CHAPTER 1

BACKGROUND OF THE STUDY

1.1 Introduction

Halinen and Salmi on 2001 disclosed that various articles, experiences, and studies

conducted prove that personal relationships are essential factors in the business world. This

indicates that it is important to know how it affects the business world as a whole so that

negative impacts may be avoided for a continuous socio-economic development of a

particular society. Consequently, it is also vital for the business world to have the knowledge

about what to prevent to maintain a good personal relationship with their business partners

otherwise, their personal relationship will be badly affected which may lead to the dissolution

of the business.

According to Murray on 2018, business partnership is a form of legal relationship

built in order to create, manage, and operate a business. The people who are involved in the

formal agreement are called partners or co-owners. Like any other forms of business,

partnership has its fair share of advantages and disadvantages. One of the disadvantages is the

possible disputes among co-owners of the business which may result to further conflicts and

problems within the workplace. Cooper and Gardener (1993) mentioned that building and

maintaining a good relationship with your business partners will result to a successfully

managed and well-developed business. This study suggests that business partners must

realize how important it is to develop a good relationship with co-owners for it to serve as a

strong foundation of their growing business.

Based on a report by Morgan (2014), 89% of small business owners admit that

personal relationship affects their decision-making and how they manage their business.
Thus, showing that personal relationships do have an impact on how business partners

operate their business. This shows that personal relationship and the relationship of the

owners as business partners are conflicted. These relationships must be differentiated by the

owners and if possible separated.

In contrast, Thelma Quince on 2001 stated that most of the co-owning entrepreneurs

see at least three advantages in doing business partnership namely; economic benefits,

emotional benefits, and organizational benefits. The study expresses that economically,

having a business partner can widen the scope of the business’ financial and labor capability.

Also, it helps emotionally by having the knowledge that they are not alone meaning, they can

assure that they can depend on someone who is always there to share any losses of the

business. Finally, partnership aids the business by ways of enhancement of management

skills hence, reducing the failure of the business.

Rivas (2018) reported that the government is targeting to accomplish the AmBisyon

Natin 2040 plan in order for Philippines to grow economically. This includes

entrepreneurship, building businesses, and expanding the longevity of businesses to generate

profits for the satisfaction of business owners and employment for the needs of the country’s

labor force to extend the lifespan of businesses, particularly partnerships, and cultivating

business relations must be observed.

Furthermore, this implies that this study is important since it aims to solve the not so

fully realized problem within a business which is the impact of business partnership on

personal relationship. This research also aims to strengthen personal relations of the partners

to lengthen the life of a business thus, creating a socio-economic impact to the society.

According to James (2013), some of the ways to ensure a fortified personal relationship with

colleagues are better communication, respect, and being considerate.

1.2 Theoretical and Conceptual Framework

A study by McQuaid, R.W. (2000) is drawn to the “Theory of Partnership” which

stated that forming partnerships may have probable advantages and disadvantages. It is

mentioned that entrepreneurs will be in an advantage if they form a partnership since this will

result to resource availability, effectiveness and efficiency, and legitimacy. On the other

hand, the disadvantages in partnership formation are mainly vague goals, unbalanced power

of partners, external usurping power, and partners’ conflicted philosophies leading to

organizational problems. This strengthens the idea that entrepreneurs willingly agree to have

an alliance in hopes that they can manage to harness the advantages into their strengths

without being properly aware of the disadvantages that comes with it.

Adjacent to the research mentioned earlier, another “Theory of Partnership” by Levin

and Tadelis (2002) only highlights the benefits of business partnerships. The researchers

stated that partnerships are more profitable compared to any other forms of business

organizations; thus, making it the common form of business and started to be prevalent at the

start of 20th century. This implies that one of the positive aspects in forming business

partnerships is the high profitability or monetary gain; hence, strengthening the personal

relationships of business co-owners through the satisfaction of having increased financial

outcomes (Gibson, McDowell, and Harris, 2014).

