIDC is also highly integrated to
its farmer-members and other members via the marketing agreement with the feed market
outlet owners. About 65% of the total feeds produced by SIDC are absorbed by the market
outlet owners while the remaining 35% is for the in-house sales. SIDC’s competitive
449 | P a g e
approach is cost leadership-best value. As a market leader, SIDC offers high quality feeds
to customers at a lower price.
Figure 4
SIDC’s Supply Chain Management Framework
Note: About 15% of SIDC’s yellow corn needs from farmer-cooperators under contract growing (CG) while 85%
from consolidators. On the market side, 65% of SIDC’s produced animal feeds go to feed outlets and 35% in-house
sales. Conversely, AICOM and BBFMPC are merely integrated to its members via the marketing agreement. Both
cooperatives deal with consolidators for the needed yellow corn and other macro and micro ingredients since these
intermediaries can provide the required volume, quality and competitive prices. BBFMPC’s competitive approach is
the focus-low cost strategy while AICOM is into cost leadership-low cost strategy. For vertical integration, AICOM
and BBFMPC had a moderate score of 2.
Technological Capabilities
Utilizing modern technology can achieve economies of scale. A high utilization

rate would mean better production efficiency. Esplana and Soliaban (2004) declared an
average of 43% utilization rate to commercial feed mill companies. Among the cooperative
feed mill enterprises, only SIDC employs the automated feed mill system while BBFMPC
and AICOM are still using the traditional ones. BBFMPC has the least utilization rate of
50%, followed by AICOM with 60%. SIDC’s utilization rate is at 96%. For technological
capability score, SIDC got a score of 3, 2 for AICOM and 1 for BBFMPC.
Geographic Market Coverage
SIDC caters to a wider geographic market with members in Regions III, IV, V and
VII but most of the members come from Region IV. BBFMPC and AICOM’s market reach
is only limited to those who are in Batangas. Since SIDC has a wider geographic market
coverage, serving Northern and Southern Luzon, as well as Visayas, it had a score of 3.
Meanwhile, AICOM and BBFMPC have both a moderate score of 2.
Adequate and Sound Financing
Adequate/ sound financing in the feed mill business is another key to success. To
achieve adequate and sound financing, the following should be present: sufficient volume
of business, good cash flow management and raising capital from members. However, it is
more difficult to cooperatives because of the service over profit concept (Castillo, 2006).
450 | P a g e
Among the cooperative feed mill enterprises, BBFMPC has the most sufficient capital and
positive financial ratios, thus a score of 3. Meanwhile, SIDC is highly leveraged with a
75% debt ratio in 2018. The cooperative uses the loaned amount to support its agri-trading
and financing program (CG agreement with the yellow corn farmers-cooperators) and
expansion activities (construction of warehouse facility, newly built feed mill plant in
Palawan etc). SIDC has a moderate score of 2. Lastly, AICOM showed a poorly managed
collection of accounts receivables (A/R) that totaled to Php 22.5M whereas its available
cash was only Php 10.3M. This represents more than 50% of the total available cash. The
problem on collection of payment negatively affects the operation of the cooperative’s feed
mill plant. Therefore, AICOM had the least score of 1 under the adequate and sound
financing.
Professional Management
Professional management is one of the key success factors of any organization.

Aside from demonstrating administrative and technical skills, good leadership is important
in professional management (Castillo, 2006). It can also help an organization determine its
strategic directions. Many cooperatives in the Philippines do not succeed due to poor
management.
SIDC prides itself for the consistent good leadership of the cooperative for several
decades already. It is the BOD members’ role to set the direction and craft strategies for
the cooperative, especially in attracting members as it would determine the volume of
business. Having quality members is the reason for SIDC’s success and continued
existence. Quality members mean those who are loyal members availing the cooperative’s
products and services. For this, SIDC got the high score of 3 being highly professionally
managed. At BBFMPC, there is no clear delineation of work. The general manager of the
cooperative also serves as the treasurer which can be a source of conflict of interest.
Consequently, the cooperative can afford to hire an additional staff based on the analysis
of its financial capability. BBFMPC had a score of 2 for professional management. AICOM
was the least professionally managed, hence a score of 1. The cooperative failed to reinvent
itself and craft strategies in sustaining its operations. Internally, the cooperative has a high
level of accounts receivables (A/R) which has long been standing for several years already.
Externally, the management is threatened by the announcement of LGU making the
municipality as an eco-tourism site. This will dwindle the number of backyard swine and
poultry farms which is the main market of the cooperative’s feeds. Results of the
assessment (Table 2) showed that SIDC had the highest score of 14. This was followed by
BBFMPC (10), and lastly, AICOM (8).
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Table 2
Summary of Scores of the Cooperative Feed mill Enterprises Relative to the Key Success Factors
Key Success Factors SIDC BBFMPC AICOM

Degree/ level of 3 2 2
vertical integration
Technological 3 1 2
capabilities
Geographical area 3 2 2
coverage
Adequate and sound 2 3 1
financing
Professional 3 2 1
management
Total 14/15 10/15 8/15
Herrera, et. al., 2019
The cooperative feed mill enterprises in Batangas survive to meet the needs of its members
for good quality yet affordable feeds. It is recommended that SIDC engages into continuous
expansion (via contract growing-CG arrangements, construction of larger warehouse facility,
establishing of new plant among others) and the corporative business model. SIDC should continue
to employ the automated feed mill system for economies of scale and diversified products. It is
also suggested that SIDC adopts the new “corporative” model. It marries the concept of corporate
farming and the features of cooperatives to help smallholder farmers organize themselves to
become a major player in the agricultural food markets. The corporative model can be engaged
into by SIDC and Monsato (Bayer). Monsanto is a private company involved into hybrid yellow
corn production. SIDC, being a cooperative will be in charge of organizing the small farmers while
Monsato will be in-charge of financing and technical expertise to be extended to the small farm
holders.
AICOM and BBFMPC currently employ the traditional/manually-operated machineries

catering mostly to small and medium swine and poultry farms in Batangas. In order for them to
become relevant, joint venture agreements is suggested, if possible. It is projected that small and
medium feed mill enterprises in Batangas will dwindle in number due to difficulty in complying
the requirements for its major markets, the backyard swine and poultry farms. To remain relevant,
the players under this group should enhance their capabilities i.e. market development, technology
among others.
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Ethical Conduct in Business Organizations: the Perceptions of
Senior High School Students
8th NBMC Paper # 34
Esiel Mae M. Domingo

[email protected]
Abstract
The study investigated the perceptions of Grade 12 Senior High School students of Accountancy,
Business and Management (ABM) strand have toward ethical conduct of business organizations
in Metro Manila in terms of the environment, the staff, community, regulators and competition.
The study adopted a quantitative research design that involved the use of survey. The self-
administered questionnaire method was used to collect data from 116 survey participants.
Reliability was measured using the Cronbach’s alpha. The data analysis methods for the study
were descriptive statistics, reliability test and one-sample t-test. The results indicated that the
Grade 12 Senior High School students of Accountancy, Business and Management (ABM) Strand
in a private university in Manila perceived positively that business organizations have ethical
conduct toward the environment, staff, community, regulators and in competition.
Keywords: Business Ethics, perceptions, senior high school
Introduction
A number of studies have examined factors that influence perceptions of ethical conduct
in business organizations. Ethical behavior is the behavior companies seek to drive performance
and success (Askew et al., 2015). As specified by Dekoulou and Antonaras (2018) doing business
ethically means to work according to the letter of the law, perform duties on time and put
consumers and customers as priorities. According to Albaum and Peterson (2006) many of the
researchers have used business students as the sample on business ethics studies because of the
high response rate and the ease with which data is collected. Moreover, study on their perception
today can give an overview of the future condition of the business world and these students also
have an interest in a firm as they are one of the stakeholders who will join the firm in the future.
The Department of Education (DepEd) K to 12 Basic Education Curriculum Senior High School
ABM Specialized Subject – Business Ethics and Social Responsibility, aims to provide students
with a basic understanding of the mechanisms whereby companies can be made to act in the best
interest of shareholders, other stakeholders, and society as a whole and provide students with
knowledge of general ethical principles as applied to the special situations of business and the
ability to make informed judgments through case analyses (Department of Education, 2016).
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Business Ethics
Business ethics (also known as corporate ethics) is a form of applied ethics or professional
ethics that examines the ethical principles and moral or ethical problems which arise in a business
environment (Sroka & Szántó, 2018). Longman Business Dictionary (2017) defines ethics as
“moral rules or principles of behaviour that should guide members of a profession or organization
and make them deal honestly and fairly with each other and with their customers”.
Business Ethics Influences Business Success
It was said by some management guru that ethical companies have greater competitive
advantage above their competitors, because they tend to do better in their respective market
(Ogbari et al., 2016). Albu et.al. (2017) points out that code of ethics is seen as a pillar for business
success, companies without ethics being not able to exactly determine what is right and fair within
their business, therefore, ethical practices may lead a company to failure or success.
According to Bulog and Grančić (2018), benefits of business ethics are extremely high,
while lack of ethics leads to a wealth of problems for a business, hence, managers in companies
must understand and cherish business ethics, honesty and integrity. Ahmed et al. (2016) mentioned
that honesty or being true to oneself and fellow-beings and others emerges as the best business
policy, supported by the principles of economic and business. Business ethics today often focuses
on the shareholder and the stakeholder theories, that is, it is largely concerned with the proper
ethical conduct of corporations (Melkevik, 2019). Carroll (2016) study highlighted that another
aspect of the ethical expectation is that businesses will conduct their affairs in a fair and objective
fashion even in those cases when laws do not provide guidance or dictate courses of action.
Stakeholder Theory
Freeman and Dmytriyev (2017) emphasized that the composition of stakeholders may
differ depending on company’s industry and business model, the main stakeholders typically
include employees, customers, communities, suppliers, and financiers (owners, investors). There
are five major stakeholder groups (internal and external of the firm) that are recognized as priorities
by most firms: owners (shareholders), employees, customers, local communities, and the society-
at large (Carroll ,1991; Adda et al., 2016).
Strategic Stakeholder Groupings
Post et al. (2002) mentioned that Strategic Stakeholder Grouping classification proposes
three groups of stakeholders namely:
- Core stakeholders: those vital to the existence of the organisation, such as investors,
employees, and customers;
- Competitive environment stakeholders: these stakeholders define the company’s
competitive position in a particular industry and market, e.g., business partners, unions,
competitors, and regulatory authorities; and
- External environmental stakeholders: these stakeholders challenge the company to foresee
and respond to developments as they arise, e.g., social and political actor.
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Purpose of the Present Study
As highlighted in the study of Goldman and Bounds (2015), the construct pertaining to
ethical conduct in competition was discarded as this construct seems to have evoked inconsistent
responses, but it does not imply that it is not important, rather items in ethical conduct in
competition was not properly understood by the respondents. For the purpose of the present study
the theoretical framework of Goldman and Bounds (2015) was used. The five stakeholder groups
by Goldman and Bounds (2015) namely:
- The environment, an external environmental stakeholder group;

- The staff (encompassing employees and managers), a core stakeholder group;
- The community at large (encompassing society and local communities), an external
environmental stakeholder group;
- Regulatory bodies, an external stakeholder group; and
- Competition (focusing on the whole competitive landscape), a competitive environment
stakeholder group.
-
Since, in the study of Goldman and Bounds (2015) the ethical conduct in competition was
poorly/not well understood the items of this construct was redesigned in the present study. The
present study investigated if Grade 12 Senior High School students perceived that business
organizations in Metro Manila acted in an ethical manner or not. This study aims to answer the
problem: What is the perception of Grade 12 Senior High School students of Accountancy,
Business and Management (ABM) Strand towards the ethical conduct of business organizations
in Metro Manila? The following hypotheses were formulated to be tested based on the five
stakeholder groups.
● Ethical conduct toward the environment

H1: Grade 12 ABM students perceived positively that business organizations act ethically
in the best interest of the environment.
● Ethical conduct toward staff
in the best interest of staff.
● Ethical conduct toward the community
in the best interest of the community.
● Ethical conduct toward regulators
toward regulators.
● Ethical conduct in competition
in competition.
The primary objective of the study was to assess the perceptions of Grade 12 Senior High
School students of Accountancy, Business and Management (ABM) Strand, towards ethical
conduct of business organizations in Metro Manila in terms of the environment, their staff,
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community, regulators and competition. The conceptual framework that was employed in this
study is presented in Figure 1. Specifically, the study aimed to present the socio-demographic
profile of the Grade 12 Senior High School students of Accountancy, Business and Management
(ABM) Strand and to determine the perceptions that senior high school student have towards
ethical practices of businesses organizations in terms of the environment, their staff, community,
regulators and competition.
Method
Sample
The participants of the study were randomly selected from the population of Grade
12 Senior High School students of Accountancy, Business and Management (ABM) Strand
at a private university in Manila. Certain parameters needed to be imposed like the target
respondents must at least 18 years old, have Business Ethics and Social Responsibility
background lastly currently enrolled in the second semester, academic year 2019-2020.
The researcher was able to obtain the target sample size of 116 respondents.
Instrument
Primary data were collected through surveys via questionnaire. The 25 item-
statements used in measuring the ethical conduct of organization are taken from the study
of Goldman and Bounds (2015) and Edumadze et al. (2014). The items for the construct
ethical conduct in competition (COP) was reversed and questions were modified from the
study of Edumadze et al., (2014). The survey questionnaire is composed of two sections –
(Section I.) the socio- demographic factors that include the profile of the respondents like
gender, age and family business background; (Section II) data pertaining to the five
constructs. All items are measured using a 6-point Likert scale where 1 means always and
6 is never.
Design
The study used the quantitative method approach and employed descriptive and
explanatory research design techniques. The present study used the research philosophy of
positivism. According to Saunders (2019), positivism is typically deductive, typically
quantitative methods of analysis, but a range of data can be analyzed. In positivism you
might use existing theory to develop hypotheses. These statements provide hypothetical
explanations that can be tested and confirmed, in whole or part, or refuted, leading to the
further development of theory which then may be tested by further research. if your
research starts with theory, often developed from your reading of the academic literature,
and you design a research strategy to test the theory, you are using a deductive approach.
Data Collection
The primary data of the study were collected through the self-administered
questionnaire. The distribution of the survey questionnaire was done through random
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sampling technique. The researcher sent a consent letter together with the questionnaire to
the Senior High School Unit of a private university in Manila. Questionnaires were
distributed randomly to the selected respondents. Data were collected in a classroom
setting.
Data Analysis
Data analysis consisted of reliability tests, descriptive and one sample t-tests to test
stated hypotheses. All data was also supported using Jamovi software. To measure the
internal reliability, Cronbach-alpha reliability tests were performed on each construct. To
evaluate the nature of the normal distributions descriptive statistics were compiled. The
descriptive statistics would show how Grade 12 Senior High School students of
Accountancy, Business and Management (ABM) Strand perceived the ethical behavior of
business organizations- positive or negative- in terms of the identified constructs.
The mean value of each construct would be analyzed against the average value of
the measuring instrument. The scale was coded from 1= Always through to 6= Never, the
average value was 3.5. In determining whether opinion was positive or negative towards a
given construct, 3.5 was an objective “midway”. Lower than 3.5 would be positive and
higher than 3.5 would be negative (Goldman & Bounds, 2015). One sample t-tests was also
employed to test the hypotheses derived from the conceptual model.
Results
Socio Demographic Profile of Respondents
Socio demographic profile of the respondents are presented in Table 1. The 116
respondents were composed of Grade 12 Senior High School students of Accountancy,
Business and Management (ABM) Strand. There were (50%) female and (50%) male.
Almost all respondents (81%) were 18 years old while a few (19%) were 19 years old.
Majority of the respondents (58.6%) answered with family business background while
(41.4%) answered without family business background.
Reliability of the Measuring Instrument
Table 2 indicates the Cronbach’s Alpha values per construct. The Cronbach’s
Alpha values range between 0.67 and 0.85. According to Taber (2018) alpha values were
describe as: reliable (0.84–0.90); high (0.73–0.95); good (0.71–0.91; reasonable (0.67–
0.87). In summary, the Cronbach’s Alpha is 0.871, which means that the instrument has
high reliability, hence, all constructs are reliable for this study.
Table 3 shows that the mean for each construct is of importance, because it indicates
the perception of respondents toward a construct. The scoring index indicates that 3.5 was
an objective “midway” (lower than 3.5 would be positive and higher than 3.5 would be
negative).
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Five item-question (1,3,11,13,21) constituted ethical conduct towards the
environment mean value was 2.33, this implies that the perception of the respondents
toward this construct is positive. Ethical conduct toward staff consists of four items
(4,6,8,10), mean value was 2.02, the perception of the respondents toward this construct is
positive. Ethical conduct toward the community consist of six items (12,14,16,20,22,23)
the mean value was 2.19, the perception of the respondents toward this construct is positive.
Ethical conduct toward regulators comprised of five items (7,9,17,18,24) the mean value
was 2.25, the perception of the respondents toward this construct is positive. Ethical
conduct in competition has five items (2,5,15,19,25) the mean value was 1.89, the
perception of the respondents toward this construct is positive.
Hypothesis Testing
The findings are measured using one sample t-test, to prove whether the deviations
are statistically significant. This would be the basis for rejecting or not rejecting the
hypotheses. It shows in Table 4, that ethical conduct toward the environment, ethical
conduct toward staff, ethical conduct toward the community, ethical conduct toward
regulators and ethical conduct in competition have t-values of larger than 2 and significance
level of <.001, indicating statistical significance of the constructs. To calculate the effect
size for these results Cohen’s d was used. To interpret the effect sizes, a value of 0.2 to 0.5
is regarded as small, 0.5 to 0.8 is medium and 0.8 and above is large (Goldman & Bounds,
2015).
The effect sizes are shown in Table 5. All effect sizes are large, therefore all
perceptions expressed toward ethical conduct of business organizations can be viewed as
a meaningful perception. For this study the statistical analysis was summarized in Table 6.
The findings indicate that all constructs- the environment, staff, community, regulators and
competition are significant.
Discussion
The selected Grade 12 Senior High School students of Accountancy, Business and
Management (ABM) Strand in a private university in Manila perceived positively that business
organizations have ethical conduct toward the environment, toward staff, toward the community,
toward regulators and in competition. The findings of this present study opposed with the study of
Goldman and Bounds (2015) because in their study the respondents are of opinion that business
organizations do not act in the best interest of the environment and regulators. The results of the
present study showed that the selected Grade 12 Senior High School students of Accountancy,
Business and Management (ABM) Strand have positive perceptions that business organizations
act ethically in the best interest of the environment and regulators. The respondents perceived
positively that business organizations are concern on protecting and caring for the environment
and they dedicate actions to eliminate wastage and pollution. In addition, respondents perceived
positively that business organizations act as good citizens and that they should not only
accountable towards their shareholders.
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The present study has similar findings with the study of Goldman and Bounds (2015)
indicating that their respondents have positive perceptions that business organizations act ethically
toward staff and the community. The results of the present study showed that the selected Grade
12 Senior High School students of Accountancy, Business and Management (ABM) Strand have
positive perceptions that business organizations act ethically toward staff and the community. The
respondents perceived positively that business organizations value the efforts of their staff in terms
of the work they do, they care about the well-being of their staff, they are committed to put
resources and time to the social and economic challenges that the society faces like unemployment
and impact of poverty and they care about the difficulties faced by their communities. Results of
the present study that ethical conduct in competition was a reliable construct which is contrary to
the result of Goldman & Bounds (2015).
Recommendations and Managerial Implications
In this study the respondents which are Grade 12 Senior High School students of
Accountancy, Business and Management (ABM) Strand positively perceived that business
organizations in Metro Manila are acting ethically. The significance of obtaining the perceptions
of Grade 12 students about ethical conduct in business can assist senior high school faculty that
are teaching the specialized subject Business Ethics and Social Responsibility in designing
performance task like case analyses in relation to ethical conduct of business organizations. The
present study can also guide the administrators in the selection of faculty to teach the subject
Business Ethics and Social Responsibility wherein the faculty should have corporate experience
or an industry practitioner to better provide students the skills to formulate strategies and tactics in
relation to corporate ethics. The respondents of the present study indicated that 58.6% of the
respondents have family business therefore by obtaining the perceptions of these Grade 12 students
about ethical conduct in business can contribute in the assessment of their understanding on the
practices of ethical standards in the business environment.
Conclusion and Areas for Future Research
In summary, all the constructs presented seem not to reject the stated hypotheses. The
findings tend to unite that all the positive perceptions of the selected Grade 12 ABM students that
business organizations are ethical in best interest of the environment, toward staff, community,
regulators and competition. There is trust amongst many respondents toward the ethical conduct
of business organizations. The data was collected from only one university in Manila. For future
study, sample needs to be taken wider through collecting data through numerous universities to
further measure the perceptions of Grade 12 Senior High School students. The respondents of the
present study are limited only to Grade 12 Accountancy, Business and Management (ABM)
Strand, other studies can also use the same instrument to workplace-based students.
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Table 1
Socio Demographic Profile of Respondents (N=116)
Item Percentage
Gender Female 50%
Male 50%
Age 18 81%
19 19%
Family Business Background With Family Business 58.6%
Without Family Business 41.4%
Table 2
Reliability statistics of Variables
Construct Number of Items Cronbach’s Alpha
Ethical conduct toward the 5 0.73
environment
Ethical conduct toward staff 4 0.82
Ethical conduct toward the 6 0.85
community
Ethical conduct toward 5 0.72
regulators
Ethical conduct in competition 5 0.67
Table 3
Mean and Standard Deviations of the Variables
Construct Mean Std. dev.
Ethical conduct toward the 2.33 0.717
environment
Ethical conduct toward staff 2.02 0.740
Ethical conduct toward the 2.19 0.753
community
Ethical conduct toward 2.25 0.704
regulators
Ethical conduct in competition 1.89 0.613
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Table 4
One sample t-test
Construct T Df P
Ethical conduct toward the 24.5 115 P<.001
environment
Ethical conduct toward staff 16.6 115 P<.001
Ethical conduct toward the 22.9 115 P<.001
community
Ethical conduct toward 23.6 115 P<.001
regulators
Ethical conduct in competition 21.0 115 P<.001
Table 5
Effect sizes (Cohen's d) per construct
Construct Effect Size Meaning
Ethical conduct toward the environment 2.28 Large
Ethical conduct toward staff 1.54 Large
Ethical conduct toward the community 2.13 Large
Ethical conduct toward regulators 2.20 Large
Ethical conduct in competition 1.95 Large
Table 6
Summary of statistical analysis
Construct Cronbach’s Mean T Effect
Alpha Size
Ethical conduct toward the 0.73 2.33 24.5 2.28
environment
Ethical conduct toward staff 0.82 2.02 16.6 1.54
Ethical conduct toward the community 0.85 2.19 22.9 2.13
Ethical conduct toward regulators 0.72 2.25 23.6 2.20
Ethical conduct in competition 0.67 1.89 21.0 1.95
Figure 1
Formation of Ethical Conduct in Business Organization
H2 Environment
Staff
H3 Community
H1
Competition
H5 Ethical Conduct in H4
Business Organization
Regulators
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Section II of the measuring instrument
1. Business organizations are serious about protecting and caring for the environment
2. Society perceives business organizations as competing fairly
3. Business organizations dedicate a lot of resources to eliminate wastage and pollution
4. Business organizations require staff to perform tasks that they are not comfortable with
5. Business organizations must be justly when doing business.
6. Society perceives business organizations to act in the best interests of their employees
7. Business organizations are “citizens” of society and, therefore, act as good citizens
8. Business organizations value the efforts of their staff in terms of the work they do
9. I trust business organizations’ intentions of acting ethically
10. Business organizations care about the well-being of their staff
11. Society believes that business organizations act in the best interests of the environment
12. Business organizations commit time and resources (i.e. take action) to the social
challenges society faces (such as crime and HIV-AIDS)
13. Business organizations will only act in the best interest of the environment if it promotes
their business
14. Society perceives business organizations to act in the best interest of society
15. Business organizations must have integrity during the performance of work.
16. Business organizations commit time and resources (i.e. take action) to the economic
challenges’ society faces (such as unemployment and the impact of poverty)
17. Business organization is only accountable toward its shareholders
18. Business organizations are truly committed to being good corporate citizens
19. A business organization has to put everything on the line to outsmart its competitors
20. Business organizations are aware of the social challenge’s society faces (e.g. crime and
HIV-AIDS)
21. Business organizations put the interests of the environment above the interests of their
shareholders
22. Business organizations care about the difficulties faced by their communities
23. Being a good corporate citizen enhances organizational learning which, in turn, enables
the
business organization to understand the market it operates within much better
24. People in general trust business organizations intentions of acting ethically
25. Business organizations must be honest in the performance of duties
Source: Goldman and Bounds (2015); Edumadze et al., (2014)
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Academic Entrepreneurship in the Philippines: The Interplay of
Absorptive Capacity and Innovation on University-based
Technology Business Incubators
8th NBMC Paper # 35
Marlo C. Novino
Mindanao State University – Iligan Institute of Technology
[email protected]
Abstract
In more recent years, universities have evolved to meet the robust demand of the knowledge-based
society thereby paving the emergence of the university’s third mission, particularly academic
entrepreneurship. One form of academic entrepreneurship is a university-based technology
business incubator (TBI) with the goal of bringing technologies from university laboratories to
commercial markets. Anchored on the two dimensions of absorptive capacity: potential absorptive
capacity (PACAP) and realized absorptive capacity (RACAP), this paper will measure the
knowledge management and innovative outputs of university-based TBIs in the Philippines using
structural equations modeling among key staff. Main findings reveal that that the mediated
relationship between PACAP, RACAP and IO explained 38.7% of the variance both predicted by
PACAP and mainly explained by RACAP. Among new organizational antecedents, slack
resources (SR) and willingness to cannibalize (WC) did not predict PACAP. Only tolerance for
failure (TF) and external openness (EO) predicted PACAP. Consequently, PACAP positively
mediated the relationship between TF and EO and RACAP (except SR and WC). Similarly,
RACAP positively mediated the relationship between PACAP and innovative outputs (IO). This
means that PACAP do not necessarily translate to innovative outputs, unless PACAP positively
influences RACAP and RACAP translates to innovative outputs. Moreover, since this model only
captured 38.7% of the variance using absorptive capacity related variables, future studies should
incorporate other explanatory variables such as leadership and organizational culture in the
equation.
Keywords: Philippine academic entrepreneurship, technology business incubators, absorptive

capacity, knowledge management, innovative outputs
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Congruence between Personal Values of selected employees of BRY
Corporation and its Organizational Values
8th NBMC Paper # 36
Flor G. Mangalino
Holy Angel University
[email protected]
Abstract
This study was conducted to determine the perceived personal values and organizational values of
selected employees in a manufacturing company in Pampanga. This also determined the significant
differences between the respondents’ profile and their perceived values. Through a survey of 137
and with the use of descriptive statistics and post hoc analysis were utilized using the Dunn-
Bonferroni approach in the demographic profile, the study found out (1) no significant differences
in the majority of the perceived personal values. Using Kruskal-Wallis H Test for organizational
values on innovation, (2) no significant differences were obtained between groups after a pairwise
comparison was done, (3) there is no significant difference on the demographic profile and the
perceived values on personal and organizational values. Using Mann-Whitney U Test results (4)
indicate that there are no significant differences in terms of gender on personal values on
rationalization, quality, humanity, and innovation and on organizational values on rationalization,
quality, humanity and innovation and value congruence (5) Similarly, majority of the correlation
results indicate moderate positive correlations between personal values, organizational values, and
congruency of values. Thus, the researcher recommends (1) (2) Future researches may deal with
the mediating effects of value congruence to employee engagement and/or job satisfaction. The
development of a values congruence framework is an important aspect of achieving organizational
goals. Interventions that encourage commitment to the organization by engaging in activities by
instilling pride in the organization and concern for the achievement of organizational goals.
Keywords: personal values, organizational values, values congruence, person-job fit,

organizational goals
Introduction
Values, as the basis of organizational culture, guide the organization in achieving its
desired performance outcomes (Safrit, Conklin, & Jones, 2003). In Schwartz, (2004) organizations
are guided by culture consisting of sets of beliefs and values; Schwartz (2006) validated extensive
types of personal values and a broad structure of relations among these values. A collection of
values, beliefs, and norms should be reflected in the organizational practices and goals and shared
by its members (Hofstede et al., 1990).
The practice of a supportive organizational culture can be derived from values themselves,
(Quinn and Rohrbaug, 1983; Frohman, 1998; Higgins & McAsllaster, 2002. (Schneider & Barbers
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2014; Tamayo, et, al 2000) organizational values are the core element of the organizational culture
at the conscious level and are more general than the organizational practices. Schein (2010),
organizational culture involves the beliefs, values, and norms; any other recognizable facet of the
organization. In Rindova (2018) value rationality generates conviction and substantial consistency
which serve as design principles and affects decision making to give coherence to a firm’s strategic
courses of action.
Values play a central role in the functioning of an organization. Set in mission statements
and in organizational cultures, they specify how organizational members should act so the
organizations can pursue their goals and efficiently allocate resources (Cascio, 2012). In Lesnik
(2006) a good foundation in achieving organizational goals is to align organizational values with
those of employees’ personal values. One way to achieve these goals is to identify and pursue the
organization’s own core values that they need to adapt and serve as a framework in matching these
to the personal values of its employees. These values serve as the keystone of cultures that may
enable and/or hinder organizational performance that promotes innovation and improve
performance (Detert,et al. 2000).
Most organizations require employees to continuously define and measure their key results
area (KRA) as part of employee professional and career development to identify whether
performance goals each year are being achieved and align this performance to the strategic goals
of the organization (Aguinis,2009). Employees with the greatest transparency on their personal
values in coherence with organizational values have the highest level of commitment such that
they make a significant contribution to the achievement of organizational goals (Kouzes and
Posner,2002). Cameron & Quinn (2011) when organizational values are not shared with
employees, it may result in conflicting strategies but when employees’ performance reflects the
values of the organization, organizational goals can be pursued effectively to its highest potential.
In Shockley-Zalabak (2012), values that are well communicated and efficiently implemented
convey a strong message that puts pressure on employees to influence them to adapt to their
working environment.
Additionally, value congruence between personal and organization results in employee

commitment and loyalty to the organization which is vital in achieving organizational goals
(Jaskyte, 2005). In (Safrit, Conklin, & Jones, 2003), for planning to become effective and achieve
organizational goals, an awareness of existing gaps between values and organizational practice can
initiate change in the organization.
The personal values of an employee are very vital in the decision-making of an

organization because they support everyday decisions and they affect organizational outcomes
(Mumford et.al. 2002). Better value congruency resulted to fast and effective decision-making,
thus promote the achievement of organizational objectives and goals. Managerial decision making
s influenced by organizational values (Liedtka, 1989), (Voss, Cable, & Voss, 2000) awareness of
the present values is important when formulating organizational policies since these can influence
the critical processes and characteristics in organizations in planning for its future directions.
Various studies focused on attitudes and values which showed the frameworks that
personal value orientations are linked to social attitudes (e.g., Maio & Olson, 1994,1995; Maio,
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Olson, Allen, & Bernard, 2001). Organizations may evaluate the personal fit of the personal values
of future employees through selection and socialization to identify if these are congruent with the
organizations’ ideal values (Sekiguchi and Huber, 2011). In Caprara (2012), prosociality or
voluntary actions that benefit others predicted agreeableness and self-efficacy beliefs which is the
foundation of human motivation.
In Boer (2013) predominance values relate positively to prosocial attitudes, fairness, and
openness-to-change whereas identity attitudes are not consistently associated with value
dimensions. However, people sometimes behave or express ideas about social concerns that are in
contrast with their personal values (Rohan,2000). In Kramer, (2010) employees who have strong
beliefs in their own behavior may be involved in inimical behaviors so it is important that personal
values agree with organizational values to identify the results of socialization to the achievement
of organizational goals.
Related Literature
Personal values
Personal values have great influence on the performance and processes of an organization
(Bourne & Jenkins,2013). Personal values are deeply held and as such have powerful impacts on
learning and action (e.g., Higgins 2016, Rokeach 1973, Schwartz and Bilsky 1987). Hoffman and
Woehr (2006) as cited in Kristof-Brown & Zimmerman, (2000) values have powerful influence
and impact on organizational setting. Same authors, suggest these work values usually define what
people consider important in organizations. Work values influence the individual’s attitude
towards the importance of work. These are the specific values an individual bear with regards to
work and the working environment.
Personal values have different dimensions which make it difficult to define (Pacheco and
Owen, 2015). Individual values vary in structure (Fischer, 2004). Likewise, (Durvasula, 2011)
personal values are immersed drive within an individual that deal with the ultimate goals that
people wish to achieve in their lives to make them wary in their decisions. Personal values are the
characteristics and behaviors that motivate employees and guide them in making decisions or in
doing the things that are important to them. This is a reflection of how these employees choose to
behave in a given situation (Hitlin & Piliavin, 2004).
In Verplanken and Holland (2002) individuals are influenced, motivated and guided by
their own values. Berkhout and Rowlands (2007) employees who were hired in the company
matching their personal values with that of the organizational values display higher performance
in their work due to a higher level of job satisfaction. Likewise, employees perceived that an
aligned personal values with that of an organization is even more important than the extrinsic
reward they received (Evans,2005).
Organizational Values
In Schwartz (1992), organizational values which refer to small number of values that make
up the value system of an organization should be practiced to revived alignment of behaviors.
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Organizational values have specific characteristics that cannot be separated in contrast with
personal values, which are located at the level of individuals who possess their own values
(Schwartz, 1992). In Finlegan and Thierault (1997) there is no indication that personal values of
organizational members are aligned with organizational values. Organizational values have been
an important factor to be considered in any organization since it is an effective marketing too
(Meglino, 1992).
Performance factors between companies which noted their organizational values explicitly
and those who do not have organizational values at all indicated a statistical significant difference
(Kaye,2009). Organizational values describe the core ethics or principles which the company
abides by. These are the shared beliefs among employees and organizations and determine how
decisions are made and how individuals within the workplace treat each other (Liaw,2010).
Organizations should have clearly defined values which reflect the organizations ideals on what
should be a good working environment and workplace behavior.
Congruence between Values
The basis for good organizational outcomes are based on the match between the personal
values of an employee and its organizational values (Kristof, 1996, Ostroff & Judge, 2007). When
employees’ values are aligned with those of the organization and their colleagues, there is
congruency (Adkins,1996). Value congruence is a narrower concept defined as coherence of the
personal values in the organization in the scientific literature (Meglino &Ravlin, 1998; Verquer et
al., 2003; Edwards &Cable, 2003). Adkins and Russel (19970 reported the lack of supervisor-
employee value congruency may cause poor performance. Piccolo & Colquitt (2006) employees
might be bewildered if there is a gap between leader’s values and the organization which may
result to members disillusioned with their roles.
Value congruence exists when there is clarity or alignment between the personal values of
the employees and the system of values within an organization which may lead to many valuable
outcomes for both parties such as a healthy working environment and employee satisfaction
(Posner, 1993). Congruence of personal and organizational values should be developed through
communication and sharing to its employees, thus to identify the personal values of employees
and which of these values are common and which of these were adopted from the managers and/or
top management (Argandoña, 2003).
In Trevino and Brown (2004) a leaders’ supportive behavior is emulated by an ethical

leaders’ followers and the relationship between charismatic leadership and values congruence
suggest that employees’ values are quite stable thus difficult to change. When values congruency
were rated as more important, organizational outcomes are more positive, while outcomes are
negative when value congruency is rated as unimportant (Ostroff, 2005). Value congruence is the
parallelism between personal values and organizational values (Lamm, 2009). Value congruence
on the attitude as well as the behavioral outcomes result to varying degrees of agreement between
personal values and organizational values (Amos, 2008).
In Graham, Mackie and Sibbald (2016) certain strategies are valuable for assessing core
values in organization and enhancing values congruence and aligned core values and
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organizational values contribute to positive work attitude. Individuals are also influenced by
counter- ideal values (Bardi and Schwartz ,2003; Schuh, et al., 2016). In Edwards and Cable
(2009) congruence between employees’ personal values and organizational values positively
affects organizational outcomes including job satisfaction. In Suar and Khuntia (2010) congruence
between personal and organizational values is higher in the private sector than in the public sector.
Value congruence between personal and organization is the most organized model of value
congruence in organizational environment (Kristof-Brown et al., 2005). Also, in Kristoff-Brown
et.al. (2005) the various types of literature on congruence which include (1) person –
organization;(2) person-job;(3) person group and (4) person-supervisor. Person-organization value
congruence is the extent to which personal and organizational values are alike (Kristof, 1996). In
Adkins, et. al. (1994) person-organization fit widely recommends the congruence of personnels’
personality traits, beliefs, and values with the culture, strategic plans, and values of an
organization. In Perera, Khatibi and Navarathna (2012) there should be compatibility between the
employee and the organization itself or termed as person-organization fit given that the persons’
values and behaviors are consistent with those of the organization as a whole.
Person-group fit involves different characteristics, such as values, features, capabilities

and person-organization fit and is most often perceived as congruence between employees’
personal values and organizational culture (Cable & Judge, 1996; Kristof-Brown, 2000; Edwards,
1991; Seong & Krisof-Brown, 2012). Sekiguchi (2006) rationalized the different models and
separated the analysis into different fit aspects: person-vocation, person-job, person-group, person-
culture. Person-job fit is perceived as the congruence between employees’ skills and employer
needs.
In Amos and Weathington (2008) positive relationship exists between congruency of

personal and organizational values on how employees perform in the workplace. When personal
and organizational ideals are congruent, person and organization share a common belief of what
is right and that employees see the organization’s principles as prudent (Edwards and Cable, 2009;
Malbasic et al., 2014).
Objectives of the study
The main objective was to help identify personal and organizational values at BRY
Corporation which currently employs more than 1000 employees. Based on the above review of
related literature and studies for an organization to perform effectively, determining the personal
values is vital. Like many other organizations, BRY Corporation which is one of the largest
manufacturing firms in Pampanga with innovative and strong technical capabilities is also faced
with employees with different sets of beliefs and values. This diversity of values may affect
organizational goals. This study adapted the survey questionnaire from the study of Jourdain and
Chênevert (2015) which perceived organizational values focusing on humanity and innovation and
denotes flexibility and on rationalization and quality which includes control.
Different generations have different values, in a series of different studies congruence

focused on the person to organization influence and that the reflection of values congruence
depends on the agreement on the extent of the practice of personal values and the organizational
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values of the company they work for (Vveinhardt & Gulbovaitė, 2016; Weber, 2015). Thus, this
study might be a valuable source of information on how managers and employees can arrive at
value congruence. It explored similarities and/or differences between the personal values and the
established values of the organization. It also determined whether the personal values and the value
system of the organization are congruent.
Research Problems
1. How may the demographic profile of the respondents be described in terms of

a. Age;
b. Gender;
c. Marital Status;
d. Education; and
e. Work Experience?
2. How employees perceive their personal values in terms of:
a. Rationalization;
b. Quality;
c. Humanity; and
d. Innovation?
3. How employees perceive the organizational values in terms of:
a. Rationalization;
b. Quality;
c. Humanity; and
d. Innovation?
4. Is there a significant difference in perceived personal values according to demographic
profile?
5. Is there a significant difference in perceived organizational values according to
demographic profile?
6. Is there a significant relationship between perceived personal values, organizational values,
and value congruence?
This study was based on the studies of different authors; In Posner and Schmidt (1993)
positive work outcomes exist when there is value congruency related to the differences in
demographic variables such as age and years of experience but there is no difference when it comes
to gender and educational level.
A positive relationship exists between personal and organizational values and/or

congruency with employee attitudes. (Amos & Weathington,2008); similarities between personal
values and the values in the work environment were identified through value congruence
(Hoffman, Bynum, Piccolo, & Sutton, 2011). Vveindhart (2015) elements of the models analyzed
were personal values, organizational values, congruence of personal and organizational values,
and the influence of congruence on the person and the organization.
This study tested the following hypotheses at a .05 level of significance;
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Ho1. There are no significant differences in perceived personal values according to the
respondents’ demographic profile.
Ho2. There are no significant differences in perceived organizational values according to the
respondents’ demographic profile.
Ho3. Perceived personal values have no significant relationship with value congruence
Ho4: Perceived organizational values have no significant relationship with value congruence
The findings from this study will be beneficial to the following:
To the employees of BRY, by reflecting on their personal values and compare them with
the organizational values may gain foresight on the possible enhancement of their weaknesses and
find opportunities in their strengths.
To the company and other business organizations’ managers and supervisors, as they define
and evaluate the personal values of their employees and their organizational values, this will guide
them in making decisions to ease resistance to policies and may gain foresight of potential issues
that may arise.
To the future Entrepreneurs that they may be aware of existing practices and policies.
Further, it will help them identify possible areas of improvement and efficient allocation of
resources.
To the future Researchers of value congruence, this will give them additional insights for
them to compare and contrast existing literature about the values phenomenon and look for new
directions for improvement of models of value congruence.
Paradigm of the Study
Figure 1 shows the paradigm of the study. This study used the four dimensions of both
personal values and organizational values as adopted in Jourdain and Chênevert (2015). It focused
on the four dimensions of both personal values and organizational values on Rationalization,
Humanity, Quality, and Innovation. The dimensions of Rationalization imply the views on rules
and procedures and Quality focuses on the importance of improving the quality of skills and
services. Humanity focuses on cooperation and respect while Innovation implies creativity and
expressing employees point of views.
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Figure 1
Paradigm of the Study
Values congruence is represented theoretically by person-organization fit as indicated in

various literature which showed that person-organization fit is positively related to the different
variables on organizational attraction, perceived organizational support, job satisfaction,
identification, job performance, organizational commitment, citizenship, and extra-role behaviors,
and intent to stay (Arthur et al., 2006; Cable & DeRue, 2002; Edwards & Cable, 2009; Kristof-
Brown et al., 2005; Verquer et al., 2003; Van Vianen, 2000). Therefore, values congruence is
represented theoretically by person-organization fit.
The last part of the survey instrument will be adopted in Vveinhardt and Gulbovaitė (2015)
personal and organizational value congruence.
Methodology
Research Design
The descriptive research design was utilized as it obtained the respondents’ description of
their personal values as well as the value system within an organization. A comparative research
design was also used to test the differences among the different demographic profile of the
respondents and their perception of personal values as well as organizational values. A
correlational research design was used to determine the relationships between personal values,
organizational values, and value congruence.
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Respondents of the Study
The company currently employs more than 1000 employees. The number of target
respondents was computed using power analysis G power application, the total number of
respondents is 134, through the use of .3 correlations H1,0.03 significance level and a power of .95.
G power is a form of statistical power analysis program. A total of 144 filled-out questionnaires
were retrieved, but only 137 were valid. This study adopted convenience sampling in selecting the
respondents, as it was limited to the availability and willingness of the participants to participate
in this study.
Moreover, most of the respondents were years of age 18-31 years old (49.6%%). They
were males (35.3%) and females (64.7%), and single (59.7%), married (33.8%) and only (5%) are
widowers. Most of them have been employed in their companies for 5 years and above Moreover,
most of the respondents were years of age 18-31 years old (49.6%%). They were males (35.3%)
and females (64.7%), and single (59.7%), married (33.8%) and only (5%) are widowers. Most of
them have been employed in their companies for 5 years and above (35.3%); and where bachelor’s
degree (82.7%) and only (4.3%) are master’s degree holders.
Sampling Design
Non-probability sampling technique was utilized in this study which is purposive random
sampling, such that researcher's choice, total population of the company and/or respondents who
were accessible, available and are willing to be part of the study were be included. The target
respondents provided the information on their demographic profile as well as their perceived
personal values and organizational values. Demographic characteristics are factors to individual
perceptions of congruence like age is an important factor which contributes to employees’
expectations about aspects of personal achievement and workplace values (Kroeger, 1995). Also,in
Kroeger (1995) more mature workers place less priority on competition and achievement so does,
educational attainment which is a factor of perceptions of over qualification, which in turn can
impact personal values.
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Figure 2
Power Analysis Sample Size Computation
Research Instrument
The personal values and organizational values instrument was used and measured on a five
Likert scale. This was adapted from Jourdain and Chênevert (2015) Values Measurement Items.
The instrument comprised of the first part about the demographic profile of the target respondents;
the second part and third part focus on the questions on the aspects of personal values and
organizational values on Rationalization which focus on the views on rules and procedures.
Quality focuses on the importance of improving the quality of skills and services; Humanity focus
on cooperation and respect and Innovation focuses on creativity and expressing employees point
of views.
The diagnostic instrument for value congruence was constructed and prepared for expert
evaluation and necessary adjustments were made based on the results of the expert evaluation to
ensure the reliability of the constructs (Vveinhardt & Gulbovaite, 2015). This study adopted the
instrument to classify employees’ choices regarding consistent personal and organizational values.
This part comprises five statements that are presented as they help in evaluating a general
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“feeling”, i.e. how much an employee’s personal values match organizational values to determine
congruence.
Data Collection Procedure
This manufacturing company was chosen due to the accessibility of information. This
manufacturing company is one of the leading manufacturing companies in Pampanga; the chosen
company has the most number of employees among other manufacturing companies with similar
operations. Per verbal communication with the Planner/supervisor who was the researcher’s
former student, the researcher was able to get HR’s approval to conduct a research undertaking in
their company. The initial information we’re given about the background of the company and the
total number of employees.
The actual data gathering was coursed through an online survey via google docs with the
help of one supervisor and one employee. As required in the first part of the survey instrument,
the participants were asked to input their demographic information. The succeeding parts assessed
their perceived Personal Values on the four dimensions of Rationalization, Humanity, Quality, and
Innovation as well as their perceived Organizational values and Congruence of values with a total
item of twenty-nine (29) items. To measure personal and organizational values, the respondent
rated the items through the use of a five-point Likert Scale was used with the following response
options: 5= Strongly Agree, 4=Agree, 3 = Neutral, 2 = Disagree, and 1= Strongly Disagree.
Data Analysis
Data analysis was based on the results of the employees’ survey questionnaire. This study
used descriptive statistics to summarize the demographic profile using Mean rating, Frequency,
and Percentage. The levels of perception on both personal values and organizational values were
analyzed using Mean Rating. The collected data were tabulated and processed through the
software SPSS.
The tests of normality were conducted and showed that the data are not normally
distributed. Thus, non-parametric tests were performed to test the differences according to
demographic characteristics. Mann-Whitney U test was performed to test the differences between
male and female respondents. Kruskal-Wallis H test was performed to test the differences based
on characteristics consist of more than two groups such as age, education, marital status, and work
experience.
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Table 1
Tests of Normality
Kolmogorov-Smirnov Shapiro-Wilk
Variables Variables df Sig. Statistic df Sig.
Perceived values
Rationalization .225 137 <.001 .783 137 <.001
Quality .257 137 <.001 .741 137 <.001
Humanity .266 137 <.001 .752 137 <.001
Innovation .206 137 <.001 .840 137 <.001
Organizational values
Rationalization .199 137 <.001 .834 137 <.001
Quality .243 137 <.001 .804 137 <.001
Humanity .202 137 <.001 .825 137 <.001
Innovation .191 137 <.001 .828 137 <.001
Spearman Rho was also utilized to test the correlation between the variables. Multiple
regression analysis was employed to test if the independent variables personal values and
organizational values can predict the changes in the dependent variable values congruency.
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The following mean rating scales were used:
Table 2
Mean rating scales
Scale Value Descriptive Equivalent Mean rating scales
1 Strongly Disagree 1.00-1.49
2 Disagree 1.50-2.49
3 Neutral 2.50-3.49
4 Agree 3.50-4.49
5 Strongly Agree 4.50-5.00
Source: Mcleod, S.A. (2008) Likert Scale: retrieved from the organization of simply psychology
Spearman Rho coefficient was utilized since the data are non-normally distributed data
and categorical data. (Berenson, Levine & Krehbiel, 2011). It was used to measure the relationship
between the variables on personal values, organizational values, and value congruence. This was
put through to determine the correlation between personal values, organizational values, and
values congruency.
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It utilized the degree of correlation shown below.
The strength of correlation by Dancey and Reidy (2004) was the basis to interpret the obtained
correlation/contingency coefficient value:
Table 3
Correlation Coefficient value and Strength of Correlation
Correlation Coefficient Value Direction and Strength of Correlation
1.00 Perfect (+/-) correlation
0.70 to 0.99 Strong (+/-) correlation
0.40 to 0.69 Moderate (+/-) correlation
0.10 to 0.39 Weak (+/-) correlation
.00 to 0.09 No correlation
Ethical Considerations
Ethical considerations are very important in any research undertaking. The researcher made
initial talks with the supervisor of the BRY company for authorization to conduct the research in
their company. The initial information on the current background of the company including the
number of employees was provided.
Privacy and confidentiality of participants’ information were considered throughout this

study. The anonymity of the identity and responses of the participants were kept with the utmost
confidentiality. Demographic data and survey responses will be kept on a private file to be stored
on the researcher’s personal computer and only accessible by the researcher. Upon the completion
of the survey and encoding of all required information, all files will be kept in both electronic and
hard copy records until a period of one year.
An introduction to the questionnaire includes a brief background of the study. Informed

consent with the specific purpose of the research undertaking and an option to voluntarily continue
with the questionnaire, study procedures, and a statement about confidentiality. Individual results
will not be handed to the institution that the researcher is affiliated with, hence it will not in any
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way affect the tenure of the respondent in case that he/she opts not to participate in the survey.
Sources of review of related literature were cited as required in the manuscript and list them
properly in the reference section.
Results
Descriptive statistics results are shown in Table 4 with the frequency distribution and the
corresponding percentages of the demographic information of the respondents. More than half
(50.37%) are aged 18 to 31 years old while only 8.63% are aged 41-50 years old. There are more
females (64.20%), while 35.80% are males. The percentage of those who are married is 59.71%
which comprises more than half of the total respondents. The majority of the respondents are
college graduates (82.73%)
while a very few numbers (5.04%) have a Masteral Degree. In terms of work experience, those
who are employed in the company for more than 5 years is 32.25%, while 16.55% of the
respondents have been with the company for less than one year.
Table 4
Descriptive Statistics on the Demographic Profile
Demographic Profile Frequency Percentage
AGE
18 <31 years old 70 50.37%
31-<40 years old 57 41.00%
41-50 years old 12 8.63%
GENDER
Male 49 35.80%
Female 90 64.20%
MARITAL STATUS
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Single 83 59.71%
Married 48 34.53%
Widower 8 5.76%
Separated 0 0%
EDUCATION
High School 17 12.23%
College 115 82.73%
Post Graduate 7 5.04%
WORK EXPERIENCE
Less than 1 year 23 16.55%
1<3 years 33 23.74%
3< 5 years 34 24.46%
5 years and above 49 32.25%
Table 5 shows a comparison of personal and organizational values, and value congruence
according to age range. The Kruskal-Wallis H Test results of indicate that there was statistical
significant differences in personal rationalization [X2(3) = 9.787, p = .020], quality [X2(3) =
13.834, p = .003], and humanity [X2(3) = 9.232, p = .026]. A post hoc analysis was impossible to
perform because there were groups with fewer than two cases. On the other hand, no statistical
differences were obtained for personal values on innovation [X2(3) = 5.788, p = .122],
organizational values on rationalization [X2(3) = 2.126, p = .547], quality [X2(3) = 4.394, p = .222],
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humanity [X2(3) = 4.596, p = .204] and innovation [X2(3) = 2.004, p = .572]. Furthermore, no
statistical differences were also obtained in value congruence [X2(3) = 1.630, p = .653].
Table 5
Comparison of the Level of values by Age
18-30 31-40 41-50 51-60
years years years years
old old old old
Variable Mean Mean Mean Mean Df X2 P Decsion

Rank Rank Rank Rank
PERSONAL
VALUES
Rationalization 68.41 75.96 43.05 5.50 3 9.787 .020 Reject Ho
Quality 75.38 68.93 34.05 17.50 3 13.834 .003 Reject Ho
Humanity 73.78 69.38 42.68 7.50 3 9.232 .026 Reject Ho
Innovation 70.15 72.83 46.41 23.50 3 5.788 .122 Do not

reject Ho
ORGANIZATIONA
L VALUES
Rationalization 69.80 69.87 64.36 16.00 3 2.126 .547 Do not

reject Ho
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Quality 74.43 64.71 61.41 18.50 3 4.394 .222 Do not
reject Ho
Humanity 72.38 69.24 51.09 19.00 3 4.596 .204 Do not

reject Ho

reject Ho
VALUES 65.34 73.02 73.45 47.50 3 1.630 .653 Do not

CONGRUENCY reject Ho
according to gender. The Mann-Whitney U Test results indicate that there are no significant
differences between male and female respondents in terms of personal values on rationalization
(U = 2115.5, p = .850), quality (U = 2113.5, p = .838), humanity (U = 2044.5, p = .596) and
innovation (U = 2134.5, p = .921). There are also no significant differences obtained in
organizational values on rationalization (U = 2154.5, p = .993), quality (U = 1963.5, p = .363),
humanity (U = 1945.0, p = .329), and innovation (U = 2119.0, p = .864). No significant difference
is also indicated in value congruence (U = 2014.0, p = .641).
Table 6
Comparison of the level of values by Gender
Male Female
Variable Mean ∑ Mean ∑ U Z P Decision

Rank Ranks Rank Ranks score
PERSONAL
VALUES
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Rationalization 68.17 3340.50 69.46 6112.50 2115.5 -.190 .850 Do not
reject
Ho
Quality 69.87 3423.50 68.52 6029.50 2113.5 -.205 .838 Do not

reject
Ho
Humanity 66.72 3269.50 70.27 6183.50 2044.5 -.530 .596 Do not

reject
Ho
Innovation 68.56 3359.50 69.24 6093.50 2134.5 -.099 .921 Do not

reject
Ho
ORGANIZATIONA
L VALUES
Rationalization 69.04 3383.00 68.98 6070.00 2154.0 -.009 .993 Do not

reject
Ho
Quality 65.07 3188.50 71.19 6264.50 1963.5 -.910 .363 Do not

reject
Ho
Humanity 73.31 3592.00 66.60 5861.00 1945.0 -.976 .329 Do not

reject
Ho
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Innovation 69.76 3418.00 68.58 6035.00 2119.0 -.172 .864 Do not
reject
Ho
VALUES 71.35 3496.00 67.69 5957.00 2041.0 -.523 .601 Do not

CONGRUENCY reject
Ho
according to civil status. The Kruskal-Wallis H Test results indicate that there are significant
differences in personal quality [X2(2) = 9.861, p = .007] and humanity [X2(2) = 9.437, p = .009].
Significant differences were also obtained in organizational quality [X2(2) = 6.013, p = .049].
On the other hand, no significant differences were obtained in personal values on

rationalization [X2(2) = .840, p = .657] and innovation [X2(2) = .758, p = .685]. No significant
differences were also obtained in organizational values on rationalization [X2(2) = .673, p = .714],
humanity [X2(2) = 4.774, p = .092]. and innovation [X2(2) = .778, p = .678]. No significant
difference was also obtained in value congruence [X2(2) = .871, p = .647].
Table 7
Comparison of the level of values by Status
Single Married Widower
Variable Mean Mean Mean Df X2 P Decision

Rank Rank Rank
PERSONAL
VALUES
Rationalization 67.64 72.60 60.93 2 .840 .657 Do not reject

Ho
Quality 73.82 66.46 28.93 2 9.861 .007 Reject Ho
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Humanity 75.47 62.56 35.50 2 9.437 .009 Reject Ho
Innovation 69.89 69.26 56.71 2 .758 .685 Do not reject

Ho
ORGANIZATIONAL
VALUES
Rationalization 70.08 68.77 57.71 2 .673 .714 Do not reject

Ho
Quality 74.70 62.41 45.64 2 6.013 .049 Reject Ho
Humanity 73.18 65.64 42.00 2 4.774 .092 Do not reject

Ho
Innovation 69.85 69.35 56.57 2 .778 .678 Do not reject

Ho
VALUES 66.48 72.76 73.64 2 .871 .647 Do not reject

CONGRUENCY Ho
Table 8 shows the results of a post hoc analysis using the Dunn-Bonferroni approach to
indicate where the differences lie following significant Kruskal-Wallis Tests. The results indicate
that the significant difference lies between widowed and married (Z = 2.506, adj. p = .037), and
widowed and single (Z = 3.086, adj. p = .006) with regard to personal values on quality, between
widowed and single (Z = 2.708, adj. p = .020) with regard to personal values on humanity.
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Table 8
Post hoc analysis results according to status
Paired groups Test Std. Std. Test P Adj. p Difference
Statistic Error Statistic
Personal Values on
Quality
Widowed-Married 37.529 14.974 2.506 .012 .037 Significant
Widowed-Single 44.891 14.547 3.086 .002 .006 Significant
Married-Single 7.362 6.747 1091 .275 .826 Not significant
Personal Values on
Humanity
Widowed-Married 27.064 15.196 1.781 .075 .225 Not significant
Widowed-Single 39.970 14.762 2.708 .007 .020 Significant
Married-Single 12.906 6.847 1.885 .059 .178 Not significant
Organizational Values on
Quality
Widowed-Married 16.772 15.279 1.098 .272 .817 Not significant
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Widowed-Single 29.056 14.843 1.958 .050 .151 Not significant
Married-Single 12.284 6.885 1.784 .074 .223 Not significant
The results of table 9 shows a comparison of personal and organizational values, and value
congruence according to education. The Kruskal-Wallis H Test results indicate that there is a
significant difference in value congruence [X2(2) = 6.413, p = .040]. On the other hand, no
statistical differences were obtained with regard to personal values on rationalization [X2(2) = .075,
p = .963], quality [X2(2) = 2.064, p = .356], humanity [X2(2) = 3.550, p = .169], and innovation
[X2(2) = .570, p = .752]. No statistical differences were also obtained in organizational values on
rationalization [X2(2) = 1.958, p = .376], quality [X2(2) = 1.252, p = .535], humanity [X2(2) = .298,
p = .861], and innovation [X2(2) = 1.230, p = .541].
Table 9
Comparison of the Level of values by Education
High College Post
school Degree Graduate
Variable Mean Mean Mean Df X2 P Decsion

Rank Rank Rank
PERSONAL
VALUES
Rationalization 69.81 68.71 73.20 2 .075 .963 Do not

reject Ho
Quality 56.72 70.45 74.70 2 2.064 .356 Do not

reject Ho
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Humanity 52.47 71.31 68.30 2 3.550 .169 Do not
reject Ho
Innovation 63.09 69.50 76.20 2 .570 .752 Do not

reject Ho
ORGANIZATIONA
L VALUES
Rationalization 66.19 68.38 92.30 2 1.958 .376 Do not

reject Ho
Quality 67.16 68.46 87.40 2 1.252 .535 Do not

reject Ho
Humanity 66.88 68.92 77.60 2 .298 .861 Do not

reject Ho
Innovation 59.66 69.95 76.90 2 1.230 .541 Do not

reject Ho
VALUES 82.97 65.65 102.00 2 6.413 .040 Reject Ho

CONGRUENCY
determine where the significant difference in value congruence lie with regard to education.
Despite the significant findings of the Kruskal-Wallis H Test, no significant differences were
obtained after a pairwise comparison between groups was performed.
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Table 10
Post hoc analysis results according to education
Paired groups Test Std. Std. Test p Adj. p Difference
Value Congruence
College- 17.318 10.641 1.655 .098 .294 Not significant

Highschool
College- -36.349 17.917 -2.029 .042 .127 Not significant

Postgraduate
Highschool- -19.031 20.098 -.947 .344 1.000 Not significant

Postgraduate
The results of table 11 shows a comparison of personal and organizational values, and
value congruence according to work experience. The Kruskal-Wallis H Test results indicate that
there are significant differences in personal values on quality [X2(3) = 24.919, p = .<.001] and
humanity [X2(3) = 25.706, p = <.001]. Significant differences were also obtained in organizational
values on quality [X2(3) = 10.572, p = .014], humanity [X2(3) = 9.741, p = .021], and innovation
[X2(3) = 7.818, p = .050]. On the other hand, no significant differences were obtained in personal
values on rationalization [X2(3) = 3.410, p =.333] and innovation [X2(3) = 6.162, p = .014]. No
significant differences were also detected in organizational values on rationalization [X2(3) =
4.469, p = .215], and in value congruence [X2(3) = 1.702, p = .636].
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Table 11
Comparison of the Level of values by Work Experience
<1 1 to 3 to 5<
year <3 <5 years
years years
Variable Mean Mean Mean Mean Df X2 p Decision

Rank Rank Rank Rank
PERSONAL
VALUES

reject Ho
Quality 71.61 46.28 62.65 87.07 3 24.919 <.001 Reject Ho
Humanity 71.66 45.75 62.21 87.70 3 25.706 <.001 Reject Ho

reject Ho
ORGANIZATIONA
L VALUES

reject Ho
Quality 74.61 51.81 67.29 78.89 3 10.572 .014 Reject Ho
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Humanity 74.95 55.70 61.54 80.18 3 9.741 .021 Reject Ho
Innovation 74.86 56.69 62.81 78.70 3 7.818 .050 Reject Ho
VALUES 77.48 65.27 71.25 66.07 3 1.702 .636 Do not

CONGRUENCY reject Ho
determine where the significant difference in value congruence lie with regard to work experience.
The results indicate that the significant difference lies between those who had worked from 1 year
to less than 3 years and those who had worked for 5 years and more (Z -4.856, adj. p = <.001), and
between those who had worked for 3 years to less than 5 years and those who had worked for 5
years or more (Z -2.961, adj. p = .018) with regard to personal values on quality. In terms of
personal values on humanity, there is a significant difference between those who had worked for
1 to less than 3 years and those who had worked for 3 years to less than 5 years (Z -4.921, adj. p =
<.001), and between those who had worked for 3 to less than 5 years and those who had worked
for 5 years or more (Z -3.046, adj. p = .014).
On the other hand, there is also a significant difference obtained between those who had
worked for 1 to less than 3 years and those who had worked for 5 years or more (Z -3.159, adj. p
= .010) with regard to organizational values on quality, and between those who had worked for 1
to less tha 3 years and those who had worked for 5 years and more (Z -2.796, adj. p = .031) with
regard to organizational values on humanity. However, despite the significant results of the
Kruskal-Wallis H Test for organizational values on innovation, no significant differences were
obtained between groups after a pairwise comparison was done.
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Table 12
Post hoc analysis results according to status
Paired groups Test Std. Std. Test P Adj. p Difference
Personal Values on
Quality
1 to < 3 years – 3 -16.366 9.103 -1.798 .072 .433 Not significant

to < 5 years
1 to < 3 years – < 25.332 10.236 2.475 .013 .080 Not significant
1 year
1 to < 3 years – 5 -40.790 8.401 -4.856 <.001 <.001 Significant

years <
3 to < 5 years - < 8.967 10.113 .887 .375 1.000 Not significant
1 year
3 to < 5 years – 5 -24.424 8.250 -2.961 .003 .018 Significant

years <
< 1 year – 5 -15.548 9.486 -1.630 .103 .619 Not significant

years <
Personal Values on
Humanity

to < 5 years
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1 year
1 to < 3 years – 5 -41.954 8.525 -4.921 <.001 <.001 Significant

years <
1 year

years <
< 1 year – 5 -16.045 9.626 -1.667 .096 .573 Not significant

years <
on Quality

to < 5 years
1 year

years <
1 year
3 to < 5 years – 5 -11.594 8.418 -1.377 .168 1.000 Not significant

years <
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< 1 year – 5 -4.724 9.679 -.442 .659 1.000 Not significant
years <
on Humanity
1 to < 3 years – 3 -5.841 9.488 -.616 .538 1.000 Not significant

to < 5 years
1 year

years <
3 to < 5 years - < 13.410 10.541 1.272 .203 1.000 Not significant
1 year

years <

years <
on Innovation
1 to < 3 years – 3 -6.121 9.456 -.647 .517 1.000 Not significant

to < 5 years
1 year
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years <
3 to < 5 years - < 12.055 10.505 1.147 .251 1.000 Not significant
1 year

years <

years <
Table 13 indicates the results of the correlational analysis between personal and
organizational values, and value congruence using Spearman’s Rank Correlation. The results
reveal that there is moderate positive between value congruence and personal values on
rationalization [rs(137) = .539, p < .001], a weak positive correlation between value congruence
and quality [rs(137) = .315, p < .001], a weak positive correlation between value congruence and
humanity [rs(137) = .265, p .002], and a moderate positive correlation between value congruence
and innovation [rs(137) = .452, p < .001].
On the other hand, there is a moderate positive correlation between value congruence and
organizational values on rationalization [rs(137) = .661, p < .001], a moderate positive correlation
between value congruence and quality [rs(137) = .541, p < .001], a moderate positive correlation
between value congruence and humanity [rs(137) = .587, p < .001], and a moderate positive
correlation between value congruence and innovation [rs(137) = .639, p < .001].
Table 13
Correlation between Personal Values and Congruency of Values
Personal Values N rs P Reaning Decision
Streng
th of
Correlatio
n
Rationalization 137 .539 <.001 Moderate correlation Reject Ho
Quality 137 .315 <.001 Moderate Correlation Reject Ho
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Humanity 137 .265 .002 Weak Correlation Reject Ho
Innovation 137 .452 <.001 Moderate Correlation Reject Ho
Organizational N R P Reaning Decision

Values Streng
th of
Correlatio
n
Rationalization 137 .661 <.001 Moderate Correlation Reject Ho
Quality 137 .541 <.001 Moderate Correlation Reject Ho
Humanity 137 .587 <.001 Moderate Correlation Reject Ho
Innovation 137 .639 <.001 Moderate Correlation Reject Ho
A multiple linear regression was calculated to predict value congruence based on personal
values and organizational values. A significant regression equation was obtained [F(2, 134) =
83.708, p <.001], with R2 of .555. The respondents’ predicted value congruence is equal to .509
- .104 (PERSONAL VALUES) + .956 (ORGANIZATIONAL VALUES). This suggests that the
respondents’ value congruence increased by .956 for each unit of increase in organizational values,
and decreased by .104 for each unit of increase in personal values.
Discussions
The results of the different analyses on the findings of the study:
The descriptive statistics show a slight difference on the mean ratings for personal values
in terms of age, gender, marital status, education and work experience. This is supported by a low
standard deviation showing an overall agreement on the variables. This signifies that majority of
the respondents strongly agree on their practice of following the rules and regulations as well as
improving themselves. In terms of quality, majority of the respondents strongly agree that quality
service is of major importance to maintain a good reputation except for the age range of 41-50
years old with the lowest rating of 4.12 and descriptive equivalent of “agree”. Further, majority
of the respondents strongly agree that cooperation, mutual respect as well as creativity in the
498 | P a g e
workplace is important. Personal values affect the performance of an individual (McShane, et al.,
2010), thus a match between a personal values and organizational values will result in positive
outcomes for the organization.
Organizational values across demographic profile revealed that majority of the respondents
also perceived a strongly agree rating. This means that rules and regulations are emphasized by
the organization as well as the effort to improve and economize resources. On quality services,
continuous improvement are prioritize by the organization to maintain a good reputation. In terms
of humanity, mutual cooperation and respect is also emphasized as a basic value but respondents
also strongly agree that the organization are making rooms for necessary adjustments in cases of
minor mistakes committed by employees. For innovation, respondents, also strongly agree that the
organization encourages employees’ creativity and thus can express their points of view.
The overall standard deviations of the constructs were relatively low denoting an overall
agreement across the demographic profile of the respondents except for work experience wherein
employees who are with the company for 5 years and have significant difference given that the p
value of .000<.05 specifically on their personal values on quality. Seemingly, those who stayed in
the company for more than 5 years are not very particular in further improving quality service and
maintaining a good company reputation company reputation. In Posner (2000) that work
experience has a significant difference while other demographics like gender, educational level,
and departments do not have impact on relationship between values
The Kruskall-Wallis test was also done to determine the differences among subgroup
differences in the demographic variable and their respective ratings on the different variables
which indicated that the results of the post hoc analysis using Dunn-Bonferroni approach showed
statistical significant differences in personal rationalization, quality, and humanity however, in
terms of age range statistical differences were obtained for personal values on quality and
humanity.
The Mann-Whitney U Test results indicate that there are no significant differences in terms
of gender on personal values on rationalization, quality, humanity and innovation and on
organizational values on rationalization quality, humanity and innovation and value congruence.
However, in terms of education, the Kruskal-Wallis H Test results indicate that there is a
significant difference in value congruence. However, in terms of education, results indicated that
statistical significant differences between personal values and organizational values were found in
personal rationalization, quality, and humanity however, no statistical differences were obtained
for personal values on innovation organizational values on rationalization, quality, humanity
and innovation.
Also, statistical significant differences between personal values and organizational values
were found in personal values on rationalization, quality, and humanity. However, no statistical
differences were obtained for personal values on innovation organizational values on
rationalization, quality, humanity and innovation. The findings of this study highlighted the
importance of congruency of values in an organization to establish shared values. As evident from
the results, the rules and regulations that are being practiced and valued in life by the employee
are similar to that of the organization. In Shockley-Zalabak (2012), when values that are clearly
499 | P a g e
communicated and effectively implemented, therefore, will somehow influence the employees to
adapt to the organization. When organizational values are clearly communicated to the employee,
values congruency is more likely enhanced and more beneficial (Cable & Edwards, 2009).
Organizational values should be focused by researchers and practitioners since the values construct
is widely induced in organizational literature, but tends to be compromised by heedless
conceptualization since research on values is limited due to the lack of a common theoretical basis
(Connor & Becker, 1994; Stackman, Pinder & Connor, 2000).
This is also supported by Atchinson (2007), values congruence is directly affected by

tenure, culture, and clarity of understanding of personal and corporate values. Also, Atchinson
(2007) that a large percentage of the respondents agree that when there is values congruence
enhanced their commitment to the organization. The values of an organization are the guiding
principles to influence an organization’s performance and strategic success (Kleijnen, et al. (2009).
Using Spearman’s Rank Correlation, the correlation analysis showed a moderate fit of
correlation between personal values and perception of organizational values which means that
increase in positive personal values result to a positive increase in organization values. A moderate
positive between value congruence and personal values on rationalization, a weak positive
correlation between value congruence and quality, value congruence and humanity. Posner
(1992), the person-organization fit (values congruency) phenomenon explored the impact of
demographic factors, such as age, gender, ethnic background, organizational level, management
position, length of service, and functional area, on work attitudes. This revealed that person-
organization values congruency was directly related to positive work attitudes and that
demographic factors did not moderate this relationship in a large manufacturing firm.
A moderate positive correlation was evident in the following: between value congruence
and innovation, between value congruence and organizational values on rationalization, between
value congruence and quality and between value congruence and humanity as well as a moderate
positive correlation between value congruence and innovation. These findings agree with the
inferences of Ary et al. (2010) when there is correlation, any change in one variable usually results
to a change in the other variable. This is also consistent with the findings of (Herrbach &
Mignonac, 2007; Ostroff, et al., 2005; Amos & Weathington, (2008) that there has been a positive
relationship between value congruence or person-organization fit. This is also supported by the
findings of Aldonsek, et.al. (2005) relationship was established between employees’ personal
values and organizational values which implies that the organizational culture is shaped by the
employees’ values
A multiple linear regression was calculated to predict value congruence based on personal
values and organizational values. A significant regression equation was obtained. This means that
the respondents’ value congruence increased by .956 for each unit of increase in organizational
values, and decreased by .104 for each unit of increase in personal values. Amos & Weathington
(2008) positive relation exists between personal and organizational values and/or congruency with
employee attitudes.
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Conclusions
The study highlighted the importance of congruency of values in an organization. The four
dimensions on personal values and organizational values focus on rationalization which implies
the views on rules and procedures, quality focus on importance of improving quality of skills and
services. Humanity focus on cooperation and respect while Innovation implies creativity and
expressing employees point of views. In this study exploring the perceived ratings of the identified
organizational values, slight variation was exhibited among the results.
The post hoc analysis was also done using the Dunn-Bonferroni approach in the
demographic profiles which indicated no significant differences on the majority of the perceived
personal values. However, despite the significant results of the Kruskal-Wallis H Test for
organizational values on innovation, no significant differences were obtained between groups after
a pairwise comparison was done. The findings of this study highlighted the importance of
congruency of values in an organization to establish shared values. Fairly consistent values
differences were found in terms of the different demographic profile indicating that when values
are communicated across the organizations. This is consistent with th e findings of Posner (2000)
that work experience has a significant difference while other demographics like gender,
educational level, and departments do not have impact on relationship between values.
This maybe explained that high value congruence is due to the requirement of the job to
work closely and to coordinate with other employees with similar values. Given that in a
manufacturing company, close coordination with both supervisor and peers is important to achieve
organizational goals on productivity and superior quality. Organizational values are communicated
through an organizations vision, mission and values statements (Leiter, 2008) If an organization
has a clear values-based culture that employees can identify with, the employees are allowed to
feel connected and be part of the organization’s decision-making. Amos & Weathington (2008)
positive relation exists between personal and organizational values and/or congruency with
employee attitudes. Individuals' values are stable and closely linked to occupational membership
and that employees' values are therefore likely to be quite difficult to change. Mulltiple types of
employee values are related with different occupations. It also indicated that socialized charismatic
leadership is associated with values congruence between the specific values leaders say they
transmit to their followers and the values their followers say they use in work. The findings shed
additional light on the values alignment process. (Brown, 2009)
Employees reported greater fit within an organization, if they personally valued having
positive relationships within their workplace. Organizations may benefit by taking actions to
encourage employees to advocate the organization’s values. When employees are part in the
development of organizational goals, it may result in employees’ sense of ownership and, therefore
individuals with values matching those of the organization will be more motivated to perform
better. Seevers (2000) organizational values has a direct effect on the way employees perform their
tasks thus good communication is an important factor when defining organizational values. As
Kunstler (2004) leaders are vital in exemplifying organizational values such that they should
reinforce these values by making them apparent in the organization and not simply imposing. This
is supported by Kristof-Brown & Stevens (2001) value congruence between team members and
their goals arise to enhanced satisfaction. Achieving superior organizational performance, the
501 | P a g e
behavior of employees should be regulated where values play a vital role (Jaakson, 2010).
Specifically, value congruence denotes the similarities between an individual’s values and the
values modeled in their work place (Hoffman, Bynum, Piccolo, & Sutton, 2011).
This study further concluded the importance of shared values within an organization to
achieve organizational goals. Sharing organizational values with those in close social contexts
enhances values congruence. As stated in their mission is to provide the best quality services
through their capable and committed employees and continuous innovation, there is consistency
in the implementation of organizational values regardless of the demographic profile. An evidence
of success within an organization is a match between organizational values and routine behaviors
of its employees (Safrit, Conklin, & Jones, 2003; Seevers, 2000). Musek Lešnik (2006) suggests
that organizations should reflect on the personal values of individuals to determine and agreement
on common values. As evident from the results, the rules and regulations that are being practiced
and valued in life by the employee are similar to that of the organization.
Similarly, majority of the correlation results indicates a moderate positive correlations

between personal values, organizational values and congruency of values. It indicates that the
company is held together by something more than just mere basic human and work values but
rather by something less tangible. This may be attributed to the perception of the employees that
to achieve organizational goals, there should be similarities between personal and organizational
values in the organization.
This is supported by McAfee et al. (2002) when there is congruency of values, the strength
of organizational values and employees’ satisfaction increases and organizational expectations are
met. Vveinhardt and Gulbovaitė (2014) the dimensions of value congruence is considered by
employees’ agreement to the values practiced in the organization as their own values. Employees’
personal values are an important part of the organization, as they can affect a number of
organizational factors.
This study may be an additional source of related literature as stated in the research gaps
that most studies determined that congruence between perceived organizational and employees’
values affects employees’ performance but limited studies with regard to person-organization
value congruence in which this study focused on. Organizational values should be focused by
researchers and practitioners since the values construct is widely induced in organizational
literature, but tends to be compromised by heedless conceptualization since research on values is
limited due to the lack of a common theoretical basis.
Recommendations and Directions for Future Research
The present study was limited to a single company of one manufacturing organization. The
overall sample size for the current study should be considered. There were 137 valid respondents
who took part in this study. Although, the number of sample size is adequate, a larger higher
number of participants would increase the statistical power of the research. However, the study
was still able to produce some statistically significant results. The sample size may have also
impacted on the demographic characteristics of the sample size. Out of the 137 participants that
were sampled, the majority were females. However, because of how the data was gathered, the
502 | P a g e
demographic profile could not be controlled because of the lack of control and knowledge of how
many people actually saw the online survey.
Measures were obtained from employees randomly across a single organization.

