Driving Local Micro, Small and Medium Enterprises (SMEs) Forward: An Analysis of Strategic Growth Drivers

Abstract

Micro, small, and medium enterprises (MSMEs) are vital contributors to global economic growth and employment. This study examines the primary factors driving the growth of MSMEs in Naga City, Philippines, with an emphasis on entrepreneurial management, technical expertise, innovation capacity, organizational learning, and government support. The research aims to: (1) evaluate how these factors improve financial performance, technical efficiency, and sustainability; (2) examine their role in fostering organizational learning as a mechanism for growth; and (3) analyze the influence of government support in amplifying these effects. A mixed-methods approach was utilized, combining quantitative surveys with qualitative interviews and focus group discussions. Data were collected from 300 MSME owners and managers in Naga City, Philippines. Statistical techniques, including regression analysis, factor analysis, and structural equation modeling (SEM), were employed to identify significant growth drivers. The findings reveal three key insights: (1) entrepreneurial management, technical skills, and innovation capacity collectively enhance MSME financial performance and sustainability, with innovative leadership yielding optimal results; (2) these capabilities promote organizational learning, fostering adaptability and long-term growth; and (3) government support strengthens the impact of these drivers through financial assistance, training programs, and supportive policies. The study recommends that MSMEs prioritize leadership development and innovation initiatives, nurture organizational learning capabilities, and leverage government programs to achieve sustained growth and competitiveness.