WEST VISAYAS STATE UNIVERSITY

COLLEGE OF BUSINESS AND MANAGEMENT

GRADUATE SCHOOL
Iloilo City

BIR Oplan Kandado Program: Knowledge and Attitude

Among Business Owners in Iloilo City

Kimberly Marie C. Salinas

Chapter 1

Introduction to the Study

Chapter One consists of five parts: (1) Background and Conceptual

Framework of the Study, (2) Statement of the Problem and the Hypothesis, (3)

Significance of the Study, (4) Definition of Terms, and (5) Delimitations of the

Study.

Part One, Background and Conceptual Framework of the Study, gives the

reasons and basis for the choice of the problem, identifies the variables used in

the study, and presents the conceptual framework upon which the study was

anchored.
 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

Part Two, Statements of the Problem and the Hypotheses, present the

main and specific problems to be answered by the researcher and the

hypotheses to be tested.

Part Three, the Significance of the Study, cites the benefits that may be

derived from the result of the investigation.

Part Four, Definition of Terms, gives the conceptual and operational

meanings of the important terms used in the study.

Part Five, Delimitation of the Study, specifies the limits and the coverage of

the study.

Background and Theoretical Framework of the Study

In almost every country, the government derives a majority of its revenues

for financing public goods and services from taxation. Moreover, the

government’s ability to serve people depends upon the collected taxes. Taxes are

indispensable in the government operation. Without it, government will be

paralyzed. In the Philippines, the Bureau of Internal Revenue (BIR) is mandated

by law to assess and collect all national internal revenue taxes, fees and charges,

and to enforce all forfeitures, penalties and fines connected therewith (Sec. 2 of

the National Internal Revenue Code of 1997- www.bir.gov.ph).

 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

Business owners are playing a crucial role in the economy of every

country around the globe (Stefanovića, Rankovićb & Prokić, 2011). Vadde and

Gundarapu (2012) emphasized that legal requirements must be complied, and

they must abide with the business laws particularly with the tax laws for them to

be not penalized.

A business is regarded as lawful if it is not opposing the law, morals, good

customs, public order or public policy otherwise, penalties will be charged

accordingly (Valencia, 2013). Moreover, taxes provide a bulk of revenue to the

government for the purpose of ensuring the social welfare of the country.

A number of cases have been filed against certain business establishments

as a result of tax non-compliance. For instance, Barford and Holt (2013) revealed

that UK government lost a big amount of revenue traced from the business

activities of Amazon, Google and Starbucks units. Moreover, a museum in

Greece, tax inspectors found 534 tax violations in the form of not issuing receipts

and it was unclear for how long this situation had been going on

(Keeptalkinggreece, 2015).
 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

Nationally, Philippines as one of the developing countries experienced a

lot of issues regarding tax evasion and revenue mobilization (Blöndal,

2010).Thereby, the BIR has continually conducting their operations in closing

down business establishments as a result of tax non-compliance

(Pricewaterhouse Coopers, 2015). Despite of the Bureau of Internal Revenue’s

actions, according to Aquino (2015), there is still a heavy issue regarding non-

compliance among businesses and practitioners.

Incorrect declaration/assessment of tax liability in the submitted tax return

is one of the major areas of noncompliance (Dom, 2013). The task force ensured

the application of the correct withholding tax rates and the proper computation

of withholding tax (Internal Communications Divisions, 2013).

Knowledge is a dynamic human process of justifying personal belief

towards the truth (Nonaka, 2006), and it has long been assumed that increases

in knowledge are associated with greater influence of attitudes on behavior.

According to Vaughan et al., (1995), attitude is a relatively enduring

organization of beliefs, feelings and behavioral tendencies towards socially

significant objects, groups, events or symbols or a general feeling or evaluation

(positive/negative) about some person, object or issue.

 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

The main reason why researcher had set out to investigate the situation

is because of their perceived needs of the Philippine society about the system

that runs between BIR and the taxpayers. Noncompliance of taxpayers is one of

the concerns of BIR. Due to this, the researcher has committed herself to study

this matter at hand to aid in the betterment of the system.