Therefore, the findings in this study should not be generalized without validation on a much larger
and broader sample. This study has determined several inferences for future research related to the
actual contribution of this study. In future research undertakings, the moderating effect of
supervisor-employee interaction should be examined on work value congruence and performance.
Future researches may be done across a larger number of sample and measuring the impact of
values congruence on employees’ performance and how to strengthen value congruence
These findings suggest that to achieve organizational values, encouraging participation in

organizational activities is recommended. Communicating the company’s mission and vision
should be highlighted. This study provides encouragement for organizations to advocate
organizational and personal efforts to identify and support related values and activities. business
organizations’ managers and supervisors should define and evaluate personal values of their
employees and their organizational values, this will guide them in making decisions to ease
resistance to policies and may gain foresight of potential issues that may arise.
Managerial implications may include that organizational dynamics that revolves in the
daily lives of the employees in the organization. This study supports the proposition that the
development of a values congruence framework is an important aspect of achieving organizational
goals. The integration of interventions that encourage commitment to the individuals are not
concerned with the potential ramifications of their actions to the organization (Umphress et al.
2010). This might be accomplished by engaging in activities or modules designed at instilling pride
in the organization and concern for its fate. Such activities might include teambuilding exercises,
visioning, goal-setting, or ritualistic ceremony. Chatman (1989) suggests that individuals will
likely to change behaviors when an organization has strong values and are open to influence and
that if the organization has strong values, an individual with incongruent personal values is not
open to influence, they will likely leave the organization.
Future researches may focus on using difference scores and profile correlations to measure
value congruence and a possible moderating effect of employees’ characteristics that may provide
different opportunities and constraints for attaining valued goals.
In addition, by engaging in value congruence and whatever level the employees perceive
congruence with their organizations, group performance is enhanced (Glisson & James, 2002).
Other studies should be undertaken like job satisfaction, organizational commitment, and value
congruence and or the impact of value congruence to the achievement of organizational goals.
Also, future researches may deal with the mediating effects of value congruence to employee
engagement and/or job satisfaction.
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Momshies Know Best: The Impact of a Social Media Influencer on
the Purchase Intention of Filipino Moms as Mediated by Consumer
Attitude
8th NBMC Paper # 37
Charisse Jollins Z. Ang, Jose Luis C. Legaspi, and Jose Rommel B. Era
Abstract
Considering the significant implications of having social media influencers as brand endorsers,
companies are eager to adapt to the rising social media trend. Firms have started to compete with
one another on who captures the most attention on social media, through the use of virtual
campaigns and digital communication.
The research study focuses on a specific marketing direction that THE FRESH POULTRY
COMPANY TFPC —a Philippine poultry integrator, intends to address. Key highlights of the
study is on the advertising effectiveness of its chosen social media influencer, the impact of its
social media influencer on the purchase intention and the consumer attitude of Filipino mothers
“Momshies” towards the products of TFPC
Determining measurements on source credibility, source attractiveness, product match-up, and

meaning transfer will serve as the predictors for purchase intention. Consumer attitude is also
measured to mediate the relationship between the independent variables and the dependent
variable of the study.
The study used causal research as a means to examine the cause-and-effect relationship between
and among its variables. For the quantitative research part, a survey method using the Likert scale
was used. Multiple linear regression was applied to determine the strength and direction of the
linear relationship between the four constructs that represent advertising effectiveness and
purchase intention. The test of mediation was applied to examine if consumer attitude will mediate
the relationship between the advertising effectiveness constructs and purchase intention.
It was concluded that first, the source credibility was proven to have a significant relationship with
purchase intention. Secondly, source attractiveness had a significant relationship with purchase
intention. Third, the study did not prove product match-up significantly impacted purchase
intention. Lastly, the present study proved that consumer attitude significantly mediates the impact
of source credibility and source attractiveness on purchase intention.
The study recommends that TFPC should leverage on the credibility and attractiveness of its
current social media influencer as an advertising strategy in its future marketing programs. Also
an interesting revelation of the study is the consideration for TFPC is to further segment its current
target market using psychographic characteristics. The primary reason why the meaning transfer
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of its social media influencer did not significantly impact purchase intention is that the target
market is apparently segmenting itself into two psychographic market sub-segments.
Keywords: Social media influencer, source credibility, source attractiveness, product match-up,
meaning transfer, consumer attitude & purchase intention
Introduction
Over the past 20 years, the use of social media has been playing a vital role in the
dynamics of social practices. Contemporarily, people have been increasingly dependent on
social media not only as a tool in gathering information but also as a virtual platform to
convey personal opinions while interacting with others. The convenience of
communication through social media also makes it easier for people to download the
opinion of and information relayed by other users, especially regarding issues and trends
that are within their shared interests. Purportedly, social media has become the new mass
media, having the ability to obtain public opinion on various issues and stimulate change
in consumer habits.
Among countless new terminologies, popular words like “add”, “follow”, “invite”,
and “subscribe” are often used to appeal to an audience in their social media environment.
In social media, the central figure of influence is called a “blogger”, “celebgram”, “kol
(key opinion leader)”, “vlogger”, or “youtuber”. Generally, the reference person is
considered a “social media influencer”, regardless of which social media platform is mainly
utilized to establish a known identity. As compared to traditional celebrities from the
entertainment industry (i.e. movies, music, TV shows, etc.), social media influencers do
not have occupational requirements. More specifically, anyone can be a social media
influencer, regardless of socio-economic status. Social media influencers have a huge
number of “followers” on various social media platforms, that can be motivated to follow
and support a product used by the social media influencer. Awakening purchase intentions
among the influencer’s audience will eventually incite purchase decisions, wherein the
follower chooses to buy the product being endorsed by the social media influencer. Given
this, there is a high probability that social media influencers can positively influence to
raise brand awareness and achieve higher ROIs for TFPC (Nurhandayani, A., Syarief, R.
& Najib, M., 2019).
Considering the significant implications of having social media influencers as

brand endorsers, companies are eager to adapt to the rising social media trend. Firms have
started to compete with one another on who captures the most attention on social media,
through the use of virtual campaigns and digital communication. Without digital
development initiatives, even large brands will lose prospective consumers. A Nelson
Cross Platform Report (2017) indicates that more than 60% of consumers aged 21-49
conducted further research upon seeing online advertisements, while only a few directly
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visit the physical store. This shift in consumer behavior obligates companies to develop
and implement advertising campaigns on social media to reach potential customers.
Furthermore, a 2011 study by Chi, K. H., Yeh, H. R., & Tsai, Y. C. elaborates that TFPC
must redirect its attention to develop advertising campaigns that would instill a strong
product recall among consumers, allowing them to easily recognize the endorsed product
and remember its corresponding message (Nurhandayani, A., Syarief, R. & Najib, M.,
2019).
Beyond social media campaigns and communication, firms have recently

recognized the signifying presence of social media influencers with regard to their ability
to persuade the audience. Through endorsers, the brand’s communication with the
consumers can influence their perceived attributes of the brand and improve their
understanding on the functionality and importance of the product. Ultimately, digital
endorsers can positively contribute to achieving The Fresh Poultry Company TFPC’s goal
of helping consumers remember the endorsed product, while motivating them to act on
their purchase intentions (Chi, K. H. et al., 2011). From TFPC’s perspective, social media
influencers are useful in delivering advertising messages to potential consumers.
Specifically, digital endorsers are able to convey different kinds of persuasive messages
such as the introduction or review of new products, procedures on how to use a certain
product, tips and tricks in using the product, and even a comparison among various
products with the same function. Conclusively, social media influencers entice and
persuade their audience to follow in purchasing and trying the endorsed product. In the
interest of TFPC, likewise, it is crucial for the advertising message delivered through the
endorser to be easily accepted by consumers and therefore influencing their purchase
decisions (Nurhandayani, A., Syarief, R. & Najib, M., 2019).
A company that continuously intensifies its use of social media as an advertising

platform is The Fresh Poultry Company TFPC brand. It is under the “Fresh Poultry Group
of Companies. The company has business presence in the entire Philippines. It sells fresh
chicken products in groceries and wet markets. In wet markets, TFPC sells fresh chicken
cuts and eggs. Meanwhile, it offers a wider variety of products in groceries. Aside from
ordinary fresh chicken cuts and eggs, it sells ready-to-eat chicken products.
Fresh chicken produce is a basic necessity for most households in the Philippines.
The primary target market of TFPC is the Philippine middle-class households which
accounts for 40% of the country’s population. Hence, a huge percentage of the sales of
Philippine poultry integrators come from this market segment. TFPC targets the mothers
of middle-class households, specifically those belonging to the lower “C” and middle “C”
households. Filipino mothers are the ones who mainly decide on what food products to buy
for their families. The target market has an age range of 30-45 years old.
Currently, there are only two large-scale poultry integrators in the Philippines,
namely TFPC and the competitor brand. In terms of market share, TFPC is a far second
industry player with a market share of 32%. The remaining 68% belongs to the competitor.
TFPC acknowledges that it would be hard to override the performance of the competitor
in the short- and medium-term. Hence, outperforming the competitor is not the priority of
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TFPC. Instead, it prioritizes on continuously increasing its market share year-on-year.
TFPC aims to increase its market share within the range of 35%-38% by 2023.
One of the critical success factors for the Philippine poultry integration industry is
to have a creative and responsive overall marketing strategy. It should be creative in a way
that it needs to develop branding and advertising strategies that are unique and more
effective than its competition. Likewise, it should be highly responsive to the market given
that the industry provides for the needs not of a limited market segment but of a wide and
diverse consumer groups divided according to geographical areas and behavioural
considerations. A creative and responsive overall marketing strategy significantly
contributes to the sales performance of a poultry integrator.
According to the marketing manager of TFPC, one of the key weaknesses of TFPC
is its lack of more competitive branding and advertising strategies. TFPC has not been
engaging in a more aggressive advertising campaign to increase consumer awareness,
purchase, and loyalty towards its brand. In the nation-wide brand health survey conducted
in 2016, the TFPC brand yielded low indexes for brand awareness (6 points) and product
quality perception (8 points). Its low brand health performance is one of the reasons why
TFPC was not able to achieve its target sales increase and market share in 2016 and 2017.
TFPC believes that its advertising strategies need to be significantly improved in order to
improve its brand health performance and meet its sales objectives.
As a response to its key marketing weakness, TFPC aggressively increased its

social media presence. In prior years, TFPC has already been active in social media
platforms such as Facebook and Instagram. However, the online marketing programs of
TFPC were not heavy enough. Since 2018, TFPC has been more active and engaging in its
social media presence. For instance, it launched new advertising campaigns such as the
“Journey Vlog” and “Chicky-Minute Episodes”. With these new advertising campaigns
came the introduction of “the social media influencer” as TFPC’s celebrity endorser
starting July 2019. She is presently TFPC’s primary social media influencer as well. TFPC
chose her to represent the brand as they believe that “the social media influencer” can relate
more closely to the target market compared to the previous celebrity endorser of TFPC.
TFPC believes that “the social media influencer” can increase consumer attitude,
awareness and purchase intent towards its brand. Further, it believes that she is a clear
match for the brand’s “value for money” proposition.
Based on social media viewership metrics, TFPC considers “the social media
influencer” to be an effective social media influencer for its brand. First, all five online
videos featuring her exceeded the 3-seconds target viewing, with one video being higher
than the target score by 400%. Second, the online advertisements featuring “the social
media influencer” has a 19.5% view-through rate (VTR) that is 4 times higher than the
industry benchmark score of 5%. Third, an analysis of the comments in the Facebook and
Instagram accounts of “the social media influencer” indicates that she is able to convince
her avid fans to switch to the TFPC brand. According to the marketing manager of TFPC,
it is rare for the target market to articulate their intent to switch to TFPC. Lastly, “the social
media influencer” was able to significantly increase the number of Instagram followers of
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the brand by 77% in a short span of time. Though the above-mentioned metrics suggest the
online advertising effectiveness of “the social media influencer”, TFPC still does not have
a specific metric that measures the perceptions of the target market. The marketing
manager also emphasized the need for them to determine how “the social media influencer”
is able to create a more positive brand image in the minds of the target market and how this
can persuade them to buy the brand.
In 2019, TFPC yielded its highest brand health performance across the areas of
brand awareness, brand interest, brand consideration, purchase intention, and trial
purchase. Also, TFPC was able to achieve its target sales objectives. The high performance
of TFPC can be attributed to numerous marketing strategies and efforts such as effective
pricing strategy, unique branding and advertising strategies, change of celebrity endorser
and social media influencer, increased in-store promotional efforts nation-wide, increased
nation-wide distribution channels, and increased market penetration in Visayas and
Mindanao regions. Given the simultaneous implementation of these strategies and efforts,
it is very hard to determine the extent to which the high brand health performance of TFPC
can be attributed to the use of “the social media influencer” as a social media influencer.
According to the marketing manager, TFPC should determine the sole contribution of its
social media influencer on the attitude and purchase intention of the target market to
evaluate if TFPC has chosen the perfect endorser for its brand. Currently, TFPC still does
not have a separate metric that examines the sole impact of a social media influencer on
the purchase intention of its target market. The marketing manager is particularly interested
in determining if “the social media influencer” is the perfect match for TFPC as this is a
key determinant of her effectiveness as a social media influencer. TFPC intends to assess
if “the social media influencer” strongly resonates with the TFPC brand and vice versa.
The present study focuses on the specific marketing issues that TFPC intends to address
on the advertising effectiveness of its chosen social media influencer. The study aims to provide a
metric that measures the sole contribution of a social media influencer on the brand health
performance of TFPC. Further, it aims to examine the advertising effectiveness of a social media
influencer by obtaining the perceptions of the target market. Finally, the present study seeks to
determine if “the social media influencer” is capable of influencing the attitude and ultimately the
purchase intention of middle-class Filipino mothers towards the TFPC brand. Specifically, TFPC
intends to determine if there is a strong association between “the social media influencer” and the
attributes of the TFPC brand.
Statement of the Research Problem
Main Problem of the Study
The present study examines the impact of a social media influencer on the purchase
intention of Filipino moms towards the products of TFPC It aims to address the following research
problems:
“Does the advertising effectiveness of a social media influencer impact the purchase
intention of Filipino moms towards the products of TFPC?”
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“Does consumer attitude mediate the relationship between the advertising effectiveness of
a social media influencer and the purchase intention of Filipino moms towards the
products of TFPC?”
Research Questions of the Study
The following are the specific research questions of the study:

- “Does the credibility of a social media influencer impact the purchase intention of
Filipino moms?”
- “Does the attractiveness of a social media influencer impact the purchase intention of
Filipino moms?”
- “Does the product match-up of a social media influencer impact the purchase intention
of Filipino moms?”
- “Does the meaning transfer of a social media influencer impact the purchase intention
of Filipino moms?”
- “Does consumer attitude mediate the relationship between the credibility of a social
media influencer and the purchase intention of Filipino moms?”
- “Does consumer attitude mediate the relationship between the attractiveness of a
social media influencer and the purchase intention of Filipino moms?”
- “Does consumer attitude mediate the relationship between the product match-up of a
- “Does consumer attitude mediate the relationship between the meaning transfer of a
Statement of the Research Objectives
General Objectives
The following are the main objectives of the present study:

- To determine if the advertising effectiveness of a social media influencer has
an impact on the purchase intention of Filipino moms towards the products of
TFPC
- To determine if consumer attitude has a mediating effect on the relationship
between the advertising effectiveness of a social media influencer and the
purchase intention of Filipino moms towards the products of TFPC
Specific Objectives
The following are the specific research objectives of the study:

- To determine if the credibility of a social media influencer has an impact on the
purchase intention of Filipino moms
- To determine if the attractiveness of a social media influencer has an impact on
the purchase intention of Filipino moms
- To determine if the product match-up of a social media influencer has an impact
on the purchase intention of Filipino moms
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- To determine if the meaning transfer of a social media influencer has an impact
on the purchase intention of Filipino moms
between the credibility of a social media influencer and the purchase intention
of Filipino moms
between the attractiveness of a social media influencer and the purchase
intention of Filipino moms
between the product match-up of a social media influencer and the purchase
between the meaning transfer of a social media influencer and the purchase
Influencer Marketing and the Emergence of Social Media Influencers
Influencer marketing focuses on the use of influencers in successfully delivering a

brand’s message to its target market segment (Smart Insights 2017). In the modern age
where the internet is commonplace, there has been an increasing number of social media
influencers becoming third party endorsers (Freberg et al. 2011). Utilizing countless social
media platforms such as Facebook, Instagram, Twitter, and Youtube, social media
influencers publicize product information and ongoing promotions to online followers
(Markethub 2016). Social media influencers also use the aforementioned platforms
available to regularly engage with their followers and involve them in day-to-day events
with the latest information (Liu et al. 2012).
From a marketing perspective, endorsements play a crucial role in establishing and

maintaining TFPC’s good reputation, thereby attaining its business goals. In recent years,
social media influencers have marketed themselves as dynamic endorsers by developing
countless buzzwords in comparison to more traditional marketing strategies including
celebrity endorsements. Social media influencers are also perceived as one of the most
cost-efficient and cost-effective trends in digital marketing (Harrison 2017; Patel 2016;
Talaverna 2015). Furthermore, the use of social media influencers as endorsers have also
been resulting in promising outcomes as determined by factors such as consumer
persuasion and media coverage (Booth and Matic 2011). However, scholarly articles on
the influence of social media influencers as brand endorsers are still comparatively
insufficient.
Applying the known foundations of influencer marketing, brands usually get social
media influencers with a huge follower audience in various social media platforms
(Tapinfluence 2017). Additionally, social media influencers as brand ambassadors are
perceived to be more convincing and trustworthy, as measured by 82% of followers.
Furthermore, according to Talaverna (2015), consumers are more likely to consider the
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endorsements and recommendations of their favorite influencers, as compared to
traditional celebrity endorsements. Conclusively, social media influencers as brand
ambassadors are considered to be more reliable, knowledgeable, and trustworthy because
of their agreeability and capability to establish rapport and connection with the target
market. More specifically, Berger et al. (2016) conferred that the use of social media
influencers as brand ambassadors is an effective strategy for companies aiming to entice
younger generations.
Lee (2017) signified that a strong relationship between consumers and an endorser
is manifested by high levels of social credibility, attitude, and purchase intentions. Lee’s
2017 study expounds that brand attitude intercedes with the link between the endorser’s
attitude and the consumer’s purchase intentions. Nonetheless, picking the right endorser is
still the most crucial part of developing a successful brand and/or product campaign. In
addition to this, consumers have been found to capture messages more effectively if the
endorser is attractive, famous, and professional (Nurhandayani, A., Syarief, R. & Najib,
M., 2019. The ability of the consumers to easily comprehend messages eventually results
in the establishment of a brand image and promotion of consumer purchase intentions
towards the endorsed product. In the same manner, social media influencers that actively
communicate with their followers through various online platforms are considered to be
strongly persuasive endorsers with regard to enhancing product image and motivating
increased purchase intentions among consumers (Lee, 2017).
The results of a Neilsen marketing survey (Tapinfluence 2017) showed that

influencer marketing produces a return on investment (ROI) 11 times greater than ROI
from digital marketing. Additionally, social media influencers are found to significantly
contribute to increasing product engagement and brand loyalty by effectively
communicating to a target segment, while celebrity endorsements are still more effective
in promoting brand awareness among consumers (Tapinfluence 2017). According to the
same study (Tapinfluence 2017), social media influencers are also perceived to be more
genuine, noting how social media influencers communicate with their followers to deliver
and demonstrate an endorsed product. In line with popular belief, business organizations
also perceive endorsements as a means of guaranteeing the truthfulness of a brand and/or
product (Amoateng and Poku 2013; Sassenberg et al. 2012). Furthermore, Media Kix
marketing identified that 80% of marketers in online platforms believe that having social
media influencers as endorsers can improve brand engagement, especially among start-ups
and new SMEs (Forbes 2017). The empirical results from the aforementioned studies
support the perceived effectiveness of social media influencers can spark the consumers’
purchase intention. Further reports on influencer marketing also identified that a significant
number of brands have increased their fund allocation for marketing initiatives employing
social media influencers to endorse their products (Forbes 2017).
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How Advertising Effectiveness Influences the Purchase Intentions of Consumers
Social Credibility
Contemporary marketing research has been using source credibility to gauge the
effectiveness of an endorsement (Hovland and Weiss 1951; Taghipoorreyneh and de Run
2016). More specifically, source credibility is delivered when a reliable endorser positively
influences the consumers’ perception (Goldsmith et al. 2000). Furthermore,
trustworthiness and expertise are common indicators of source credibility, wherein the
information communicated by a credible source can influence the consumers’ behaviors,
opinions, and beliefs (Wang et al. 2017). Correspondingly, influencers that are seen as
experts in a certain field are likely to be perceived more compelling (Aaker and Myers
1987), and therefore adept to motivate consumer purchase intention (Ohanian 1991). Till
and Busler’s study (2000) also supported this premise by highlighting the importance of
expertise in positively influencing consumer attitude and purchase intention. Along with
expertise, trustworthiness is embodied by the endorser’s credibility, dignity, and honesty
(Erdogan 1999). Metzger et al. (2003) affirmed that the consumers’ indifference and
acceptance of an advertising message can be influenced by the consumers’ perception of
the endorser’s trustworthiness and expertise.
Additionally, source credibility further contributes in the establishment of long-

term relationships with consumers (Hung, K., 2014). Manifested by expertise and trust,
credibility positively influences consumer attitude, which eventually leads to instilling
consumer purchase intentions (Anwarl, A. & Jalees, T., 2017). Individually, expertise also
has a positive effect on the attitude towards brands and products. Thus, when an endorser
has both credibility and expertise, the endorser’s persuasiveness will be even more
effective in influencing consumer attitudes towards purchase intentions. Recent studies on
correlation between the aforementioned factors also confirmed the favorable effect of
source credibility in determining consumer purchase intentions (Anwarl, A. & Jalees, T.,
2017; Hung, K., 2014; Taghipoorreyneh & de Run, 2016; & Wang et al. 2017).
Social Attractiveness
In addition to source credibility, the physical attractiveness of a social media

influencer is also considered a factor in boosting the acceptance rate of the advertising
message. According to Erdogan (1999), source attractiveness encompasses the positive
physical attributes of the endorser. Beyond having the inclination to capture the attention
of more followers, several research studies have also shown a significant relationship
between source attractiveness and consumer attitude, as exhibited through consumer
purchase intentions (Petty et al. 1983; Erdogan 1999). Likewise, McGuire (1985) identified
that source attractiveness has a direct influence on the effectiveness of an endorsement. In
particular, attractive social media influencers have the ability to persuade consumers to
favorably support a brand, and consecutively influence a consumer’s purchase intention
toward a product (Till and Busler 2000).
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Further research also determined that alluring endorsers have a stronger influence
on consumer attitude, as compared to less attractive endorsers. More specifically, good-
looking endorsers are considered more persuasive in favorably altering consumer attitude
towards the advertised products, particularly for appearance-enhancing products
(McCabe, Vail III, Arndt, & Goldenberg, 2014). Moreover, consumers also have the
tendency to associate the attractiveness of the endorser to the attributes of the product
(Malik & Sudhakar, 2014). In comparison to less attractive endorsers, appealing endorsers
also receive more positive responses from consumers, as they are perceived to be more
credible, reliable, and trustworthy (Anwarl, A. & Jalees, T., 2017).
Product Match-up
Similarly, the compatibility of the product to its endorser also plays a crucial role
in creating effective marketing strategies. (Till and Busler 1998). Also referred to as
product congruence, product match-up pertains to the positive, significant connection
between the characteristics of the endorsed brand and the personality of the celebrity
endorser (Anwarl, A. & Jalees, T., 2017). In the same manner, the synergy between the
endorser and the brand is crucial to accomplish exceptional outcomes. The match-up
hypothesis probes on the perfect fit between the brand and the endorser (Kamins 1990),
wherein a successful match-up is derived from a strong association between the endorser
and the product (Misra and Beatty 1990). More specifically, social media influencers as
brand endorsers must demonstrate a congruent match with the product features. Having an
appropriate match-up between the two factors has been reported to develop the consumer’s
positive attitudes towards the particular brand (Kamins and Gupta, 1994). Furthermore,
Shimp (2008) emphasized that the brand and product match-up with the endorser is the
central goal in managing consumers’ purchase intention. Correspondingly, developing an
ideal match-up between the product and the social media influencer can significantly
improve and sustain the advertising results. In particular, consumers need to interpret the
advertising message wherein the audience is able to discern the relationship between the
brand and the endorser. Without proper understanding of the consumers, marketing
messages are considered ineffective in reaching its target market ((Jamil & Rameez ul
Hassan, 2014). Related studies have also determined that a recognized match-up between
the brand and the celebrity endorser positively influences the consumer attitudes towards
purchase intention (Escalas & Bettman, 2015; Mishra, Roy, & Bailey, 2015; Wright, 2016;
Anwarl, A. & Jalees, T., 2017).
Meaning Transfer
According to McCracken (1989), the endorsement effect is interceded by a meaning

transfer process, wherein the endorser’s effectiveness is dependent on his/her ability to
deliver product meanings in addition to the endorsement process. This theory considered
endorsements as a movement of meaning, from the endorser to the product. Consequently,
the meaning transfer process contributes to the development of the consumer’s self-image
through consumption. Marketers also believe that consumers are more likely to purchase a
product endorsed by a well-known personality they find admirable (Fowles 1996).
Likewise, in a more recent study, products that are endorsed by social media influencers
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generally have a positive image perception (Peetz et al. 2004). By determining a significant
relationship between the endorsement and the product meaning (McCracken 1986), recent
literature confirmed the premise of the endorsement effect in determining the correlation
between meaning transfer and consumer attitude, specifically through purchase intentions
(Peetz et al. 2004).
Consumer Attitude
Marketers have always been interested in studying consumer attitudes, as it is vital

information in developing effective marketing strategies (Solomon et al. 2010). Moreover,
empirical research determined a parallel relationship between consumer attitude and
purchase intention (Ting and de Run 2015; Tarkiainen and Sundqvist 2005).
Comparatively, a study by Chen (2007) suggested that a consumer’s favorable attitude
towards a product is an indicator of purchase intention. With the same premise,
consequently, the consumers’ favorable attitudes toward a product endorsed by a social
media influencer can contribute to the high probability of consumers acting on their
purchase intentions.
The Mediation of Consumer Attitude on the Relationship Between Advertising

Effectiveness and Purchase Intentions
According to Phelps and Hoy (1996), consumer attitude encapsulates both

favorable and unfavorable beliefs. Relative to understanding the effect of social media
influencers, Laroche et al. (1996) believed that endorsers have the ability to modify
consumer preferences, thereby eliciting purchase intentions. Moreover, source credibility
is strongly associated with the development of positive consumer attitudes (Brinol et al.
2004), eventually prompting a boost in product purchase intentions (Harmon and Coney
1982). Consequently, Chan et al. (2013) determined a significant relationship between
consumer attitude and credible endorsers, as manifested by consumer purchase intentions.
More specifically, consumers with positive attitudes towards the credibility of social media
influencers as endorsers also tend to have stronger purchase intentions.
Furthermore, the endorser’s attractiveness can likewise enhance consumer attitudes

(Bardia et al. 2011; Chan et al. 2013). For instance, an admirable, good-looking endorser
can be an influential brand ambassador (Atkin et al. 1984; Freiden 1984). Having a
trustworthy and well-liked endorser can arouse the consumers’ positive beliefs, resulting
in a desire to act upon their purchase intentions. Kahle and Homer (1985) cited that
advertisements featuring an attractive endorse could result in favorably changed attitudes
among and purchase intentions of consumers. A more recent study by Chan et al. (2013)
further affirmed that the attractiveness of social media influencers can positively influence
the consumers’ attitudes, and their corresponding purchase intentions.
In addition to source credibility and attractiveness, the ideal match-up between the
endorser’s image and the product’s characteristics can play an important role in the
endorsement processes (Choi and Rifon 2012). The same study also emphasized that a
congruent match between the endorser and the product can indirectly contribute to
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developing consumers’ attitude towards advertisement. Pradhan et al. (2016) also validated
the effect of the match-up hypothesis on consumer attitudes, leading to significant changes
on consumer purchase intention.
Conclusively, the study by Goldsmith et al. (2000) supported the hypotheses of

previous researchers, wherein endorsers are considered as a compelling strategy to create
brand awareness and product engagement. Endorsers utilize the meaning transfer process
in which they provide an image to a specific product to instill positive feelings and purchase
intention among consumers. Likewise, this manifests the consumers’ ability to display
higher purchase intention when they agree with the message delivered by the brand through
the endorser (Thwaites et al. 2012).
Synthesis of the Review of Related Literature
Research Gaps Found in the Review of Related Literature
Lim et al. (2019) conducted their study on the impact of social media influencers
on the purchase intention of Malaysian public university students. They stated that the
profile of their respondents being teenagers is a significant limiting factor. Teenagers may
not be an accurate determinant of purchasing power as they still do not earn any income.
Lim et al. (2019) recommend for future research to replicate their study to other respondent
groups, such as millennial consumers and other generation groups, in order to yield more
reliable results. The present study addresses this research gap by using mothers as its
research participants. It can be argued that mothers can be a good determinant of purchase
power and intention given that they are responsible for deciding on what food items to
purchase for their families. Also, there are mothers who work and earn money for their
families.
Furthermore, the study of Lim et al. (2019) focused on the prior purchasing
experience of their respondents, regardless of the product or social media influencer
involved. The prior favourable or unfavourable purchasing experiences of the respondents
may strongly influence their attitudes and purchase intentions. This can lead to a high
chance of incurring respondent bias which can then adversely impact the gathering and
analysis of data. Lim et al. (2019) recommended for future research to apply the study
using a specific brand and social media influencer as a means to prevent the occurrence of
such a bias in the responses of participants. The present study addresses this research gap
by examining a single brand which is the TFPC brand under TFPC Consequently, the
present study will focus on only one social media influencer, “the social media influencer”,
for TFPC.
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Research Frameworks and Hypotheses of the Study
The Social Learning Theory (SLT)
Social Learning Theory (SLT) is a kind of learning theory that is anchored in the
notion that individual behaviour is shaped by the triangular relationship between cognitive
factors, environmental stimuli, and behaviour. This theory was developed by Albert
Bandura (1963) who proposed that social learning transpires by means of four key stages:
close interaction, imitation of superiors, understanding of concepts and role model
behavior. The processes governing social learning are attention, retention, motor
reproduction, and motivation. As learning necessitates attention, retention and impetus,
social learning theory extends to both cognitive and behavioural frameworks. The
independent constructs under the social learning theory is individual behaviour whereas
the dependent constructs under it are cognitive factors (knowledge, expectations, and
attitudes), environmental factors (social norms, access in community, and influence on
others or the ability to alter an individual’s environment), and behavioral factors (skills,
practice, and self-efficacy).
Research in advertising has immensely used the social learning theory as a

theoretical foundation in explaining how socialization agents influence consumer
behaviors (King and Multon 1996; Martin and Bush 2000). Social learning theory argues
that socialization agents, through direct or indirect social communication, can motivate
individuals in developing a positive attitude towards them (Subramanian and Subramanian
1995; Moschis and Churchill 1978). Socialization agents can be in the form of celebrities,
friends, family, and role models. Numerous scholars have embraced this theory in their
attempt to analyse the consumption behaviour of individuals (North and Kotze 2001; Clark
et al. 2001; Martin and Bush 2000). As an example, Makgosa (2010) proved that social
learning theory strongly confirms the impact of celebrity endorsers on consumer behaviour.
In a similar way, social learning theory can serve as a foundational basis in understanding
the modern phenomenon of how social media influencers impact the consumer attitude and
buying behaviour of individuals. Social media influencers are individuals who have
established a credible reputation for their knowledge and proficiency on a particular topic.
They continuously create online posts about the topic on their social media accounts. Social
media influencers are able to garner a large following of highly affianced consumers who
give serious attention to their online content. Companies nowadays rely heavily on social
media influencers in advertising their products and brands given that these influencers can
initiate market trends and compel their followers to purchase the products and services that
they advertise. The main argument of the social learning theory is that a consumer’s intent
to purchase a product is immensely influenced by the consumer’s attitude and advertising
effectiveness of the social media influencer. Advertising effectiveness is represented by
four constructs, namely source credibility, source attractiveness, product match-up and
meaning transfer.
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Figure 1
Figure 2
The present study adopts the research framework developed by Lim et al. (2019). In their
study, the authors examined the influence of advertising effectiveness of social media influencers
on purchase intention as mediated by consumer attitude. Their study was applied in the context of
public university students in Malaysia. Source credibility, source attractiveness, product match-
up, and meaning transfer serve as the predictors of purchase intention. Consumer attitude is
hypothesized to mediate the relationship between the independent variables and the dependent
variable of their study.
In addressing the research problem and research questions of the present study, the following
hypothesis statements have been formulated:
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Hypothesis 1 (H1) = The credibility of a social media influencer will impact the purchase intention
of Filipino moms
Hypothesis 2 (H2) = The attractiveness of a social media influencer will impact the purchase
Hypothesis 3 (H3) = The product match-up of a social media influencer will impact the purchase
Hypothesis 4 (H4) = The meaning transfer of a social media influencer will impact the purchase
Hypothesis 5 (H5) =
Hypothesis 5.a (H5.a) = Consumer attitude will mediate the relationship between source
credibility and the purchase intention of Filipino moms
Hypothesis 5.b (H5.b) = Consumer attitude will mediate the relationship between source
attractiveness and the purchase intention of Filipino moms
Hypothesis 5.c (H5.c) = Consumer attitude will mediate the relationship between product match-
up and the purchase intention of Filipino moms
Hypothesis 5.d (H5.d) = Consumer attitude will mediate the relationship between meaning
transfer and the purchase intention of Filipino moms
Methodology
Research Design
The present study aims to examine the impact of advertising effectiveness on the
purchase intention of consumers towards the products of TFPC. It adopts a correlational
descriptive research design as a means to address its research problems and objectives. The
study employs a causal research as a means to examine the cause-and-effect relationship
between and among its variables. It adopts quantitative research, more specifically the
survey method.
Research Locale
The present study is being applied in the context of TFPC, a large poultry integrator
in the Philippines. It focuses on the advertising effectiveness of TFPC’s celebrity endorser
who is also its primary social media influencer. The target survey respondents are the
middle- class Filipino mothers who reside in Metro Manila, Philippines.
Sources of Data
The present study uses primary data by means of gathering data through the handing
out of a self-administered survey questionnaire. The decision to obtain primary data is
based on the justification that such an approach is most closely aligned with the research
questions and objectives of the study.
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Research Instrument
The present study adopts the advertising effectiveness research instrument of Lim
et al. (2017). The instrument consists of seven questions for source credibility, six
questions for source attractiveness, four questions for product match-up, three questions
for meaning transfer, five questions for consumer attitude, and four questions for purchase
intention. A five-point Likert scale is used to measure the four advertising effectiveness
constructs. Meanwhile, a seven-point Likert scale is used to measure consumer attitude and
purchase intention. Aside from close-ended questions, the research instrument of the
present study also consists of five open-ended questions soliciting the reasons of the
participants as to why they think the social media influencer of TFPC is credible, attractive,
fit for the brand, and effective in transferring brand meaning to the target market. The final
open-ended question probes into the reasons as to why the social media influencer will
increase the purchase intention of the participants. The research instrument of the study
consists of four parts: (1) orientation on TFPC, its products and “the social media
influencer” as its social media influencer, (2) participant personal information, (3) survey
questions for advertising effectiveness constructs, consumer attitude, and purchase
intention and (4) open-ended questions for the reasons of the participants for their survey
ratings.
All of the research variables and constructs yielded acceptable internal consistency,
with Cronbach’s coefficient alpha (α) scores of .84 for source credibility, .78 for source
attractiveness, .73 for product match-up, .74 for meaning transfer, .80 for consumer
attitude, and .72 for purchase intention.
Sampling Design
Purposive sampling and convenience sampling are used in obtaining the sample of
the study. First, active followers of the TFPC Facebook and Instagram accounts were
tapped to answer the advertising effectiveness survey questionnaire. Majority of the online
followers are mothers as confirmed by the marketing manager. The link to the online
survey questionnaire was posted in both social media accounts of the brand for a period of
two months. Only those respondents residing in Metro Manila and having a monthly
income between Php20, 000 and Php100, 000 were considered as part of the study’s final
sample. A total of 103 survey respondents are obtained from the social media accounts of
TFPC. Second, mothers residing in middle-class villages and subdivisions within Metro
Manila have also been tapped to participate in the survey. Communication with these
respondents was mostly done via online communication platforms such as the official
Viber and messenger groups of the villages and subdivisions. A total of 18 villages and
subdivisions were tapped. The same screening criteria as with the first set of respondents
are applied to determine the final set of respondents who qualified as part of the sample. A
total of 148 respondents are obtained from this source. Adding the samples from the two
sources, the study generated a total of 251 qualified research participants.
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Statistical Treatment of Data
Multiple regression analysis and test of mediation are applied in addressing the
research problems and objectives of the present study. Multiple linear regression is applied
to determine the strength and direction of the linear relationship between the four constructs
that represent advertising effectiveness and purchase intention. The test of mediation is
applied to examine if consumer attitude will mediate the relationship between the
advertising effectiveness constructs and purchase intention.
Data Confidentiality
Due to the sensitivity of the data such as monthly income, the personal information
and survey responses of the participants will be kept in strict confidentiality. To protect the
privacy of TFPC, the names of both TFPC and its endorser will be kept anonymous.
Finally, all information obtained from the survey will be strictly used for research purposes
only.
Results of Descriptive Analysis
Descriptive analysis results
The average age of the participants is M = 41.10 (SD = 9.00). Their average
monthly income is M = 38,592 (SD = 14,704). Out of the 252 survey participants, 80.1%
or 201 participants have college degrees as their highest educational attainment, 17.9% or
45 participants have master’s degrees, and 2.0% or 5 participants have doctoral degrees.
20.7% or 52 participants are housewives, 27.9% or 70 participants are self-employed,
44.2% or 111 participants are corporate employees, while 7.2% or 18 participants have
other occupations such as government employees and consultants.
The average scores for the advertising effectiveness constructs are as follows: M = 3.90
(SD = 0.55) for source credibility, M = 4.64 (SD = 0.34) for source attractiveness, M =
4.41 (SD = 0.46) for product match-up, and M = 4.58 (SD = 0.39) for meaning transfer.
The average score for consumer attitude is M = 6.27 (SD = 0.49). Lastly, the average score
for purchase intention is M = 6.41 (SD = 0.44).
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Table 1
The mean (M) and standard deviation (SD) of research variables and constructs.
Results of Multiple Regression Analysis
Regression analysis results
As predictors of purchase intention, source credibility, source attractiveness,

product match-up, and meaning transfer explained 13.1% of the variance (R² = .13, F (4,
247) = 9.29, p < .001). Source credibility significantly predicted purchase intention (β
= .1327, p < .05). Source attractiveness significantly predicted purchase intention (β
= .3238, p < .001). Product match-up did not significantly predict purchase intention (β =
-.0763, p > .05). Meaning transfer did not significantly predict purchase intention (β
= .0938, p > .05). Meanwhile, consumer attitude, as a predictor of purchase intention,
explained 39.4% of the variance (R² = .39, F (1, 250) = 162, p < .001). Consumer attitude
significantly predicted purchase intention (β = .553, p < .001).
Table 2
Multiple regression results for advertising effectiveness constructs as significant
predictors of purchase intention.
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Table 3
Multiple regression results for consumer attitude as a significant predictor of purchase
intention.
Results of Mediation Test
Mediation Analysis Results
The mediation of consumer attitude is examined using the test of mediation in

Jamovi. The results are presented in Table IV. First, the test is carried out on the influence
of the four advertising effectiveness constructs (source credibility, source attractiveness,
product match-up, and meaning transfer) on purchase intention as the dependent variable.
The test of mediation indicates that source attractiveness significantly (p < .05) influences
purchase intention. Consumer attitude also has a significant influence on purchase intention
(p < .05). Meanwhile, source credibility, product match-up, and meaning transfer do not
significantly influence purchase intention. Second, the influence of the advertising
effectiveness constructs on consumer attitude is tested. The results indicate that source
credibility and source attractiveness significantly (p < .05) influence consumer attitude.
However, product match-up and meaning transfer did not influence it. Third, the mediation
of consumer attitude on the relationship between the advertising effectiveness constructs
and purchase intention is tested. The results indicate that by adding consumer attitude to
the test, source attractiveness still significantly influences purchase intention, but its degree
of influence is lower, as evidenced by the lower coefficient. This means that consumer
attitude partially mediates the influence of source attractiveness on purchase intention.
Source credibility also significantly influences purchase intention, as shown by the p-value
(p < .05) and the reduced coefficient. This means that consumer attitude fully mediates the
influence of source credibility on purchase intention. Meanwhile, the influence of product
match-up and meaning transfer on both consumer attitude and purchase intention is still
insignificant.
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Figure 3
Path model of the mediation of consumer attitude on the relationship between advertising
effectiveness and purchase intention.
Table 4
Mediation of consumer attitude on the relationship between advertising effectiveness and
purchase intention.
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Conclusion
The present study examines the impact of source credibility, source attractiveness, product
match-up, and meaning transfer on the purchase intention of Filipino mothers towards the TFPC
brand. It also looks into the mediation of consumer attitude on the relationship between these
variables. First, source credibility is proven to have a significant relationship with purchase
intention (H1 is accepted). “the social media influencer” is perceived by the target market as a
credible social media influencer for the brand due to her popularity as a celebrity, good reputation,
pleasing personality, and authenticity as a product endorser. Likewise, middle-class Filipino
mothers strongly relate to her given that she is also a mother. These factors influence the target
market in having a positive attitude towards the brand which in turn increases their purchase
intention. This finding of the study is aligned with the findings of Anwarl, A. & Jalees, T., 2017;
Hung, K., 2014; Lim et al., 2017; Taghipoorreyneh & de Run, 2016; & Wang et al., 2017.
Second, source attractiveness is also proven to have a significant relationship with purchase
intention (H2 is accepted). The target market considers “the social media influencer” as an
attractive social media influencer who has beautiful and expressive facial features. She has a
captivating, enthusiastic, and confident aura which is very appealing to the mass market. Middle-
class Filipino mothers also find “the social media influencer” as an attractive influencer for TFPC
because of her simple, authentic, wholesome, cheerful, and witty personality. Lastly, the target
market perceives her as an endorser with excellent communication skills. The study proves that
the attractiveness of “the social media influencer” as a social media influencer significantly
contributes in creating a positive attitude towards the brand and in yielding a high degree of
purchase intention. This finding of the study is aligned with those of McCabe et al., 2014; Malik
& Sudhakar, 2014; and Anwarl, A. & Jalees, T., 2017.
Next, the study does not prove that product match-up significantly impact purchase
intention (H3 is rejected). The main reason for this is that the target market expects the social
media influencer for TFPC to be someone who has expertise and enthusiasm in cooking, and “the
social media influencer” is not perceived as having impressive cooking skills, unlike other
celebrity social media influencers. She is better known as an actress, singer, and television host
than a cook. It is also observed that she doesn’t cook often as evidenced by her limited online posts
about cooking. Further, some of the research participants do not associate “the social media
influencer” with food products. Instead, they see her as a fit influencer for beauty and fashion
products.
Consequently, meaning transfer is found not to have a significant relationship with

purchase intention (H4 is rejected). Some middle-income Filipino mothers more strongly relate
TFPC with endorsers who are known for their expertise in cooking (e.g. celebrity cooks and chefs).
This inability of a portion of the target market to relate the symbolism of “the social media
influencer” to that of the brand results in a less effective transfer of intended brand meanings.
Another reason as to why meaning transfer did not influence purchase intention is the reality that
some middle-class mothers do not rely on social media influencers in learning about the attributes
of the brand. For instance, some of the participants buy TFPC for its high quality, affordability,
excellent taste, and variety. They rely more on their personal experience with the brand and word-
of-mouth referrals from family, friends, and credible chefs in discovering these brand attributes.
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Finally, the present study proves that consumer attitude significantly mediates the impact
of source credibility and source attractiveness on purchase intention (H5.a and H5.b accepted).
The study indicates that the credibility and attractiveness of “the social media influencer” as a
social media influencer greatly contribute to the development of the target market’s positive
attitude towards TFPC, which then leads to purchase intention. The finding of the study is
congruent with those of Bardia et al., 2011; Brinol et al., 2004; Chan et al., 2013; and Lim et al.,
2017 who confirmed that consumer attitude mediates the impact of source credibility and
attractiveness on purchase intention. Meanwhile, the study indicates that consumer attitude did not
mediate the impact of product match-up and meaning transfer on purchase intention (H5.c and
H5.d rejected).
Implications of the Study
The study offers key managerial implications that TFPC should consider in order to more
effectively leverage on the use of a social media influencer as an advertising strategy. Given the
results of the study, TFPC should leverage on the credibility and attractiveness of “the social media
influencer” as a digital influencer in creating advertisements that can most effectively increase the
positive attitude and purchase intention of the target market towards TFPC. However, BBFI should
also prioritize on developing advertising strategies that will increase the product match-up and
meaning transfer of its social media influencer. In terms of increasing the product match-up of “the
social media influencer” with TFPC, TFPC should create more online advertisements that
showcase her as a great cook. The study reveals that middle –class Filipino mothers envision the
ideal endorser or influencer for the brand as someone with enough expertise and enthusiasm in
cooking. The social media accounts of both TFPC and “the social media influencer” should include
more contents on cooking. It might even be beneficial for TFPC to create an online cooking
channel with “the social media influencer” as the host. Such efforts can more closely align the
chosen social media influencer with the “ideal” endorser for the brand.
An interesting revelation of the study is the consideration for TFPC to further segment its
target market psychographically. The primary reason why the meaning transfer of “the social
media influencer” did not significantly impact purchase intention is that the target market is
apparently segmenting itself into two market sub-segments. The first market sub-segment pertains
to the existing target market that still rely heavily on a credible, attractive, and product-fit
endorser/influencer that will persuade them to purchase TFPC. The second market sub-segment is
the “aspirational market” of middle-income mothers who aspire for something else in the brand
and no longer rely on an endorser/influencer. This “aspirational market” relies more heavily on
personal product usage or experience as a means to discover the brand’s symbolism and attributes.
These middle-income mothers focus more on the quality, affordability, taste, and variety that the
brand offers. The aspirational market can be considered as moving up the hierarchy of needs.
Given this emerging phenomenon, the study recommends two strategies that TFPC can adopt.
First, TFPC can develop a segmented product line, one for its existing target market and another
one for its aspirational market. Second, TFPC can also segment its advertising strategies to
strategically respond to the unique psychographics of its two market sub-segments. For the existing
target market, “the social media influencer” can still be used for mass- or above-the-line
advertising in the form of television, radio, print, and especially online advertising (e.g. Youtube
commercials and Facebook paid advertisements). Meanwhile, in communicating with its
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aspiration market, TFPC can use below-the-line advertising in the form of smaller brochures,
leaflets, and flyers among others. It can veer away from the use of a social media influencer and
focus more on communicating the positive attributes of the brand. Overall, BBFI can allocate 80%
of its entire advertising efforts on the use of “the social media influencer” as its social media
influencer to communicate to its existing target market. Then, the remaining 20% of its advertising
efforts can be allocated for the below-the-line activities for its aspirational market.
Limitations and Areas for Future Research
The present study poses some limitations that serve as opportunities for future researchers
to address in their study on the advertising effectiveness of social media influencers. First, the
sample of the study consists only of middle-class mothers residing in Metro Manila, Philippines.
Future researchers should replicate the study in other areas of the Philippines such as the other
parts of Luzon, Visayas, and Mindanao in order to gain a more comprehensive understanding of
the perceptions of the target market. Data gathered from the present study is only cross-sectional.
Future researchers can conduct longitudinal studies to more accurately evaluate the impact of a
social media influencer’s advertising effectiveness on purchase intention over time as a company
continuously improves on its branding and advertising strategies. In the case of TFPC, regular
advertising effectiveness studies can be conducted to see how the perceptions of the target market
will change over time. The study uses purposive and convenience sampling techniques.
Convenience sampling is used particularly to ensure the health and safety of both the research
proponents and the participants during this time of the COVID-19 pandemic. Future studies can
adopt other sampling techniques such as stratified sampling and cluster sampling once the
pandemic ceases. Lastly, the present study only focuses on the impact of advertising effectiveness
on consumer attitude and purchase intention. Future studies can focus on the impact of advertising
effectiveness on the latter elements of the marketing funnel for a brand such as actual purchase,
sustained interest and brand loyalty.
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A Neo-Classical Economic Theory: Leveraging Underground
Economy
8th NBMC Paper # 38
Demetria May T. Saniel, Isa Pab Geen P. Gue, Catherine Coñales-Salvo

University of Science and Technology of Southern Philippines and Bukidnon State University
Abstract
Increasing underground economies, an emerging disruptive behavior in the economy,

employment, and human development, reaches more than $10 trillion, and close to 2 billion people
currently employed. Traditionally, the legal economy is the formal economy, the White Market;
the illegal economy is the underground economy, the Black Market. Over time, the global
phenomenon evolved with the illegal, unreported, unrecorded and the informal economies. A color
spectrum too developed, Black, Gray, Red, Pink and White Markets. On the exponential growth
of 12-52% in ASEAN, GFI identify Myanmar and Thailand as the largest. Nearly $100 billion
were funnelled illegally through Myanmar with unregulated financial inflows close to $10 billion.
Bloomberg Business ranks Thailand 7th biggest in the world and 2nd largest among ASEAN as per
share of the country’s GDP’s illicit revenue. Inferring that the robust tourism industry and is the
street food capital of the world resulted in the prevalent street businesses and “darker” economic
activities. Economic-political-legal dynamics serve as dissatisfiers perpetuating shadow
economies. As the formal global economy proposes extreme sanctions and closure, tremendous
loss of the underground employment collapses the formal economy. Economic outcomes of the
shadow businesses serve a critical purpose of keeping the formal economy afloat.
Key Words: Shadow economy, underground economy, economic theory
Introduction
Underground economy or shadow economy became a well-known subject at international

level as its increasing activities play an emerging role in employment, economy, and human
development. The underground economy has been traditionally associated with illegality but is a
growing global phenomenon that exists in both developing and highly developed countries alike.
The world’s underground economy totals the economic activity of $10 trillion. Countries find their
profitable robustness engaged by the largest “shadow economies” with Gross Domestic Product
(GDP) as high as 72.5 percent. The Philippines has 48.4 percent of GDP in the shadow economy,
that is, 147.6 billion USD of the GDP of 304.9 billion USD in 2016. In Philippine Peso, the
underground economy amounts to 7.38 trillion of the GDP. The Bloomberg study ranks the
Philippines 26th among the world’s shadow economy the list. OECD estimates that the
underground economy also currently employs almost half of the world’s workers, that is, about
1.8 billion people.
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Underground economies as they grow bigger and bigger become significant economic
agents that disrupt the traditional nature of economic systems transforming world economies over
time. The effects of the underground economy on the official economy become now the focus of
future studies. A source of allocation distortions can be illicit works, and the growing underground
economy may entice (local and foreign) workforces away from the official labor market and create
competition for business firms in the formal economic arena. The underground economy as an
emerging disruptive economic behavior requires the study that leads to innovative approaches to
understanding the new dynamics in economic and financial processes.
The study focuses on the underground economy in ASEAN countries. The Association of
Southeast Asian Nations (ASEAN) is created in 1967 by five founding countries: Indonesia,
Malaysia, the Philippines, Singapore, and Thailand which is considered as a political and economic
cooperative group. For the first time, ASEAN admitted Brunei as the sixth member and later on
accepted four of the least Southeast Asian countries: Cambodia, Laos, Myanmar, and Vietnam. As
an outcome of the agreements, ASEAN has developed not two- but three-tiered regionalism due
to the diverse levels of economic advancement and the varied political systems among old and
new members (Areethamsirikul, 2008).
Figure 1
Schematic Diagram showing the Interplay of Variables in the Study
Objectives
The world confronts underground economies as both a phenomenon and a paradox,

meaning, underground economies as a boon or a bane, illegal or lifesaver. In this research study,
the purpose of the paper is threefold.
1. It intends to categorize and classify underground economies activities according to the

traditional and emerging literature; and the size of the underground economy.
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2. It proposes to infer from the economic and political-legal dynamics among the member
countries of ASEAN which become dissatisfiers and perpetuate shadow economies.
3. It hopes to formulate a neo-classical economic theory for the ASEAN Bloc to leverage the
underground economy.
Methodology
This research employed the qualitative descriptive method to gather information about the
underground economy or shadow economy. The study utilized Data Mining strategy to obtain and
categorize the historical data to achieve the objectives of the study.
Categorization and Classification of Underground Economies Activities according to Traditional

and Emerging Literature
Traditionally, the simple description of economic activities is legal or illegal. The legal
economic activities are generally those that adhere to the statutory and regulatory requirements or
set of institutional rules and industry regulations. The legitimate economy is the formal economy,
the White Market. Illegal economic activities are those against or not allowed by law, and
considered as a crime. The commercial activities partially or entirely disregard the institutional
and industry set of rules that define the products and services prohibited by law. Also, the
production and distribution of illegal goods and services as well as the processes of which are non-
compliant. The illegal economy is also traditionally called the shadow economy, the underground
economy, or the Black Market. Individuals who engage in the Black Market are members of the
illegal economy. Likewise, individuals who patronize or buy goods or avail the services are also
an accomplice to the crime.
Table 1
A Taxonomy of Types of Underground Economic Activities
Type of
Money Transactions Non-Monetary Transactions
Activity
● Barter of drugs, stolen goods,

Trade with stolen goods; drug dealing smuggling, etc.
Illegal
and manufacturing; prostitution;● Producing or growing drugs for own
Activities
gambling; smuggling; fraud; etc. use.
● Theft for own use.
Tax Evasion Tax Avoidance Tax Evasion Tax Avoidance
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Unreported income
from self-
Employee
employment; wages, Barter of legal All do-it-yourself
Legal discounts and
salaries and assets services and work and neighbor
Activities fringe
from unreported work goods help
benefits
related to legal
services and goods.
As the magnitude of how varied the economic activities are in the shadow economy. Table
2 shows the characteristics of the underground economy that evolved. The classification of
economic activities outside the legal or formal economy is illegal economy, unreported economy,
unrecorded economy or the informal economy. According on Blades (1983), the general categories
of illegal economic activities are production and distribution of unlawful goods; production of
prohibited services; production activities which are usually legal but which become banned when
carried out by unauthorised producers; poaching; production and sale of counterfeited products;
smuggling; fencing (resale) of stolen goods; bribery; and money laundering. Specifically, the
examples of the illegal products and services are banned drugs and pornographic materials;
prostitution; unlicensed medical practices; immoral gambling activities; unrestricted production of
alcohol; illegal fishing, hunting and tree cutting; products with false trademarks such as software,
CDs and videos; smuggled goods like tobacco, weapons, alcohol, and food.
Table 2
A Taxonomy of Types of Traditional and Emerging Underground Economic Activities
Type of
Underground Definition Activities
Economy
Illegal Economy Totality of the revenues that are Illegal activities such as illegal
generated by those economic drug dealing, black market of
activities that violate the legal status
currency exchange, money
of legitimate forms of trade. laundering, unlicensed money
lending, illegal gambling,
prostitution and pornography.
Unreported Totality of economic activities that Unreported revenue either from
Economy escape fiscal rules as they are legal sources or illegal sources.
defined in fiscal codes.
Unrecorded Activities that avoid institutional
Economy conventions that define the
necessary requirements
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Informal Economy Economic activities that avoid costs Revenue that is generated by
and excluded from the rights and economic agents that operate
benefits that come along with informally.
leasing, work contracts, loan and
social security
Source: (Feige, 1997) and (Radulescu, Propescu and Matei, 2010)
The illegal economy comprises the income generated by the economic activities pursued
in violation of legal statutes defining the scope of legitimate trade system. The accomplices of the
illegal economy are involve in the production and distribution of forbidden goods and services,
such as drug trafficking, arms trafficking, and prostitution. The unreported economy consists the
economic activities that evade the institutionally established fiscal decrees as codified in the tax
code. This includes the aggregate income that is to be reported to the tax authority but is not stated.
A complementary degree of the unreported economy is the "tax gap" namely the difference
between the number of tax revenues due to the government and the actual collection of tax revenue.
The unrecorded economy consists of those economic activities that circumvent the institutional
rules that define the reporting requirements of government statistical agencies. A summary of the
unrecorded economy is the amount of unrecorded revenue, namely the amount of income that
should (under existing rules and conventions) be recorded in national accounting systems (e.g.,
National Income and Product Accounts) but is not. Unrecorded income is a particular problem in
transition countries that switched from a socialist accounting system to UN standard national
accounting.
The income generated by economic agents who operate informally summarizes the
measure of the informal economy. This includes those economic activities which circumvents the
costs and excludes the benefits and rights incorporated in the laws and administrative rules
covering property relationships, commercial licensing, labor contracts, torts, and financial credit
and social security systems. Thus, the informal sector is defined as the part of an economy that is
not taxed, or monitored by any form of government, or included in any gross national product
(GNP). In developed countries, the informal sector is characterized by unreported employment.
This is hidden from the state for tax, social security or labor law purposes but is legal in all other
aspects. On the other hand, the term Black Market can be used to a specific part of the economy
in which contraband is traded.
It is interesting to note that the changing landscape of the underground economy has a color
spectrum with the Black Market, Gray Market, Red Market, Pink Market, and White Market. The
genuine goods which are sold and bought through the unauthorized channels of distribution is the
arrangement in the Gray Market. The Gray Market goods are authentic in terms of their
manufacture. The controversy lies in the nature of its disposal through a distribution channel not
authorized by the product’s manufacturer or trademark owner. The goods can be either domestic
or foreign. With the local products, an authorized reseller sells them to unauthorized channels that
resells them domestically. In contrast, the imported Gray Market goods that bear a valid trademark
of the country of origin are sold without the approval of the trademark owner. They are purchased
abroad and are never intended for sale in the home country. The distribution channels for both
domestic and foreign gray market goods, referred to as parallel channels, product diverting, and
536 | P a g e
even arbitrage, because not one reseller in the distribution channel is not an authorized distributor.
The advantage the Gray Market economic activities is the difference of the costing of products in
countries; the products are usually devoid of the warranty; tend to compete with the authorized
dealers, and can often lead to black markets.
The Red Market is that sector of the economy that has been exempted from market
competition by governmental fiat as national governments decide to nationalize organizations,
firms or even industries. Government interventions are in place when products of significant
general public interests chronically lose money, but the political stature of the market is so great
that the financial losses are within threshold to maintain the politically sensitive jobs, industries,
commodities, and so forth. A classic example of the Red Market is the state-owned enterprises
(SOEs) are those engaged in wheat flour or rice as basic food; and petroleum products, nuclear
energy. In many parts of the world, the major state-owned enterprises exist at their great
government’s expense. SOEs receive preferential indirect government subsidies or loans from the
public treasury but at several instances are never paid back being “dole out” financial assistance.
SOEs are also immune from competition being organizations that provide a monopoly of
mandatory service or services to the general public. Examples are water and electric utilities and
agriculture-related organizations such as cooperatives; other primary products and services that
are government-owned and government controlled.
The Pink Market economic activities are indirect support to industry. For example, the
home construction industry is directly supported by the cement, steel, wood industries; but the
home appliances, home furniture, home gardens landscapes businesses, among others, indirectly
supports them. Another example is the automobile industry that is indirectly supported by
legislated insurance, vehicle registration, vehicle insurance, vehicle registration plates.
The Exponential Growth and Size of the Underground Economy
The volume of the shadow economies is difficult to measure considering the nature of
underground economies. Economic exports substantially study how to measure and presented
varying approaches. Experts like Edgar L. Feige and Friedrich Schneider considerably studied how
the world’s shadow economies work and its measurement totalled to $10 trillion. They used the
Multiple Indicators Multiple Causes (MIMIC) model, which consists of the structural equation
model and the measurement model. Using the MIMIC model, it tries to explain the relationship of
the observable variables and the unobservable variables. It minimizes the distance connecting the
sample covariance matrix along with the covariance matrix as predicted. The source of the latent
variable and its indicators demonstrates the observable variables.
The MIMIC method estimates that the size of underground economic activities.
Table 3 shows the size of the underground economy of the Association of Southeast Asia
(ASEAN) countries and other Asian countries. It is difficult to make generalizations because Asian
countries are not economically equal. Some countries like Japan, Singapore, and Hong Kong are
already highly developed; while the others are developing countries and while there are still under-
developed countries. Myanmar and Thailand have the biggest underground economies among the
ASEAN countries with $50.99 billion and $43.12 billion respectively. The two biggest shadow
economies also have huge averages over ten years with $50 billion annually.
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According to US-based non-profit organization named the Global Financial Integrity
(GFI), Myanmar is on the list of countries that has the largest informal economies. In the report
that used the MIMIC methodology, the “shadow economy” soared alongside large legit
investments made by telecom, oil, trading and manufacturing companies and a general economic
upswing after the junta established a quasi-civilian government in 2011. Nearly $100 billion were
funneled illegally through Myanmar; unregulated financial inflows totaled close to $10 billion.
Myanmar’s interactions between illicit flows and the underground economy concluded the
existence of deceitful trade transactions. The majority of Myanmar’s illegal financial activities
over the period of 54 years are at 59.6% and 89.2%, respectively. The unlawful flows totaled to
$77.7bn.
Table 3
Size of Underground Economy of ASEAN Economies
Figure 2
The Size of Underground Economy in ASEAN Countries
In the case of Thailand, Bloomberg Business ranks Thailand as the seventh-biggest shadow
economy in the world and the second largest in the ASEAN economies based on the country’s
gross domestic product (GDP). Informal business in Thailand is visible and widespread, which
consists of street vendors, food stalls, souvenir sellers, repair shops, makeshift entertainment
venues and so forth. In the darker corners throughout the country, it is observed to have the
538 | P a g e
presence of illegal lotteries, street drug trade, gasoline smuggling, human trafficking, informal
money lending and small weapons trade are rife.
In particular, the fleshpot attracts some 500,000 sex tourists every year. A study by a Thai
university estimated the sex sector at around $25 billion, or 12% of the country's gross domestic
product. Some 4.6 million Thai men use an estimated 700,000 prostitutes annually, a third of whom
are minors and children. All these economic activities do not pay taxes, nor for licenses and no
documentation. The usual practice is the payment of bribes to individuals and groups or offices
that form part of the legal or official structure in the formal economy.
Table 4 below shows the underground economy of other countries in Asia with Hong Kong
having the most underground economic activities illicit flows and the highest average in 10 years.
Table 4
Size of Underground Economy of Other Asian Economies
Figure 3
Size of Underground Economy of Other Asian Economies
Economic and Political-Legal Dynamics Which Become Dissatisfiers and Perpetuate

Shadow Economies among the ASEAN Member Countries of ASEAN
Businesses hide their activities in the underground economy when they are faced with
burdensome regulation and inconsistent enforcement coupled with corruption. Most
shadow economies are driven commonly by higher tax rates and social security
contributions; labor market standards; early retirement; safety workplace/industry
standards; and administrative procedures.
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Figure 4
Diagram Showing the Interplay of Dissatisfiers Leading to Underground Economies
Price/Cost of Product or Service

Tax rates Product or Service of Short Supply
Social security Contributions Profit earned far higher than formal
Minimum Wages economy
Early Retirement Controlled Distribution og Goods /
Legal Economic
Political Social
Type of Government Social Affluence from Economic Power
Extent of State-ownership of industry Poor Public Services
Extent of Shadow Businesses owned
by Politicians
Measuring the underground economy poses a challenge due to its inherent nature. The
estimation of the size may be generalized from the sample surveys or tax audits and evaluated
against the national accounting statistics. The underground economy is also affected by the
unsteadiness of the global economy. Its size also changes in times of recession. When taxes are
excessive, regulations are rigid, prices are controlled, or governments interfere with market
exchanges, economic activities have higher rates of not being reported. Not recognizing or
enforcing the private property rights and contractual agreements may also add to underground
economic activities.
There are others who patronize the black market due to its faster delivery at a lower price.
The cost of smuggled products is usually lower than when the product is manufactured locally. No
taxes were paid, only transportation and seller’s cost. They are ordinarily seen displayed in the
streets. Products that are short in supply in the conventional market, will cost more in the black
market but is readily available.
The sellers and buyers, owners and workers who are engaged in underground economic
activities have different motivations. The sellers who offer their products in the black market wants
to make more money. They may also do it for prestige or power, and self-esteem. They are there
when it is socially acceptable, if not encouraged. Yet others are socially conditioned to believe that
the black market is the only way to get ahead of the competition. Buyers on the other hand have
other motivations. For most, the black market is the only way to acquire an illegal product.
The most influential factors on the underground economy are tax policies and state
regulation. A government can deregulate the economy or incentivize “to be an entrepreneur”;
which would make self-employment easier, potentially reducing unemployment and positively
contributing to efforts in controlling the size of the underground economy (Schneider, 2014). A
concern interprets the underground economy as an indicator of an unhealthy state between citizens
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and government. The taxpayers are dissatisfied with what public services they get for their
contributions and seek to re-stress the balance by evading to the underground economy. (Frey &
Schneider, 2000).
Neo-Classical Economic Theory for the ASEAN Bloc To Leverage Underground Economy
The ready approach to combat the increasing underground economies is to stress the rule
of law to combat the underground economic activity. Should governments place more emphasis
on strengthening the rule of law, more stringent enforcement of the minimum necessary set of
regulations, and increase the plethora of regulatory requirements (Singh, Chandra, & Mohommad,
2012). Policy resolutions that extensively reduce tax rates and amplify the number of regulations
or even simplify access to the formal economy may not further the decrease of the shadow
economy. The government revenue is low in countries with shadow economies which are largely
proportionate to their total GDP. This translates to either their public services are poor, or their
formal economy are taxed at a higher rate. The issue on high tax rates prompts people to stay
‘below the radar.’
Two-thirds of the income gained in the shadow economy is used to buy products in the
official economy, thus stimulating the formal economy (Schneider & Enste, 2002). Important
efforts to reduce shadow economy size in the states might include reductions in both tax burdens
and government spending. Direct government regulation of shadow activity, though a deterrent,
only imposes added cost on the taxpayer, thereby increasing tax burden and incentive to engage in
the informal sector; off-setting to some degree the regulatory effort (Wiseman, 2013).
According to Voicu (2012), the underground economy is considered as the most profitable
component of the economy and an avoidable ingredient of any economy. Lack of consideration
can lead to severe shortfalls of economic analysis leading to the adoption of unrealistic strategies.
Time evidence shows that the underground economy is a source of development, subsistence and
even escape from the periphery zone of some underdeveloped economies. Researchers suggest
strongly that underground economy can be beneficial, as long as it serves to the proper functioning
of the economic environment responding to the demand for urban and small craftsmen. It can help
create markets, increase financial resources, enhance entrepreneurship and provide reservoirs for
economic and social institutions.
The study of Williams and Round (2011) reveals that governments pursuing deterrence
will end up stifling with one hand precisely the entrepreneurship and enterprise culture that with
another hand they are so desperately seeking to nurture. Given that the informal economy is
currently not only a main platform for the development of enterprise and entrepreneurship but also
a vast and so far untapped hidden enterprise culture, there seems no doubt that it needs to be
represented as a potential asset rather than as a hindrance to development. Hart (1973) derived his
analysis from Weber’s theory of rationalization, arguing that the informal economy might be both
a source of growth and a crucial ingredient of economic transformation.
Dore (2014) suggested that the relationship between “formal” and “informal” sources of
employment might be of significance for economic development models in the long run. Some
think the informal economy can benefit the formal economy by incubating new businesses and
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enabling entrepreneurs to test its viability informally before deciding to register and legitimize
their ventures. Formalization remains a slow journey, which means accepting informality as a
legitimate state of affairs for many entrepreneurs. Growing empirical evidence indicates that the
informal economy can constitute a protective environment that many fledgling micro
entrepreneurs need as they move from unemployment to the formal sphere.
Conclusion
The stark findings now pose the issue that the shadow businesses serve a critical economic
purpose. Despite the avoidance of paying taxes by operating off the data grid, there can be no
doubt then that the underground economy keeps the economy in balance and afloat just above the
poverty line. Extreme sanctions and sudden closure of the underground economy will mean the
tremendous loss of underground employment whose wage compensation supports the formal
economic activities. Strict regulation leading to the decrease of the shadow economy results in the
collapse of the formal economy.
Hence, with the purpose of this research paper to consider the urgent need to understand
why old economic theories may fail now and formulate a neo-classical economic theory as a
practical, more applicable alternative. This explains the consideration of re-evaluating the concepts
of the economic theories used today. The goal is to achieve a genuine human-centered economic
theory and practice. The financial symbiosis of both the underground economy and the formal
economy that developed over time establishes a complex system where interdependencies of
economic structures are inter-woven layers that even segregation becomes impossible.
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The Influence of Brand Equity To Millennials’ Customer
Motivation Toward BPI Credit Cards
8th NBMC Paper #39
Bienvenida, Veronica Blythe S. ; Caladiao, Aireen F. ; Dy, Joaquin Benjamin L. ;

Esperanza, Ricelle Justine L. ; Go, Johannes Anne T.
Abstract
The Bank of the Philippine Islands (BPI) is known to be one of the most prominent companies in
the banking industry. With the prevalence of cashless transactions, especially amidst the shift to
the new normal, this study aims to analyze the effect of brand equity to customer motivation
towards BPI credit cards. The researchers conducted focus group discussions and a survey to
obtain qualitative data from select participants and respondents. Furthermore, David Aaker’s
Brand Equity Model was used to support the study’s conceptual framework, with the brand equity
of BPI measured through five components: brand awareness, value perception, brand loyalty,
brand associations, and other proprietary assets. The results show that among the five components
of brand equity, brand awareness drives customer motivation the most. Brand loyalty and brand
associations were also defining indicators, encompassing convenience, customer service, and
security as attributes highly valued by consumers. The study highlights the importance of
understanding key components of brand equity that aid in strengthening customer motivation
among consumers through improved marketing strategies.
Keywords: Credit Card, Brand Equity, Customer Motivation, Bank of the Philippine Islands
Introduction
The plight caused by the COVID-19 global pandemic continually brings about changes to
society, and this encompasses customer motivation. As the circumstances have changed, various
industries were greatly affected, including all economic activities. Understanding the pandemic’s
impact, there is an undeniable demand to shift to the online setting. As such, the utilization of
credit cards and online banking have prevailed in the midst of the pandemic as this approach,
evidently, limits physical contact between people, being able to comply with the health and safety
precautions necessary for the spreading virus. In addition, credit cards yield a convenient method
of handling bank transactions. It permits one to purchase goods and services cashless anytime and
anywhere, providing its consumers an increased purchasing power.
In relation to this, BPI, known to be one of the most prominent companies in the banking
industry, leads its way in providing financial services to its clients – one of which is offering ten
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different types of credit cards. However, over the years, several banks such as BDO, Metrobank
and Citibank have also outstood BPI when it comes to its customer service, interest rates, and
overall customer motivation. Having said this, the present research allows a deeper understanding
of the implications of brand equity to customer motivation, specifically that of Millennials, towards
BPI credit cards, especially in the time of COVID-19. Furthermore, the study shall provide BPI
with marketing strategies that may aid the company in their overall improvement.
Literature Review
Millennials
According to Stolba (2020), 72% of Generation Y are credit card users as of 2019,
occupying the greatest number of credit card holders among other age ranges. Also known
as the Millennials, this generation consists of people who were born between the early
1980s and 1990s. People who are part of Generation Y are typically described as self-
confident and ambitious. They grew up with the presence of new technologies and the
internet, which is why most people would assert that they are able to handle technology
better than older generations. Moreover, given their age ranges from twenty-four to thirty-
nine (24-39) years old, it is also assumed that most of the people from this generation are
now working adults who find the need for financial assistance through opting for bank
services which include credit cards.
Credit Cards
Credit cards have been a staple payment method for purchasing goods and services.
Trinh et al. (2020) argues that credit card consumers deem its perceived usefulness, ease
of use, and social influence to be motivational factors. The belief that the credit card will
be useful and convenient to use relies on the rational mindset of consumers. However, their
purchasing behavior when utilizing the card can be influenced by those around them:
friends, family, spouse, and co-workers. Besides this, factors that bank clients consider
when availing a card includes credit limit, rewards program, interest rates, customer
service, and brand image (Dospinescu et al., 2019).
As the advancement of technology has rapidly altered the way individuals handle
their funds, key players in the financial services industry continuously adapt to these
changes in order to meet the demands of their market. Eleven years ago, the majority of
Filipino consumers did not own a credit card; however, there has been a growing demand
for such services in the past years (VISA, 2014).
Bank of the Philippine Islands (BPI)
BPI is historically the first financial institution within the Philippines and Southeast
Asia. It remains to be a top-of-mind brand amongst Filipino consumers as the bank
contributes 15% to the total number of credit cards within circulation. It is noteworthy to
mention that this observes a 7% increase from 2018 based on a report conducted by
Euromonitor.
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Although the credit card industry continues to flourish, it also faces an inadequate
support structure in certain provinces in the Philippines since credit card acceptances are
only mostly available in larger cities. Furthermore, as there has been a suspension of
commerce activities due to the ongoing crisis, a decline of transaction volume and value in
2020 occurs (Chandrasekar, 2020).
Brand Equity Model
According to David Aaker (1991), brand equity comprises five dimensions: brand
awareness, perceived value, brand loyalty, brand associations, and other proprietary assets.
This customer-based definition is stated to be significantly beneficial to companies when
achieved because strong brand equity, encompassing the five dimensions, in turn
strengthens competitive advantage (Trillo Trillo, 2017).
Figure 1
Aaker’s Brand Equity Model
Brand awareness
Brand awareness reflects consumers' ability to recognize the brand without the need
for a signal (Alkhawaldeh et al., 2017). It helps the brand establish distinction from
competitors and lead the consumers to choose the given brand (Valavi, 2014). Sharifi
(2014) postulated that there is a moderating effect of brand awareness to the potential
purchasing behavior of consumers.
Value perception
Measuring customer value perception involves a balance of not only the objective
cost-benefit analysis, but also the subjective consumption experience. In this sense,
ensuring positive value perception is key in pursuing effective marketing strategies
(Holbrook as cited in Hwang & Griffiths, 2017). For instance, a study by Laukkanen (as
cited in Wang & Li, 2018), showed that banking services with better convenience and
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accessibility online yielded more significant value perception among consumers.
Amplifying competitive strengths and key attributes of a product may prove beneficial in
achieving positive value perception.
Brand Loyalty
Customers give positive associations which they attach to a certain brand, in return
gives loyalty towards the firm (Kopp, 2019). Brand loyalty can help establish a long-term
relationship with their consumers, therefore increasing brand equity (Manzoor et al., 2016).
Brand Associations
Brand associations have a lasting impact on consumers (Schmidt, 2020). The

objective of a firm is to give their consumers positive associations within their brand. The
higher association a customer has in regard to the brand, the more loyal they become (Suki,
2015). There are three types of brand associations: (1) attributes, the descriptive functions
that reflect a certain brand, (2) benefits, the services, and products that remain useful to
consumers, (3) attitudes, the overall consumer assessment of the given brand (Zhechev et
al., 2016).
Proprietary assets
Proprietary assets such as patents, trademarks and channel relationship (Sacui &
Dumitru, 2014) bring a significant role in the company in establishing competitive
advantage.
Customer Motivation
Customer motivation refers to the driving force behind a consumer’s purchase

behavior. It is what encourages the customers to avail a certain product or service.
According to Tanduklangi et al. (2017), the factors behind the motivation of a consumer
includes their needs, brand of choice, where they can avail it, and many more.
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Figure 2
Research Conceptual Framework
Following Aaker’s Brand Equity Model, this study will utilize the proposed framework
shown above. The objective of the study is to identify the influence of brand equity to customer
motivation towards BPI credit cards. In line with this, the individual dimensions of Brand Equity
will be used as predictors of Customer Motivation. The variables were measured through the
following survey questions:
1. Brand Awareness: (#9) I know a lot of banks in the credit card industry, (#10) Brand names
influence my evaluations to avail a credit card, (#11) BPI commands high awareness and
has many strong, positive associations, (#12) I remember having seen or heard BPI
advertisements in the past two months, (#13) I can easily recall and recognize BPI.
2. Value perception: (#16) It is worthwhile to avail credit card from BPI, (#17) I think having
a credit card is convenient, (#18) I save money by using a BPI credit card, and it offers a
lot of rewards and benefits, (#19) BPI’s customer service is commendable, (#20) The
potential savings from finding the lowest price of a credit card is worth the cost.
3. Brand Loyalty: (#23) When availing a credit card, it is important to me which bank I avail from,
(#24) After I get used to a credit card bank, I hate to switch, (#25) I intend to keep the same
bank of credit card that I currently own for the foreseeable future, (#26) Next time I avail
a credit card, I would be willing to pay more for my current bank than other banks, (#27) I
would still avail credit card from my current bank, even if it receives bad evaluations by
the media or other people.
4. Brand Associations: (#30) BPI is convenient and accessible, (#31) I can agree that BPI has
great customer service, (#32) BPI champions security and trust. (#33) BPI is one of the
leading banks in the Philippines, (#34) I say positive things about BPI credit cards to other
people.
5. Proprietary Assets, measured through reflected competitive advantage: (#37) I can easily
distinguish BPI’s logo, (#38) Compared to other companies, I find BPI’s credit card
services of superior quality, (#39) I believe BPI offers more services than other banks,
(#40) BPI is a well-established bank compared to others, (#41) To me, BPI is the best credit
card company in the Philippines.
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Methodology
The researchers conducted two (2) focus group discussions (FGD) and a survey in order to
gather qualitative data from select participants. Two data gathering methods were used to better
validate information from two different sources. The researchers gathered a group of current credit
card users and conducted their FGD via Zoom calls. For the survey, respondents were chosen
through convenience sampling. A total of 103 credit card users within the Millennial age range,
living in the National Capital Region (NCR) of the Philippines were surveyed. There was a total
of 103 respondents, 55 of which being female and 48 being male. The Likert seven-point scale
was used to measure the opinions and attitudes of the respondents in line with brand equity and
customer motivation using a ranking system with 7 being strongly agree and 1 being strongly
disagree.
Mean, linear regression, and one-way analysis of variance (ANOVA) were used to analyze
the survey data. The mean was derived from the results of Likert’s seven-point scale questions in
order to determine the highest average among the five components of brand equity. Meanwhile,
linear regression was used to examine relationships between the individual components of brand
equity with customer motivation. One-way ANOVA was utilized to compare the value perception
among BPI and its two main competitors, BDO and Citibank.
Findings
Brand Equity
The participants from the FGDs were mostly familiar with the following banks:
BPI, BDO and Metrobank. The participants remembered these above-mentioned banks
immediately. However, the survey results showed that BPI, BDO and Citibank were the
three (3) banks most easily recalled when asked for top-of-the-mind credit card firms. In
addition, the respondents acknowledged that BPI has a high degree of recognition and
multiple positive associations. BPI can be easily remembered and recognized by
respondents. As such, it is comprehensible that BPI’s communication strategy is effective
as consumers can easily recognize the bank. It is important that BPI should maintain its
marketing strategies in terms of brand awareness.
Meanwhile, no evident loyalty to a bank was observed among the participants of

FGD. Instead, some were found to have multiple credit cards from different banks while
others intend to cancel their BPI credit card. The survey results revealed that respondents
are loyal to their current bank/s at a moderate level. The consumers are conscious of which
bank they avail credit card from. Additionally, they intend to keep the same bank of credit
card that they currently own for the foreseeable future. Given a situation where a bank may
have bad evaluations from the media or other people, the respondents were somewhat
skeptical on retaining their current credit card. This implies how public reviews and
opinion may affect customer loyalty to a brand. In this light, banks should also be vigilant
with the level and quality of service provided to consumers. Credit cards should be
convenient to use especially online. While the quarantine protocols are to be observed,
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consumers shift to online banking. BPI could improve its online banking system by making
it more user-friendly compared to other banks. Moreover, and above all, credit card
transactions must be secured.
The respondents associated continuity, strength, and innovation as values that best
capture the identity of BPI. Along with this, they deemed BPI as accessible, convenient
and trustworthy. Consumers are somewhat satisfied with the customer service of BPI.
These associations could be helpful for BPI in improving their branding strategy and
customer service. BPI should also build on their unique selling proposition as results
indicate that consumers find it difficult to remember their slogan. In terms of competitive
advantage, respondents tend to agree that BPI is a well-established bank compared to other
banks. The respondents are inclined to agree that it is worthwhile to avail a credit card from
BPI. They also agreed that BPI credit cards help them save money and offer a lot of rewards
and benefits at a moderate level. Given the results, BPI should work on providing more
incentives to the customers when they avail their credit card. In line with this, participants
of the FGDs regard convenience, customer service, and safety to be key factors when
evaluating the quality of a bank’s credit card. Banks could focus on these highlighting and
strengthening these elements when creating their integrated marketing communication
plan.
Influence of Brand Equity to Customer Motivation
The results show that Brand Loyalty, Brand Associations, Proprietary Assets, and
Value Perception are not significant to Customer Motivation. Among the five components
of Brand Equity, only Brand Awareness significantly affects Customer Motivation. Brand
Awareness was mainly measured through consumers’ level of advertisement exposure,
name recognition, and brand recall of BPI. While BPI already upholds strong brand
awareness among consumers, it is important for marketers to further build on this strength
and better establish differentiation from their competitors. It is noteworthy to mention that
respondents regarded the promotional materials of BPI to lack differentiation from other
brands of credit cards. Advertisements targeted towards millennials should highlight
themes that are central to their interests, such as empowerment, ambition, and
independence. Moreover, taking into consideration how generally accustomed millennial
consumers are to technology and the internet, it may be helpful for marketers to strengthen
the brand’s presence on social media. This may include improving online customer service
and user experience through their applications. Furthermore, maintaining and
strengthening the bank’s brand awareness may aid in achieving a long-term customer
relationship. The value perspective of clients towards BPI should be taken under
consideration as this can be used to their competitive advantage. In line with Aaker’s brand
equity theory, all dimensions of brand equity may still aid in the formation of customer
motivation. However, brand awareness proves to be of most significance when analyzing
the influence of brand equity towards customer motivation.
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Comparison of Value Perception Among Credit Card Banks
There was a significant difference found among value perception when grouped
according to BPI and its two main competitors, BDO and Citibank. Value perception was
mainly measured through convenience, benefits, and customer service on the consumers’
perspective. In this regard, BPI scored lower than both BDO and Citibank. Citibank also
scored lower than BDO. However, the results showed that the value perception of each
bank is not significant to one another. This coincides with the findings from prior focus
group discussions wherein the participants expressed the overall satisfaction and
convenience credit cards have yielded in their purchasing experiences. Though this may be
the case, the participants had similar responses with regards to not recommending BPI’s
credit card to their peers due to the credit limit being too low and the number of times the
card gets rejected for payments. It is also worth mentioning that good reviews were voiced
out pertaining to BPI’s competitors, BDO and Citibank. Consequently, the focus groups
argued that there is low to no differentiation among the banks in the Philippines,
specifically when it comes to credit limit, interest rates, and rewards, among others.
Furthermore, the respondents expressed their perspective on each bank’s advertisements -
finding them to be similar and mainly geared towards hyper consumerism.
Conclusion
The study shows that Brand Loyalty, Brand Association, Proprietary Assets, and Value
Perception have no significant impact on Customer Motivation. However, of the five components
of Brand Equity, Brand Awareness holds the most significant impact on customer motivation when
it comes to choosing brands of credit cards. It is important, therefore, for BPI to adjust their
marketing strategies and incline it with themes and attributes that better echo what Millennials
value, such as ambition, convenience, and customer service. Additionally, the respondents seem
to lack stronger views when ranking brand equity components, as well as when comparing
different banks from each other. To further strengthen BPI’s brand awareness among consumers,
it may be helpful to engage more presence online, encompassing both social media marketing and
application user experience. This may boost differentiation from other banks, especially since the
study revealed that BPI relatively lags behind its competitors when it comes to customer service.
The study shows important emphasis on maintaining strong brand awareness to better drive
customer motivation. In the creation of marketing communication materials central to this, it
remains important to follow through with quality in product and service delivery to ensure stability
among the other brand equity components as well.
Limitations and Future Research
The study has certain limitations that can be areas of improvement for future market
research. First, the use of convenience sampling for both the FGD and survey implies
generalizability and is therefore not representative of all Millennial consumers of BPI. The survey
questionnaire also featured questions specific to certain banks (BPI, BDO, and Citibank), however,
the number of respondents for each bank were not of equal amount. Given that the study was
central to BPI, there was a greater number of BPI users surveyed compared to users of other banks,
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thus comparing the banks’ average scores for value perception, as well as analyzing the data
gathered overall, may require higher accuracy.
Furthermore, the study does not take into account consumer insights from other regions of
the country, given that the researchers focused only on respondents from NCR. The marketing
inputs yielded by the research may not have an influence to credit card users outside the area of
study. In order to strengthen the accuracy of the data obtained, it may be ideal for data gathering
to be conducted in several parts of the country.
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An Assessment of Recruitment and Selection of Talents in
Restaurants of Iligan City
8th NBMC Paper #40
Joana Marie C. Edera, Polaus M. Bari, Pamela F. Resurreccion,

