Asia Pacific Journal of Multidisciplinary Research | Vol. 2, No. 1 | February 2014 _____________________________________________________________________________________________ 74 P-ISSN 2350-7756 | E-ISSN 2350-8442 | www.apjmr.com Social Networks and Industry Competitiveness: The Case of Liliw Footwear Industry Prof. Juvy G. Mojares mojuvs@gmail.com Batangas State University – Malvar Campus PHILIPPINES ABSTRACT One of the effects of trade liberalization is the reduction of tariff rates for the manufacturing sector. Aldaba (2012) found that trade liberalization has increased the likelihood of firms exiting the manufacturing industry. Unless domestic firms face economies of scale, they will not be able to cope to the adverse effects of trade liberalization. The footwear industry is an example. It has been reported that the footwear industry in Marikina, known as the Shoe Capital of the Philippines, and in Binan, Laguna are said to be slowly dying in these areas. This has adversely affected shoe laborers who, because of lack of employment opportunities in their respective localities, have started to move to other places in search of employment. A number of them found employment in Liliw, Laguna. This study explores the conditions that enable the footwear industry to flourish amidst competition at the local, regional, and national levels and to explore the role of social networks in the competitiveness of four selected footwear firms in Liliw. Results showed that Liliw footwear industry was able to compete in the market effectively due to the following factors: the reputation of Liliw as producer of affordable, cheap, and marketable footwear products, increased competition among local footwear producers, enmity of local footwear producers against imported footwear products from China, and the existence of financial and community support arrangements. Keywords: social networks, industry competitiveness, footwear industry, trade liberalization I. INTRODUCTION With the premise that the General Agreement on Tariff and Trade (GATT) would provide equal treatment on countries in terms of trade, i.e. every member country is committed in lowering its trade restrictions and import tariffs, the Philippines would be able to have greater access in the international market [1]. However, with that premise also, the Philippines is heavily affected. One of the effects of trade liberalization is the reduction of tariff rates for the manufacturing sector. Reference [2] found that trade liberalization has increased the likelihood of firms exiting the manufacturing industry. Unless domestic firms face economies of scale, they will not be able to cope to the adverse effects of trade liberalization. The footwear industry is an example. In 2005, the total number of footwear establishments in the Philippines was 1,153 with a total of 16,600 employees. Both figures declined in 2009 with 1,072 footwear establishments and 12,155 employees, or about 7% and 14% decline in the number of establishments and total employees, respectively [3]. It has been reported that the footwear industry in Marikina, known as the Shoe Capital of the Philippines, and in Binan, Laguna is slowly dying. This has adversely affected shoe laborers who, because of lack of employment opportunities in their respective localities, have started to move to other places in search of employment. A number of them found employment in Liliw, Laguna. So this study explored the conditions that enabled the footwear industry to flourish amidst competition at the local, regional, and national levels. Specifically, it aimed to describe the profile of the footwear industry in Liliw, Laguna; to analyze the value chain system of four selected footwear firms in Liliw in relation to the perceived competitiveness; and to explore the role of social networks in the competitiveness of four selected footwear firms in Liliw. II. MATERIALS AND METHODS Employing the qualitative type of research, first, the researcher made an observation in the Trade Fair Center along Gat Tayaw Street. Various social interactions of seller to buyer, seller to seller, buyer to buyer, owner to worker, and worker to worker were observed. Then, an interview with an interview guide was conducted during the second visit to gather data among footwear store owners and workers in Liliw, Laguna last August 2012. Four footwear store owners and three footwear workers were interviewed.