Hence, the researcher studies the knowledge and attitude of business

owners in Iloilo City towards BIR Oplan Kandado Program.

Figure 1 shows the conceptual framework of the study.

INDEPENDENT VARIABLES DEPENDENT VARIABLE

Knowledge of business owners

Personal profile in Iloilo City towards BIR Oplan
Kandado Program
 Sex
 Age
 Civil status
 Educational Attainment
Attitude of business owners in
 Seminars attended
 Years in business Iloilo City towards BIR Oplan
Kandado Program

Figure 1. Knowledge and attitude of business owners in Iloilo City towards BIR

Oplan Kandado Program.

 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

Statement of the Problem:

The main objective of the study is to determine the knowledge and attitude

of business owners in Iloilo City towards BIR Oplan Kandado Program.

Specifically, it aims to answer the question:

1. What is the level of knowledge of business owners in Iloilo City towards

BIR Oplan Kandado Program when they are taken as a whole and

classified according to (a) sex, (b) age, (c) civil status, (d) educational

attainment, (e) seminars attended and (f) years in business?

2. What is the attitude of business owners in Iloilo City towards BIR Oplan

Kandado Program when they are taken as a whole and classified

according to (a) sex, (b) age, (c) civil status, (d) educational attainment,

(e) seminars attended and (f) years in business?

3. Are there significant differences in the level of knowledge of business

owners in Iloilo City towards BIR Oplan Kandado Program when they are

group according to (a) sex, (b) age, (c) civil status, (d) educational

attainment, (e) seminars attended and (f) years in business?

4. Are there significant differences in the attitude of business owners in Iloilo

City towards BIR Oplan Kandado Program when they are group according
 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

to (a) sex, (b) age, (c) civil status, (d) educational attainment, (e)

seminars attended and (f) years in business?

5. Are there significant relationships among knowledge and attitude of

business owners in Iloilo City towards BIR Oplan Kandado Program when

classified according to (a) sex, (b) age, (c) civil status, (d) educational

attainment, (e) seminars attended and (f) years in business?

In view of the aforementioned problems, the following hypotheses were

advanced:

1. There are no significant differences in the knowledge of business owners

in Iloilo City when classified according to (a) sex, (b) age, (c) civil status,

(d) educational attainment, (e) seminars attended and (f) years in

business.

2. There are no significant differences in the attitude of business owners in

Iloilo City when classified according to (a) sex, (b) age, (c) civil status, (d)

educational attainment, (e) seminars attended and (f) years in business.

3. There are no significant relationships between the knowledge and attitude

of business owners in Iloilo City when classified according to (a) sex, (b)
 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

age, (c) civil status, (d) educational attainment, (e) seminars

attended and (f) years in business.

Significance of the Study

The results of this study may benefit the following:

Tax Authorities. To enable them to know what other appropriate

strategies in order to improve compliance among taxpayers.

Business owners. To develop a positive perception of the income tax

system, particularly on tax rate structures and government spending, can

motivate them to comply and observe paying tax.

Future researchers. Finally, the findings of this study will act as the

reference point to the future researchers who are interested in this field of study

and can help to replicate the study to a wider scope.

Definition of Terms

For clarity and precision, the following terms used in the study are given

conceptual and operational definitions:

Attitude--a favorable or unfavorable evaluative reaction towards

something or someone exhibited in ones beliefs, feelings, or intended behavior

(Michener, DeLamater, & Myers, 2004).

 WEST VISAYAS STATE UNIVERSITY
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GRADUATE SCHOOL
Iloilo City

In this study, attitude is the belief or outlook of the businesses towards

the BIR Oplan Kandado Program.

BIR--the Bureau of Internal Revenue shall be under the supervision and

control of the Department of Finance and its powers and duties shall

comprehend the assessment and collection of all national internal revenue taxes,

fees, and charges, and the enforcement of all forfeitures, penalties, and fines

connected therewith, including the execution of judgments in all cases decided in

its favor by the Court of Tax Appeals and the ordinary courts. The Bureau shall

give effect to and administer the supervisory and police powers conferred to it by

this Code or other laws (Sec. 2 of the NIRC, 1997 - www.bir.gov.ph).

