January 30, 2026 l The Manila Times
In theory, both big and small businesses should grow together. The “big brother-small brother” concept — long promoted in development literature — argues that large firms help micro, small and medium enterprises (MSMEs) through forward and backward linkages, sharing technology, market access and stability.
In practice, many Philippine SMEs experience something closer to the opposite: late payments, consignment arrangements that shift risk entirely downstream and just-in-time (JIT) production systems that make small suppliers carry inventory without compensation.
MSMEs are the backbone of the Philippine economy. They account for roughly 99.6 percent of all registered firms, about two-thirds of employment and 36–40 percent of gross value added. Yet, as of 2023, they received only 4.1 percent of total bank lending, down from 8 percent in 2010. That gap means their survival depends heavily on the behavior of large corporate buyers — behavior that remains uneven at best.
Studies on Philippine SMEs in domestic and global value chains consistently find that integration with large firms leads to better production quality, higher capacity, improved management practices and more jobs. SMEs learn from the standards, processes and discipline that large corporations impose. In turn, the large firms benefit from the innovation, agility, local presence and cost-efficiency that SMEs naturally provide.
But other studies — such as work by Canare, Francisco and others — underscore that most Philippine SMEs still do not meaningfully participate in big-business supply chains. And for those that do, relationships can be extractive rather than developmental.
The most common complaints are familiar: payment delays, returns of delivered goods, acceptance only upon entering the production line and uncompensated JIT requirements. In effect, many SMEs serve as zero-interest lenders to their large customers.
International evidence reinforces the problem. Surveys show SMEs suffer from chronic late payments globally, prompting countries like Australia to require large firms to publicly report how fast they settle with small suppliers under a Payment Times Reporting Scheme.
The Philippines has no equivalent, allowing “60–90 days after the end of month” (and often much longer) to become normalized — even when SMEs have already delivered and the buyer has already earned.
If SMEs bear disproportionate financing and inventory risks, we should not be surprised that many remain stunted, undercapitalized or fall out of supply chains altogether.
Yet there are encouraging examples — though still scattered — of attempts to improve value-chain fairness. Logistics players have begun integrating micro transporters into more formal systems. Agribusiness projects link farmers to processors with embedded training and quality assurance. Digital platforms are emerging to help small suppliers meet compliance standards.
The Department of Trade and Industry continues to promote supplier-development pilots and digitalization under various “big brother-small brother” initiatives. But these remain pockets of progress, not systemic norms.
If we want genuine, sustained support for MSMEs, big business must move from slogan to standard. This requires the following concrete commitments:
– Treat prompt payment as an obligation, not a negotiation.
For SMEs, cash flow is oxygen. Large firms should default to 30-day payment terms and publish their actual average payment days specifically for SME suppliers. Boards already track days sales outstanding; they should also monitor days payables outstanding to SMEs as an environmental, social and governance and inclusive-growth metric. Industry associations can establish voluntary codes of conduct that later evolve into reporting requirements.
– Stop outsourcing all the risk to smaller firms.
Consignment arrangements, return-at-will clauses and JIT systems should be rebalanced. If large firms require hyper-flexibility, they should co-invest — through warehousing access, shared logistics, supplier training or paying a premium for responsiveness. Otherwise, SMEs are forced to bear inventory and demand volatility they cannot finance or hedge.
– Shift from price squeezing to capability upgrading.
The developmental value of big-brother linkages lies in capacity transfer. Supplier-development programs — such as joint quality improvement projects, technical training, shared digital tools and performance feedback loops — help SMEs become more competitive and bankable. Support must be structured with clear milestones so that SMEs graduate into stronger enterprises, rather than remain perpetually dependent.
– Use your balance sheet to unlock SME finance.
Supply chain finance can transform the landscape. When a reputable large buyer certifies an invoice and commits to pay on a set date, banks and fintechs can finance the receivable more safely. Early payment programs allow SMEs to convert invoices to cash while the buyer retains its preferred terms. Large firms, in effect, lend their credit rating to their smaller partners — an efficient and highly scalable way to expand SME access to finance.
The question is not whether big businesses help SMEs, or whether SMEs help big businesses. If corporate leaders are serious about shared value and stakeholder capitalism, the test is simple: Are you willing to pay your smallest suppliers first, not last? Are you prepared to treat “big brother” not as a marketing line, but as a commitment — to nurture, not exploit, the enterprises that keep your supply chain alive?
Real inclusive growth starts not in boardroom statements, but in purchase orders, contract clauses and payment cycles. That is where big business must begin.
***The views expressed herein are his own and do not necessarily reflect the opinion of his office as well as FINEX. For comments, email benel_dba@yahoo.com. Photo is from Pinterest.