Adaptive Capacity of Small Filipino Food Processing Firms to the ASEAN Economic Integration 2015

Abstract

The Association of Southeast Asian Nations (ASEAN) is a regional organisation with the primary goal of institutionalising cooperation among Southeast Asian nations. An ASEAN Community has been envisioned by the leaders of its member states of which an Economic Community stands as one of its three pillars. The ASEAN Economic Community (AEC) is to be realised through the ASEAN Economic Integration which will facilitate trade among memberstates by reducing and eliminating tariffs on trade. For small manufacturers, this change in trade environment can usher in opportunities or challenges. As the agri-food sector is one of the priorities for ASEAN, this research focuses on small food processing enterprises from the Davao City region in the Philippines. The main purpose of this research is to assess the readiness of these firms to respond to the ASEAN Economic Integration, which is expected to be rolled out by 2015. It also seeks to find out how the firms perceive and anticipate the ASEAN Economic Integration. Adaptive capacity is the theoretical construct utilised in the study to obtain perspective about these firms. This concept refers to an entity‘s set of resources and its ability to utilise these for adaptation. A qualitative methodology involving six in-depth, semi-structured interviews from ownermanagers of micro to small food processing firms coming from a variety of food products were conducted. Results were analysed using the organisational adaptive capacity framework and the determinants of adaptive capacity. All firms reveal indicators of organisational adaptive capacity but at varying degrees. Significant barriers to building organisational adaptive capacity for the food processors include institutional concerns and sustainability of sourcing resources. Other themes that emerged included risks from natural disasters and political tensions. It is recommended that institutional mechanisms be enhanced to further organisational adaptive capacity. Such mechanisms include low-cost quality certifications, the accessibility of training, risk mitigation and sustainable alternatives to sources of raw materials. Theoretical implications to international entrepreneurship as well as organisational learning literature are fostered by enriching SME literature and synthesising the concept of adaptive capacity and organisational adaptive capacity. Future research could explore other themes such as the role of the entrepreneurs and the impact of non-economic risks or shocks to the adaptive capacity of SMEs.