In a family-owned business context, Shepherd and Haynie (2009) concluded that

family identity and business owner identity are two separate personalities. They defined

family identity as a set of anticipated actions in relation to their role as a family, whereas

business owner identity is a set of behavioral assumptions related to their role as a business

owner. As a result, they emphasized Identity Control Theory (ICT), a theory that targets who

people are and how their nature affect their relationship as well as their behavior (Burke,
2007), as their basis in managing and solving the clash between identity as a family and

business identities.

Business Partnership Personal Relationship

Figure I. Research Paradigm

This figure shows that the personal relationship is the dependent variable of business

partnership. Researcher will identify what are the factors that affecting personal relationship.

1.3 Statement of the Problem

This study attempts to determine proofs that answer the impact of business

partnership on personal relationships. Specifically, it seeks to answer the queries listed below:

1. What are the aspects in the business affecting personal relationships?

2. Does the business affect the relationship of the owners towards one another?

3. What are the positive and negative impacts of business partnership on personal

relationships?

4. How do owners separate their personal relations from their relationship as business

partners?

1.4 Significance of the Study

The importance of this study is to prove and make the business world be aware of

how vital it is to strengthen their relationship with their business partners. In turn, the

business world will have knowledge of the business impact towards the personal relationship

of the co-owners. Moreover, the following are the beneficiaries of this research:
  Future entrepreneurs- specifically those who are planning to become business

partners, that they may have the idea or knowledge on the factors that must be

avoided in order to maintain a positive relationship with their co-owners.

 Present business partners- that they may be mindful with their partner’s insight

towards each other in relation to the business.

 Future researchers- that this study may serve as their basis for their study.

1.5 Scope and Limitation of the Study

This study focuses on the factors, impacts, and effects of business partnerships on

personal relationships of those partners owning the particular business. The research is

conducted only within the boundaries of the City of Cabadbaran. The respondents of this

study, as the focal point of the research suggests, are those owners of a business that is legally

formed as a partnership.

1.6 Definition of Terms

For a better comprehension of this research, these are the definitions of the terms

mentioned earlier:

AmBisyon Natin 2040 Plan- is the vision that the government seeks to be

accomplished in order to give Filipinos a better future.

Business partners- also known as co-owners, are the ones involved in the legal

agreement of forming a partnership to start and operate a business.

Entrepreneurs- are those people who build business or businesses by creating a new

market to generate profit.

 Partnership- form of legal business organization in which 2-15 partners or co-owners

manage a business.

Personal relationship- a relationship that is formed through emotional interactions

between people.
 CHAPTER 2

REVIEW OF RELATED LITERATURE

This section contains the related literatures that were reviewed for the betterment of

this study. This chapter consists of two major parts: (a) conceptual literature and (b) research

literature that are related to business partnerships and its impact on personal relationships.

2.1 Conceptual Literature

This part lays down concepts from where the present study is based. This shows

theories, principles, among other ideas relevant to business partnership and its impact on

personal relationship.

Business Partnership

Keegan and Francis (2010) defined business partnership as a legal business composed

of two or more persons. Business partnership is also associated with material outcomes in

terms of human resource service delivery. This means that family-owned businesses,

businesses owned by groups of friends, and married couples are considered to be a form of

partnership since they are two or more persons.

According to Seitandi and Ryan (2007) partnership implementation does not begin

after a strategy has been planned and designed, but is integral to its section in the first place.

The first phase of partnership implementation is therefore Partnership Section, which

commences with the decision to choose ‘Partnership’ as the preferred associational form

rather than other forms of community involvement.

Nature of Partnership

According to Seitanidi and Ryan (2007) when two or more persons join hands to set

up a business and share its profits and losses it is called partnership. Partnership has been one

the most exciting and challenging ways that organizations have been implementing corporate

social responsibility in recent years. In addition, McQuaid (2000) disclosed that this form of

business involves cooperation which means “to work together”. This indicates that it is just

right for this study to have respondents of this study are those businesses that are formed in

partnership categorized into family, friends, and married couples.

