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"SME" stands for small and medium-sized enterprises. SMEs in most developing countries
are characterized by scarcity of capital resources and lack of management skills and
capacity. (Olutunla, 2008) SMEs in the Philippines are governed by RA 9178, an act to
promote the establishment of Barangay Micro Business Enterprises (BMBEs) providing
incentives and benefits. Furthermore, SMEs are governed by RA 6977 as amended by RA
8289. The RA 6977 is the Magna Carta for Small Enterprises, an act to promote, develop
and assist small and medium scale enterprises through the creation of a Small and Medium
Enterprise Development (SMED) Council, and the rationalization of government
assistance, programs and agencies concerned with the development of small and medium
enterprises, and for other purposes. (DTI-NCR, 2014)
According to Ayozie (2008), the common criteria used to classify industries includes:
number of employees, scales of investment, income generated, and turnover. There are two
operational definitions of small and medium enterprises in the Philippines:
employment-based definition and asset-based definition. The former is the most
widely-used in the country and it defines the different size categories. Small enterprises are
composed of 10-99 employees, medium enterprises have 100-199 employees and large
ones have 200 or more employees. Enterprises with 1-9 workers are considered as micro
enterprises and they are not covered by the SME definition.
The SME Development Council defined the size categories in terms of total assets as
follows: small enterprises have P3-15 million, medium enterprises have P15-100 million
and large enterprises have P100 or more worth of assets. Enterprises with P3 million or
