Society and culture have an impact on every aspect of a business. Although it is not directly included in business operation, they indirectly appear as key elements in shaping how the business in managed, from what products to produce, up to the determination of the success or failure of the business. There are external factors in the business environment that affects business practices of small and medium-sized Enterprises (SMEs); it does not only end in determining what are these factors but it also goes down as to how these factors affect its business practices. The category of small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million (European Commission, User Guide to the SME Definition; 2016).
Development of new business through entrepreneurship directly impact on societies and economies grow and prosper. Although there has been considerable research based on psychological and economic approaches to entrepreneurship, the influence of socio-cultural factors: Religion, Ethnicity, Family, Physical attributes, Economic Status, and Education, make an impact on entrepreneurial development process in developing country (Rahma Akhter, Farhana Rahman Sumi; 2014). The business environment of the 21st century is an intertwined force of complex socio-cultural, economic, political and technological factors creating intricate challenges for owners of Small and Medium Enterprises (Tesfayohannes, 2012).
Philippines has been a progressive country in terms of business. It is known to be a Christianized country and Filipinos are known to be family centered. In a study on Filipino Entrepreneur, Chu et. al. (2002) explored the issue of how Filipino culture affected the manner by which several primary strategic entrepreneurial decisions are made; in that he found out that Filipino kinship system causes Filipino entrepreneurs to look towards their family and friends for all type of support including venture financing.
Calbayog City has a growing number of SMEs and the majority of these businesses are into retailing. Small and Medium Enterprises plays a great role in employment creation, income generation, and economic growth. The importance of studying socio-cultural factors affecting business practices of SMEs in Calbayog City is that it influences decision making of business owner and to the improvement of the business.
It is on this premise that the researchers are prompted to conduct aa study on socio-cultural factors affecting business practices of SMEs in Calbayog City. The findings may pave way to the improvement of their decision making skills and help them to improve their businesses.