Types of Partnership

Kluwer (2019) expressed that there are three different types of partnership: general

partnership (GP), limited partnership (LP), limited liability partnership (LLP). They are

described as follows:

General Partnership is the default version of a partnership. Each partner represents the

organization and has equal right to participate in the management, decision making, and

control of the business. Kluwer emphasized the advantages of this type which are ease of

creation, low cost of operation, and few ongoing requirements. He stated that general

partnership is easy to create because just by beginning business activities with partners, the

partnership is immediately created. Thus, there are no paper filing required unlike the other

types.

Kluwer said that Limited Liability Partnership gives limited liability to every owner.

This indicates that each partner is protected from financial and legal mistakes of the other

partners. He mentioned that this can only be created by particular professional service

business. Kluwer also illuminated an advantage of doing this type of partnership which is the
protection of personal assets. Meaning, partners’ assets cannot be utilized to satisfy the debts

of the business and there liability is limited to their investments.

Limited Partnership involves one general partner with unlimited liability and the other

must have a limited liability. Kluwer stated that those with limited liability are not involved

in the business management unlike those with unlimited liability.

Personal Relationship

Lawson, Hathaway, and Bakken (2016) defined personal relationship refers to close

connections between people, formed by emotional bonds and interactions. These bonds often

grow from and are strengthened by mutual experiences. Hence, personal relationship includes

family, friends, and married couples. Family is one of the most common examples of

personal relationship since this pertains to two or more persons bonded by mutual

experiences. Another one is groups of friends which are clearly formed because of constant

emotional and social interactions. Lastly are married couples since they are connected

through a strong emotional bond.

Business Relationship

Business relationships, as described by Kleinaltenkamp et al. in 2015, have several

factors that affect an individual and in turn, these effects will have a significant effect to the

business relationships as well as to the business itself. The relationship between personal

contacts and such issues as sales performance (Ahearne, Gruen, and Jarvis 1999; Walter

1999), innovation development (Walter 1999), and customer satisfaction and commitment

(Halinen 1997) have been analyzed, but still little is known about the role of personal

relations in the development of business relations. It was elaborated that the aforementioned
issues or factors can affect the business relationship positively or negatively, positive if the

outcome of them are good and negative if the result of the factors is bad.

Process of Partnership

According to Googins and Rochlin (2000) there are six (6) processes of partnership

namely (1) defining clear goals, (2) obtaining senior level commitment, (3) engaging in

frequent communication, (4) assigning professional to lead the work, (5) sharing the

commitment of resources, and (6) evaluating progress/result. Based on the statement of

Androif (2001) it refers to the '4Ps' stakeholder partnership building the purpose of

partnerships, the pact between the partners, the power relationships within the partners and

the process of partnerships evolution.

2.2 Research Literature

In this part, the researchers show various studies that were administered about

business partnerships and its impact on personal relationships in which these impacts also

have an effect on the business partnership and the business itself.

Halinen and Salmi (2001) stated that there are various critical phases in business

relationships from its formation down to its dissolution. The study focused on the vital role of

personal relationships in the formation and development of business relationships. These

critical phases include initiation, crisis periods, and ending which has both negative and

positive effects on the relationships of business partners. The researchers of this study also

identified that the role of personal relations are divided into six functions: (1) the role of door

opener and gatekeeper wherein personal relations serve as the way towards potential business

partners for the betterment of the business and widening of connections, (2) the role of door

closer and terminator in which personal contacts is vital for the appealing ending of a certain
business, in fact Alajoutsijärvi et al. (2000) suggest that positive relationships are likely to

lead to “a beautiful exit”, and (3) the role of peacemaker or trouble maker. More importantly,

they illuminated that personal relationships may have a positive or negative effect on these

critical phases. These six functions may either strengthen or help keep the relationship in a

continuous positive progress or intervene and destroy the supposed to be well-developed

relationship.