Rhede Nelson J. Manulat, Cheryl C. Encabo
Mindanao State University-Iligan Institute of Technology
[email protected]
Abstract
One of the most significant objectives of Human Resource Management (HRM) is to acquire
competent workforce for an organization. However, research on evaluation of recruitment and
selection policies is rarely explored in Philippine studies. This underlines the lack of attention
given to assessment of these two essential HRM functions prevalently in studies that involve
Medium, Small, and Micro Enterprises (MSMEs). Thus, a study on the assessment of recruitment
and selection policies and practices in restaurants in Iligan City was conducted.
A cross-sectional study in a form of descriptive research was executed to describe the current
policies and practices in recruitment and selection of select micro restaurants in Iligan City. Using
survey method to collect primary data, the study was able to gain in-depth understanding of 35
select restaurants in Iligan City.
Results show that most of the restaurants in the City do not have an existing HRM department,
and just employing managers as recruitment representatives. Often, these managers do not apply
definite recruitment and selections standards, such as not scrutinizing qualifications of candidates
in their level of education and experience. Managers also limit their recruitment sources to referrals
and walk-ins. Hence, restaurants in Iligan City can enhance their recruitment through exploring
other sourcing strategies such as advertisements, internet postings and job fairs. They can also
expand their selection techniques through background checks, Realistic Job Previews (RJP),
employment tests, work simulations and more. Consequently, even if restaurants in Iligan City do
not have established HRM Departments, they can still properly recruit and hire through proper
guidelines in the form of HRM policies.
Above all, restaurants in Iligan City have to re-evaluate their recruitment and selection processes
starting with the workforce plan because acquiring and retaining competent talents begin even
before candidates get to know about any vacancy in an organization.
Keywords: Recruitment, Selection, Hiring, Orientation
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Introduction
The acquisition of competent members of an organization’s workforce is one of the most

significant objectives of Human Resource Management (HRM). This entails HR professionals to
identify the competencies and skills of employees as well as specific behaviors and attitudes
needed by the organization in order to attain its goals. Based on this knowledge, HR practitioners
are tasked to recruit and select the right talents, i.e., individuals who possess the needed and desired
characteristics and competencies (Diamante & Tan, 2015).
Corollary to the growing recognition given to human resource, numerous researches in

HRM attempt to explore empirically the link between HRM and firm performance. However, these
studies are largely confined to large companies (Sels, et al 2006; Huang, 2012). Additionally,
research on evaluation of recruitment and selection policies and practices with the use of HRM
metrics is rarely explored in Philippine studies, if not at all. Moreover, this scant attention is more
prevalent in studies that involve Medium, Small, and Micro Enterprises (MSMEs) as the subject.
Undeniably, MSMEs play a key role in our economy. Based on 2015 statistics provided
by the Philippine Statistics Authority (PSA), there are 900,914 establishments in the Philippines
of which 99.5% (896,839) are micro, small, and medium enterprises (MSMEs). While large
enterprises comprise the remaining 0.5% or 4,075 of establishments (Department of Trade and
Industry, 2017). Additionally, MSMEs contributed almost 61.6 % (4,784, 870) of the total jobs
generated by all types of business establishments in that same year. Accommodation and Food
Service Activities where hotels and restaurants belong constitute about 13.3% (119,037) of the
total number of MSMEs by industry type. Based on July 2017 employment statistics by the
Philippine Statistics Authority (PSA), the largest proportion of workers were employed in the
services sector comprising 55.6% of the total employed in that month.
Following the above mentioned facts, this study on the assessment of recruitment and
selection of talents in restaurants of Iligan City was proposed.
Recruitment and Selection in Human Resource Management
“Recruitment refers to activities designed to attract qualified applicants to the

organization. Selection is the process of choosing the best qualified applicants to fill open
positions in the organization.” (Ibid p.5) The quality of the organization’s human resource
largely depends on how efficient and effective these two functions are carried out (Gamage,
2014 cited in Ekwoaba, Ikeije&Ufoma, 2015). With human resource management playing
a strategic role in many organizations today the performance of recruitment and selection
activities has become a vital consideration.
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The resource-based concept explains that the strategic capability of a firm depends
on its resource capability in shape of people. The aim of these actions is therefore to ensure
that the firm achieves competitive advantage by employing more capable people than its
rival (Armstrong, 2012: p.220). However, matching resources to organizational
requirements does not simply ensure the organizational success, because organizations are
inclined to maintaining the status quo and perpetuating a moribund culture rather than
radically thinking about skills and behavior required in the future to achieve sustainable
growth and cultural change (Armstrong, 2012: 221).
The recruitment and selection process is an integrated process. These activities

concerned with identifying, attracting and choosing suitable people to meet an
organization’s human resource requirements. Where recruitment stops and selection begins
is a moot point’ (Anderson, in Beardwell and Claydon, 2007). From recruitment process,
a firm is looking for and getting the most appropriate and potential candidates to fill its job
needs (in terms of sufficient numbers and quality) (Dowling and Schuler in Beardwell and
Claydon, 2007). Whilst selection, is more focused with predicting which candidates will
make the most appropriate contribution to the firm now and in the future.
Micro, Small, Medium, Enterprises
Micro, small and medium enterprises (MSMEs) have a very important roles in
developing the Philippine economy. They help reduce poverty by creating jobs for the
country’s growing labor force (SERDEF, 2007). They stimulate economic development in
rural and far-flung areas. They serve as valuable partners to large enterprises as suppliers
and providers of support services. They serve as breeding ground for new entrepreneurs
and large corporations. A vibrant MSME sector is thus an indication of a thriving and
growing economy. Despite policies that aim to provide an enabling environment for
MSME development, the sector still faces various constraints that prevent it from realizing
its full growth and potential (Senate Economic Planning Office, 2012).
An MSME in the Philippines is defined as any business activity or enterprise

engaged in industry, agri-business and/or services that has: (1) an asset size (less land) of
up to PhP100 million; and (2) an employment size with less than 200 employees. Based on
these categories, it is classified as micro, small or medium regardless of the type of business
ownership (i.e., single proprietorship, cooperative, partnership or corporation) (Senate
Economic Planning Office, 2012).
Based on 2015 statistics by the Philippine Statistics Authority (PSA), there are
900,914 establishments in the Philippines. Of these, 99.5% (896,839) are micro, small, and
medium enterprises (MSMEs) and large enterprises comprise the remaining 0.5% or 4,075
establishments (Department of Trade and Industry, 2017). Moreover, on employment,
MSMEs contributed almost 61.6 % (4,784, 870) of the total jobs generated by all types of
business establishments in that same year. Accommodation and Food Service Activities –
where hotels and restaurants belong – constitute about 13.3% (119,037) of the total number
of MSMEs by industry type. Based on July 2017 employment statistics by the Philippine
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Statistics Authority (PSA), the largest proportion of workers were employed in the services
sector comprising 55.6% of the total employed in that month.
The Restaurant Industry
Restaurant industry is defined in its broadest sense, to all types of establishments

where food is regularly served outside the home. Such establishments include formal
restaurants, dining rooms, coffee shops, family restaurants, specialty and ethnic restaurants
and fast-food outlets (Payne-Palacio & Theis, 2010).
One of the fastest growing businesses in the Philippines right now is the restaurant
industry says Villegas, B.M. (2016). Using data from the Family Income and Expenditures
Survey (FIES) of the National Statistics Office, it is estimated that Food Consumed Outside
Home now exceeds P500 billion annually. Out of the budget for food of the typical middle-
income household, some 20 percent goes to food consumed outside the home.
Consumption of food either at home or outside the home will be the first to be benefited
by the contemplated tax reform of the Duterte Government to reduce the income tax rate
for those in the 200,000 to P1 million range, the expanding middle class. They are expected
to spend the increase in their disposable income on eating out. This refers not only to
restaurants, cafés, canteens and the like. It also includes street stalls/kiosks that are in high
demand in business districts with heavy foot traffic (Villegas, B.M. 2016).
Furthermore, the preliminary results of the 2015 Annual Survey of Philippine

Business and Industry (ASPBI) showed that a total of 5,492 establishments with total
employment (TE) of 20 and over in the formal sector of the economy were engaged in
Accommodation and Food Service Activities sector. Restaurants and mobile food service
activities led the sector with 3,942 establishments accounting for 71.8 percent of the total
number of establishments. This was followed by short term accommodation activities with
1,210 establishments (22.0%). Beverage serving activities and event catering and other
food service activities with 261 establishments (4.8%) and 79 establishments (1.4%),
respectively (ASPBI 2017).
Recruitment and Selection in Restaurants
Recruitment and Selection process by Muhammad, A., Naqvi, H., Anam, B., (2014)
involves:
1. Defining requirements – preparing job descriptions and specifications; deciding

terms and conditions of employment.
2. Attracting candidates – reviewing and evaluating alternative sources of applicants,
inside and outside the company, advertising, using agencies and consultants.
Attracting candidates is primarily a matter of identifying, evaluating and using the
most appropriate sources of applicants.
3. Selecting candidates – sifting applications, interviewing, testing, assessing
candidates, assessment centers, offering employment, obtaining references;
preparing contracts of employment.
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Gugesh, J. N. and Rani, S. S. (2013) states that the industrial sectors have to face
the rise of hyper competition. Customers are more demanding. Viable technology and
information have forced industries to serve their best quality products and services with
competitive price in tight time context. Industrial sphere competition becomes more
volatile and dynamic.
Hiring of new workers is a time-consuming and expensive process and includes a

number of steps (Fernandez-Araoz, 1999; Gregoire, 2010) which involve:
1. Posting a job advertisement in appropriate places;

2. Evaluating the information provided on each job application;
3. Screening candidates to determine which ones to interview;
4. Verifying references and information;
5. Conducting personal interviews; and
6. Deciding who will be offered the job.
Recruitment is an essential part of any organization. Ensuring you have an efficient,

cost-effective, and rewarding experience for all involved is important. When you measure
recruitment on a consistent basis and focus on continuous improvement based on those
results, you’ll see better hires, less time and money spent, and a well-oiled recruiting
machine overall (Brown, J. 2015).
Methodology
Research design
This study makes use of both quantitative and qualitative research designs.
Specifically, a cross-sectional study in a form of descriptive research that attempts to
describe the current policies and practices in recruitment and selection of select medium,
small and micro and restaurants in Iligan City.
Respondents
The respondents in this study are owners/managers/HR managers/personnel who

are directly involved in both the recruitment and selection decisions and processes in their
respective organizations. Additionally, employees hired from 2012 to present were
included as respondents. The MSME restaurants as classified by the Local Government
Unit is the unit of analysis for the study. Consequently, 35 restaurants were employed as
respondents of this study.
Data collection
Both primary and secondary data as well as quantitative and qualitative data were
collected. The survey method served as the means for collecting primary data. Secondary
data such as pertinent human resource and organization’s records were also be gathered.
Survey questionnaires were administered to individual respondents representing their
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organizations. A letter explaining the purpose of the study were sent to target organizations
in order to determine and establish their participation to the study.
The questionnaires retrieved were examined for accuracy and completeness. Data
extracted were processed and analyzed using the Microsoft Excel. Both descriptive and
inferential statistics were utilized to analyze the data collected.
Data analysis
Given the objectives, the study was able to collect nominal, ordinal and interval
data. To analyze the data, both descriptive and inferential statistics was employed.
Descriptive statistics included the use of frequencies, percentages and proportions, means,
and standard deviations. Cronbach’s alpha was used to establish reliability and consistency
of data gathered from the survey.
Instrumentation
A structured questionnaire served as the means for collecting primary data. The
questionnaire consisted of both closed-ended with fixed alternative responses and open-
ended questions. It was designed in such a manner to facilitate quick and easy answering
by the respondents. Guide questions for personal oral interview was designed. The
questionnaire was pre-tested and evaluated for suitability and reliability in collecting the
needed data. Part of the questionnaire is adapted from Oprean, 2012.
The main objective of the study is to assess the recruitment and selection of talents in
MSMEs, specifically, selected restaurants in Iligan City. With the use of both quantitative and
qualitative research designs, this study describes the current policies and practices in recruitment
and selection of select medium, small and micro restaurants in Iligan City.
Profile of Participating Restaurants in the Study

a. Total assets and total no. of employees
The study shows that there is an average of 14 employees per restaurant with an
average of Php 887,500.00 total number of assets. During the gathering of data, only
several respondents disclosed their assets because for them it is classified information.
Consequently, most of our respondents come from the Micro level of enterprises.
b. No. of years in operation
The restaurants under our study have been existing in Iligan City for an average of
at least six years.
c. Number and classification of employees by employment type, age, gender, and

educational attainment
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Results of the study tells us that most employees in the restaurant industry employ
ages ranging between 21 to 30 years old. This means that most restaurants we have
surveyed prefer younger employees for the reason that most jobs in a restaurant needs
physical strength such as waiting, cashiering, cooking, cleaning, dishwashing, and so on.
This also means that the restaurants need employees who act and think fast given that the
restaurant industry is a large and fast-growing economy in the Philippines.
Consequently, restaurants employ practically equal number of male and female

employees with 54% frequency for male and 44% frequency for female. Additionally,
restaurants in Iligan City hire employees who at least entered high school. All of these goes
to show that with or without a degree, male or female, people can have a job in the
restaurant industry.
d. Existence or non-existence of a separate HRM department
According to the study, most restaurants in Iligan City do not have a separate HRM
department. This is for the reason that most restaurants in Iligan City belongs to Micro
enterprise thus with a limited number of employees, there is no need for a separate HRM
department. In addition, most restaurants have their General Managers do the recruitment
for their organization.
e. Recruitment policies practiced:
In this study, recruitment refers to activities designed to attract qualified applicants

to the organization.
Results show that the restaurants have their General Manager/Managers

responsible for the recruitment of new job applicants. Moreover, majority of the restaurants
in Iligan City source their candidates for jobs via word of mouth/referrals or walk-in
applicants.
Since most of the restaurants in Iligan City are Micro enterprises, they do not have
the financial resources to do additional recruitment activities other than referrals and walk-
ins inclining restaurants to use referrals as a mean for recruitment. Moreover, most
restaurants have been using referral from the start of their establishments asserting that
referrals are the most effective candidate source.
f. Selection policies in terms of screening and test methods
The selection process usually is the final stage in the form of a brief conversation
wherein the company makes a verbal offer to the candidate. Once the company makes its
selection, it moves forward with the vetting process or the pre-employment steps, which
include background check and drug screen.
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Ninety seven (97) percent of the respondents said curriculum vitae, resume or bio-
data are important documents that provide employer detailed presentation of job
candidates’ work experience, educational attainment and other accomplishments. The
resume often supplies employment objectives, summary of skills and knowledge, and
potential contributions. As practiced by many organizations, curriculum vitae is what
recruiters feel appropriate for job seekers. CVs help attract recruiters’ attention when well
prepared.
Moreover, ninety-one (91) percent of the respondents said curriculum vitae/

resume/ bio-data scanning are done or used in the selection process. While Eighty nine (89)
percent of the respondents said job interviews are done during the selection process.
Employment interviews are done to identify candidate’s skill set and ability to work in an
organization. All respondents of the study said interviews conducted were individual
interviews and were done face to face.
Eighty nine (89) percent of the respondents said work experience is an important
detail to look for in resumes in order for the managers to know if the applicants have
necessary work experience relevant to the position to be filled up.
More than half of the respondents said they conduct two interviews in their
selection process. Then, thirty four (34) percent of the respondents said that they conduct
interviews only once in the selection process. The frequency of conducting interviews are
normally done at least twice for job applicants: first one is done for preliminary interview
and the other one for final interview for those final candidates for a position to be filled up.
Study also reveal that most restaurants are not particular on educational
requirements of certain positions. 13 out of 21 newly-hired employees are high school
graduates compared to college graduates with only 7 of them.
Assessment of Recruitment and Selection of Talents of Restaurants in Iligan City
According to the managers, in every restaurant, there is an average of 7 applicants

hired per year with Php 1, 579.00 estimated cost of hiring. The results convey that most
of the respondents are micro enterprises described with Php 3million or less assets with
only 1-9 employees. Moreover, the rate of hiring in restaurants is high. However, even
with a high number of recruitment activities annually, the budget is noticeably low
perhaps due to the choice of candidate sources such as referral and walk-ins that incur
minimal costs. When recruiters were asked how satisfied they are with their newly hired
employees, 60% said they were somewhat satisfied.
Lastly, study shows that 10 and below employees have resigned for the last three
years. This may be instigated by having no existing HRM Department in most of the
restaurants or having unaligned applicants during the recruitment process. According to
the respondents, most of the problems they encountered during their recruitment and
selection processes include applicants who do not have the proper qualifications for the job
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they are recruiting for and who do not have the right mind set or attitude when applying
for jobs causing them to stop participating halfway through the application process.
On the other hand, while it is important to gather the views of the managers on the
recruitment and selection, it is also equally important to gather the assessment of restaurant
employees particularly on their satisfaction level on recruitment and selection practices of
restaurants in Iligan City.
Results show that restaurant employees in Iligan City are generally happy with their
experience on their employers’ recruitment activities. Specifically, respondents agreed that
“It was easy to find all the information regarding the position.” Respondents also agreed to
the statement, “Recruiter told me how to prepare for the interview.” This implies that there
were opportunities to communicate and initially meet between the hiring restaurant and the
job applicant.
Meanwhile, respondents generally agree that recruiters were friendly and

professional while only relatively small percentage of the respondents tend to disagree. In
terms of information provided by the recruiters upon clarification by the job applicants,
respondents agree that that they were able to get the needed responses and that all their
questions were answered in a timely manner. This suggests that management
representatives of restaurants in Iligan City who are engaged in recruitment activities were
responsive to queries. The results further corroborates with the respondents’ impression of
friendliness and professionalism among recruiters. Respondents also found it easy to apply
for the vacant positions and to find the company for the interview. Many of the restaurants
included in the study are located in prominent locations thus, finding the venue for the
interview did not pose any difficulty on the applicant. This also suggests that interviews
were done in the restaurant premises thus, location was easy to find. In addition,
respondents felt very welcomed when they came for the interview. This strengthens the
general observation that recruiters were friendly.
The study also found that job applicants were pleased with the time between the
application and the response and with the time between the interview and feedback with
these items garnering a mean of 4.35 and 4.20, respectively, with a corresponding
qualitative descriptor of “strongly agree.” This implies that the value of professionalism
was demonstrated during the interaction between the recruiters and the job applicants.
Other Relevant Concerns on Recruitment and Selection
When managers were asked if they have other concerns on their recruitment and
selection experiences in their establishment, they shared that they encounter lots of
applicants who do not have the right qualifications, were inexperienced and were
unscrupulous. According to the respondents, some applicants do not show up during
interviews, while other applicants lack enthusiasm to further the application process, while
others just don’t fit the qualifications the respondents are looking for.
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The results may be due to deficiency in most restaurants’ recruitment practices such
as having managers who do not have the right skill sets for recruitment and selection. Plus,
there is a lack in recruitment assessment for most restaurants due to not having an HRM
department to establish recruitment and selection policies and guidelines. Restaurants may
have to explore other recruitment methods such as job advertising, internet postings and
even internships.
Synthesis and Conclusion
The restaurants under this study belong to the Micro enterprises category, because of this,
most of them do not have an existing HRM department to head the recruitment and selection
processes in their organization. Instead, they have management representatives do the recruitment
and selection activities for them. When sourcing for applicants, managers make use of referrals
and walk-ins as most of them do not have a lot of budget for recruiting activities. This may be the
reason why most managers surveyed had concerns on some applicants who do not have the right
qualifications, are inexperienced and are unscrupulous. Moreover, when management
representatives hire new employees, they do not discriminate on whether the candidates have
experience or not on the job they are applying for. They also do not require high level of
educational attainment when selecting candidates, at least High School level candidate would
suffice. Although most restaurants do not discriminate on the educational attainment and
experience, they do require applicants to submit resume, curriculum vitae or biodata as evidence
of qualifications. Health certificates are also considered in selecting new employees.
On the other hand, when newly-hired employees were surveyed, most of them are generally
happy with their experience on their employers’ recruitment activities. Mostly, management
representatives of restaurants in Iligan City who are engaged in recruitment activities are found to
be open for communication, responsive, friendly, and professional.
Overall, restaurants in Iligan City can enhance their recruitment capabilities through
exploring other attractive sourcing strategies such as advertisements, internet postings and job
fairs. Recruiters can also consider expanding their selection techniques through background
checks, Realistic Job Previews (RJP), employment tests, work simulations, personal interviews,
references, and recommendations. Restaurants can also improve their recruitment and selection
capabilities through continuing education for managers with various HRM trainings, workshops
and even short courses. Consequently, even if restaurants in Iligan City do not have established
HRM Departments, they can still properly recruit and hire through proper basis in the form of
HRM policies and guidelines. HRM policies can be generic to all restaurants in Iligan City that
will include job descriptions, job design, recruitment strategies, selection strategies, and more.
Above all, restaurants in Iligan City have to re-evaluate their recruitment and selection
processes starting with workforce planning. It is very important to lay down plans beforehand in
order to determine what the restaurants really need, how many talents they need now or for the
future and what kind of qualifications, skills and competencies they must consider when hiring
because acquiring and retaining competent talents begin even before candidates get to know about
any vacancy in an organization.
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Edition). Pearson Education
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Sustainable Direction of Sachets and Soft Plastics: A Stakeholder
Analysis on Kolek Kilo Kita para sa Walastik na Maynila
8th NBMC Paper # 41
Franz Corneille Li, Jose Gabriel Cortel, Ashley Jade De Silva,

Angelique Blasa and Maricel Balatbat
[email protected]
Abstract
Despite the Philippines ranking among the top contributors of plastic waste, little emphasis is given
regarding the recycling programs of manufacturing companies in the country. The purpose of this
paper is to determine the expected roles of stakeholders and the values that are exchanged in Kolek
Kilo Kita para sa Walastik na Maynila program by using a combination of role theory and
stakeholder theory. The researchers of this study believe there is a need to emphasize the
importance of a permeable role boundary to ensure stability in a recycling program to combat the
increase of plastic waste in our oceans and landfills. As this study uses a qualitative method, the
researchers interviewed at least one representative from each of the stakeholder entities involved
in Kolek Kilo Kita: this includes Unilever Philippines, the City of Manila, Republic Cement, and
the participants of the project. With the insights gained on their roles and values exchanged,
managers and leaders can facilitate smoother collaborations and ensure stability in programs that
address recycling and other efforts to reduce waste in the country. The researchers found that there
was a general alignment of roles between the stakeholders, but participants still lack complete
knowledge of the process, specifically on the role of Republic Cement. The researchers also found
that the stakeholders are satisfied with the program and all have received and given values to one
another which may explain their role fulfillment in the program.
Keywords: Reverse logistics; Stakeholder theory; Role theory; Recycling initiatives;

Sachet
Introduction
Several manufacturing companies have expressed their concern and active participation
in mitigating the negative effects of single-use plastic waste in the Philippines; they have begun
engaging in community-based recycling and repurposing programs as part of their reverse logistics
activities in partnership with organizations concerned in sustainability and recycling advocacies
(PARMS, n.d.). Despite these efforts, a beach clean-up by Greenpeace Philippines and The Manila
City Government found these same manufacturing companies in their brand audits as the top
manufacturers whose plastics are found scattered in the city’s surrounding waters (Greenpeace
Philippines, 2018). It is evident, therefore, that despite these efforts, the problem of single-use
plastic pollution in the Philippines has yet to be improved if not fully solved. Given the recentness
of these recycling programs in the country, it is still unclear how large manufacturers work with
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other stakeholders to successfully conduct their recycling program as well as why exactly
stakeholders participate in the first place. Because of these, the researchers of this study aim to
answer the following questions: 1. What are the roles of the stakeholders in a company’s recycling
program? 2. How are the expectations and relationships between all stakeholders in the company’s
recycling program being met? 3. Why do stakeholders participate in a company’s recycling
program? 4. What are the management implications for each stakeholder in conducting the
recycling programs?
The researchers of this study therefore intend to explore the phenomena and its different
participants in order to understand the activities and stakeholders involved in the chain, specifically
in relation to Unilever Philippines and sachets. This research study intends to produce the
following outputs: 1. Determine the stakeholders and their roles in Kolek Kilo Kita para sa
Walastik na Maynila; 2. Identify the expectations and perceptions between stakeholders in Kolek
Kilo Kita para sa Walastik na Maynila; 3. Determine the management implications of firms
practicing in Kolek Kilo Kita para sa Walastik na Maynila; 4. Provide recommendations to
strengthen the relationships between all stakeholders and their initiatives in the program.
To maintain stability and social order, role theory suggests that individuals must play their
roles. Roles, as defined by Miles (2012), are “behaviors [and] characteristics of a person in a
specific context” (p. 226). Role theory, according to Biddle (1929), has five major propositions.
Roles are formed by patterned behaviors which an individual performs; they also include positions
and involve a shared common identity. Playing one’s role also entails expectations from others
and may be carried and maintained over time as they are incorporated in larger social systems.
Roles, however, are taught to individuals who may find joy or sorrow in performing them. When
roles are performed well by each individual, processes and organizations are expected to be stable
and efficient. The theory also has two main perspectives. From a functionalist perspective, roles
are behavioral expectations created and assigned by the society to an individual (Lynch, 2007).
Tied with the roles are rights and responsibilities which one must accept (Miles, 2012; Linton,
1936). From an interactionist perspective, roles are formed by an individual interacting with his
or her social environment and are results of “inferences about what others expect of someone
playing that role, and then act accordingly, thereby creating the role extemporaneously” (Miles,
2012, p. 227). However, more recently, theorists presented a new perspective wherein roles are
seen as a means to achieve structure and agenda (Callero, 1994; Collier & Callero, 2005).
Realizing that roles tend to overlap, Lynch (2007) expounded on the concept that roles
may be performed simultaneously. The approach highlights role permeability, the degree to which
an individual can perform a role while worrying or thinking about another. Miles (2012) explains
that this approach allows people to “move, change, and combine the borders and boundaries of
their simultaneous roles” (p. 227). Those with a permeable work role boundary are described to
have more opportunities and resources such as access and time to attend to other roles. When
conflict is present, role permeability allows people to improve the situation by transitioning to
another role when necessary (Ashforth, Kreiner, & Fugate, 2000). Role ambiguity, on the other
hand, occurs when roles are lacking in clarity. Sell et al. (1981) identifies “lower productivity,
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tension, dissatisfaction, and psychological withdrawal from the work group” as its consequences
(p. 66).
Some criticisms of role theory include its failure to explain the motivation behind action
in conducting a party’s role—why do individuals carry out their expected roles (Biddle, 1979).
Additionally, role theory has been criticized for taking away an individual’s ability to question and
ponder on their roles leading to them blindly following their roles (Miles, 2012). Finally, another
criticism of role theory is that the theory fails to study and explain an individual’s subjective
experience in performing a role (Miles, 2012).
Since its creation, the stakeholder theory has been used to address critical business issues
as it offers various concepts, models, and phenomena from distinct disciplines (Harrison, Freeman
& Sá de Abreu, 2015). It also has been used to explain the relationship between stakeholders and
sustainability, value maximization, and environmental marketing (Hörish, Freeman, &
Schaltegger, 2014; Wallace, 2005; Polonsky, 1995).
Methodology
Figure 1
The researchers combined and related the reviewed literature on stakeholder and role
theories to study the value creation and roles of stakeholders involved in a joint purpose. The
bottom half of the framework reflects the various stakeholders of a joint purpose and their
respective roles. According to Biddle (1979), roles are formed by patterned behaviors by which
an individual performs; he also explains that playing one’s role entails expectations from others.
This means that the roles of a stakeholder, based on the expectations of the other stakeholders
involved, must be aligned with the former's understanding of their role. In order to address the
criticism of role theory on failing to explain the motivation behind action in conducting a party’s
role (Biddle, 1979), the researchers utilized stakeholder theory and the concept of value creation
as seen from the upper half of the framework.
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Figure 2
The joint purpose, in this case, is Kolek Kilo Kita while the stakeholders are Unilever,
Residents of Manila, City of Manila, and Republic Cement. The following stakeholders will be
studied in the context of Kolek Kilo Kita and will serve as the subjects of this study.
Research Method and Design
This paper utilized the case study research method as the study explored how each
stakeholder is meeting the expectations for them and how this affects the implementation of the
program. It also used the case study research method because it delved into a phenomenon in real
life, wherein the researchers cannot control the events. As this descriptive research will focus on
recycling initiatives involving several stakeholders, the study also utilized a single embedded case
study research design.
A qualitative research method was used in this research to develop an in-depth

understanding of a phenomenon from a variety of sources including people, organizations, and
institutions (Cooper & Schindler, 2014). They also performed semi-structured interviews to obtain
a degree of freedom and to enable certain responses in particular areas where the researchers
require greater depth (Horton, Macve, & Struyven, 2004).
Research Instrument
The researchers conducted interviews using the guide questions stated in the operational
framework of this study. The semi-structured questions were formulated to answer the research
questions of this study and are based on the literature review conducted in relation to stakeholder
theory and reverse logistics activities. Follow-up questions were also asked in order to clarify and
build up on responses. The interviews were voice-recorded with the permission of the participants
and transcripts will be attached as appendices to this paper.
Respondents and Sampling Procedure
This study mainly relied on primary information, specifically interviews for its data, to
identify the effect of each stakeholder on the other members of the recycling efforts of Unilever
Philippines and determine whether or not the expectations of one another are being met. The
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researchers conducted separate interviews, either through electronic mails or video calls, with the
different stakeholders identified by Unilever: Republic Cement, and the City of Manila (Local
Government Unit).
Table 1
Summary of Respondents for Kolek Kilo Kita para sa Walastik na Maynila
Stakeholder Representative Respondent Explanation
Unilever Lavin Gonzaga Unilever Philippines, Inc. leads Kolek Kilo Kita
Philippines, Inc. Community Relations & para sa Walastik na Maynila. They are also
Sustainability Manager manufacturers of products in sachet format and
have been identified as one of the top brands in
Rondell Torres Greenpeace’s brand audit (Wisner et al., 2012;
Sustainable Business Senior Greenpeace Philippines, 2018).
Manager
City of Manila Joanna Mae Norcio The City of Manila leads the waste collection
Assistant Chief of program and divert the waste to Republic
Operations Division Cement. They disseminate information
regarding the program and allot one trip around
the barangays every month to collect waste (L.
Gonzaga, personal communication, July 19,
2020).
Participants in Sigfred Hernane The residents of Manila are the main

Manila Captain of Barangay 128, participants of the program. They collect their
Manila soft plastics and cut them into small pieces in
exchange for incentivized products (L.
Gonzaga, personal communication, August 17,
2020).
Republic Cement Angela Edralin Republic Cement receives the plastics collected
Environmental from the northern half of the City of Manila and
Performance and co-processes them into cement in their depot in
Community Relations Malabon (A. Edralin, personal communication,
Director August 6, 2020).
Table 1 presents the profile of respondents for this study. The representative respondents
interviewed are the direct leads for Kolek Kilo Kita para sa Walastik na Maynila in their respective
organizations.
Data Gathering Procedure
The group utilized a total of nine months, from December 2019 to August 2020, to gather
data and complete this research. Primary data was collected through semi-structured interviews
with open-ended questions. Prior to the gathering of data, the group researched on and collected
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the contact information of all the target respondents and the researchers conducted extensive
preliminary research about them and a background of their institution or organization.
Analysis of Interviews
Unilever Philippines
Unilever’s vision across their offices around the world has always been centered
around creating positive social impact and reducing their environmental footprint. To
uphold these values, the Sustainable Business and Communications team of Unilever
Philippines continuously develops programs to raise awareness on proper waste
segregation, each building on the success of previous projects to broaden their reach. After
stabilizing during the coronavirus pandemic, Lavin and Rondell aim to scale up their
program by expanding to 300 to 400 barangays in Manila.
The success of their sustainability projects throughout the years has initiated more
conversations within the company about how Unilever Philippines can reduce their
environmental footprint. Lavin and Rondell often share their insights from these projects
to discuss how they can redesign their packaging and increase investments for partners
with greener technology. Therefore, on a larger scale, their model for sustainability
projects aims to serve as the foundation for similar programs of other companies and local
government units in the Philippines.
Participants in Manila
According to Chairman Sigfred, Kolek Kilo Kita has brought in many advantages
for the participants and the City of Manila. He identified three benefits: “less waste, less
expenses [for personal care products], and being able to help [with the cause].” Through
the program, waste is being managed and lessened in the city. It also allows the City of
Manila to meet the expectations of participants in implementing Republic Act 9003 or the
Ecological Solid Waste Management Act of 2000.
Through the incentivized products, participants are also able to save on their
expenses for their personal care products. As Unilever offers 10 Philippine pesos worth of
products per kilo of soft plastics, Chairman Sigfred mentioned that Kolek Kilo Kita
participants now spend less on their shampoo, soap, or toothpaste. Above all, the program
also allows them to contribute to the efforts of the local government in diverting the waste.
When asked about the relationship of the participants with the other stakeholders,
Chairman Sigfred affirms that they have a good relationship with Unilever as they
coordinate frequently with Lavin, Unilever’s Community Relations & Sustainability
Manager, especially when they encounter problems in the program. To improve, he
suggested that Unilever Philippines increase its truck capacity so that it can accommodate
more kilos of plastics when transporting them to the recycling facility. While COVID-19
has postponed the program’s operations, Chairman Sigfred expressed his interest and
support for Kolek Kilo Kita. “Our barangay will always be here to support it” he said, “if
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Unilever and the City of Manila continue the program, our barangay will participate and
cooperate to divert the wastes away”.
City of Manila
There are several implications for the City of Manila in participating in this project.
First, because of the IEC programs that are being done for the project, participants of
Manila are more aware of environmental concerns especially in relation to soft plastics.
Additionally, through the program, participants understand that they play an active role in
addressing the plastic disposal issue in the Philippines. Second, the management of the
City of Manila in dealing with waste segregation is greatly improved. The Kolek Kilo Kita
program is the pilot project of the mayor’s May Pera sa Basura agenda; the project therefore
paves the way for future projects of the same nature. Third, the program provides new
found value for residual plastics. Initially, soft plastic wastes had no value and junk shops
even refused to accept these, but because of the project, the city is able to provide its
residents with another way to receive household products. Finally, the project has great
contribution towards the overall environmental state of Manila with over 123,510
kilograms of plastic waste being diverted from waterways and landfills.
Joanna mentions that they are generally very happy with the program. She
mentioned that Kolek Kilo Kito has become the bread and butter of their presentations with
other cities and has gained the interest of other local government units exclaiming “How
were you able to partner with Unilever?” and other words of praise. Despite this, however,
Joanna mentions that no program is perfect. At one point, there was a misunderstanding
from Republic Cement’s end. She believes that the plant manager at the time was changed,
and when the City of Manila arrived with their deliveries, Republic Cement did not accept
this. Because of this, the trucks used for the waste had to wait for a few hours instead of
going about its intended tasks for the day.
Republic Cement
Through Kolek Kilo Kita, Republic Cement is able to uphold its mission of
producing greener cement. By co-processing plastic wastes, the firm is able to manufacture
cement with no produced ash and less gas emissions emitted as compared to manufacturing
cement with coal. A longtime partner of Unilever Philippines, the cement manufacturing
firm is also able to strengthen its relationship with them through the program. It is now
able to help the firm manage not only the company’s manufacturing waste, but also its
post-consumer waste.
When asked about the company’s challenges, Republic Cement believes that one
of the challenges the project may face in the future is sustaining the interest of the
participants. Compared to the Kolek Kilo Kita’s incentives, the value that the consumers
get from junk shops for collecting and exchanging their PET bottles is significantly
higher. “Considering the volume that you have to collect, one kilo of [soft] plastics is huge
compared to one kilo of hard plastics” she added.
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A more serious threat, however, is the dropping demand for cement due to the
COVID-19 outbreak. Because many construction projects across the country are
suspended, the demand for cement and other building materials is significantly low. If
there is no demand, Republic Cement may need to stop their operations.
Cross Analysis
Analysis of Expected and Actual Roles
The following subsections show the comparison and analysis of the different
stakeholder roles in Kolek Kilo Kita. Analyses state whether expected roles are met
(where all roles are met), partially met
Unilever Philippines’ Role
Table 2
Summary of Expected and Actual Roles of Unilever in Kolek Kilo Kita
Stakeholder Expected Roles of Actual Role of Unilever Analysis

Unilever Philippines Philippines
Participants of ● Provides incentives to ● Provides IEC Met.

Manila participants materials
● Offers solutions to ● Engages with all Unilever Philippines acts
program-related stakeholders according to all the
problems ● Participates during expected roles.
waste collection
● Provides products as
incentives
● Offers solutions to
program-related
problems
● Segregates waste
City of Manila ● Engages with all according to criteria Met.
stakeholders
● Provides IEC Unilever Philippines acts
materials according to all the
● Provides incentives expected roles.
● Participates during
waste collection
● Offers solutions to
program-related
problems
according to criteria
Republic ● Engages with all Met.

Cement stakeholders
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● Provides incentives Unilever Philippines acts
● Participates during according to all the
waste collection expected roles.
Table 2 summarizes the cross analysis of Unilever Philippines’ expected role from the
different stakeholders. In executing Kolek Kilo Kita para sa Walastik na Maynila, Lavin Gonzaga
and Rondell Torres of Unilever Philippines stated that they develop the IEC materials for the
dissemination of the City of Manila, engage with all stakeholders during the project, provides
incentives to participants, and offers additional solutions encountered throughout the program.
Based on interviews with the stakeholders involved, their expectations from Unilever’s roles in
Kolek Kilo Kita are all met.
Participants in Manila’s Role
Table 3
Summary of Expected and Actual Roles of Participants in Manila in Kolek Kilo Kita
Stakeholder Expected Roles of Actual Role of Analysis

Participants in Manila Participants in Manila
Unilever ● Clean, cut, and dry ● Clean, cut, and dry Met.
Philippines plastic waste plastic waste
● Turn in plastic ● Turn in plastic The participants of Manila act
waste waste according to all expected roles.
City of Manila ● Clean, cut, and dry Met.

plastic waste
● Turn in plastic The participants of Manila act
waste according to all expected roles.
Republic ● Clean, cut, and dry Met.

Cement plastic waste
● Turn in plastic The participants in Manila act
waste according to all expected roles.
Table 3 summarizes the cross analysis of the participants in Manila’s expected role from
the different stakeholders. The participants in Manila participate in Kolek Kilo Kita by collecting,
cleaning, and cutting used plastic waste before depositing them every month to the waste collectors
of the City of Manila. Based on interviews with the other stakeholders involved, their expectations
from the role of the participants are all met.
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City of Manila’s Role
Table 4
Summary of Expected and Actual Roles of City of Manila in Kolek Kilo Kita
Stakeholder Expected Roles of City Actual Role of City of Analysis
of Manila Manila
Unilever ● Collects the plastic ● Collects the plastic Partially Met.

Philippines waste waste
● Distributes IEC ● Handles logistics from The City of Manila did not
materials the barangays to mention segregating waste
● Handles logistics recycling facilities according to criteria as
from barangays to ● Coordinates with other part of their role.
recycling facilities internal departments to
● Coordinates ensure proper execution
internally to ensure of the program
program’s proper ● Distributes IEC materials
execution
according to criteria
Participants ● Manages and Partially met.

in Manila maintains the
cleanliness and order The participants see the
in barangays City of Manila’s role in a
broad sense of ensuring
cleanliness and order in
the barangays.
Republic ● Distributes IEC Partially met.

Cement materials
● Segregates waste The City of Manila did not
according to mention segregating waste
criteria according to criteria as
● Handles logistics part of their role.
from the
barangays to
recycling
facilities
Table 4 summarizes the cross analysis of the City of Manila’s expected role from the
different stakeholders. The City of Manila participates in Kolek Kilo Kita by collecting the plastic
waste, handling the logistics from the barangays to the recycling facility, and disseminating
information about waste management through the IEC training. Based on the interviews with
Unilever, the participants, and Republic Cement, their expectations for the City of Manila are
partially met for all the stakeholders involved.
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Republic Cement’s Role
Table 5
Summary of Expected and Actual Roles of Republic Cement in Kolek Kilo Kita
Stakeholder Expected Roles of City of Actual Role of City of Analysis
Manila Manila
Unilever ● Collects the plastic ● Collects the plastic Partially Met.

Philippines waste waste
● Distributes IEC ● Handles logistics The City of Manila did not
materials from the barangays mention segregating waste
● Handles logistics from to recycling according to criteria as part
barangays to recycling facilities of their role.
facilities ● Coordinates with
● Coordinates internally to other internal
ensure program’s proper departments to
execution ensure proper
● Segregates waste execution of the
according to criteria program
● Distributes IEC
Participants ● Manages and maintains materials Partially met.
in Manila the cleanliness and order
in barangays The participants see the
City of Manila’s role in a
broad sense of ensuring
cleanliness and order in the
barangays.
Republic ● Distributes IEC Partially met.

Cement materials
● Segregates waste The City of Manila did not
according to criteria mention segregating waste
● Handles logistics from according to criteria as part
the barangays to of their role.
recycling facilities
Table 5 summarizes the cross analysis of Republic Cement’s expected role from the
different stakeholders. Republic Cement participates in Kolek Kilo Kita by cascading information
on acceptable plastics, accepting the collected plastic waste during collection days, and co-
processing the collected waste to be used as a substitute for coal in cement production. The
participants do not have a clear understanding of Republic Cement’s role and can be related to the
IEC materials being distributed as these do not necessarily state that the plastic wastes are being
co-processed.
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Analysis of Values Exchanged
Unilever Philippines Value Exchange
Because the company has been partnering with the City of Manila to execute
sustainability programs since 2012, the value given by Unilever Philippines to the City of
Manila is their solution to waste management in the city. In return, the city government
continues to prioritize waste management in Manila, and the value given by the City of
Manila to the company is a strengthened and deepened relationship between public and
private institutions.
Second, for every kilo of plastic waste collected, Unilever Philippines provides
participants in Manila with 10 Philippine pesos worth of Unilever products including
shampoo, soap, and toothpaste. The value that Unilever Philippines gives to the
participants is therefore basic nourishment and sustenance. Apart from this, Unilever
Philippines prepares information, education, and communication materials about waste
management to be disseminated to the participants. The value therefore given by these
materials to the participants is increased knowledge and awareness on waste management.
Third, the values given by Unilever Philippines to Republic Cement due to their
sustained partnership is a strengthened relationship and increased support for Republic
Cement’s sustainable efforts. In exchange, Republic Cement facilitates the conversion of
the collected plastic waste into energy further reducing the amount of waste redirected to
landfills. The value therefore given by Republic Cement to Unilever Philippines is their
fulfillment in Unilever’s sustainability goal of proper waste management.
Participants in Manila Value Exchange
First, through Kolek Kilo Kita, Unilever Philippines incentivizes the participants
with products that they would usually spend on with their own money. This, in a way,
allows the participants in Manila to save and allocate their finances to other things. In a
larger perspective, Unilever Philippines also provides the participants in Manila with
awareness regarding waste management through Kolek Kilo Kita and are now more aware
of the different ways they can reduce the pollution of solid waste within their city. In
return, the participants in Manila are able to help Unilever Philippines fulfill their
sustainability goal on proper waste management through Kolek Kilo Kita.
Second, through the program, the City of Manila is able to maintain the cleanliness
and order in the barangay. As this is a partnership between multiple stakeholders,
including the local government unit, the residents in Manila benefit from the positive
impact of the program’s goal of reducing mismanaged waste. The City of Manila also
assists Unilever in disseminating educational materials to the participants, so they are also
partly responsible for helping increase awareness among the community.
Third, the participants of Kolek Kilo Kita are helping Republic Cement continue its
sustainable efforts of co-processing soft plastic waste by joining the program. On the other
577 | P a g e
hand, the participants see Republic Cement as an agent in reducing the waste in the
barangays of Manila by recycling their once-invaluable plastic waste into something of
value, specifically cement. Although communication between these two stakeholders are
relatively low, they still benefit from each other through active participation in Kolek Kilo
Kita.
City of Manila Value Exchange
First, through Kolek Kilo Kita, the City of Manila is able to help Unilever
Philippines fulfill its sustainability goal on proper waste management as part of their
company-wide commitment to become a more sustainable business. In turn, Unilever
Philippines has provided the City of Manila with a waste management solution through
Kolek Kilo Kita and has even served as the pioneer program for the Mayor’s larger goal of
proper waste management in the city. In addition to this, the relationship between Unilever
and the City of Manila, in a private-public partnership sense, has been strengthened further
as they’ve mentioned previously working together.
Second, the City of Manila has exerted efforts into the maintenance of cleanliness
and order in the barangay through Kolek Kilo Kita in addition to helping the participants
become more aware of waste management to help them appreciate the program further. In
return, of course, the participants are supporting the Mayor’s call to proper solid waste
management by turning over their prepared plastics in Kolek Kilo Kita. As residents of the
City of Manila, the program has helped the government fulfill its obligations in serving its
people and has even empowered them to improve their own environment by taking
responsibility for their waste.
Third, the City of Manila sees that Republic Cement, as their recycling partner, has
given them a waste management solution through Kolek Kilo Kita. Additionally, the City
of Manila, through its participation in Kolek Kilo Kita, helps support Republic Cement in
fulfilling its sustainable efforts much like it does for Unilever.
Republic Cement Value Exchange
First, through the program, Republic Cement is able to help Unilever Philippines
in fulfilling its goal on sustainability and waste management as it handles not only its pre-
consumer waste, but also post-consumer waste. In return, Unilever Philippines provides
support for Republic Cement and its sustainable efforts by linking it to more sources of
plastic waste which they may use as an alternative fuel in manufacturing cement. Through
the program, both Republic Cement and Unilever Philippines also gained a stronger
relationship because of the increased interaction and engagement.
Second, Republic Cement is able to help the participants reduce their waste in their
respective barangays. Through the program, 3000 kilos of plastics are collected and
diverted from their streets and surrounding areas. In return, the participants are also able
to support Republic Cement’s efforts in producing cement in a sustainable manner.
578 | P a g e
Third, through Kolek Kilo Kita, Republic Cement is able to offer the City of Manila
solutions in managing their waste. By co-processing the plastics, Republic Cement is able
to lessen the waste in the city.
Conclusion
Biddle’s (1979) role theory explains that stability and social order are achieved when
individuals fulfill their roles. However, this theory is criticized as it fails to explain the motivation
behind the fulfillment of roles. To explain the fulfillment of roles among Kolek Kilo Kita’s
stakeholders, the study of Freudenrich et al. (2019) was used as it raises that stakeholders of a joint
purpose give and receive certain values between each other. The group was also able to conclude
that stability, stakeholder participation, and sustainability are achieved under normal
circumstances if all stakeholders perform their expected roles and values are created between
stakeholders.
The first proposition of this study is that stability is achieved if all stakeholders perform
their expected roles. The results of this study show that there is a general alignment of roles, and
the program maintained its operations relatively problem-free until the pandemic forced it to cease.
This stability and social order, according to Biddle (1979), is attributed to the fulfilled roles and
met expectations of the members.
Aside from the fulfilled roles and met expectations, stability was achieved in the program
because of Unilever’s permeable role boundary. The ability of Unilever Philippines to permeate
and attend to other roles allowed the rising problems to be addressed immediately. For instance,
when there was a miscommunication between the stakeholders, Unilever mediated and scheduled
a meeting with the City of Manila and Republic Cement to align and recalibrate their roles and
responsibilities in Kolek Kilo Kita. Because of the role permeability of Unilever when conflict
arose, the program was able to remain stable by the company’s ability to switch over to another
role when needed (Ashforth, 2000).
Additionally, the findings reveal that there are some misalignments in the expected roles
among the stakeholders. The misalignment on Republic Cement and City of Manila’s roles stems
from the participants’ lack of knowledge on the program which were evident in the interviews.
When asked about the local government unit’s role, the respondent mentioned that it is the City of
Manila’s role to manage the cleanliness of the barangay. On Republic Cement’s role, the response
was a confused mix between creating cement and producing charcoal. These statements, although
factual in some ways, show uncertainty on the involvement and understanding of the Kolek Kilo
Kita participants in Manila. Despite these misalignments, the program remained stable and the
values continued to exchange between the stakeholders. A possible explanation behind this is that
knowledge on the roles of the other stakeholders creates no impact on the exchange of values for
the participants. From their perspective, they simply need to surrender their sachets in order to
receive Unilever products in return; the rest of the processes are out of their hands. For the other
stakeholders, the values received are more grounded and dependent on the role fulfillment and
success of the program; these include corporate social responsibility, overall improvement of waste
management, and improved partnerships. In their case, an immediate fulfillment of their roles do
not necessarily translate to an immediate exchange of values.
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Although role theory explains that stakeholders must fulfill their roles, there is uncertainty
as to what will happen if the role is performed by another member, or in this case, carried out by
two entities. In the case of Kolek Kilo Kita, it is unclear who exactly is in charge of checking the
state of these plastics based on the interviews. Nonetheless, it is being done because the plastics
have been co-processed successfully throughout the course of the program. The study then
suggests that the accomplishment of tasks has more salience than the identification of the role
performer. However, while it is more important to the program that certain tasks are performed
rather than knowing who should perform them, recycling programs can only succeed if at least
one stakeholder has role permeability to ensure that all tasks are fulfilled. In this case, Unilever
Philippines is the only stakeholder with role permeability in the Kolek Kilo Kita, as they are able
to transition to other roles to improve or resolve conflict across their operations.
The second proposition of this study is that stakeholder participation can be achieved if
values are created per stakeholder. As role theory lacks explanation behind the actions of an
individual’s role, the researchers utilized stakeholder theory in the upper half of their framework
to determine the motivation behind the participation of each stakeholder. The results are consistent
with the study of Freudenreich et al. (2019) on stakeholder value creation wherein all the identified
stakeholders in the program have become both recipients and co-creators of value, and they
continue to participate because of the exchanged values for an overarching joint purpose
(Freudenreich et al., 2019). The researchers therefore conclude that the motivation of each
stakeholder to participate increases because of the values generated from the program. Although
the different types of values received by all stakeholders were studied, the current framework may
not be able to capture all values as the study relied mostly on insights made from the interview.
The third and final proposition of this study is that sustainability can be achieved if all the
interests of stakeholders are served and all roles are fulfilled. In line with Garvare (2010)’s central
idea on stakeholder theory, the results of this study reveal that in normal circumstances, served
interests allow the program to be sustained. However, the results of this study also suggest that
sustainability may not be guaranteed at all times as there are external factors that threaten the
program’s sustainability. The study then shows that external factors such as this pandemic are
capable of forcing certain stakeholders to recalibrate or lose their ability to serve the interests of
all stakeholders. It also reveals that external factors may impose threats on the sustainability of
the program. As the role theory and stakeholder theory fail to account for these external factors,
the researchers suggest that other theories and frameworks be explored to gain a more holistic view
of a program’s sustainability.
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Being Fully Human: Reflections on the Journey to Wholeness
8th NBMC Paper # 42
Pia T. Manalastas
[email protected]
Abstract
Integral Human Development is a positive vision of human flourishing articulated in modern

Catholic social teaching. It centers on the idea that the dignity of the human person is expressed
not only in work and economic activity, but also in cultural richness, artistic creativity, religious
belonging, and spiritual practice. The challenge for a Catholic university is not only to train modern
business leaders in technical skills, but also to ensure that they work toward the true good of every
individual, community, and society, in every single dimension of human life. Our hope is that our
graduates become competent and socially responsible business leaders who serve as change agents
in society to uplift the conditions of the poor. By encouraging them to become fully human, their
relationships with, and obligations to, family, community, and all of humanity, around the globe
will change, allowing them to lead in addressing the challenges of the next normal.
Therefore, it is imperative that business schools change the way they train the next generation of
business leaders. In De La Salle University, the MBA program has begun to offer an elective that
uses experiential learning as its pedagogy. The students undertook several activities, from visiting
a museum and learning zen meditation, to interacting with social entrepreneurs and managing their
finances, that started them on a path to an integrated life.
Using the Lasallian Reflection Framework of SEE-EXPERIENCE, ANALYSIS-REFLECTION,
and COMMITMENT-ACTION, the students were asked to reflect on these experiences and
challenged to create a life that is worth living – becoming more mindful, sustainable, learned,
creative, caring, ethical, resilient, engaged, and deeply well. This paper documented their
reflections and insights as they journey to wholeness.
The research philosophy used is Interpretivism. With the permission of the students enrolled in
this class, their journals and Action Research projects re used to document their understanding of
the challenges and opportunities along the journey to wholeness.
Keywords: Integral Human Development, Lasallian Reflection Framework, Interpretivism
Introduction
In the light of business scandals, financial crises, and corporate failures over the past twenty
years, business schools continue to reflect of its role in the educating future business leaders.
Khurana (2007), in his critique of business education, contended that many business schools have
been complicit in creating recent corporate scandals by turning out graduates fixated on
shareholder value at the expense of all other stakeholders in society. In their quest to "prepare
students for the real world" (Verschoor, 2003), business schools contributed to the social and
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cultural crisis when it taught students to prioritize profit maximization over other responsibilities
of business, creating a social and cultural crisis.
For Catholic business schools, not only does this critique hit home, but also adds to its on-
going quest of truly living up to its role in the wider Mission of the Church in promoting the gospel
and helping to build the Kingdom of God. Maines and Naughton (2010) believed that Catholic
and other faith-based university have been remiss in this key responsibility. “Universities and
their business schools have contributed to this cultural crisis by providing students with an overly
compartmentalized and specialized form of education.” As a result of this education, business
students are not prepared “to see the whole, especially as it relates to the social and moral character
of human relationships.”
This compartmentalized education has resulted in students living a divided life. The
Second Vatican Council describes this divided life as “the split between the faith which many
profess and their daily lives.” (Naughton, 2020).
Also, as a signatory of the United Nations Principles of Responsible Management (PRME),

DLSU is committed to championing responsible management education through research,
engagement, and thought leadership. As one of over 600 PRME schools and universities, DLSU
has committed to teaching ethics, corporate social responsibility (CSR), and sustainability. As
articulated by Haertle and Miura (2014) “PRME encourages collaborative learning and
collaborative innovation on practice in responsible management education, research, and thought
leadership”. However, in a recent critique of PRME, Millar and Koning (2018), stated that
management education has still not addressed “the focus on short-term, individualist orientation
at the expense of the long term and collective well-being.” They believe that business schools still
need to refocus the way they educate their students, especially in the MBA, to ensure increased
human well-being, social and environmental sustainability, and empowerment, thus educating for
integral development.
Therefore, as a Catholic institution that is a signatory of the United Nations Principles for
Responsible Management Education (UNPRME), one of the challenges of the university is how
to integrate and assess how well we teach CST and UNPRME principles to form responsible
business leaders. In Goodpaster et. al (2018), the authors introduced a Catholic Identity Matrix as
a way to describes a Catholic business school’s current efforts to operationalize the six CST
principles through its management system. This assessment enables Catholic business schools
better manage their continuous progress toward implementing the CST and UNPRME principles.
Currently, the university does not use any metrics to measure its progress. This study provides
input to answer questions on what and how it teaches these principles.
Human Development
Human development is a process of enlarging people’s choices. The most critical ones are
to lead a long and healthy life, to be educated and to enjoy a decent standard of living. Additional
choices include political freedom, guaranteed human rights and self-respect' (Human Development
Report, 1990).
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In addressing the issue of human development, Nobel prize winner, Amartya Sen, argues that focus
should be on the extent of human freedom or capability because the achievement of certain
functionings relies on the person’s capability. Sen notes that “the assessment of good social orders
has been concerned directly with achievement, treating the importance of the freedom to achieve
as being entirely instrumental” (Sen 1992). He believed that people are the most important
stakeholder in development. His works strongly influenced the United Nation’s Human
Development Reports which accentuate that development should be people-centered, and as such,
attention should be given to redefining the kind of life they live.
In her survey of different dimensions of human development, Alkire (2002) defined human
development as human flourishing in its fullest sense—in matters public and private, economic
and social and political and spiritual. She defines dimensions of human development as
nonhierarchical, irreducible, incommensurable and hence basic kinds of human ends. Dimensions
do not derive from nor divide up an idea about what the good life is, but rather are values or
‘‘reasons for action.’’
Her survey of the different dimensions of human development is presented as Table 1.

Some common elements identified by the different authors include life, health, work, leisure, and
relationships.
Table 1
Dimension of Human Development
Catholic Social Teaching on Integral Human Development
Pope Paul VI (1967) wrote the encyclical, Populorum Progresio (or Development of
Peoples. that laid the foundation for the vision that each person has the right to integral human
development: “Development cannot be limited to mere economic growth. In order to be authentic,
it must be complete: integral, that is, it has to promote the good of every man and of the whole
man” (14). Thus, Integral Human Development must be the holistic development of the whole
person, covering all aspects of life: social, economic, political, cultural, personal, and spiritual.
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In the first sentence of Caritas in Veritate, Pope Benedict XVI explains that this charity is
the “principal driving force behind the authentic development of every person and of all humanity”
(CV 1). These two fundamental dimensions of human action, of giving and receiving, of action
and contemplation, of work and rest are not simply two isolated periods of time in human life, but
rather they are the primary dimensions of a person’s integral development what makes him or her
most human.
The course: Integral Human Development (IHD)
To address the miseducation of business students, a new elective in the MBA program was
designed to allow students to explore the different dimensions of Integral Human Development:
spiritual, bodily, aesthetic, social, physical, cultural, emotional, material, moral, and natural. The
goal of this course is to start the students on their path to an integrated life.
Integrity comes from the Latin integritas, from which the word “integer,” or whole number,
is derived. It refers to the condition of wholeness or being one. The second meaning of integrity
relates to being untouched, innocent, or pure. It is derived from the negating prefix in- combined
with the verb tangere (to touch), conveying the idea that a person of integrity is someone who is
un-touched, un-impaired, or un-blemished. (Naughton, 2020).
In the first offering of this elective in the 3rd Trimester of AY 2018-2019, guest speakers
were invited to explore the different dimensions of IHD. Using experiential learning as the main
teaching pedagogy, the graduate students had the opportunity to interact with these speakers,
discuss relevant issues, and reflect and act on the insights gained from this experience. Students
also had the opportunity to experience the different IHD dimensions via field trips to the National
Museum, China Town, and GK Enchanted Farm. The artistic and creative dimension was also
explored when students watched an original Filipino musical, Binondo.
The students were introduced to the IHD framework adapted from Alford & Naughton’s
(2001) book, Managing as if Faith Mattered. They defined the organization’s role as “the
promotion of all the goods necessary for integral human development in the organization, in such
a way as to respect the proper ordering of those goods” (p. 45). Figure 1 presents the various facets
of IHD. The depiction of the different dimensions as petals of a flower is appropriate because the
goal of IHD is development in all its dimensions, a flowering of not only the material, but also
social, cultural and spiritual human being.
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Figure 1
The Integral Human Development Framework
Table 2 presents how Alford and Naughton (2001) operationalized the different human
dimensions for the workplace.
Table 2
Human Development at Work
IHD Dimension Description

Bodily The physical structure of the workplace and the design of work-processes and
development equipment are calculated to protect employees’ health and to respect their overall
physical well-being.
Cognitive Employees’ expected contributions to the work process are made intelligible to
development them; jobs are kept “smart” to exercise and develop employees’ talents and skills;
overall, employees’ cognitive abilities are matched to proportionately challenging
work.
Emotional Through the freedom to take initiative without fear of reprisal, employees exercise
development responsibility and accept accountability for their work.
Aesthetic Craftsmanship is encouraged, and within the limits prescribed by their uses,
development products are designed and manufactured with an eye for beauty, elegance and
harmony with nature; services are conceived and delivered in ways that honor the
human dignity of both the provider and the receiver.
Social Internally, the organization encourages appropriate expressions of collegiality; the

development organization exhibits a “social conscience,” encourages the same in employees, and
supports employees’ initiatives in the direction of service to the wider community.
Moral The organization’s managerial practices and work-rules recognize that human acts
development are as such moral acts; working relationships of every kind should demonstrate
respect for the human dignity of each party to them.
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Spiritual Work is understood as a vocation, and valued as collaboration, in the presence of
development God, for the good of one’s fellow human beings.
Table 3 presents how this course exposed the students to these human dimensions via guest
speakers, lectures, and experiential activities for the Term 3, AY 2018-2019.
Table 3
IHD Topics and Learning Activities
SESSION Topics Learning activities

1 What is Integral Human Course Orientation
Development? Lecture: Introduction to Integral Human
05/25/19 Development
Seatwork: Assessment of your personal well-
being
2-3
06/01/19 Spiritual/Moral Recollection c/o Lasallian Pastoral Office
Development 9:00 a.m. to 3:00 p.m.
3
06/08/19 Material Development Speaker: Mr. Sandy Giles, CFA
Savings and Investment 101
4-5 Aesthetic/Cultural Field trip to the National Museum/China Town

06/15/19 Development
6 Bodily/Emotional Meditation and Mindfulness

06/29/19 Development Guest Speaker:
Zen Center Philippines
c/o Mrs. Irene Araneta
7 Integrality in the Guest Speaker:

07/13/19 Workplace Dr. Cristine Atienza
President, Institute for Integrality
8 Artistic/Cultural Binondo - A Tsinoy Musical

07/13/19 Development Solaire
9-11 Social Development Visit to GK Farms

07/20/19 Barangay Encanto, Bulacan
Research Philosophy
This study seeks to document the journey of MBA students towards wholeness via their
experiences in the IHD elective. As part of their training to be critical and creative thinkers, the
students were tasked to critically reflect on their experiences. By examining their experiences,
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they were led to personal transformation. This personal transformation is the impetuous for
embarking on the path to living an integrated life that is the ultimate aspiration of this course and
DLSU’s MBA program.
Reflection, one of the primary tenants of experiential learning theory has been construed
as the vehicle to transformation. Mezirow (1991) states, “Part of the reflective process includes
recognition of “premise distortion” which are deeply embedded internal injunctions that define the
boundaries of what we allow ourselves to think. They are self-censorship devices, voices of denial
that set up acceptable interpretations of human phenomena.” (p. 45). By itself, it does not guarantee
a critical reflection of assumptions leading to transformative learning. Mezirow (1998) contends,
critical self-reflection of assumptions involves critical reflection of one’s one assumptions,
pertaining to the economic, ecological, educational, linguistic, political, religious, bureaucratic, or
other taken for granted cultural systems” (p. 9).
Therefore, as the goal of this study was generating rich perspectives on the experiences of
students, a qualitative approach was chosen within an interpretivist paradigm. The methodology
used is document analysis. Document analysis is a form of qualitative research in which
documents are interpreted by the researcher to give voice and meaning around an assessment topic
(Bowen, 2009). For this study, the research instrument used is the students’ reflection and project
paper and their work was used to examine the way they experienced the different dimensions of
IHD. Since there were only nine students in this class, all their outputs were used in this research.
At the beginning of the term, students were informed that their journals and papers would be used
for this research project and all consented. Content analysis was the research tool used to identify
meaningful and relevant passages to document their journey to an integrated life.
Reflective Practice
The students were asked to reflect on their experiences during the term and were asked to
use the Lasallian Reflection Framework to structure their journal entries. Anchored on the core
values of Faith, Zeal of Service and Communion in Mission, the Lasallian Reflection Framework
(LRF) is a guide to all formation and engagement activities. LRF has three important stages: “See-
Experience” (“Masid-Danas”) understanding of the situation and the social issues; “Analysis-
Reflection” (“Suri-Nilay”) elevating the situation to cognitive level of analysis and critical
reflection; and the “Commitment-Action” (“Taya-Kilos”) engaging the Lasallians into the work-
mission where plans are put into action (Lasallian Mission Office, 2011).
Table 3 documents one of the student’s entry after the class visited the National Museum
using the LRF.
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Table 3
Reflections using the Lasallian Reflection Framework
Stage Reflection
See- Wow! Ang Ganda! Amazing! These are the words that I uttered during our
Experience educational trip at the National Museum.
Wow! Because it has reawakened my interest in arts. I like painting and

drawings!
These outings are very engaging and educational, and it is an awesome

experience that you only get to read and see in the books, photos
and the internet. As they said, the most efficient way to learn from one thing is
to be a part of it. I believe that going to museums is an informal way of
educating yourself effectively.
Analysis Art plays a big role in our history and is based on the display of artifacts in the
and Museum. It shows how we are very reach in culture and history.
Reflection
We should learn from the past and keep on going as a nation. Be aware and learn
from what happened in the past
There will always be hope for our country and we can surpass all the
problem that we go through. Understanding our history helps us to understand
our present situation.
Commitment- I commit myself to…
Action
• Buy local products, promote Philippine Tourism to my foreign friends
and encourage them to visit our Museums;
• Continuously pay Proper Taxes and Support our government leaders.
We always need to support them.
• Show support to our local artist especially in the field of Music and Film
by watching local concerts and movies rather than foreign ones.
As part of developing the aesthetic aspect of my human being, I promise to

visit more art exhibits at least every quarter and invite my family and friends
to come with me so that we could appreciate our culture together.
Throughout the term, the students were exposed to various dimension of IHD via guest
speakers, exposure trips, exercises, and their own action research projects. These journal entries,
in the form of publicly available blogs, allowed insights to what they experienced and learned. For
example, after the day-long recollection, one of the students wrote:
A short but regular and dedicated time for spiritual development is important to refresh
one’s energy. We are always caught up with our lives as it unfolds but we usually forget to
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pause and to be present to ourselves, as well as to others. We often look back to the pains
from our past, and be anxious of the future, but never truly present at the moment.
Another student committed to the following after reflecting on how the recollection
increased his desire to grow his spiritual dimension:
As a Christian and Lasallian, I commit myself to enrich the spiritual aspect of my well-being
with these steps:
1. Prioritize and make it a morning habit to do meditation, read a verse in the Bible
and do my breathing exercises. From that point, I will pray to God on what his
message is for me.
2. I will make sure to remember and hold the bible verse I read that morning for the
day. I will practice it as how a good Christian practices bible verses.
3. Be more thankful and grateful in my life. I believe that being grateful builds good
values and promotes better character development.
After watching Binondo: A Tsinoy Musical (Cultural/Aesthetic dimension), one of the

students, a Filipino-Chinese, had this reflection:
During the play, I pondered why there are still some Filipino-Chinese families enforce the
"Great Wall" concept -- where the children should only marry someone with Filipino
Chinese blood. For me it is sad because they're limiting their children in choosing who to
love. My best friend is like that and I can see his struggles in finding the right woman for
him. He chose to follow his parent's wishes to pursue a Filipino Chinese woman but until
now he is still searching.
Another student’s honest insights were much appreciated. Reflecting on his first
experience of live theatre, he wrote:
Today was a weird day for me. Even though I got a heads up of what’s coming for the day.
Experiencing it was really cool and uncool for me. Cool in the sense that seeing it happen
was awesome. The choreography, blockings, scripts and props are amazing. To create such
a feat is really amazing. The uncool part is that I thought I was going to enjoy it. But I
honestly didn’t get or understand what I was seeing and experiencing.
Reflecting on the term’s experiences, a student shared this insight:
I find the concept of integrality, living with a purpose, interesting and refreshing. It clumps
altogether the aspirations that I want to achieve in life, a well-balanced and purposeful life.
I also learned the importance of taking care of yourself in the sense that you cannot give a
part of yourself when your whole/totality is unwell. I am guilty of this tendency to always
give more of myself to others, may it be time, energy, knowledge, etc. At the end of the day,
we must strive for wholeness, and once we achieved this, we make use of our self for the
benefits of others who are more in need.
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The students’ personal journeys were documented in their journals, but since the goal of
the MBA program is for them to be Change Agents in their organization, the course also required
them to undergo an Action Research project. The project challenged them to improve one
dimension in their workplaces, to launch the IHD journey within their organizations.
Upon completion of his Action Research project, the student had this metalearning on the
importance of ensuring the health of the employees (body dimension):
One thing more, I realized that health of the employees is truly the wealth of a company as
well. If the health of employees will be well-taken care of, this will cause a long-term and
higher revenue for the owners of top-level managers of the company. This is because as one
takes care of the employee needs, this will keep them motivated, thus productive. Without
them knowing it, providing Health and Wellness Program to the organization is a strategic
move of management, which may greatly affect, not just the current status of the company,
but also its the future.
Another student shared his insights on his intervention in the social dimension:
During this research I also found out that social activity outside of the workplace is very
important and it will help boost the team spirit and providing more output at the workplace.
During the implementation everybody in the team is very cooperative and the first two
activities were very successful. The team also has the positive morale that will improve not
only the team’s overall performance, but also the organization’s performance.
Conclusion
Being able to experience a course like IHD can be the catalyst for MBA students to create
a life that is worth living - becoming insightful, learned, creative, caring, ethical, resilient, engaged,
and deeply well. Also, as change agents in their workplaces, they now have the tools to initiate
programs that will lead not only to greater appreciation for culture, arts, spirituality, and material
development, but also encourage others to explore their own human flourishing.
As this course is taken by more business students in future terms, these students will be at
the forefront of the movement that will define the “new normal.” These future business leaders,
who are whole/complete, will shape their organizations that will result to a more prosperous,
sustainable, and equitable world. As a final entry, a student wrote:
I have realized during this session that I really don’t know my real purpose or mission. I
know that I’m serving God and following His will is always my intention. But, what is really
my core purpose? I have these dreams, goals, and objectives to pursue. After that, what is
next? As I reflect, if you know your purpose in life, you know your mission, it is where you’ll
be complete.
This course had an impact not only on the students but also on me. While I am thankful to
witness the student’s personal transformation and growth, I also grateful for the chance to continue
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my own journey to an integrated life. It made me realize that I have been remiss in developing
some of my IHD dimensions. Like most of the students, I struggle with time management,
harmonizing work and family life, health issues, having a meaningful prayer life, and stress. The
course carved out time for me for contemplation and allowed me to feed my soul. I also “sharpened
my saw.” From being introduced to mindful practices and meditation in our Zen session, to
revisiting the National Museum, China Town, and GK Farms, these experiences made me more
committed to grow in my vocation as an educator. It is in this role that I not only journey toward
my wholeness, but also given the privileged to journey with my students toward being fully human.
References
Alford, H., & Naughton, M. (2001). Managing as if faith mattered: Christian social principles in
the modern organization. University of Notre Dame Press.
Alkire, S. (2002). Dimensions of human development. World Development, 30(2), 181–205.
https://doi.org/10.1016/s0305-750x(01)00109-7
Benedict XVI. (2009). Caritas in veritate [Encyclical letter]. Retrieved from
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Dean Maines, T., & Naughton, M. (2010). Middle level thinking: The cultural mission of business
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research, and enact business ethics: Insights from the Catholic Identity Matrix for business
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Naughton, M. J. (2020). A tale of two Adams: Insights for the integrity of a Catholic university.
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Mezirow, J. (1991). Transformative dimensions of adult learning. Jossey Bass.
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vi_enc_26031967_populorum.html
Sen, A. (1992). Inequality reexamined. Oxford University Press.
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Filipino Consumers’ behavior on CSR-driven marketing efforts: A
study on consumers’ buying behavior driven by the brands’
corporate social responsibility
8th NBMC Paper # 43
Aletheia Ordiales
[email protected]
Abstract
This study aims to discover the effects on the Filipino consumers’ buying behavior for advocacy-
driven marketing campaigns in the Philippines. It seeks to understand how corporate social
responsibility as part of the brand’s marketing narrative influences the buying behaviors of Filipino
consumers. Changing the marketing message to adapt to the new normal, this study explores why
buying-for-a-cause creates a positive positioning to the brands and an important factor in the
consumer's purchase funnel. The study also features in-depth insights from consumers who weigh
on the sincerity of the brand’s CSR efforts. A discussion on how consumers gauge whether the
company’s advocacy efforts are profit-driven or purpose-driven has been discussed in this research
study. Meanwhile, this study discusses how CSR campaigns unintentionally (or intentionally)
correlate with revenue strategy per industry leads.
The research will be conducted in literature review, survey and focus group discussions, and
corporate interviews with industry leaders in the Philippines. The data obtained shall be processed
and analyzed qualitatively.
Keywords: corporate social responsibility, charity, brand marketing, consumer behavior,

marketing funnel, shop, donate
Introduction
Covid-19 has affected the marketing purchase funnel. There has been a domino effect due
to the pandemic, starting with the rising Covid cases that eventually led to economic meltdown in
the Philippines. From business closures to job losses, the Philippine economy is forecast to suffer
a further economic decline by the end of 2020 as per Asian Development Outlook Update of 2020.
The dwindling monetary resources of Filipinos have affected their buying decisions drastically.
There’s a major shift on the companies’ marketing narratives and efforts this year as
businesses consider the pandemic challenges in the customers’ purchase journey. As the world
awaits for the coronavirus vaccine, the contribution from private sectors creates a massive impact
in our country’s COVID-19 response. Today’s pressing reality challenges most companies to do
more Corporate Social Responsibility (CSR) efforts.
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CSR has been an important part of one company’s business model as it enhances brand
values. Companies are expected to be catalysts to make the world a better place or to make a
difference in the society.
Brands such as Procter & Gamble, SM, Unilever Philippines, ABS-CBN, and San Miguel
Corporation are among the leading businesses that invest on their CSR initiatives. This pandemic
has also highlighted the COVID response, in form of CSR efforts, of business tycoons. Ramon
Ang’s San Miguel Corporation, for example, donated more than Php 13 billion pesos to aid
medical front liners, fund the government’s Libre Sakay program, and help disadvantaged
communities. The SY family of the SM Investment corporation donated Php 170 million for
medical supplies for hospitals battling the coronavirus disease. Aboitiz Group of Companies
chipped in Php 388 million for medical frontlines and relief goods for underprivileged families
(Gonzales, 2020).
As businesses shifted their attention to doing CSR efforts beyond what’s defined in their
existing programs, companies doing extra effort during the pandemic have gained raves from the
public. Whether it’s a philanthropic deed or a PR stunt, brands who are socially responsible and
are very present in time of need creates a high brand recall to consumers, resulting in brand
patronage (and loyalty).
As consumers need more compelling reasons to shop beyond budget, CSR takes center
stage on today’s marketing message; especially for non-essential goods and services that have been
affected by the 10-month lockdown in the Philippines. The shop-to-donate or buying-for-a-cause
has been apparent on every company’s marketing message thus recruiting potential buyers.
The researcher will delve on how and why consumers are most likely to patronize a product
- even if it means going beyond the consumer's budget - if purchase-triggers appeal to one’s
personal beliefs, social affiliation, and life advocacy. The research chose this topic for its relevance
in the Philippine settings. Survey was conducted during the time of the pandemic.
In this study we discover the fusion of CSR and Marketing Communication where CSR
influences the buying behaviors of overly-conscious and sensitive customers today. The researcher
chose this topic to study the effects of CSR-driven marketing efforts to Filipino consumers during
this pandemic season.
Statement of the Problem:
The rising number of coronavirus cases in the Philippines has continued to affect the
economy’s growth until the end of 2020. The pandemic has caused companies to close, thus,
increasing the job losses in the Philippines. According to the Philippine Statistics Authority (PSA),
the Philippines recorded an unemployment rate of 17.7% in April due to the lockdown (Agcaoili,
2020). In effect, marketing leaders are prompted to change their advertising narratives by taking
into consideration the consumers’ mindset and behavior on the new normal.
Consumers have become careful with brand associations and sensitive with their product
purchases considering the current state of the economy and politics.
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In the height of pandemic, consumers have become conscious of their purchase decisions.
Shop and donate have become the triggering advertising message to consumers. While some
brands do CSR works as philanthropic practices since the launch of their businesses, marketing
leads need to establish a fresh marketing message without overusing the ‘buying-for-a-cause’
narrative in light of the new normal.
Objective of the Study:
1. To analyze the consumers’ purchase behavior towards CSR-driven marketing efforts

2. To obtain factual data that support the positive positioning of brands in the mindset of
consumers
3. To analyze why consumers patronize socially-responsible brands
4. To obtain factual data enumerating the marketing communication effects of CSR-driven
marketing efforts initiated by brands
Literature Review:
Corporate Social Responsibility (CSR) is defined as how a company addresses and

manages its environmental, social, corporate governance and economic impacts and how such
impacts may affect the company’s stakeholders (Noked, 2013).
CSR is aligning the company’s social and environmental activities with its business
purpose and values. An article on Harvard Business Review revealed that CSR is more leaning
towards shared value where a business doesn’t only create economic value but a value that impacts
the society (Rangan, Chase, Karim, 2015).
CSR programs center on the idea of making the world a better place; these initiatives can
also benefit both the businesses and their shareholders. CSR aims to improve a company’s
environmental and social impact. (Edmondson, 2020). For example, Maynilad’s internal efforts
to provide shuttle services to its employees and to facilitate regular health checks inspire its
employees to do initiatives on their own. Some employees donated via salary deduction to help
third-party service providers such as janitors, maintenance, and security officers. (Torres, 2020).
Long-term impact of CSR to Consumers
There are three reasons why CSR is important as per U.S. Chamber of Commerce
Foundation: Engaged Employees, Loyal Customers, and Positive Public Attention
(Lanphear, 2019). “A culture of responsibility seems all the more essentials in these trying
times” (Goncalvez, 2020). CSR is an opportunity to engage customers, enhance and
practice brand values by demonstration of strong corporate responsibility culture. CSR
houses multiple benefits from public relations, satisfied customers, and improved company
profits (Edmondson, 2020).
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Consumer behavior in the time of Covid
There’s a consumer behavioral reset this 2020 due to the Covid-19 pandemic.
According to Nielsen, 83% of consumers in Asia Pacific cut down their expenses in the
2nd quarter of 2020. Brands started to recalibrate their efforts to meet the effects of
pandemic. In the Philippines, ‘do-it-yourself’ behaviors and homebound lifestyles
influence them to make a purchase (Ordinario, 2020).
Nielsen Philippines, meanwhile, also revealed the distinction between the insulated
shopper and constrained shopper in a recent study on Filipno Consumer Behavior and
Retail Updates on Covid-19. Insulated shoppers are those who managed to retain the job
they have with sustained, stable income and with money to spare; while constrained
shoppers are workers who lost their jobs, those faced with the challenges of compressed
income, labor relocation, and debt default (Campos, 2015).
Socio-cultural advocacy as a trend
There has been a rising conversation about advocacy campaigns. People are more
involved and vocal about the issues they stand for. The social media landscape has been of
great help in disseminating important scope about the advocacy. There’s also this growing
involvement of celebrities and key opinion leaders who have great influences; celebrities
either amplify or start the advocacy campaigns for wider reach (Meyer, 2020).
A social advocacy challenge can also get a spring effect. A strong campaign
movement like Greenpeace’s Detox My Fashion Campaign in 2011 --- a campaign that
challenged a lot of fashion companies --- was successful that it recruited around 80
companies such as: Adidas, Puma, and Nike Philippines (Greenpeace, 2011).
Environmental care, for example, is one major advocacy that has been taking space
on consumers’ radar since 2019. It was expected in 2020 that most companies would create
more sustainability efforts and campaigns to address the advocacy-driven behaviors of the
Filipinos, especially millennials (Diamante, 2019). Local governments also started to ban
single-use plastics to make a positive difference in the society; companies followed suits
from Starbucks to SM Corporation.
As a domino effect, economically, there’s been a rise in eco-friendly products in

the Philippines, Most eco-friendly pop-up stores have always been present in events; these
products have become accessible to consumers as many malls have been offering spaces
for green-friendly products.
CSR impact on Business Performance
Although sales response is not the tall order when it comes to CSR initiatives, brand
leads attest the impact of CSR on their business performance. Internally, companies
influence their employees to make a difference. Advocacy practices start internally; most
employees experience CSR first within their corporate territory. Sales aside, social
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responsibility empowers employees to leverage the corporate resources at their disposal to
do good and boosts employee morale to and lead to greater productivity in the workforce
(Murphy, 2019).
Businesses are great initiators for social movement. Externally, CSR is also an
opportunity for businesses to inspire people to make a positive impact on their purchase
decisions. Consumers are more responsive to an advertising campaign knowing that part
of the profit will be allocated to a charitable cause (Murphy, 2019).
Methodology
The research methods that were used for this study are quantitative in form of survey
questionnaires and qualitative in form of focus group discussions. The researchers pursued
quantitative data to… The researches also pursued qualitative data for rich and deep data targeting
to consumers and brand leads.
Survey Questions
Survey questions were focused on studying how CSR-driven marketing efforts of

companies affect the purchase behaviors of Filipino Consumers. The survey was conducted over
a week period with a total of 43 respondents across all ages, within ABC1 demographics, and with
buying capacity. The survey questions can be found on Appendix A. Survey results can be
presented upon request due to privacy matters.
Interview Format
Interviews were focused on research questions stated below targeting brand and marketing
leads from different companies in the Philippines. The interview set-up was informal and held
through online meetings, phone and email conversations. Interviews began by participants stating
their name, age, and company affiliations. A total of 10 interviews were completed over a week
period; over 10 companies participated. The industries represented by company recipients are
Retail, Apparel, Lifestyle, Education, Technology, Food & Business, and Media. Recording of
the interview was not allowed by the participants due to privacy and some confidential comments.
All data collection and analysis were taken by the authors through note taking.
Research Questions
The research questions were developed and intended to have a better understanding of the
effects on Filipino consumers’ buying driven by the brands’ corporate social responsibility on the
perspective of business leaders.
RQ1: Does your company have CSR programs? What are those?
RQ2: When and how did your CSR program start?
RQ3: Why do you think CSR is important to companies / to your company?
RQ4: How do CSR programs affect your brand positioning?
RQ5: Do you have CSR-driven marketing efforts?
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RQ6: How does your CSR-driven marketing effort create impact on sales conversion?
RQ7: Do you think a long-term CSR marketing effort is important to acquire and drive
consumers?
Key Findings
The key findings present the perspective of the Filipino consumers and brand managers on
how CSR-driven marketing efforts influence the purchase behavior of their target market. The
transcripts were evaluated through insight analysis and data collection shared by the participants.
The details shared below were lifted from the direct answers of respondents.
Summary of Survey Results. The results only cover the top three (3) answers from each
question or the top three (3) best answers ranked per question.
Demographic data.
Age Bracket Employment Type
26-35 years old 58.10% Full Time Employee 83.70%
19-25 years old 23.30% Self-employed 9.30%
36 - 45 years old 14% Freelance 4.70%
Income Bracket
21,000 - 35,000 34.90%
65,000 and above 27.90%
36,000 - 50,000 20.90%
Consumer Familiarity on CSR. This section analyzes the familiarity level of consumers on
the concept of CSR, the consumers’ involvement or interest in CSR efforts, and how they perceive
a socially responsible business.
Consumer Familiarity
with Corporate Social What makes business
Responsibility responsible?
If the company hires
people with disability
I am familiar with the and acknowledges
concept of CSR 34.90% human rights 81.40%
I have basic understanding If the company cares

about CSR 32.60% about the environment 76.70%
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If the company is highly
I am highly knowledgeable involved in charitable
with the concept of CSR 16.30% activities 67.40%
Types of CSR advocacies

that they want to be
involved with
Health (ex. Mental Health) 67.40%
Environment 62.80%
Education 58.10%
Purchase Motivations. This section analyzes the purchase motivations and priorities of
consumers in the new normal.
Main factors that

influence product
Purchase priorities in the purchase in the new
new normal normal
The product is important

