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Capital Investment Decisions of Micro, Small and Medium Enterprises: The Case of Digos City

Author

Listed:
  • Relativo, Jona Princess
  • Sumayang, Mildred
  • Diasana, Sarah Jean
  • Murcia, John Vianne

Abstract

This paper examined the capital investment decisions of micro, small and medium enterprises, with the aim of assessing its current levels and its conditions across industries in Digos City. Questionnaires measuring the four phases of capital investment decisions were administered to a stratified random sample of 125 owners or managers of micro, small and medium enterprises while further in-depth interviews were done to extract explanatory factors of capital investment decisions that were not accounted in the quantitative phase. Non-parametric test of association revealed no significant association of capital investment decisions and nature of industry being engaged by MSME owners/managers. Pearson r correlation test revealed that generation of investment opportunities, project analysis and approval, and post-implementation audit have significant relationship with years of operation. Further qualitative analysis of interviews revealed that the influential factors affecting financing decisions of MSME’s owners include sources of finances, entrepreneurs’ prior experiences, business trends, and diversification of investments.

Suggested Citation

  • Relativo, Jona Princess & Sumayang, Mildred & Diasana, Sarah Jean & Murcia, John Vianne, 2016. "Capital Investment Decisions of Micro, Small and Medium Enterprises: The Case of Digos City," MPRA Paper 79574, University Library of Munich, Germany, revised 07 Jun 2017.
    • Handle: RePEc:pra:mprapa:79574
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    More about this item

    Keywords

    capital investment decision; MSME; sequential-explanatory design; Digos City; Philippines;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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