According to McQuaid, R.W. (2000), in a business partnership there are numerous

beneficial and non-beneficial impacts of it to the personal relations of partners to one another.

These impacts may make their personal relationship stronger or these may ruin their

relationship completely. Beneficial impacts are (1) the greater availability of resources-

capital, human, and natural resources, (2) effectiveness and efficiency because of greater

managerial competence since there are 2 or more persons who will contribute their skills and

ideas, and (3) legitimacy because there are more managers that are regarded to be reliable.

These benefits will result for them to operate their business flexibly which will be a reason to

generate a positive atmosphere. In contrast to these beneficial impacts are the non-beneficial

impacts which constitute the following: (1) vague goals wherein partners do not have clear

objectives and intentions on why they are doing the business, (2) unbalanced powers of

partners wherefore business partners are having trouble with distributing equal tasks to each

other and giving way for others to present their ideas, in other words they lack the openness

to welcome ideas of other partners, (3) external usurping powers are the outside forces of the

business that forcibly take over the business in a way that they overpower the actual owners

of the business to the point that they do not have a say on what to do with their business, and

finally (4) the different beliefs and philosophies of each partners that consequently results to

disarrangement of the organizational structure of the business hence, leading to the

breakdown, broken relationship of the partners, and potential dissolution of the business.

Therefore, it is clearly implied that business partnership has a significant effect, both negative

and positive, on the personal relationships of partners.

Another study by (Morris et al.) includes the nature of relationships among family

members as a determinant of how a family-owned business will become successful. With

this, they concluded that family members should pay more attention and more time with one

another not as business partners but as family. Morris et. al emphasized that personal issues

of the family must be addressed and relatively less time will be given to business

management, since it is more important to build a strong foundation for the business to last

and for the business’ continuous operation which will benefit the socio-economy of the

society by generating profit and employment.

Kwan et al. (2011) conducted a study which aims to analyze the difference between

the family and non-family conflicts. They gathered information by administering interviews

and survey questionnaires that was participated by business owners who are related and not

related. Thus, they revealed in their investigation that family-to-work conflict (FWC) among

nonfamily business is negative which implies that business managers who are not related by

blood or who are not family does not have any or have lesser problem with each of their

families regarding their work. Whereas in a family business, FWC is found to be positive this

means that business partners who are related or who are family have a relatively high

possibility that they will be encountering conflicts and problems with their relationship as

family in accordance to their relationship as business partners. In conclusion, it is positive

that business partnership has a disadvantageous impact on personal relationships.

In a study by Cooper and Gardener (1993) that they discovered that businesses should

concentrate more on cultivating positive relationships with their business partners so that they
can create a strong foundation for the business. They even gave emphasis that business

partnerships is not just creating strategic alliance but building good relationships with co-

owners. This implies that co-owners of a legal business must spend quality time with one

another and not disburse too much time with planning and managing the business. This

further implies that without a good foundation, too much dedication to the planning of

business is useless. This study is supported by Bickenbach and Liu (2010) when they

confirmed that personal relationships are important in doing business since it is the bedrock

of the business.

Based on a study done by Spinello (2003), there is a way in eliminating negative

outcomes on a business’ profitability and that is regulating personal relationships by utilizing

ethical theories and the implications of these theories. This expresses that if ever there are any

problems or conflicts remedial measures can be done to treat the relationships of the co-

owners of the business. In this way, lifespan of businesses will be lengthened and this will

contribute to the socio-economy of the community.

The studies mentioned earlier are not local which have given this research as well as

the proponents a better comprehension and understanding of business partnerships and its

impact on personal relationships. This study shares similarities with the aforementioned

studies but differs in the fact that it focuses on how business partnerships affect the

relationship of the owners of a particular business and what are the effects of these business-

related factors affecting personal relationships. In addition to that, the latter gives emphasis

on how the answers of this problem will help the society grow economically.
 CHAPTER 3

RESEARCH METHOD

This chapter presents how the research will be administered; it identifies and

describes the nature of the research, the participants, and the research instruments to be used

in the study.