Food and Health Essentials 90.70% to meet my daily needs 100%
The product is within
Safety and Security 79.10% my budget 81.40%
The product has
Home and Lifestyle 72.10% discounts and promos 55.80%
Would you be willing to

spend if:
Buying a product supports a
greater cause 41.90%
Buying a product will help
other people 30.20%
Buying a product will
support my friend's small
business 20.90%
CSR as a marketing effort. This section analyzes how CSR affects the purchase behavior
of consumers.
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How much are you willing Does a CSR initiative
to spend if the product has influence your
a shop and donate factor? purchase behavior?
10% of the original product
price 48.80% Somewhat 60.50%
price 27.90% To a great extent 20.90%
price 14% Very Little 18.60%
How often would you buy Will you shop from a

from a company that company that supports
promotes a buy-for-a- a social issue that you
cause effort? agree with?
Frequently 34.90% Definitely 37.20%
Occasionally 37.20% Probably 32.60%
Very Rarely 14% Possibly 16.30%
Impact of CSR
When it comes to the level of knowledge of the respondents about CSR, 34.9% of our
survey respondents are familiar with CSR, 32.6% have basic knowledge, and 16.3% are highly
knowledgeable. More than 60% of the survey respondents participated in CSR efforts; their types
of involvement revolved around fund donation, service contributions via relief operations and
company-initiated programs.
More than 40% of our survey participants state that they are willing to spend more if buying
for a cause supports a greater cause. Though daily needs and discounts are important factors, CSR,
as a compelling component of the advertising message, is one of the things that influence them to
buy a product in this new normal.
Meanwhile, some consumers also think that CSR has become a manipulative marketing
strategy to some brands, especially in this pandemic season where shop-and-donate has been the
norm to get the buyer’s attention. Well, in fact, 48% of the survey respondents say that they are
willing to spend an additional 10% mark-up from the actual price if a product has a shop and
donate component. Brand managers, on the other hand, expressed in the interviews that though
CSR attributes to the company’s revenue gain in the long run, it’s not positioned as an independent
revenue driver, or worse as a mere sales tactic to gain clients or customers.
On the other hand, brand leads also stressed in the interview that the intersection of PR and
profit is inevitable.
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The Millennial and Gen-Z mindset
The future purchase drivers are the Millennials and the Gen-Zs. These segments, with the
influence of social media, want to make a difference. Companies take into consideration the
purchase power of the millennial segment; this segment is keen on supporting companies and
organizations that are helping and supporting those in need. This segment doesn’t just look at the
products or services a company offers, they also check who the companies support and who they
represent. This segment also can make or break one company’s reputation since Filipino-
millennials are very socially and politically involved. They can do a “boycott” call and make it a
trend online.
The Game of Authenticity and Social Relevance
Corporate Social Responsibility is a way to give back and share the success that the brand
has achieved over the years. Some companies are known for their philanthropic needs. However,
the narrative this year is different. A series of unfortunate events (from pandemic to typhoon) have
prompted a lot of donations calls, and shop-and-donate executions from companies.
The survey stated that consumers will most likely buy frequently and occasionally if a
company promotes a buy-for-a-cause effort. Consumers are somewhat influenced by CSR
initiatives. However, manipulative marketing strategy has inevitably come into play. Consumers
are wary of the brands’ genuine intentions. Consumers have become skeptical in fear of gaining
profit in the guise of CSR. There are brands who ride on the bandwagon; but these brands shouldn’t
underestimate the consumers discernment. A CSR effort is a duty, not a gimmick.
Brand Vision and Advocacy Alignment
Consumers patronize companies that support social issues they agree with. Genuine service
will naturally radiate if the brands’ intentions are clear and aligned. With a premise of ‘we need
all the hands that we can get’, hyper-sensitive consumers may still police once effort. Thus, in
order to dispel questions about authenticity, brands, at the onset of the work, make sure that their
brand visions and business model are aligned with their advocacies.
Say, for example, SM Cares’ Points Donation Drive encourages members to use points that
they have earned within SM retail stores and external partnerships to provide assistance to affected
communities. McCormick Philippines initiates feeding programs and open kitchens for the poor.
PR, Profit, and People
Companies think that consumers are more engaged with the activities that the brands have
been doing especially if it’s beneficial to the community that are affected by poverty, health crisis,
and natural calamities. Consumers initiate the conversation about the brands’ initiatives; these
conversations have become important in the customer’s purchase journey. The brands’
involvement in making the world a better place has turned potential customers to loyal customers.
A simple word of mouth, triggered by the company’s CSR effort, somehow offsets the advertising
fees of the company.
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Yes, CSR is a PR opportunity. However, for companies, PR is just secondary. CSR is
multifaceted in terms of returns, but the tall order should be about helping other people and giving
back to society. The intersection of PR --- that is relevant to profit-building --- and CSR will be
handled carefully depending on the execution and key messaging. For example, Cherry Mobile’s
MSN Foundation Inc, partnered with their brand ambassador Heart Evangelista’s Big Heart Effort
to provide Cherry Tablets to students who don’t have equipment for their online class. This effort
has helped amplified brand recall for Cherry Mobile. If people hear about the brand, they will most
likely buy the products even if they are not the primary target of the CSR campaign.
CSR is a good opportunity to separate the brand from the buy and sell transaction. More
than it being a PR experience, it becomes an opportunity for the brands to show their human side.
More than 58% of the survey respondents agree that CSR initiatives influence the company’s
image favorably. It’s also proven in some case studies adding CSR as a component on one’s
marketing campaign drives interest from potential partners, clients, and consumers. For example,
a client partnered with a media brand because of its CSR effort.
Companies also acknowledge their responsibility for influencing their employees to make
a difference. Survey study also revealed that their first CSR experience was mostly company-
initiated.
Managerial Implications
CSR has been part of the government’s and companies’ Bayanihan effort. Businesses, for
one, take on a huge social responsibility to help our country recover from the health and economic
impact of COVID-19.
For consumers, participating in CSR efforts doesn’t only mean helping other people; CSR
participation gives a sense of moral fulfillment to consumers as responsible citizens and of course,
consumers.
Although this study reflects a positive implication on how CSR-driven marketing efforts
affect consumers, readers must take note of the limitations of this study: majority of survey
participants reside within Luzon only and the research was conducted fourth quarter of 2020 during
COVID-19 pandemic.
Furthermore, this study may require another research with more case studies that present a
correlation between CSR and Sales. Case studies may include long term and short term impacts of
all CSR efforts implemented per year.
Discussions
In evaluating the responses from the participants, CSR-driven marketing efforts affect the
purchase behavior of Filipino consumers. Consumers rely on large businesses to lead the donation
drives. Participating in any CSR’s in forms of fund donation or service contribution creates a sense
of emotional satisfaction to consumers.
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Marketing initiatives that are advocacy-centric trigger engagement and involvement from
consumers. If the company supports an advocacy or a movement that they associate with or
support, then all the more that they will patronize. A transparency report of their contributions also
encourages loyalty to the CSR programs.
Marketing in the time of covid is a challenge for brand leads. By placing CSR as part of
marketing efforts this year, it wouldn’t just help recover revenues but also manage or anticipate
consumer sensitivity. While businesses try to recover, they also want to be part of a bigger
movement, addressing the current health situation through a part-and-parcel CSR component on
their marketing efforts.
On another note, businesses should be consistent in their marketing efforts to address

thinking (and hyper-sensitive) consumers who are skeptical of the brands’ CSR movement.
There’s been a social discussion about companies who participate in CSR due to social pressure;
most see CSR as just a passing fad (Keys, T., Malnight, T.W., Graaf, Kvd, 2019).
Take for example, Apple recently announced that the iPhone 12 model will not include
charger and earbuds to lessen mining, packaging, and planet-heating carbon dioxide emissions
associated with making the products. Though Apple gained praises from some environmentalists
for curbing e-waste, most consumers think that this is just another opportunity for Apple to gain
profit while consumers are forced to buy accessories on top of their regular model purchase.
Marketing efforts implemented this year may hit two birds with one stone: helping and
moving --- helping those who are in need and moving the revenue up. Marketers, too, must handle
their CSR efforts intricately to avoid questions on sincerity and manage reactions on advertising
abuse.
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References
Rangan. V.K., Chase, L. Karim, S. (2015). The Truth About CSR. Harvard Business Review.
https://hbr.org/2015/01/the-truth-about-csr
Agcaoilli, L. (2020). Philippine jobless rate highest in Southeast Asia. Retrieved from:
https://www.philstar.com/business/2020/08/13/2034814/philippine-jobless-rate-highest-
southeast-
asia#:~:text=Latest%20data%20from%20the%20Philippine,19%20lockdowns%20in%20
the%20world.
Torres, A.L.H. (2020). CSR in the time of Covid-19. Business Mirror.
https://businessmirror.com.ph/2020/04/13/csr-in-the-time-of-covid-19/
Noked, N. (2013). The Corporate Social Responsibility Report and Effective Stakeholder
Engagement. Retrieved from https://corpgov.law.harvard.edu/2013/12/28/the-corporate-
social-responsibility-report-and-effective-stakeholder-engagement/
Lanphear, K. (2019). Three Reasons Why CSR is Important for Your Business.
U.S. Chamber of Commerce Foundation. Retrieved from
https://www.uschamberfoundation.org/blog/post/three-reasons-why-csr-important-your-
business
Ordinario, C. (2020). Nielsen tracks Covid-era consumption patterns. Retrieved from
https://businessmirror.com.ph/2020/09/09/nielsen-tracks-covid-era-consumption-patterns/
Campos, O. (2020). Pandemic changes consumer behavior. Retrieved from
https://manilastandard.net/mobile/article/336859
Edmondson, B. (2020). What is Corporate Social Responsibility? The Balance. Retrieved from
https://www.thebalance.com/corporate-social-responsibility-csr-4772443
Goncalves, A. (2020). 3 Lessons Corporate CSR can learn from the Coronavirus Crisis.
https://youmatter.world/en/coronavirus-lessons-csr-corporate-responsibility/
Meyer, L. (2020). A new approach to advocacy: Four global trends.
https://www.ipra.org/news/itle/a-new-approach-to-advocacy-four-global-trends/
Greenpeace (2020). Detox My Fashion: Who’s on the path to toxic-free fashion?
https://www.greenpeace.org/international/act/detox
Diamante, H (2019). Trends to Expect in the Philippines This 2020.
https://primer.com.ph/blog/2020/01/19/trends-to-expect-in-the-ph-2020/
Murphy, C. (2019). Why Social Responsibility Matters to Businesses. Investopedia.
https://www.investopedia.com/socially-responsible-investing-4689738
Keys, T., Malnight, T.W., Graaf, Kvd (2019). Making the Most of Corporate Social
Responsibility. McKinsley Quarterly. https://www.mckinsey.com/featured-
insights/leadership/making-the-most-of-corporate-social-responsibility
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Assessment of the food safety culture of the city of Bacoor Food
Processing Center
8th NBMC Paper # 44
Ashley Knicole N. Riazon, Cherry Lou R. Nuñez,
Dinah Pura T. Depositario, and Melodee Marciana E. de Castro
University of the Philippines Los Banos
[email protected]
Abstract
This paper aims to assess the food safety culture and determine the food safety maturity of the City
of Bacoor Food Processing Center, a local government-led processor of fresh mussels.
This study utilized descriptive exploratory research design to explain the dimensions of food safety
culture (i.e. vision and mission, people, consistency, adaptability, hazards and risk assessment) as
applied on the food safety management practices of the City of Bacoor Food Processing Center.
Data were gathered using guided surveys, document/records reviews as well as observations of
artifacts and food safety practices in the work setting. The mean values were derived from survey
questions in terms of each behavior-based dimension to determine the food safety culture index of
the Center. In determining the food safety maturity of the Center, the researcher adopted the food
safety maturity model by Jespersen et.al. (2016).
Survey results suggest that the Bacoor Food Processing Center is at Stage 4 or the “Predict” stage
of the food safety maturity level. This means that the organization exhibited a proactive approach
to food safety. Employees understood their respective responsibilities and accountabilities with
regard to food safety. However, the food safety culture of the organization cannot be characterized
to be “positive” due to lack of documented systems used to measure compliance. Vulnerability to
optimistic bias was also found based on the Center’s lack of food safety vision, lack of documented
systems and failure to enforce strict food safety procedures at critical control points.
This paper contributes to the limited literature on food safety culture. This is also a contribution to
the existing research on food safety culture. This is also a contribution to the existing research on
food safety culture within organizations which has been gaining popularity in recent years.
Keywords: food safety, green mussels, culture, Bacoor
Introduction
Foodborne illness or disease is defined as the instance wherein a person happens to

consume a food or a beverage that is contaminated and leads to any sort of illness. This illness
becomes an outbreak if two or more cases have been recorded as triggered by a similar illness
cause. Further, a foodborne illness outbreak can also be the unexplained, unexpected increase in
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the number of illnesses in which food is the likely source (Rocourt, 2014).
The WHO Foodborne Disease Burden Epidemiology Reference Group (FERG) estimated
that foodborne hazards had caused 600 million foodborne illnesses and 420,000 deaths in 2010.
The foodborne hazards in the study include 11 diarrhoeal disease agents (1 virus, 7 bacteria, 3
protozoa), 7 invasive infectious disease agents (1 virus, 5 bacteria, 1 protozoan), 10 helminths
and 3 chemicals (WHO, 2015).
These estimates by the WHO is an attempt to measure the impact of foodborne diseases
to worldwide morbidity and mortality. The problem of food safety, however, cannot be isolated
as a microbiological problem. Studies have shown that food safety has a behavioral component
and that a significant part is influenced by the food safety organizational culture (Griffith et.al.,
2010).
Edgar Schein, one of the most influential writers on organizational culture, describes
organizational culture as “ a pattern of basic assumptions, invented, discovered or developed by
a given group, as it learns to cope with its problems of external adaptation and internal integration
that has worked well enough to be considered valid and, therefore, is to be taught to new members
as the correct way to perceive, think and feel in relation to those problems” (Schein, 1990).
Food safety culture, on the other hand, is viewed by Yiannas (2009) as “how and what
the employees in a company or organization think about food safety. It’s the food safety behaviors
that they routinely practice and demonstrate.” These thoughts and behaviors have to permeate the
entire organization and be sustained over time to truly create a food safety culture.
Food safety management systems and food safety culture are two distinct concepts. How
things should be done within a business are referred to as management systems (Griffith, 2010).
Griffith et.al. (2010) posits that food safety management system and culture have a close and
intertwined relationship. To ensure the quality of food served, food production requires an
effective food safety management system coupled with an appropriate culture (Griffith et.al.,
2010).
In the Philippines, there were 319 recorded foodborne disease outbreaks (FBDO) from
2005 to June 2018. Out of the 319, 27 FBDOs originated from fish and other seafood dishes.
Shellfish dishes, in particular, triggered 10 FBDOs for the said period. There were 13,577
morbidity cases from documented outbreaks that occurred from 2005 to 2018. It was noted that
87.97% or 11,956 cases have no identified causative agents (Azanza et.al., 2019). Due to the
high percentage of unidentified causative agents, there is clearly a need to strengthen the
monitoring and surveillance system of FBDOs in the Philippines (Azanza, et. al., 2010 citing
Carlos, 2007).
The recent study of Azanza et.al. (2010) shows that food safety continues to be a major
concern and that FBDOs remain a significant cause of morbidity in the Philippines. This is
seemingly the case despite the passage of Republic Act No. 10611 or the “Food Safety Act of
2013”. It was only in 2015 that the Implementing Rules and Regulations (IRR) of this law has
been finalized. Azanza, et.al. (2010) found the law and the IRR to be only at its infancy and thus
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the positive effect of the law was not yet appreciated in their study.
This paper looks into the food safety culture of a local government-led facility, the Bacoor
Food Processing Center, which processes fresh mussels, a nutritious but highly perishable
seafood and one susceptible to the red tide phenomenon.
Paralytic Shellfish Poisoning (PSP), caused by red tide, is considered as a foodborne

disease in the Philippines. It is of particular concern because of the significant number of seafood
consumers at risk of poisoning and the economic impact to the fishing industry. Hartigan-go &
Bateman (1994) reported that there were 18 outbreaks of PSP between 1983-1991. There were
1,300 PSP cases reported and 50 deaths during the same period. The report of the Water
Environment in Asia (WEPA) provided more recent data covering the years 1983 to 2001. WEPA
reported a total of 42 toxic outbreaks which have resulted in a total of 2,107 PSP cases with 117
deaths (WEPA, n.d.).
The organization subject of this study, the City of Bacoor Food Processing Center (the
“Center”), was inaugurated in 2018 and is envisioned to be instrumental for the mass production
of mussels-based food products. Bacoor City is known to be one of the largest producers of
mussels in Southern Tagalog. The center aims to provide benefits to the local economy of the city
by offering job opportunities to the community. Using mussel as the raw material and equipment
and machineries provided by the Department of Science and Technology, the center has come up
with innovative products like tahong chips, adobong tahong, tahongganisa, tahongpanada,
tahongballs, crispy tahong, siopao, siomai, lumpia, tahong in olive oil and sweet & spicy tahong.
This research adds to the existing literature on food safety culture within organizations
which has been gaining popularity in recent years, albeit research on food safety culture is still
considered limited (Nayak and Waterson, 2016). It is likewise the first, to the researchers’
knowledge, that studied food safety culture within a seafood processing organization.
The evolution of the term “food safety culture” started with organization culture and was
developed through literature on health and safety culture (Griffith et.al., 2010).
Schein (1990) posited the problematic nature of defining organizational culture from the fact that
the concept of an organization is in itself ambiguous. It must first be specified that a given set of
people had enough common history and stability so that a culture could form. Necessarily, this
means that some organizations with frequent turnover or having no common history will not
develop an overarching culture.
Culture, according to Schein (1990), is “a pattern of basic assumptions, invented,

discovered or developed by a given group as it learns to cope with its problems of external
adaptation and internal integration, that has worked well enough to be considered valid and,
therefore is to be taught to new members as the correct way to perceive, think, and feel in relation
to those problems”. According to Schein (1990), there are three fundamental levels at which
culture manifests itself: (a) observable artifacts, (b) values, and (c) basic underlying assumptions.
Artifacts are easily noticeable as one enters an organization and includes everything from physical
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layout, dress code, how people address each other. Artifacts, while palpable, are hard to decipher
accurately and is not a reliable indicator. An organization’s espoused values, norms, ideologies,
charter and philosophies can be studied through interviews, questionnaires, or survey instruments.
To this end, open ended interviews are very useful. As for assumptions, these can be deciphered
through more intensive observation, more focused questions and involving motivated members of
the group in intensive self-analysis (Schein, 1990).
Yiannas (2009) defined food safety culture as “how and what the employees in a company
or organization think about food safety”. Thoughts and behaviors that are routinely practiced and
demonstrated are learned by employees by simply becoming part of the company or organization
(Yiannas, 2009). In the last few years, safety culture has been applied within the food industry
(Nayak and Waterson, 2016).
Griffith et.al. (2010) explained that all businesses possess a “food safety culture” and this
can be a “continuum from positive to negative”. In a positive culture, food safety is considered an
important business objective and there is compliance with documented systems. If food safety is
not perceived to be of prime importance, other business priorities are dominant, and there is poor
compliance with documented systems, then the organization’s food safety culture is considered
negative.
On the importance of food safety culture, Yiannas (2009) propounded that the
organization’s culture will influence how individuals within the group “think about safety, their
attitudes toward safety, their willingness to openly discuss safety concerns and share differing
opinions, and, in general the emphasis that they place on safety”.
Schein (1990) and Yiannas (2009) both advocated that culture is formed by the leadership
at the top that flows to the bottom and permeates the organization. Yiannas (2009) explained that
food safety culture starts at the top and flows downward and is not created from the bottom up.
Yiannas (2009) further explained that the strength of an organization’s food safety culture is a
direct reflection of how important food safety is to its leadership.
Additionally, Schein (1990) highlighted the cultural dynamics that occur when an
organization had just been formed. At this stage, there are dominant figures, usually the founders,
whose own beliefs, values, and assumptions provide a “visible and articulated mold” for how the
organization should be structured and how it should function.
Griffith et. al. (2010) emphasized the need for top management to be aware of their role
and responsibilities in the formation of culture. Griffith et.al. (2010) stressed that middle
management or unit level managers, in particular, must be equipped with the skills to create and
maintain a positive food culture. With regard to large organizations or those with multiple sub
units, Griffith et.al. (2010) propounded that there could be more than one food safety culture in
this case.
In the assessment of food safety culture of an organization, Griffith et.al. (2010) identified
six indicators that are applicable to studying food safety culture in relation to food safety
performance. These indicators are: (1) management systems, style and processes; (2) leadership;
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(3) communication; (4) commitment; (5) environment; and (6) risk awareness, perception and risk-
taking behavior.
Griffith et.al. (2010) citing Cooper (2007) suggests that there exists a reciprocal link
between management systems and operator behavior, albeit the theory needs further investigation.
According to Griffith (2009), a “documented food safety management system should contain an
overall food safety policy containing aims supported by food safety objectives setting out how the
aim will be achieved”. Griffith et.al. (2010) propounds that the documented food safety
management system provides a marker for food safety leadership and communication. It was also
suggested by Griffith et. al. (2010) that operating methods, instructions and procedures should be
included in the secondary levels of documentation.
Citing from Tuominen et. al. (2003), Griffith et.al. (2010) stated that HACCP is a food
safety management system that is currently promoted internationally because it enables food
business operators to control food safety risks at all points along the production line, rather than
waiting for microbiological testing of the final product.
According to Yiannas (2009), there should be a move towards incorporating people as well
as process, behavioral science and the belief that behavioural change is complex and not based on
mere provision of factual information. This veers away from the traditional food safety
management systems with a focus on process, food science and a simplistic view of food handler
behavior.
On the aspect of leadership, Griffith et.al. (2010) advances the notion that the key to
leadership is having a food safety vision combines with goals and standards. Griffith et.al. (2010)
believes that the “organizational culture must possess an underpinning vision and this articulates
the organizations goals and values and leadership helps align food handlers with these goals”.
Greenberg and Baron (2008) was cited by Griffith et.al. (2010) in defining communication
as a business process that described how individuals, groups, and organizations transmit
information to other individuals, groups and organizations both within and outside businesses. The
quality of social exchanges between leaders and employees is measures through the Leader-
member exchange (LMX) and this is found to influence culture (Flin and Yule, 2004 as cited by
Griffith et. al., 2010). Individuals with high LMX appeared as more likely to engage in larger
volumes of safety-related communication and appear committed to safety (Hofmann and
Morgeson, 1999 cited by Griffith et.al., 2010).
On communication, Griffith et.al. (2010) emphasized the equal importance of correct

messaging. Channels of communication vary according to their degree of formality, the work
environment and the amount of technology utilized by the business. Organizations that possess a
proactive communication system were found to have lower accident rates than organizations with
reactive communication systems, according to Vredenburgh (2002) as cited in Griffith et.al.
(2010). A good communications policy will be a balanced blend of different approaches which
includes formal, semi formal and formal communications. Griffith et.al. (2010) believes that
effective communication with employees can help them feel involved and empowered, increase
productivity and reduce staff turnover by increasing staff motivation and commitment.
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Significant correlation between commitment and measures of safety culture and job
satisfaction were found by a number of studies such as that of Lok and Crawford (1999) and
Adkins and Caldwell. Indicators of food commitment include rewards and incentives (Pfeffer and
Sutton, 1999 as cited by Griffith et. al., 2010), job satisfaction (Harvey et al., 2002; Lok and
Crawford, 1999 as cited by Griffith et. al., 2010) and regard for personal responsibility (Greenberg
and Baron, 2008 as cited by Griffith et. al., 2010).
The facilities available, such as hand wash basins or other hygiene equipment, sufficient
numbers of staff to fully perform the required safety practices are some of the tangible factors that
make up the food safety environment of business. This is said to work both positively and
negatively. It works positively if sufficient facilities are available since it shows support for food
safety. But, if absent, food safety is perceived to be unimportant (Griffith et. al., 2010). According
to Hofmann and Morgeson, (1999), perceived organizational support is “a measure of the level of
support that employees perceive the organization has provided for them in terms of availability
and usefulness of resources and the safety measures employed (as cited in Griffith et.al., 2010).
In defining risk, Griffith et.al. (2010) cited Dillon and Griffith (1996) saying that risk is the
probability of an adverse event in conjunction with the seriousness or severity of that event. The
judgement and decision-making processes enabling individuals to evaluate the chances of being
affected by a particular risk are called perceived risks. Novak et. al. (2006) propounds that risk
perception is closely linked to risk communication and should be a specific component of any food
business communication strategy (as cited in Griffith et. al., 2010). Further, Novak et. al. (2006)
defined food business risk communication as the interactive process between employees within an
organization for identifying risk, projecting its relevance and potential impact, and enacting
practices to eliminate or minimize the threat (as cited in Griffith et.al., 2010).
Another tool to evaluate food safety culture is the determination of the state of food safety
maturity of a given organization. According to Jesperson et.al. (2016), maturity modelas are tools
to evaluate a current state of a given culture, system, business or process, and to develop
improvement plans against a scale of maturity. Jesperson et.al. (2016) developed a food safety
maturity model from an investigation and review of three maturity models applying the modified
Delphi method and definition of pinpointed behaviors based on Ajzen and Fishbein’s
characteristics of behaviors (Fishbein & Ajzen, 2009 as cited in Jespersen et.al., 2016). The table
below shows the food safety maturity model developed by Jespersen et. al. (2016).
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Table 1
Food Safety Maturity Model
Stage Name People System
Stage 1 Task are only completed when senior leader’s demand, without
Doubt understanding responsibility, the task, or why it is important.
Tasks being completed out of fear for negative consequences.
Top management having to individually certify the accuracy of food
safety information.
Stage 2 Little understanding of true food safety performance.
React to Responsibilities for problems are established as the problems are
discovered and solved mostly by use of negative consequences.
Tools are invented as new problems arise and the tools are rarely
incorporated into systems for future use.
Stage 3 Strong, databased understanding of true food safety performance.
Know off Deeper understanding for the importance of food safety systems,
where responsibilities are clearly defined and communicated, is
gained one issue at a time.
Consequences are mostly managed when mistakes happen, seldom
through a defined plan, with both positive and negative
consequences.
Stage 4 Develop and assess tools for improving processes through knowledge
Predict and data.
Responsibilities and accountabilities are discussed, communicated,
and assessed with patience.
Processes are developed, including consequences (positive and
negative), and managed preventive through communication and
assessment.
Stage 5 Strategic direction is set across the complete organization with
Internalize defined accountabilities, responsibilities, and food safety as one of
the business enablers.
Preventive definition and continuous improvement of specific food
safety behaviors, consequences and tools.
Source: Jespersen et. al. (2016).
There is limited research in the area of food safety culture. The literature, however, is
growing in popularity and is being assessed within organizations (Nayak and Waterson, 2016).
Among the areas where food safety culture was studied include a five-star hotel in Dubai (Caccamo
et.al, 2018), food hawkers in Malaysia (Toh and Birchenough, 2000), Maple Leaf Foods in Canada
which had a tragic listeria outbreak in 2008 (Jespersen and Huffman, 2014), small restaurants in
Madagascar (Sarter and Sarter, 2012), healthcare and school food services in Iowa, Minnesota and
Kansas (Ungku et. al., 2014) and dairy processing organizations in Zimbabwe (Nyarugwe et.al.,
2010).
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Research Methods
This study utilized descriptive exploratory research design to explain the dimensions of
food safety culture (i.e. vision and mission, people, consistency, adaptability, hazards and risk
assessment) as applied on the food safety management practices of the City of Bacoor Food
Processing Center.
Data were gathered by combining surveys/interviews, document/records reviews as well

as observations of artifacts and food safety practices in the work setting. The mean values were
derived from survey questions in terms of each behavior-based dimension to determine the food
safety culture index of the Center. In determining the food safety maturity of the Center, the
researcher adopted the food safety maturity model by Jespersen et.al. (2016).
Primary data collection was executed by conducting guided survey on the employees of
the processing center. In addition, observation of practices and artifacts that describe food safety
culture was performed. The adoption of Good Manufacturing Practices of the processing center
was observed following a checklist that was adapted from an earlier food safety study of Mojica
(2018). The checklist was validated by the focal person of the food processing center. A separate
questionnaire was used to profile the employees of the processing center however. Six out of seven
employees were present during the survey.
In evaluating the food safety culture of the Center, two sets of questionnaires based on
Jespersen et. al.’s (2016) framework adapted in the study of Rebong (2018) applied in a food
manufacturing company. Separate questionnaires were prepared for the rank and file employees.
The questionnaire for staff/supervisor was completed by the focal person of the processing center.
The secondary data used in the study were those that were gathered from the records of the
processing center. Moreover, relevant data was also obtained from the official website of the
official government agencies like the Philippines Statistical Authority and the Official Gazette of
the Republic of the Philippines.
Results
City of Bacoor Food Processing Center
The City of Bacoor Food Processing Center (the “Center”) is a food processing
organization that uses green mussels are the main ingredient for production. It was
established in May 2018 and started its operations in October of the same year. The office
of the processing center is situated in Barangay Sineguelasan in Bacoor which is near to
the city proper.
The Center is a project of the local government unit in order to promote and
introduce to the public the products being manufactured locally in the city of Bacoor. Aside
from this, the processing center was established to help local “magtatahong” (processors
of fresh mussels) of the city by providing them a stable source of income. Currently, the
food processing center does not have an established vision and mission statement but has
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the long-term goal of making their operations stable and self-sustained. As the operation
becomes sustained, the ownership of the processing center will be transferred to their
current employees. As of the moment, their operations are being funded by the local
government of Bacoor and by the Department of Science and Technology (DOST).
All production processes were done manually by seven employees of the processing
center that are tasked to perform various jobs starting from processing the mussels up to
selling the products. Specifically, the job descriptions of the employees include a packager,
labeler, cook, dishwasher and seller. The focal person stated that the number of employees
is still enough to sustain the production since they do not venture yet into the mass
production of products.
The processing center’s employees are composed mainly of employees ranging

from 25 to 50 years old. Most of them are high school graduates and have the average
working experience in the food manufacturing of two years. The processing center is not
very strict with job qualifications such as age, sex, educational attainment, working
experience, civil status, and others except for the requirement that all applicants undergo
a mandatory medical exam. This is to ensure that they are free from any medical concern
as they will be involved in food handling. Their employees report to work from 8 a.m. to
5 p.m. on Monday to Friday and are paid monthly for Php 5,000. In instances where there
is no production of products, the employees are just asked to go to work to keep the facility
clean.
The processing center acquires its raw materials (fresh mussels) from local mussel
farmers residing near the coastal areas of Bacoor. The fresh mussels were bought in the
farming boats right after the mussels were harvested. The prices per gallon of the fresh
mussels vary according to the season and the sizes. The biggest size of fresh mussels which
is called malakihan is being sold for Php 60 – Php 70 per gallon which is only available
during the harvest season. If it is not harvest season, the medium-sized mussels, pamaktura,
and the small-sized mussels, semilya, is being sold for Php 120 per gallon.
The raw materials were brought immediately to the City of Bacoor Food Processing
Center for processing to maintain good quality and avoid spoilage. The process of
pagtitiptip immediately follows as the fresh mussels arrive at the food processing center.
It is done to separate the mussels from each other since the mussels were clumped together
when they were acquired from the farms. Pagtitiptip is being done by two or three
employees while the duration depends on the volume of mussels and the expertise of the
one executing it. As the mussels become separated from each other, it undergoes thorough
washing to remove unwanted dirt and dust such as sand. Then, the mussels are boiled until
the shells open-up which usually takes up less than an hour. As the mussels are boiled, the
mussel meat will be filtered to enable them to separate the meat from the broth since the
broth will be used during further processing of products. After the separation, the mussel
meat will be subjected to various cutting or marinating, depending on the product to be
produced. Lastly, the packaging is also done in the facility by the employees.
The processing center uses a different kind of machines to have an efficient

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production. They use a cooking bath, meat grinder, meat mixers, meat stuffer, food cutter,
deep fryers, steamers, and siopao maker. The equipment was provided by the DOST to the
Center when it was established.
Based on the process flow of the processing center, the threat of contamination can
start from the acquisition of fresh mussels from the farm. Contamination may be observed
if there are foreign matters found in raw materials. During the boiling of fresh mussels,
contamination may start if the water being used is not regularly changed since it may
accumulate unwanted matter from the raw mussels. Too much exposure to the environment
can also permit bacteria and pathogen growth in the products. Inappropriate temperature
maintenance for the storage of raw materials and finished products may also contribute to
degrading of quality.
The products of the City of Bacoor Food Processing Center include tahong chips,
adobong tahong, adobong tahong in olive oil, tahongganisa, tahong panada, tahongballs,
crispy tahong, siopao, siomai, lumpia, and sweet & spicy tahong. The average shelf life of
a processed mussel product is about one week. These products are being sold to trade fairs
being held in the city, mainly in malls. About six to seven trade fairs happen in a year. They
can sell as much as 60 gallons of mussels in a trade fair, during the peak season of sales.
Currently, the processing center only manufactures their products when orders are
placed, this is due to an inadequate supply of mussels that results in higher cost of raw
materials which in turn results in lower revenues. The processing center does not have an
outlet in which they can sell their products. The products are being displayed in the lobby
of the city hall to introduce it to every guest visiting the city hall. The Center considers
only one competitor in the market, the Ocean Fresh Tahong which currently dominates the
market.
Food Safety Culture of the City of Bacoor Food Processing Center
The behavior-based food safety culture of the City of Bacoor Food Processing
Center was described by using questionnaires adapted by Rebong (2018) that contain 20
questions/situations that will be rated by the respondents on a Likert Scale. The
questionnaires were filled by the Staff/Supervisors and the Rank and File employees.
Specifically, the focal person answered the questionnaire for the staff/supervisor since the
focal person leads the daily operations of the food processing center, while the
questionnaire for the rank and file employees was answered by the employees involved in
the daily operations.
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Table 2
Frequency of Ratings by Rank and File Employees (n=6)
Food Safety Percentage Food Safety Percentage
Culture Item Stage 5 Stage 4 Culture Item Stage 5 Stage 4
Dimension “Internalize” “Predict” Dimension “Internalize” “Predict”
1 100.0 10 50.0 50.0
Vision 2 100.0 11 83.3 16.7
Consistency
and Mission 3 100.0 12 83.3 16.7
4 100.0 13 100.0
5 100.0 14 83.3 16.7
6 100.0 15 83.3 16.7
People 7 100.0 Adaptability 16 66.7 33.3
8 66.7 33.3 17 50.0 50.0
9 100.0 18 66.7 33.3
Hazards and 19 83.3 16.7
Risk 20 83.3 16.7
Management
* Note: There were no responses given for stages 3 (“know-off”), 2 (“react to”) and 1 (“doubt”)
Stages 4 and 5 generated most frequencies rated by rank and file on food safety culture
dimensions. This implies that the rank and file employees “strongly agree” with the situations
pertaining to the five dimensions. According to the rank and file responses, they understood well
the vision and mission of the organization. The employees perceived that their management valued
food safety through effective communication of principles, policies, requirements, and
expectations.
For the people dimension, the employees “strongly agree” that they were practicing food
safety at all times by responding quickly to food safety concerns, having a high commitment to
food safety, implementing food safety measures and gaining a high understanding regarding food
safety and its requirements.
Regarding the consistency of the organization, this discusses how consistent the
organization is in implementing food safety. Based on the data gathered, half of the employees
strongly agree that they are aware of their responsibilities in terms of food safety. Furthermore, it
showed that the organization values food safety more over productivity and food safety is
influenced by customer perceptions.
As for the adaptability, the employees strongly agree that they are prepared to adapt to the
changes within the organization and can respond to it quickly. Additionally, they also incorporate
their learnings from the past in decision-making. Meanwhile, half of the respondents agree that
they can contribute decisions based on food safety policy.
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Lastly, for the hazards and risks, the employees strongly agree that they possess an
understanding of food safety hazards and their responsibilities to prevent the occurrence of such
hazards.
Table 2
Frequency of Ratings by Staff/Supervisors
Food Safety Percentage Food Safety Percentage
Culture Stage 5 Stage 4 Stage 1 Culture Stage 5
Item Item
Dimension “Internalize” “Predict” “Doubt” Dimension “Internalize”
1 100.0 10 100.0
Vision 2 100.0 11 100.0
Consistency
and Mission 3 100.0 12 100.0
4 100.0 13 100.0
5 100.0 14 100.0
6 100.0 15 100.0
People 7 100.0 Adaptability 16 100.0
8 100.0 17 100.0
9 100.0 18 100.0
Hazards and 19 100.0
Risk 20 100.0
Management
Based on the data gathered, the respondent strongly agrees that her superiors “walk the
talk”, obeys the food safety principles at all times, and performs proper allocation of resources.
Additionally, there is effective communication of food safety requirements and expectations
within the organization.
For the people dimension, the respondent complies with food safety standards even without
the superiors observing. She also strongly agrees that they provide food safety training on a regular
basis, that there are metrics being used for continuous improvement, and people in the organization
are highly engaged, motivated, and committed. As per the personal behavior of the respondent,
she strongly agrees that she has a high level of understanding of the food safety requirement in
their organization and has high confidence in her food safety behavior.
For the consistency dimensions, the respondent strongly agrees that their employees are
aware of their responsibilities and accountabilities for exercising food-safety-related tasks. She
also strongly agrees that a higher number of customer complaints reflect a negatively supported
food safety culture, that their documentation system supports food safety and that their line
employees are involved in the design and improvement of food-safety-related procedures and work
instructions. Meanwhile, the respondent perceives that it is more important to prioritize production
yield over food safety measures.
The respondent strongly agrees that the organization is quick to address and adjust to
changes in the system and uses the learnings from the past for the future. Lastly, for the hazards
and risks management, the respondent strongly agrees that the information is accessible and
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interpreted in their organization and are fully understood.
The analyses of Tables 1 and 2 are only a description of whether the respondents agree or
disagree with the statements regarding the food safety culture within the organization. These
analyses do not represent the maturity level of the organization’s food safety culture. To determine
the maturity level, the mean values of the ratings from the two questionnaires will be computed
and be plotted against the food safety maturity model.
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System of Rice Intensification (SRI): Farmers’ Awareness,
Perceptions and Attitudes in Quezon Province
8th NBMC Paper # 45
Gemma U. Reyes, Julia P. Adajar, Melodee Marciana E. de Castro, Rachelle A. Mariano

University of the Philippines Los Banos
[email protected]
Abstract
The System of Rice Intensification (SRI), was introduced as a viable solution to several constraints
in rice cultivation, such as insufficient yield, increasing cost of production, dependency on
chemical inputs, and adverse environmental impacts. However, even when all essential elements
(high yielding, low cost, environment-friendly system) seem to be present, the end result can
disappoint those responsible for developing and promoting the method. The research therefore
examined contributing factors affecting the willingness of farmers to practice SRI. The study was
conducted in General Nakar, Quezon wherein the Rice Watch Action Network (RWAN) in
cooperation with the Municipal Agriculture conducted trainings on SRI through the Climate
Resiliency Field School (CrFS). A Binary Logistic Regression Analysis revealed that the
willingness of the farmer to practice SRI is a function of farm size, training and support, and
perceptions of initial cost and physical compatibility. A negative significant relationship was found
between farm size and willingness to practice SRI while perceptions on initial cost, physical
compatibility, and training and support were found to have a positive significant influence with
the willingness to practice SRI.
Keywords: System of Rice Intensification, Binary Logistic Regression, Perceptions, Case
Introduction
Rice has been one of the most important staple crop in the world, feeding nearly half of the
world’s population (GRiSP, 2013). In the Philippines, food security is highly dependent on rice
production as it is a major constituent of the Filipino diet. In spite of being an agricultural country,
the Philippines cannot suffice the rice demands of its own people. In terms of yield, the Philippines
ranked third to last after India in the high-yield season (dry season) and ranked lowest in low-yield
season (wet season) (Dy, 2017). With the continuous increase in population, it is expected for the
country to depend on rice imports in order to match the country’s demand for rice.
Other than consumption, the Global Rice Science Partnership (2013) claims that rice is the
single most important source of employment and income for rural people. There are over 2.4
million rice farmers in the country with an average farm size of 1.14 ha (Tolentino, 2015). Among
these farmers, there is a residing poverty incidence of 30.2% (Briones, 2016). One factor that could
have led to this is the farm cost. The Philippines ranked third in terms of highest farm cost during
the high yield season and first during the low yield season (Dy, 2017). Often in cases of
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smallholder farmers, rice cultivation is becoming less profitable due to increasing price of inputs,
water shortage, labor shortage and low level of returns. It needs to adopt technologies, systems, or
managerial practices that could further improve yield, quality, and profitability.
With regard to the importance of learning new ways of improving productivity, the System
of Rice Intensification (SRI) is emerging as a promising innovation in rice production. It is aimed
at increasing the productivity of irrigated rice by changing the management of plants, soil, water
and nutrients (SRI International Network and Resources, n.d.). To add, SRI is a site specific system
and such changes or adjustments are counter-intuitive which rely on the farmer’s judgement, such
as whether to transplant smaller, younger seedlings or to reduce the number of plants grown per
square meter (Uphoff, 2016).
SRI initially seemed well suited to cases of smallholder farmers because of the
unavailability or high cost of fertilizer and the inability of most farmers to grow enough rice to
feed their families. Numerous cases around the world and in the country as well, have proven SRI’s
increase in yield. Furthermore, knowledge on SRI is continuing to reach certain parts of the country
with the help of a consortium of farmers' groups, civil society organizations, academics, and
government researchers. Despite the increasing awareness with SRI, the number of SRI
practitioners remain to be relatively few since many still prefer the conventional practice of
planting rice (Verzola, 2016).
According to SRI Rice (n.d.) knowledge regarding SRI initially came to the Philippines
through different paths. The International Institute for Rural Reconstruction (IIRR) was the first
to take interest in SRI after Norman Uphoff visited in 1997. By 1998, a national NGO seminar on
rice was hosted to introduce SRI to NGOs in the Philippines. It was cosponsored with CIIFAD and
ILEIA, and supported by Justin Rabenandrasana, secretary of Association Tefy Saina in
Madagascar. ILEIA invited Rabenandrasana and Uphoff to provide an article on SRI for
its newsletter. The CIIFAD website also provided information on the innovation. In 1999, the
Consortium for Development of Southern Mindanao Cooperatives (CDSMC) conducted its first
trials in Mindanao that resulted in 4.95. t/ha, a substantial increase from the usual yields of 1.5-2.5
t/ha. Adaptation of SRI concepts to upland rice production were then made by Broader Initiatives
for Negros Development (BIND) based in Bacolod City. It conducted trials adapting SRI to upland
conditions in Negros between 1999 and 2002, with results for some spacings averaging over 7 t/ha.
By the year 2002, SRI Pilipinas, a non-profit group that actively promotes SRI in the
Philippines, was established. They were the main promoters of the method among farmers and in
the government. By 2007, they have managed to do 50 one-day SRI trainings in 49 provinces. Out
of these trainings emerged the national network of SRI Pilipinas. In 2009, they were able to hold
a national trainers' conference, to evaluate the results of the earlier nationwide trainings. Since
then, they have also received support from Oxfam Great Britain, Caritas Czech, and other
humanitarian organizations, conducting one-day trainings on request, each training attended by
20-25 farmers on the average.
Based from the article by Verzola (2016), other organizations have also been promoting
SRI. One of the most successful is the Rice Watch Action Network (RWAN), which includes SRI
training as part of its 16-week climate resiliency field school (CrFS) directed at municipalities.
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Through their efforts, more than 30 municipalities have received official season-long trainings on
SRI. And because adaptation to climate change has become a top government priority, more
municipalities are queuing up for the trainings. The first trials of SRI in the Philippines was soon
followed by a series of annual national SRI workshops in March 2002. The workshops were hosted
by the Philippine Rural Reconstruction Movement in which Prof. Uphoff has been able to attend
with 50-70 participants from Isabella to Mindanao. Verzola (2008) was able to provide yield
results of SRI field trials in the Philippines.
In General Nakar, Quezon Province, there were four groups of farmers who received
training from the Climate Resiliency Field School. General Nakar was one of the few
municipalities selected by RWAN (Rice Watch Action Network) to receive trainings on SRI since
it is a member of LOAMC (League of Organic Agriculture Municipalities and Cities). Likewise,
one of General Nakar’s vision is to practice inclusive and sustainable growth through organic
agriculture which happens to be the main highlight of SRI trainings. In spite of the promise of this
innovation, the level of acceptance towards SRI in the areas where it was promoted has been low,
and those who continue to practice the method rarely do so on more than half of their land.
Therefore, the study aimed to examine how the extension efforts of RWAN and the municipal
agriculture affect the participant farmer’s level of acceptance towards SRI.
Origin of SRI
The System of Rice Intensification (SRI) was an accidental discovery by Father Henri de
Laulanié, a Jesuit priest who worked closely with peasant farmers in Madagascar (Perera,
Simmons, & Ahamed, 2007). Due to the severe drought which resulted to a decrease in water
availability, he experimented by transplanting 15 day old seedling in 1983 which resulted to a yield
of 7 to 15 t/ha (Katambara, et al., 2013). He introduced a low-cost method that was not dependent
on expensive and environmentally-unfriendly external inputs and was able to increase rice yield
by means of modifying the way that rice plants, soil, water and nutrients are managed (Uphoff,
2008). Subsequently, Laulanié’s work was initially undertaken by an NGO that he established in
1990 with some of his Malagasy colleagues (Uphoff, 2008). They also collaborated with a North
American university, working with the Cornell International Institute for Food, Agriculture and
Development (CIIFAD) which had worldwide networking connections (Uphoff, 2008).
Furthermore, Uphoff (2008) explains that most of the early work on SRI were undertaken
by farmers, NGOs and other individuals who had the curiosity with the idea of “getting more from
less”, further claiming that SRI can benefit farmers, consumers, and the environment if SRI’s
claims could only be validated. With all the advantages associated with SRI, Katambara, Kahimba,
Frederick, Mahoo, Mbungu, Mhenga, Fikiri, and Nyarubamba (2013) claim that SRI lacks proper
guidelines and it is considered to be highly empirical. In order to fully understand the concept of
SRI, it is necessary to determine the underlying principles of SRI and how it was able to achieve
the increase in yield.
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Principles of SRI
Katambara, et al., (2013) explains the applied principles of SRI ranging from seed sorting,
sowing, transplanting young seedlings, weeding, and water management, all within the growing
period of rice plants:
● Sorting out of the seeds: Although other approaches used in sorting rice seed may exist,
in SRI the approach used to remove defective seeds from good seeds so as to ensure that
only good seeds are sown by floatation-sink method in salty solution. Good seeds are the
ones that sink in salty water capable of floating a raw egg. Generally, the concentration is
not substantial to cause an effect on the selected seed.
● Raising seedlings in garden like nursery: This ensures a careful management of seedlings
and easy uprooting as well as transplanting.
● Uprooting and transplanting time: The time between uprooting and transplanting should
be between 15 - 30 minutes and the roots should be kept moist during this time.
● Early transplanting of 8 to 15 days old seedlings: In addition to the provision of adequate
buffer for the seedling from being damaged during transplanting, full tillering and optimal
production occurs when the seedling is transplanted before entering the fourth phyllochron
of growth.
● Single, widely spaced transplants: This ensures that the plants have enough space for
tillering as well as to allow a mechanical weeder to pass through without harming the
plants.
● Early and regular weeding: This ensures that weeds do not compete with the rice plant. In
addition, mechanical weeders aerate the soil. The roots need oxygen so as to be strong and
healthy for optimal tillering and development of healthy rice grains.
● Carefully controlled water management: Makes the rice plant healthy since the roots are
supplied with moisture as well as air. This allows the root to uptake adequate nutrients
from various soil horizons.
● Application of compost: The compost materials are rich with nutrients as well as
organisms whose activities favor the growth of rice. Above all it is environmentally
friendly to use composite than industrial fertilizers.
● No use of herbicides: The non-use of herbicides favors the sustainability of the ecosystem
and the micro-organisms whose activities are suitable for the growth of rice plants.
However, Katambara, et al., (2013) still argues that there is the need to identify quantitative
parameters such as moisture content, plant spacing, and age of transplanting with respect to the
environmental characteristics of a given area in order to maximize its potential benefits. In relation
to this, Perera, Simmons, and Ahamed, (2007) clarifies that SRI is not a set of fixed practices of
technical specifications, which means there will always be the possibility of adjusting the exact
technical components based on the socioeconomic and biophysical characteristics of the area.
Regardless, realizing the full potential of the SRI effect yields to similar benefits.
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Benefits of SRI
For a smallholder farmer, it is often difficult to improve production by following the

recommendations of the conventional method. The Green Revolution paradigm, in its original or
revised forms, requires improved seeds, fertilizers and other chemical inputs, which are often
unaffordable or unavailable to farmers (SRI Rice n.d.). The use of chemical inputs leads to
stagnation and decrease in crop productivity over time, due to diminishing soil fertility. This is the
result of substituting improving soil fertility naturally with the exclusive use of fertilizers. Thus,
the SRI methodology was introduced as an alternative that represents a new direction of regaining
agricultural productivity through ecological and natural processes. A summary of its benefits
includes increased yields, less external inputs, and reduced emissions of CH4 and N20 (SRI Rice,
n.d.).
Pandian, Sampathkumar, and Chandrasekaran (2014) were able to confirm the increases in
yield under SRI with respect to conventional practice in Tamil Nadu, India. Along the verification
was an explanation behind the increase. The study claims that maximum grain yield achieved in
SRI was due to higher Leaf Area Index (LAI) and light interception at wider spacing between
plants gained from open plant structure (Pandian, Sampathkumar, and Chandrasekaran, 2014). In
addition, an article published by the Asian Farmers Association for Sustainable Rural
Development (2012) verifies that Cambodia had more than doubled its national rice production in
2008 upon SRI’s introduction in 2002. Moreover, SRI was also the method that Indian farmers
used to reach 400 cavans per hectare (Verzola, 2016)
Based from the knowledge of SRI Rice (n.d), paddy cultivation in SRI requires less amount
of seeds, and significantly reduces disease pressure and chemical fertilizer, resulting to increased
fertilizer use efficiency in soils enriched with organic matter. As soils improve in structure and
become more fertile through periodic organic matter amendments, less fertilizer is needed to
achieve a targeted production level SRI Rice (n.d).
By reducing inputs of seed, water, chemical fertilizers, and in some cases of labor, SRI
Rice (n.d) claim that, the system gives greater returns to farmers' available resources of land, water,
labor and capital, and can lower their production costs. This increases farmers' incomes and
increases the profitability of rice farming.
SRI Adoption
While studies concerning the multiple benefits of SRI abound, little evidence exists on the
farmer’s adoption or continued use of SRI in the country. Nirmala (2012) was able to conduct a
study on the adoption of SRI considering a farmer’s age, education, farm size, farming experience,
training, extension contact, sources of information utilization, perception, risk orientation, and
innovativeness as significant factors affecting the adoption of SRI in Andhrapradesh, India.
Through a correlation analysis, it was found that education, training, extension contact, perception,
risk orientation, and innovativeness had a significant effect on the extent of adoption. However,
the use of correlation only described the linear relationship between two variables alone, ignoring
the combined effects of such factors and cannot be used to predict the outcome of the dependent
variable.
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In rural Bangladesh, a study on adoption of SRI was conducted wherein adoption of SRI
was treated as dichotomous, represented by a value of 1 if a farmer practices SRI and 0 otherwise
(Barret, Fafchamps, Islam, Malek, & Debayan, 2016). It was hypothesized that farmers’ decision
to adopt or reject new technologies at any time is influenced by the combined effect of a number
of factors related to farmers’ objectives and constraints. Logistic regression analysis technique was
applied to identify the major components of independent variables for distinguishing adopters from
dis-adopters. The findings of this study indicated that variables such as difficulty in water
management, difficulty in early transplantation, non-availability of skilled labor and difficulty in
using cono weeder were the most important components for adoption of SRI. Aside from probit
and logit models, performing descriptive analysis also contributed in providing a rich discussion
in the adoption of SRI (Durga & Suresh, 2016).
Factors Affecting SRI Adoption
Research done on SRI measured how socio-demographic, psychographic, and support

network factors have influenced adoption. Below is a discussion regarding the variables identified
to have a significant relationship towards the adoption of SRI.
● Age: An analysis of age-wise composition of respondents reflects that younger farmers

show greater inclination towards adopting SRI technology (Durga & Suresh, 2016). Karki
(2010) was also able to find similar results wherein age played a significant influence on
the adoption of SRI. It was concluded that younger farmers are more likely to adopt SRI.
● Gender: Although Karki (2010) was not able to find a significant relationship between
gender and adoption of SRI, his findings showed that females were more likely to adopt
SRI. To add, increased participation of women in SRI was noticeable in Maharashtra,
further claiming that SRI is empowering women (MAVIM, 2015).
● Education: Durga and Suresh (2016) have concluded that higher education levels lead to
earlier and more effective adoption. Farmers having good education levels are more open
to new technology, indicating a positive relationship between education and adoption
(Bakele, Machiel, Gezahegn, & Syed, 2009).
● Farming Experience: Farmers with higher experience appear to have complete information
and better knowledge and are able to evaluate the advantages of SRI technology. It was
found that the experience level of the farmer is positively and significantly influencing the
adoption of SRI (Durga & D., 2016).
● Farm Size: Karki (2010) found a significant positive relationship between farm size and
adoption of SRI. He concluded that farmers with large landholding were more inclined of
practicing SRI since these farmers are able to test SRI on small plots of their land.
● Perception: There is a positive and significant relation between perception and extent of
adoption of SRI (Nirmala, 2012). Respondents who have developed favorable perception
on SRI are expected to show higher rates of adoption (Nirmala, 2012).
● Innovativeness: There is a positive and significant relationship between innovativeness and
extent of adoption of SRI (Nirmala, 2012). A farmer who is innovative tries to be ahead of
others and adopts a new technology first (Nirmala, 2012).
● Knowledge/ Awareness: There is a positive and significant relationship between awareness
and extent of adoption of SRI (Nirmala, 2012). Farmers who are more knowledgeable of
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the system tends to lessen the risk upon trying the technology and is able to implement its
practices in their own farm (Nirmala, 2012).
● Proper and Formal Training: A positive and significant relationship between training and
extent of adoption of SRI was found (Nirmala, 2012). Nirmala (2012) further concludes
that training improves knowledge, and as a result, farmers get motivated for adoption of
SRI.
● Source of Information Utilization: A positive and significant relation between sources of
information utilization and extent of adoption of SRI was observed in the study (Nirmala,
2012). Respondents who utilized more sources of information had more knowledge
regarding SRI, that led to more confidence and finally adoption of technology (Nirmala,
2012)
● Input Availability: A positive and significant relationship between input availability and
extent of adoption of SRI were found (Nirmala, 2012), Nirmala (2012) argues that timely
availability of quality inputs like markers and weeders at reasonable cost and labor may
encourage the respondents to adopt the technology.
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Figure 1
Framework
The study took into consideration analyzing three groups of factors that affect the level of
acceptance towards SRI. These are the socio-demographic, psychographic, and support network
factors. Under socio-demographic factors, these would include age, gender, education, farm
experience, and size of landholding. As for the psychographic factors, farmer perception,
innovativeness, and awareness were taken into consideration. Lastly, support network factors were
studied by determining sources of information utilization, presence of proper and formal training,
and input availability.
Socio-demographic Factors Support Network Factors

Age Psychographic Factors
Proper and Formal
Gender Level of Perception
Training
Educational Innovativeness
Source of Information
Attainment Awareness/
Utilization
Farm Size Knowledge
Input Availability
Farm
Experience
Willingness to practice
System of Rice Intensification
Insights
Constraints and Opportunities
Recommendation
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Each factor was hypothesized to have a significant influence on the willingness to practice
SRI. Insights are drawn from the results of the analysis followed by the identification of the
constraints and opportunities. Lastly, conclusions and recommendations were drawn according to
the issues identified. Figure 1 shows a diagram of how the research will be analyzed.
Methodology
Research design
The study used both qualitative and quantitative methods in order to garner insights
that provide a richer level of data and explain why the farmers have responded in such a
manner. A similar study by Nirmala (2012) with a few modifications was employed in the
design.
In the quantitative phase of the study, random sampling of 60 respondents from the
pool of farmer beneficiaries who were trained under the Climate Resiliency Field School
(CrFS). The collection of primary data was done in General Nakar. Field observations and
individual interviews through close and open-ended questions and structured questionnaire
were used in order to gather primary data concerning their perceptions, knowledge, and
attitudes towards SRI. Quantitative data was analyzed by entering the responses into the
SPSS in which responses were coded for each question. Frequencies were used to
determine the distribution patterns of respondents with respect to the selected variables for
the study. Percentages were used for the standardization of size by computing the number
of individuals that would be in a given category, if the total number of cases were hundred.
In the qualitative phase, farmer cases were selected from the four barangays which
received trainings on SRI. These farmers were asked to discuss their experience on SRI.
Their responses were transcribed and used to support the quantitative analysis. Also,
secondary data was gathered from various journals, articles, books, reports and so on.
Binary Logistic Regression model
A binary logistic regression analysis was done to analyze the dataset consisting of 17
independent variables and a dichotomous dependent variable. Farmers were categorized whether
they were “willing” or “unwilling” to practice SRI, of which was characterized as the dependent
variable (Y). Responses under “extremely willing” and ”willing” were recorded as “willing” where
Yi = 1 while responses under “undecided” and “unwilling” were recorded as “unwilling” where
Yi = 0. Thus, the dependent variables in the following binary logistic model are unwillingness = 0
and willingness = 1 to practice SRI.
The objective of logistic regression is to find the best fitting model to describe the relationship
between the dichotomous characteristic of interest and a set of independent variables (Elliot &
Tranmer, 2008). The logistic regression model links the range of real numbers to the range 0 – 1:
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Where is the probability that the ith case is willing to practice SRI and zi is the value of the
unobserved continuous variable for this ith case. Also, zi is assumed to be linearly related to its
predictors. Hence:
Where zi is the ith value of the dependent variable, xi is ith value of the independent variable and n
is the number of the independent variable. The following model was constructed and used to
analyze the willingness of the farmers to practice SRI in General Nakar.
The description of the model variables is presented in Table 1. In relation to the discussion
in the literature review, the expected relationship between the dependent and independent
variables are also indicated.
Table 1
Description of variables
Variable Categorical Coding Expected

Relationshi
p
Dependent variable
WFS Willingness to practice SRI Unwilling = 0 Willing = 1
Independent Variable
SEX Sex of respondent Female = 0 Male = 1 -
AGE Age of respondent Ratio Scale -
EXP Number of years in rice paddy Ratio Scale
+
cultivation
EDU Number of years of formal Ratio Scale
+
education
FS Size of rice paddy in ha Ratio Scale +
COST Perception on SRI’s initial cost Same or greater initial cost =
+
0 Less initial cost = 1
SIT Perception on SRI’s feasibility Not feasible = 0 Feasible = 1
+
(Situational Compatibility)
PCPT Perception on SRI’s farm Not suitable = 0 Suitable = 1
suitability (Physical +
Compatibility)
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SCPT Perception on SRI’s recognition Not recognized = 0 Well
in the community (Social recognized = 1 +
Compatibility)
IND Perception on SRI’s Not independent = 0
independence of existing Independent = 1 +
practices
COM Perception on SRI’s ease to Difficult to communicate = 0
+
communicate Easy to communicate = 1
TS Perception on SRI’s ability to Does not save time = 0
+
save time Saves time = 1
INN General innovativeness of the Innovativeness score (Hurt,
respondent Joseph, and Cook (1977):
Innovators = >80
Early Adopters = 69 – 80 +
Early Majority = 57 – 68
Late Majority = 46 – 56
Laggards = <46
KNL Knowledge/ awareness on SRI Fail = 0 Pass = 1 +
IA Perception on availability and Total score of ease of
ability to acquire inputs when availability and market price
shifting to SRI
Ease of availability
Readily available = 4
Available but needs to wait
short (<1 month) time = 3
Available but needs to wait
+
long (>1 month) time = 2
Not available = 1
Market price
Free = 4
Cheap = 3
Reasonable = 2
Expensive = 1
TRS Perception on the training and Total score using statements
support given by agricultural measured on Likert scale
extension workers. Strongly agree = 5
Agree = 4 +
Neutral = 3
Disagree = 2
Strongly disagree = 1
SRC Available sources of information Total score using frequency
on SRI of contact with information
sources with weightages of 2 +
(often), 1 (sometimes) and 0
(never)
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A total of 17 variables were of interest in the study with only sex and age perceived to have
a negative relationship towards willingness. The model was able to make use of all the variables
under socio-demographic and personal related factors. However, certain attributes in the
psychographic factors such as net profitability, multiple benefits, cognitive complexity, resource
complexity, application complexity, labor intensiveness, visibility, etc. revealed constant
responses on every case hence they were automatically excluded from the model.
Sociodemographic profile of respondents
The socio-demographic profile of the respondents was summarized in Table 2.

Results is consistent with the literature that majority of farmers are getting old (more than
50 years old). The probable reason might be that young people have been engaged in
activities other than agriculture and that older people choose to remain and stay in their
traditional ways. However, it should be noted that nearly half (43.3 %) of the total number
of respondents are females, possibly indicating that the interest in learning new ways of
farming is evident within female farmers. In terms of education, majority (58.3 %) of the
respondents achieved high school level, and few reached college level. The possible
explanation for this is the absence of enough formal education institutions, or its lack of
accessibility since vast areas of General Nakar still remain to be untapped and undeveloped
(Roxas, 2015). Lastly, farmers are marginal farmers as a significant percentage (83.3 %)
of the respondents is cultivating rice land that is less than 1 hectare.
Table 2
Distribution of respondents according to socio-demographic profile
Socio-demographic Frequency Percentage (%)

Characteristics
Age
36-50 18 30
51-65 36 60
66-80 6 10
Gender
Male 34 56.7
Female 26 43.3
Educational Level
Elementary Level 17 28.3
Highschool Level 35 58.3
College Level 8 13.3
Number of years in farming
10 – 27 20 33
28 – 45 35 58
46 – 63 5 8.3
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Farm Size
0.25 – 0.77 ha 50 83.3
0.78 – 1.3 ha 7 11.7
1.3 – 1.8 ha 3 5
Binary logistic regression results
The results of the logistic regression model indicated that the overall predictive power of the
model (95 %) was high, while the significant Chi square (P < 0.01) was indicative of the model’s
good fit (Table 3).
Table 3
Analysis of determinant factors influencing willingness to practice SRI using
Binary Logistic Model
Variables B Wald P – value
Sex(1) -.057 .001 .976
Age -.152 .325 .569
Farming experience .078 .111 .739
Educational level .416 .754 .385
Farm size -12.237 4.495 .034**
Initial Cost (1) 13.608 4.017 .045**
Situational Compatibility (1) 1.061 .492 .483
Physical Compatibility (1) 7.466 4.503 .034**
Social Compatibility (1) 2.577 1.104 .293
Independent of existing .543 .064 .800
practices(1)
Communicability (1) .941 .146 .703
Time Saving (1) .063 .001 .977
Innovativeness .054 .171 .179
Knowledge (1) 2.509 .989 .320
Input Availability .038 .004 .951
Training and Support 1.301 3.262 .071*
Source of Information Utilization .257 .076 .783
Constant 45.731 2.000 .157
** and *, Significant at P<0.05, P<0.10, respectively. B, Parameter Estimate; SE, Standard Error.
-2log likelihood is 22.191, Chi square statistics is 54.191***, Overall Percentage Accuracy is
95 %.
These estimates signify the amount of increase or decrease, in the predicted log odds of
willingness (1) that would be predicted by a 1 unit increase or decrease in the predictor while
holding all other predictors constant. Based from the p values, training and support, farm size,
perceptions on initial cost, and physical compatibility, were significant predictors of an
individual’s willingness to practice SRI.
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Expressed in terms of variables, the binary logistic regression equation is as follows:
Results suggest that farmers who cultivate larger farm size are less willing to practice SRI,
contrary to the results by Karki (2010). A possible reason for this is that farmers regard SRI as
more complex than conventional farming, has resource complexity and labor intensive and farmers
find it difficult to apply it in larger farms. Conversely, this suggests that SRI is more convenient
to small farms due to its (SRI) complexity as compared to conventional farming.
The significant (p<.05) and positive relationship of the perception on initial cost indicates
that farmers who think that SRI entails less initial cost are more willing to practice it. Such finding
suggests the importance of highlighting the benefits on savings when using SRI during awareness
campaigns and trainings as in the study of (Arayaphong, 2012).
Similarly, the perception on physical compatibility is found to have positive and significant
(p<.05) relationship with the farmer’s willingness to practice SRI. This suggest that farmers who
regard SRI as compatible with existing cultivation practices in terms of current general farming
situation, good recognition among farming community and compatibility with existing practices
are more willing to practice SRI.
Training and support is found to be have positive and significant (p<.1) relationship with
the farmer’s willingness to practice SRI. This result is consistent with earlier studies such as that
of Nirmala (2012). Those farmers who think that agricultural extension workers regularly visit the
area, training materials are ready, sufficient and easily understandable, and facilitators are
knowledgeable are more willing to practice SRI. This result suggests the importance of proper and
sufficient trainings conducted with the farmers to positively influence their perception.
Interestingly, age, gender, education, and farming experience were found to have no
significant influence on the farmer’s willingness to practice SRI. The findings that age has an
insignificant effect on the farmer’s willingness to practice SRI is contrary to the findings that
younger farmers are more likely to adopt SRI (Durga and Suresh, 2016). Another contradicting
result is the insignificant effect of education and farming experience to the studies of Durga and
Suresh (2016) and Bakele, Machiel, Gezahegn, & Syed (2009). This study, therefore, suggests
that age, education and farming experience do not matter in terms of the farmer’s willingness to
practice SRI. This implies that SRI can be promoted to a wider audience of farmers, young or old,
educated or not, and experienced or not. Meanwhile, the result on gender is consistent with
previous studies (Karki, 2010 ; MAVIM, 2015). Lastly, variables concerning the perception of the
farmer such as situational compatibility, social compatibility, independence of existing practices,
communicability, ability to save time, input availability, and source of information utilization had
no significant influence on the willingness to practice SRI.
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Farmer-cases of SRI adoption
The farmer cases representing each barangay where field demonstrations, trainings and
lectures in SRI were conducted by the RWAN through their Climate Resiliency Field School
during 2015 – 2017 are discussed.
Farmer-case from Barangay Pamplona
The farmers of barangay Pamplona received training on SRI from the Climate Resiliency
Field School in 2015. They were the first batch to receive training. Among these farmers, only two
applied SRI in their farms. The main reason for shifting towards SRI was the absence of chemical
use and less dependency on inorganic fertilizer. He claimed that the introduction of the full set of
SRI practices was easy since he already started the incremental use of organic fertilizer in 2007.
By 2015, he was already practicing a full set of SRI practices. From an estimated average of 38
sacks from previous practices, he is now harvesting not less than 45 sacks in his 0.5 ha land which
is a 20 % increase from the previous practice. Moreover, he believes that his harvest are of greater
quality than before. Nevertheless, he also believes that he is yet to reach the full potential of the
SRI effect and that his current yield still hasn’t reached its maximum. However, the laborious
nature of SRI and the golden apple snail infestation made him practice SRI only on half of his
land. He claimed that the golden apple snail infestation was the major difficulty in practicing SRI
in their area. Most of the farms in Pamplona were low lying and near flowing streams of water
hence the great numbers golden apple snails were a problem.
Farmer-case from Barangay Batangan
The farmers of barangay Batangan were second to receive training on SRI from the Climate
Resiliency Field School. Out of the 35 farmers who were listed as recipients of the training, only
one applied SRI in their farm. The president of the Abaca/ Panususuan Irrigation and Farmers
Association of Batangan (APIFABA) was the only one to practice SRI for the reason of wanting
to regain the soil’s fertility. However, he was not able to fully practice SRI immediately. On his
first trials of SRI, he observed that the plants seemed weak and needed more nutrients, hence he
felt the need to use inorganic fertilizer. Still, the use of inorganic fertilizer has become less. From
applying four bags of urea, it was reduced to one and a half bags. In the coming planting season,
he plans of reducing it to half a bag until he is able to plant completely with organic inputs.
Moreover, he does not follow SRI’s principle of early transplanting. Since his farm is low lying,
he transplants seedlings at 15 days old to be able to withstand cases of flooding.
Nevertheless, he follows the required number of seedlings per hill, spacing, land preparation,
and water management guidelines of SRI. Although costs on fertilizers have been minimized,
additional costs were incurred in terms of labor. A big chunk of his expenses go to land preparation.
Also, preparations were done earlier as compared from his previous practices. Nevertheless, the
partial practice of SRI was able to give increases on yield. From previous practices, he was
harvesting 32 to 35 sacks in his 0.3 ha land. Upon gradually changing his practice, he was able to
harvest an average of 38 sacks and just last April, he harvested 45 sacks.
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Despite the positive results, farmers of APIFABA were reluctant of trying SRI. According
to their president, it was not only the soil that needed adjustments with the use of organic, but also
the farmers as well. He claimed that farmers cannot immediately dissolve their dependency on the
use of inorganic inputs, as these provided more ease in terms of application and availability. When
asked why a farmer would not want to practice SRI, most of the undecided and unwilling farmers
answered that SRI is too laborious and that there are too many processes involved. Moreover, the
president claimed that SRI still remains as a new method since not many are practicing it. Farmers
will only follow the practice once they have witnessed the majority of the farmers benefiting from
the practice.
Farmer-case from Barangay Maigang
Barangay Maigang was third to receive trainings on SRI. The farmers graduated last May
2017 from the Climate Resiliency Field School. However, the president of the Maigang Farmers
was the only one to practice SRI for the purpose of wanting to improve yield and quality of rice.
He just recently started using SRI in his 0.5 ha land and is expecting to harvest on October. He is
partially following the guidelines of SRI. Although he follows the guidelines on early
transplanting, required number of seeds per hill, spacing, water management, and pest and disease
control, he cannot completely shift from the use of inorganic to organic fertilizer. Hence, he plans
of gradually increasing the amount of organic fertilizer to be used for every cropping season.
As for the other farmers who received training, they were interested and willing to practice
SRI. However, they claimed that they cannot immediately practice SRI since they were still
waiting for a source of water. Most of the farmers source their water from nearby streams. One of
the farmers stated that he plans of practicing SRI on the next cropping season but only on one third
of his 1.5 ha land. Still, some remain reluctant of practicing SRI. As mentioned from the results
and discussion of innovativeness, a farmer was hesitant of practicing SRI since she practices
farming as a group with the farmers whose paddy is adjacent to hers. Hence, they use the same
rice variety, and practices. This was done to avoid attracting pests on adjacent paddies since having
older plants could draw pests to the area and affect adjacent paddies.
Farmer-case from Barangay Minahan
Barangay Minahan was the last to receive trainings on SRI. The farmers of Magasaka
Farmer’s Association (MFA) graduated from the Climate Resiliency Field School last August
2017. Similar to previous cases, only the president of MFA was practicing SRI. However, he
immediately applied the full set of SRI practice on his 0.75 ha farm and is waiting for harvest by
the end of the year. This decision was based from wanting to minimize cost. He used to spend Php
4,850 on five sacks of urea and Php 5,850 on five sacks of triple 14. Currently, he is spending Php
580 for 116 sacks of chicken manure and no other additional costs for making the bokashi. Labor
expense was not much of an issue since he and his family does most of the work.
Moreover, farmers were impressed of the results of organic and inorganic fertilizer
comparison from their field trial. They applied vermicompost for the organic trial plots, and triple
14 and amophos as the inorganic counterpart. The paddy with organic compost was able to
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withstand harsh winds while paddy with inorganic fell to the ground. Farmers claimed that paddy
under organic SRI treatment have deeper root growth and sturdier stalks.
However, one farmer elicited that farmers within their area, specifically those who were
not part of their association, were reluctant of trying new practices and would rather stick to their
previous practices. Despite being the largest barangay among the four, MFA remains to have the
least number of members. Moreover, out of the 17 total members, only 10 were active and able to
participate in the training. Nevertheless, the farmers who graduated from the field school claimed
that they were willing to practice SRI but only on a certain portion of their land.
Conclusion
The research aimed to investigate on contributing factors that can improve the level of
acceptance of SRI in Quezon Province, Philippines. Using a binary logistic model, results showed
that farm size, initial cost, training and support, and physical compatibility play significant roles
in the farmer’s willingness to practice SRI. Further, this study has limitations. First, the area of
investigation was restricted to one site of the SRI project in the Philippines, limiting the
generalizability of the results. Second, since the study was based on farmer perception, some
degree of bias may be possible in the data.
As mentioned from the cases of SRI from different barangays, it is possible for a farmer to
follow only a certain number of principles of SRI. Uphoff (2016), stresses that SRI is something
to be treated as a system or as a methodology rather than as a technology. Therefore, farmers are
not required to follow a fixed set of instructions. Instead, they are encouraged to apply their
insights and experiences in managing under SRI as it needs to adapt depending on their farm
condition. Also, farmers have the option to practice SRI to only a certain portion of their land.
Given these findings, the study recommends that research on mechanization of certain
portion of SRI practices should be done in order to minimize labor and possibly provide ease for
sourcing organic resources. In addition, research on transplanting requirements, fertilizer, water
and weed management, optimal spacing, and most suitable variety for different soil conditions and
topography should be conducted to receive the optimum benefits of SRI in their area. On the other
hand, regular meetings, discussions, and farmer-to-farmer exchange visits with adopters and non-
adopters at different stages of vegetative growth should be done in order to help build knowledge,
experience, and confidence among farmers to try and practice SRI. The agricultural extension
workers should encourage the establishment of communal compost houses in each area. This will
help residents to set up a compost system in their residence to secure organic inputs and provide
ongoing support through collective efforts.
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The Insights of Metro Manila Arts Audiences during the Pandemic
8th NBMC Paper # 46
Glorife Samodio
[email protected]
Abstract
The COVID-2019 pandemic has placed everyone’s lives to a sudden halt as immediate measures
were put in place by governments such physical distancing, lockdowns, work-from-home
arrangements, and cancellations of mass gatherings. Being highly dependent on social
interaction, the creative industries and art making are among those badly hit ---specifically the
performing arts sector. The sector’s vulnerability is magnified by the onslaught of this crisis,
and the industry, in most countries are not given funding priority in the region, especially when
the immediate need is to mitigate the spread of the virus.
The Philippine government has provided some assistance to the sector, but these will never be
enough. The concerns and anxiety of creative workers continues to heighten with these questions:
“Will the industry will ever go back to the way it was before COVID? Will the arts retain its
patrons and audiences in these times of uncertainty, with limited resources and spending power,
and with the looming threat of recession?”
This descriptive study intends to solicit the perceptions and behavior of arts audiences in Metro
Manila through a quantitative survey conducted from May to June 2020. The insights gathered
from this study aims to provide guidance as to how struggling arts organizations will be able to
pivot their operations and productions, and transition towards the new normal in presenting the
arts in the country.
Key Words: Arts Management, Audience Engagement
Introduction
The COVID-2019 pandemic has placed everyone’s lives to a sudden halt as immediate
measures were put in place by governments such physical distancing, lockdowns, work-from-
home arrangements, and cancellations of mass gatherings. Those in the arts, practically
experienced the same nightmare brought to their source of livelihood. Being highly dependent on
social interaction, the creative industries and art making are among those badly hit. Cancelled
engagements meant unpaid work, audience refunds, and revenue losses, which were valued at
P132.83B from the figures gathered by the National Live Events Coalition (Caruncho, 2020).
Naturally, cost-cutting measures were immediately implemented, and the first to take the blow is
the human capital, as jobs lost were estimated at 400,000 (Caruncho, 2020). It should be noted that
jobs in this sector have already been precarious, with the existence of multiple job holding,
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contractual projects, unemployment or underemployment due to scarcity of projects, high
mobility, prolonged work hours, and insufficient access to social security benefits (Bennett &
Hennekam, 2016). The sector’s vulnerability is magnified by the onslaught of this crisis, and the
industry, in most countries are not given funding priority in the region, especially when the
immediate need is to mitigate the spread of the virus. This pandemic has truly created a threat to
the security and survival of the major players and workers in the cultural and creative production.
Given these developments in the field, it is timely that the government and other creative
industry practitioners be provided with an initial baseline information on the cultural participation
and perspectives of the arts audiences and patrons that primarily sustain the Philippine creative
economy. This study was done to gather data about their general perception and experience on
cultural participation, specially that their usual live artistic experience has migrated online, at this
time of the pandemic. In this study, I primarily intend to determine their perceptions, beliefs and
attitudes towards online arts-related activities, the factors affecting their intention to participate,
their actual participation, and their reaction to the experience.
The information gathered in this quantitative study shall serve as inputs for struggling
culture and arts organizations, artists and arts managers as they formulate their strategies and
decisions as to how they will be able to pivot their operations and productions, and aid in the
transition towards the new normal in presenting the arts in the country.
Cultural Participation in the time of the Pandemic
Cultural Policies
–
Culture and arts have always been intertwined, and for years have been supported by
governments and institutions through policies and funding. According to N.T. Matthew in
Prudente-Sta.Maria, (2001), cultural policies are sets of guiding principles where the alternatives
programs for cultural action emanate from. He also asserted the idea of democratization of culture,
particularly in providing equal access to all citizens in matters of cultural heritage, participation in
cultural and artistic activities, and the consumption of cultural products and services. (Prudente-
Sta.Maria, 2001)
Cultural policies aid in building structures, secure adequate resources to harness a nurturing
environment for human fulfillment; support cultural workers and arts managers in establishing
cultural programs which are in line with the country and their respective institution’s goals for
cultural development; and help in soliciting cultural participation from the general public. In the
early stages of the lockdown in the country, the National Commission for Culture and the Arts
(NCCA) provided P76.8M to provide financial assistance for the displaced and disadvantaged
freelance artists and cultural workers affected by the nationwide quarantine by providing 10-days
tax-free minimum wage and sanitation of their residences, plus another P1.5M to 400 workers in
partnership with the Department of Labor and Employment (DOLE) (Tiangco, 2020). In October
of this year, Congress approved a special House Committee that will push for the welfare and
development of the creative industry, culture and the arts, headed by Rep. Christopher de Venecia,
as they recognize the sectors’ important role in the creative evolution of the country, and in
influencing national consciousness and addressing social issues (“House okays creation of
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Committee on Creative Industries”, 2020). On the part of the Commission on Higher Education,
it has drafted guidelines on the flexible delivery of student affairs and services for implementation
by all public and private higher education institutions during the pandemic, which includes a
section on culture and arts, but still for finalization as of this writing (CHED, 2020).
Cultural policies vary in every country, and are mostly focused on improving the
accessibility of creative endeavors to the public, and foster the artistic, musical, ethnic,
sociolinguistic, literacy, and other expressions of the people of each country. Mulcahy highlights
the importance of arts to the society, as cultural and artistic products and services are considered
public goods which should be relished by a greater number of audiences who are open to witness
artistic excellence and innovation. (Mulcahy, 2006). Since the quarantine situation in the country
was implemented in the country, both public and private organizations in the creative field never
stopped their engagement with their audiences confined at home, and still found ways to showcase
their art virtually. At the onset, performing arts companies made the archival footages of their
productions, available to the public for free to gather donations for health workers, displaced
families and creative workers. They were able to conduct workshops, webinars and talk shows
using the digital platforms; while museums and galleries began offering virtual and audio tours;
and provided access to their exhibitions via digital meeting rooms (Sorilla, 2020).
Cultural Participation
It is said that the definition of cultural participation should not be limited to just the
attendance of the public to cultural venues or events, nor it be associated with the consumption of
cultural and artistic products by the “elite” culture. In fact, it should be treated as one which
impacts the quality of life of a community or nation and the perception of personal health, may it
be receptive or creative cultural participation.(Bollo, Pozzolo, Federico, & Gordon, 2009). During
this time of the pandemic, experts cite the importance of art as a source of therapy and healing,
even for those without artistic skills (Grossman, 2020).
During this time of the pandemic, an important analysis by the Creative Economies Council
of the Philippines president, Paolo Mercado (2020), should also be considered in the light of
cultural participation. He introduced the Creative Industries Impact Table, which considered five
factors to assess the likelihood of the different domains in the creative industry to bounce back
quickly from this pandemic, specifically: 1) large gathering are essential, 2) close human
interaction is essential, 3) hygiene is critical (or perception thereof), 4) dependence on travel
(business or leisure), 5) service/product is expendable. Ratings were given per factor, with 5 as
most severely impacted and 1 being least affected. From his assessment, the cultural creative
sectors (cultural, performance, arts) will be greatly hit, while the commercial creative sectors
(audio-visual broadcast, digital media, creative services) are more likely to recover easily. Given
the lingering crisis, all sectors are forced to evolve their business models and switch to “low touch”
digital platforms for a chance at survival. The insights in this table should be highly considered as
cultural participation is mostly driven by the cycle of artistic production and consumption.
Production cannot happen without the promise of a steady flow of audiences and patrons of the
artistic products.
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Figure 1
Creative Industries Impact Table
Note: Mercado, P. (2020, Apr. 21). Reprinted from “Insight: Paolo Mercado, President of Creative Economy
Council of the Philippines, on Creative Disruption During a Global Pandemic” by P. Mercado, 2020. Adobo
Magazine.
There are different aspects in terms of participation in arts and cultural events, as people
attend various types of cultural events for various reasons, with different people, in different
venues, bringing with them diverse experiences. (Ostrower, 2005) Indeed, participation varies per
art form and the different creative industry domains. In most cases, culture and arts participation
is measured through surveys that gather data regarding attendance or ticket sales based on the
scope of cultural activities offered, including simple individual creative endeavors, such as acting
in plays, taking photographs, playing a musical instrument, reading books, etc. which are provided
by organizations that aim to promote the arts. On the other hand, governments also conduct
national and local social survey of consumption patterns of cultural and artistic goods and services
through their statistical offices. The participation rate is usually presented as a percentage of the
population (or sub-populations) who participate during a given period. Audience surveys are
usually deployed by individual arts organizations to understand the characteristics of their
audiences and visitors for purposes of artmaking and proposing requests for financial support.
(Towse, 2010) Thus, arts organizations which are intent on expanding their participation need to
clearly deﬁne and understand the type of “culture” in which they wish to accomplish their
strategies accordingly. (Ostrower, 2005)
In previous studies, recognizing hindrances to participation helps cultural institutions to

