Institutional Agility Measurement for MSMEs: A Validation Study

Institutional agility is essential for micro, small, and medium enterprises (MSMEs) functioning in environments characterized by swift changes and technological advancement. Despite its importance, the lack of validated and widely accepted measurement tools specifically for small businesses, particularly in developing nations like the Philippines, remains a significant concern. This study aimed to develop and validate an institutional agility instrument that assesses the sensing, seizing, and transforming abilities of MSMEs in Iligan City. The research design used was quantitative and non-experimental, with data gathered from owners, managers, and decision-makers in operations of MSMEs. The initial instrument underwent expert evaluation, pilot testing, item analysis, exploratory factor analysis, and reliability assessment. The findings revealed a distinct factor structure consistent with theoretical predictions and showed acceptable reliability across all subscales. Construct validity relied on substantial factor loadings and aligned model fit indices. This study resulted in the creation of a customized institutional agility measurement scale for MSMEs, serving as a diagnostic instrument for business owners, policymakers, development professionals, and researchers alike. Following its validation, the tool serves as a resource for strategic decision-making, guides MSME capacity-building initiatives, and reinforces the theoretical framework regarding dynamic capabilities in small businesses.