3.1 Research Design

This research will be using descriptive analytical method which is usually used in

qualitative research and is a method used in gathering pertinent information and is used to

describe what exists (Costales, 2001). This implies that this research method is appropriate

and fit for this study since it focuses on the current work and personal relationship conflict

and it also aims to determine what are the business-related factors affecting personal

relationship of partners. The proponents will interview the owners of businesses which are in

the form of partnership and record all their responses.

3.2 Participants of the Study

The participants of this study are determined by considering that these people are

partners in operating their business; hence making the business in a form of business

partnership. The participants include 5 married couples, 5 groups of friends, and 5 families

who own and manage a business. Married couple-owned businesses are Pretea, Sweet While,

Phoenix, Gina Domingo (GD), and Jam’s Lechon Manok. Businesses owned by groups of

friends include Jaz Pro Salon, Lemon Station, Techcity Computer Servicing, Maple Salon,

and Pixel. Family-owned businesses are Joyro’s, Duay Hospital, Jovince, Allen’s Chicken

Joy, and Just Conveniently Around (JCA).

3.3 Setting of the Study

Maple Salon

Lemon Station

Allen’s Jam’s Lechon Manok

Pretea

Jovince

Jaz Pro Salon

Pixel

Phoenix
Techcity Computer Servicing
Joyro’s
GD
Sweet While
Duay Hospital

JCA

This research will be conducted within the City of Cabadbaran which is a place where

numerous businesses in a form of partnership can be found. In fact, according to Gov. Sol F.

Matugas, Cabadbaran City was one of the cities that surpassed the 10% target and contributed

13.04% to the increase of CARAGA’s Real Property Tax (RPT). Specifically, the proponents

will be gathering data from married couples, friends, and families who own a business.

Under married couples are the businesses (1) Pretea situated at Brgy. 1, (2) Sweet

While at F. Ojeda Ave., Brgy. 10, (3) Phoenix located at Purok 3, Lower Mabini, (4) GD also

found in Purok 3, Lower Mabini, and (5) Jam’s Lechon Manok at Purok 4, Brgy. Mabini.

Belonging to friends are (1) Jaz Pro Salon located at Purok 4, Brgy. Mabini, (2)

Lemon Station at E. Curato Street, Brgy.1, (3) Techcity Computer Servicing found in Purok

4, Brgy. Mabini, (4) Maple Salon at Brgy. 11, and (5) Pixel which is situated at Brgy. 1.
 Finally, family-owned business involves (1) Joyro’s which is found in F. Ojeda Ave.,

Brgy. 10, (2) Duay Hospital at Purok 8A, Dagani, Tolosa, (3) Jovince situated at Brgy 11, (4)

Allen’s Chicken Joy at Brgy. 11, and (5) JCA located at Brgy. 12.

3.4 Research Instrument

For the data collection, this study will administer direct meetings and interviews with

respondents who are co-owners of a particular business. These co-owners may be married

couple, friends, or family members. Thus, the researchers will be formulating and preparing

interview questions for the interviewees to answer. The researchers will make sure to inform

the participants that their responses to the queries will be used for the present study.

3.5 Data Gathering Procedure

To gather data, the proponents will determine the respondents of the study. The

researchers identified the respondents as those who owned a business in the form of

partnership namely Pretea, Sweet While, Phoenix, Gina Domigo (GD), Jam’s Lechon Manok,

Jaz Pro Salon, Lemon Station, Techcity Computer Servicing, Maple Salon, Pixel, Joyro’s,

Duay Hospital, Jovince, Allen’s Chicken Joy, and Just Conveniently Around (JCA). Second,

the researchers made interview questions for the interview to be conducted and set a schedule

for the gathering of data. After that, the co-owners of the aforementioned businesses will then

be interviewed together. The researchers will properly disclose to the interviewees that their

answers will be utilized to answer the problem of the research and will ask permission from

them to record the interview. The purpose of the recording is for it to serve as the reference

for the interpretation of the results.