engage in audience development efforts, which prompts them to discover innovative means of
presenting, promoting, and finding the appropriate time and venue to showcase their cultural or
artistic products or services to enable more audiences to witness the experience them. Challenges
in the socio-political aspects in participation should also be looked into, as it is crucial for
policymakers to improve on participation, in accordance with the objectives of the government.
(Bollo et al., 2009) After all, culture and arts are considered a public good. Thus, there is a great
level of accountability shouldered by the government as funds for national and local culture and
arts programs come from public taxes.
In the 1990 U.S. National Endowment for the Arts study, it recorded that the most common
barriers to attendance was the respondents’ lack of time, perception of costly tickets and
inconvenience of the location or the time, transportation problem, and having no companion to go
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with. Other important factors to note are the unavailability of relevant information about the event,
and the lack of education on art appreciation. (Cornwell, 1990)
Scholars on cultural participation have also emphasized the role of arts education in
invigorating market demand and attendance for culture and arts activities. In a study by Bergonzi
and Smith (1982) for the United States’ National Endowment for the Arts, it was found that the
implementation of a strong arts education intensely influences attendance, considering other
variables at play, such as socio-economic class, the type of schooling (school-based or out-of-
school education), and the years of education. In addition, Gray (2001) confirmed that years of
education is a key factor for the arts to have a positive association with participation albeit other
relevant factors which are controlled. (Heilbrun & Gray, 2001)
In the same study, it was also noted that even with the increase in audiences, its
demographic makeup remains the same, that the arts audience is still considered elite compared to
the greater public, since this particular segment is at the center of the culture and arts circle. It can
be said that education and income are two variables that predict the profile of the arts consumers,
and their level of consumption. In a perfect environment with a participatory society, the existence
of a strong arts education program will be beneficial to train the aesthetic sense of future audiences.
This presence of a well-appreciative audience will fuel the demand and consumption level of the
industry. Eventually, this ideal system will give birth to a cultural tradition anchored on the value
of participation. (Cornwell, 1990)
Figure 2
The model used in this study is patterned after McCarthy & Jinnett’s (2001) Participation
Model used in their research for RAND. The Participation Model explains that there are four (4)
different stages that a person goes through before deciding to participate in any culture and arts
activity. Figure 1 illustrates the framework of the model, with the various stages considered by an
individual as s/he makes his/ her participation decisions. The said diagram only proposes the
different components in the decision-making process.
Figure 2
Jinnett & McCarthy's Participation Model
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Background Stage
The background stage begins with the evaluation of the factors that generally frames the
person’s personal beliefs and perceptions about the arts. These factors consist of: 1) the socio-
demographic factors which include the education, income, occupation, gender, age, 2) the
personality factors, 3) the person’s prior engagement with the arts, and 4) the socio-cultural factors,
those which describe the person’s group affiliation and identities. While all the other background
factors except for affiliation and prior experiences cannot be changed, arts organizations can have
the chance to change the individual’s perception through providing new experiences that will be
subject to the evaluation of the individual.
Perceptual Stage
In the perceptual stage, the individuals assess the benefits and costs of arts participation
and all the other available considerations as to the type and forms of participation. Before
considering whether to participate in a specific way, individuals are likely to assess the benefits
and costs of arts participation and the different types of art and forms of participation they might
choose. In this framework, it is asserted that the individual will be influenced by his/her own
personal beliefs, perceptions and attitudes towards the arts. Furthermore, emphasis is given to the
individual’s attitude toward the arts, as a factor to predispose him or her toward or against
participation.
Practical Stage
After the individuals have decided on their involvement in the arts, s/he moves towards the
practical stage which will further subject him/her to evaluate various options in participating. It
should be considered that there might be practical obstacles, such as lack of publicity, expensive
ticket prices, lack of time and other reasons, which should be addressed before participation. The
amount of effort that a person will exert to overcome the presented obstacles will depend on the
strength of his/her inclination.
Experience Stage
Finally, all the barriers should have been overcome at this stage, as the individual prepares
to participate in a specific arts activity and eventually assess the experience. It is given that the
experience can take various forms depending on the individual’s familiarity with the arts and his/
her level of involvement in the arts community, such as in the case of volunteers or donors. Prior
studies note that the greater the inclination of the individual is toward the arts, the more likely that
the person will participate in various ways.
The person’s reaction to the experience should also be considered, as it will have an effect
on several factors, such as the knowledge on the type of art, the value given to the social aspect of
the experience, and the level of which he or she gathers personal accomplishment through the arts.
These new reactions will then form new perceptions that will guide the person, in the new decisions
for future culture and arts events.
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Methodology
In this study, the intended participants are those who identify themselves as arts audiences
or those who consume artistic products, with the approximate age range of 16 to 70 years old. The
area of permanent residence was also recorded and limited to those living in Metro Manila, as most
online artistic activities during that time was centered in Metro Manila. The total population in
Metro Manila as of this year is 13.9M. With 95% confidence level, 5% margin of error, 385
respondents were targeted, but there were 417 who responded and were counted to be part of the
study. The electronic survey via Google forms was sent to six (6) of my personal and
organizational networks in the creative field. Snowball sampling was employed, as the respondents
were also encouraged to forward the survey to their friends. The online survey was open from May
1- June 30, 2020.
The research is an applied, quantitative and descriptive study, aimed at getting more
information about the Metro Manila arts audiences’ propensity for participating in culture and arts
activities. It employed a self-administered online survey partly based on Jinnett & McCarthy’s
participation survey, using a thirty-three (33) item questionnaire as its instrument. The main
sections are composed of the following: 1) the demographic profile of the respondent (7 questions);
2) the modified Participation model (26 questions) which corresponds to perception, motivation,
participation and reaction to experience variables, with 5-point Likert scale choices based on the
importance of the factors affecting their participation in culture and arts activities; and 5-point
Likert scale based on the frequency of their participation in such events. Descriptive statistics for
the survey items were summarized in the text and reported in the succeeding pages. The summary
of data was established in the descriptive study through measures such as frequency, percentages
and means. Content analysis was used for the open-ended questions, to ensure proper organization
of texts into leaner content categories; as well as frequency counting, in the assumption that the
words often mentioned signify the most crucial concerns.
Findings
Background Stage
The respondents represented a diverse group in terms of age, educational attainment,

and income. A large share of females (58.5%) participated in the survey. Most of the
respondents are from ages 16 to 22 years old (50%), an age bracket relatively associated
with the youth, based on Philippine standards (15-30 years old). Majority of the
respondents may be considered well-educated, either having college degrees or currently
in college (66.9%). Most of the seventeen (17) cities in Metro Manila are represented
except for Navotas and Pateros; while the respondents are mostly Muntinlupa residents
(22.3%). In terms of socio-economic class, there was a good spread across all seven (7)
classes as identified by the Philippine Institute for Development Studies (PIDS) in 2018,
ranging between 12% to 17.7%. More than half of them (60%) are students, and 21.3% are
full time employees. Apart from the students (60.4%), the respondents come mostly from
arts, design and entertainment industries (15.3%) and the education sector (11%). Majority
practice an artistic craft (82%) (music (50.3%) and dance (39.8%)) and 51% of them have
family members who are also into the arts (music (65.1%) and visual arts (46.9%)).
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Before the lockdown, 89.7% participated in a culture and arts events and are 34.8%
are frequent goers, at an average of 2 or more activities per month, while 25% at an average
of once per month. From those produced by professional companies, the top 3 live arts
entertainment activities that they go to are: movies (f=256), plays and musicals (f=219),
and museums/ art galleries (f=204), but followed closely at f=193 by modern music
concerts. From among those produced by school-based arts organizations, these are where
they usually go to: plays and musicals (f=214), artistic workshops (f=161), modern music
concerts (f=148).
Perceptual Stage
Ninety-two percent (92%) of the respondents expressed their willingness to watch or

participate in any online arts and entertainment activities. From among them, these are the
top five (5) factors that influence them to participate: appreciate and experience high
quality art (M=4.69), wanting to learn something new (M=4.65), wanting to support the
arts with family and friends (M=4.55), wanting to support a community/ organization or
event (M=4.52) and wanting to patronize the arts and cultural heritage (M=4.51). In terms
of their experience in participating in online artistic performances or events, majority
(33.9%) were able to watch at least 1-2 times during that period, followed by those who
were able to see 5 times or more (25.4%). However, it should also be considered that almost
one-fourth of the respondents (22%), were not able to participate in any. The types of online
arts performances/ exhibitions they have participated in, are: theatre plays/musicals
(f=214), films (f=214), modern music concerts (f=202). Meanwhile, for arts tutorials, they
are more interested on the following: modern dance (f=141), films (f=117), visual arts
(f=115).
Practical Stage
The most effective means of providing information about online arts activities are
the following: internet, email and social media (95.6%), friends (word-of-mouth) (71%)
and school-based media (42%). However, their common concerns that prevent them from
participating in online arts activities are: the perceived ineffectiveness of online artistic
experience and technical issues in the material (M=4.04), connectivity issues (M=3.86),
and preference to spend leisure time in other activities (M=3.75). It should also be
important to note the factors that attract audiences for cultural participation, which are: the
nature of the activity (M=4.69), art form involved in the activity (M=4.65), free access
(M=4.50), theme of the activity (M=4.4), and positive recommendation from friends and
family (M=4.27).
In terms of payment/ donation schemes, they prefer to do it through the following:

donate button link at the livestreaming event (37.5%), online bank deposit (36.6%), and
GCash (35.1%). It is also important to note, that even if the audiences have the freedom to
share access within their household, 67.4% watch the online event alone; and sometimes
with 2-3 people (26.2%). Those who live with other people in the household say that these
statements hold true for them: 1) that they invite them to join, and they are already willing
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upon the first invitation (44.4%), 2) that they prefer to watch/ participate alone so they
don’t invite (23.4%), 3) that they invite them to join, and they are usually difficult to
convince at the onset, but they end up joining the person who invited them (22.6%). It is
also important to note that most prefer to pay P100-P299 for their participation in an online
event (23.1%). However, not too far in the percentages are those who indicated P300-P499
(21.8%) and P500-999 (21.3%), which means that people are still willing to pay more to
access even online shows.
When asked when they will buy tickets for any live events/ arts performances after
the physical distancing measures are relaxed, 32.7% answered that they are not sure, while
most of the remaining respondents said that they will purchase when the outbreak is over
in the country (25.2%) and when it’s over globally (22.1%). Meanwhile, 37.1% of the
respondents also have a neutral stance as to how they perceive the importance of ticket
purchases for arts performances/ classes in their purchase priorities. This is followed by
those who regard the purchase as important (27.3%), and very important (25.5%).
Experience Stage
When accessing online artistic activities, they usually watch through their smart
phones (85.5%), and their laptop (66.4%). The online arts activities that they watch are
usually movies (86.5%), livestreams (music - band, singer, orchestra) (70.2%), and tutorial
videos (68.6%). In terms of most common platforms used for arts/ entertainment, Youtube
tops their choices (93.6%), followed by Facebook at 84.5%, and Netflix (70.6%).
Meanwhile, Youtube is mostly preferred for watching arts workshops/ tutorials, watching
performances and online exhibits and is followed by Facebook.
Lastly, all the respondents had relatively given high scores when asked about their
last online artistic experience. With the various questions posed to verify their responses,
all the scores were 4.0 and above, based on a 5-point Likert scale, of 5 being the highest.
They all affirmed that: 1) the artistic quality was high, 2) that it was an enjoyable activity,
3) they learned or experienced something new, 4) it was professionally run with no
technical difficulties, 5) they found it emotionally rewarding, 6) they will see another
similar event next time, 7) the event was value-for-money and worthwhile.
This study probed into the Metro Manila arts audiences’ general perspectives and
experiences regarding cultural participation during the pandemic. This initial data gathered shall
provide insights on how government agencies, policy makers can appropriately respond to the
needs of the industry through relevant policies and programs to support the sector and for arts
organizations to implement innovations on their business models. Cultural participation surveys
such as this, provide a rich harvest of information related to different policy areas – including
education, information, social issues as well as culture itself.
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Background Stage
With the bulk of youth respondents this survey, it can be said that their responses have
reflected their openness to online arts events during this period. This is verified by the studies of
the Global Web Index that pinpoints the deep immersion of the Gen Z into these online platforms
(Mander, 2020). Given that they already have previous artistic experience considering that the
respondents, together with their families are also practicing the arts in their own way, their affinity
for the arts pushed them to continue in being active cultural participants even if their engagements
have migrated virtually. There’s a window for arts organizations to take advantage of this positive
attitude of the young market, through maximizing the role of arts education to motivate market
demand and virtual attendance from this sector.
Considering the present challenges, and the unequal access to cultural resources, it is
evident that there is a need for the creation of more outreach programs for the underprivileged
communities, and participatory after-school arts programs in schools (Cornwell, 1990). These
were also expressed further by the respondents’ recommendations. Thus, arts organizations may
explore arts programs for school children, connect arts engagements with the curriculum or
subjects in school and offer arts tutorials (i.e. performing arts, visual arts and film) either for free
or for reasonable fees. Likewise, there’s also a challenge in terms of presenting the classical genres
in both music and dance, as young people expressed their preference for the contemporary genres.
New experiences in presenting the classical genres may be provided by arts organizations to
provoke interest from the younger market.
Perceptual Stage
The expressed openness of the youth market to engage in virtual productions and exhibitions
already poses an opportunity for growth. With their responses on the factors that influence them
to participate, the key themes that should be noted are: artistic quality, education and support for
culture and the arts. Artistic quality in both the ends from content creation to execution play a big
role in their perception. They have cited their suggestions for the online engagements to have good
production and entertainment value as manifested in the choice of relevant and relatable topics or
themes featured in the material, production and lighting design and technical execution.
Practical and Experience Stage
The responses that fall under this stage support those previously raised at the perceptual
stage, which highlights the prime importance of the nature, theme, quality and the preference for
the art form featured in the activity. Arts organizations should then create more venues to reach
out to their audiences to get to know more about their tastes and choices. The online polls and
comments section in social media pages may very well be put to good use as valid points to
consider in future concepts to be produced. Moreover, the opinions of family and friends affect
the decision for participation. Thus, the overall quality of the artistic product should not be taken
for granted.
Likewise, for those who are still non-believers and non-users of online artistic content, arts
organizations are now challenged to convert these negative perceptions that online arts activities
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are ineffective. In the recent months, most arts companies have tried to ensure the quality of their
output through productions of well-edited pre-recorded materials, since synchronous artistic
events are considerably problematic due to the varying quality of connectivity of the artistic
producers to the audiences. With this strategy, the companies were able to establish their credibility
to showcase professionally run productions and exhibitions, as seen in the positive responses of
the audiences.
Nevertheless, this strategy should also be paired with providing synchronous, interactive
engagements with their audiences as the respondents stated their appreciation for such types of
efforts by the producers to make their artistic experience to inject a personal touch to their event.
Possible efforts maybe live talkbacks via Zoom and synchronous responses at the comments
section or annotations during the show.
The respondents have emphasized the need for arts organizations to be more virtually
present, particularly via social media platforms, as this has become the most effective way to reach
them. They even suggested for arts organizations to be updated and be more systematic in
promoting their offerings, such as having specialized apps/ software and a consolidated calendar
of events for all arts organizations. Changes in the way company partnerships are done were also
suggested, particularly with media, influencers and similar organizations, where the sponsorship
values can be in form of engagements in their respective pages than just merely monetary values.
Exchange deals between relevant companies such as delivery services and internet service
providers may also be considered to be more useful for both the arts organizations, and for the arts
audiences, when used as a promotional tool (i.e. using free connectivity and delivery services for
online raffle draws during the event).
On the other hand, the issues on ticket prices and finances continue to be tricky specially
with the decreased purchasing power of the arts audiences. While most favor for the artistic
products to be free of charge, they also understand the amount of time and effort put into the
production of the said materials, plus the equally problematic economic situation of the creatives.
With this, arts organizations should be able to think of ways on how to balance responding to the
needs arts audiences vis-à-vis their financial sustainability.
There’s a clarion call for defining new business models with the changes that have recently
happened in the creative industry. The various available online platforms have provisions for
monetization that can actually provide passive income to creatives who are into content creation.
Products and platforms should be carefully reviewed to match the types of artistic products offered,
and the level of intended engagement with their target audiences (i.e. Zoom for webinars/tutorials
and interactive discussions, livestreaming for larger audiences via YouTube and Facebook, and
Instagram for casual events and visuals-oriented community). Intellectual property issues should
also be ironed out and carefully planned based on the policies and guidelines of each online
platform; and considerate of the interests of the creator, the platform and the audience.
The stigma of COVID19 in the way humans interact will surely stay for a good amount of
time. The responses highlight the concern of Filipinos on their physical and financial safety, which
heavily affected their perceptions on arts-related purchases. Thus, arts organizations should
continue to connect with their audiences to be more updated on their preferences and concerns.
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In closing, cultural participation surveys provide information useful to test and to (re)shape
cultural policies, provided they are designed in a way that allows for collecting information
about issues and areas on which stakeholders can make an impact. Understanding changes
should be a priority for all those supporting the arts and culture; while research and analysis
should be a prioritized form of support by public institutions.
References
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Bollo, A., Pozzolo, L. D., Federico, E., & Gordon, C. (2009). Measuring Cultural Participation.
Byrnes, W. (2009). Management and the Arts (4th ed.). Burlington, MA: Elsevier.
Commission on Higher Education (2020). Guidelines on the Implementation of Flexible Delivery
of Student Affairs and Services during Covid-19 Pandemic. https://ched.gov.ph/wp-
content/uploads/Draft-CMO-for-the-Guidelines-on-the-Implementation-of-Flexible-
Delivery-of-Student-Affairs-and-Services-during-COVID-19-Pandemic.pdf
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Daily Inquirer. https://lifestyle.inquirer.net/363407/live-events-sector-forms-coalition-
400000-jobs-lost/
Cornwell, T. L. (1990). Democracy and the arts: The Role of Participation. New York, USA:
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Grossman, D (May, 2020). Experts: Art can be a source of therapy during pandemic, even for
those without artistic skill. The Denver Channel.
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of-therapy-during-pandemic-even-for-those-without-artistic-skill
Heilbrun, J., & Gray, C. (2001). The Economics of Art and Culture (1st ed.). Cambridge, UK.
House okays creation of Committee on Creative Industries. (2020). Manila Bulletin.
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Mander, J. (July 2020). Coronavirus: Insights from our multinational study wave 5. Global WEb
Index. https://blog.globalwebindex.com/trends/coronavirus-multinational-study-5/
Mercado, P. (April 2020). Insight: Paolo Mercado, President of Creative Economy Council of
the Philippines, on Creative Disruption during a Global Pandemic. Adobo Magazine.
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economy-council-of-the-philippines-on-creative-disruption-during-a-global-pandemic/
McCarthy, Kevin F. and Kimberly J. Jinnett (2001). A New Framework for Building
Participation in the Arts. Santa Monica, CA: RAND Corporation.
https://www.rand.org/pubs/monograph_reports/MR1323.html. Also available in print form.
Mulcahy, K. (2006). Cultural Policy: Definitions and Theoretical Approaches. The Journal of
Arts Management, Law, and Society, 35(4), 319–330.
https://doi.org/https://doi.org/10.3200/JAML.35.4.319-330
Ostrower, F. (2005). The Diversity of Cultural Participation: Findings from a National Survey.
Prudente-Sta.Maria, F. (2001). A Cultural Worker’s First Manual: Essays in Appreciating the
Everyday. Pasig City: Anvil Publishing, Inc.
Sorilla, F. (August 2020). The State of the Philippine Art Scene During the Covid-19 Pandemic.
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Philippine Tatler. https://ph.asiatatler.com/life/the-state-of-the-philippine-art-scene-during-
the-covid-19-pandemic
Tiangco, M. (May 2020). NCCA releases P76.8-M bubdget to aid displaced freelance cultural
workers, artists. Manila Bulletin. https://mb.com.ph/2020/05/21/ncca-releases-p76-8-
million-budget-to-aid-displaced-freelance-cultural-workers-artists/
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Understanding the Motivations and Challenges of Early Generation
Z College Students While Establishing Online Baking Businesses
Amid the COVID-19 Pandemic
8th NBMC Paper # 47
Joseph Emil Santos and Alice Katherine Tenorio

Abstract
The paper offers an in-depth view of the considerations, influences, and experiences of college
students and fresh graduates starting a baking business amid the COVID-19 pandemic. With the
problem of unemployment and the increase of non-hiring employers amid the pandemic, along
with the increased time spent at home rather than what normally would be spent in school or work,
home-bakers are strongly self-motivated to earn for themselves through a small baking business
due to the disruption of their allowance or income. This study investigates Filipino Generation Z’s
lifestyle, personality, and values and how these could motivate their baking hobbies, spending
habits, and operation decisions. The qualitative research based on semi-structured detailed
interviews with 8 Filipino Generation Z college students and fresh graduates, between the age of
18 to 25 years old, chosen because they tend to use online communication tools, such as social
media, digital marketing, and instant messaging, in October-November 2020. The purpose of the
paper is to examine how early Generation Z college students and fresh graduates operate their
small baking enterprises despite the Philippines’ mobility restrictions, limited supplies, and
imposed curfews to name a few. The research aims to discover the students’ and the graduates’
motivations and challenges while establishing online baking businesses amid the pandemic. The
research also explores the radical shifts in Generation Z’s behavior caused by the current state of
the country, with spending habits, marketing strategies, brand engagement, and more. A
framework was illustrated from the factors that came out from the participants’ shared experiences.
Key Words: baking, branding, marketing, execution, COVID-19, social media, Generation Z
Introduction
On the evening of March 16, 2020, the Philippine government imposed an enhanced
community quarantine (ECQ) in Luzon in response to the growing spread of the novel coronavirus
outbreak (Ravelo, 2020). This served as a total lockdown that restricted the nation’s movement,
except for necessity, work, and health circumstances. As schools and universities closed and the
summer break approached, students remained at home. With nothing to do, most reconnected with
their past hobbies to keep them occupied, with baking as one of the leading activities. Mendoza-
Dayrit (2020) claims that people who participate in small creative projects, more so in cooking
and baking, were more enthusiastic about their pursuits the following day. In a way, baking
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resembled meditation wherein it not only demands concentration but offers some sort of sanctuary
to the baker (Spalding, 2017).
Nevertheless, to stay productive and earn extra income doing something they enjoy, these
students ventured into selling their baked goods online by maximizing the usage of several social
media platforms. Numerous pages were created on Facebook and Instagram as these home-bakers
tried to sell their products online. However, with strict quarantine protocols, several challenges
emerged among these young bakers in terms of finding supplies, balancing school and the
business, or delivering goods to customers. Despite these difficulties, many still persevered in their
start-up baking businesses as a way of relaxing and earning extra income for the household.
After undergoing months of lockdown, people have had time to explore their kitchen and
ride on the latest baking trends. Since ready-made bread tended to go out of stock during the first
few weeks of ECQ, people resorted to baking their loaves at home, which eventually led to some
important baking supplies (i.e. yeast, flour) to dwindle. One notable trend among young Filipinos
is the non-traditional flavors of pandesal, including ube-cheese, matcha, and chocolate. Although
this first started in late 2019, the trend only reached its peak by mid-2020 when people
experimented with more unique flavors. This trend led to home-bakers attempting complex bread
recipes like sourdough and focaccia. For those who prefer easy recipes, banana bread also made
quite an appearance on social media.
Objective of the Study
Making a name in the baking industry, specifically with loaves of bread and pastries,
proves to be a challenging task for newly established online baking businesses due to the COVID-
19 pandemic. With this said, the qualitative study examines how early generation z college
students and fresh graduates operate their small baking enterprises despite the Philippines’
mobility restrictions, limited supplies, and imposed curfews to name a few. The research aims to
discover the students’ and the graduates’ motivations and challenges while establishing online
baking businesses amid the pandemic. The research also explores the radical shifts in generation
z’s behavior caused by the current state of the country, with spending habits, marketing strategies,
brand engagement, and more.
Methodology
Research Design
Given the exploratory nature of this research study, a qualitative methodological

approach investigates the attitudes, behaviors, and routines of college students in terms of
their small baking businesses. The study gathers data from multiple sources: primary and
secondary sources. The information gathered from these sources were used to enhance the
interview questions and survey questionnaire.
Primary data was gathered through individual semi-structured interviews

containing open-ended questions about their day-to-day operations, budget constraints,
marketing strategies, delivery preferences, and other factors in line with their businesses.
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Through analytic induction in collecting the data, the researchers would allow more
flexibility in investigating the considerations, motivations, and experiences that come with
owning small baking enterprises. These yielded a total of eleven (11) individual interviews.
Secondary data was gathered from online resources on the operations of online
baking businesses before and during the COVID-19 pandemic, which includes websites
and social media channels of the participants’ baking businesses; news and magazine
articles; academic journals, and e-books. These were also used to understand and compare
baking businesses’ goals and strategies.
Target Participants
The target participants are currently Filipino college students and fresh graduates,
male and female, from ages 18 - 25 years old. Also, the participants should be continuous
small baking business owners for more than two months to provide substantial information
on the experiences they have encountered and the goals they wish to achieve within the
quarantine period. Because of the problem of unemployment and the increase of non-hiring
employers amid the pandemic, along with the increased time spent at home rather than
what normally would be spent in school or work, home-bakers are strongly self-motivated
to earn for themselves through a small baking business due to the disruption of their
allowance or income. With these possible reasons, Generation Zs have expressed and
utilized their stress and anxiety online, and some became productive by starting their own
business, which is interesting to understand the motivations that triggered them to make
the most of the negativity happening around them. Moreover, this demographic group is
chosen because they tend to use online communication tools, such as social media, digital
marketing, and instant messaging. However, the actions of this particular demographic may
be indicative of future trends.
Sample Frame
The target sample includes eight (8) participants that fit the demographic profile
stated. The recruitment of interview participants will utilize the existing De La Salle
University-Manila pool of voluntary research subjects from the Ramon V. del Rosario
College of Business. While the connection of the interview participants with the university
may not be relevant to the research study, it is practical in terms of data collection and
findings analysis. Once the participants agree to the terms in the informed consent form of
the research study, they will be contacted via email to establish a time and place for the
interview.
Interview Format
An interview guide will structure the content, flow, and conversation; this will
provide some degree of consistency, allowing for easy comparison and contrast between
the data obtained from various interview participants. Furthermore, field notes will record
and aid the data analysis, especially to minimize the researchers’ preconceived notions.
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Thereafter, the data from the interview will then be analyzed thematically with the method
of systematic text condensation.
While the assumptions of this study are anchored on the research discussed in the
review of related literature, the study remained open to themes that emerged from
responses from the interviews and survey. It was also sensitive to patterns that revealed
themselves during data analysis.
The Benefits of Baking
People bake for different reasons. They bake cakes to celebrate milestones, to earn
income, or simply to satisfy their cravings. Baking, however, proves to be more than
combining ingredients; the craft also provides psychological benefits to its bakers.
For one, baking is a meditative process that requires the bakers’ full attention when
performing basic instructions, such as measuring, timing, and icing the baked goods.
According to Hofstra (2017), people must have the concentration and patience to carry out
the process and to successfully bake pastries. According to Philip Muskin, a Columbia
University psychiatry professor and the secretary of the American Psychiatry Association,
baking teaches mindfulness that entails people to be present in ongoing activities (Mull,
2018). Moreover, it influences one’s emotional and mental state, similar to other practices
that directly affect mood, such as breathing exercises. By becoming productive, bakers
concentrate their attention on the tasks, which distracts them from environmental stressors
(Thomson, 2017). Baking is a behavioral activation activity that engages the prefrontal
cortex and re-regulate anxious brains. By supplying a sense of achievement and control
over the mind, people feel happier and satisfied.
Baking, too, has transformed into a way of procrastination. By combining the two
words, the term procrastinate has become a common practice among those who bake to
avoid impending work deadlines. Procrastibake has also received a lot of positive
engagement as a hashtag trend on Instagram with over 45,000 posts to date. Moskin (2018)
finds that people unconsciously immerse themselves in delaying tactics to feel skilled,
nurtured, and virtuous in the present while being distracted from the future. Besides the
resulting baked goods, procrastinating aids bakers to be open-minded, creative, and
resourceful, which may help them accomplish the work they were trying to avoid in the
first place.
As college students and fresh graduates experience pressure from school, work, and
the overall COVID-19 pandemic, they are in dire need of diverting their attention to
something more positive and fun. Baking not only provides them a sense of comfort and
accomplishment, but it also aids in improving their mental capabilities in creativity and
concentration. The activity helps them temporarily forget about the aggravating
environmental stressors around them, and focus on being in the moment instead.
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The Rise of Baking Businesses
With President Rodrigo Duterte’s announcement of a COVID-19 lockdown in the

Luzon island, where 50% of its population resides, and 73% of the country’s GDP
originates, the Philippines is fighting for survival as a result of the economy contracting
and the institutions ceasing (the Philippines In Covid-19 Lockdown: Impact On Consumer
Sector, n.d.). The country’s consumer and retail sector is expected to be one of the most
affected, for the ongoing production of food companies has been slowed down by mobility
restrictions, limited supplies, and imposed curfews. Bread and pastry manufacturers are
not exempted from this issue, even the largest bread manufacturer in the Philippines,
Gardenia Bakeries, is facing operational issues with the lack of manpower at the
community quarantine (Pedro et al., 2020).
With the COVID-19 lockdown in force, some people have to work from home
while some have resigned from their jobs. With this, Filipinos are seizing the opportunity
to establish their own business in hopes of earning income. Whether through producing
washable face masks, distributing sanitation gadgets, or even preparing homemade food,
people have come up with various ways to take their mind off current events and secure
funds for their daily expenses (Schroeder, 2020). Furthermore, home-based online food
businesses have significantly increased throughout the months of quarantine. Beginning as
a social media trend (i.e. ube pandesal), baked goods have become the best-selling products
of start-up businesses (Yummy. ph, 2020).
With this, college students and fresh graduates have opted to secure funds in a
simple, yet enjoyable way: baking. While still in the safety of their homes, these young
bakers could still earn some extra pocket money that they use for themselves or their
family.
However, in the early stages of the nationwide quarantine, there have been
difficulties in procuring baking supplies. The Asosasyon ng Pilipinong Pandero (APP)
spokesperson, Eclaro Chavez, had reported that in the first month of the community
quarantine, there was a disruption in the raw material supply chain (Gil, 2020). With many
purchasing and using the same supplies, baking businesses must find other ways to stand
out from their competitors, through marketing and execution.
As most of these baking businesses are established online, home bakers must
evaluate which social media platforms are best suited to market their brand. For most young
Filipino entrepreneurs, Instagram and Facebook are the two commonly used social media
platforms used to sell their products due to their easy user interface and pleasing visual
layout. Both platforms utilize features that enhance users’ interaction with the page,
including hashtags, 24-hour stories, IG/FB live, and geotagging (Universal Class, n.d.). By
using these platforms, businesses can digitally transform their brand while establishing a
better connection with their consumers.
Since one of the most effective ways to contain the current COVID-19 pandemic is
to avoid personal contact, home bakers are trying to reduce the movement of the people
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who deliver their products. The pandemic has brought about numerous restrictions, with
the need for most to stay at home as much as possible. Being so, there has been a massive
surge in the need for on-demand delivery (Abadilla, 2020). Companies offering on-demand
delivery, such as Grab, Lalamove, and Angkas Padala, have enabled most of these home
bakers to transport their products to the customers. The immediate pick-up and delivery as
well as the real-time tracking and insulated bags provide a safe yet affordable means of
delivering products to prospective consumers.
Furthermore, in line with these indications, most businesses recommend their

customers to use online cash transfers. This being said, the mode of payment for most of
these businesses has then shifted to online payments through bank transfers or online
transactions (The impact of COVID-19 on the use of online banking, 2020). Payments are
done mostly through GCash or PayMaya to avoid personal contact. Though there are still
some who accept Cash on Delivery, online payments are becoming more popular due to
their practicality.
The Impact of COVID-19 on Generation Z
Generation Z comprises those born from 1995-2009. Around this time, the older
Generation Zers are completing their final years in college and beginning to apply for jobs.
However, due to the pandemic, there has been a steady rise in youth unemployment due to
their lack of experience in the work field and the forecasted economic recessions
worldwide. In addition to this, there are higher rates of stress and anxiety from the drastic
transformation of physical to online classes among students, and the uncertainty of securing
a job among fresh graduates. In light of the worldwide pandemic and being quarantined,
Euromonitor (2020) reports that Gen Zers have changed their behavior and priorities
accordingly in regards to (1) spending, (2) virtual living, and (3) health, family, and society.
As for spending, Gen Zers are known to be pragmatic. They are realistic and
mindful of financial issues and will find ways to move forward despite environmental
challenges. Instead of making impractical purchases, these individuals now spend their
limited supply of money on necessities like food, rent, healthcare, and education. With this,
young entrepreneurs are born. By establishing online businesses to earn extra income, Gen
Zers also embrace their digital knowledge to help them in their business operations.
Advancements in e-commerce and social media have forced people to do almost
everything, including working and shopping, with the use of their smart devices.
Lastly, Gen Zers also show a change in their health and ethical lifestyle by engaging
in physical activities or eating more nutritious meals. By being open-minded and socially
responsible, Gen Zers tend to make choices not only for themselves but for the people
around them, especially their family. Specifically, among Filipinos, who are known to be
family-oriented, family members will continuously worry about each other’s well-being.
Being stuck at home encourages Gen Zers to find new hobbies that they could do alongside
their parents or siblings. With creating a baking business online, a stronger bond among
family members is formed as they work together for a common goal.
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Data Results
Profile of Participants
The researchers gathered a total of eleven (8) participants, aged 19-24 years old, to
take part in this qualitative study conducted between October-November 2020. Four (4) of
them are currently still in college while the remaining four (4) are fresh graduates of
bachelor degrees all of which are in the field of Marketing and Advertising from the
College of Business. Of the 4 fresh graduates, 4 of them are already working, either in a
professional firm or by self-employment. Researchers also balanced gender by having 4
male and 4 female participants.
The online businesses formed by the participants do not solely focus on one product
but sell a variety of baked goods ranging from pieces of bread to all kinds of sweet desserts.
From a general perspective, the most common baked products sold by these online
businesses are pieces of bread (i.e. artisan pieces of bread, cinnamon loaves, milk buns,
and pandesal) and cookies. Although desserts are easier to make, the online market is
already saturated with so many businesses catering to such products. Pieces of bread, on
the other hand, are considered a staple food that almost everyone eats and are easier to
differentiate amongst the high competition. More specifically, artisan pieces of bread like
sourdough, focaccia, fougasse, and bagels are commonly made among these bakers.
As young and inexperienced entrepreneurs, these students and fresh graduates

encounter numerous challenges in regards to their business operations. Market saturation
and the difficulty in procuring supplies serve as the challenges in establishing an online
baking business during a pandemic.
Figure 1
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Figure 1. Research framework in establishing an Online Baking Business amid the COVID-19
Pandemic
Table 1
Challenges of Operating an Online Baking Business
SUBTHEME DEFINITION QUOTES
Subtheme A: The pandemic brought about a “We had a lot of ideas in baking
Market Saturation boom in the baking industry. before we started, but we thought
However, with that boom comes of something new to the people,
several newcomers into the and hence, toasted siopao was the
market. Because of this, the home baked good that we chose to sell.”
bakers had to take into --Florenz, 24 y/o
consideration their products,
quality, and advertising, to be “Market is super saturated now
successful in a growingly due to so many baking
oversaturated market. businesses.” --Coleen, 22 y/o
“One of our products is unique

(cookie bars) and not a lot are
selling that product.” --Kiara, 21
y/o
Subtheme B: Ingredients and baking equipment “When ECQ just started, getting
Difficulty in are some of the most essential ingredients was difficult. The
Procuring Supplies elements for a baking business. grocery lines were always
However, because of the extremely long and there was a
quarantine restrictions and the rise limit to how much you can buy of
of people getting interested in certain items (like eggs, sugar,
baking, there are limited supplies etc).” --Bernise, 21 y/o
for key ingredients like eggs,
sugar, and flour. Furthermore, “Supplies are more expensive and
because of its high demand, prices harder to get because stocks run
for these increased. Due to this, out fast.” --Anton, 21, y/o
acquiring ingredients and other
supplies became a challenge for “Finding suppliers for our
these bakers. ingredients and packaging was a
struggle that we faced initially
while setting up the business.” --
Kiara, 21, y/o
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Theme 2. Motivations for Starting an Online Baking Business
This theme reveals the different motivations to start an online baking business amidst the COVID-
19 pandemic. Three sub-themes were extracted from the data: (A) reconnection with passion, (B)
monetary value, and (C) mental health.
Subtheme A: Reconnection with passion
Baking provides gratification by tapping into unfulfilled passions. The need for a
break from work responsibilities or academic duties emerged during the individual
interviews, for the feeling of being content with binge-watching shows, scrolling through
social media, or engaging in unproductive activities starts to wane. The participants
expressed that free time now has afforded them the chance to reconnect with the activities
that have once made them experience genuine contentment. “It keeps me busy. It's nice to
do something else at home besides eating, sleeping, and [being] on your phone all the
time.” (Timmy, 21 y/o).
One reason behind the resurgence of passion for baking is that preparing baked
products enables them to tap into their true potential. Although creativity varies in meaning,
the findings show that there is an overall sense of creativity the participants feel when
baking. Many of the participants mentioned that they began their hobby by copying the
methods and ingredients used in Filipino culture. After learning the fundamentals of
baking, the participants learned to play creative interpretations of the styles they have
learned to imitate. These vary from the participants forming Pinoy-inspired recipes, such
as pandesal, ensaymada, and monay, to generating unconventional flavors, such as ube,
macapuno, and yema. “I love making things beautiful and I'm inspired by the beautiful
things I see every day. As for taste, I take inspiration from things I think people would
enjoy. The way I develop recipes is by asking myself what people want the most but don't
have.” (Ange, 21 y/o).
Another reason behind the resurgence of passion for baking is that preparing baked
products allows them to understand their priorities. The findings reveal that those who seek
to impact others through their work retain a high level of passion in their operations. A
closer inspection of this sub-theme shows that the participants were motivated to let people
in their community try their creation, for baking is a way to share happiness with others
whenever they have free time. Many participants mentioned that the passion for baking is
not measured by longevity but by the meaning they give to it. Furthermore, baking offers
personal satisfaction and pride in being available to others. “I got into baking because I
desired to try something new and do something that could make others happy.” (Joni, 21
y/o). The participants have also emphasized the culture of being family-oriented. Filipinos
are known for having close family ties, and baking makes a difference or a personal
contribution to something greater.
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Subtheme B: Monetary Value
Baking has become one of the multiple streams of income popularized after the
COVID-19 pandemic outbreak. With the Philippines’ mobility restrictions, limited
supplies, and imposed curfews, the findings reveal that many are finding ways to stop
living from paycheck to paycheck. Besides lessening the fear of not having enough money
to spend on essentials, baking has also given me the freedom to leave corporate jobs and
pursue passion-businesses instead. “We bake to gain some extra income from this
quarantine.” (Florenz, 24 y/o). The participants expressed that the time available due to
quarantine has helped them learn to cut the budget, pay off debt, and contribute to
household expenses, even at the premises of their homes.
The participants have conveyed that they are not necessarily in a bad financial
situation; however, they still take it upon themselves to evaluate the time they are given to
reach their career and financial goals. For the participants who are employed, they can test
their business ideas on the side while still having the stability and income of their full-time
job. For the participants who have fully committed to their new business venture, they
communicated that they have eliminated their worries that one day they could be
unemployed and lose their main source of income. These have enabled the participants to
improve existing products or experiment on possible choices for the menu. “I spend it on
things that I know will help me with my business - like bigger pans, better ingredients, etc.
I’ve also saved up for a stand mixer already which is something I’ve been wanting for a
while now and it has helped me with my small business since it helps me get things done
faster.” (Bernise, 21 y.o).
The participants have claimed that the monetary value earned is a form of
responsibility towards helping those in need. Instead of the Philippines’ economic
recession, they are now motivated to be prepared for similar events in the future. The
findings show that many have gone back to the Filipino value of being generous or helpful.
Even if there is very little to offer, the participants explained that they are always willing
to help their families, friends, neighbors, and even strangers. In terms of close ties, baking
has helped the participants' purchase essentials for the household. “Our profit just comes
and goes. We put a portion of it into our savings, some of it into our bills, and most of it
turns into puhunan" (Florenz, 24 y/o). In terms of other ties, some participants mentioned
that part of the income earned will be donated to helping the frontliners. “I wanted to help
those who are in need during this COVID-19 Pandemic and what better way to do so by
doing what I love. I donate a portion of my proceeds to various beneficiaries.” (Joni, 21
y/o.).
Subtheme C: Mental Health
Baking is known to be a meditative process. Those who take part in this activity are
required to pour their full attention and patience when performing each step. While being
mindfully present in completing the task at hand, may it be icing a cake or measuring
ingredients, the baker is distracted from environmental stressors such as the pandemic,
work problems, or school projects. “One thing I love about baking is that it helps distract
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me from other things. Now that I’ve started this baking business, I don’t spend as much
time scrolling through social media” (Bernise, 21 y/o).
Based on the interviews, the fresh graduates talked about the pressures they feel
from work or completely losing their job amid the pandemic. “It felt like wasted time and
there is so much uncertainty that can be a factor in deteriorating my mental health”
(Anton, 22 y/o). To divert themselves from these negative thoughts and emotions, they
reward themselves with feelings of satisfaction and confidence that come from baking. “It
keeps me busy and productive, and since I just graduated, looking for a full-time job with
the current situation is difficult'' (Kiara, 21 y/o). Through baking, the participants can direct
their feelings of trouble and anxiety into an activity that produces a tangible and definite
outcome. Due to this, baking is generally seen to have a positive impact on the mental
health of those who practice it. For some, the kitchen is considered a haven where they can
focus on self-improvement and creativity. By trying out new recipes and experimenting
with new flavors, they are forced to think big and new to continue pleasing their customers.
The creativity not only stops in the kitchen, for these young bakers also have to come up
with marketing strategies that appeal to their target market. For instance, one fresh graduate
applies what she learned in college as a Communication Arts student to her advertising
strategy, by professionally taking photos of her baked goods to be posted on her social
media pages.
Being around food also brings sentimental value to some of the participants as they
are reminded of the better days. It appeals to their five senses wherein the smell or taste
would unlock one of their fondest childhood memories. “When I'm around food, be it
eating or making, I'm reminded of better days. Sometimes stories are told over food, and
sometimes food tells stories themselves” (Ange, 22 y/o). For others who seem to practice
procrastinating, they can clear their heads as they find the process of baking quite relaxing
and stress-relieving. Oftentimes, especially among the college student participants, they
would complete making the goods and delivering the orders during the day to feel like they
have done something productive, even if it is not related to school. Once they get back to
completing their course requirements, they already feel more collected and inspired to also
do well on the task at hand.
Discussion
This chapter represents an analysis and interpretation of the data obtained in the study, and
discusses an in-depth exploration of the objectives: (1) to discover the students’ and the graduates’
motivations and challenges while establishing online baking businesses amidst the COVID-19
pandemic, and (2) to explore the radical shifts in generation z’s behavior caused by the current
state of the Philippines. The findings were based on the data gathered through individual semi-
structured interviews from the participants as well as online resources on the operations of online
baking businesses before and during the COVID-19 pandemic.
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Implication A: The Benefits of Baking on College Students and Fresh Graduates
Baking could form part of a mindful practice. The COVID-19 pandemic has greatly
affected all the sectors and industries in the Philippines. With no exception, the food landscape is
going through considerable distribution across traditional stores and alternative channels, such as
online services and suppliers. The participants as well as the related literature expressed preparing
baked products, which include bread and pastries, as a form of productive therapy. The terms stress
baking, anxiety baking, and procrastinating emerged during the individual interviews and were
associated with improved self-esteem, primarily as a result of increased concentration,
coordination, and confidence. Whether they are baking for their consumption or with the intention
of sharing, the participants release their negative emotions and replace them with rewarding
feelings - sentiment and gratitude being the most important.
While both the participants and the related literature consider baking as a distraction from work
responsibilities or academic duties, the participants provide a deeper insight as to how baking
brings a sense of comfort, security, and escape. The participants are multi-dimensional, and it is
not possible to express every aspect through their job. Neglecting those other aspects could lead
to a lack of personal satisfaction and self-fulfillment, and baking serves as the creative output that
could provide genuine contentment. According to the participants, baking requires the hands to
work in harmony with the brain, and the emotions manifest the possibilities that result from the
participants’ culture. The participants find the motivation to give meaning to baking, whether it is
through manifesting the Filipino value of being family-oriented or producing Pinoy-inspired
recipes. Henceforth, culture has provided the participants with a sense of unity during isolation
and a sense of stability during the crisis.
Implication B: The Philippine Economy during the COVID-19 Pandemic
In addition to its impact on public health, COVID-19 has also caused an economic shock
to various countries around the world and of course, the Philippines is no exception. Due to the
downturn caused by the pandemic, the response of the majority of local businesses and
establishments were to close down temporarily while some were forced to close permanently.
Reasons for this include reductions in their products or services’ demand, their employees’ health
concerns, and disruptions with their supply chains due to the economic movement during this time.
Others were forced to lay off some of their employees due to their income loss. With that being
said, there was also an increase in the number of employers who are no longer hiring during this
pandemic. As a result, the unemployment rate of the Philippines rose further during the first few
months of the pandemic. As reported by the Philippine Statistics Authority’s Undersecretary
Dennis Mapa, the estimated unemployment rate for July 2020 was estimated at 10% which is
higher than last year’s unemployment rate of the same month which was placed at 5.4%, but lower
than the record high 17.7 % during April 2020 (Employment Situation in July 2020, 2020).
Unemployed individuals found the motivation to start their businesses to earn money that they
could use to buy their daily necessities. Fresh graduates especially from Generation Z experienced
difficulty in looking and applying for jobs during the pandemic due to their lack of experience in
the field as well as the forecasted economic recessions worldwide.
With the surge in unemployment and businesses reducing their staff, there is an evident
presence of new entrepreneurs conducting businesses online. One of the most popular businesses
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that emerged during this time is the baking businesses. However, due to the high number of
unemployed individuals and the people getting interested in baking, these newly established online
baking businesses also face challenges with their operations. Two of the most mentioned struggles
are the saturated market and the difficulty in procuring supplies and ingredients for their goods.
The unemployment problem as well as the difficulty in procuring supplies and ingredients
of these online baking businesses are some of the factors that can tell something about the state of
the Philippine economy during this time. Although several countries also experience an economic
recession during the COVID-19 pandemic, these countries can get back up and return to their
normal operations immediately through their immediate response in combating the spread of the
virus. It seems that because the Philippines is unprepared for a pandemic like this and does not
have sufficient resources, it remains in quarantine for a long period and further affects various
industries and its people.
Implication C: The Effects of the Pandemic on Business Operations
Despite the Philippines being the country with the longest lockdown, there is no significant decline
in COVID-19 cases. With the scarcity of mass testing and thousands of cases daily, the curve has
not yet fully flattened. Filipinos constantly worry about their safety and well-being as they take
precautionary measures in everything they do, including their self-made businesses. More
specifically, Generation Zers use their technology-driven lifestyle to influence most of their
decisions to accomplish their business goals whilst being in the safety of their homes.
Firstly, due to the strict community quarantine regulations, the participants are forced to conduct
their baking businesses online. Since the participants all belong to Generation Z and live in an
active digital space, their knowledge and constant exposure to social media come into play when
forming marketing strategies to ensure success in their businesses. From creating their content for
advertisements to portraying it aesthetically on their social media pages, these young entrepreneurs
need to know the basics of photography, editing, and social media marketing. Just as it is stated in
the review of related literature, Instagram and Facebook deem to be the most used community
platforms to sell their products because of their busy web traffic and easy-to-use interface. Since
the businesses are heavily reliant on online connections between the seller and the consumer, the
participants make certain that they constantly update their pages by weekly posting or simply using
special tools like featuring customer feedback on their 24-hour stories.
Moreover, the participants deal with external challenges in their operations, including
modes of delivery and payment. There is a constant worry about getting infected from the
interaction with customers or suppliers. With this, they mostly rely on third-party couriers like
Grab or Lalamove for delivery of goods, and GCash or bank transfers for payment to avoid
personal contact. Other times, however, the participants would personally deliver the products and
collect cash on delivery themselves if the customer is located within the vicinity. By using third-
party couriers, the participants can focus on more important things like auditing or completing
other orders. They also find it more affordable wherein they do not have to spend money on extra
things like gas or tollgate fees, which verifies the pragmatic nature of Gen Zers. Some have even
befriended trustful riders who agreed to become the designated person to deliver the goods. In
return, these riders are ensured an extra income daily. This thought shows the social responsibility
among Gen Zers as they also take into consideration the lives and financial state of others.
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Conclusion
Overall, this study interprets how college students and fresh graduates operate their online
baking businesses despite the challenges brought by the current Philippine economy that directly
affects their acquisition of supplies, marketing strategies, and modes of delivery. The study also
presents the motivations and challenges behind the Gen Z participants’ decision to establish their
online store. Results are only for this case study group and may not be projected to the general
population.
After thoroughly analyzing the data, the motivations and challenges for these home-bakers
during this pandemic are made clear. The state of the Philippine economy during this time had a
major impact on why these bakers started with their online businesses. With the problem of
unemployment and the increase of non-hiring employers amid the pandemic, along with the
increased time spent at home rather than what normally would be spent in school or work, home-
bakers are strongly self-motivated to earn for themselves through a small baking business due to
the disruption of their allowance or income. Aside from this, baking also helped them deal with
the pandemic as it serves as a therapeutic activity that helps them take their mind off the
overwhelming situation. Furthermore, since the participants are all stuck at home during
quarantine, they also took the time to be productive and reconnected with their passion for baking,
which they were unable to do when they followed their normal schedules before COVID-19.
With the limitations during community quarantine, these home-bakers turned

entrepreneurs found ways to cope and proceed with their business operations. They used various
modes of payments like GCash, online bank transfers, and cash on delivery to collect their
payment. Third-party couriers such as Grab and Lalamove were also used to deliver their goods to
their customers if they are unable to personally deliver them. They also encountered challenges
while establishing a business amid the pandemic such as market saturation and difficulty in
procuring supplies. Due to the rise of different small baking businesses, home-bakers prioritized
unique products that are not widely known yet in the Philippine market, and also exerted effort in
advertising their goods on social media. Being part of a technology-driven generation, they made
use of different online platforms for their transactions and operations, which became the
foundation for these Generation Z entrepreneurs to market their product. Lastly, they dealt with
the challenge of attaining supplies and ingredients by ordering early from online suppliers to give
lead time for their suppliers to deliver their orders. The challenge of acquiring baking supplies and
ingredients can be linked to the market saturation and the rise of the home-baking industry during
this time of the pandemic.
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Philippine entrepreneurial framework conditions: A fresh look at
the Global Entrepreneurship Monitor’s National Experts’ Survey
8th NBMC Paper # 48
Emilina R. Sarreal, Jed Seraphim C. Abalos, and Ayana Danielle R. Molina

[email protected]
Abstract
The entrepreneurial framework conditions, as stated by M.R. Gabor (2018), is one of the essential
components of an entrepreneurial ecosystem. The framework includes the entrepreneurial
infrastructures that are also defined as the entrepreneurial framework conditions (EFCs) in the
Global Entrepreneurship Monitor (GEM) report which proposed that entrepreneurship dynamics
can be linked to conditions that enhance (or hinder) new business creation known as EFCs.
Assessment of EFCs could indicate the types of entrepreneurs and their motivation in starting a
business: The Opportunity-Motivated Entrepreneurship and the Necessity – Motivated
Entrepreneurship. This framework provides an understanding of the two motivations for entrepreneurs
that lead to business development. Entrepreneurs rely on the infrastructures provided by the
government and non-governmental institutions. Entrepreneurs who are driven by necessity have the
tendency to participate less while entrepreneurs motivated by opportunities have choices in relation to
their participation in entrepreneurial infrastructures (Tseng, 2012).
All EFCs for the period 2013-2015 are significantly different in terms of the level of assessment
of being completely false (1) or not in favor of providing conducive environment for starting and
growing firms and completely true (9) or favorable for starting and growing firms in the
Philippines. Except for government policies and programs’ level of assessment, all the other EFCs
are deemed to be assessed as significantly different across the 3-year period. The Tukey post hoc
analysis confirmed that only government policies and programs’ level of assessment are not
significantly different (meaning the same) for the year 1 (2013) through year 3 (2015). The
negative mean differences determined across the 3-year period revealed that all EFCs except
government policies and programs are significantly different across the period with improving
ratings with year 1 (2013) rated lower (1=completely false) than year 3 (2015) with higher
assessment.
Key Words: Entrepreneurial Conditions, government policies and programs, opportunity driven
and necessity driven entrepreneurs
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A country’s economic growth, development and the availability of employment heavily

relies on the presence of business ventures and entrepreneurial activities in a country. This is then
affected by factors that make up the Entrepreneurial Framework Conditions (EFC) which was
developed by Global Entrepreneurship Monitor (GEM). There are 9 factors that compose the
framework which includes government policies, availability of finance and equity, cultural norms,
and research and development, among others. Considering this, the understanding of
entrepreneurial conditions and landscapes of country requires a holistic approach as it is a
multifaceted phenomenon (Shukla et. Al, 2014).
The entrepreneurial framework conditions, as stated by M.R. Gabor (2018), is one of the
essential components of an entrepreneurial ecosystem. This is because business growth and
dynamics in a country where an entity is located are directly affected by the presence and the
current conditions of business opportunities, entrepreneurial capacity, and preferences. On the
other hand, Shukla et. al (2013) defined entrepreneurial conditions as a catalyst for entrepreneurial
activities. Early entrepreneurial activities are critical for the development of wider economic
activity and is important to provide dynamism (Kinnunen & Georgescu, 2020).
In the GEM Philippine Report (2015), Filipinos are mainly motivated to be an entrepreneur
by the opportunity to earn more (41.55%) rather than necessity (25.64%). These opportunities can
provide them greater financial independence and higher financial income. In 2006, 45% of
Filipinos were encouraged to be entrepreneurs due to necessity as compared to only 25.64% in
2015. The entrepreneurial motivation for opportunity to earn more has been increasing since 2013,
from 38% to 41.55% in 2015. There is also increasing expectation of business growth in terms of
more jobs generated, a bigger market that can be tapped, and offering innovative products and
services.
Research Problems
This study aims to determine the changes in the assessment of entrepreneurial

framework conditions (EFCs), whether positive or negative, across the period 2013-2015
using the GEM National Experts Survey (NES) undertaken in the Philippines.
Research questions
1. What entrepreneurial condition/s as assessed in the GEM national experts survey

(NES) differ from 2013-2015?
2. Which of the entrepreneurial conditions are forecasted to improve after the 2015
NES?
3. Which of these conditions need to be reevaluated to improve the current state of
entrepreneurial environment that would boost start up intentions among
opportunity-driven entrepreneurs?
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The basis of the study is the Conceptual Framework for Entrepreneurship Development
developed by Reynolds et. al. (2002) used in the GEM research that was conducted in the year
2002-2003. The framework includes the entrepreneurial infrastructures that are also defined as the
entrepreneurial framework conditions (EFCs) by GEM. GEM has proposed that entrepreneurship
dynamics can be linked to conditions that enhance (or hinder) new business creation known as
EFCs. These conditions are considered important components of any entrepreneurship ecosystem
and constitute “the necessary oxygen of resources, incentives, markets and supporting institutions
for the creation and growth of new firms” (cf. Bosma et al., 2008: p. 40).
GEM research needed a source of information to assess these conditions that directly
influence the existence of entrepreneurial opportunities, entrepreneurial capacity and preferences,
which in turn determines business dynamics. Thus, the source of information was created as the
National Experts Survey (NES) which assesses various EFCs as well as some other topics related
to entrepreneurship. NES provides the views of additional experts on various entrepreneurship
issues and topics which include women entrepreneurship support, high growth business
encouragement and questions related to the special topics each year.
Figure 1
Conceptual Framework of GEM EFCs
Dimensions of EFCS include: A.) Financial or Entrepreneurial Finance – the availability of

financial resources, equity, and debt for small and medium enterprises; B.) Government Policies – this
is the extent to which policies support entrepreneurship; C.) Government Programs – the presence and
quality of programs that directly assists SMEs at all levels of the government; D.) Education and
Training – the extent to which training and education in creating and managing SMEs are incorporated
in all levels of education; E.) R&D Transfer – the extent to which national research and development
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leads to new commercial opportunities available to SMEs; F.) Commercial and Legal Infrastructure –
the presence of property rights, commercial, accounting, and other legal and assessment services and
institutions that support or promote SMEs; G.) Entry Regulation – includes two components which are
market dynamics or the changes in the market, and the market openness or the extent to which new
firms are free to enter existing markets; H.) Physical Infrastructure – this relates to the ease of access
to physical resources such as communication, utilities, and transportation among others that does not
discriminate against SMEs; and I.) Cultural and Social Norms – the extent to which norms encourage
or allow actions leading to new business methods that can increase personal wealth and income.
Assessment of EFCs could indicate the types of entrepreneurs and their motivation in starting
a business: the Opportunity-Motivated Entrepreneurship and the Necessity – Motivated
Entrepreneurship. This framework provides an understanding of the two motivations for entrepreneurs
that lead to business development. Entrepreneurs rely on the infrastructures provided by the
government and non-governmental institutions. Entrepreneurs who are driven by necessity have the
tendency to participate less while entrepreneurs motivated by opportunities have choices in relation to
their participation in entrepreneurial infrastructures (Tseng, 2012).
Research hypothesis
Based on the research questions and resulting framework of the study, the following
hypothesis was tested:
Ho1: Entrepreneurial Framework conditions (Financial or Entrepreneurial Finance,

Government Policies, Government Programs, Education and Training, R&D Transfer, Commercial
and Legal Infrastructure, Entry Regulation, Physical Infrastructure and Cultural and Social Norms) do
not differ across the periods 2013-2015.
Methodology
Datasets from GEM website through the NES survey for the Philippines from 2013 to 2015
with a sample size of 115 was used. The responses to the items follow a Likert scale, where 1
means the statement is completely false according to the expert and 5, 7 or 9 (depending on the
year data was collected) means the statement is completely true. Experts are also asked to express
their views about the most important institutional successes and constraints for fostering
entrepreneurship in their country. They also provide some key recommendations for the same
purpose. The 5 points scales keep the time series comparable from the year 2000 to present; while
the 7 and 9 point scales were used from 2014 onwards.
Descriptive Analysis
The average educational attainment from 2013 and 2015 respondents is a university/college
graduate (M = 4.29, SD = .98), with the 2014 respondents being those with graduate scholarly work
(M = 4.56, SD = .56). Across the 3 years of NES survey, males have outnumbered female respondents
at 14 females (0) and 23 males (1) in 2013; 16 females (0) and 20 males (1) in 2014; and 20 females
(0) and 19 males (1) in 2015.
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Analysis of Variance (One-Way ANOVA)
ANOVA was used to determine if there were significant differences in the means scores of the
EFCs across the 3 years. The results of the one way ANOVA indicates that the assessment of the EFC
has significantly improved across the 3 year period from a scale of “1” being completely false up to
“9” as completely true.
Based on Table 1, all EFCs’ p values are significant (p<.001) except for government
policies on “new firms getting most of the required permits and licenses in about a week (B04)”,
“taxes and other government regulations are applied to new and growing firms in a predictable and
consistent way (B06), and “coping with government bureaucracy, regulations, and licensing
requirements is not unduly difficult for new and growing firms (B07)”. The mean scores of these
EFCs remained to be within the completely false to false assessment of the experts. The EFC
variances across the 3 year period do not significantly vary or differ which means that the
entrepreneurial conditions did not change in the areas of permits, licenses, taxes, and government
bureaucracy, regulations and licensing requirements that favor or ease doing business for new and
growing firms.
Thus, the null hypothesis (Ho1) Entrepreneurial Framework conditions (Financial or

Entrepreneurial Finance, Government Policies, Government Programs, Education and Training, R&D
Transfer, Commercial and Legal Infrastructure, Entry Regulation, Physical Infrastructure and Cultural
and Social Norms) do not differ across the periods 2013-2015, is rejected.
A Tukey post hoc analysis was also undertaken as a result of the significant ANOVA results
and to determine which EFCs had significant mean differences across the 3 year period. A negative
and significant mean difference per EFC indicates that the assessment of the entrepreneurial condition
has improved from completely false to true based on the scale used in the NES. A negative and non-
significant mean difference also indicates an improvement from completely false to true assessment of
EFCs but not found to be statistically significant.
The post hoc analysis of all EFCs in Table 1 coincides with the ANOVA findings where
all EFC assessments indicates negative and significant mean differences from year 1 to year 3 from
complete false to somewhat true with the exception of government policies on permits, licenses,
taxes, and government bureaucracy, regulations and licensing requirements. In addition, negative
but non-significant mean differences were found in government programs on “a wide range of
government assistance for new and growing firms can be obtained through contact with a single
agency (C01), the people working for government agencies are competent and effective in
supporting new and growing firms (C04), almost anyone who needs help from a government
program for a new or growing business can find what they need (C05), Government programs
aimed at supporting new and growing firms are effective (C06)”. This means that the
improvements in their EFCs were not found to be significant among NES respondents across the
3 year period.
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• Table 1. Analysis of Variance across 2013-2015 NES Survey
mean
difference sig
FINANCING Year Mean p Year 1 at .05*,
less Year .001***
3
A01 1 3.18 < .001 -1.54 ***
In my country, there is sufficient equity funding
available for new and growing firms 2 2.47
3 4.72
A02 1 3.21 < .001 -1.86 ***
In my country, there is sufficient debt funding
available for new and growing firms 2 2.89
3 5.08
A03 1 2.92 < .001 -1 *
In my country, there are sufficient government
subsidies available for new and growing firms 2 2.14
3 3.92
A04 In my country, there is sufficient funding 1 3.37 < .001 -2.91 ***
available from private individuals (other than 2 2.75
founders) for new and growing firms
3 6.28
A05 In my country, there is sufficient venture 1 2.66 < .001 -2.17 ***
capitalist funding available for new and growing 2 2.31
firms )
3 4.83
A06 1 2.63 < .001 -2.64 ***
In my country, there is sufficient funding
available through initial public offerings (IPOs) 2 2.75
for new and growing firms
3 5.28
mean
difference sig
GOVERNMENT POLICIES Year 1 at .05*,
less Year .001***
Year Mean p 3
B01 1 2.42 0.002* -1.15 **
In my country, Government policies (e g , public
procurement) consistently favor new firms 2 2.08
3 3.58
B02 In my country, the support for new and growing 1 3.11 < .001 -0.995 *
firms is a high priority for policy at the national 2 2.39
government level
3 4.1
B03 In my country, the support for new and growing 1 3.05 < .001 -0.747
firms is a high priority for policy at the local 2 2.28
government level
3 3.8
B04 1 2 0.074 -0.9
In my country, new firms can get most of the
required permits and licenses in about a week 2 1.94
3 2.9
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B05 1 2.26 0.045 -0.312
In my country, the amount of taxes is NOT a
burden for new and growing firms 2 1.78
3 2.58
B06 In my country, taxes and other government 1 2.45 0.091 -0.853
regulations are applied to new and growing 2 2.58
firms in a predictable and consistent way
3 3.3
B07 In my country, coping with government 1 2.32 0.222 -0.359
bureaucracy, regulations, and licensing
requirements it is not unduly difficult for new 2 2.03
and growing firms 3 2.67
mean
difference sig
GOVERNMENT PROGRAMS Year Mean p Year 1 at .05*,
less Year .001***
3
C01 In my country, a wide range of government 1 2.53 0.001* -0.599
assistance for new and growing firms can be 2 1.83
obtained through contact with a single agency
3 3.13
C02 In my country, science parks and business 1 2.74 < .001 -1.39 **
incubators provide effective support for new and 2 2.31
growing firms
3 4.13
C03 In my country, there are an adequate number of 1 3.03 < .001 -1.02 *
government programs for new and growing 2 2.53
businesses
3 4.05
C04 In my country, the people working for 1 3.21 < .001 -0.189
government agencies are competent and 2 2.19
effective in supporting new and growing firms
3 3.4
C05 In my country, almost anyone who needs help 1 2.82 0.017* -0.309
from a government program for a new or 2 2.22
growing business can find what they need
3 3.13
C06 1 2.74 0.011* -0.738
In my country, Government programs aimed at
supporting new and growing firms are effective 2 2.28
3 3.48
mean
difference sig
EDUCATION AND TRAINING Year Mean p Year 1 at .05*,
less Year .001***
3
D01 1 3.32 < .001 -2.16 ***
In my country, Government programs aimed at
supporting new and growing firms are effective 2 3.14
3 5.47
D02 1 2.95 < .001 -1.98 ***
2 2.89
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In my country, teaching in primary and
secondary education provides adequate
instruction in market economic principles 3 4.92
D03 In my country, teaching in primary and 1 2.92 < .001 -1.65 ***
secondary education provides adequate attention 2 2.5
to entrepreneurship and new firm creation
3 4.58
D04 In my country, Colleges and universities provide 1 3.26 < .001 -2.79 ***
good and adequate preparation for starting up 2 3.25
and growing new firms
3 6.05
D05 In my country, the level of business and 1 3.42 < .001 -2.98 ***
management education provide good and
adequate preparation for starting up and growing 2 3.14
new firms 3 6.4
D06 In my country, the vocational, professional, and 1 3.42 < .001 -2.83 ***
continuing education systems provide good and
adequate preparation for starting up and growing 2 3.17
new firms 3 6.25
mean
difference sig
R & D TRANSFER Year Mean p Year 1 at .05*,
less Year .001***
3
E01 In my country, new technology, science, and 1 2.26 < .001 -2.84 ***
other knowledge are efficiently transferred from
universities and public research centers to new 2 2.06
and growing firms 3 5.1
E02 In my country, new and growing firms have just 1 2.37 < .001 -2.08 ***
as much access to new research and technology 2 1.89
as large, established firms
3 4.45
E03 1 2.18 < .001 -1.29 ***
In my country, new and growing firms can
afford the latest technology 2 2
3 3.48
E04 In my country, there are adequate government 1 2.32 < .001 -0.884 *
subsidies for new and growing firms to acquire 2 1.64
new technology
3 3.2
E05 In my country, the science and technology base 1 2.53 < .001 -1.45 ***
efficiently support the creation of world-class
new technology-based ventures in at least one 2 1.86
area 3 3.98
E06 In my country, there is good support available 1 2.24 < .001 -1.16 **
for engineers and scientists to have their ideas 2 1.86
commercialized through new and growing firms
3 3.4
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mean
difference sig
COMMERCIAL & LEGAL INFRASTRUCTURE Year Mean p Year 1 at .05*,
less Year .001***
3
F01 In my country, there are enough subcontractors, 1 3.24 < .001 -2.44 ***
suppliers, and consultants to support new and 2 3.11
growing firms
3 5.67
F02 In my country, new and growing firms can 1 2.84 < .001 -1.58 ***
afford the cost of using subcontractors, 2 2.33
suppliers, and consultants
3 4.42
F03 In my country, it is easy for new and growing 1 2.92 < .001 -2.28 ***
firms to get good subcontractors, suppliers, and 2 2.5
consultants
3 5.2
firms to get good, professional legal and 2 2.89
accounting services
3 5.08
firms to get good banking services (checking
accounts, foreign exchange transactions, letters 2 3.06
of credit, and the like) 3 5.33
mean
difference sig
ENTRY REGULATION Year Mean p Year 1 at .05*,
less Year .001***
3
G01 In my country, the markets for consumer goods 1 3.58 < .001 -2.55 ***
and services change dramatically from year to 2 3
year
3 6.13
G02 In my country, the markets for business-to- 1 3.29 < .001 -2.64 ***
business goods and services change dramatically 2 3
from year to year
3 5.92
G03 1 3.13 < .001 -1.69 ***
In my country, new and growing firms can
easily enter new markets 2 2.69
3 4.83
G04 1 2.89 < .001 -1.78 ***
In my country, the new and growing firms can
afford the cost of market entry 2 2.56
3 4.67
G05 In my country, new and growing firms can enter 1 2.76 < .001 -1.16 **
markets without being unfairly blocked by 2 2.33
established firms
3 3.92
G06 1 1.92 0.004 -1.13 **
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In my country, the anti-trust legislation is 2 1.75
effective and well enforced 3 3.05
mean
difference sig
PHYSICAL INFRASTRUCTURE Year Mean p Year 1 at .05*,
less Year .001***
3
H01 In my country, the physical infrastructure 1 3.03 < .001 -1.05 **
(roads, utilities, communications, waste
disposal) provides good support for new and 2 2.31
growing firms 3 4.08
H02 In my country, it is not too expensive for a new 1 3.97 < .001 -1.75 ***
or growing firm to get good access to 2 3.33
communications (phone, Internet, etc )
3 5.72
H03 In my country, a new or growing firm can get 1 3.92 < .001 -1.53 **
good access to communications (telephone, 2 2.89
internet, etc ) in about a week
3 5.45
H04 In my country, new and growing firms can 1 3.71 < .001 -2.11 ***
afford the cost of basic utilities (gas, water, 2 3.14
electricity, sewer)
3 5.83
H05 In my country, new or growing firms can get 1 3.74 < .001 -2.39 ***
good access to utilities (gas, water, electricity, 2 3.25
sewer) in about a month
3 6.13
mean
difference sig
CULTURAL AND SOCIAL NORMS Year Mean p Year 1 at .05*,
less Year .001***
3
I01 In my country, the national culture is highly 1 3.58 < .001 -2.12 ***
supportive of individual success achieved 2 3.42
through own personal efforts
3 5.7
I02 In my country, the national culture emphasizes 1 3.55 < .001 -1.95 ***
self-sufficiency, autonomy, and personal 2 3.19
initiative
3 5.5
I03 1 3.24 < .001 -2.16 ***
In my country, the national culture encourages
entrepreneurial risk-taking 2 2.56
3 5.4
I04 1 3.63 < .001 -2.12 ***
In my country, the national culture encourages
creativity and innovativeness 2 3.14
3 5.75
I05 In my country, the national culture emphasizes 1 3.29 < .001 -2.59 ***
the responsibility that the individual (rather than
the collective) has in managing his or her own 2 2.83
life 3 5.88
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Note. * p < .05, ** p < .01, *** p < .001
With the use of linear regression, the EFC forecast values for 2016-2020 may be
computed using year as predictor for level of assessment of these conditions ranging from 1=
completely false to 9 = completely true. All linear regression equations for each EFC are
significant with p values <.05. However, since year (time) was used to predict the level of
assessment, the adjusted R2 values ranged from 0.339 or 33.9% of education and training can be
explained by time, while government programs can only be explained by time at only 3.7%
(R2=.037). The forecast values for government policies and programs only reached “5” out of the
possible maximum rating of 9 (completely true), meaning, these EFCs are forecasted to remain
as “somewhat true” for 2016-2020.
Education and training’s forecast values are expected to be greater than the maximum
scale of 9 (completely true) for 2019-2020 indicating that all levels of education (from primary
to college), and types of education (business and management education, vocational,
professional, and continuing education systems) are forecasted to provide good and adequate
preparation for starting up and growing new firms.
Table 2. Forecast values for EFCs for 2016-2020
CULTU-
GOVT R&D COMM_
FORECAST GOVT EDU_ PHYSI- RAL_
FINANCING PROG- TRANS- LEGAL ENTRY
VALUES POLI- TRAINING CAL SOCIAL
RAMS FER INFRA REGLN
CIES INFRA NORMS
2016 6 3 4 6 4 6 5 6 6
2017 7 4 4 8 5 7 6 7 7
2018 8 4 4 9 6 8 7 8 8
2019 9 5 5 10 7 9 8 9 10
2020 10 5 5 11 8 10 9 9 11
INTERCEPT 1.502 1.889 2.166 1.551 1.095 1.711 1.590 2.268 1.858
BETA COEFF. 1.022 0.386 0.362 1.210 0.819 1.002 0.923 0.896 1.106
P value 0.000* 0.006* 0.022* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000*
ADJ R2 0.268 0.058 0.037 0.339 0.201 0.253 0.274 0.193 0.268
*SIGNIFICANT AT p<.05
Conclusion
In answer to the research questions, all EFCs for the period 2013-2015 are significantly
different in terms of the level of assessment of being completely false (1) or not in favor of
providing conducive environment for starting and growing firms and completely true (9) or
favorable for starting and growing firms in the Philippines. Except for government policies and
programs’ level of assessment, all the other EFCs are deemed to be assessed as significantly
different across the 3 year period. The Tukey post hoc analysis confirmed that only government
policies and programs’ level of assessment are not significantly different (meaning the same) for
the year 1 (2013) through year 3 (2015). The negative mean differences determined across the 3
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year period revealed that all EFCs except government policies and programs are significantly
different across the period with improving ratings with year 1 (2013) rated lower (1=completely
false) than year 3 (2015) with higher assessment.
Based on the NES data for 2013-2015, all EFCs may improve after 2015 except for government
policies and programs with forecast assessment value of “5” out of the “9” maximum rating of these
policies and programs to be completely true in enabling start up and growing firms. Government
policies and programs related to government policies on permits, licenses, taxes, and government
bureaucracy, regulations and licensing requirements.
Education and training and social and cultural norms proved to be the EFCs that are
forecasted to be completely true in enabling start ups and growth of firms.
Factors directly related to government have remained considerably the same over the last
3 years. Although there are numerous laws and policies that are aimed to support entrepreneurship
in the country, the population is not well-informed regarding these policies. There is also
inconsistent implementation of these policies among local government units.
References
Gabor, M. (2018). Entrepreneurial Framework Conditions and Sustainable Growth in Europe. A

Multimethod Analysis. Retrieved from
https://www.researchgate.net/publication/325180578_Entrepreneurial_Framework_Condition
s_and_Sustainable_Growth_in_Europe_A_Multimethod_Analysis
Tseng, C. (2012). Linking Entrepreneurial Infrastructures and New Business Development:
Entrepreneurship Development in Taiwan. Journal of Entrepreneurship.
doi:10.1177/097135571102100105
Velasco, A. et. al. (2015). Philippine Entrepreneurship Report 2015-2016. De La Salle University
Publishing House, pp. 5, 17-18.
WHAT IS THE NATIONAL EXPERT SURVEY (NES)? (n.d.). Retrieved September 30, 2020,
from https://www.gemconsortium.org/wiki/1142
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Exogenous Scarcity in the mind of Filipino Consumers during
Covid-19 Pandemic
8th NMBC Paper # 49
Reynaldo A. Bautista Jr. and Marjorie I. Eugenio

[email protected]
Abstract
The Philippines, being one of the countries that have been greatly affected by the pandemic, was
put under Enhanced Community Quarantine or ECQ during the height of the Covid-19 pandemic.
In this trying time, panic buying was observed and an unusually large number of products were
being hoarded by consumers. E-commerce also attracts new customers to adopt digital
transactions. The purchasing behavior became a means of survival and scarcity of supply became
evident. This study seeks to provide an understanding of the attitudinal motivation of panic buying
behavior of consumers that may lead to the stockpiling and the scarcity of supply in the market
specifically during the Covid-19 pandemic by means of the reactance theory to help the online
industry to address the scarcity in their marketing strategies to counter or capitalize on the adverse
effects of shortages.
Keywords: Scarcity, panic buying, purchasing power, pandemic, new normal, hedonic,
utilitarian, urgency to buy, instore hoarding, reactance theory, Covid-19, bulk buying
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Exploring the impact of COVID-19 on MSMEs in the Philippines: A
Case Study
8th NBMC Paper # 50
Erwin Carlo Gonzales and Vicente A. Pitogo

De La Salle University and Caraga State University
Abstract
The outbreak of the 2019 novel coronavirus (COVID-19) has severely affected the Philippines and
the global economy. Economic casualties of COVID-19 outbreak are predominantly micro, small,
and medium-sized enterprises (MSMEs). This paper aims to assess the impact of COVID-19 on
MSMEs engaged in manufacturing and outsourcing which represent prevalent industries in the
Philippines. This study is exploratory in nature and will use an inductive holistic multiple case
study design and thematic analysis as the method of analysis. The results reveal that most MSMEs
represented in the study were negatively impacted in several ways among which were liquidity,
value chain, workforce management, technological infrastructure, and government. All the
MSMEs in the case study admittedly were not prepared for the impact and gravity of COVID-19.
Some started pivoting from their core business to survive in the new normal. The results were
consistent with other studies outside the country. While the Philippine Government enacted
Republic Act No. 11494 or Bayahihan Act to aid MSMEs in recovering from the pandemic
however, the MSMEs in the study did not take advantage of this aid citing various concerns.
Key Words: COVID-19, MSMEs, Business resilience
Introduction
The Novel Coronavirus (2019-nCoV) or (COVID-19) has disrupted economies in national

and global scale. Nations and firms are contending with a myriad of issues in varying degrees.
These issues include disruption in global supply chains, customer demand, transportation policies,
technology usage and lifestyle shifts. Capital markets have been wiped out and oil has plunged
into negative territory as far as -$38 a barrel and having more of it is accelerating oil producers
into bankruptcy (Mensi, Sensoy, Vo, & Kang, 2020). It is quite evident that whether small or large
enterprises around the world are reeling from the effects of COVID-19 and that these effects have
yet to fully manifest its gravity as it may take years to fully comprehend the situation where the
world is at this point in time. We would argue that negative impact of COVID-19 would be greater
towards MSMEs because they do not possess the scale and resources of large corporations such as
strength of financial assets, sophistication of technological architecture and competitive
managerial skills. Hence, they are not in any way prepared to deal with this unique situation (Bartik
& Hershbein, 2020; Prasad, Su, Altay, & Tata, 2015). In addition, most MSMEs have a limited
customer base and for the most part is reliant on predictable business transactions, their business
681 | P a g e
model is inventory dependent therefore disruptions in supply chain puts them in a very precarious
position (Williams & Schaefer, 2013).
In the Philippines and neighboring South-East Asia, small and medium-sized enterprises
(SMEs), including small-scale agriculture, are the backbone of many economies worldwide. Small
and medium-sized companies range from micro-enterprises, such as retailers on the street markets,
to manufacturing plants with major capital investments in machinery and training for the workers.
They are considered to be the key to social and economic growth in South-East Asia by the Asia-
Pacific Economic Commission (APEC) and the Association of Southeast Asian Nations (ASEAN)
xxxx -111 GAP2019, which is the world's most vulnerable area to natural hazards. Therefore, their
resistance to catastrophes is also essential to sustainable development. 99.56 percent of companies
in the Philippines are micro, small and medium-sized enterprises (MSMEs) and provide 62.85
percent of all jobs xxxx 112-GAP. A typical illustration of the private industry when disaster
strikes is of large companies assisting with resources or relief supplies. Small and medium-sized
businesses, however, seldom have substantial capital to offer others in this way and are therefore
not part of business networks such as chambers of commerce. Fires and chemical, electronic,
biological, and environmental hazards are also at risk. Small and medium-sized enterprises are
differentiated from their residential neighbors by the fact that in a globalized economy, small and
medium-sized enterprises are particularly vulnerable to structural risks related to supply chains
and access to markets due to events that could occur far away xxxx-GAP. A biological threat that
disrupts the worldwide economy is the Covid-19 pandemic; many companies are forced to shut
down because of economic loss and inadequate funding, in which MSMEs are not exempted. In
order to provide assistance and coping measure, the Philippine Government enacted Republic Act
No. 11494 or Bayahihan Act to aid MSMEs in recovering from the pandemic, however, the
MSMEs in the study did not take advantage of this aid citing various concerns; as such, this paper
aims to examine the effect and impact of the Covid-19 pandemic on MSMEs in the Philippines
and how these organizations deal with the phenomenal and burgeoning biological risk of the
pandemic. The research design used in this paper is an inductive holistic multiple case study that
subscribes to the principle of the case study of Myers (2013), described as using empirical data
obtained from one or more organizations to contextually analyze the subject at hand. The definition
made by Myers (2013) shows that most case study studies in business and management require
organizations to be carried out but the subject matter to be studied may focus on processes,
procedures, routines. In this paper, we focus on manufacturing and outsourcing organizations and
examine how the Covid-19 pandemic affects and impacts these organizations; and we analyze the
transcript data, encode it and discover new insight and understanding of the phenomenon under
investigation using a semi-structured interview. The results reveal that most MSMEs represented
in the study were negatively impacted in several ways among which were liquidity, value chain,
workforce management, technological infrastructure, and government. All the MSMEs in the case
study admittedly were not prepared for the impact and gravity of COVID-19. Some started
exploring other channels of sales from their core business in order to survive in the new normal.
Research Objectives and Questions
Samantha (2018) posits that because of their size, most MSMEs do not survive until the
post-disaster stage. MSMEs operating in developing countries such as the Philippines are at a
severe disadvantage due the lack of structured government support, high poverty rate, economic
682 | P a g e
and political unpredictability. Therefore, this case study aims to explore different MSMEs in the
Philippines that were affected and impacted by Covid-19 pandemic and attempts to suggest
recommendations to aid the survival of MSMEs in the Philippines. The specific research questions
are.
RQ1: How Covid-19 pandemic impacted MSMEs in the Philippines?

