Author: Sheevun Di O. Guliman


Research Article

Year: 2020, Volume 20 Number 3

Page: 120-129

Abstract

The Philippine microenterprises sector is considered as an important stimulus of the country’s economic growth. Previous studies have cited that the struggles faced by micro and small entrepreneurs are brought about by the difficulty in access to finance and the lack of entrepreneurs’ financial literacy and inadequate business acumen. Anchored on the resource- based view theory, the primary objective of this study is to determine the role of financial sophistication, as a human capital resource, and its components, on the link between the strategy–sustainability indicator relationship. Based on a study of 384 micro-entrepreneurs from the National Capital Region, results of the partial least squares–structural equation modeling (PLS-SEM) showed that business strategy is positively linked to each of the sustainability indicators, that is, economic, environmental, social, and governance. Conversely, the entrepreneur’s financial sophistication increases the effect of business strategy on each of the sustainability indicators. The results of the study also showed that a positive financial behavior and decision-making style are significant components of financial sophistication.

Keywords: financial sophistication, financial literacy, business strategy, sustainability, MSMEs