Impact of supply chain disruptions during the COVID-19 pandemic to micro, small and medium enterprises in Davao Region, Philippines
| DOI | https://doi.org/10.1108/JABS-05-2021-0216 |
| Published date | 11 January 2022 |
| Date | 11 January 2022 |
| Pages | 568-586 |
| Subject Matter | Strategy,International business |
| Author | Nikko Longjas Laorden,Jon Marx Paredes Sarmiento,Glory Dee Antero Romo,Thaddeus Retuerto Acuña,Imee Marie Añabesa Acopiado |
Impact of supply chain disruptions during
the COVID-19 pandemic to micro, small
and medium enterprises in Davao
Region, Philippines
Nikko Longjas Laorden, Jon Marx Paredes Sarmiento, Glory Dee Antero Romo,
Thaddeus Retuerto Acuña and Imee Marie Añabesa Acopiado
Abstract
Purpose –This paper aims to investigate the impact of supply chaindisruptions on the operations and
sales performance of micro, small and medium enterprises (MSMEs) and the adoption of ‘‘green’’
technologyduring the COVID-19 pandemic in DavaoRegion, Philippines.
Design/methodology/approach –A business impact survey was conducted among 113 MSMEs in
Davao Regionthrough the Regional Inclusive Innovation Centerparticipated by the industry, government
and the academefrom October–December 2020. The impactof supply chain disruptions on the status of
business operations was determined using ordered logit regression, while the impact on sales
performance during the lockdown and new normal periods were modeled using logit regression. The
technology upgrading plans of the MSMEs, including the adoption of ‘‘green’’ technology, were also
determined.
Findings –This studyfound that the extent of disruption in processingthe goods and services resultedin
a negativeimpact on business operations, and the disruptionof the availability of raw materials negatively
affected the sales performance during the lockdown period. Moreover, around 20%–33% of MSMEs
experiencing heavy supply chain disruptions had a plan to upgrade their business processes by
adopting‘‘green’’ technology.
Research limitations/implications –MSMEs need to establish strategic collaboration among the
differentstakeholders through public, private,non-government institutions and academecollaboration to
enhance the capabilities of MSMEs in handling supply chain disruptions and pursuing technology
upgrading.
Originality/value –This paper is among theearly studies of the impact of COVID-19 to supply chainsin
the Philippinesfocusing on the MSMEs.
Keywords Innovation, Supply chain, Entrepreneurship, Small- and medium-sized enterprises,
COVID-19, Green technology
Paper type Research paper
1. Introduction
1.1 Background of the study
The coronavirus disease 2019(COVID-19) has brought various disruptions across local and
global economies. In Asian countries, including the Philippines, the economic impacts of
the pandemic are evident. The Asian Development Bank (ADB) reported that the gross
domestic product (GDP) of the country woulddecrease by 8.5% in 2020 but would recover
with a 6.5% growth in 2021 with the easeof restrictions and lockdowns (Shinozaki and Rao,
2021). These estimates, however, assumed that the country would be able to contain
Nikko Longjas Laorden,
Jon Marx Paredes Sarmiento,
Glory Dee Antero Romo,
Thaddeus Retuerto Acun
˜a
and Imee Marie An
˜abesa
Acopiado are all based at the
School of Management,
University of the Philippines
Mindanao, Davao City,
Philippines.
Received 31 May 2021
Revised 5 September 2021
11 October 2021
9 November 2021
Accepted 11 December 2021
PAGE 568 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 16 NO. 3 2022, pp. 568-586, ©EmeraldPublishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-05-2021-0216
COVID-19 in 2020. As of November 9, 2021, the Philippines has 2.8 million cases with more
than 44,000 deaths, while only 32% of the population has been fully vaccinated (Johns
Hopkins Coronavirus Resource Center, 2021). With the prolonged pandemic, economic
damages are expected to increase exponentially across national, regional and global
levels.
The micro small and medium enterprises (MSMEs), which comprise the most vulnerable
group of the business sector, face the highest risk during the COVID-19 pandemic
(Shinozaki and Rao, 2021). The MSME sector is considered the backbone of the Philippine
economy because it constitutes about 99.5% of the total number of business enterprises in
the country (Department of Trade andIndustry, 2021). In Davao Region, the MSME sector is
composed of 58,459 enterprises, where 61% of these enterprises are from Davao del Sur
(35,919), followed by Davao del Norte with 19% (11,215), Davao de Oro with 11% (6,173),
Davao Oriental with 7% (3,828) and Davao Occidental with 2% (1,324) (Department of
Trade and Industry, 2021). One major impact of the COVID-19 pandemic that was
commonly observed on businesses was supply chain disruptions (Xu et al.,2020), and this
has been observed in the Philippines (Asian Development Bank, 2020;United Nations
Industrial Development Organization, 2020). However, there has been little information on
supply chain disruptions and their impact on MSMEs operations(Chowdhury et al., 2021a),
especially at the subnational level.
The COVID-19 pandemic brought awareness of the need to create resilient supply chains
(Fonseca and Azevedo, 2020). At the same time, it presents a transformational opportunity
because it engenders efforts to reduce risks and respond to crises, bringing forth
sustainable measures geared toward building resiliency (Sarkis, 2020). The pandemic also
offers opportunities for countries to assess their greening strategies (i.e. approaches to
improve environmental performance) and how they intend to transition toward a low carbon
footprint (Mohideen et al., 2021). More importantly, there is an urgency for these plans and
strategies because the pandemic has stalled the transition toward renewable
energy (Hosseini, 2020). Thus, determining the MSMEs’ greening initiatives to recover from
COVID-19 will help the government in identifying the initial steps that would support these
initiatives across the supplychains.
1.2 Research gaps
Contemporary literature has emphasized MSMEs to be moderately to severely affected by
the pandemic. Disruptions were mainly manifested in terms of supply chain and sales
performance (Shafi et al., 2020). This resulted in sourcing and logistics constraints,
temporary or permanent halting of production and business closure among many others as
experienced by enterprises in developing countries (Nordhagen et al., 2021). In the
Philippines, there have been limited studies on supply chain disruptions brought by the
pandemic crisis, which are focused on MSMEs.Strategies drawn out from studies similar to
that of Taqi et al. (2020),Paul and Chowdhury (2020),Nordhagen et al. (2021),Chowdhury
et al. (2021b), Paul and Chowdhury (2021),Nasir et al. (2021),Rahman et al. (2021),Paul
et al. (2021a,2021b;2021c) and Cheramin et al. (2021) would be beneficial for MSMEs in
the Philippines.
A good understanding of these impacts on supply chains would allow enterprises to
strategically tap their resources, partners and processes, including viable innovations, to
achieve a more agile, flexible and sustainable supply chain. Furthermore, looking into
supply chain disruptions and their impact on business operations and sales performance
would guide policymakers on how to provide support mechanisms for MSMEs to recover
sustainably and build resilience against pandemics. This paper is among the early studies
of the impact of COVID-19 on supply chainsin the Philippines, particularly on MSMEs.
VOL. 16 NO. 3 2022 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 569
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