RQ2: What are the coping strategies conducted by MSMEs in the Philippines that were impacted
by the Covid-19 pandemic?
Impact of external environmental on MSMEs
Between 2005 until 2011 the world has experienced natural upheavals. The US has had
hurricane Katrina and Harvey, in Asia, Japan fell victim to the Great East earthquake and tsunami,
while Thailand in 2011 had tropical storm Nock-ten. All of which cost the global economy over
$700 billion in damages. However, these were not the only events that created chaos in the world.
North American, Asia and Africa faced a different adversary in the form of SARS, MERS, swine
and avian flu, Ebola and ZIKA (Auzzir et al., 2018; Eggers, 2020; Kim et al., 2020). These events
have caused a great degree of concern in modern society, the economy and MSMEs some of these
concerns were business continuity, more specifically supply chain disruption.
According to Bode and MacDonald (2017) disruptions in the supply chain are triggered by
an assembly of fortuitous events within the supply chain, inbound logistics, or sourcing process
with consequential results that threaten the natural course of business operations of a firm. These
disruptions man-made or otherwise are embedded characteristics of a global supply chain that are
irrespective of industry (Golan, Jernegan, & Linkov, 2020).
Growth in most developing economies have been driven by globalization and outsourcing
which of course has led to the creation of a global circular economy. Because of recent events this
model might not be viable moving forward according to Naidoo and Fisher (2020). A circular
economy was created to be a viable industrial economic model, to satisfy a variety of roles ranging
from the decoupling of economic growth into consumption, waste management and value creation
(Ibn-Mohammed et al., 2021).
A global pandemic such as COVID-19 has greatly disrupted the global supply chain at the
center of a circular economy whereby MSMEs irrespective of industry have been fighting for
survival because these external forces have disjointed the circular economy directly and indirectly.
Some examples include access to public infrastructure, supply of electricity, transportation
including global oil prices and production costs of inventory and logistics (Asgary et al., 2020;
Eggers, 2020; Prasad et al., 2015; Samantha, 2018). They are especially vulnerable because of
their size, limited access to resources and financial capacity vis-a-vis their larger counterparts
(Asgary et al., 2020; Bartik et al., 2020; Eggers, 2020; Prasad et al., 2015; Samantha, 2018;
Williams & Schaefer, 2013).
Between 1998 until 2017 natural disasters have eroded around $2.9 trillion of global
economic value Ahmad & Afzal, 2020; Ahmad & Ma, 2020; Hussain et al., 2019). Nations such
as the US lost around $950 billion followed closely by China, India, Japan, and the EU according
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to (World Trade Organization, 2019). Some of the consequences of these natural disasters on
MSMEs are in the form of job losses, in 2011 and 2014 the great floods in Thailand and Malaysia
impacted over 550,000 MSMEs thereby eliminating over 2.5 million jobs in the country. MSMEs
account for 90% of employment in these developing nations (Auzzir et al., 2018). In 2001
developed countries like the UK contended with the Foot and Mouth Disease (FMD) outbreak that
caused over 5 billion GBP in losses mostly in non-farming MSMEs (Bennett & Phillipson, 2004).
Impact of COVID-19 on the global economy
The COVID-19 pandemic has put the world economy to a grinding halt. It went live on
February 21st, 2020 and after 9 months and counting cases are still growing especially in
developing economies, its effects will cause major consequences for global GDP growth (Word
Economic, 2020). According to (ADB, 2020) this will adversely affect global GDP in the range of
2.3% to 4.8%. % (UNCTAD, 2020b) forecasts that global foreign direct investment will contract
by 5% to 15% respectively and this will require about $2.5 trillion in order to absorb the losses. In
addition, global job loss is forecasted to be around 25 million which translates into north of $ 3.4
trillion of workers income (ILO, 2020c). Developing nations will have the worst impact of
COVID-19 because they are bound to foreign exchange restrictions which will impede effective
implementation of economic stimulus (UNCTAD, 2020a). Most specifically countries with weak
healthcare infrastructure, high debt ratios, and deeply reliant on trade and tourism with volatile
capital inflows, this signals a deep recession in South East Asia and could precipitate the worst
economic performance in 40 years (World Bank, 2020a).
COVID-19 and MSMEs in the Philippines
In developing nations MSMEs are the foundation of economies, they create jobs, provide
income and opportunities for billions of people around the world. The Philippines is no different.
According to the (Department of Trade and Industry, 2017) MSMEs account for 99% of business
in the country and employ over 62% of the national workforce making them the primary job
creation mechanism in the Philippines (Gonzales, 2018). Apart from providing employment
opportunities they stimulate commerce, economic growth and absorb the growing workforce in
municipalities and rural areas. MSMEs created over 3.8 million jobs accounting for 60% of the
total workforce in the sector vis-a-vis the 2.4 million jobs created by large organizations in 2011
alone (Camposano, 2014; Roxas & Chadee, 2016).
According to the Philippine Department of Trade and Industry (DTI) MSMEs are firms
that engage in entrepreneurial activity and are structured as a single proprietorship, cooperative,
partnership, limited partnership, or a corporation with an asset base of about P100 million and
employs not more than 200 employees. The industries where these MSMEs are engaged in are
predominantly retail and wholesale trading whether B2C or B2B, hospitality, food services and
manufacturing. Some on the other hand function in the ICT and financial services space. The
National Capital Region (NCR), Central Luzon and CALABARZON has the highest concentration
of MSMEs in operation and NCR serves as a hub for entrepreneurship. They account for over half
of the geographic distribution of MSMEs in the country while Mindanao, specifically the
Cordillera Administrative Region (CAR), Autonomous Region of Muslim Mindanao (ARMM)
and Caraga have the lowest distribution.
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Since 2017 the DTI has deployed its MSME Development Plan to promote and reinforce
MSMEs to ensure that they continue to succeed in their role in improving the economy from which
they generate employment for millions of Filipino workers. Because of this DTI has been steadfast
in creating plans to improve the local business environment by helping increase productivity,
efficiency, and strategies to provide access capital and create new markets. The Philippine has in
place several laws that help support the creating and expansion of MSMEs. Among them are the
Magna Carta for Micro, Small and Medium Enterprises or the revised Republic Act Number 6977
(R.A. 6977) provides governance and a legal framework for the development of MSMEs, The
Barangay Micro Business Enterprise Act of 2002 or Republic Act Number 9178 (R.A. 9178)
promotes the creation of Barangay Micro Business Enterprises (BMBEs) and the Go Negosyo Act
or Republic Act Number 10644 (R.A. 10644) all of which are created to promote, support and
encourage entrepreneurship by providing programs that assist, strengthen and sustain the
development of MSMEs. The Philippine Government is committed to help lower barriers to entry
for MSMEs through four outcome areas namely, an inclusive business environment, accessibility
in financial instruments and markets, productivity, and operational efficiency. These allow
MSMEs to be created and compete in business centers, municipalities, and provinces because they
enable ease of doing business.
Methodology
Research is defined as an original and systematic analysis and review of materials and
sources to create facts and draw a fresh conclusion that contributes to the knowledge and
understanding of a particular field. This involves imaginative thinking, which leads to the
development of new findings and usually involves the analysis of these phenomena, either
empirically or philosophically (Berryman, 2019; Myers, 2013). This holistic case study
qualitatively explores the assumptions and the possible production of fresh and vibrant
perspectives from the phenomenon under study, which is the impact of Covid-19 on MSMEs in
the Philippines. The following figure shows the model adopted by Myers (2020) in the design of
qualitative research.
Figure 1
Research Design
Research Method
In hopes of discovering interactions and conclusions emerging from a particular viewpoint

within the organization dealing with such phenomena, some pieces of literature applied in
organizational environments take an observational case study approach (Deng & Gonzalez, 2018;
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Dini et al., 2018). In order to discover real-life dynamics that have led to some theoretical
understanding of how organizations deal with challenges and opportunities in society, a case study
was also used as the underlying methodical context (Lindberg et al., 2014).
In this context, an inductive case study that subscribes to the concept of Myers' (2013) case
study defined as the use of empirical data gathered from one or more organizations venturing to
contextually examine the topic at hand will be implored. The description made by Myers (2013)
indicates that most business and management case study research include organization to be
carried out but the subject matter to be studied may concentrate on method, procedures, routines.
The organizations involved in this study are outsourced startups, manufacturing and exporting
companies, and the focus of the investigation is on how the Covid-19 pandemic affects and impacts
these organizations, which makes it the unit of research. A bottom-up method or inductive
methodology will be followed, starting with the collection of information from different
organizations, generation of trends, case analysis and interpretation, outlined in the data analysis
section, towards the creation of a new theory.
Research Context Company/Organization Profiles
Company X is an outsourced digital marketing startup headquartered in California USA

with a local office located in Mandaluyong City, Metro Manila. The Philippines is an outsourcing
haven for organizations looking to take advantage of global arbitrage, the country offers a
relatively college educated workforce, where about 84% have a college degree or are enrolled in
college. This makes the workforce competitive vis-à-vis its neighboring counterparts (Santos,
2019). English proficiency, familiarity with US markets is also high including technology adoption
and social media consumption (Ong & Cabañes, 2018; Soriano & Cabañes, 2020).
Company Y on the other hand is engaged in the fabrication of below the line advertising
collaterals. It is an early-stage startup with about 50 employees and has been in operation for
around 3 years headquartered in Makati City. Company Y’s business model is traditional in-house
manufacturing and deployment of advertising and marketing materials for its customers. These
customers are primarily in the business to business (B2B) space. Customers include big name
international brands and public companies locally and internationally. It also operates
internationally engaging in projects within Southeast Asia.
Data Collection Technique
A semi-structured interview is the key data collection technique in this analysis. The
interview allows rich data to be obtained from individuals in various situations and circumstances
(Creswell, 2012; Myers, 2013). Semi-structured interviews require, but do not always adhere
exclusively to the use of a predetermined question to direct the interviewer. During the discussion,
a new question could arise as a supplementary question to a specific topic or as an elaboration of
a concept. This helps the participant to share his/her point of view and other perspectives on the
subject of the research on how the Covid-19 pandemic in the Philippines affects and impacts
organizations. There are four (4) organizations chosen as the case may be; this analysis would pick
a representative of each organization, of whom the owner/CxO of the emerging organization is
likely to be, who has an overall view of how the organization emerged. After each interview,
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transcripts of interviews will be recorded, coded, and analyzed. As long as the main goal of the
study is accomplished, there is no objective significance as to the number of interviews to be
conducted (Baker & Edwards, 2012; Myers, 2020), and the proponent presumed that the data
required (reflected on the research questions and objective of the study) would be adequate for
these four interviews to be interpreted and new knowledge produced further. The use of a tape-
recording system and note-taking instruments would also be used in the discussion to enable later
transcription of the interview.
Data Analysis Approach
A variety of approaches, philosophical theories, and research designs on how data is

processed and interpreted are involved in qualitative research (Creswell, 2014; Linneberg &
Korsgaard, 2019). It is important to pay careful attention to the empirical information gathered and
how to make sense of it based on the overarching technique at hand, regardless of the tools and
approaches used (Berryman, 2019; O'Connor & Gibson, 2003). The implementation of Saldaña's
Coding (2015) in which an inductive coding would be adopted.
Figure 2
Saldaña's Coding (2015) model
The figure illustrates the entire cycle of how qualitative data can be stored, evaluated,
interpreted, and presented. Inductive coding relies explicitly on the data and discusses the
empirical specifics, reflects, and encourages some understanding using codes; cluster these codes
in the next coding phase to shape categories leading to common themes/concepts and eventually
creates new information or theory (Charmaz, 2014; Linneberg & Korsgaard, 2019).
Therefore, coding is the best way to make easy sense of the data by marking or tagging
sentences or groups of words that imply a specific context and convey a sense of what the empirical
data is all about (Miles et al., 2014). By reading and reflecting line-by-line on the information,
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phrases by phrases and sentences, the researcher may establish a careful interpretation of what the
text means (Creswell, 2014).
The researchers conducted a coding on the transcript from the interview. Later, codes are
grouped into categories and further processed to emerge a new theme or concept. The newly
developed concepts and observations would contribute to an understanding of phenomena under
study, the theory, and likely an implication on practice on how organizations impacted and affected
by Covid-19 pandemic. Interpretation and Presentation of results will be detailed on the next
section.
Findings and Discussion
The impact of COVID-19 on Philippine MSMEs
The results of the interviews provide a snapshot of the different challenges that Philippine
MSMEs are struggling to overcome during the COVID-19 pandemic. The case study provides a
synthesis of the data extracted from the thematic analysis on the companies, management, and the
strategies they employed to endure the pandemic, thru reflective understanding the researchers
were able to answer the research questions discussed in the case.
Background
The participants in the case study are MSMEs in the Philippines within different industries.
These include outsource digital marketing, advertising, manufacturing, and exporting. The
variations of industries provide a rich perspective of MSMEs during the COVID-19 pandemic.
Liquidity
The primary category cited by all the participants was liquidity. This refers to the extent of
cash available to the company to fulfill its cash requirements for the year. Subcategories include
working capital, cash reserves, receivables collections and cost of capital.
Working capital
Represents the amount of cash that a company has available to fulfill its financial
obligations to employees, suppliers, utilities, and other expenses due within the year.
“the main challenge is your cashflow is depleting and your cash reserves are almost gone.
There is a big uncertainty on whether the business could continue because you are almost
out of cash and you cannot collect at this time because everyone is not working.”
“Even the internet, we have expensive internet in the office, our internet costs about
PhP40,000 per month alone. I still have to worry about paying for the lease for our office
because the landlord did not give us a discount or stop collecting rent when the lockdown
started. Let’s not forget salaries and Christmas bonuses.”
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Cash reserves
The amount of capital that a company has access to for discretionary use. For the most part
these are funds used during times of crisis.
“the problem was very evident that there would be a cash flow problem so going on to the
third, fourth fifth month, majority we can say that the problem was the lack of funds, the
lack of emergency funds if you will or the cash reserve.”
Receivables collections
The process that facilitates the collection of cash from entities that are financially obligated
to the company.
“if you want to get clients, specifically clients under the top 30 companies of the
Philippines, they would have to wait because their aging for collection is really long, you
would sign a contract for 30 days when in reality, you cannot collect in 30 days, in practice,
60 days to 90 days.”
Cost of capital
Represents the interest or financial obligation inherent to the use of other people’s money.
“We receive a commitment from one of our big clients, they promised a specific date for
payment. That would have no cost of money because that is money owed to us.”
Value Chain
Another consideration that the participants identified to be critical was their role in the value chain.
Because business activities are part of a mechanism of interconnected actors that in many ways
are interdependent to one another, a disruption within the value chain interrupts the entire system
within the industry. The subcategories involved were supply chain disruption and cooperating with
suppliers.
Supply chain disruption

Represents the degree of impact that interrupts the activities of supply chains within
industries.
“Our core clients are malls, restaurants, and fitness facilities. They were the worst hit
during in the pandemic. They have no sales therefore we cannot collect so we are all tied
up in the same mess.”
Cooperating with suppliers

Proactive involvement and cooperation between company and supplier to meet each other’s
obligations.
“One strategy we did. And third we had to ask our suppliers more time, we must write to
them, we had to send out commitment letters that we are going pay them. We did not
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provide any terms on when to pay. It is a commitment letter lang that states that we will
pay, we will honor our obligations to them. We’re just asking for extension.”
Workforce Management
Human capital is the most valuable resource that MSMEs have access to, therefore workforce
management suffers from a great degree of vulnerability during the COVID-19 pandemic.
Forecasting labor supply, dispositioning, and taking care of staff is critical. Subcategories in
workforce management include telecommuting and attrition.
Telecommuting
Is a work arrangement between employee and employer where the employee can work
remotely outside the employers main location of work.
Attrition
Refers to the contraction of the employee workforce in a company whereby employees
leave the company whether voluntarily or not.
“We have several jobs project-based employees or project-based staff so let them go
immediately. During the second month of the lockdown, sorry, the first month of the
lockdown, we must let them go, eventually moving on to the second and third month of the
lockdown, we understood that there is a lot of news that there will be an extension of the
lockdown, so we must decide, we had to slowly cutdown the manpower size. So, prior to
COVID we were 45 then now we are down to 23. We had to let go of 50% of our
workforce.”
Information Technology (IT) Infrastructure
As with any organization MSMEs and even government require some degree of IT in order to do
business in the age of the internet. IT infrastructure has become increasingly vital in the COVID-
19 pandemic because of the accelerating shift to a no-contact work environment. Computing and
infrastructure along with software and hardware has become the focus of most MSMEs.
Subcategories include technological readiness and internet connectivity.
Technological readiness (hardware/software)

The degree of sophistication of the technology used in an organization, this includes the
hardware and software that employees use in their job.
“So if you could see the list of MSMEs 97-98% of the economy are MSMEs right?, but if
you see the allocation you know that a lot of them don’t even have a website. They’re not
even digital.”
“As for the government if you look at the DTI website, what they’re saying is unclear. Its
not even user friendly. I saw it on social media because someone else shared it from an
online news outlet. But that did not come directly from the government source.”
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Internet connectivity
Refers to the method with which access to the internet is available for use and the degree
it provides utility for the user.
Government
Government is the central player in the COVID-19 pandemic economy. Its decisions can alleviate
or aggravate the effects of the pandemic in a nation or the global supply chain. Its participation
and competency to function in the internet space provides the direction at which MSMEs may
adapt and conduct business. There is no denying the fact that the government’s action plans, and
its implementation could decide the survival of MSMEs in the country. The singular reason why
MSMEs are deterred to seek government support is bureaucracy.
Bureaucracy
Refers to the complexity of systems and processes that create layers of control within the
government.
“There’s so little information, its not even clear. Even those we availed like CAMP and
SBWS its so bureaucratic. Too many processes, if it can be done in two steps it would
probably take over five with government to avail of that.”
“Government is difficult. I tried it before, it takes so long, they ask for so many
requirements because of red tape. I did it with a simple maternity benefit for my employee
it took over a year! The child was already 1 year old before we got the money.”
Conclusions
References
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The other business aside from showbiz: Effectiveness of celebrity
endorsing their own business venture
8th NBMC Paper # 51
Reynaldo A. Bautista, Jr., Dave Vincent A. Mangilet, and Mirabel Reyes

De La Salle University and De La Salle College of St. Benilde
[email protected], [email protected], and [email protected]
Abstract
The pandemic has redefined the business landscape globally. Some sectors are forced to reduce
their operations while others are left with no choice but to close their shops. The show business is
not exempted from the negative effects of the pandemic. As celebrities grapple with the situation,
some decided to put up their own enterprise to cope with their financial losses. In the Philippines,
it is common to see celebrities endorsing their product or brand as their primary mode of
promotion. This study will explore the effectiveness of this approach as perceived by the
consumers. The contribution of this paper is a conceptual framework that combines the tri-model
component (Ohanian, 1990) as predictors of perceived risk and credibility. Subsequently,
perceived risk and credibility will influence electronic word of mouth and intention to purchase
the products (see figure 1). Using the Tri-component model, Ohanian (1990) developed the scales
to measure sources such as trustworthiness, expertise, and attractiveness; it is called a tri-
component model of source credibility. The model used source credibility (Hovland et al., 1953)
and the source attractiveness model (McGuire, 1985) for constructing the measurement scales. The
source credibility model measures only celebrity trust and expertise as the dimensions, whereas
the source attractiveness model measures the celebrity attractiveness attributes. The tri-component
model has combined the attributes of source credibility and source attractiveness to derive three
dimensions to measure the impact of celebrity credibility (trust, expertise and attractiveness) on
consumer behavior. These variables will be used as antecedents to perceived risk and credibility.
Keywords: Celebrity, credibility, influencer
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Background
Previously, celebrities use their popularity to create awareness to the products they endorse,
whether it is in the field of sports, beauty, arts, and even politics, they support brands where
consumers relate with them through wishful identification (Schouten, 2020). On the other hand,
the power of the internet has paved the way to introduce a new set of individuals who also influence
others, also considered as self-made celebrities, they utilize social media through vlogs, blogs and
online posts (Wang, 2018). Celebrity endorsers is the new media in advertising (Roberto, 2003).
It has been proven through the years that the use of celebrities as endorsers of brands will be most
likely to succeed. At the same time, the sudden growth of influencers gave the opportunity for
small businesses to experience such powerful endorsements (Teng et al., 2020).
While the role of a celebrity gives a lot of exposure and revenue, their job is dependent on
projects and exposures. During the Covid-19 pandemic, a lot of celebrities continue to find ways
to earn a living despite the cancellation of shows, TV appearances, events, and other related
projects.
For example, Rihanna, a popular singer from the US launched a make-up brand Fenty
Beauty where it gained popularity because of products that match all skin tones and gender. Mark
Wahlberg even used his name to open a fast-food restaurant chain known as Wahlburgers. Jessica
Simpson also leveraged on her popularity by using her name as brand for a collection of make-up
and perfume products.
The Philippine “showbiz” industry has been through challenging times during the
pandemic. Aside from the declaration of lockdown in March 2020, a lot of shows, movie shoots,
and events were cancelled. Moreover, ABS-CBN, the largest network that is also known to be a
popular star-maker through its talent management, Star Magic, has gone off the air because of the
cease-and-desist order released by the National Telecommunication Communication. And finally,
in July 2020, the Committee on Legislative Franchises of the House of Representatives denied the
franchise renewal of ABS-CBN network. A lot of celebrities were affected resulting to loss of
potential income.
Manila Bulletin featured some Filipino celebrities who have entered a new business
venture during the lockdown. Aristotelle Pollisco, also known as “Gloc 9”, the famous rapper in
the Philippines started selling fried chicken and even created a YouTube channel to launch a rap
song to teach viewers on the recipe. However, Gloc 9 was criticized by a fan because selling did
not match his celebrity status. (Pabalate, 2020).
Being part of the “showbiz” industry depends on popularity, a celebrity owes it to their
fans who continues to support them on and off the camera. It is their ability to influence others and
that is how they can use their credibility and fame even to their own brand (Hashaw, 2019).
This study shall highlight a conceptual framework that will support celebrities entering a new
business venture and using their popularity to influence consumers to purchase their products or
services.
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Tri-component model
The combination of source credibility (Hovland et al., 1953) and source

attractiveness (McGuire, 1985) has created tri-component model (Ohanian, 1990). It has
defined celebrity credibility with the measurement on the level of attractiveness, expertise,
and trustworthiness and its impact on consumer behavior.
Attractiveness. Attractiveness refers to intellectual skills, personality, lifestyle, or

athletic power in relation to the celebrity endorser (Erdogan, 1999). Studies show that
celebrity attractiveness creates a positive influence on the perceived quality of the product
(Osei-Frimpong et al., 2019), giving the celebrity endorser the ability to persuade its target
audience (Muda et al., 2017). A similar study of Escalas and Bettman (2015) highlighted
that consumers support a brand endorsed by an attractive endorser because it satisfies a
sense of belongingness.
Expertise. The ability to be the source of knowledge, skill, or experience related to

expertise (Erdogan, 1999). Expertise has clearly as significant positive impact on
consumer’s attitude towards the brand (Bergkvist et al., 2016).
Trustworthiness. Trustworthiness relates to the consumer’s perception on the

honesty, integrity, and believability of the celebrity endorser (Erdogan, 1999). It has been
concluded that celebrity trustworthiness creates positive influence on perceived quality of
the product (Osei-Frimpong et al., 2019) and positive impact on the advertisement (Gupta
et al., 2015).
Perceived Risk. Perceived risk has been defined by researchers in marketing

literature in different ways. Bauer (1960) defined it as a two-dimensional concept that
includes uncertainty and negative consequence. Jacoby and Kaplan (1972) suggested that
perceived risk should be considered as multi-dimensional concept that include financial,
performance, physical, psychological, and social risks. Roselius (1971) and Mumel (1999)
added time risk to the definition. More recently Libermann and Stashevsky (2002)
identified technological risk and Merriman (2002) included security risks in the categories.
Murphy and Enis (1986); in Snoj et al (2004), in Harridge (2006) defined the types
of risks as follows:
1. Financial risk – a risk that a consumer is losing his money because the product
does not satisfy his expectations; a risk that rather than having more benefits, a
consumer invests more money in acquiring the product.
2. Physical risk – a risk wherein a consumer harms himself or others while using
the product.
3. Psychological risk – a risk of choosing a wrong product might have a negative
effect on a consumer’s ego.
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4. Performance (or Functional) risk - a risk that a product will not work as
expected by a consumer.
5. Social risk – a risk that by choosing a product, a consumer’s status will change
among his friends and/or his family and/or his colleagues.
6. Time risk – a risk that time spent in searching for a product will be lost if a
product does not perform according to consumer’s expectation.
7. Technological risk – a risk that have a crucial effect on both internet current and
future users and amount of usage, internet card stealing and supplying personal
information.
8. Security risk – a risk pertaining to information security.
According to Stone and Gronhaug (1993), the perception of riskiness may vary
from person to person and from product to product or service to service, hence it is a very
personal thing related to specific circumstances. Risk has a moderating effect on consumers
because they are often more inclined to try to avoid mistake rather than benefit from the
use of product or service in their buying decisions (Harridge, 2006).
The research on perceived risks in marketing of Shimp and Bearden (1982) as well
as Grewal, Gotlieb and Marmorstein (1994) indicate that a consumer forms risk perception
in terms of intangible cost such as anxiety, frustration, down time etc. associated with a
given product-price deal. When a product does not conform to expectation, the consumer
will experience disappointment (Cox 1967 and Tzeng et al., 2005).
Kim and Lennon (2013) found out that reputation has a significant positive effect
on consumer’s emotion and significant negative effect on perceived risk and that perceived
risk had a significant effect on consumer’s emotion and both perceived risk and emotion
has a significant impact on purchase intention in the case of website reputation and website
quality. It proposes that online retailer reputation is a significant antecedent of consumer
responses and future behavior considering it is established by the flow of information from
one user to another and sharing opinions creates a halo effect which could become a source
of external reference (Jin et al., 2009).
Doney and Cannon (1997); Ganesan (1994) suggested that reputation is a factor
that reduces consumer’s perceived risk in sales organization. In the study of Lwin and
Williams (2006), on perceived risk and top 6 risk relievers, online retailer reputation rank
third thereby implying it can reduce the level of consumer’s perceived risk regarding online
retailer.
Studies of Agarwal and Teas (2002); Tse (1999); Yeung and Morris (2001) reported
that perceived risk is negatively related to consumer purchase decisions.
Credibility
Customers may tend to follow a central or peripheral route in the response to

advertisements. A highly involved customer follows a central route where their response
is based on the facts about the product. A customer follows a peripheral route for low-
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involvement condition because they rely on heterogenous cues such as the source of the
message. Source credibility is favorable to low-involvement situations (Petty et al., 1983).
In addition, studies show that source credibility is influenced by Ohanian’s tri-

component model of attractiveness, expertise, and trustworthiness. However, different
studies would have shown that source credibility may be based only from expertise and/ or
trustworthiness (Goldsmith et al., 2000; Grewal et al, 1994; McGinnies and Ward, 1980)
while some solely used attractiveness (Kang and Herr, 2006). This makes source credibility
a multidimensional component that is dependent on the customer’s level of involvement.
Brand Attitude
Customer’s buying intention is positive when being endorsed by a celebrity

(McCormick, 2016). In a study of Teng et al. (2019), they found out that purchase
intentions toward products of celebrity’s own business venture does not directly enhance
customer’s buying intention. However, fans of the celebrity are enticed to have a positive
attitude towards the brand they are endorsing. Since the business venture is relatively
smaller, the scope of influence is also limited.
Electronic word-of-mouth
Litvin, Goldsmith, and Pan (2008) defines electronic word of mouth (eWOM) as
any informal communications to customers through technologies connected through the
Internet such as emails, websites, online communities, etc. The level of interactions may
be asynchronous or synchronous.
The use of eWOM in sharing product information may decrease decision time and
effort that may lead to a favorable decision outcome (Schiffman and Kanuk, 2000).
Proposed Theoretical Framework and Objectives
Celebrity entrepreneurs select products that are related to their original source of fame like
Oprah Winfrey, a known American talk show host who created her own network (Teng et al.,
2019). The ability to endorse is based on the celebrity’s fame and personality (Kotler et al., 2008).
Familiar celebrity endorsers create positive customer’s buying intention (McCormick, 2016). It is
highlighted that celebrity endorsements are more effective if the product has high psychological
and/or social risk than products with high financial and performance risks (Mehulkumar, 2005).
Fans are also consumers who develop strong emotional attachment with their favorite
celebrities (Leets et al., 1995). The engagement of the celebrity contributes to the success of their
own business.
On the other hand, physical attractiveness of the celebrity enhances the brand
advertisement (Kamins, 1990). A physically attractive endorse can easily persuade the customer
(Muda et al., 2017).
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When previous couple Derek Ramsey and Andrea Torres ventured in ProlabsNxt Gen
protective mask business during the Covid-19 pandemic, their YouTube channel followers
supported them (Pabalante, 2020). They even used the channel to demonstrate on how to use the
product.
P1: The attractiveness of celebrity endorsing their own business venture has
positive impact to customers specifically their fans, however, the limitations of brand
exposure may pose a social risk to the ones supporting it. If the social risk is higher
compared to financial and performance risk of the product endorse, celebrity endorsement
will still be effective.
Expertise depends on customer’s perception towards the celebrity endorser (Hovland et al.,
1953; Ohanian, 1990). Celebrity expertise creates a positive customer attitude towards the brand
(Bergkvist et al., 2016). However, real experts can endorse more effectively because it gives more
impact to the brand (Biswas et al., 2006). In this case, customers may tend to potentially have time
risk in searching for the right information just to satisfy expectation and security risk in information
gathered from different sources in different channels of communication.
Benjamin Alves had to work closely with their florist to understand how flower
arrangement works based on their taste and even asked celebrity friends to help endorse the
product. A famous rapper, Gloc 9 or Aristotelle Pollisco, started selling fried chicken during the
lockdown due to limited work opportunities. He even created a YouTube channel to launch a rap
song to teach viewers on the recipe. However, Gloc 9 was criticized by a fan because selling did
not match his celebrity status. (Pabalante. 2020).
P2: Expertise of a celebrity may tend create a perceived risk on time and security
compared to actual experts who are more knowledgeable of the product.
Just like perceived risk, trust is defined in marketing literature in various ways, it is a
complex state that comes about because individuals do not know what motives and intentions of
others Kramer (1999). It is an expectation about others’ behavior in society in which they live or
by which they are ruled Barber (1983). Rigelsberger et al. (2003) defines trust as a device to reduce
complexity, a short cut to avoid complex decision processes when facing decisions that carry risks.
It can be given on a person, an object, an organization, an institution or a role or it may be

acquired by a rational process on what it known of the other party and an incentive of the other
party to honor the trust bestowed upon him, her or it (Hardin, 1992). It may easily be acquired but
if abused can be easy to destroy. Boyed and Bonabich (1970) indicated that individuals
continuously update their expectations based on their experiences with individuals in whom they
have placed their trust. Trust and satisfaction lead to commitment as suggested by the studies of
Selnes (1988) and Srinivasa (2004).
Research made by Grabner-Krauter and Lauscha (2002); Mayer et al. (1995) revealed that
trust exists only when there is the potential of risk and vice versa.
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A celebrity may always be in the spotlight gaining popularity and criticism. All their
activities become a subject of public opinion, inclusive of personal activities and relationships.
There is risk in negative publicity or endorsing too many products which may even result to
perceived risk to credibility (Clow & Baack, 2018)
For example, Gal Gadot, who played the role of Wonder Woman became so popular when the
movie was launched, thus she got to endorse Huawei Mate 10 Pro in 2018. However, when she
used her Twitter account to post “Say hello to my new mate!” – supposedly endorsing the Android
phone, the tweet has shown that she used her iPhone in posting the message (Hardy, 2018).
P3: The trustworthiness of a celebrity may impact perceived risk of consumers

about the brand they are endorsing.
Clow and Baack (2018) has identified celebrities as one of the most common sources and
spokespersons on advertisement. Celebrities tend to create an emotional bond with their audience
and helps in establish a brand personality. However, when a celebrity starts their own business
venture, they have a responsibility to maintain a good relationship with their fans. Celebrities enjoy
the perks of public recognition as use it in endorsing their own business (McGuire, 1985).
In choosing a business venture, celebrities may choose product categories that are close to
their original source of fame (Teng, 2020). For example, Jose Sarasola who started to be popular
in the Pinoy Fear Factor TV Series of ABS-CBN, is an owner of Avenue 75 restaurant in BF
Homes Paranaque. Even before entering the showbiz industry, he has passion for cooking as a
graduate of Hotel, Restaurant, and Institution Management in De La Salle – College of Saint
Benilde. He is now featured in a morning show as Chef Jose sharing his cooking skills to viewers.
Other celebrities may have entered a business venture out of their expertise like “Gloc 9” who
started selling chickens during the lockdown because of the Covid-19 pandemic. In this case, how
can celebrities establish credibility?
P4: The tri-model component of Attractiveness, Expertise, and Trustworthiness

influences credibility of the celebrity to endorse the product/ service.
When consumers consider a celebrity to be credible, it leads them to develop a favorable

attitude towards the brand endorsed by the celebrity. The positive association from the celebrity
get transferred to the brand (Silvera & Austad 2004). Celebrity endorsement makes
advertisements more interesting and attention-drawing (Kamins 1990; Rashid et al 2002).
The presence of a celebrity in an advertisement generates higher purchase intention

(Pradhan et al 2016). The higher the endorser’s credibility, the greater the purchase intention
(Lafferty & Goldsmith 1999). The celebrity role in advertisement is an important deciding factor
in the consumer’s attitude formation and purchase intention (Park 2006).
P5: Celebrity credibility leads to greater purchase intention. A celebrity must be

credible before endorsing their business to consumers to influence their purchase towards
the product.
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Studies have shown that for influencers the effectiveness of Electronic Word of Mouth
(eWOM) on consumer product attitudes and purchase intentions is determined by endorser
credibility (Reichelt, Sievert and Jacob 2014; Erkan and Evans 2016). Furthermore, findings from
the studies of Chapple and Cownie (2017) and Djaforova and Rushworth (2017) suggested that
influencer credibility plays a vital role in affecting purchase behavior.
The Hootsuite report in 2020 has shown that global internet users significantly increased
by 7% (298 million) compared to previous year, while active social media users increased by 9.2%
(321 million), it highly proves the influence of electronic channels to consumers. Moreover, most
online content activities are watching online videos (90%) and watching vlogs (51%) giving
opportunities to influence viewers.
According to Schouten et al (2019), the processes of wishful identification, similarity and

identification may explain why influencer endorsement are more effective than celebrity
endorsement and that to be effective the influencer must elicit trust. Influencers are not seen as
more knowledgeable than celebrity endorsers and expertise does not explain why influencer
endorsement may be more effective than celebrity endorsement.
P6: The attitude towards the brand is further influenced by the celebrity’s exposure
to electronic media, thus elevating their role as a “celebrity influencer” where consumers
can directly relate to their key selling messages.
Celebrity endorsements can add to recall and consumer evaluation of the product in certain
situations (Clark & Hortsmann, 2005). It can help in building an existing brand or a new brand
noticeable by affecting the consumer’s pre-purchase notion as well as enhance the effects of
product or prompt sales of a matured product that needed a boost (Dean, 1999). Past research that
included the Elaboration Likelihood Model, (Petty & Cacioppo 1984), Technology Acceptance
Model (Davis 1986) and Hierarchy of Effect Model (Lavidge & Steiner 1961) indicated that
purchase intention is a function of brand attitude and that the consumers’ favorable attitude
towards advertised brands lead to purchase intention.
According to Wang et al. (2013), celebrity endorsement, advertising effectiveness and

advertising appeal positively influence purchase intention. Marketers use celebrity endorsement to
in still information in consumers’ minds which they can recall in buying situations. So that
consumers’ minds with a favorable attitude towards the advertisement may lead to purchase
intention. The celebrity acts a facilitator that brings about positive reinforcement which may
ultimately lead to the purchase of the product or services.
P7: A celebrity endorser depicts a positive brand attitude which influences

consumer behavior on purchase intention towards the brand.
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Figure 1
Conceptual framework of the study
Conclusion
The growing trend among celebrities to invest in businesses outside show business is an
interesting field of research. This study proposes a conceptual framework that identifies the
potential predictors of electronic word of mouth and purchase intention as applied in the context
of business ventures. Particularly, the framework is useful in determining the effectiveness of
celebrities who endorse their own business. Utilizing the tri-component model which includes
attractiveness, expertise and trustworthiness as main drivers of endorser credibility and perceived
risk for consumers, the framework attempts to predict brand attitude leading to electronic word of
mouth and purchase intention. While the primary objective of this paper is to propose a conceptual
framework, the goal is to encourage researchers to test the proposed model. The model can be
tested using quantitative study and employing current statistical techniques such as Structural
Equation Modeling (SEM). Furthermore, the conduct of qualitative research would be useful to
supplement the findings of the quantitative results. Ultimately, the specific variables that could
predict the success of the celebrity business ventures would be established.
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Ethics and Digital Marketing: A New Normal Perspective of Filipino
Consumers
8th NBMC Paper # 52
Ma. Elenita A. Entila

De La Salle College of St. Benilde
[email protected]
Abstract
The 2020 pandemic has drastically changed the business landscape. With the “new normal” ,
business owners are forced to turn to digital marketing and sales to survive. Technology has
provided businesses that employ digital marketing with the opportunity to address their target
audience day or night instead of their standard operating hours in a brick and mortar store. This
could potentially lead to abuse. This shift in marketing technique leads us to ask these questions
that led to this study: “Why should ethics matter in digital marketing?” and “Does digital
marketing have a code of ethics to follow?”
A qualitative research was conducted by the researcher through two methods: online survey and
focus group discussions, in an attempt to answer these questions, and primarily, “Is ethics
important in digital marketing?” The goal of this paper is to determine how the Philippine market
reacts to the absence or presence of ethics in digital marketing. A common marketing technique
is to misrepresent a product or service by making it appear more attractive than it is in reality. Is
it ethical? Some would argue about the level of deceit, which brings up the question of ethics in
marketing.
The findings of this study have established that 82% of the respondents prefer to support brands
that practice ethical digital marketing. While guerilla marketing and unethical practices can
generate “likes and follows”, actual revenue is created when ethical marketing practices are
practiced.
A change in digital marketing may be needed to meet the demand of the “new normal” reality.
This study presents some initial thoughts on how the current crisis influences Filipino buyers’
ethics. This paper ends with a recommendation for a wider research on the shift in Filipino
consumer behavior due to the pandemic and the call for more socially responsible business
orientation.
Keywords: ethics, digital marketing, new normal business
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Introduction
Marketing existed from the first moment that someone bartered a product or service. The
Merriam-Webster Dictionary defines marketing as “the process or technique of promoting, selling,
and distributing a product or service”. In 2009, Kotler and Armstrong defined digital marketing
as “a direct marketing which electronically links the consumers with sellers using interactive
technologies like emails, websites, online forums and newsgroups, interactive television or mobile
communications”.
These days, we are plied with digital marketing everywhere – on billboards, on smart
devices (like our TVs), personal electronic gadgets (like personal computers, tablets, and phones).
With the 2020 pandemic, digital marketing has become increasingly aggressive as people are now
forced to stay home. Marketers need to find a way to push their wares and digital marketing opens
that door. With digital marketing being constant now in our lives, the question now shifts to: Is
ethics important in digital marketing for Filipinos?
The “new normal” has forced businesses to make many changes to the way they conduct
operations, marketing, and sales. Despite these many changes, the issue of ethics remains the same
but the question that arises is how it is implemented. The shift from traditional marketing to the
more aggressive and far-reaching digital platform means that new rules are put into place and the
line between ethical and unethical becomes blurry unless it is well-defined.
Why then should ethics matter in digital marketing? Is there a code of ethics in digital
marketing? Do Filipino consumers become victims of unethical digital marketing practices?
The shift to digital marketing means that marketers today have greater access to their target
market than ever before. In the past, sales and marketing practitioners can only conduct official
business at a predesignated schedule with the prospective customer/client – they couldn’t simply
show up at their homes or join them for dinner.
Digital marketing has been around for many years but the push for digital marketing is
more pronounced in 2020 because of the imposed quarantine which prevented businesses from
resuming normal operations and consumers from visiting business establishments. Digital
marketing allows businesses to reach their potential customers 24/7 which could lead to potential
abuse and incorrect usage. Marketers now have a greater responsibility to act ethically but the
question is, will they? And what’s the boundary between ethical and not so ethical?
The purpose of this research is to determine how marketing has evolved and changed the
way consumers and businesses interact under the new normal situation. The researcher would like
to answer three questions: 1) Is ethics present in digital marketing? 2) Do marketers employ ethical
marketing practices, and 3) What are the repercussions when ethical marketing practices are not
applied?
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This research paper will discover the relevance/importance of practicing ethical digital
marketing to Filipino consumers and why companies should apply ethical digital marketing
especially now, under the new normal.
Through a combination of an online survey, focus group discussion (FGD), and referencing
global articles, this paper aims to show how digital marketers perform and how the Philippine
market reacts to the presence or absence of ethics in digital marketing.
All of the gathered and reviewed literature are on marketing for foreign consumers and
none for the Filipino market during this new normal business environment. According to “The
Little Guide to Ethics in Digital Marketing” (Newton, 2019), there are currently over 3,800
marketing technology tools available to marketers which can be used either ethically or
unethically. The line between ethical and unethical marketing practices are often blurry which
leads us to wonder how do we know when a company practices ethical marketing? The article
“Ethics in Online Marketing: Does Brand Morality Matter?” (Trounce, 2017) states that if a
promotion lies, conceals vital information, or deceives the buyer, then the advertiser can be called
to task and taken into account.
The tendency to exaggerate to make a product or service more appealing to its target
audience is a common marketing strategy. The consumers are stuck at home and their only contact
to the outside world is through their computer, tablet, or smartphone. To reach this market, brands
have focused their marketing efforts to saturating social media through targeted posts and ads on
websites/apps and games that consumers play.
According to Richard Ingleton (CEO of Kantar, Insights Division) in “How to Grow an

Audience in the Age of Brand Ethics” (Malin, 2020), it is about the brand adding the public to
their portfolio of product and person. This means that brands can no longer afford to think of their
brand or product as a stand-alone unit. There is a need to create campaigns that would engage the
audience by taking into consideration their reactions (thoughts, opinions, and feelings) so that the
audience will choose their product/service over that of their competition.
Among the few things which consumers take note of is how a marketing strategy is being
implemented. While some may be effective, there are some which infringe on the privacy of
potential customers. As discussed in “Ethics and Marketing. Is there a problem?” (Agnihotri,
2014), to understand ethics is to understand what works for people and what does not. Knowing
ethical issues in direct marketing can help marketers avoid strategies that could potentially irritate
the customer and frustrate the marketer.
When marketers learn how to handle marketing ethically, customer loyalty as well as long
term gains are achieved. It also builds credibility, industry leadership, and basic human needs and
wants are satisfied. They will not have a hard time to attract the right talent, to attain their financial
targets, and enhance their brand value. These inputs are from the paper on “Importance of
Marketing Ethics” (Bhasin, 2018).
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Lastly, the “Data Ethics to Shake up Digital Marketing” (Bushell-Embling, 2020) states
that the demand for the ethical treatment of customer data will intensify as consumer trust
decreases. To be able to win back consumer trust, marketers will need to talk about customer data
ethics and to demonstrate transparently to be more than legally compliant.
The article on “The Impact of COVID-19 Pandemic on Corporate Social Responsibility

and Marketing Philosophy” (He & Harris, 2020) states that the customers’ opinions, beliefs,
values, habits, and behaviors evolve due to both good and bad experiences. It also indicates that
the COVID-19 pandemic has a significant impact on consumer ethical decision-making. This
2020 global crisis we are experiencing opens a great chance for companies to pursue Corporate
Social Responsibility (CSR) initiatives because customers are now leaning towards more
responsible and pro-social purchasing. Because of this shift, marketers may need to adjust their
strategies and policies to match the shift in their “new normal” customers’ attitudes and opinions.
Figure 1
Four theorists were referenced for the framework of this research, namely: Jeremy
Bentham (hedonism and utilitarianism), Immanuel Kant (duty, altruism, and the Judeo-Christian
ethics), Ayn Rand (objectivism, rational egoism, and laissez-faire capitalism), and John Rawls
(social justice, anti-utilitarianism, and the welfare state). These four concepts of the mentioned
theorists are highly evident today. Bentham applied the "greatest happiness" principle; Kant used
religious ethics as the basis for great criticism of business activities; Rand with his concepts on
capitalism and objectivism; and Rawls who was against the idea of utilitarianism and supported
egalitarianism. These originated from the “Ethical Theory in Marketing” article of the Marketing
Education: Challenges, Opportunities, and Solutions: Proceedings of the Western Marketing
Educators' Association Conference Journal.
Methodology
A qualitative research design was used to gather data for this paper with semi-structured
questions for the online survey respondents and participants of the focus group discussion, both
made up of all-Filipino respondents. For convenience sampling, twenty respondents of varying
ages were tapped. The research philosophy of this paper is a combination of epistemology and
axiology. Based on parameters, this research is limited to respondents who are Filipino consumers.
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Axiology is applied as the topic of this research paper, judgment and ethics, have an element of
subjectivity.
The secondary source of this paper are online articles and YouTube videos. The study of
ethics in digital marketing especially in the Philippines during this New Normal scene is a
relatively new topic so there is not much published information on it. There are, however, many
online sources in websites, journals, and videos that juxtapose and illustrate the differences
between traditional and digital marketing and how ethics play a major part in the success of a brand
campaign as well as the impact and repercussions when brands cross the line just to make a sale.
Research Findings
Eighty-two percent (82%) of online survey respondents and the focus group discussion
participants (all of whom are Filipinos) indicated that they will only support brands that practice
ethical digital marketing. They reiterated that the reputation of the brand and management of the
company plus ethical (whether traditional or digital) marketing are important. Guerilla marketing,
comparative marketing, and some unethical practices may get some likes, follows, and subscribes
for brands but what still converts at the end of the day is the purpose which ethical brands practice.
Filipino consumers prefer “real talk” over exaggerated marketing ploys that offer empty promises
that manipulate consumers into buying their products but do not deliver what they promise. This
will have a negative impact on their sales and reputation and the brand can lose everything
overnight.
The practice of ethics needs to be highly visible in digital marketing. However, due to the
desire of companies or brands to gather in the numbers, it can be easily overlooked. With people’s
obsession to make things look better than they do, sometimes ethics can be the first thing that gets
thrown out of the window.
Another important aspect that one needs to be conscious of in digital marketing is the
manner of managing customer data. Whereas before when the only way for sellers to get the
buyers’ private information is to request the filling out of forms only after the closure of the sale,
now people are freely sharing their personal information in public haphazardly and without thought
via online sign-ups and by granting permission to mobile applications for data mining. This can
lead to abuse when it comes to data mining since sharing of information is dramatically a lot easier
now with or without a lockdown due to pandemic. Digital marketers need to be mindful also of
the development of personalization engines which are commonly being used to extract data for
marketers’ use to target potential customers, which may shake up the Filipino market either
positively or negatively.
Public opinion holds such heavy sway on the success or failure of a business, practicing
ethical marketing strategies can only bring good – good profit, good reputation, and good
relationship with the customer. This study displays how sales and marketing strategies have
evolved and how practices that used to be acceptable (but questionable) are no longer acceptable
today. This study triggers what better business policies need to be in place for implementation and
reinforcement.
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It is important to note that this study discussed unethical, not illegal marketing strategies.
While an action or marketing campaign may be unethical, it does not follow that the marketer
himself is engaged in illegal activity. However, in both cases, this could lead to disastrous losses
for the business. When trust is lost from the consumer’s perspective, it can be damaging for the
brands.
This paper highlights that Filipino buyers prefer to support products and services that are
morally right as opposed to blindly following what the trends dictate. This is proven in the recent
closure of brands that used sweatshops in China and the proliferation of sustainable products and
sustainable living everywhere.
Recommendations
This exploratory paper presents some initial thoughts on how the current crisis influences
Filipino buyers’ ethics. It is a good indicator that Filipinos demand ethical marketing practices
from brands. It also illustrates how trends and practices change – how things that were acceptable
then may not be acceptable now and forward to the future. The new normal may have blurred the
lines between what is ethical and what isn’t.
The next research paper may include the legal dimension from sources such as the
Department of Trade and Industry, Department of Information Communications Technology.
Quantitative research may also be pursued which will consider and analyze the demographics of
respondents vis-à-vis consumer behavior. Finally, this study ends with a recommendation for a
wider research on general marketing as regards the shift in the Filipino consumer behavior due to
the pandemic and the call for more socially responsible business orientation.
References
Accuracast. (2019, Mar. 22). What is "Ethical" Digital Marketing? [Video file]. From YouTube:
https://youtu.be/Y7mCJuzCKxE
Agnihotri, G. (2014, June 17). Ethics and Marketing. Is there a problem? From LinkedIn:
https://www.linkedin.com/pulse/20140617054600-79304306-ethics-and-marketing-is-it-
possible
Bhasin, H. (2018, Aug. 2). Importance of Marketing Ethics. From Marketing 91:
https://www.marketing91.com/importance-of-marketing-ethics
Bushell-Embling, D. (2020, Aug. 14). Data Ethics to Shake Up Digital Marketing. From
Technology Decisions:
https://www.technologydecisions.com.au/content/it-management/news/data-ethics-to-
shake-up-digital-marketing-1015966134
D, V. (2015, Oct. 22). Digital Marketing and Advertising Ethics [Video file]. From YouTube:
https://youtu.be/ggkmBiYuKxk
He, H., & Harris, L. (2020, May 21). The Impact of COVID-19 Pandemic on Corporate Social
Responsibility and Marketing Philosophy. From NCBI:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7241379
Malin, J. (2020, Sept. 4). How to Grow an Audience in the Age of Brand Ethics. From The
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Startup: https://medium.com/swlh/how-to-grow-an-audience-in-the-age-of-brand-ethics-
7132cb997885
Mertes, J. (2018, Feb. 14). PART 1: Ethical Use of Technology and Digital Marketing [Video
file]. From YouTube: https://youtu.be/0Wx1-0MZaYs
Newton, P. (2019, Feb. 22). The Little Guide To Ethics In Digital Marketing Part 1. From
Intelligent HQ: https://www.intelligenthq.com/little-guide-ethics-digital-marketing-part-1
Platten, J. (2020, May 17). Ethical vs Unethical Marketing - What's The Difference? [Video file].
From YouTube: https://youtu.be/GTmVFSwW57A
Riopko, C. (2018, Apr. 26). Marketing in a Gray Area: The Ethics of Digital Targeting. From
Chief Marketer: https://www.chiefmarketer.com/marketing-gray-area-ethics-digital-
targeting
Schlenker, L. (2019, Oct. 13). Marketing Data Ethics: Identity, Trust and Value(s). From The
Startup: https://medium.com/swlh/marketing-data-ethics-identity-trust-and-value-s-
12fd91074534
Shewan, D. (2020, Feb. 25). Ethical Marketing: 5 Examples of Companies with a Conscience.
From Wordstream Online Advertising Made Easy:
https://www.wordstream.com/blog/ws/2017/09/20/ethical-marketing
Sparks Digital Marketing. (2020, Sept. 30). Ethics in Digital Marketing | Benefits of Ethical
Marketing [Video file]. From YouTube: https://youtu.be/TPjZyuw9TIs
Thompson, J. (2018, Aug. 23). Ethical Dilemmas in Digital Marketing: Where’s the Line? From
Nonstopjamhen: https://nonstopjamhen.com/ethical-dilemmas-in-digital-marketing
Trounce, D. (2017, Jan. 4). Ethics in Online Marketing: Does Brand Morality Matter? From
Search Engine Journals: https://www.searchenginejournal.com/ethics-online-marketing-
brand-morality-matter/181863
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A Market Study to Check the Feasibility of CINA-LEM Mosquito
Repellent Oil
8th NBMC Paper # 53
John Carlo Nasol and Jonathan David Jr. Bote

De La Salle College of St. Benilde
Abstract
In 2019, the Philippines had reported 106,630 dengue cases nationwide from January 1 to June 29
2019, a significant increase of 85% compared to the year prior with only 57,564 cases in the same
period (Department of Health, 2019). Given this situation, Villasolis Inc., is an export business
concept that will take an opportunity to produce “CINA-LEM Mosquito Repellent Oil” in Tarlac
City, Philippines.
The product is composed of cinnamon and lemon extract that would be used for repelling
mosquitoes and other various insects. According to a research conducted by Amer et. al., a 20%
oil solution of a cinnamon extract has a repellency rate of 100% for up to 8 hours while also being
a great mood enhancer. For the lemon, studies show that citrus fruits are also good at controlling
the spread of mosquitoes in its adult and larvae form.
A survey was formulated by the researchers to see if mosquito repellent products would be
something that people would be enticed to buy especially during these times. The target market
was the Class C in NCR and 100 respondents were needed before the results were analyzed.
Cronbach’s alpha was used to determine if the survey questions were deemed to be reliable.
Keywords: cinnamon, lemon, mosquito, dengue, health, repellent
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Introduction
Mosquito-related diseases account for more than 17% of all infectious diseases and cause
more than 700,000 deaths annually (World Health Organization, 2020). There are many types of
mosquito-related diseases but the two most deadly are dengue and malaria, which cause 40,000
and 400,000 deaths annually, respectively (2020).
In the first half of last year, dengue cases reached 106,630, which is 85% higher compared
to the same period last year at 57,564 cases (Department of Health, 2019). Moreover, it is estimated
that 7,315 cases were in the National Capital Region alone.
For this, CINA-LEM Mosquito Repellent is proposed. The CINA-LEM Mosquito

Repellent Oil is made with Cinnamon and Lemon extract that would be used for repelling
mosquitoes and other insects. According to the study: Phytochemical biopesticides states that
Essential oils have been proven time and time again to have a lot of benefits. One is the elevation
of mood and the relaxing effect that it has on people. EO or Plant Essential Oils can act as an anti-
stress and relaxing agent. According to research conducted by Amer et. al. (2011) Study shows
that cinnamon’s concentration dose has a 20% oil solution. It also has a repellency rate of 100%
and its duration can last 8 hours against An. Stephensi or also commonly known as the Malaria
carrying mosquito, The Aedes Aegypti which carries the Dengue and Zika viruses. Also made by
the same study, Lemon also shows that a concentration dose of 20%, it has a repellency rate of
95% and can last 7.5 hours against mosquitoes.
The product is cinnamon and lemon extract that can be used as a mosquito repellent. The
product would be dropped in cotton or in fabric and then it is put to where mosquitoes are abundant
or where the user would like to reduce the number of mosquitoes in said area. Moreover, it can
also be used as an efficient mood enhancer.
The intended target market that the product will cater to are the households located in the
National Capital Region or NCR, specifically the middle-class households that want to avoid the
risk of getting dengue, malaria, or zika virus.
The product would help repel mosquitoes and other insects which can reduce the cases of
dengue, malaria, and zika. Also, the scent of cinnamon can emit a relaxing aroma and can be a
mood enhancer(Whelan, 2019). The product would be placed in line of other mosquito repellents
such as lotions, mosquito coils, mosquito patches and other mosquito repellants in the market.
In order to know if the product would be feasible to the target market, a survey instrument
was used. This was to test if the product is attractive to the target market or if the target market is
open to the idea of mosquito repellents.
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Framework
Figure 1
Theoretical Framework: Theory of Planned Behavior (Ajzen, 2006)
The theory of planned behavior (TPB) was adapted to explain the “gap” between intention
to buy Mosquito Repellent products and actual purchase. It is widely used to explain
environmentally friendly behavior. According to the theory of planned behavior, behavior is
guided by three major factors: attitude, subjective norm, and perceived behavioral control (PBC).
Individuals are expected to act in accordance with these factors if the opportunity arises. Expected
positive and negative consequences of a certain behavior influence their behavioral decisions.
Moreover, the cost-and-benefit analysis of consumers associated with Mosquito Repellent
purchase is also taken into account as a predictor of Mosquito repellent purchase. Beliefs in general
are also considered as antecedent on the three factors that form intention.
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Figure 2
The diagram shows the beliefs, attitudes and the perceived behavioral control towards
mosquito repellent buying of the Class C Household head respondents in NCR. Using IcekAjzen’s
Theory of planned behavior as reference. It starts first with their awareness of buying mosquito
repellents, then their attitude towards them and their willingness to pay before ultimately buying
them in the process which results in loyalty and advocacy.
Methodology
The researchers conducted a study on the Socio-economic Class C in the National Capital
Region in the Philippines regarding the awareness and prevention of mosquito-related diseases.
This would be done by the use of a survey questionnaire that consists of purely rating scale
questions to find out if the respondents showed a positive or negative reaction to each question
being answered. As such, the goal of this study determines how the target population indexes their
health and how they feel about mosquito repellents, which is one method of preventing mosquito-
related diseases.
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A non-probability sampling technique was used in this research wherein the survey forms
were given to the specific target market, specifically the criteria of Socio-economic Class C in the
National Capital Region in the Philippines. The questionnaire was devised by the researchers of
this study and had 21 questions, aside from the basic profiling questions. The questionnaire was
then further divided into four parts: health awareness, mood about mosquito repellents, mosquito
repellent awareness, and intention to buy mosquito repellents. This will give an idea to the
researchers on the state of the target population’s health status and would also give a general feel
on how the target population’s attitude is toward mosquito repellents.
The researchers’ preferred platform for making the questionnaire was through the use of
Google Forms, as this pandemic severely restricts some areas of the research and would make
handing out questionnaires in person seemingly impossible. The questionnaire was handed out to
100 individuals in the target population and for each question, and the collection of data was done
in a span of one week from October 22, 2020 until October 27, 2020 and that amount of time was
deemed sufficient enough to collect enough respondents and a scale of 1 to 5 was given as the
options. (With 1 being Strongly Disagree and 5 being Strongly Agree)
Cronbach’s alpha was used in order to check for the reliability of each question. As a
general rule, a 0.6 ー 0.7 score indicates an acceptable level of reliability, then a 0.8 or higher
indicates high reliability but a score of more than 0.95 is not always necessarily good, as it can
indicate a level of redundancy (Hulin, Netemeyer, and Cudeck, 2001).
Table 1
Summary of Findings
Health Awareness
SURVEY QUESTION CRONBACH’S ALPHA
I am concerned about my health 0.4064
I would describe myself as a healthy person 0.8099
I consider the impact to my health when making many 0.6691

of my decisions
I am willing to be inconvenienced in order to take 0.7952

actions that will benefit my health
My purchase habits are affected by my concern for my 0.6984

health
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I feel like my purchase is helping my health 0.6398
Mood About Mosquito Repellents
My general attitude towards Mosquito Repellent buying 0.6644
It is important to me that I use mosquito repellents 1.2171
Buying mosquito repellents make me feel good 0.7011
I feel that buying mosquito repellents will benefit me 0.5450
Most of the people would commend me if they know I 0.9164

buy more effective mosquito repellents
Mosquito Repellent Awareness
If I want to shift to Mosquito Repellent buying I would 0.8691

easily do so
I know where to buy mosquito repellents 0.4376
There is a vast number of mosquito repellents in the 2.6076

market
Most of the people I know buy mosquito repellents 1.0513
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Most of the people who are important to me would 1.017
encourage Mosquito Repellent buying
Intention to Buy Mosquito Repellents
I am willing to pay more for effective mosquito repellent 0.8675

products
I am willing to pay the extra costs for switching to 0.8300

another mosquito repellent products
I would most likely buy Mosquito Repellents in my next 1.0779

shopping trip
If I have the opportunity to buy, I would buy Mosquito 1.0444

Repellents
I will buy Mosquito Repellents in the near future 1.1100
Discussion
Concerned about health, mosquito bites, Mosquito Repellent Awareness and Mosquito
repellent buying, the researchers decided to study 100 respondents belonging to Class C Household
Heads in NCR. Out of the 100 respondents, 49 percent belonged to the male segment. On the basis
of marital status, 79 percent are single, and 21 percent are married. On the educational status of
the respondents, 58 percent have earned their bachelor's degree while the rest are undergraduates.
The researchers are discussing results based on the hypothesis of the framework and the results of
our survey / questionnaire.
Health Awareness
In this segment, the health of the respondents was focused here. 5 of the 6 survey
questions here were met with acceptable standards. The only one that got an unacceptable
standard is the first question, which asks if the respondent was concerned about his health.
The other questions, which focused on the overall health of the respondent, got acceptable
standards, though. This means that the respondents that answered the survey were most
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likely healthy individuals as a whole but were not too concerned about the status of their
health.
Mood about Mosquito Repellents
The overall mood of the respondents has been positive all throughout except for
one question which asks if they think that mosquito repellents would benefit them. Overall,
they have positive outlooks seeing as the Cronbach alpha is very high on almost all of them
but 1 survey question got more than 0.95, and that means that there is a chance that it is not
accurate due to redundancy. Those questions are the importance of them buying mosquito
repellents and if people they know would commend them if they bought more effective
mosquito repellents.
Mosquito Repellent Awareness
This segment seems to be the most unreliable out of all the sections because only 1
survey question was actually in the acceptable region of 0.6 - 0.9. Three questions got
scores of above 0.95, and one question was even above 2.0, which strikes as really
unreliable because of how high its score is. The other question that was unreliable but was
not above 1.0 was scored an abysmal 0.4, which is clearly unreliable because of how low
the score is.
Intention to Buy Mosquito Repellents
This segment all got scores of above 0.6, which makes them all somewhat reliable
but three of the survey questions here have a chance of being unreliable because of
redundancy for the reason that these three survey questions scored above 0.95. However,
the two remaining questions have a very reliable score because they are in between the 0.8
- 0.9 range.
Conclusion
Based on the findings by the researchers, the following conclusions are indicated below:
1. The number of respondents is all belonging to the local market of Social Class C Household
heads in NCR, their earnings make them in the Class C Socio-Economic range.
2. The respondents’ intent on buying mosquito repellents soon or in the future are positive as
shown in the survey. This means that the respondents are considering buying mosquito
repellents.
3. The study proves that even people who are healthy would want to buy mosquito repellents
or at least interested in it
4. Most people are aware of mosquito repellents but do not know where to buy them
specifically.
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Recommendations
Based on the stated conclusions, here are our recommendations:
1. The other class E respondents who are male and female, single, living in NCR and earning
less than Php10,481 may likewise be studied.
2. The study may stretch out onto other areas wherein there is an influx of mosquito-related
diseases, like in the Dumaguete area, wherein there are more reported cases of mosquito-
related diseases.
3. Research specifically just for awareness can be done to people here and in other countries
so that a comparative study may be conducted to compare the outlook of non-Filipinos
toward mosquito repellents.
References
Asadollahi, A., Khoobdel, M., Zahraei-Ramazani, A., Azarmi, S., & Sayed, H. M. (2019).
Effectiveness of plant-based repellents against different
0RW1S34RfeSDcfkexd09rT2anopheles1RW1S34RfeSDcfkexd09rT2 species: A
systematic review. Malaria Journal, 18, 1-20. doi:http://dx.doi.org/10.1186/s12936-019-
3064-8
Bamberg, and Moser, (2007); Leonidou, (2011); Paul et al., (2016). Ajzen, (2002)
Department of Health. (n.d.). Monthly Dengue Report No. 6. retrieved from
“https://www.doh.gov.ph/sites/default/files/statistics/Dengue%20Monthly%20Report%2
0No.%206.pdf”
Hulin, C., Netemeyer, R., and Cudeck, R. (2001). Can a Reliability Coefficient Be Too High?
Journal of Consumer Psychology, Vol. 10, Nr. 1, 55-58.
Whelan, C. (2019, May 24). Cinnamon Oil Benefits, Uses, Side Effects, & Interactions.
Healthline; Healthline Media. https://www.healthline.com/health/cinnamon-oil
World Health Organization. (2020, March 2). Vector-borne diseases.
https://www.who.int/en/news-room/fact-sheets/detail/vector-borne-diseases
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The Growth of Digital Money during the Community Quarantine
Periods in the Philippines: An Analysis
8th NBMC Paper # 54
Jerico Del Rosario Mahandog and Ahmed N.Y. Meandahawi

Abstract
This study analyzed digital money growth during the Philippines' community quarantine period
due to the COVID-19 pandemic in 2020. The usage of cash significantly dropped by 56.17%.
There should be an alternative to using cash in this pandemic season to continue economic
activities, household spending, and facilitate the firms' sustainable growth. Researchers conducted
a survey with a 95% confidence level and a seven percent margin that showed significant growth
in the frequency of usage of digital money, which recorded an increase of 93.92%, 80.31%, and
33.57% for online bank transfers, online credit/debit card transactions, and the use of e-wallet,
respectively. This paper investigated the different factors affecting the transition of the country to
a cashless society, namely: a) the physical restriction due to health protocols as mandated by the
government, b) the convenience brought by the digital money, c) the adaptability of digital banking
platforms, d) and the overall perception of financial technology as a better alternative to cash. With
regression lines and correlation tests, there is a trend with usage frequency against these factors.
The major underlying components explored in this research were based on the theory of reasoned
action.
Keywords: Digital Money; Digital Banking; Cashless Society; Financial Technology, COVID-19
pandemic
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Introduction
A novel coronavirus (COVID-19) pandemic hit the whole world in the first quarter of 2020,
resulting in damage to economic activities and, worse, a global economic recession. It triggered
an unexpected change in how the economy moves as social distancing measures were imposed,
lockdowns in many countries were enforced, and non-essential business operations were
suspended (Proaño, 2020). To combat the spread of COVID-19 within the Philippines, different
measures were implemented by the national government involving strict home quarantine,
physical distancing, intercity and inter-province lockdowns, suspension of public transportation,
and restricting air, sea, and land travel as positive COVID-19 cases exponentially increased.
Though heavily concentrated in Metro Manila at first, the virus quickly spread to surrounding
regions (Lau, et al., 2020), significantly disrupting how companies conduct their businesses, thus
yielding lower revenues, higher operational expenses, and unemployment. The pandemic's
devastating economic effects may remain harmful for several years, presenting minimal economic
activities, negative growth, enormous costs, and immense challenges resulting in a global
recession.
Going along with the market disruption is the change in personal behavior on how money
is being spent. The dynamic development of the internet platforms may fundamentally change how
people move: more effective use of artificial intelligence, remote work, and e-learning (Kolodko,
2020). When people are locked at home, they tend to rely on technology to carry their business,
and this will amplify and accelerate digital change. The use of technology to conduct money
transactions instead of conventional cash has increased because of physical restrictions during the
pandemic. As a catalyst for structural change, this pandemic could speed up the shift towards
digital payment, enabling a technology-driven cashless society. The level of usage of financial
technology (fintech) while the Philippines is under community quarantine was the focus of this
research.
With the implementation of a stringent community quarantine with an indefinite timeline,

there is a significant restriction on transportation, travel, business operations, lifestyle, and daily
economic activities. To better understand the significant changes in the economy, household
spending has extremely low growth forecasts. The global uncertainty, increasing unemployment,
closure of several business establishments, and negative consumer sentiments led Filipinos to
refrain from making purchases. The cash movement along the financial ecosystem is expected to
be moving at a slow pace. This dilemma should be replaced with a better cash alternative to ensure
economic growth amidst the pandemic.
This study aimed to analyze digital money growth during the Philippines' community
quarantine period due to the COVID-19 pandemic in 2020. This paper investigated the different
factors affecting the transition of the country to a cashless society, namely: a) the physical
restriction due to health protocols as mandated by the government, b) the convenience brought by
the digital money, c) the adaptability of digital banking platforms, d) and the overall perception of
financial technology as a better alternative to cash.
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Specifically, this research sought to answer the following problems:
1. Is there a decrease in cash usage and an increase in digital money used during the
community quarantine periods in the Philippines?
2. Is digital money a better alternative to cash to sustain continuous economic activities and
household spending amidst the lockdown?
3. Does physical restriction play a significant role in shifting to a cashless and technology-
enabled financial system?
Hypotheses
The following hypotheses were tested by the researchers to answer the statement of the
problem stated above:
Ho – There is no significant increase in the usage of digital money during the community
quarantine periods in the Philippines.
Ha – There is a significant increase in the usage of digital money during the community quarantine
periods in the Philippines.
The usage of financial technology has always been the advocacy of increased financial
inclusion. Transitioning from cash to digital money will call for a more significant financial
inclusion because all transactions will be monitored and recorded in the digital bank's or service
provider's database. The spending behavior of consumers can be interpreted by data science. This
will further help several businesses strategize their daily operations for an increased revenue
amidst the pandemic. Small businesses are very prone to shutting down and bankruptcy during
these trying times. The role of approximately 150 million small businesses in the Asia Pacific
economic region is very substantial in economic development, contributing between 40 to 60% of
Gross Domestic Product (GDP) in most economies, providing employment to approximately 60%
of all workers (Asia News Monitor, 2020). The promotion and adoption of digital tools will help
companies to generate more revenue, reduce operational costs, eliminate risks during the
pandemic, streamline the logistics process, and engage well with customers in a different approach.
It was heavily emphasized that there should be no turning-back to push for this transition now that
the virus continues to spread (Business Mirror, 2020). People will soon adapt to this shift and start
using digital platforms for business transactions. The pandemic may be the catalyst to force the
shift to a cashless society.
Scope and Limitations
The research was conducted during the community quarantine periods in the Philippines
from March 2020, until October 2020. Primary data was obtained from an online survey distributed
to the respondents via email. The majority of the study participants belong to the middle-income
class, since a vast portion of them are from the workforce with a steady inflow and outflow of
cash, as well as exposure and access to different technology platforms. The timeline of the COVID-
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19 pandemic is indefinite because it is currently ongoing. Several community quarantine
restrictions are still taking place and intermittently being lifted or imposed in different parts of the
country. This research was also limited to people currently living or working in the Philippines
during the said periods and excluded OFWs.
Openness to Fintech
To assess the Filipino population's openness in going digital, different personal behaviors
were seen as an essential aspect in the implementation of fintech (Lim Chiu, Bool, & Lim Chiu,
2017). The factors that will drive the sustainability of fintech are the clients' trust, security, privacy,
infrastructure quality, perceived costs, and adaptiveness to technology. The researchers made a
theoretical framework to implement mobile banking that will address the public's concerns in their
fear of technology-based banking. However, a rising concern that is out of the banking system's
scope is the performance of the telecommunications sector. Internet connectivity should be readily
accessible to ensure efficient digital banking. Though the bank's infrastructure is secured,
intelligent, and efficient, there is still a hindrance to overall digital inclusion because of the
limitations of existing internet services both in the urban and rural areas. Salac & Kim (2016)
suggests that the telco providers' inefficiency hampers the innovation that could promote the
information society's inclusive growth. With the Information and Communication Technology
(ICT) situation in the Philippines, the country's internet infrastructure lags among the developing
countries in Asia, particularly in terms of internet speed and connectivity.
Even before the pandemic started, the e-wallets' usage growth rates overtook the banks'
growth rate since 2018 (Wong, 2020). E-money is made accessible. Out of 45 commercial banks
in the country, 31 now have the license to issue digital money. Rizal Commercial Banking
Corporation (RCBC) and Banco de Oro (BDO) have the most used digital money in terms of
transaction volumes worth Php55.7 million and Php52.4 million, respectively, with Compounded
Annual Growth Rate (CAGR) of 13% and 15%. Next on the rank is Paymaya and GCash.Format.
Businesses Shift to Digital
The role of small businesses in the APEC region was seen as very substantial in economic
development, contributing between 40 to 60% of GDP in most economies, with 150 million
businesses classified as small scale, employing approximately 60% of all workers (Asia News
Monitor, 2020). The promotion and adoption of digital tools have helped these small businesses
to generate their revenue, reduce operational costs, eliminate risks during the pandemic, streamline
the logistics process and engage well with customers in a different approach. As the Philippines
continues on this journey toward becoming a cash-lite economy, there are five key payment use-
cases that will get the most benefits in terms of increasing the share of digital payments: (1)
merchant payments, (2) supplier payments by businesses, (3) remittances, (4) utility payments,
and (5) social benefit transfers (Bambawale, Totapally, & Bhandari, 2019). Moreover, regulations
and policies were also discussed to enrich the country's fintech use: The National Retail Payment
System (NRPS) and The National Payment Systems Act (NPSA). The NRPS led to the creation
of two automated clearing houses (ACH), namely, PESONet and InstaPay, that allow fund transfer
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between any two accounts in the country. Financial institutions are mandated to enable
interoperability between two accounts through these ACHs. Under the NPSA, this mandate has
further expanded beyond banks and non-bank financial institutions. A new rule required the
providers to adopt a national QR code payment standard to foster interoperability and competition
to accelerate digital payments growth further. Another highlight of this article is a study revealing
that businesses could save US$20–45 billion annually by digitizing supplier payments alone.
The Asian economic landscape is transforming into a technological and digital