After the needed data is gathered, the proponents will then interpret and analyze the

data that are collected.

3.6 Data Analysis

To interpret and analyze the data, the present study will use content analysis,

descriptive statistics, and qualitative distribution table, since these methods are used for

qualitative research. These types of analyses are also often used in interpreting responses of

interviewees particularly; it is utilized for analyzing documented information like texts,

media, or other physical items (Denzin NK and Lincoln YS, 2000). Specifically, the

qualitative distribution table will be used to aid in the tally of frequent results; hence it is

going to be utilized for the analyzation of qualitative data. In this research, the proponents

will be using media in the form of recording since the interview will be recorded for the basis

of the researchers’ interpretation.

 APPENDIX A

BIBLIOGRAPHY

Ahearne, Gruen, and Jarvis, 1999. If looks could sell: Moderation and Mediation of the

Attrativeness Effect on Salesperson Performance.

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https://www.sciencedirect.com/science/article/abs/pii/S0167811699000142

Halinen and Salmi, September 2001. Managing the Informal Side of Business Interaction:

Personal contacts in the critical phases of relationships.

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https://www.google.com/search?q=managing+the+informal+side+of+business+intera

ction%3A+personal+contacts+in+critical+phases+of+relationships&oq=man&aqs=ch

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samsung&sourceid=chrome-mobile&ie=UTF-8

Keegan and Francis, 2010. Practitioner Talk: The Changing Textscape Of HRM and

Emergence of HR Business Partnership.

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A+the+changing+textscape+of+HRM+and+emergence+of+HR+business+partnership

&btnG=

Kleinaltenkamp, Plinke, Sollen, 2015. Theoretical Perspectives of Business Relationships:

Explanation and Configuration.

 Retrieved January 25, 2019 from

https://link.springer.com/chapter/10.1007/978-3-662-43856-5_2

Lawson, Halthaway, and Kken, 2016. What do we mean by Personal Reationship.

Retrieved February 6,2019 from

https://www.takingcharge.csh.umn.edu/what-do-we-mean-personal-relationships

Levin and Tadelis, August 2002. A Theory of Partnership.

Retrieved January 25, 2019 from

https://www.google.com/amp/s/www.researchgate.net/publication/4821484_A_Theor

y_of_Partnerships/amp

McQuaid, January 2000. The Theory of Partnership: Why Have Partnerships?.

Retrieved January 24, 2019 from

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Ur7KSUIsKTlqTxr_Mvi

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Conflict

Quince, September 2001. Entrepreneurial Collaboration: Terms of Endearment or Rule of

Engagement?.

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 APPENDIX B

Sample Questionnaire

1. What are the aspects in the business affecting personal relationships?

a. Does decision-making affect their personal relationship?

b. Does financial problems and equity affect their personal relationship?

c. Does a personal habit affect their personal relationship?

2. Does the business affect the relationship of the owners towards one another?

a. Why does business partnership affect personal relationship?

b. In what way does business partnership affect personal relationship?

c. What are the effects of business towards personal relationship?

3. What are the positive and negative impacts of business partnership on personal

relationships?

Access (to knowledge):

Access (to people):

Effectiveness:

Efficiency:

Innovation:

Human resource development:

Long-term stability and impact:

Reputation and credibility:

Loss of autonomy:

Conflicts of interest:

Drain on resources:

Implementation challenges:

Negative reputation impact:

4. How do owners separate their personal relations from their relationship as business

partners?

a. What are the strategies used by owners to separate their personal relationships

from business relationship?

b. Do you learn from your mistakes?

c. Does your conduct promote or damage trust?

d. Do you communicate with your business partners often?