Abstract
Micro, Small, and Medium Enterprises (MSMEs) play a vital role in the Philippine economy but continue to face financial management and resource constraints that affect their financial performance. This study examined the mediating role of Resource Allocation Efficiency in the relationship between Entrepreneurial Orientation, Budgeting Practices, and perceived Financial Performance among participating MSMEs in Bulacan, Philippines. Using a cross-sectional explanatory correlational design and Partial Least Squares Structural Equation Modeling (PLS-SEM), supplemented by open-ended responses for contextual interpretation, data were collected from 403 MSME owners, managers, and finance representatives in selected municipalities of Bulacan. Results showed that Budgeting Practices had the strongest positive relationship with Resource Allocation Efficiency (β = 0.514, p < 0.001), followed by Entrepreneurial Orientation (β = 0.407, p < 0.001). Entrepreneurial Orientation (β = 0.283, p < 0.001), Budgeting Practices (β = 0.298, p < 0.001), and Resource Allocation Efficiency (β = 0.414, p < 0.001) were likewise positively associated with perceived Financial Performance. The model explained 63.5% of the variance in Resource Allocation Efficiency and 75.2% of the variance in perceived Financial Performance. Mediation analysis confirmed that Resource Allocation Efficiency partially mediated the effects of Entrepreneurial Orientation and Budgeting Practices, while open-ended questions’ responses emphasized the importance of budget monitoring, cash flow management, and timely resource reallocation. In conclusion, Resource Allocation Efficiency serves as key mechanism linking Entrepreneurial Orientation and Budgeting Practices with perceived Financial Performance. It recommends that MSMEs strengthen allocation through structured budgeting and monitoring appropriate to enterprise size, that LGUs, DTI offices, and MSME support organizations integrate Resource Allocation Efficiency into existing capability-building programs, and that future studies validate and extend the proposed framework using longitudinal designs, objective financial indicators, industry-specific analyses, balanced MSME representation, and additional organizational variables.
Keywords: Entrepreneurial Orientation; Budgeting Practices; Resource Allocation Efficiency; Financial Performance; MSMEs; PLS-SEM
https://zenodo.org/uploads/21850775