environment. This digital transformation is driving the growth of the retail market and online
commerce across the Asian region. With a generally young population and rising income levels,
the digitalization of Asia presents a unique growth opportunity for the sector. Whether in the form
of disruption, revolution, or evolution, significant changes occur in the banking sector, mainly
because of new technologies (Raharja, Sutarjo, Muhyi, & Herawaty, 2020).
Cash is a barrier to telemedicine's business growth in the Philippines, especially those who
provide 24/7 online consultation from licensed medical professionals. Patients should pay online
since the consultation was done online, but the absence of financial technology reverts them to pay
in cash, which is impractical. In transportation, cars queueing up in the cash lane of expressways
cause the buildup of traffic jams. A convenient Radio Frequency Identification (RFID) lane is
already made available to provide a fast, smooth, and cashless transaction to motorists. Those
people who are not comfortable going cashless were forced to do so, reaching a point of making
requests of increasing their wallet limit due to the convenience it brings them (Manila Bulletin,
2020).
PayMaya, another mobile wallet app that is increasingly popular in the Philippines, has
partnered with famous companies in transportation, retail, pharmacy, hotels, and restaurants to
enable cashless transactions on their physical branches. They have made use of One by PayMaya
device, which combines credit, debit, prepaid card, and QR in just one device for in-store
transactions. Besides, PayMaya also allows merchants to accept card payments using only the
customer's mobile number linked to their PayMaya account. These innovations will help the
businesses and government to continue their businesses smoothly and encourage a cashless
lifestyle amidst the pandemic. A leading fast food chain in the Philippines, McDonald's, has
partnered with PayMaya to give them a payment gateway to go cashless. PayMayaOne was
introduced, which can accept credit cards, debit cards, prepaid cards, and virtual cards, to offer all-
in-one payment solutions. What drives success is the evident interests of customers in using the
self-ordering kiosks. Soon, McDonald's is looking at a cashless online donation to Ronald
McDonald House Charities, again with the help of PayMaya (PayMaya Enterprise, 2020).
Innovation and digitalization are critical, especially for the year 2020. The recent business
boom in Davao have shown that Davao, the biggest city in the Mindanao region, has opportunities
for resilient businesses even during disruptions, like food production and exports, BPOs,
agribusiness, and digital services. As the economy continues to recover, more businesses will
restart operations under the new normal with online mode of payments to suppliers and online
receivables from buyers. Small businesses are gaining popularity among millennials, especially
those in food, decorations, clothing, and home furnishing. Businesses are attracting an audience
through social media accounts such as Facebook and Instagram. The impact of online business is
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significant because almost everyone has social media accounts with a broad reach. It is also a way
to help the economy during this trying time. It has provided convenience and access for the online
selling industry, but it has also offered jobs to Davao locals. Overall, the Philippine economy is
being directed in looking at all positive outcomes given the global recession that we are
experiencing (Asia News Monitor, 2020).
Consumers Shift to Digital
The pandemic has forced the majority to not go outside of their own homes. With the
continuous months of community quarantine, people are being empowered by the digital realm.
Businesses started to develop their digital marketing, processes, and presence in the online
platform. Fintech is made essential to every Filipino today (Business Mirror, 2020). Access to
urban centers remains an issue for the Filipinos, and fintech services have bridged the gap between
traditional and modern practices. Cash is king, but most people perceive digital money as a basic
necessity. The importance of digital finance over conventional cash is being seen as an agent to
fight the pandemic.
Fitch Solutions' forecast for the Philippines' household spending for the third quarter of
2020 is at a low 3.4% growth (Fitch Solutions Group Limited, 2020). This research provided a
rundown of household consuming projections classified according to functions. Health and food
got the highest spending growth as they are the essentials for every Filipino household. Others
have negative growth, such as clothing, transport, communication, home furnishing, and alcohol.
It also presented a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis of the
general population's spending. From the perspective of the digital banks, the SWOT can help
penetrate the online market by targeting the group of people that are able to continue their
economic activities amidst the macroeconomic hindrances. This is where a great opportunity
comes in. Several years ago, shifting to digital payment has always been the advocacy towards an
increased financial inclusion (Business Mirror, 2020). It will be complicated to go back to the
traditional ways of conducting business due to significant health risks. Ibrahim (2020) emphasized
that people will soon adapt to this shift and start using digital platforms for business transactions.
Years ago, the concept of an Automated Teller Machine (ATM) took time to be introduced to the
people because access is hard, but later on, people grew accustomed to it. That should be the case
as well for digital payments.
In all Southeast Asian markets during the COVID-19 outbreak, there is a decrease in cash
usage of 64% in the Philippines. It is 67% in Singapore, 64% in Malaysia, and 59% in Thailand.
On the other hand, use of contactless payment methods have significantly increased. The most
significant increase in contactless payment methods is under mobile and digital wallets occurred
in the Philippines, Malaysia and Thailand. Singapore got the highest increase in credit card usage.
The uncertainty due to the pandemic has also led consumers across the region to refrain from
making massive purchases: 80% in the Philippines, 75% in Malaysia, 74% in Thailand, and 65%
in Singapore. Data from the Philippine Payments Management Inc. (PPMI) showed that e-payment
transactions during the community quarantine period reached a total value of P53 billion or an
average of P6,130 per transaction (Adobo Magazine, 2020). In April 2020, there is a 32.2%
increase in Instapay transactions as compared to March 2020. This indicates the growth of online
shopping upon the announcement of the community quarantine. Consumer preference is also
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gradually shifting to digital, given the rising popularity of fintech usage in the country (Bondoc,
2020).
Bondoc (2020) also revealed that Filipinos have the highest daily internet usage worldwide,
at nine hours and 45 minutes. Women have higher daily internet usage than men. Close to 60% of
the female respondents spend seven hours or more online, while only 45% of males allot the same
amount of time. The survey respondents would usually allow around three to 3.5 hours daily on
online shopping and visiting e-commerce websites. The survey also showed that daily internet
usage and time spent on online shopping increase with age. Those 51 years old and older spent
more than 10 hours a day online, with online shopping reaching as much as half that. Younger
respondents (21 to 30 years old) spent on average, three to six hours a day online, with two hours
of that on online shopping alone. This supports a recommendation that retailers should increasingly
target older shoppers and senior citizens.
Performance of Digital Banks
In the statistics of GCash, an increasingly popular e-wallet mobile app in the country, it
can be extracted that during the community quarantine periods, the installation of their app
increased by 100%. New user registration rose 2.5 times. This growth, coinciding with the
community quarantine, signifies the population's welcoming of the digital money as part of the
new lifestyle. In May alone, GCash transactions soared by 700% year on year. As it continues to
recognize its responsibility in the fight against the coronavirus, GCash has taken steps forward in
its commitment to extend its services to everyone (Business Mirror, 2020).
Relatively new to the Philippine market, CIMB Bank Philippines has a significant digital
presence in the nation's financial development. CIMB Bank Philippines is part of the CIMB Group,
one of ASEAN's leading banks, and is present in over 16 global markets. Being a new player is
not a hindrance because CIMB already attracted 2.5 million users and is foreseeing a 500%
increase in their deposit balances by the end of 2020. As of the 2nd quarter of 2020 alone, there is
a 160% surge of average cash-in per customer, which is reflective of its public demand during the
community quarantine periods in the country. One of the most incredible things that CIMB is
doing as part of their commitment to the country is giving financial assistance of Php 10,0000,
approximately US$200, for an account holder that tested positive for COVID-19. They have also
raised donations through digital banking to 6,000 families affected by the pandemic (PR Newswire
Association LLC, 2020).
Digital money continues to thrive in the Philippines with forecasts in the year 2021 of P370
billion and P700 billion for transaction volume and wallet inflow, respectively. Digital money has
recorded a 15% compound annual growth rate (CAGR) in usage during 2014-2018. Eighty-one
percent of the digital money inflows came from universal and commercial banks, explicitly
amounting to P443.26 billion in 2018 alone, an 8.12% increase from 2017. Funds transfer was the
top reason for using digital money (Piad, 2020).
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Digital Financial Aid and Donations
The distribution of a portion of the Social Amelioration Program (SAP) was distributed
electronically. The SAP beneficiaries can access the money via GCash, PayMaya, UnionBank,
RCBC, and Robinson's Bank. It also provides the medium of access, depending on what region
you came from. The Department of Social Welfare and Development (DSWD) led the 2nd tranche
of delivery through innovative means. Though it has not adapted to technology quickly, it is doing
its best to complete the distribution as efficient as possible (Thai News Service Group, 2020).
MENA Report (2020) has presented a clear breakdown of the DSWD's distributed relief finance
per platform. The department has already pre-funded or transferred funds for the SAP of more than
4.8 million beneficiaries to its bank accounts and mother wallet accounts maintained by its partner
FSPs. The number includes 1,286,551 families who received their subsidy from GCash; 337,768
from PayMaya; 682,639 from RCBC; 99,745 from Robinsons Bank; 1,890,263 from Starpay; and
537,668 from Unionbank. Some 50,459 will receive their SAP from Landbank of the Philippines
(MENA Report, 2020).
Aside from payments and sending of money, raising donations to the coronavirus-affected
families are also being done digitally. Financial technology platforms PayMaya and GCash have
raised a total of nearly a Php13 million in donations through their apps. PayMaya and GCash have
raised about Php7.8 million for 16 organizations and Php4.5 million for seven partner groups,
respectively. The funds will be used to purchase medical gears for health workers and struggling
families living on a "No Work, No Pay" basis. Aside from its users' generosity, their creativity can
also be highlighted in this new form of sending out help. The success of fintech is not just measured
in increased numbers of usage or amount of transactions but, most notably, as a channel for social
initiatives (Marasigan, 2020).
The Theory of Reasoned Action, as shown in Figure 1, was used as the theoretical
framework of this study. This theory suggests that if people evaluate the suggested behavior as
positive (attitude) and if they think that society wants them to perform the behavior (subjective
norm), this results in a higher intention (motivation). They are more likely to perform the behavior.
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Figure 1
Theory of Reasoned Action
Research Design
In this research, an individual who is tech-savvy and has an availability of resources such
as the stream of income and internet connectivity may evaluate whether digital money will provide
daily convenience, ease of usage and perceive it better than cash. These factors will influence the
behavioral intention of the individual (Morales & Trinidad, 2019). Depending on the individual's
evaluation, there may be a positive acceptance of the usage of fintech. Society, on the other hand,
is advocating the usage of digital money for a more robust financial inclusion as spearheaded by
the Philippines' central bank (Nair, 2016). There should also be continuous economic activities
amidst the COVID-19 pandemic to mitigate risks of business closures and lesser revenues. This
norm will be further supported due to the implemented strict lockdown measures forcing
individuals to be physically restricted inside their homes, resulting in reduced cash usage. The
individual and society's merge will result in digital money usage as a behavioral intention. This
will cause the transition from the usage of cash to digital money, as depicted in Figure 2, which
shows the conceptual framework of this study based on the Theory of Reasoned Action.
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Figure 2
Conceptual Framework adapted from Theory of Reasoned Action
Methodology
The study utilized the descriptive methods of research. The researchers constructed a
survey questionnaire, pre-validated, and distributed online to the respondents of this study, who
were mainly millennials who form a significant part of the workforce sector. This is since they are
seen to be consistently transacting in their everyday activities. The circulation of money in this
group of people is more frequent than households, students, and senior citizens. This study's
sample size was 151 respondents, with a 95% confidence level and an interval of seven percent,
the survey questionnaires included the respondents' age, gross monthly income, and daily number
of hours spent on the internet as the continuous variables.
Purpose
The reasons why the respondents are using digital money were investigated. There was a
checklist for 1) To pay bills, 2) As a mode of payment for purchases, and 3) To send or receive
money. The results were tabulated and analyzed using frequency tables.
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Frequency of Usage
The different modes of fintech that they are using were asked, such as online credit/debit
cards, online bank transfer, and e-wallet. This research monitored the frequency of usage of cash
and digital money before and during the community quarantine period and examined whether there
is a decrease in cash usage and increased digital money usage. A sample survey question is
presented in Figure 3. The frequency of their usage is converted into quantitative measures such
that "Daily, Once a Week, Once a Month, Once a Year, and Never" are equivalent to scores of
"30, 4, 1, 0.083, and 0" respectively. For baseline purposes, these numerical equivalents are the
corresponding number of days in a month when they are using the said money.
Figure 3
Survey Questions for Usage Frequency before and during the CQ
Behaviors
The researcher also monitored the respondents' insights regarding fintech usage using
Likert scales. Based on the Theory of Reasoned Action, these fintech perspectives were generally
referred to as Behaviors, specifically Convenience, Better than Cash, Adaptability, and Physical
Restrictions. Figure 4 shows the actual survey question to assess these behaviors. The financial
behaviors are quantitatively measured, such that "Strongly Agree, Agree, Neutral, Disagree and
Strongly Disagree" are equivalent to behavior scores of "5, 4, 3, 2, and 1", respectively.
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Figure 4
Likert Scale for Behaviors
Methods of Analysis of Data
Primary data was gathered through online surveys because the pandemic restricts physical
movements. Data were digitally monitored as online surveys provide a real-time presentation of
actual data collected.
The survey is classified into different portions, and several statistical analysis methods
were used to arrive at the results.
The behavior scores were computed using the straightforward mean formula. The collected
usage frequency was analyzed by measuring the mean. The summation of each frequency was
divided by the number of respondents. The mean ] represents the number of days in a month in
which the population uses specific money. Most importantly, what is analyzed is the growth rate
of digital money and the decline rate of cash, based on the mean of the usage frequency.
The normality of the data was presented with their p-values. It is expected that respondents
who frequently use digital money have higher behavior scores, and frequent cash users have lower
behavior scores. To visually present it, a regression line of usage frequency against behavior scores
was included. The researchers determined the correlation coefficient (R) using Pearson or
Spearman, whichever is applicable depending on the normality of data, to evaluate the magnitude
of the relationship of usage frequency and behavior scores.
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Purpose of Usage
The top primary purpose of why the respondents are using digital money is displayed in
Figure 5. As answered by 84.18% of respondents, the principal purpose is to act as a payment
method for purchases. 70.06% of respondents use digital money to send or receive funds, while
69.49% use them to pay bills such as electricity, water, and credit cards.
Figure 5
Purpose of Using Digital Money
Frequency of Usage Before and During the Pandemic
The frequency of usage of different payment methods before and during the CQ periods
are shown in Figures 6 and 7, respectively. Based on the graph, daily cash usage significantly
decreased during the CQ period. Most respondents are using cash on a weekly and monthly basis
today. However, the digital methods, namely online credit/debit cards, online bank transfer, and
e-wallet, increased their daily usage during the CQ period. The central tendency mean was
calculated to represent the usage frequency of each digital method quantitatively. The mean
represents how many days per month the money is being used. In reference to Table 1, cash usage
decreased by 56.17%. During the CQ period, e-wallet is the most frequently used (M = 8.44).
There is a significant increase in usage of all-digital money methods, including online bank
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transfer, online credit/debit card, and e-wallet with the growth of 93.92%, 80.31%, and 33.57%,
respectively.
Figure 6
Payment Methods
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Table 1
Mean of Usage Frequency and Percent Growth of Payment Methods Before and During the
Pandemic
Financial Behaviors
The central tendency mean of each of these behaviors was calculated to quantitatively
measure the respondents' approval of a particular behavior towards fintech. Table 2 displays these
means. The first four behaviors are between the "Agree" and "Strongly Agree" scales, with means
above four. This suggests that digital money users perceive them as convenient, easily adaptable,
and better to use than cash. The respondents use digital money more frequently due to the imposed
physical restrictions during the pandemic.
On the other hand, limited internet connectivity is low (M = 2.77) between Neutral and
Disagree, which suggests that respondents have good and reasonable access to the internet. A
lower score is more desirable because it means that there is better internet access. All behaviors
are statistically significant (p < .001).
Table 2
Mean of Financial Behavior Scores and its Normality
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Correlation of Frequency of Usage and Behaviors
Online Credit/Debit Card. Figure 8 presents the upward regression line of online use of
credit/debit cards. More frequent online credit/debit card users have better insights compared to
those who never used them at all.
Figure 7
Online Credit/Debit Card
Online Bank Transfer. As for online bank transfers, generally, all behaviors are on an
upward trend, as seen in Figure 9. There is also a stronger correlation above 20%. Daily users, on
the other hand, still consider Physical Restriction as a significant contributor, but it is not the
biggest driver.
Figure 8
Online Bank Transfer
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E-wallet. E-wallet, on the other hand, has a random trend, as displayed in Figure 10.
Correlation values are extremely low. The primary factor behind this is the first-time users since
the lockdown started because the mean scores suggest that they have no extreme liking to use
fintech. The performance of fintech is generally rated fair by those who tried using e-wallets only
once. The good thing about those who never tried using them is that they have more positive
support. The concept of fintech is appealing to them even if they have no experience using e-
wallets at all. Overall, scores are above 3, which still shows a positive affirmation.
Figure 9
E-Wallet
Cash. Using cash on this pandemic has a downward regression line with negative
correlation coefficients, as seen in Figure 11 and Table 6. This means that more frequent users of
cash have lower behavior scores to fintech. Those who used cash only once gave a perfect score
of five. The daily users still see cash as a better mode of payment compared to digital money.
However, mean scores are all high (above 3.8). This suggests that even though negatively
correlated, all-cash users today have a high acceptance and openness to fintech.
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Figure 10
Cash
Level of Recommendation
Figure 12 presents the percentage of the respondents who will most likely recommend the
usage of digital money to their family and friends. The majority of the respondents (54.5%) will
strongly recommend cash, while 37.5% will recommend fintech, meanwhile eight percent are
neutral about it. On a positive note, no respondent said they will not recommend digital money.
Figure 11
Level of Recommendation
The regression line against behavior scores and level of recommendation is shown in
Figure 13. There is an upward trend, and stronger levels of recommendation suggest a stronger
behavior score. The correlation coefficient is also significantly higher, with 0.4 as the lowest, and
all values are statistically significant, as displayed in Table 7.
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Income
Figure 14 illustrates the regression line for using the frequency of digital money against
the monthly income level of the individuals in pesos. It can be observed that higher-income
individuals most frequently use both online credit/debit cards and bank transfer. Lower-income
individuals have less access to credit/debit cards and electronic bank transfer, resulting in a positive
correlation and statistically significant distribution, as displayed in Table 8. E-wallet, on the other
hand, is consistent for all low, middle, and high-income groups. The correlation coefficient is
negative but almost zero.
The disruption of the pandemic in the national economy severely impacted businesses and
consumers. The usage of cash during the community quarantine period significantly dropped by
56.17%. There should be an alternative to cash during the pandemic to continue economic
activities, household spending, and facilitate the firms' sustainable growth. With the consumers,
businesses, and banks going digital, financial technology plays a significant role in this transition
to be a cashless society. This paper has highlighted the significance and growth of digital money
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and the openness of Filipinos in conducting daily transactions through technology instead of
conventional cash. In a survey conducted by researchers with a 95% confidence level and seven
percent margin, there is significant growth in the frequency of usage of digital money, which
recorded a 93.92%, 80.31%, and 33.57% increase for online bank transfers, online credit/debit
card transactions, and e-wallet usage, respectively. Insights of individuals regarding fintech, often
referred to in this research as behaviors, such as convenience, adaptability, and better perception
than cash, were measured. Physical restriction, while the lockdown is imposed, also played a
significant role in the rise of usage of digital money. With regression lines and correlation tests,
there is a trend with usage frequency against these behaviors. These are the major underlying
factors explored in this research based on the Theory of Reasoned Action on how the population
transitioned from using cash to digital money during the Philippines' community quarantine
periods.
Recommendations
The researchers did not explore the amount of money involved in these transactions.
Economies of scale could also be a factor that affects the usage of digital money because using
extra cash would be more practical for small transactions. Future research may include the amount
of money as another significant variable.
The availability of digital banking platforms in the business environment of each

respondent may also be investigated. People may have positive acceptance of digital money, but
due to the specific environment's limited banking platforms, consumers still revert to conventional
cash. Countries witness more fintech startups and venture capitals when the business environment
has active policies that are well-developed and induce entrepreneurs (Haddad & Hornuf, 2018).
There is an excellent relationship between financial literacy and the demand for fintech
services. The nature of correlation is positively straightforward. The general increase in the
financial literacy of the population contributes to the growth of public confidence in the financial
sector and the volume of transactions (Sadigov, Pakhnenko, & Lyeonov, 2020). This could be
another independent variable that should be incorporated in future studies.
With the imposed community quarantine, consumer and household spending are on a free
fall due to a reduction in leisure, entertainment, travel, and other non-essential businesses as
mandated by the national and local governments. Consumer spending is dependent on the
outbreak's severity, leaving individuals saving up more. (Martin, Markhvida, Hallegatte, & Walsh,
2020). Future studies could also incorporate the spending and consumption levels of individuals
and establish a relationship with cash and digital money usage.
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Regulating the Use of Social Media Data in Employee Selection
8th NBMC Paper # 55
Mirielle Anne S. Mora and Ma. C. P. Assumpta C. Marasigan

[email protected]
Abstract
Social media enables individuals to share personal information including sensitive personal
information. One of the human resource management functions is selection, in which personal
information of job applicants is processed. In this study, the authors looked at how HR
professionals and hiring managers in the Philippines use social media in screening job applicants.
The results show that Facebook and LinkedIn are their preferred social media platforms to do this.
However, processing information from social media platforms violates the Data Privacy Act of
2012. Thus, the researchers propose that companies prohibit the use of social media to screen
applicants, and use alternative approaches in verifying applicants’ information and “organizational
fit.”
Keywords: Data privacy; social networking
Social Media
Social media refers to technology that promotes participation and interactive sharing of
information and other user-generated data (Elefant, 2011). It refers broadly to different
technologies that individuals use to create online communities, such as social networks and photo
and video sharing networks (Locklear, 2012). Social networking sites (SNSs) are website or
mobile applications that help people from anywhere in the world connect and share information
with others (Lam, 2016) and interactively dialog with various audiences (targeted or not)
(Calvasina et al., 2014). SNSs: 1) allow users to create public or partially public profiles; 2) contain
lists of “friends” connected to the users; and 3) allow users to view and look at the content of the
users’ own connections or “friends” and connections of others or “friends of friends” and tagged
friends (Boyd & Ellison, 2008 as cited in Landers & Schmidt, 2016).
The Philippines has been heralded as the social media capital of the world. A 2015 study
(Kemp, 2015) reveals that 40% of the Philippine population was active on the top social media
accounts, which are Facebook, Google+, Twitter, Instagram, and LinkedIn. The average number
of hours spent per day in browsing the internet was 6.3 hours for PC and laptop users, and 3.3
hours for mobile device users (Kemp, 2015). By January 2018, 67 million Filipinos were active
social media users, averaging daily use of 9 hours and 29 minutes and making the Philippines the
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country that spent the most time in using social media (Kemp, 2018). Kemp (2020) reports that in
January 2020, the country had 73 million social media users.
Social media is primarily a communication tool (Thomas et al., 2015; Ladkin & Buhalis,
2016; Arnaboldi & Coget, 2016). SNSs require users to post personal information so that their
family, friends, and acquaintances can identify and communicate with them. This information may
include a person’s birth date, location, relationship status, thoughts, interests, hobbies, audio
material, photos, videos, education and work history, political affiliations, and religious beliefs.
Because of the prevalence of SNSs, organizations have spotted opportunities that

information found on SNSs could provide their businesses (Thomas et al., 2015). For instance,
human resource (HR) practitioners use social media to investigate or screen job applicants (Basu,
2015). Selection is the process of collecting and evaluating information about a job applicant to
ensure that he or she has the abilities to do work; to help decision-makers predict whether a job
applicant will perform a job successfully; and to provide a base for effective motivational practices
(DeCenzo et al., 2013; Gatewood & Feild, 1998). HR practitioners can access social media
accounts to collect information about job applicants that they can use in their hiring decisions
(Black et al., 2015; Bannister et al., 2014). However, accessing a job applicant’s social media
account and using the data found therein could give rise to management and legal issues. As a
result, employers’ use of social media is blurring the boundaries of work and private life and is
changing the nature of employee-employer relationships (Ladkin & Buhalis, 2016).
Selection
Selection involves a series of steps of screening and assessment that an organization’s

decision-maker goes through to determine who among the applicants best suits the job and the
organizational culture (Ivancevich, 2010). Each step in the selection process gives decision-
makers information that will help them predict whether job applicants would be able to
successfully carry out job functions (Landers & Schmidt, 2016).
The decision-maker chooses the applicant who is best suited for the demands and
requirements of the job and at the same time best fits the organization’s culture (Ivancevich, 2010).
The selection process involves initial screening; completion of application forms; pre-employment
tests, interviews, conditional job offers, background investigations, medical and physical
examinations; and job offers (DeCenzo et al., 2013).
The pre-employment check is one of the steps in the selection process that helps decision-
makers verify if the information supplied by the job applicants on application forms is correct and
accurate (DeCenzo et al., 2013). The pre-employment check could be a background check, a
reference check, or a character check (Barada Sr., 2014; Bernardin, 2010).
A background check verifies the information found in the job application form, the resume,
and the cover letter (Barada Sr., 2014) while a reference check verifies the applicant’s skills,
abilities, and know-how that he or she claims to have, based on information gained from former
employment (Bernardin, 2010). Such checks help verify information given by the job applicant
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and serve as predictors of job success (Gatewood & Field, 1998). The information gathered from
these checks also helps complete the picture of a job candidate (Ivancevich, 2010).
The traditional methods of conducting background checks or reference checks are costly.
However, the norm is shifting, and employers can now routinely, efficiently, and informally
conduct online background checks without job applicants’ knowledge (Clark & Roberts, 2010).
HR professionals use social media to screen applicants because it is the cheapest way to validate
what applicants have written on their applications, resumes, and cover letters (Arnaboldi & Coget,
2016; Chauhan et al., 2013; Sinha & Thaly, 2013; Madera, 2012).
Data Privacy
Privacy refers to “freedom from unauthorized intrusion” (Merriam-Webster, n.d.). It

encompasses “freedom of thought, control over one’s body, solitude in one’s home, control over
personal information, freedom from surveillance, protection of one’s reputation, and protection
from searches and interrogations” (Bowman et al., 2015). It refers to the “right to be left alone”
(Nachura, 2016), and the “liberty to do as one chooses as an autonomous self” (Sison III, 2010).
There are three types of privacy: locational or situational privacy, decisional privacy, and
informational privacy (Puno, 2008, as cited in Velasco Jr., 2014). Informational privacy refers to
the right to control information about oneself (Velasco Jr., 2014).
Relationships among government, businesses, and citizens
Baumann and Schünemann (2017) state that modern regulation and self-regulation in the
field of privacy and data protection must deal with a ménage a trois – three actors with different
interests – as illustrated in Figure 1. In this trilateral relationship, the government and businesses
can be both protectors and violators of citizens’ right to privacy.
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Figure 1
Ménage a trois
The first dimension (the left arrow) describes the relationship between the citizens, who
have civic freedom and human dignity, and government, whose interest lies in security and control.
According to Baumann and Schünemann (2017), “this first dimension was almost forgotten in an
era of unworried internet use, culminating in the rapid rise of social media with is inherent privacy
problematic, ….giving more and more insight into governmental mass surveillance practices in
the digital age.”
The second dimension (the bottom arrow) describes the relationship between citizens and
businesses. Businesses process large amounts of data, including personal information, to provide
more individualized products and services; however, individuals no longer determine which
information to disclose about themselves (Baumann & Schünemann, 2017).
The third dimension (the right arrow) pertains to the relationship between government and
businesses. This dimension describes government’s having to ensure, through law enactment and
enforcement, that consumers’ data are protected even as businesses remain economically
competitive (Baumann & Schünemann, 2017).
At the center of the diagram are the collective interests of society that limit privacy: public
order, security, public health, public moral, the privacy, freedom, and rights of others, and freedom
of information (Baumann & Schünemann, 2017).
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Data Privacy Act of 2012
Republic Act (R.A.) No. 10173, also known as the Data Privacy Act of 2012, defines
sensitive personal information as:
Personal information (1) about an individual’s race, ethnic origin, marital status, age, color,
and religious, philosophical or political affiliations; (2) about an individual’s health, education,
genetic or sexual life of a person, or to any proceeding for any offense committed or alleged to
have been committed by such person, the disposal of such proceedings, or the sentence of any
court in such proceedings; (3) issued by government agencies peculiar to an individual which
includes, but not limited to, social security numbers, previous or current health records, licenses
or its denials, suspension or revocation, and tax returns; and (4) specifically established by an
executive order or an act of Congress to be kept classified (Section 3 (l), R.A 10173 - Data Privacy
Act of 2012).
Section 13 of the Act prohibits the processing of sensitive personal information subject to
certain exceptions. The term “processing,” under Section 3 (j), “refers to any operation or any set
of operations performed upon personal information including, but not limited to, the collection,
recording, organization, storage, updating or modification, retrieval, consultation, use,
consolidation, blocking, erasure or destruction of data” (Republic Act 10173 - Data Privacy Act
of 2012).
The authors sought to answer the following questions:
1. Do HR and hiring managers in the Philippines process information from the social media
platforms of job applicants when screening them?
2. Does the use of social media data in pre-employment screening violate the Data Privacy
Act of 2012?
This exploratory qualitative research reflects the perspectives of HR managers and hiring
managers. Semi-structured interviews with open-ended questions focused on gathering data on the
use of social media data in personnel selection in the Philippines. Follow-up questions to clarify
some answers were sent through email. The interview questions were tested with one HR manager
and one hiring manager.
Five HR managers and five hiring managers were interviewed. A hiring manager is the
person to whom the employee will report if hired (Heathfield, 2016). For this research, a hiring
manager refers to a manager of any business function other than HR. The hiring managers and HR
managers interviewed do not belong to the same company except for the HR manager and the
hiring manager from an IT-software industry.
Table 1 lists the industry and position of the interviewees. The interviewees’ names and
companies are not disclosed to protect the respondents’ privacy.
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Table 1
HR and Hiring Managers Interviewed
Interviewee Industry Position
HR Manager 1 Consultancy HR Head
HR Manager 2 Car dealership HR Manager
HR Manager 3 IT software HR Business Partner
HR Manager 4 Engineering, procurement, and construction HR Lead
HR Manager 5 Consultancy Recruitment Manager
Hiring Manager 1 BPO Training Manager
Hiring Manager 2 Car dealership Group Sales Manager
Hiring Manager 3 Car dealership Group Sales Manager
Hiring Manager 4 FMCG/marketing distribution Business Development

Manager
Hiring Manager 5 IT software Quality Assurance Team

Lead
Content analysis was used to analyze the data. Content analysis refers to systematically
identifying and categorizing the presence of words, concepts, characters, themes, or sentences
from the recordings of interviews (Sekaran & Bougie, 2009). It establishes the frequency of the
concepts, words, themes, and sentences and allows the examination of relationships among them
(Sekaran & Bougie, 2009).
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Research Findings
Review of Social Media Profiles
Table 2 shows the interviewees’ responses to the question, “Have you ever looked at an
applicant’s social media account?”
Table 2
Managers’ Responses to the Question about Looking at an Applicant’s Social Media Account
Interviewees Yes No
HR Managers 4 1
Hiring Managers 2 3
HR Manager 4, the only HR manager who answered “no,” said, “Rarely – only if the
possible immediate supervisor asks us to do so.”
Two of the five hiring managers answered that they look at applicants’ social media
accounts. One respondent said neither she nor the company does. One answered that she rarely
does. One answered that she doesn’t, but the company does. Hiring Manager 1 said, “I don’t think
it is necessary because you have to stick with the screening process. The rare instance is if I have
two candidate[s] who are both good, only to break a tie.” On the other hand, Hiring Manager 4
said, “I don’t, but the company does.”
The managers were asked, “Do you review the social media profile of a job applicant?”
Six of the ten managers said they review the social media profiles of job applicants. Of the six
managers, five of them said they look at a job applicant’s Facebook and LinkedIn profiles as well
as their Twitter and Google+ accounts. One of the six managers said that she looks only at the
Facebook account of the applicant.
Information Interviewees Look for in Social Media Accounts
The managers were asked what they look for and what they find when they look at an
applicant’s social media account. Table 3 shows their responses.
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Table 3
What HR and Hiring Managers Look for in an Applicant's Social Media Account
Interviewee What did you look for? What did you find?
HR Manager 1 Good and not-so-good points of the applicant “What I was looking for.”
Pleasing personality
Truthfulness of the applicant’s stated background and
past employment
HR Manager 2 Applicant’s picture “If the applicant is pretty or handsome,

Family background or if his or her picture is different from
that shown in the resume. Sometimes,
I see gossip and some family
background.”
HR Manager 3 Employment gaps that are not in the resume of the “The information that I was looking
applicant for was validated.”
HR Manager 4 Pictures “What I was looking for”

Person who referred the candidate
Location of the candidate
HR Manager 5 “The applicant’s character such as if they have “What I was looking for”
drinking habits, use foul language, or use gay lingo”
Hiring Manager 1 “Background and perception management or the “Red flags such as foul language and
influence one has over how others perceive them” negative feedback”
Hiring Manager 2 Daily activities “What I was looking for”

Family background
Group of friends
How well the applicant manages himself or herself in
social gatherings
Whom the applicant spends weekends with
Applicant’s mood swings
Hiring Manager 3 Not applicable; survey respondent does not look at the Not applicable
social media account of a job applicant
Hiring Manager 4 Not applicable; survey respondent does not look at the Not applicable
social media account of a job applicant
Hiring Manager 5 Behavior “Of course, photos and posts and

Hate posts their context”
Use of privacy settings
Six of the ten managers review the social media profiles of job applicants. They look at
their photos, the comments on their photos, the status messages they had posted, and the content
they had shared. As a result, they can see the ethnicity, relationship status, age, political affiliation
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and opinions, health conditions, lifestyle, personality, attitude, behavior, sexual orientation, skills,
education, and abilities of the job applicants.
Of the information that the managers can see on the social media profiles of job applicants,
the following is considered sensitive personal information by the Data Privacy Act of 2012:
ethnicity, relationship status, education, health conditions, and political affiliations or opinions
(Republic Act 10173 – Data Privacy Act of 2012).
Of the six managers who review the social media profiles of applicants, two said that they
consider the job applicants’ opinions on political issues. Only one of the six said that he considers
the religious quotes posted or shared by the applicant.
Verifying Information in Applicants’ Resumes
The managers were asked, “Do you think social media would be helpful in assessing the
truthfulness of what is written in the applicant’s resume with regard to: 1) a job applicant’s job
history; 2) an applicant’s educational background; and 3) an applicant’s skill set? Tables 13 to 18
show the managers’ responses.
Four of the HR managers and four of the hiring managers agreed that social media is helpful
in assessing the truthfulness of what is written in the applicant’s resume with regard to his or her
job history. Table 4 shows their responses.
Table 4
Managers’ Responses to the Question on Assessing the Truthfulness of What Is Written in a Job
Applicant's Resume with Regard to the Applicant’s Job History
Interviewee Yes/no Reason given
HR Manager 1 Yes “Partial overview/history of job experience is presented.”
HR Manager 2 Yes “You may use it and compare it with what was written in his
resume. You can also have a glimpse of how he was as an
employee.”
HR Manager 3 Yes “Provided that the applicants' profile is updated, the posts in his/her
social media accounts provide accounting of the work he or she has
been doing.”
HR Manager 4 Yes “People are generally truthful with their background online as other
people can call them on it.”
HR Manager 5 No “I don’t label the person based on what I see in one platform.”
Hiring Manager 1 Yes “You will know if the applicant declares all his employment
history/employer (e.g., LinkedIn).”
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Hiring Manager 2 Yes “Shows his/her history through posts”
Hiring Manager 3 Yes (No answer given)
Hiring Manager 4 No “This type of information is not necessarily indicated in a social

media profile.”
Hiring Manager 5 Yes “It can show the attitude or behavior of an applicant if what is
written in resume is the same as [what is written in] his/her social
media [account].”
Four of the five HR managers and three of the five hiring managers also agreed that social
media helps them assess the truthfulness of what is written in the applicant’s resume with regard
to the applicant’s educational background. Their answers are presented in Table 5.
Table 5
Interviewees’ Responses to the Question on Assessing the Truthfulness of What Is Written in an
Applicant's Resume with Regard to Educational Background
HR Manager 1 Yes “Partial overview/ history of job experience is presented.”
HR Manager 2 Yes “You may use it and compare it with what was written in his
resume. You can also have a glimpse of how he was as an
employee.”
HR Manager 3 Yes “Same with the work history, posts could reflect and validate
the schools that the candidate has attended at the very least.”
HR Manager 4 Yes “People are generally truthful with their background online as
other people can call them on it.”
HR Manager 5 No (No answer given)
Hiring Manager 1 No “There are times that people will not indicate their educational
background in social media.”
Hiring Manager 2 Yes “Normally shows thru pics”
Hiring Manager 4 No “Some social media profiles have this information hidden. At
times, what is indicated there is not truthful.”
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Hiring Manager 5 Yes “It can show attitude or behavior of an applicant if what is written
in the resume is the same as [what is written in] his/her social
media [account].”
Four of the five hiring managers do not think that social media would help them assess the
truthfulness of what is written in an applicant's resume with regard to the applicant’s skills. In
contrast, three of the five hiring managers think that social media would help them do so. Table 6
shows their answers.
Table 6
Interviewees’ Responses to the Question on Assessing the Truthfulness of What Is Written in an
Applicant's Resume with Regard to Skill Set
HR Manager 1 Yes “Partial overview/history of job experience is presented”
HR Manager 3 No “I would not use social media as a reliable indicator of the skill set
because you could not validate the actual skill just through social media
posts.”
HR Manager 4 No “Not all skills can be shown through social media.”
Hiring Manager 1 No “Skills of the applicant can only be validated through interview process.”
Hiring Manager 2 Yes “Shows interests of applicants”
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Hiring Manager 4 No “This may not necessarily be included in the profile.”
Hiring Manager 5 Yes “It can show attitude or behavior of an applicant if what is written in
resume is the same as his/her social media.”
The answers indicate that social media helps managers in verifying the information
provided by the job applicants. Verification is the process of checking the completeness and
accuracy of the information provided by the job applicants during the recruitment and selection
process (Outram, 2017). Vetting, on the other hand, happens when the employer actively makes
its own inquiries about the applicant’s background and circumstances (Outram, 2017). It refers to
the employer’s use of non-governmental, non-institutional online tools such as SNSs to collect
informal and often personal information about job applicants or current employees and to use it in
evaluating prospective or current employees – it is an act of surveillance that is intrusive of privacy
(Outram, 2017; and Berkelaar & Buzzanell, 2014).
Character Check and Organizational Fit
According to the hiring managers, looking at a job applicant’s social media accounts helps
them get to know an applicant’s character, behavior, personality traits, and personal background.
For the HR managers, looking at a job applicant’s social media profile helps them get to know the
job applicant and to determine his or her “fit” in the company’s organizational culture. In the
follow-up questionnaire, the managers were asked: 1) Do you think social media would be helpful
in determining if the job applicant would "fit" into the organization's culture? 2) Do you think
social media would be helpful in determining the job applicant's character? Eight of the ten
managers answered “yes.” Table 7 shows the managers’ explanations.
Table 7
Interviewees’ Responses to the Question on Why Social Media Is Helpful in Determining
Applicant's "Fit" to the Company's Organizational Culture
HR Manager 1 No “It will only provide an overview of the applicant's background but
not an in-depth identification of his/her personality and behavior.”
HR Manager 2 Yes (No answer given)
HR Manager 3 Yes “Posts on social media sites show what we could consider as
unguarded moments where behavior is in display. [They] can
provide insight into how the person is in his/her environment and
what the person holds dear as her/his value system.”
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HR Manager 4 Yes “In terms of employee activities, you might find some common
interests/hobbies that the company offers, promotes or organizes.”
HR Manager 5 Yes “In social media, people are generally comfortable to post about
themselves [and their] interests, which will help us see whether he
or she fits in or not.”
Hiring Manager 1 No “It should only be used as a reference, but should not be a
determinant if the applicant is fit for the job.”
Hiring Manager 2 Yes “As an employer, we normally check on how the applicant gets
[along] with his future co-workers. Negative mindset is a big no-no.
Through social media, we can determine applicant’s strengths and
weaknesses.”
Hiring Manager 3 Yes “Somehow, social media may give accurate or some information we
need to know about the applicant.”
Hiring Manager 4 Yes “Yes, because what is normally posted in social media accounts
reflects the character of the person (or at least what he or she is trying
to project to his or her audience). However, my apprehension on this
would be on the truthfulness behind it. With social media, you can
project different personas depending on who you are trying to attract.
This may not be true to all, but there exist some accounts (trolls, for
example) that are created with false profiles.”
Hiring Manager 5 Yes “I think so. For example, [if] the applicant likes to rant or share work-
related posts, this will not fit the best interests of our company
especially since out company is a security company.”
Three of the five HR managers and four of the five hiring managers think that social media
would help in determining a job applicant’s character. Table 8 shows their explanations.
Table 8
Interviewees’ Responses to the Question on Why Social Media Is Helpful in Determining an
Applicant’s Character
HR Manager 1 No “It will only provide an overview of the applicant's background, but
not an in-depth identification of his/her personality and behavior.”
HR Manager 2 Yes (No answer given)
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HR Manager 3 Yes “Same as how it can show indicators of the person's culture fit.
Social media posts can give indicators of how a person responds to
adversity, to opinions that contradict his/her own, etc. The
interactions that happen online surfaces how they deal with people
and how they conduct themselves in social situations.”
HR Manager 4 No “It can go both ways, positively or negatively, but I believe it will
be largely detrimental to the applicant's chance of being hired. It is
not an accurate indicator of the potential employee's character.”
HR Manager 5 Yes “In social media, people are generally comfortable to post about
themselves [and their] interests, which will help us see whether he
or she fits in or not.”
Hiring Manager 1 No “We are not sure how open or expressive the person is in social media.
Not everyone posts details about what's happening in their life in social
media. There [are] some things that they are keeping private.”
Hiring Manager 2 Yes “A lot. This social media shows the character of each applicant.”
Hiring Manager 3 Yes “Determining job applicant's character may be seen or projected on his
[or her] social media account.”
Hiring Manager 4 Yes “It possibly can because what they normally post on social media is
how unique or likable their character is. However, I do not find this
accurate because there is so much [about] social media acceptance that
pressures people to project a type of character that can be acceptable
to others rather than showing who they really are. There are instances
when the personality they project on social media is actually different
from who they are in person.”
Hiring Manager 5 Yes “Yes, but not 100%. Majority of the people today post what they feel
for a specific moment. In addition, I think majority of companies today
use social media in determining their applicants.”
The interviewees’ answers show that many job applicants use Facebook more frequently
than they do LinkedIn. The interviewees look at applicants’ social media accounts because they
often show the applicants’ unguarded moments. Some of the interviewees also perceive social
media as a reliable source of information about the applicants, and use this information to assess
their character and “fit” with the organizational culture.
Effect on Hiring Decisions
Six of the ten managers said that the information they find in the applicants’ social media
accounts affects their hiring decisions. The extent to which the information affects their decisions
varies from “not much” to “greatly affects.”
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HR Manager 1 said that the information “greatly affects my decision because they include
a detailed narration of their skill set in their social media account. Making a good impression is
important.” HR Manager 2 said, “It affects the decision. The social media accounts contain certain
information that the applicant will not say or include in the resume.” For HR Manager 3, the hiring
decision is affected if the information found is disturbing, but the hiring managers have the last
say on whom to hire. In contrast, HR Manager 5 said, “Not much. What’s in the applicant’s social
media account is not the only basis for the decision. It is just one part of the process. If the applicant
does okay in majority of the recruitment and selection stages, why not hire him or her?”
Hiring Manager 5 stated, “I usually do [a] technical interview, if ever the behavior I see in
his posts and his answers in my interview have the same impact. I will just say to HR that he passed
[the] technical [interview], but check his attitude.” He explained that the information found in the
applicant’s social media accounts partly affects his hiring decisions. His hiring decision is “50%
[based on] attitude or behavior on social media, 50% [based on] technical [interview]. I mean,
even if he was not able to answer all the technical questions, if his attitude is okay, [I] will pass
him rather than [the applicant who] was able to answer almost all my questions during the
interview but you’ve confirmed that he has a possible attitude problem. I will tell HR he passed
the interview but that it’s possible that he has an attitude problem.”
Hiring Manager 2 replied, “Yes, the information affects my decision. Some people don’t
care about what they post. [I give] plus points to those who know how to manage their social lives.
We’re in sales. An applicant with negative posts is out.”
Consent
The managers were asked if they inform the applicants that they would search or have
searched the applicants’ social media accounts.
Of the four HR managers who check the applicants’ social media accounts, two said that
generally, they do not inform the job applicant that they have searched or will search the job
applicant’s social media account. HR Manager 3 said, “Generally, we don’t. But during interviews
and if the applicant mentions that he or she has a blog, we ask, or if the applicant says it’s public,
we assume it’s okay. Sometimes, they themselves search for us and send requests for us to friend
them or connect with them. In that case, I refrain from accepting until he or she has onboarded.”
HR Manager 5 said, “Headhunters are the ones who really stalk.” She further said, “When
we’ve just started the recruitment and selection process, like sourcing, I don’t ask nor inform them
that I’ve searched for them on social media. But when the search is down to two to three candidates,
during the interview, I mention that I’ve searched for them, or ask them if I can search for them
on Facebook. It depends on how you deliver the message. If you’re rude, the applicant will get
offended; of course, he or she would feel that it’s unfair for you to do so. But if you deliver the
message nicely, some of them just laugh and would take it as a compliment.”
The other two HR managers said that although they look at the social media accounts of
job applicants, they do not inform them that they have searched or will search the job applicants’
social media accounts. HR Manager 1 said, “I don’t inform them because it’s very disrespectful. I
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might get asked, “What for?” HR Manager 2 replied, “No. Searching for them on social media is
not part of the recruitment process; it’s a personal thing. The applicant might say that it’s a
violation of privacy.”
Both hiring managers who check the applicants’ social media accounts said they do not
inform the applicants. Hiring Manager 5 said, “No. My purpose is to check on some of his/her
posts. It might defeat the purpose if I informed them beforehand.”
Hiring Manager 4 said she does not look into the social media account of an applicant;
however, she knows that the company does, and she is not sure whether the job applicants are
informed or not.
Manner of Search
Among the ten managers, six said they review the social media profile of a job applicant.
Four of the six managers said that their review is not time-bound. One said that when she reviews
an applicant’s social media profile, she looks at the posts that the applicant made during the past
six months. Another said that he looks at the posts made by the applicant during the past two
weeks.
Company Policy on the Use of Social Media in Selection
Four of the five hiring managers said that their companies have no policy on the use of
social media in recruitment and selection. Hiring Manager 5 said, “We have no formal policy on
checking applicants' social media profile.”
Four of the five HR managers said that their companies have no policy on the use of social
media in recruitment and selection. HR Manager 2 said, “None. It would be unfair if it were to be
part of company policy.” HR Manager 3 said, “We do not yet have a policy on the use of social
media for recruitment and selection. But since we are a network security company, we should
know better.” On the other hand, HR Manager 1 said, “We have a policy on [the] use of social
media. The policy is just [a] basic tool for recruitment. We don’t have a specific policy for
Facebook and LinkedIn.”
Government Regulation
The managers were asked if they would like the government to regulate the use of social
media in selection.
Four HR managers do not want the use of social media in selection to be regulated. HR
Manager 1 said it is “useful in initial screening and background review.” HR Manager 3 shared,
“Any type of regulation of this nature is tricky. Freedom of speech is protected, so what I choose
to post on my social media accounts is an exercise of that. And if I consent to the posting of this
content as well as [to] the guidelines of the social media site where it is posted, it should follow
that I consent to [its being] used in any way or form by the people who can access it. Government
regulation can make this complicated.”
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Only one HR manager wants the government to regulate the use of social media in selection
because “reviewing social media history is very subjective to the reviewer’s or recruiter’s outlook
and bias.”
In contrast, three of the hiring managers would like government to regulate the use of social
media in selection. Hiring Manager 1 said she wants the government to regulate it because “it is
not [a] 100% reliable source about the person’s character.” Similarly, Hiring Manager 4 wants it
regulated because
I personally do not think that social media is an appropriate AND accurate platform to
check someone’s background. I believe that cross-referencing from previous employers through
feedback and recommendation letters is still the more acceptable basis for character reference.
Hiring Manager 2 said he would like the use of social media in selection regulated “for the
recruiters to evaluate the applicants properly and be able to understand the personality and
character of each applicant.”
Only one hiring manager does not want the government to regulate the use of social media
in selection. Hiring Manager 3 stated, “It is better not to publicly regulate because the applicants
may alter their social media accounts, and details may not be very accurate.” Hiring Manager 5
said that he does not want the government to regulate the use of social media for selection “because
it still depends on people (interviewers) on how they will use social media as their basis.
Government agencies have a tendency to abuse this kind of selection process.”
Conclusion
Based on the interviews, the companies represented by the interviewees look at the social
media accounts of job applicants. This allows the HR and hiring managers to access information
on race, ethnic origin, marital status, age, color, and religious, philosophical or political
affiliations, health, education, and genetic or sexual life that is considered as sensitive personal
information in Section 3 of the Data Privacy Act of 2012.
However, as admitted by some of the interviewees themselves, the information that the
applicants post in their social media accounts may not be completely truthful as people have been
known to create false profiles.
The managers more often than not do not ask for consent from the job applicants to access
the latter’s social media accounts. Section 13 also states that the data subject (in this case, the job
applicant) should give his or her consent, specific to the purpose and prior to the processing.
This practice of accessing social media accounts without prior consent violates the
applicants’ right to informational privacy, which is enshrined in the Data Privacy Act of 2012.
Recommendations
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The recommendations given here address the second dimension (represented by the bottom
arrow) in the ménage trois of Baumann and Schünemann (2017), which shows the relationship
between citizens and businesses. Government has already addressed the first dimension (the left
arrow in the diagram) and done its part to protect the citizens by enacting the Data Privacy Act of
2012. Thus, businesses should comply with the provisions on processing personal information and
sensitive personal information even as they try to to ensure they hire personnel best fit for the jobs.
Therefore, in line with the strict requirements of the Data Privacy Act of 2012, companies
should codify policies prohibiting the use of social media to screen applicants. All HR personnel
and hiring managers should familiarize themselves with these policies.
To address the concern of the possibility of the applicants’ giving spurious information,
HR managers can, with regard to the applicants’ educational background, ask for copies of the
applicants’ school documents and verify such with the schools which supposedly issued these
documents. This is similar to the practice done by educational institutions when they accept
applicants. With regard to applicants’ previous employment, HR managers can ask for references
(Pulakos, 2005) such as from HR managers of the companies listed in the applicants’ resumes who
can verify whether the applicants indeed worked there. With regard to the applicants’ skill sets,
HR managers can conduct work sample tests and job knowledge tests (Pulakos, 2005). Finally,
with regard to the applicants’ “fit,” HR managers can conduct traditional personality tests and
aptitude tests (Ministry of Labour, Finland, 2004) and integrity tests (Pulakos, 2005).
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Study on the Impacts of Online Shopping Values, Web Atmospheric
Cues, and Electronic Word-of-Mouth on Young Millennials’
Repurchase Intention
8th NBMC Paper # 56
Ryan Acosta
[email protected]
Abstract
The substantial and rapid growth of the Philippine E-Commerce Industry has become very evident
due to the emergence of technology particularly with the existence of internet where it has changed
the way individuals shop and buy their products and services.
With this remarkable changes in consumption patterns brought about also by the spread of novel
corona virus (Covid-19) pandemic, where face-to-face contact has decreased significantly, the
exponential use of online shopping platforms was apparently sensationalized. Lazada, for one, is
one of the most commonly used online shopping platform nowadays.
This paper aims to investigate the effects of Online Shopping Values both Hedonic and Utilitarian
Shopping Values, Web Atmospheric Cues categorized as Web Informativeness, Effectiveness of
the Information Content, and Web Entertainment , and Electronic Word-of-Mouth on E-
Satisfaction.
The present study also explores the significant role of E-Satisfaction as a mediating variable
between Online Shopping Values, Web Atmospheric Cues, Electronic Word-of-Mouth on Young
Millennials’ Repurchase Intention.
Furthermore, this present study is grounded and rooted on the Stimulus-Organism-Response

Framework by Mehrabian and Russell (1974) which was adopted from the Theory of
Environmental Psychology.
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Effect of Liquidity, Profitability, and Leverage on Firm Value of
Philippine Publicly-listed Service Companies during COVID-19
Pandemic
8th NBMC Paper # 57
Michelle A. Ang and Joy S. Rabo

[email protected]
Abstract
The novel coronavirus 2019 (COVID-19) outbreak has affected various aspects of an entity’s life,
including that of the business. As it was declared a global pandemic in March 2020, several
economies have been trying to come up with strategies to mitigate the impact of the said pandemic
on the industries’ financial aspects and save them from possible failures. While it was discovered
that some industries, mostly serving basic necessities, were not much affected, a few others are at
high risk of losing the company to a pandemic if current circumstances persist without any
remedial action. With the Philippine service sector contributing positively to decreasing
unemployment rate during the second quarter of 2020, this study focuses on the effect on the
financials of publicly-listed service companies in the Philippine Stock Exchange during a
pandemic. Specifically, this study determines the effect of liquidity, profitability, and leverage on
firm value using regression analysis.
The study shows that taken together, liquidity, profitability, and leverage, when controlled by firm
size, significantly predicted firm value. As a standalone, except for liquidity which did not exhibit
any significance, all other variables showed significant effect on firm value. It is therefore
suggested to service firms to consider how they set their prices and manage their costs and
resources should they aim to improve their firm value during a pandemic.
Keywords: firm value, liquidity, profitability, leverage, COVID-19
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Introduction
Maximizing firm value is the primary financial goal of every profit-oriented organization,
thus studies on factors affecting firm value abound in business research. Liquidity, profitability,
and leverage are some of the variables that are often found to have an effect on firm value.
As the COVID-19 pandemic continues to have an influence on organizations through

potentially hindering their economic performance, researchers are advised to look into the
conditions, industries, and firm-specific settings that might reduce organizational performance
(Falaster et al., 2020). It was, however, noted that recent studies dealing with the economic impact
of COVID-19 focuses on the economy as a whole, rather than on an industry level (Shen et al.,
2020). Exceptions would be the 2020 studies of He et al. and Gu et al. which dealt with the impact
of COVID-19 on various industries in China in order to assist policymakers to come up with
recovery strategies and provide the necessary government assistance to industries, particularly
those which were hit the hardest namely, manufacturing, hospitality, residential services (He et al.,
2020), mining (Gu et al., 2020), and culture, sports, and entertainment (Gu et al., 2020).
In the Philippines, the COVID-19 pandemic brought about major disruptions in economic
activities with the government-imposed community quarantines (TESDA, 2020). Specifically, the
International Labor Organization identified wholesale and retail trade, manufacturing, real estate
and renting activities, and accommodation and food and personal services sectors as high-risk,
while transport and communication, tourism, and arts and entertainment and other services sectors
are considered medium to high risk when it comes to COVID-19 impact (TESDA, 2020).
However, with the relaxation of quarantine but also damage from calamities, the Philippine
economy is expected to contract by 9.8% with a fairly weak private sector confidence and weaker
forecast for gross domestic product in the year 2020 (Noble, 2020). As a result, a slow economic
recovery is estimated in the second half of 2020, following a decrease in unemployment rate from
17.7% to 10.0%, mainly contributed by the services sector with 3.4 million jobs added during the
months of April to July (Asian Development Bank [ADB], 2020).
With little to no studies on the firm value of a particular Philippine industry during the COVID-19
pandemic and given that the services sector showed positive contribution to the Philippine
economy through decreased unemployment rate despite the pandemic, this study aims to determine
whether liquidity, profitability, and leverage remain to have a significant effect on firm value using
data of Philippine publicly-listed service companies during pandemic.
Literature Review
Firm Value and COVID-19 Pandemic
The novel coronavirus 2019 (COVID-19) outbreak was declared as a global pandemic by
the World Health Organization (WHO) on March 11, 2020. It is predicted to reduce economic
growth as it has caused higher production cost and temporary inflation while reducing labor supply
and social consumption (Wren Lewis, 2020 as cited in Sarker, 2020). Governments have
responded to this by implementing restrictions and policies. Although related primarily to public
health, the effect of COVID-19 affects all aspects of community life, including business
community (Kepramareni et al., 2020). Listed companies are affected as investors adjust their
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perceived risks and expectations and this has resulted to recent studies focusing on the extent of
impact of COVID-19 on firm value of various economies.
In a study that analyzes over 6,000 firms across 56 economies during the first quarter of
2020, it was revealed that the pandemic-induced drop in stock prices was milder among firms with
(a) stronger pre-2020 finances which are typically represented by more cash, less debt, and larger
profits, (b) less exposure to COVID-19 through global supply chains and customer locations, (c)
more corporate social responsibility activities, and (d) less entrenched executives (Ding, et al.,
2020). In an event study to investigate the market reaction to the COVID-19 pandemic on 3,518
Chinese listed firms, Xiong et al. (2020) found that firms with good financial conditions, as
evidenced by larger scale, better profitability and growth opportunity, higher combined leverage,
and less fixed assets, experience a less adverse impact of the COVID-19 pandemic than other
firms. Xiong et al. (2020) also found that firms with high institutional investors and those which
are classified under the industries vulnerable to the virus such as transportation, food and beverage
retail, hotel and tourism, postal warehouse, real estate, video entertainment, and construction
industries, have more intense market reaction. Meanwhile, the COVID-19 pandemic was shown
to have a significant positive impact on cash holdings in serious-impact industries, although this
impact was weakened by goodwill and goodwill impairment (Qin, et al., 2020).
Using data from January 1, 2019 to March 31, 2020, He et al. (2020) noted that most
industries in China had a steady upward trend in terms of value index and found the following
impact of COVID-19 pandemic on different industries: (1) The pandemic has a significant effect
on the industry and commerce, life and technology, culture and social industries, aviation, tourism,
and other service industries, (2) The pandemic has a lesser impact on basic industries, (3) The
pandemic brought about heavy losses to the hotels and catering, and residential service industries,
(4) The pandemic brought about development opportunities to the manufacturing, and sports and
entertainment industries.
Gu et al. (2020), which sampled 34,040 firms in China noted that electricity consumption
and manufacturing had the most adverse impact of the pandemic at the aggregate level and firm
level, respectively, while construction, information technology, and health and social services had
positive impacts.
Firm Value and Liquidity
Previous research findings suggest that liquidity has a significant relationship and impact
with firm value. Aggarwal & Padhan (2017) found liquidity to be significantly related with firm
value. Farooq and Masood (2016) and Lebo et al. (2017) found a significant positive relationship
between liquidity and firm value while Ibrahim’s (2017) study of manufacturing companies
reveals that liquidity has a significant negative association with firm value. A recent study by
Widyastuti (2019) of food and beverage companies listed on the Indonesia Stock Exchange proves
that liquidity has a significant positive effect on financial performance which in turn has a
significant positive effect on firm value. Sukmawardini and Ardiansari (2018) also found that
liquidity, proxied by current ratio, has a significant but negative effect on firm value.
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On the contrary, Tahu and Susilo (2017) found that liquidity has no significant effect on
firm value. The research of Nisasmara and Musdholifah (2016) confirms this wherein cash holding
was found to have no influence on firm value. This was further supported by other studies revealing
that liquidity has no significant impact on corporate value (Karlina & Lako, 2020; Lebo et al.,
2017; Listyaningsih, 2020).
Firm Value and Profitability
The positive significant effect of profitability on firm value has been confirmed by previous
researches (Tahu & Susilo, 2017; Widyastuti, 2019; Zeb & Rashid, 2016). Furthermore, Gharaibeh
and Qader’s 2017 study of 40 companies listed in the Saudi Stock Exchange provides empirical
evidence that profitability is considered a main determinant of firm value. Sampurna and
Romawati (2020) also reveals the same impact of profitability on firm value. A study covering 86
diversified Philippine companies also reveals that of the three factors, namely, industry, company
age, and profitability, only profitability shows significant positive impact on the firm’s value
(Sucuahi & Cambarihan, 2016). This is consistent with the study of Karlina and Lako (2020)
wherein they concluded that financial performance increases corporate value. Studies on listed
companies in Indonesia Stock Exchange show that profitability have a significant effect on firm
value (Lebo et al., 2017; Listyaningsih, 2020), and this same result was also observed by Chadna
and Sharma (2016) and Ibrahim (2017).
In contrast, an analysis of the property sector and real estate companies listed on Indonesia
Stock Exchange showed that profitability has no influence on firm value (Nisasmara &
Musdholifah, 2016). This was further confirmed by Putri and Rachmawati (2018) and Hirdinis
(2019) in their studies wherein they found out that profitability has no significant effect on firm
value. Sukmawardini and Ardiansari (2018) also found that profitability, measured by return on
assets, has no effect on firm value.
Firm Value and Leverage
Considerable evidence have found leverage to have a significant relationship with or

significant effect on firm value. Zeb and Rashid (2016) and Hirdinis (2019) found in their studies
that capital structure has a significant positive effect on firm value. This was further confirmed by
a study of 19 Pakistan cement companies listed in Karachi Stock Exchange (Farooq & Masood,
2016). The study of Adenugba et al. (2016) also found significant effect of leverage on firm value.
Furthermore, several studies show that there is significant relationship between leverage and firm
value (Aggarwal & Padhan, 2017; Lebo, et al., 2017; Nisasmara & Musdholifah, 2016). Other
studies revealed that although leverage has a significant relationship or effect on firm value, its
relationship or effect is negative (Ibrahim, 2017; Shah & Khalidi, 2020; Sukmawardini &
Ardiansari, 2018). These findings, however, were contradicted by studies of Chadna and Sharma
(2016), Gharaibeh and Qader (2017), Tahu and Suhilo (2017), Putri and Rachmawati (2018),
Karlina and Lako (2020), and Sampurna and Romawati (2020) which found that leverage has
neither significant relationship nor effect on firm value.
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Firm Value and Firm Size
The effect and relationship of firm size on firm value have been inconclusive based on past
studies. Chadha and Sharma (2016), and Aggarwal and Padhan (2017) determined that firm size
is significantly related to firm value. Other studies found that firm size has a significant but
negative effect on firm value (Hirdinis, 2019; Ibrahim, 2017). This is consistent with the research
of Shah and Khalidi (2020) which studied Shariah-compliant firms listed on the Pakistan Stock
Exchange wherein they found out that firm size significantly and negatively impacts firm value.
However, an analysis of 84 listed manufacturing companies in Indonesia Stock Exchange revealed
that the effect of firm size on firm value is positive instead of negative (Sampurna & Romawati,
2020). There were also studies that support the view that firm size has no significant effect or
relationship with firm value (Farooq & Masood, 2016; Gharaibeh & Qader, 2017; Putri &
Rachmawati, 2018).
Liquidity, Profitability, Leverage, and COVID-19 Pandemic
Kepramareni et al. (2020), which studied the Village Credit Institution, found that there is
a low level and declining cash turnover caused by less opportunities of the community to optimize
fund provision and earn income during the pandemic. Thus, the COVID-19 pandemic caused a
decrease in profitability in the financial sector due to limited operational activities (Kepramareni
et al., 2020).
Meanwhile, Shen et al. (2020) predicted the performance of listed Chinese firms in the first
quarter of 2020 and found that the COVID19 pandemic decreased firm revenues which led to
lower net profit. He et al. (2020) also found a declining profit for hotels and catering services but
noted an increasing demand for internet, cultural, and sports entertainment services during the
pandemic.
As to leverage, He et al. (2020) found that under a pandemic situation, there is a high
financial risk in manufacturing, information technology, and sports and entertainment industries
caused by fewer market demand but higher manufacturing costs, which leads to declining industry
profits. In contrast, basic industries experience a relatively stable financial leverage.
Since most recent studies on COVID-19 pandemic characterized the industries and the
degree of impact on firm-level indicators brought about by the pandemic, mostly in Chinese firms,
it would be interesting to find out if the pandemic had significantly affected the firm value of
Philippine service firms through liquidity, profitability, and leverage, when firm size is controlled.
Variables Used
This study makes use of firm value as the dependent variable with liquidity, profitability,
and leverage as the independent variables, and size as a controlling variable. A brief description
of each variable is presented next.
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Firm Value
Firm Value (FV), also known as enterprise value, is the total value of a company at a
particular date. It indicates the market’s assessment of how much the company is worth. To
measure firm value, this study makes use of Market Capitalization (MCap) which has been used
as proxy of firm value in previous studies (Adenugba, et al., 2016; Aggarwal & Padhan, 2017;
Chadna & Sharma, 2016). MCap shows how much the firm’s equity is priced in the market and is
calculated as shown in (1) wherein market price per share refers to quarter-end closing stock price
and shares outstanding are as of quarter-end.
MCap=market price per share x shares outstanding (1)
Liquidity
Liquidity (LIQ) is the ability of a company to pay off its short-term obligations. In this
study, liquidity is measured by current ratio (CR). CR indicates the extent to which current
liabilities are covered by current assets and has been used in various studies (Farooq & Masood,
2016; Karlina & Lako, 2020; Lebo, et al., 2017; Listyaningsih, 2020; Sukmawardini & Ardiansari,
2018; Widyastuti, 2019). It is computed as shown in (2) wherein both current assets and current
liabilities are the balances as of quarter-end.
(2)
Profitability
Profitability (PROFIT) is the ability of the company to generate profits from its operations.
PROFIT in this study is proxied by Return on Equity (ROE). ROE has been used in previous
studies including Nisasmara and Musdholifah (2016), Tahu and Susilo (2017), Putri and
Rachmawati (2018), Sukmawardini and Ardiansari (2018), Widyastuti (2019), Karlina and Lako
(2020), and Kepramareni et. al. (2020). It measures the return earned on stockholders’ investment
and is calculated using the equation in (3) wherein net income is for the quarter, while average
stockholders’ equity is the sum of stockholders’ equity at the beginning and end of the quarter
divided by 2.
(3)
Leverage
Leverage (LEV) is a company's ability to use assets and/or funds that have fixed expenses
in order to realize the company's goal to maximize the wealth of the company owner (Ichsani &
Susanti, 2019). Several studies have used Debt Ratio (DR) as proxy for financial leverage
(Demirgüneş, 2017; Gharaibeh & Qader, 2017; Lebo et. al., 2017; Widyastuti, 2019; Karlina &
Lako, 2020; Sampurna & Romawati, 2020; Shah & Khalidi, 2020). DR measures the amount
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provided by creditors for every peso provided by total assets and is computed as shown in (4)
wherein both total liabilities and total assets are the balances as of quarter-end.
(4)
Firm Size
Firm Size (SIZE) pertains to a firm’s scale or volume of operations. This study measures
SIZE on the basis of the natural logarithm of Total Assets (lnTA) which uses log transformation
to equate total assets, expressed in nominal value, with other variables. This proxy measure for
SIZE is similar to previous studies (Aggarwal & Padhan, 2017; Gharaibeh & Qader, 2017;
Ibrahim, 2017; Putri & Rachmawati, 2018; Hirdinis, 2019; Listyaningsih, 2020; Sampurna &
Romawati, 2020). The equation is found in (5).
(5)
Methodology
Data and Data Gathering Procedures
This study uses causal research design in order to determine the effect of liquidity,
profitability, and leverage, controlled by firm size, on firm value of publicly-listed service
companies in the Philippines during the pandemic. Specifically, this study covers the second
quarter of 2020 when WHO declared COVID-19 as a global pandemic and the Philippine
government started imposing community quarantines in March 2020.
The population of this study consists of sixty-three (63) service companies listed in the
Philippine Stock Exchange (PSE) during the period April 1, 2020 to June 30, 2020. Sample size
used in the study was forty-three (43) which excluded the following: (1) those whose trading were
suspended during the period covered, (2) those that adopt a fiscal or non-calendar year, (3) those
with incomplete data or report, (4) those who reported zero gross revenue or stockholders’ equity,
(5) those with negative gross revenues, and (6) those with financial reports denominated in foreign
currency. This was further trimmed down to thirty (30) companies in order to meet the classical
assumptions test in regression analysis.
Secondary financial data obtained from the quarterly financial reports and other company
disclosures were collected from the PSE Electronic Disclosure Generation Technology (PSE
Edge). The formula discussed under the operational framework were then applied to compute the
dependent and independent variables. Regression analysis was then ran in SPSS to come up with
the econometric regression model as shown in (6). The use of regression analysis has also been
used by Ichsani and Susanti (2019) in determining the effect of firm value, leverage, profitability,
and firm size on tax avoidance.
〖FV〗_i= β_0+ β_1 〖LIQ〗_i+ β_2 〖PROFIT〗_i+ β_3 〖LEV〗_i+ β_4 〖SIZE〗_i+e_i (6)
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Table 1 shows the mean, standard deviation, minimum, and maximum firm value, liquidity,
profitability, leverage, and size of the 30 Philippine publicly-listed service firms derived from the
SPSS results. It shows that the industry average on firm value, liquidity, leverage, and size remain
positive, while profitability decreased by approximately 3.53% on average during the three-month
period of April 1 to June 30, 2020.
Table 1
FV LIQ PROFIT LEV SIZE
Mean 45802572618 1.6818 -0.0353 0.5072 23.2355
SD 76674074794 1.0394 0.0712 0.2122 1.9179
Minimum 443713800 0.2805 -0.2293 0.1666 19.3660
Maximum 276205744890 4.1368 0.0577 0.8810 27.0471
Observations 30 30 30 30 30
Note
FV is firm value measured by market capitalization; LIQ is liquidity measured by current
ratio; PROFIT is profitability measured by current ratio; LEV is leverage measured by debt ratio;
and SIZE refers to firm size.
Correlation Results
Table 2 shows the Pearson’s correlation matrix between the different variables. At a 1%
significance level, the following exhibited strong correlations: firm value and size at 70.3%, and
leverage and liquidity at 64.5% albeit negative. At a 5% significance level, firm value and
profitability, firm value and leverage, leverage and profitability, and leverage and size showed
weak to moderate correlations ranging from 37.5% to 40.9% with leverage and profitability
showing negative correlations. Meanwhile, firm value and liquidity, liquidity and profitability,
and profitability and size did not exhibit any significant correlations.
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Table 2
Correlation Matrix
FV LIQ PROFIT LEV SIZE
FV 1
LIQ -0.136 1
PROFIT 0.380* 0.158 1
LEV 0.375* -0.645** -0.409* 1
SIZE 0.703** -0.222 0.113 0.400* 1
Note: *p < .05, ** p < .01
Regression Results
A multiple regression analysis was then used to test if at the outbreak of the COVID19
pandemic, liquidity, profitability, and leverage, while controlling firm size, significantly predicted
firm value. The results indicated that taken as a whole, the predictors LIQ, PROFIT, LEV, and
SIZE explained 65.7% of the variance in FV (R2 = .705, F(4, 26) = 14.905, p = 0.000). Taking out
liquidity which did not have any significant correlation with firm value will cause a drop in the
adjusted R2 to 63.3% (R2 = .671, F(4, 26) = 17.647, p = 0.000) thus liquidity was retained in the
predicted model as shown in (7).
〖FV〗_i= 511287845720+ 0.245〖LIQ〗_i+ 0.512〖PROFIT〗_i+ 0.551〖LEV〗_i+ 0.479〖SIZE〗_i+e_i (7)
Taken individually, it was found that profitability (p = .038) and leverage (p = .041)
significantly predicted firm value. In addition, the influence of the control variable, firm size, was
found to be significant (p = .000). On the other hand, liquidity was found to have no significant
effect on firm value (p = 0.475).
Conclusion and Recommendations
The results of the study is consistent with the previous studies wherein profitability was
found to have a significant positive effect on firm value (Sucuahi & Cambarihan, 2016; Gharaibeh
and Qader, 2017; Karlina & Lako, 2020; Sampurna & Romawati, 2020). In addition, this research
also found that the leverage ratio significantly positively impacts firm value. This is in line with
previous studies of Adenugba, et al. (2016), Farooq and Masood (2016), Zeb and Rashid (2016),
and Hirdinis (2019).
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This empirical finding also supports partial evidence to the validity of signaling theory
which predicts a positive impact of profitability and leverage on firm value. High profitability and
debt financing provide signals of favorable prospects in the future leading investors to demand for
the company’s stock resulting in an increase in firm value.
This study recommends to Philippine service firms wishing to improve their firm value
during a pandemic to emphasize more on profitability and leverage, rather than liquidity which
was found to have no significant relationship or effect to firm value. Firms can focus on improving
profitability through setting appropriate prices to maximize revenues as well as managing their
costs properly. At the same time, managing properly their assets and funds to maximize
shareholders’ wealth in order to increase leverage can aid companies in ensuring that there will be
less adverse impact on their firm value during a pandemic.
This study only considers financial data during the second quarter of 2020 of 30 Philippine
publicly-listed service firms. Future researchers can extend the study to include a longer time
period, a different industry or wider scope, and other variable measures (such as Tobin’s Q for
firm value, cash ratio for liquidity, return on assets for profitability, debt-to-equity ratio for
leverage, and other control variables). The purpose of future research can focus on comparison
across industries and regions, and possibly employ more advanced statistical techniques to be able
to predict future financial indicators of various industries.
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Exploring the Product Development and Sales Processes of An
Embedded For-Profit Social Enterprises in the Growth Lifecycle
Phase: A Grounded Theory Approach
8th NBMC Paper # 58
Denver Daradar and Shieradel Jimenez

[email protected]
Abstract
Social enterprises represent an organizational form that can potentially hold the key to solving
many societal problems. With these organizations’ balancing acts of pursuing business
sustainability while pursuing social missions, it is essential to look at what strategies might be
employed to ensure these organizations succeed. This study examines one exploratory case to shed
light on the strategies employed in the product development and sales process of a successful social
enterprise, Messy Bessy. Results reveal that the organization does not seem to have formal
processes for both product development and sales.
Keywords: social enterprises, product development, sales process, business life cycle
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Introduction
Background
With the dawn of the 21st century came the global awareness that the Earth is most likely
no longer the most beautiful place in the universe. We find ourselves immersed in the fallout of
our species' long experiment in ugliness (Adler, 2015). Less arguably today, perhaps, than a
century ago, business corporations and their leaders are to blame and in great part. Less than 20
years ago, the world saw the rise and fall of legacy companies – the enterprises themselves or their
reputations – due to the inherent curse of greed. These include such once-revered names as Enron,
Arthur Anderson, Bear Stearns, AIG, and Lehman Brothers (“List of corporate collapses and
scandals,” 2017). Our natural environment suffered more and more, the poor have become poorer,
and over-all businesses and countries have become more challenging to sustain. How can the
economic, social, and environmental benefits – no matter how indirect – trickle down to the greater
masses who languish below a dignified state of living?
Nancy J. Adler reported that in 2010, "Eight-hundred million people go to bed hungry
every night; including more than 300 million children. Every 3.6 seconds, a person dies of
starvation” (p. 90.) The World Bank (2010) reported the same year that:
By century's end, climate change could lead to warming of 5°C or more compared with
preindustrial times and a vastly different world from today, with more extreme weather
events, most ecosystems stressed and changing, many species doomed to extinction, and
whole island nations threatened by inundation. Even our best efforts are unlikely to stabilize
temperatures at anything less than 2°C above preindustrial temperatures, warming that will
require substantial adaptation (p.1).
What can contribute to this? The World Bank (2010) pointed out that high-income
countries, with one-sixth of the world's population, are responsible for nearly two-thirds of the
greenhouse gases in the atmosphere.
Leaders of various political, economic, corporate, and social regimes are definitely at the
top of the machinery that created this ugly world. But this ugliness has no longer remained
acceptable. Change is on its way. But is it here to stay?
Like a dark horse rising, a new trend in business has simultaneously been evolving. Dees
and Anderson (2003) has this to say
We live in an age in which the boundaries between the government, non-profit, and
business sectors are blurring. This blurring results from a search for more innovative, cost-
effective, and sustainable ways to address social problems and delivery socially important
goods, such as basic education and health care (p. 1).
And so with the impetus of an ugly and unsafe world triggered by materialism and its many
masks comes the dismantling of different traditional sector boundaries and the emergence of for-
profit social enterprises.
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Purpose and Objectives
If these for-profit social enterprises indeed offer a ray of light, a more favorable alternative
to building a better world, then it is a matter of concern to ensure that these enterprises stick around
for the long haul. Most enterprises, together with their products, experience rises and falls through
the product life cycle. Their positioning and strategies evolve simply because internal and external
forces change (Kotler, 2003). As these transformations occur, are for-profit social ventures
capable of coping, if not changing with, the change? Do the dual mission of social purpose, and
business profits make survival and extending the lifecycle a burdensome enterprise?
It is the general aim of this paper to explore the situations and strategies of for-profit social
ventures as they cope with the unique challenge of their status in the product/business lifecycle.
The research questions that will be addressed in this paper are the following:
1. What sales process strategies and activities do for-profit social ventures employ and do to
overcome the challenges of a growth lifecycle stage?
2. What product development strategies and activities do for-profit social ventures employ
and do to overcome the challenges of a growth lifecycle stage?
3. How do these strategies compare with typical strategies for firms in a growth lifecycle
stage, as identified by existing literature?
The Product Life Cycle
It has been argued that the business or product life cycle is indeed a fundamental variable
that affects business strategy decisions and performance (Anderson & Zeithaml, 1984). To
determine the general descriptions of companies in each stage of the life cycle, Anderson and
Zeithaml (1984) reported the following:
Introduction Stage: Primary demand for the product just starting to grow; products or
services still unfamiliar to many potential users.
Growth Stage: Demand growing at 10% or more annually in real terms; technology or
competitive structure still changing.
Maturity Stage: Products or services familiar to the vast majority of prospective users;
technology and competitive structure reasonably stable.
Decline Stage: Products viewed as commodities; weaker competitors beginning to exit (p.
9)
Thus, rapid sales growth, ramping up of business technologies, and dynamic industry
activity characterizes companies and products in the growth stage of the lifecycle.
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Hofer (1975) pointed out that changes in strategy are necessary during the introduction,
maturity, and decline stage in the entire life cycle. Strategies employed particularly during each
stage were discussed by Anderson and Zeithaml (1984). For the introduction stage, buyer-focused
strategies should be employed. These strategies include advertising and activities that aim to
increase purchase frequency. Product development is deemed essential at this stage. The growth
stage will necessite strategies that include strategic segmentation, attaining efficiencies in
marketing and production, product performance, and product modification to increase customer
satisfaction important and intensive distribution or market penetration. For the maturity stage,
strategies should include improving overall efficiencies and costs, particularly in marketing and
distribution, and further product differentiation and market segmentation. Lastly, for the decline
stage, a broad range of strategic options can fall between one extreme of industry exit to increasing
investment in the declining business.
Thus for companies in the growth stage, it is crucial for marketing to continue
understanding the markets, improving marketing's efficiencies or bang per buck, explore product
improvements given customer feedback, and ramp up sales and distribution.
Meantime, Kotler (2003), citing a variety of sources, summarizes product life cycle
characteristics, objectives, and strategies accordingly. Table 1 highlights the Growth and Decline
stages.
Table 1
Summary of Product Life Cycle Characteristics, Objectives, and Strategies for Growth and
Decline Stages
Product Life Characteristics Objectives Strategies
Cycle
Growth · Rapidly rising Maximize market · Offer product extensions,

sales share service, warranty
· Average cost · Price to penetrate the
per customer market
· Rising profits · Build intensive distribution
· Customers are · Build awareness and
early adopters interest in the mass-market
· Growing · Reduce sales promotion to
number of take advantage of massive
competitors consumer demand
Decline · Declining sales Reduce · Phase out weak products

· Low cost per expenditure and · Cut prices
customer milk the brand · Go selective: phase out
· Declining unprofitable outlets
profits · Reduce advertising to the
· Customers are level needed to retain hard-core
laggards loyal customers.
· Declining · Reduce sales promotion to
number of minimal level.
competitors
From “Marketing Management” by Philip Kotler. Copyright 2003 by Pearson Education, Inc.
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Zeroing in on possible insights or strategies recommended for firms in the growth and
maturity stages, Hamper (2014) summarizes product/product development and sales/distribution
strategies accordingly:
Table 2
Life Cycle Product, Sales and Distribution Strategies
Life Cycle Stage Product Strategies Sales and Distribution Strategies
Growth Stage · Maximize product quality · Find new distribution

· Fit buyers' needs with product channels
changes as needed. · Put a strong emphasis on
· Modular design to facilitate keeping dealers well supplied
adding new features that appeal to with minimum inventory cost
different segments · Pay close attention to rapid
· Eliminate unnecessary specialties resupply of distributor stocks
with little market appeal · Stimulate general trial
· Increase features · Use personal sales,
sampling, dealer promotions
Maturity Stage · Pay close attention to possibilities · Strongly emphasize

for minor product improvement and keeping dealers well supplied
cost-cutting with minimum inventory cost
· Pay close attention to · Put a strong emphasis on
opportunities through either bold cost dealers and distributors
and price penetration of new markets · Maintain consumer and
or significant product changes trade loyalty
· Consider the introduction of new
products
Note: Adapted from “The Ultimate Guide to Strategic Marketing” by Robert Hamper. Copyright
2014 by McGraw Hill Education.
It is important to highlight that between growth and maturity stages, the role of market
penetration, market development, product development, active and targeted sales efforts,
distribution expansion and management, and cost-efficiencies are activities that need to be defined
and combined to maximize the benefits of the lifecycle stage, and extend the life of the product, if
not the business. Table 3 layouts the different product development and sales process or sales
management or distribution strategies.
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Table 3
Comparative Table of Product Development and Sales & Distribution Strategies for Firms in the
Growth Lifecycle Stage
Anderson and Kotler (2003) Hamper (2014)
Zeithaml (1984)
Product Product Offer product · Maximize product quality

Development modification extensions, · Fit buyers' needs with product
service or changes as needed.
warranty · Modular design to facilitate adding
new features that appeal to different
segments
· Eliminate unnecessary specialties
with little market appeal
· Increase features
Sales & Intensive Build intensive · Find new distribution channels

Distribution distribution or distribution · Put a strong emphasis on keeping
market dealers well supplied with minimum
penetration inventory cost
· Pay close attention to rapid
resupply of distributor stocks
· Stimulate general trial
· Use personal sales, sampling,
dealer promotions
Hamper's strategic points provide a framework to assess and evaluate the selected social
enterprises' product development and sales & distribution strategies.
For-Profit Social Enterprises
Social enterprises (SE) engage in business and trade, not for shareholder gains or profits,
but to create social and environmental impact (Doherty, Haugh, & Lyon, 2014). But despite the
abundant definitions of a social enterprise, it is clear that there are two characteristics that define
it. These characteristics pertain to the dual mission of for-profit social enterprises as profit-making
and mission-fulfilling. This duality is considered as an essential, concomitant quality of social
enterprises (Dees & Anderson, 2003; Doherty et al., 2014).
In their meta-analysis, Doherty and colleagues (2014) noted that social enterprises face
many challenges. First, in trying to achieve business and social goals, SEs experience conflicting
demands between customer needs and other stakeholder needs. Second, in the pursuit of the dual
mission, one could be caught between sacrificing social value creation for economic value capture
versus purposely not seeking profit maximization.
Notably, though, Dees and Anderson (2003) concluded that for-profit social ventures give
priority to its ability to fulfill their social mission in the final analysis. This appears to be the
manner of resolution. This is affirmed by Doherty and colleagues (2014) when they said "SEs
differ from organizations in the private sector that seek to maximize profit for personal gain by
prioritizing social change above private wealth creation” (p. 420). Legally organized, their
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inception was already informed with the intent to provide social value through its operations –
either in the products or services they offer, in the embedded processes and mechanisms of its
operations, or the manner and quality of its procurement or supply chain practices (Dees &
Anderson, 2003). Their work reveals that when apparent tensions arise between the mission and
profit goals, for-profit social ventures prioritize the mission.
Ignat and Leon (2017), however, tend to disagree. In their study involving for-profit social
enterprises in Sweden, in a rise of tensions amongst the different goals, what takes precedence
largely depends on the pressures' specific contexts or causes. Some firms cited in their study
adopted decisions that affirm Dees and Anderson's (2003) findings. Some did not. This poses
implications on the marketing decisions – product development and sales and distribution, for
example – which the firm through its executives will make.
In classifying the different types of for-profit social ventures, Alter (2006) offers three (3)
types: 1) the embedded social enterprise, where the social mission is at the center of the company's
purpose and operations, and the entire operational design is intent on achieving and living out the
social purpose; 2) integrated social enterprises, where the operations and the social activities of the
firm are not fully integrated, although they are overall and are related to each other; and, 3) external
social enterprise, where the firm maintains its for-profit traditional business orientation but is
associated with another firm, usually non-profit foundations and the like, that serves as an outlet
to do some social good (Alter, 2006). The manner of embeddedness for the first type can be such
that social beneficiaries are the target market, a direct beneficiary or grantee, an employee, or even
an owner. Operations fund all social programs.
Of interest above is that as asserted by Alter (2006) and affirmed by Habaradas and Aure
(2016), the embedded social enterprise tends to be more sustainable. The latter's affirmation came
by way of the cited study results. In the cases discussed, the firm categorized as an embedded
social enterprise proved to be more profitable (Habaradas & Aure, 2016).
For purposes of this study, the former definition following Alter (2006) is adopted.
Product Development: Growth Firms and Social Ventures
In their study of innovation and product development for start-up and mature firms,
Freeman and Engel noted that mature firms tend to decide based on status quo benchmarks or
basis. Innovation, in general, they pointed out, usually requires the mobility of resources and the
alignment of incentives. When doing so also entails disruptions in current markets or the
organizational structure or the management processes, adopting the change becomes more
difficult. After all, who wants to rock the boat so grandly for new products or new payoffs that are
uncertain (Freeman & Engel, 2007)?
That being said, incentives for change are usually adopted to motivate innovators but may
include those who will execute and embrace the innovation. However, such incentives may run
counter or inconsistent with existing norms or expectations of equity and create more resistance
than diffuse it (Freeman & Engel, 2007). That being said, it is apparent that product innovation –
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or any innovation for that matter – should include some form of change management in its plan or
program.
Sales Process Management
Marketing efforts – product development, promotions, location selection, pricing, etc. –

should translate to sales, and sales growth goes without saying. How fast sales respond to different
marketing variables is essential. In 1981, Parsons and Abeele studied the factors that contribute to
sales call effectiveness. While this has something to do with actual push efforts, much can be
learned regarding the factors that contribute to positive sales responses. In the study of
pharmaceutical company efforts to sell, what appears to contribute to sales efforts would be
doctors' presence (i.e., experts) and women (i.e., client testimonials), handouts, product samples,
company experience/history/reputation, and even mailing campaigns (Parsons & Abeele, 1981).
While the factors highlighted are not necessarily sales variables, these set the stage, the
context to determine, or even argue for or against, the required marketing efforts for-profit social
enterprises should embark on to support the kind or level of sales they hope to achieve. Sales
elasticity exists, and that more efforts on selected marketing activities do redound to sales
effectiveness (Parsons & Abeele, 1981).
Meantime, interestingly, factors such as the regional strength of a particular sales territory
office, their span of control, salesperson experience, and company marketing efforts – over an
extended period – do not significantly explain variations in sales growth (Ryans & Weinberg,
1987). So while they appear necessary to sales growth, they do not guarantee stable performance.
This can prove an issue for growing or mature firms. Standard promotional efforts, or regional
capabilities and strengths, are insufficient in meeting sustainable growth issues of the product life
cycle's middle stages. Given the discussion on product lifecycles earlier that cited, among other
things, the importance of sales intensification, it appears that this activity or tactic cannot be used
in isolation or even paired with activities cited by Ryans and Weinberg (1987) or by Parsons and
Abeele (1981). The other activities or strategies mentioned should be explored as part of the
strategic set for growth-stage or mature-stage firms.
Even Darmon (2005), who studied sales force size and sales call guidelines efficiencies,
pointed out that size does matter. Sales calls do help. It cannot be implemented in isolation. It may
require further market segmentation towards segment homogeneity – a matter taken up by Kotler
(2003) and Hamper (2014) to discuss the growth and mature stages.
Other Growth Issues
Behind all the strategic and marketing demands growth and mature firms are pressed to
implement lies an entire set of concerns and challenges that, if unaddressed, could make growth
challenging. Hynes (2009) pointed out that financing, staff retention, staff adjustment to new roles
(resulting from rotations), and even social and business impact measures appear to underpin over-
all business performance (Hynes, 2009).
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These issues are essential, especially if the strategy and marketing issues pointed out by
Kotler (2003) and Hamper (2014) are to be factored in. Product development, inventory
management, distribution expansion, among others, need to be prime-pumped with funds,
competent people, and efficient technology if the firm is to pull through and succeed.
In summary, it would appear from the survey of literature that first, firms in the growth
stages need to consider marketing strategies and market research and segmentation, rapid market
penetration, product development, and sales promotions if they are to reap the most from their
growth opportunities. Second, social enterprises are challenged with similar forces but need to
grow and succeed from a double-mission perspective, and that investing in marketing efforts may
not prove beneficial to improving profitability or risk not fulfilling its social mission. Third,
embedded social enterprises are more likely to succeed. So product development and sales
strategies may need to be embedded with the social mission if it is also to succeed for the for-profit
social venture. Last, there appears to be minimal literature that describes the marketing strategies
that can favorably serve embedded for-profit social enterprises, particularly along with product
development and sales process management.
The phenomenon that is the for-profit social enterprise or venture is a relatively new one,
with initial studies attempting to describe and understand it running early in the 21st century
(Doherty et al., 2014). With a yet growing body of literature on for-profit social enterprises, there
appear to be more gaps in marketing research areas, particularly product development and sales
distribution, especially sales process management.
Thus, given the exploratory nature of this study, it appears best to approach it qualitatively.
This research is also an exploratory one and aims to discover, identify, and understand product
development and sales and distribution strategies that growing for-profit social enterprises employ
to sustain growth and improve market share. Aside from this, the research topic appears to be an
infrequently researched area. Lastly, there appears to be limited to no sample group of significant
size that has been subjected to deliberate research and observation that can merit the application
of a quantitative approach.
The strategy employed was one anchored on grounded theory. Grounded theory is a
research strategy “in which the researcher attempts to derive a general, abstract theory of a process,
action, or interaction grounded in the views of participants in a study (Creswell, 2013, p. 63).”
Given that the qualitative genre is that of the strategies and activities in product
development and sales and distribution for growth stage for-profit social firms, where the focus of
the inquiry is the social enterprise, the specific strategy was a case study (Marshall & Rossman,
1999).
The Role of Reviewed Literature
"It is important to highlight that [grounded theory] is not based on existing theories; it is
rather based on data contained in social scenarios and has no pretention to refute or prove its results
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but to add others/new perspectives so to clarify the studied object” (Dantas, Leite, Lima, & Stipp,
2009, p. 574). For such a process, the review of related literature does not constitute the initial
stage of the research process, but a concomitant process from which will arise reflections on the
said emerging themes (Dantas et al., 2009). That being said, themes that surfaced from the
literature review are not intended to serve as lenses or constructs to analyze or evaluate interview
results. Still, simple to inform the researcher about possible themes and constructs.
Findings and Analysis
Messy Bessy: The Embedded For-Profit Social Enterprise
Messy Bessy is registered as a for-profit enterprise. Its product categories include all-
purpose cleaning materials, disinfectant, aroma and odor sprays, dishwashing aids, special purpose
cleaning aids, laundry care, pesticides, and hand and body care for women and babies. The
enterprise originally sold their products through multiply.com platform, bazaars, retail
consignments, and weekend markets. They are now distributed through their kiosks, through
online retail apps such as Shopee, through modern trade (such as some branches of SM
Hypermarket, Robinson’s Supermarket, etc.), their resellers' program (who simply do buy and sell
at 15% discount of suggested retail price), and corporate sales or accounts.
The first and primary evidence of their social mission is their commitment to their
“learners.” Learners are youth-at-risk, predominantly but not exclusively women, who in the past
were victims of abuse, trafficking, or were once incarcerated/imprisoned, and now are employed
with Messy Bessy (or, after two years of working with Messy Bessy are currently employed with
other partner firms of HOUSE Foundation, such as Starbucks Philippines, etc.). These learners are
pursuing undergraduate studies, while receiving regular counseling from a retained mental health
practitioner.
Seventy percent of the company’s 100-plus strong workforce are learners. They are mostly
deployed in production, supply chain, and the different stores. Each store, relative to size, would
have one to three learners deployed, overseen by a supervisor who may not be a learner. Learner’s
work schedules are designed around their school schedule, and shifts are planned accordingly.
While the company and the partner foundation provide support for the education, the learner is
also required to pay a portion via salary deduction to have a sense of ownership over his or her
educational program.
Furthermore, they are required to see their counselor regularly. Also, non-learner
employees must spend time mentoring and tutoring the learners assigned to them (more on this
later). They also have recognition activities that even feel like a commencement exercise to
motivate their learners to remain committed to the program.
In terms of their supply chain, Messy Bessy has aimed to use, as much as possible, all-
natural and recyclable materials, and their biggest hurdle so far is the issue of packaging. For their
packaging, they have opened their doors to allow customers to return bottles. For buyers of bigger
bottles, they have recently opened a refilling station in Rockwell, Makati, where consumers can
refill select liquid products. Packaging wise, they have also included graphical illustrations of the
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social impact that the purchase of a particular product can give (e.g., if it will contribute to one
learner's tuition, etc.). To even drive support for this further, they recently launched their loyalty
program called the Messy Movement. Loyal followers and customers, called Messy Movers, earn
points for every purchase. If registered online, they are regularly updated on the social impact so
far contributed by the amount of purchases/points they have spent on Messy Bessy. This update
is given to Messy Movers once a month.
Lastly, in terms of management time and commitment, Messy Bessy managers are
monitored weekly via the PLS scoreboards, where PLS stands for Profitability, Learners Score,
and Self Love. By profitability, managers are required to deliver and report business goal
attainment versus targets. By Learner Score, managers are required to say how much time they
have devoted to mentoring learners, tutoring them in subjects they are enrolled in, and monitoring
their progress and development in their jobs. By Self-Love, each manager requires disclosing a
personal development goal per quarter (for example, reading a certain number of books, losing a
certain amount of weight, etc.) and reporting their progress.
Product Development in Messy Bessy
The founder and CEO generally spearhead Messy Bessy’s product development. “Mostly
talaga si Krie, tapos she consults naman the team,” says junior marketing manager Jhoey Naddeo.
“Until now naman, when may launch kami, we’ll start like gawa kami drafts and consult the
management team. Team effort talaga, yung team ko maliit talaga siya eh, we relied on interns,
and then sabi ko, I need a graphic artist nga, so ganun siya.” Even packaging and product labels
are conceptualized by Krie Lopez-Reyes. So it would appear that there is no formal product
development process or structure, although they do have to comply with the local Food and Drug
Administration (FDA) to ensure product safety.
Sales Process in Messy Bessy
As of 2017, Messy Bessy’s sales mix is as follows:
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Figure 1
Messy Bessy’s 2017 Sales Mix per Channel
Therefore, business expansion is dependent on channel expansion, adopting a multi-

channel approach, even where the traditional store-kiosk concept generates almost three-quarters
of the business.
During the interview, there appeared to be no formal process to selling their products;
hence sales process concepts do not appear to apply. What is crucial would be the intensive
ramping up of channels.
An Assessment and Analysis
Over-all it has been observed that Messy Bessy is primarily committed to its social mission
and sees its profit orientation as a necessary driver to achieving its social purpose. This observation
is consistent with the words of Dees and Anderson (2003) and Doherty and colleagues (2014) and
contrary to the claims of Ignat and Leon (2017). It is also clear that the ability to help more learners
is dependent on their ability to sell more.
This research aimed tried to see how product development and sales & distribution play a
role. In terms of product development, it would appear that the function is primarily concentrated
in the owner-founder, and no process is in place to formally enable regular, periodic product
development.
While product development is not the primary concern of growing firms, as compared to
product modification (Anderson & Zeithaml, 1984; Hamper, 2014; Kotler, 2003), this appears to
be the priority of Messy Bessy. New product development and introduction are seen as an essential
marketing strategy for companies in the mature product life cycle (Hamper, 2014; Kotler, 2003).
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An important insight here is that funds poured into producing and maintaining a huge product
portfolio too soon, too rapidly, might have put a brake on the firm's fiscal expansion and its social
expansion. In hindsight, they could have focused on a narrower set of products, expanding features
and variants, and then leveraging other marketing functions (such as sales and distribution) to bring
in the sales. That way, funds “freed up” or re-channeled could have fueled distribution network
expansion and the social mission.
In terms of sales and distribution, intensive sales expansion is derived primarily by opening
and maintaining multiple channels, a mix of traditional and digital means. This is consistent with
the recommendation of the cited scholars on the product life cycle. Because there appears to be no
evidence of a clear process for managing sales and channel expansion, it would seem that no
management focus has yet been applied to improving the fiscal and measured monitoring of their
expansionary strategy.
When asked if they will export, the researcher was told that they would like to conquer the
domestic market first before going abroad. When asked about the local expansionary strategy, it is
not company-wide knowledge; hence, it is not a corporate initiative. At best, it might be only
tactical decisions and activities shared between the founder-owner and the sales head – but this is
already speculation.
Problems have arisen to meet demand, especially during the holiday season, hence the need
to contract toll manufacturers to produce their corporate packs. They have difficulty meeting
demand and may partly be part of the broad multi-channel strategy and the rather diverse product
portfolio. It should be noted that engaging toll manufacturers effectively takes away production
capacity or opportunity that could have been assigned to learners if only the company had the
funding to retain a larger learner workforce.
On the Sales Process
For-profit social enterprises like Messy Bessy do not seem to have formal sales processes.
The focus, it would seem, would be to build and serve multiple distribution channels, consistent
with the challenges of the growth lifecycle stage. However, as suggested by the literature, this
should be matched by improved production and marketing efficiencies, lest the rapid ramping up
would not be adequately served with available products/inventory.
And this has become the case for Messy Bessy. Unfortunately, the decision to partner with
toll manufacturers to serve the unmet demand takes away from the firm’s ability to carry out more
faithfully their social mission. And it would appear that the root cause of their inability to serve
unmet demand is the lack of product focus and product and production improvements.
On the Product Development Process
For-profit social enterprises like Messy Bessy do not seem to have formal product
development processes. Still, they are rapid in coming up with new products – not just product
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variants or extensions. As in the case of Messy Bessy, they have diversified even the kind of
categories they have entered.
This is not, as pointed out previously, supported by the product life cycle model. And the
repercussions of business and the social mission are tremendous. Too many products with minimal
production capacity also limit the volume produced per stock-keeping unit (SKU), thus limiting
all SKUs' ability to meet demand. And while there may be some raw materials that enjoy
economies of scale, the opportunity cost may increase when there are too many product categories
and variants too early in the game. The firm may lose out on better economies, and funds tied
could have been better used to serve the social mission again.
Comparing Practice versus the Literature
To summarize, the practice is not entirely consistent with the proposed strategies reiterated
in the literature. The effect on a for-profit social enterprise is not only on the business purpose but
also on the social mission. Doing strategies applicable for later stages in the life cycle too early
poses challenges to the firm’s ability to meet its business goals and social mission and purpose.
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Impacts of Working Capital Management
on the Profitability of Manufacturing Companies
8th NBMC Paper # 59
Ma. Raina Philline V. Canilang, Adriel Jed B. Faigal, Jazmine Alyanna M. Ong, Nadine
Alexandria S. Villanueva, and Tomas S. Tiu
Abstract
The study measured the impact of working capital management on the profitability of selected
manufacturing companies in the construction materials sector in the Asia – Pacific region for
selected developed markets, namely Japan, Singapore, Australia and Hong Kong, versus selected
emerging markets namely the Philippines, Indonesia, Taiwan, and South Korea, for the period
2015 – 2019. The study used cash and short-term investments, accounts receivable turnover,
accounts payable turnover, inventory turnover, current ratio, debt ratio, firm size, sales growth,
and gross domestic product growth to measure this impact on the profitability of these companies
in terms of their net profit margin, return on assets and economic value added. There were 40
manufacturing companies used in the study. The study used panel data regression. The results
showed that there are more significant determinants of profitability in developed markets
compared to emerging markets. The significant determinants of profitability in developed markets
for NPM are Accounts Receivable Turnover (1.23), Debt Ratio (16.87), Sales Growth (.0.27), for
ROA are Current Ratio (0.004), Firm Size (0.06), Sales Growth (-0.02), and for EVA is Cash and
Short-Term Investments (0.26). On the other hand, the significant determinants in emerging
markets for NPM is Firm Size (0.20), ROA is Current Ratio (0.02), and for EVA are Current Ratio
(46.13) and GDP growth (-7973.80). The more competitive environment in developed markets
brought the need for firms to consider more factors of profitability than the emerging markets.
Keywords: working capital management, profitability, panel data regression, developed markets,
emerging markets
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The Threshold of “Ginhawa:” Implications for Work Motivation
and Performance
8th NBMC Paper # 60
Ma. Carmen V. Penalosa

Miriam College
[email protected]
Abstract
“Ginhawa” is a fundamental Filipino motivation and aspiration in life and understanding it and
how it impacts on human resource management processes, particularly work motivation and
performance is essential if employers are to maximize the benefits of investing on its Filipino
workforce.
The paper defines this indigenous concept which is a common cultural thread across the country,
and presents its four critical dimensions: 1)respiratory-alimentary, 2) philosophical-religious, 3)
relational-communal, and 4) spacio-temporal dimension, particularly with regards to how these
dimensions play out or take shape in formal sector employment, serving either to fuel or quell
work motivation and performance. Ultimately, the paper calls for a reframing of human resource
management from its usual western orientation to placing “ginhawa” at the center of its processes
with programs designed to equally attend to the oftentimes neglected areas of relational-
communal, philosophical-religious, and spatio-temporal dimensions as much as the general
emphasis placed on the basic respiratory-alimentary dimension, valued in monetary terms.
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Nascent Academic Entrepreneurs’ Venture Emergence:
A Study in Critical Realism
8th NBMC Paper # 62
Bienvenido S. Balotro
University of the Philippines Manila
[email protected]
Abstract
This explanatory multiple case study research on nascent academic entrepreneurs’ venture
emergence adapts critical realism as a research philosophy and methodological approach. The
study seeks to provide a comprehensive explanation of the phenomenon of nascent academic
entrepreneurs’ venture emergence or successful venture creation of operational business ventures
arising from academic research output by nascent academic entrepreneurs from four Philippine
universities. Eight academic entrepreneurs from four universities: Manila Central University,
Adamson University, University of the Philippines (Manila, Diliman, and Los Baños), and De La
Salle University-Manila, are the subjects of the case study. The case study uses key person
interviews, site observation visits, description of product samples, and review of documents and
secondary literature to gather data and information. Data analyses are done by applying a critical
realist’s three-step method of retroduction. The final output of the study is a theoretical framework
that outlines a comprehensive explanation of the phenomenon of nascent academic entrepreneurs’
venture emergence in the three domains of reality, namely: the empirical, the actual, and the real.
Keywords: academic entrepreneur, critical realism, nascent entrepreneur, venture creation,

venture emergence
Introduction
In our present economic environment, the ability to translate research findings into
products and services through technology transfer and commercialization of research output is
critically important. In this way, universities and other institutions of higher learning are expected
to contribute to economic development through science and technology. The academic
entrepreneurs, the faculty, and researchers in the academe, who were able to commercialize their
research inventions are the major actors in this phenomenon.
At the forefront of this phenomenon are nascent academic entrepreneurs. Nascent academic
entrepreneurs are the academic entrepreneurs starting business ventures arising from research
inventions for the first time. The nascent entrepreneur has been described as pursuing an
opportunity, i.e., a possibility to introduce new products or services, serve new markets, or develop
more efficient production methods in a profitable manner (Casson, 1982; Shane, 2000)
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It is interesting to follow the events leading to the emergence of a venture of an academic
entrepreneur. It begins from the time that the academic entrepreneur aspires to bring his promising
research output to the market to the time that he can operate and sell to the market. It is the time
when the venture is most vulnerable that the nascent entrepreneur needs all the support that can be
obtained from the government, the industry, and other institutions to be able to start the venture.
This research about venture emergence of nascent academic entrepreneurs adapted critical
realism (CR) as a research philosophy and methodology.
Critical realism (CR) adapts a realist ontology which posits that a “world exists
independently of our knowledge of it” (Sayer as cited by Easton, 2010, p. 119; Miller & Tsang,
2010, p. 144). This implies that human knowledge captures only a small part of a deeper and vaster
reality which is why CR deviates from both positivism and constructivism. Positivism limits
‘reality’ to what can be empirically known (e.g., through scientific experiments). The same critique
applies to constructivist perspectives that view reality as entirely constructed through and within
human knowledge or discourse.
The use of CR in this research is compatible with the nature and objectives of this study.
CR applies a stratified ontology based on the three domains of reality assumptions (Bhaskar, 1975)
which enables it to study complex social events holistically.
CR ontological position is the basis of Bhaskar’s (1978) assumption of a stratified model

of three interrelated domains of reality: the empirical, the actual, and the real. The domain of the
empirical is the world of the human experience of events. At this level, events or objects can be
observed through human experience and are interpreted with the aid of common sense. The domain
of the actual refers to the level of social events which are the focal objects that critical realist
research investigates (Easton, 2010). These are the events whether or not we experience or
interpret them, and these true occurrences are often different from what is observed at the empirical
level” (Danermark et al., 2002, p. 20). Finally, the domain of real is the level of causal structures
and causal powers. These are the inherent properties in an object or structure that act as causal
forces to produce events (i.e., those appearing at the empirical level). Events are the result of
exercised generative mechanisms and causal powers embedded in a structure of entities in the
domain of the real.
In CR terminology, entities has certain ‘causal powers’ which refer to the things that an
object can do, or more broadly, its potentials, capacities, or abilities to act in certain ways and/or
to facilitate various activities and developments” (Lawson, 1997, p. 21). Hence, water can
extinguish a fire, and an entrepreneurial network can form the basis for a series of different
ventures over time. Critical realists make use of the term “mechanisms” to connote the ways that
the causal powers of an object are exercised. These mechanisms are sometimes described as
“generative”, in the sense that they can give rise to concrete phenomena, such as an event that we
might experience. However, activation of causal powers is not automatic, because it is dependent
on the presence of other conditions. As Sayer (2000, p. 58) noted, “a particular mechanism can
produce completely different actions at a different time, and inversely, the same event can have a
completely different cause.” A simple example to illustrate this is the case of two individuals who
might have similar capacities to become successful entrepreneurs, yet due to differing conditions,
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they may end up differently. Causal powers and generative mechanisms are not necessarily
observable; they exist irrespective of whether they have been exercised, detected, or become
manifested (Bhaskar, 1978). It is also possible that the causal powers and mechanisms are not
exercised at all.
Methodology
This is an explanatory multiple case study of the phenomenon of venture emergence of

nascent academic entrepreneurs adapting critical realism as a research philosophy and
methodology. The phenomenon was examined in the critical realist’s three domains of reality
namely: the empirical, the actual, and the real. The result of the study was presented in a theoretical
framework that gave a comprehensive explanation of the entrepreneurial event.
The unit of analysis of this holistic multiple case study was the phenomenon of nascent
academic entrepreneurs’ venture emergence. The structural entities, causal powers, and generative
mechanisms were identified tentatively from prior knowledge obtained from literature review and
a pilot study.
The multiple case study was conducted using semi-structured interviews of nascent
academic entrepreneurs from four Philippine universities, and their technology transfer officers in
the university. Additional research data and information were collected through site visit
observations, description of product samples, and review of documents and secondary literature.
The study utilized the critical realist’s analytical method of retroduction. The scope of the
period of the study was only during the process of the nascent academic entrepreneurs’ conception
of the idea of the venture to emergence. The study did not look into the sustainability of the
business venture established by the academic entrepreneurs.
There were eight cases of academic entrepreneurs investigated in the study from four
academic institutions, namely: Manila Central University, Adamson University, University of the
Philippines (Manila, Diliman, and Los Baños), and De La Salle University-Manila. The case study
followed the holistic multiple case study design as eight cases of nascent academic entrepreneurs
were included.
Pilot Case Study
A pilot interview was conducted before the main interviews of the academic entrepreneurs.
The purpose of conducting the pilot study was to develop the empirical research questions and
interview guides to be used in the study. Most importantly, the pilot study was done to test if the
hypothetical framework can support initial beliefs about possible social structures, causal power/s,
and generative mechanism/s that lead to the phenomenon being studied – venture emergence of
the nascent academic entrepreneurs. This information was necessary to be able to pursue the
research satisfactorily based on critical realist methodology.
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Analysis of Data
I applied the three-step critical realist research design to analyze the cases and develop the
causal explanations of the phenomenon under study. It is an iterative process whereby each step
of research affected the next step. First, the explication of events step described experienced
academic entrepreneurship venture emergence based on three stages of the successful venture
creation, namely: conception of business venture, organization or start-up, and venture emergence.
Then, academic entrepreneurs’ venture emergence as an experienced social event was abstracted
and re-described through the identification of internal and necessary entities.
Second, the retroduction step involved hypothesizing about the possible mechanisms or
structures capable of generating the experienced academic entrepreneurs’ venture emergence. A
preliminary hypothetical framework was developed after the pilot study where human capital and
social capital represented the inherent causal powers. This hypothetical framework was further
tested, developed, and refined at the empirical corroboration step to provide a relatively accurate
causal explanation of the phenomenon. See Figure 1.
Figure 1
Hypothetical Framework of Academic Entrepreneurs’ Venture Emergence in the Three Realms of
Reality
Note. Adapted from Hu (2018).

Second Step: Retroduction
Hypothetical Causal Explanation of Academic Entrepreneurs’ Venture Emergence
This step was directed towards providing preliminary causal explanations of the
phenomenon of nascent academic entrepreneurs’ venture emergence. This step was linked to the
pilot study that explored the potential existence of the social structures and causal power/s which
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led to the phenomenon or the social event. The pilot study fed initial information to the retroduction
to direct the study leading to the identification of the structure, causal power/s, and generative
mechanism/s associated with the occurrence of the event.
Hypothetical Framework
Figure 1 represented my hypothetical framework of the study based on critical research

philosophy and methodology. In the diagram, it was shown that the description of the phenomenon
of nascent academic entrepreneurs’ venture emergence, the empirical event, was moved from the
domain of empirical to the domain of the actual. This was accomplished by the process of the
explication of events. First, by describing the phenomenon of academic entrepreneurs’ venture
emergence as an experienced social event, in three phases: conception of business venture,
organization of business venture, and the emergence of the venture. Second, the experienced
academic entrepreneurs’ venture emergence was abstracted by the method of comparative case
analysis inherent to critical realism. This was accomplished by distinguishing the internal and
necessary themes from the external and formal themes obtained through comparing and
contrasting the narratives across different cases.
The hypothetical framework was developed first through a review of literature from which
I have identified and proposed the inherent causal power/s and the potential generative
mechanism/s which may lead to the social event or the phenomenon. Based on a critical realist
position and preliminary studies, I presented the hypothetical framework where I considered
human capital and social capital as inherent causal powers and motivation and socially- supportive
institutional environments as the potential generative mechanisms leading to the phenomenon of
nascent academic entrepreneurs’ venture emergence.
The Selection of Theories
The use of existing theories is essential in the retroduction process. Wynn & Williams
(2012) stated that retroduction is a creative research process where researchers may develop or
propose multiple theoretical explanations. Therefore, researchers must evaluate and compare the
explanatory power of different theoretical explanations available to be able to select theories that
may most accurately represent the “domain of real” in the study. This is described as judgmental
rationality in critical realism (Bhaskar, 1998b).
The power of CR derives from its use of explanatory framework to assess competing
scientific theories to arrive at plausible explanations to complex phenomena without closing the
door to other possible explanations.
Third Step: Empirical Corroboration
This final step aims to ensure that the proposed selected mechanism/s adequately represent
reality and have both sufficient causal depth and better explanatory power than an alternative
explanation for the focal phenomenon using the data from observations and experiences (Wynn
and Williams, 2012).
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Empirical corroboration is needed to overcome the tentativeness of inferences derived
through retroduction by attempting to validate the existence of the proposed mechanisms. In
critical realism (CR), the hypothesized mechanism is not only seen as a potential rationale linking
cause to effect. CR also seeks to verify that the mechanism/s was sufficient to produce the observed
effects, and that there is reason to believe that the retroduced mechanism was present (and possibly
enacted) in the generation of the given phenomena (Wynn & Williams, 2012).
The task in empirical corroboration is to identify the mechanism which exists (Bhaskar,
1975). Validation of these knowledge claims include the empirical search for either the mechanism
itself or its effects. This can be done by using data from empirical observations to assess the
proposed causal explanations from two perspectives: first, confirming that the proposed
mechanism is clearly and accurately described in terms of generating outcomes within the given
context; and second, that it offers better explanatory power than other potential mechanisms that
have been identified. Bhaskar describes this as the process “in which the reality of mechanisms
postulated are subjected to empirical scrutiny” (1975, p. 15).
Research and Discussion
Findings and Analysis – Explication of Events
The findings in the explication of events addressed the first research objective which is to explain
the phenomenon of nascent academic entrepreneurs’ venture emergence in the domain of the
empirical and the actual.
In this chapter, the profiles of the eight nascent academic entrepreneurs and of the business
ventures arising from their research inventions were presented. The chapter also includes the
stories of the ventures of each of the academic entrepreneurs from the conception of their ventures,
organization of the venture, and eventual emergence.
For the abstraction of academic entrepreneurship experiences, I used the method of

comparative case analysis approach guided by critical realist grounded theory process, as
suggested by Kempster & Parry (2011). This method of abstraction, as applied to critical realist
methodology, involves comparing and contrasting data per entrepreneurial stage from conception
of venture, organization, to venture emergence guided by prior knowledge, references from the
literature, and analysis of collected information. As a result, I identified three internal and
necessary entities as the essential constituents corresponding to each entrepreneurial stage from
conception of business venture, organizing the venture, and venture emergence namely: research,
venture creation, and customer orientation and institutional linkages, respectively.
Empirical Corroboration – Findings and Analysis
This chapter presents the findings from the empirical corroboration of the research
methodology. This part of the study discussed the causal powers and generative mechanisms that
are in the domain of the real that leads to the event, the venture emergence of nascent academic
entrepreneurs.
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In the language of critical realism, the nascent academic entrepreneur, was the entity who
operated in the social structure (e.g., in the university or academic setting and later on in his firm
environment). The academic entrepreneur possessed the causal powers (human capital and social
capital) which brought about the generative mechanisms in our model that led to the phenomenon
or social event of venture emergence. The human capital of the academic entrepreneurs in the
study consists of the general human capital (education and work experience) and specific human
capital (entrepreneurial, technical, and managerial capabilities) that were developed by the
academic entrepreneur through their education, training, and experiences. The social capital of the
academic entrepreneurs in the study consisted of their linkages with their universities, government
agencies, industry connections, and institutional support.
But according to critical realist philosophy, what gives rise to an event is not solely the
combination of human capital and social capital but the generative mechanism/s. In the case of
venture emergence (the event) in the study, I hypothesized that one of the generative mechanisms
was entrepreneurial motivation, the motivation of the academic entrepreneurs to start-up and
succeed in their ventures. This premise is supported by literature as individual motivation has been
related to the achievement of various start-up outcomes most notably the establishment of new
firms (Renko et al., 2012). Motivation is considered an important factor that distinguishes nascent
entrepreneurs who were able to establish an operating venture from those who were not.
Based on the cases of the academic entrepreneurs in the study, the source of motivation of
the academic entrepreneurs were not only due to their entrepreneurial traits (risk taking, locus of
control, entrepreneurial self-efficacy) but as influenced by perceptions of the probable outcomes
of their venture and personal expectations.
Another generative mechanism I was able to establish in the study was caused by socially
supportive institutional environments. Socially supportive institutional environments resulted
from the collaborative atmosphere created by institutions working to assist academic entrepreneurs
to enable venture emergence. Empirical evidence from the narratives of the nascent academic
entrepreneurs corroborates the proposed theoretical framework. The causal factors (causal powers
and generative mechanisms) found in the narratives of the cases were represented in the theoretical
framework.
The diagram in Figure 2 is the theoretical framework of venture emergence in the realm of
the real.
Conclusion
This research explained the phenomenon of nascent academic entrepreneurs’ venture

emergence by applying critical realism as a research philosophy and methodological approach.
Using the experiences of eight nascent academic entrepreneurs from four Philippine
Universities as the main source of empirical data, I came up with a theoretical framework that
explains the phenomenon of venture emergence of academic entrepreneurs in the three domains
of reality, namely: the empirical, the actual, and the real.
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Figure 2
Theoretical Framework of Venture Emergence in the Realm of the Real
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Bhaskar, R. (1998). The possibility of naturalism: A philosophical critique of the
contemporary human sciences (3rd ed.). Routledge.
Blundel, R. (2007). Critical realism: A suitable vehicle for entrepreneurship? Handbook of
qualitative research methods in entrepreneurship (pp. 49-74). Edward Elgar
Publishing. https://doi.org/10.4337/9781847204387
Carter, N.M., Gartner, W.B., & Reynolds, P.D. (1996). Exploring start-up event sequences.
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Casson, M. & Giusta, M. D. (2007). Entrepreneurship and social capital: analysing the impact
of social networks on entrepreneurial activity from a rational action perspective.
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https://doi.org/10.1177/0266242607076524
Danermark, B., Ekström, M., Jakobsen, L., & Karlsson, J. C. (2002). Explaining society:
Critical realism in the social sciences. Routledge.
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sm_in_Social_Sciences
Estay, C., Durrieu, F., & Akhter, M. (2013). Entrepreneurship: From motivation to start-up.
Journal of International Entrepreneurship, 11(3), 243-267.
https://doi.org/10.1007/s10843-013-0109-x
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Gartner, W.B. (1985). A conceptual framework for describing the phenomenon of new venture
creation. The Academy of Management Review, 10(4), 696-706.
https://doi.org/10.2307/258039
Hopp, C. & Stephan, U. (2012). The influence of socio-cultural environments on the
performance of nascent entrepreneurs: Community culture motivation, self-efficacy, and
start-up success. Entrepreneurship & Regional Development, 24(9-10), 917-945.
https://doi.org/10.1080/08985626.2012.742326
Hu, X.R. (2018). Methodological implications of critical realism for entrepreneurship
research. Journal of Critical Realism. https://doi.org/10.1080/14767430.2018.1454705
Kempster, S. & Parry, K. W. (2011). Grounded theory and leadership research: A critical
realist perspective. The Leadership Quarterly 22(1), 106–120.
https://doi.org/10.1016/j.leaqua.2010.12.010
Renko, M. & Freeman, M.J. (2017). How motivation matters: Conceptual alignment of
individual and opportunity as a predictor of starting up. Journal of Venturing Insights, 8,
56-63. https://doi.org/10.1016/j.jbvi.2017.06.003
Sayer, A. (2000). Realism and social science. Sage.
Shane, S. (2003). A general theory of entrepreneurship. Edward Elgar.
Wynn, D. Jr. & Williams, C. K. (2012). Principles for conducting critical realist case study
research in information systems. MIS Quarterly, 36(3), 787-810.
https://doi.org/10.2307/41703481
Yin, R. K. (2014). Case study research design and methods. Sage Publications, Inc.
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Leadership and Conflict Management Styles among Administrators
in a Catholic University
8th NBMC Paper # 63
Julie Anne Mary C. Cruz

Holy Angel University
[email protected]
Abstract
This study sought to determine the leadership styles of school administrators and their relationship
with their conflict management styles. It employed a descriptive-correlational and confirmatory
research design. Two instruments were used to gather the needed information. The Blake and
Mouton Managerial Grid Leadership Self-Assessment Questionnaire (2010) and the Rahim
Organizational Conflict Inventory –II, Form B were employed to assess the leadership and conflict
management styles respectively. Results show that the administrators are team leaders with more
Focus on People than Focus on Task. The data revealed that the administrators have a high
preference on the collaborating conflict management style with top managers being most
collaborative and low level managers as least collaborative. Findings show that significant
relationships exist between team leadership behaviors and collaborative, accommodating,
compromising and conflict management practices. Recommendations included the updating of the
administrators with the latest causes, theories, approaches and strategies of conflict management
through observation, role modeling, and skills training.
Keywords: leadership, conflict management, transactional leader, transformational leader
Introduction
For an organization to be successful, the employees of an organization must work

congenially in order to attain its strategic goals and objectives. Leadership is responsible in
maintaining harmonious work environment by exhibiting such behavior when dealing with
subordinates.The presence of emotional tensions and conflicts in the organization is one dimension
of organizational environment. Leaders react to problems, resolve crises, reward and punish
followers, provide encouragement and support to followers. The leaders may help to release
tensions, harmonize misunderstanding and deal with disruptive behaviors (Coleman, P.T.,
Deutsch, M., & Marcus, E.C. (2014). In the ideal and conducive environment it is important that
a leader is able to achieve organizational objectives by focusing on both the rational and emotional
aspects of conflicting issues while resolving disputes or conflicts that occur at any level in the
organizational hierarchy. Due to the primary role of leadership in the workplace and the intricacy
in understanding human resources, leaders need to give serious consideration in handling conflict
according to Smith & Tonidandel, 2003 in the study by Saeed, 2014. It was argued that the
employers’ perception of leadership styles has relationship with conflict management. Leaders are
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inclined to shape strategies in conflict management and in order to motivate people to work
together effectually.
Conflict management is significant in any organization because it has a crucial impact on

productivity and teamwork. Proper conflict resolution strategies applied by administrators in an
organization will help maintain a healthy work environment which enhances organizational
performance. Managers must be flexible in handling conflicts among their subordinates depending
upon the situation. There are different ways to manage conflict. There are times when it is may be
good to face it, or avoid it or just avoid it. Therefore, managers must be adept on the strategies to
manage conflicts within his realm of authority to prevent its destructive consequences.
Managers must be flexible in handling conflicts among their subordinates depending upon
the situation. There are different ways to manage conflict. There are times when it is may be good
to face it, or avoid it or just avoid it. Therefore, managers must be adept on the strategies to manage
conflicts within his realm of authority to prevent its destructive consequences.
Conflict management research involves conflict situation and the person – situation
interaction as stated by Knapp et al.(1988) in the study of Sehrawat and Sharma(2014). However,
it is believed that conflict behavior is determined by both situational and dispositional influences.
Conflict resolution requires specific leadership skills, problem solving abilities and
decision making skills. Although leadership is important in educations, researches on leadership
styles as determinants of conflict management styles are ambiguous, and the matter is still
inconclusive which necessitates more studies to determine the relationship. However, is claimed
as shown by literature that leadership styles remain constant over time and are presumed to be
significantly related to conflict management styles (Tahir, Shazia, & Anis-ul-Haq, 2014)
Cognizant of the significance of leadership as a basis of conflict management in the

operation of an organization, this research is intends to examine leadership styles of the
administrators as well as their concomitant conflict management styles. This study on leadership
and conflict management can guide leaders comprehend the nature of conflict and identify the
ways to successfully managed it. It can also enable leaders perceive its impact on employees. When
leaders know the dynamics of conflict management, they can control the consequences on how
their leadership can bring about positive resolution of conflicts. Similarly, evaluation of leadership
style can also lead to the information of a way in which leaders can communicate with others and
how they can change their behavior in order to achieve higher efficiency (Blake & Mouton, 1985).
This study is conducted in one of the largest universities in Region 3 founded in 1983. It
is a catholic institution which offers educational courses from K-12 to doctoral degrees. It caters
to students from almost all provinces of the region. It has currently an approximate population of
14,219.
Leadership is perhaps one of the most observed, yet least understood phenomena on earth
(Burns, in Abbasialiya, 2010). It is difficult to provide one specific definition of leadership because
of the extent of complexity of its task. The scope of leadership keeps on growing and several
definitions are still being developed by scholars, as stated by Bass (1985) in a study of McCleskey
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(2014). Leadership involves a type of responsibility aimed at achieving particular ends by
applying the available resources (human and material) and ensuring a cohesive and coherent
organization in the process (Ololube, 2013). Likewise, Mayowa (2009) defines leadership as the
ability to evaluate and or forecast a long term plan or policy and influence the followers towards
the achievement of the said strategy. Warren Bennis, once called the “leadership gurus” asserted
that leadership is the capacity to translate vision into reality. Indefinitely, leadership is different
from management because management is deals with short-term problems within an organization
while leadership covers a much wider scope.
A research which explored the factors influencing leadership style in small businesses in
Nigeria showed the size of an organization to be a critical determinant. It is therefore imperative
that as the outfit grows in size, the leaders must adapt to the needs of the growth. There must be
need to decentralized authority so as to make decision making more participatory and effective
(Nojimu, 2014). Thrash (2012) affirmed that there were no significant differences on the
leadership style and the year of service of school administrators. The research found no
relationship between the leadership style and the length of service of the administrators. Bersin
(2012) conducted a study to explore the difference of leadership style in developed economies and
emerging market leaders, particularly India and China. Findings showed that emerging economies
have a very strong focus and skill-set on operational execution. He attributes the differences to
cultural differences.
Some foreign and local researches deal intensively with the effect leadership style on
organizational goal attainment and satisfaction of employees. A study by Josanov-Vrgovic and
Pavlovic (2014) revealed that the principals’ people oriented style positively influences teachers’
in the areas school development, relationship with colleagues and teamwork and satisfaction. On
the hand, principals’ tasks-oriented style negatively influences teachers’ satisfaction in the areas
communication, school development and safety. Similarly, Dalluay and Jalagat (2016) confirmed
in their study that leadership styles significantly impacts both job satisfaction and performance.
Based on these findings they concluded that the company should continuously utilized and sustain
the participative leadership style which will promote employees’ productive performance and
satisfactory level of job satisfaction.
Organizations adapt to changes in the environment by facing major conflicts, addressing

them and deal with them at any level of organization. Conflict management skills are important
prerequisites for effective leadership. Conflict management is the process of regulating the
adverse aspects of conflict and at the same time increasing its constructive aspects. The aim of
conflict management is to enrich learning and group results, including efficacy in an organization
properly managed conflict can improve group outcomes. Conflict management requires such skills
as effective communication, problem solving and negotiating with a focus on interests (Rahim,
2011).
In the earliest research, Follet (1940) categorized five strategies of handling conflict:
domination, compromise, integration, avoidance and suppression. A number of conflict style
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inventories have been in active use since the 1960s. Most of them are based on the managerial grid
devised by Robert R. Blake and Jane Mouton in their Managerial Grid Model.
Blake and Mouton Conflict Management Styles. The conflict management styles proposed by this
framework are centered on two dimensions: (1) assertiveness (satisfying self-interest); and (2)
cooperativeness (satisfying the concerns of the other conflict party. Graphing these two
dimensions, Blake and Mouton (1991) and others have generated five corresponding conflict
management strategies
Literature reviewed in researches revealed that conflict management styles were applicable
in resolving conflict. The results regarding the conflict styles which bring about favorable
outcomes are almost similar and consistent. It is clear that flexibility, adaptability and a willingness
to compromise and solve problems are necessary for successful in handling conflict management
that results in harmonious organizational relationships. The ideal styles vary in the focus for self
or assertiveness and attention for others or cooperativeness. Chan, Huang, and Ng, (2007) declared
in a study by Smollan (2013) that conflict management style is needed to ensure positive attitudinal
outcomes for subordinates in the workplace thus creating a favorable environment and to win the
trust of employees, managers, particular. Managers should focus on solving the problems in a win-
win situation.
A few studies were conducted to investigate the conflict management styles among heads
of secondary schools. Farooqi and Aktar (2013) in their research study showed that crucial
difference between conflict management styles employed by school administrators in private and
public secondary schools. Results showed Integrating, compromising and to some degree obliging
styles were used according to the realities of secondary schools. The results also showed that
private schools resorted to compromising and obliging styles in contrast with public schools.
This result is similar with the study of Ghaffar, Zaman and Naz (2012), in which they
concluded that most school managers follow a compromising management conflict. Additionally,
they claimed that the difference was in using avoiding style of conflict management. They
confirmed the results of the study of Farooqi, Akhtar, Islam and Iqbal, (2013) that which exhibited
that Avoiding conflict management was widely used in new universities as differentiated from old
universities. A research undertaken by Saeed et al. (2014) proposed a framework to show the
correspondence of Rahim conflict management styles and the Bass and Avolio leadership styles.
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Figure 1
Rahim conflict management styles and Avolio leadership styles
In a fast constantly changing world characterized by continuous technological

development, globalization, along with evolving new relationships, administrators and leaders in
educational institutions need to cope with these changes to provide the most effective and relevant
services to their students. But in doing so, they need to handle the conflicts which concur with
these changes. An awareness and assessment of their leadership styles consistent with their conflict
management styles will allow them to improve their jobs more effectively for the benefit of their
clients and employees. It is in this regard that this study will attempt to assess effective leadership
and conflict management styles of administrators in a Catholic University for job performance and
organizational change. The results may guide them to realize better ways of achieving the shared
goals of the university in working with their subordinates.
Figure 2
Managerial Grid by Blake and Mouton showing the concern for production and concern for
people with the different managerial styles
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Figure 3
Rahim and Bonoma’s two-dimensional model of five styles of handling interpersonal conflict
The research paradigm shows the independent variables which consist of leadership styles
according to Blake and Mouton (1964). They are the Country Club, Team Leader, and Middle of
the Road, Impoverished and Task Management. The dependent variables are the conflict
management styles based on the Rahim Organizational Conflict Inventory II. They are
Collaborating, Accommodating, Competing, Avoiding, and Compromising. The relationship
between leadership and conflict management styles can be affected the levels of management of
the administrators, namely: top, middle and first level. The degree of difference of leadership and
conflict styles among the top, middle, and low level administrators will be computed. Additionally,
the extent of relationship between leadership and conflict management styles among the
administrators from the three levels will be determined.
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Figure 4
Conceptual framework shows the independent, intervening and dependent variables based on the
Blake and Mouton Grid and the Rahim Conflict Styles (2010)
This study is designed to determine the relationship between leadership styles of

administrators and their conflict management styles. It can serve as a guide in assessing
leadership/management and/or conflict management of administrators/managers in the
organization to further enhance their conflict resolution behaviors. The results may provide useful
inputs to the human resource department in setting up seminars, activities and policies designed to
equip them with necessary leadership skills as well as conflict resolution strategies. This may
enable them to learn ways to overcome conflicts in their respective departments which can lead to
a favorable school climate and ultimately improve working relationships among employees.
Furthermore, this research can serve as a catalyst for students and future researchers who may want
to explore similar areas of investigation on other types of organizations. Finally, this study can
contribute to the pool of researches on leadership and conflict management styles in the Philippine
setting which may be useful as reference to researchers.
Method
This study utilizes descriptive-correlational and confirmatory research to describe the

leadership and conflict management styles of administrators. Ultimately the research will
determine if there is a significant relationship between leadership and conflict management styles
of administrators. It will also investigate the differences/similarities of the leadership and conflict
management styles among the top, middle, and first level administrators. The research respondents
of this study are all administrators that belong to top, middle and first level of management. The
data gathered will be organized and tallied accordingly.
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This research attempted to investigate the leadership and conflict management styles
exercised by different levels of administrators in a Catholic university by using descriptive
statistics. The extent of their differences in their leadership and conflict management styles were
calculated by using Kruskal Wallis test and Chi Square. By using Spearman rho, the study sought
to find out if there existed a significant relationship between their leadership styles and their
conflict management styles. The findings showed that although all levels of administrators were
team players, top managers exhibited higher concern for people than the others while the lower
level managers displayed greater focus on task. Both middle and low-level managers claimed that
they highly encourage their teams to participate in decision making and try to implement their
ideas and suggestions. These behaviors empower their employees in order to facilitate team work
harmoniously. In contrast they were somehow worried that relationships will be risked rating the
behavior lowly. This may be the case because they are most closely connected with employees
and may relate with them informally and individually.
Findings on Concern for Task behaviors showed top and middle managers moderately
evaluated challenging task as enjoyable. Due to the nature of their position in the organization,
they are mainly involved in major and strategic decision making which make them more concern
and interested on broader conceptual and challenging tasks than in programmed and minor routine
task. Thus, such leaders ensure that complex tasks are completed with every detail accounted for.
The nature of their task as decision makers cannot be time bound which makes them poorly
evaluate efficient time management. These managers do not follow the conventional time
schedule. Mid and first level managers highly rated the aspect that accomplishment of goal or task
is most important. They may agree on this because they are both accountable to the top
administrators in the completion of their job. Perhaps, to them this goal is all about what makes
them feel accomplished. Since the functions of these managers involve assigning and scheduling
specific tasks, they find it moderately easy and comfortable to break large projects into small task.
Evidently, the administrators in this research were employing different leadership behaviors.
According to Yusuf, Muhammed, and Kazeem (2014) this was necessary to cope with different
circumstances which require which is most applicable in order to increase organizational operation
and efficacy. They further declared that using a single style was found ineffective for goal
achievement.
Conflict Management Styles of Administrators
The results of this study revealed that the administrators at all levels apply the collaborating
style of conflict management. This style is also known as integrating or problem solving style. In
a conflict situation both parties are willing to exchange information openly and thoroughly
examine differences constructively to reach an effective mutually accepted situation thereby
creating a win-win scenario. Collaborating style is both effective and appropriate in managing
conflicts. The top level managers also showed preference in utilizing the accommodating style
more than the other administrators. This style is also called smoothing or obliging. It involves a
low concern for self and high concern for others. The leaders using this style tend to satisfy the
needs of others while ignoring or sacrificing their own needs. It is thus non-confrontational
associated with playing down differences and focusing on relationships, cooperation and harmony,
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and therefore putting aside one’s needs to please the other party in a conflict situation (Wilmot &
Hocker, 2001). This was also used by mid and low level managers but not as often as the top
managers. Sometimes top managers were using the avoiding style more than the middle and low
level administrators who least apply it. The avoiding style has been called non-confrontational and
is associated with withdrawal or sidestepping situations based on having little or no concern for
oneself or others. It is uncooperative and indirect. Thus it is considered inappropriate and
ineffective (Guerrero, 2000).
Top level managers indicated a moderately high rating in getting along with the suggestion
of their subordinates. This is a affirming their high degree of collaboration with their subordinates
in decision making. The middle and low level managers, on the other hand, rated themselves as
low in this behavior as a result of their limited access to make final decisions in their respective
units. Again, all three levels manifested their high concern for people as leaders by evaluating
themselves as moderately high in trying to satisfy the expectations of their subordinates.
Organizational leadership sets the tone for conflict management. As team leaders, administrators
were averse to competing conflict management style by rating themselves to be low to very low
in applying the competing behaviors. The competing style is contrary to the collaborating
resolution of conflict which was found most prevalent among the administrators. The competing
mode is also referred to as the dominating conflict resolution involving high concern for self and
low concern for others It is noted however, that literature emphasizes the importance of all
managers employ different conflict management behaviors. This enables them to handle conflict
effectively. It is important that leaders avoid becoming committed to only one strategy but instead
they must develop skilled in different conflict management styles.
By conducting a Shapiro Wilk and the Kruskal Wallis tests, it was revealed that the mean
ratings of responses of the administrators from all levels of management had no significant
differences. This means that they evaluated themselves almost similarly in employing the different
behaviors of conflict management styles. The results of this study show that leadership style has
an impact or influence on conflict management. This implies that effective conflict resolution
mode can be employed when the appropriate leadership style is implemented. The implication of
utilizing the appropriate leadership style and conflict management style is to increase the
credibility and vitality of the catholic university in ensuring the teachings of the Catholic Church.
Conclusion
This research was sought to determine the relationship between leadership styles of
administrators and their conflict management styles. Data were collected from 63 top, middle and
low level managers of a catholic university. They were mostly females aged 26 to above 61years
old. They been occupying their current position for between 5 – 30 years and have been employed
in the university between 5 to more than 40 years. All levels of administrators were found to be
team leaders. Top level administrators rated relatively highest in concern for people while the low
level administrators were highest in focus on task. When data were further analyzed it was revealed
that although the administrators were categorized as team leaders, they were applying people or
task focus practices at varying degrees. There were instances when top and middle managers were
employing them at the same intensity while there were behaviors which were applied similarly by
top and low level managers or by middle and low level managers. However, on the whole no
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significant differences in the mean ratings of administrators on the leadership behaviors.
Apparently, the administrators where employing a mixture of people focus and task focus in
varying degrees.
The administrators revealed high preference on the collaborating conflict management

mode. Middle administrators were relatively most collaborative while low level administrators
were found least collaborative. Top level managers were also more collaborative than the other
two groups of managers. When the conflict management behaviors were ranked, they came out in
the same group of descriptive ranks on all levels of administration. However, the administrators
revealed that they were occasionally employing different modes of conflict resolution. Top and
low level managers revealed moderate preference on some accommodating behaviors. Although
considered a usual deterrent to organizational performance, certain competing behaviors were
tapped by the administrators. The avoiding style which is the least preferred by most
administrators was found being employed to some extent by the administrators specifically the
middle and low level managers. It is evident that the administrators were using different styles in
handling conflict. This enables them to be flexible and determine the most beneficial in the
situation. However, the Kruskal Wallis test showed that there were no significant differences
conflict resolution behaviors of the administrator. Finally, the study confirms that leadership styles
have an impact on the conflict management styles of administrators. Particularly, Concern for
People leadership was significantly correlated with the collaborating, accommodating, competing
and compromising styles of conflict management.
Recommendations
The results in this study showed that the administrators were consistent in the application
of teamwork leadership and collaborating conflict management. However, managing conflict
effectively requires many professional qualities and skills, and changing organizations to be
conflict-positive require on-going, persistent action. To become effective and appropriate conflict
manager, one must be equipped with knowledge and understand the causes, theories, approaches
and strategies of conflict management. This requires continuous learning and updating current
skills to cope with the changes in the environment. This can be done through observation. Role
modeling can be an effective learning strategy, providing managers with the skills and abilities
needed. Skill training and short courses can be provided to administrators to widen their existing
managerial skills and acquire a wide range of knowledge in managing conflicts. Trainings can
tackle how to use different styles of handling conflict in dealing with various situations effectively.
The findings in this research can be tested in future researches in other schools both private
and government, in organizations such as banking, telecommunications, hospitals, restaurants and
manufacturing. Other variables rather than leadership style may influence choice of conflict-
handling mode; therefore, more researches on individual and environment characteristics could be
conducted to gain better insights on how conflict management strategies are determined. Future
research can ascertain the influence of variables such as gender, age, culture, formal training and
industry type on the leadership role perspectives and conflict resolution styles of entrepreneurs.
Researches can be conducted on effective conflict management for job satisfaction and job
performance. They may involve the faculty and other employees of the organization. Likewise,
exploring issues with reference to personality factors and the characteristics of the organization
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through researches can be beneficial for more effective formulation of conflict management
strategies.
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The mediating role of marketing innovation to the marketing
competence and sustainable competitive advantage of the selected
small and medium enterprises
8th NBMC Paper # 64
Danzen B. Olazo
De La Salle University and Holy Angel University
Abstract
The purpose of this paper is to measure the mediating role of marketing innovation to the marketing
competence and sustainable competitive advantage. The study used a descriptive and quantitative
approach to test the hypotheses. The data was collected among 85 managers and/or owners of the
SMEs foodservice sector in Angeles City, Pampanga. The results of the research show that there
is a significant relationship between marketing competence, marketing innovation and sustained
competitive advantage of the firm. Furthermore, product and price innovation significantly
mediates the relationship between marketing competence and sustainable competitive advantage.
Keywords: Small and medium enterprises, marketing competence, marketing innovation,

sustainable competitive advantage
Introduction
There is growing attention to the essential role operated by SMEs to support growth
(Miranda & Miranda, 2018). SMEs face challenges from the intensified competition, the strength
to adjust to fast-changing market search, technological shift, and capacity limitations associating
with information, novelty, and creativity (Yoshino, 2016). For institutions to become more
sustainable, contentious, and develop their performance, they must have enough resources and
abilities to continuously develop innovative products as well as approaches (Ungerman, Dedkova,
& Gurinova, 2018). Gupta, Malhotra, Czinkota, & Foroudi, (2016) administered a study
determining the correlation between unique marketing in an industry and a growth in the
competitiveness of a firm.
Marketing modifications are intended at better addressing customer demands, presenting

different markets, or afresh placing a firm’s product on the market, to improve the firm’s sales
(Karthika, 2014). The effectiveness of a firm in a market specifies its aptitude to catch the target
market utilizing fresh and unique marketing approaches (Gupta, Malhotra, Czinkota, & Foroudi,
2016). Quaye and Mensah (2017) recognized these difficulties as either from the macro and micro
environment. As an effect of the challenging industry conditions, SME owners–managers
formulate possibilities when they are bound to “think outside the box” to produce unique and/or
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distinctive methods and tactics to satisfy the growth plans of untamed entrants, customer, and
administrative requirements. Despite the above reality, its influence on the capability of a business
to improve and maintain advantage among entrants has not yet acquired satisfactory observational
inquiry. In the study, Kamp & Parry (2017) confirmed that improved and unique marketing
techniques have a purposeful influence on increasing revenue and decreasing outlays, so
improving the effectiveness of the firm. Also, the research study aims to improve the prior
conducted literature by concentrating on the precursors of innovation in marketing and its impact
on building a sustainable competitive market (Prodromos, 2018). The paper intentions to link this
hole, examining the influence of innovation on the growth of SME. To do this, the research will
further explore the types of marketing innovation being conducted by SMEs; determine the
relationship between MC, MI and SCA; to measure the mediating role MI on MC and SCA and
assess whether SMEs have the marketing resources and capabilities to execute innovation in order
to achieve sustainable and competitive market.
The result of the study may contribute and be useful to the following: (1) Department of
Trade and Industry (DTI); (2) Small and Medium Enterprises (SMEs); (3) Future Researchers. The
study assessed the MC, MI, and SCA of the SMEs foodservice sector in Angeles City, Pampanga.
Only small and medium firms were included in the study since micro enterprises (e.g. sari-sari
stores and the like) may not adopt marketing innovation and have limited resources.
Literature Review
In this modern age, it admitted that the sustainability of a firm depends on its capabilities
and know-how based on information retrieval, the unification of systems and method, and
applicability of technology (Medase & Barasa, 2019). The emerging perils of competition,
engagements of consumers, and their fast-changing requirements make it more important that
businesses continuously develop their business. SMEs need to contemplate on continuously
improve product design and packaging, pricing schemes, retail location, promotional approach,
production costs, delivery schedules, relevance, and productivity in all systems (Mbizi et al.,
2013). In this regard, marketing innovation is a modification to increase the marketing method.
Based on the literature that it is essential to maximize firms' competitive edge and perform better
with other competitors, the business must search and utilize the various innovation to unique
products, pricing scheme, place and distribution, and brand positioning (Na, Kang, & Jeong, 2019).
It also includes the understanding of the business to assign and create the assistance and
capabilities of the business fit to the modern market. Tamayo, Ruiz, & Verdu, (2010) said that
such improvement of product and service continues to aid and support, the firms by the
combination of different means. Moreover, the improvement of product offerings can be further
strengthened, and continuously improved through the corresponding support of the firm
The firm's status and performance can be strengthen and improved by improving firms'
capability in the connection between MI and SCA (Ejrami, Salehi, & Ahmadian, 2016). Therefore,
change methods are recommended as an imperative requirement for a sustainable competitive edge
and the final purpose of marketing innovation is in enhancing the use of the firm and matching the
need of customers (Na et al., 2019).
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Na, Kang, & Jeong, (2019) affirmed that the concept of SCA links to delivering superior
performance utilizing the support and capacities of the firms. It shows the capability to create more
favorable conditions and tremendous value for customers based on its greater resources and
capabilities. Jaakkola et al., (2020) asserted that SCA is fulfilled by understanding results and the
firm's capabilities that are good, different, hard to replicate, and important. The accomplishment
of a firm that will improve and grow more as time advances because the firm will have more
versatility, the capability to utilize resources, and the continuous development of product offerings.
Since the SCA of the firm can be improved and generated based on its resources and capabilities.
In the progress of the fundamental connections between the variables of the research, the
theoretical framework of this research was based on the influential theory Resource-Based View
of the firm theory was integrated. The RBV is a foundation in strategic management research that
has been used and applied to various researchers in studying management principles and concepts.
This theory is to examine the resources of a firm that have the potential to develop and sustain a
competitive edge and, in turn, superior performance among firms (Barney, 2007; Barney, 2001;
Barney & Arikan, 2001; Barney & Hesterly, 2010; Sheehan & Foss, 2007). The RBV objectives
to describe the in-house resources of a firm’s continued competitive edge (Kraaijenbrink,
Spender, & Groen, 2010). Also, this theory discusses how to obtain a sustainable competitive
advantage by creating and utilizing new product development of the organization. By giving
excellent service to consumers (Nuryakin, 2018), price innovation, retail/distribution innovation,
and promotion innovation (Nkemkiafu et al., 2019). Wade and Hulland (2004) debate that
businesses have possessions, a subcategory of which allow them to attain competitive lead, and a
subsection of those that lead to excellent long-term performance.
According to (Morgan, 2011) the achievement of the firms sustainable performance and superior
edge among firms is managed by marketing skills and resources. Marketing capability is
intimately linked to understanding capabilities that generate innovation related to maintaining
firms’ market success.
Conceptual framework
The conceptual framework of the study (Figure 1) illustrates that small-scale and medium
scale enterprises own different promotional means such as economics, supplies, workers (Saunila
et al., 2014) professional experiences, capabilities, information, licenses, and assets (Remeikiene
and Startiene, 2009) associated to building buying innovation enterprise (Abdelrahman, 2012).
Firms’ capabilities also cover regular methods, ideas, approaches, systems and services, and
compliance to modify (Miller et al., 2002). With regards to the necessity to set goals for the
research of resources and competences, this inquiry will concentrate on employees, technology
application, economics, plans and policies, marketing strategies, and flexibility to adapt (Santos-
Vijande, Sanzo-Pérez, Trespalacios Gutiérrez, & García Rodríguez, 2012).
In this research, the researcher will follow the recommendation that effective integration
of marketing competence builds blocks of core capability to produce innovative marketing
strategies towards the sustainable competitive advantage of SMEs (Barney, 1991; Genç et al.,
818 | P a g e
2013; Jiao et al., 2010; Miller et al., 2002). The ability to innovate depends largely on the marketing
capabilities and resources of SMEs to achieve a sustainable competitive advantage, shown in
Figure 2.
Figure 1
Conceptual framework
General Assumption
Generally, the research questions and hypotheses were derived from the most salient
findings of the literature, particularly that of Quaye, D.M., and Mensah, I. (2017). The main
research question and its corresponding hypotheses, which are based on the findings of the
literature review, is stated as: What is the relationship of the independent variables (marketing
competence: resources and capabilities) on dependent variables (marketing innovation: product
design innovation, price innovation, promotion innovation, and retail innovation)? What is the
relationship between the independent variables (marketing innovation: product design innovation,
price innovation, promotion innovation, and retail innovation) on dependent variables (sustainable
competitive advantage)? Hence, it is hypothesized that: H1. There is a positive relationship
between MC and MI? H2. There is a positive relationship between MI and SCA? H3. MI mediates
the relationship between MC and SCA?
Methods
The study used descriptive correlational using a quantitative approach since the entire
paper revolves around testing the hypotheses and examining the relationship of variables. The
paper objectives is to measure the relationship between marketing competence and marketing
innovation, the impact of marketing innovation and SCA, and the mediating effect of marketing
innovation that strengthens the relationship between marketing competence and sustainable
competitive advantage. The researcher used respondents from different small and medium
businesses in Angeles City, Pampanga. The list of SMEs in Angeles City, Pampanga showed that
there was a total population of 731 small and medium enterprises. Using a sample size calculator
by Raosoft Software with a 95% confidence level and 5% margin of error, the derived sample size
of this study was 253 respondents. However, due to time constraints and non-response due to the
refusal of other respondents, the margin of error was increased to 10%. Therefore the computed
819 | P a g e
sample size for this study was 85 SMEs. For the computation refer to Appendix B. The research
questionnaire was adopted from Quaye & Mensah, (2019). The questionnaire was divided into
four (4) parts: part one (1) demographic profile of the respondents, part two (2) marketing
competence, part three (3) marketing innovation, and part four (4) sustainable competitive
advantage. The questionnaire was developed through Google forms as the main instrument of
collecting primary information from respondents.
To establish the content validity of the survey questionnaire, the researcher conducted a
pretest of the survey form to 20 business owners/managers using Cronbach’s α (CA), before the
conduct of the survey. They were not included in the sample size. The result of the reliability test,
therefore, was 85.28% which signifies the validity of the said research instrument. The said result
is attached as Appendix C. The instrument used in the study scored an overall Cronbach's alpha
of 82.73%. The reliability rates reported were within the range of 0.95 and 0.68 over the satisfying
levels of 0.70 as suggested by CA (Cronbach, 1951; Hair et al., 2013. Survey questionnaires were
distributed to the owners and managers of the selected enterprises. The questionnaires were
personally distributed while some were sent through electronic-mail, and lastly through Google
forms. The data were collected and tabulated, analyzed, and interpreted using Jamovi Software.
Result
Descriptive statistics of respondents
Table 1
Demographic characteristics of respondents
Characteristics Item Mean SD Frequency Percent
Age 29. 7.8

5 3
Years of operation 8.3 8.6

7 2
Number of 21. 19.

employees 2 1
Gender Male 45 52.9
Female 40 47.1
Total 85 100
820 | P a g e
Level of education Vocational 1 1.2
High school 2 2.4
High school graduate 6 7.1
College level 19 22.4
College graduate 41 48.2
Master’s level 11 12.9
Master’s graduate 5 5.9
Total 85 100
Job position Owner-manager 16 18.8
General manager 12 14.1
Supervisor 32 37.6
Non-managerial 25 29.4
Total 85 100
Nature of business Bakeshops/bakery 14 16.5
Bars 3 3.5
Cafes/coffee shops 13 15.3
Fast-food chains 16 18.8
Food kiosks 3 3.5
Restaurants 35 41.2
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Take-out and delivery stores 1 1.2
Total 85 100
Firm's size (assets) Small (3,000,001-15,000,000) 81 95.3
Medium (15,000,001-100,000,000) 4 4.7
Total 85 100
Mean and standard deviation of construct

Table 2
Construct mean and standard deviation
Constructs Mean SD Cronbach’s
α Verbal
Interpretation
Marketing competence 4.23 0.722 0.8889 Highly

competent
MC1 4.19 0.893 0.8709
MC2 4.06 0.943 0.8673
MC3 4.25 0.925 0.8670
MC4 4.49 0.750 0.8866
MC5 4.31 0.845 0.8855
MC6 4.08 0.929 0.8304
Product design innovation 4.29 0.808 0.8679 Highly

innovative
PDI1 4.41 0.849 0.8522
822 | P a g e
PDI2 4.22 0.993 0.8416
PDI3 4.33 0.956 0.8140
PDI4 4.46 0.839 0.8440
PDI5 4.01 1.120 0.8455
Price Innovation 4.10 1.22 0.7719 Quite

innovative
PRI1 3.86 1.220 0.7160
PRI2 4.15 0.906 0.6566
PRI3 4.18 0.978 0.7125
PRI4 4.22 0.956 0.7806
Retail Innovation 4.03 0.939 0.8756 Quite

innovative
RI1 4.38 0.963 0.8596
RI2 3.55 1.380 0.8364
RI3 3.87 1.390 0.8285
RI4 4.32 1.050 0.8376
Promotion innovation 3.99 0.966 0.8083 Quite

innovative
PMI1 4.28 1.030 0.7370
PMI2 3.92 1.200 0.8404
823 | P a g e
PMI3 3.98 1.160 0.6624
PMI4 3.76 1.320 0.7788
Sustainable competitive advantage 4.44 0.678 0.9042 Highly

evident
SCA1 4.48 0.766 0.8905
SCA2 4.52 0.717 0.8805
SCA3 4.49 0.826 0.8925
SCA4 4.39 0.803 0.8808
SCA5 4.47 0.765 0.8822
SCA6 4.34 0.853 0.8841
SCA7 4.44 0.778 0.9025
SCA8 4.46 0.853 0.8852
SCA9 4.32 0.759 0.9064
SCA10 4.45 0.866 0.9359
Relationship of variables
Table 3
Path relationship
Constructs Hypothesis Result Spearman’s rho Significance
824 | P a g e
MC ↔ MI H1 Strongly positively correlated 0.710 p<.001
MC ↔
PDI H1a Moderately positively correlated 0.637 p<.001
MC ↔
PRI H1b Moderately positively correlated 0.645 p<.001
MC ↔ RI H1c Moderately positively correlated 0.648 p<.001
MC ↔
PMI H1d Moderately positively correlated 0.515 p<.001
MI ↔
SCA H2 Moderately positively correlated 0.672 p<.001
PDI ↔
SCA H2a Moderately positively correlated 0.548 p<.001
PRI ↔
SCA H2b Moderately positively correlated 0.614 p<.001
RI ↔ SCA H2c Moderately positively correlated 0.631 p<.001
PMI ↔
SCA H2d Moderately positively correlated 0.497 p<.001
Note. * p < .05, ** p < .01, *** p < .001
Regression Analysis
Table 4
Model Fit Measures – MC on MI
Overall Model Test
Model R R² F df1 df2 P Decision
MC on MI 0.753 0.568 109 1 83 < .001 Accepted

H1
825 | P a g e
MC on PDI 0.711 0.506 84.9 1 83 < .001 Accepted
H1a
MC on PRI 0.679 0.461 70.9 1 83 < .001 Accepted

H1b
MC on RI 0.661 0.437 64.5 1 83 < .001 Accepted

H1c
MC on PMI 0.555 0.308 37 1 83 < .001 Accepted

H1d
Table 5
Model Fit Measures - MI on SCA
Overall Model Test
Model R R² F df1 df2 P Decision
MI on SCA 0.7 0.49 79.9 1 83 < .001 Accepted H2
PDI on SCA 0.678 0.46 70.6 1 83 < .001 Accepted H2a
PRI on SCA 0.671 0.45 67.8 1 83 < .001 Accepted H2b
RI on SCA 0.593 0.351 45 1 83 < .001 Accepted H2c
PMI on SCA 0.487 0.237 25.8 1 83 < .001 Accepted H2d
Test of Mediation
Table 6
Path relationship
Constructs Hypothesis ß pvalue Mediating Effects Result
0.003
MC → MI → SCA H3 0.247 Complementary Partial Mediation Supported
MC → PDI → SCA H3a 0.217 0.003 Complementary Partial Mediation Supported
826 | P a g e
MC → PRI → SCA H3b 0.211 0.002 Complementary Partial Mediation Supported
0.120 0.062
MC → RI → SCA H3c Direct only (No mediation) -
MC → PMI → SCA H3d 0.0603 0.219 Direct only (No mediation) -
Note. * p < .05, ** p < .01, *** p

< .001
Summary of the study and hypotheses testing
This research study aims to investigate fifteen hypotheses, showing the relationship
between MC, MI, and SCA and the mediation effect of MI that influences the relationship between
MC and SCA. Obtained on the result of the study, completely the hypotheses were verified and
validated. Earlier investigations (Walobwa et al., 2013; Sudarmiatin and Suharto, 2016; Woschke
et al., 2017) have discovered that key MC is important in improving MI to support industry lead.
Conclusions from this study show that marketing competence significantly correlated with
marketing innovation (H1), PDI (H1a), PRI (H1b), RI (H1c), and PMI (H1d). The result of the
study indicates that the firm is highly competent in identifying resources and capabilities and
highly innovative in developing and improving product design/packaging, new pricing schemes,
retail concepts, and promotional programs to achieve superior performance over time.
This investigation further discusses that utilizing marketing competence (resources and
capabilities) provides an accumulative development and growth in the competitive advantage of a
business. Also, prior investigations (Awan and Hashmi, 2014; Haq et al., 2008; Osei et al., 2016;
Porter and Advantage, 1985; Chuwiruch et al., 2015) have discovered a meaningful relation
between MI and SCA, likewise, this study also found that marketing innovation (H2), PDI (H2a),
PRI (H2b), RI (H2c), and PMI (H2d) significantly correlated and provide a sustainable market
advantage for SMEs in Angeles City, Pampanga. Hence, the result means that utilizing key
appropriate resources and capabilities are important to sustaining firm’s success and even
development and advance on it (O’Cass and Ngo, 2011).
Moreover, this study also tested the mediation effect of MI that influences the relationship
between MC and SCA. Most of the hypotheses posited were supported. Marketing innovation
(H3), product design innovation (H3a), and price innovation (H3b) significantly mediates the
relationship between marketing competence (MC) and sustainable competitive advantage (SCA).
However, retail innovation (H3c) and promotion innovation (H3) in the model did not mediate the
relationship between MC and SCA.
827 | P a g e
Conclusion
The main purpose of this research investigation was to measure how marketing competence
influences SCA and examine how SCA can be obtained through MI in SMEs following the Theory
of Resource-Based View (RBV) as its theoretical framework. The key finding indicated that
marketing competence significantly influences marketing innovation, as well as a sustainable
competitive advantage, which can be achieved through marketing innovation. In this study, the
researcher analyzed the relationship between MC and MI as an approach to achieve a sustainable
and competitive market. The paper concludes that firms should be highly competent in terms of
an adequate number of people in place, use of new technology like updated information software,
sufficient financial funds, continuous development of marketing plans and programs, and ease in
adapting to change. This primary capability is the foundation for sharpening a business's
competitive advantage and it leads brand standing, business growth and advancement, and
marketing tactics.
Correspondingly, marketing resources and capabilities impact on MI, assisting with the
view that selling and buying is an initiator of modification movement in the company (Hutt et al.,
1988). MC is vital for distinguishing goods from those of opponents and for attaching firms with
clients. These competencies establish business opportunities for searching macro and micro
information, changing to green alterations, improving the level of variation, and acknowledging to
consumer requirements. MMC is imperative in building and developing effective connections
between industry and customers through strengthening addition completion (Egbetokun, 2015;
Hauser et al., 2006; Ren et al., 2015; Vorhies et al., 2009). The conclusions show that MC has a
perceived-direct and matched impact on SCA. Also, the conclusions show a direct positive impact
of marketing resources on firm performance, the study further shows that MC and performance
supervision support a firm’s ability to understand more business possibilities for the unique goods
improvement. Also, MC could let the business to influence the capabilities and resources of
companies for worth creation or to increase the worth of goods, services, or even business by
further letting businesses to hasten and calculate customer-specific and hidden charges. These
capabilities are deliberated to enable the capability of the businesses to introduce either essential
innovative products or suggestively better-quality existing products for meeting the needs of their
customers. Marketing competences vigorously influence and strengthen the outcome of
globalization on business innovation performance. Additionally, MI practices such as unique and
improved product ideas and boxes, different brand positioning, tactics, and cost systems are drivers
to achieving sustainable competitive advantage. Innovative product promotion spurs unique
offering (Gunday et al., 2011; Kanagal, 2015) by making information among current and possible
consumers (da Costa et al., 2018; Hills et al., 2010; Slater et al., 2014; Wang and Rafiq, 2014).
Moreover, variation is expected to go with an overview of innovative products; subsequently, they
are likely to necessitate new marketing methods as well (Gunday et al., 2011).
Attaining and sustaining a competing edge for greater performance continues powerful for
advanced businesses in the modern era (Chen and Huang, 2009). Therefore, the increasing
knowledge-based building of rivalry, instructions, and guidelines of the businesses to attain and
improve the capabilities that will give them an excellent advantage over their competitors in the
marketplace (Murray and Chao, 2005). For new start-up businesses, they can explore product
improvement to attain competitive advantage and keep this advantage (Estrada et al., 2016).
828 | P a g e
Recommendation and practical implication
The paper suggests a support instrument to offer vital data on different categories of
innovation to the foodservice sector SMEs so that they can embrace and implement new innovative
methods in their practices. SMEs need to evaluate their concentrations and vulnerabilities to build
their competing edge and straighten with the way customers perform buying choices. Small-scale
and medium-scale businesses are delaying online selling selection and are not compelling in
promoting and achieving online marketing plans. The paper recommends that SMEs in foodservice
businesses should prioritize their promotion innovations to SCA. Additionally, innovative
promotional tactics such as green advocacy and promotion, goods re-branding, and digital
platforms are vital to maintaining market excellent. SMEs should organize more and more
seminars and related online programs to make people understand how marketing can be more cost-
effective and can help them to develop the business with more effectiveness and also provide a
free demonstration of online marketing courses to create awareness among them. SMEs require to
strategically plan on a short-term objective and long-term plan of the firm. This strategic move
requires collaboration with online/virtual marketing specialists or government agencies that can
encourage SMEs on the best approaches, tactics, vehicles, channels, and a way to achieve.
Collaboration with appropriate government agencies like the Department of Trade and Industry
(DTI) and the Department of Science and Technology to assist them in the possible improvement
of their enterprise and to identify potential market opportunities for them to explore and maximize
their digitalization. These government agencies are willing to assist SMEs who are not yet fully
online and embrace business innovations through the use of technology. SMEs need to guarantee
that they have the appropriate tracking tools and devices in place to measure digital marketing
performance. These are the possible tracking mechanisms: Search engine referral, Page views this
metric measures several pages each visitor to your site looks at.
Future researchers may also explore other core competencies such as quality, customer
service, and value to customers towards sustainable competitive advantage. It would be fascinating
to explore why SMEs regarded organization culture as under control determinants for
technological innovation by adding or only thinking non-technological innovation. SMEs should
hire experienced staff. Innovative designs can be introduced within the company. Organizational
structures should be tailored to boost creativity and innovation amongst SMEs. Future studies may
also opt to explore and investigate large scales such as micro and large enterprises in Angeles City,
Pampanga, and other industries like manufacturing, agriculture, and fishing, real estate, retailing
and wholesaling, and others.
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832 | P a g e
Where lies the competitive advantage of the Pili processors of
Camarines Sur, Bicol, Philippines?
8th NBMC Paper # 65
Ma. Cresilda M. Caning

Central Bicol State University of Agriculture
[email protected]
Abstract
Pili (Canarium ovatum) is considered by Bicolanos as its flagship commodity and their tree of
hope because of the different industrial, commercial, environmental, and nutritional benefits from
its roots, trunks, branches, leaves, saps, and fruits discovered through the years possibilities
(BCARRD, 2010). However, despite its importance as a commodity, the industry still suffers
from constraints such as the limited supply of superior quality planting materials, inadequate
marketing systems, and unavailability of cost-saving postharvest and processing facilities, high
cost of transportation, drastic fluctuation in prices, and the lack of appropriate credit support to
farmer producers (Ebora, Eusebio,Pelegrina, and Alaban, 2017). Knowing the importance of the
commodity to the region, this research performed a value chain analysis to determine the local
industry’s source of competitive advantage so that firms involved in the chain can better
understand how to sustain a collaborative chain relationship. It is important to study the value
chain of pili to allow for a disaggregated analysis of the resources the players possess and
understand what their potential sources of competitive advantages are. Specifically, this study
determined the value-adding activities and financial performance of the Pili processors from the
province of Camarines Sur, Philippines, and explored their sources of comparative advantage.
Results showed that, at present, the Pili farmers enjoy cost advantages as their competitive edge
while the Pili processors of the province use differentiation as their advantage. The smallholder
producers and processors may enjoy valuable benefits, but it is not rare, it is imitable, and it is
substitutable, implying the need for strengthening collaborative interaction relationships among
the different chain players.
Keywords: value chain, Competitive advantage, pili value chain analysis, pili processors
833 | P a g e
E-commerce: Micro, Small and Medium Enterprise (mSME)s
Gateway to Sustainable Competitive Advantage
8th NBMC Paper # 66
Ma. Teresa B. Lirag, Ma Cresilda M. Caning, and Josephine F. Cruz

Central Bicol State University of Agriculture
[email protected]
Abstract
E-commerce is increasingly perceived by mSME’s as a strategy for rapid growth. To determine

whether the local mSMEs are ready for e-commerce adoption, this project aims to provide an
overview of the available ICT hardware mostly used by the mSMEs, determine their readiness by
evaluating the perceived barriers and incentives to e-commerce adoption, and assess how they use
e-commerce for their product promotion activities A survey of 96 MSME’s revealed that they are
still at the early stages of e-commerce adoption. Further, using the Technology-Organization-
Environment (TOE) framework initially developed by Tornatzky, Fleischer, and Chakrabarti
(1990), results revealed that the local mSMEs have differing perceptions with regards to the
incentives and drivers of e-commerce. Results further revealed some critical success factors for e-
commerce adoption such as the availability or adequacy of existing technology and tools, viable
market or customer base for e-commerce, projected profitability of e-commerce, perceived value
or relevance to the business, and company’s willingness to adopt new technology. On the other
hand, respondents perceived that cost to set-up and access to capital for the setting-up of the
technology are important barriers to e-commerce adoption. Result of the study further showed
that while all respondents have access to internet technology, only 4 % have websites for the
promotion of their products and about half have no definite plans of establishing their websites.
However, it is worth noting that 70% of the SMEs are already doing online business through social
networking sites. To take advantage of the benefits of e-commerce, the mSMEs need to invest in
the required ICT infrastructure and for the owners to commit to digitalization. The mSMEs should
also be taught the use of social media for promoting their products; use of data analytics to analyze
their performance; and use the different online platforms to serve their different market and
stakeholders. Given the cost for e-commerce adoption, it is further noted that any initiative
towards increased e-commerce adoption and utilization should contribute to value-addition for
their businesses and should be operationally feasible.
Keywords: e-commerce, mSME, internet technology, social networking, product promotion
834 | P a g e

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CONFERENCE

The Emergence of the Fourth Industrial Revolution: Mediating Effect of Hyperconnectivity on

Impacts of Employee Empowerment and Organizational Agility on Employee Productivity: The

Determining the influence of consumers’ level of involvement on communication message

Robotics Process Automation: Adoption in Accounting ............................................................ 155

Ignatian Pedagogy in Entrepreneurship Courses: Innovations in Content and Delivery............ 227

Enhancing the Performance Management System of Social Enterprises ................................... 249

Gen Z Shopping Behavior during this Pandemic ....................................................................... 314

The Diverse Challenges and Impact of Multiculturalism in a Collaborative Online International

Compassion and Social Entrepreneurial Intentions in Times of Covid-19................................. 378

Knowledge Management Model for Implementation and Evaluation ........................................ 428

Academic Entrepreneurship in the Philippines: The Interplay of Absorptive Capacity and

Posner, B.Z (1992) Person-Organization Values Congruence: No Support for Individual

A Neo-Classical Economic Theory: Leveraging Underground Economy ................................. 532

An Assessment of Recruitment and Selection of Talents in Restaurants of Iligan City............. 554

Being Fully Human: Reflections on the Journey to Wholeness ................................................ 585

Filipino Consumers’ behavior on CSR-driven marketing efforts: A study on consumers’ buying

Philippine entrepreneurial framework conditions: A fresh look at the Global Entrepreneurship

Regulating the Use of Social Media Data in Employee Selection.............................................. 743

Effect of Liquidity, Profitability, and Leverage on Firm Value of Philippine Publicly-listed

E-commerce: Micro, Small and Medium Enterprise (mSME)s Gateway to Sustainable

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1. What college degrees do employers value the most?

Frequencies of Years of Existence

What college degree do employers value the most?

What are the necessary attitudes needed by employers in Ilocos Norte?

Dependability 1.169 3 14.2 0.356

Positive 1.166 3 14.2 0.357

Management Implications and Future Research Direction

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1. Ayala Corporation (AC) 16. LT Group, Inc. (LTG)

𝑧 = 𝑑1+ + 𝑑2− (8)

𝑑1− is the extent of underachievement for tracking error,

Sensitivity Analysis. A process of recalculating outcomes under alternative assumptions

a) Scenario 1: Equally Weighted Stocks

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Goal Programming Model Formulation. The goal programming model is shown as

a) Scenario 1: Equally Weighted Stocks

Scenario 1: Equally Weighted Stocks

Portfolio PSEi (Benchmark) Goal Programming Model

Stocks Weights (%) Amount (Php)

Scenario 3: Setting a Lower Bound Constraint

Scenario 4: Recalculation of Optimal Stock Mix

Stocks Weights (%) Amount (Php)

Portfolio PSEi (Benchmark) Goal Programming Model

Portfolio Performance of the Optimal Portfolio. Table 11 displays the comparison of

Portfolio PSEi (Benchmark) Goal Programming Model

As to the determination of the robustness of the model is concerned, sensitivity analyses

Limitations and Recommendations for future research

Melvin V. Moraga, Joshua Miguel Avante, Patricia Marie Ibay,

Keywords: Digitalization, Hyperconnectivity, Competitive Advantage, Innovations, Service

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