In this study, BIR refers to the government agency that conducts the Oplan

Kandado Program.

Business Owners--

In this study, Business owners are the respondents of this study.

Iloilo City--is a major city and highly urbanized city in the Philippines and

the capital city of Iloilo. It is the regional center of the Western Visayas, as well

as, the center of the Iloilo-Guimaras Metropolitan Area (Latosa, 2015).

In this study, Iloilo city is the area where the study will be conducted.
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COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

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Knowledge--the state of fact knowing, familiarity, awareness, or

understanding gained through experience or study (Reader’s Digest Universal

Dictionary, 1986).

In this study, knowledge is the understanding of the facts and information

of the businesses towards the BIR Oplan Kandado Program.

Oplan Kandado Program--is an intensive campaign, which seeks to

padlock businesses with unpaid tax dues, as well as those who are engaged in

illegal practices such as failure to register, understatement of taxable sales by

more than 30 percent and the refusal to issue receipts (Revenue Memorandum

Order No. 3-2009 - www.bir.gov.ph).

In this study, the same definition was used.

Delimitation of the Study

This descriptive research study is conducted to determine the knowledge

and attitude towards BIR Oplan Kandado Program among business owners in

Iloilo City. The independent variables included are sex, age, civil status,

educational attainment, seminars attended and years in business of the owner.

The dependent variable is the knowledge and attitude of business owners

towards the program.

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GRADUATE SCHOOL
Iloilo City

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The respondents of the study are the business owners of the registered

businesses at the Business Permits and Licenses Office (BPLO) of the City

Government of Iloilo. A validated researcher-made questionnaire is employed to

test the level of knowledge and attitude of business owners towards Oplan

Kandado.

Frequency count, percentage analysis, mean, and standard deviation are

employed as descriptive statistics, while Mann-Whitney U test, Kruskal-Wallis test

and Pearson’s r are used as inferential statistics.

The .05 alpha level of significance is used as the criterion for the acceptance or

rejection of null hypothesis.

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GRADUATE SCHOOL
Iloilo City

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Chapter 2

Review of Related Literature

This chapter presents and discusses literature to substantiate the

researcher’s conceptual framework and various related studies. It has four major

points: (1) BIR Tax Program, (2) Knowledge, (3) Attitudes and (4)Business

owners.

Part One,

Part Two, Knowledge,

Part Three, Attitudes,

Part Four, Business owners,

Philippine Tax System

Tax. Defined as money that has to be paid to the government by the

people according to their profits on goods and services provided. (Angahar,

2012). It is a transfer from individuals to the government, which can be used to

provide public goods or redistribute towards individuals deemed worthy of

support.
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GRADUATE SCHOOL
Iloilo City

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Tax Purpose.

The most obvious goal is raising revenue to spend on public services: balancing

the potential extra revenue taken by high tax rates with the disincentive to work

and temptation to illegally evade taxes that high tax rates induce. (Reimers, S.

2009)

Tax literacy. According to study made by Madi et al (2010) a person can be

considered functionally literate if he/she can read, write and calculate for his/her

own self. By analogy tax literacy may be defined as follows' a person is

considered functionally tax literate if he/she can

independently read and understand tax reports, can engage independently in var

ious tax calculations and is aware of possible tax risks in its financial

environment.

Nero et. al (2010) cited that tax literacy is the ability to fill in the tax form

and calculate their tax liabilities independently. Emphasize that

respondents should know howto determine tax liability if they know what constit

utes taxable income, deductible deductions, claimable tax reliefs and rebates.

The only aspect that has not been explored in this tax literacy paper is the
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application of tax rate against the taxable income before claiming tax

rebates to arrive at tax payable.

According to Waris and Murangwa (2012) tax literacy is intended to firstly,

help provide information about taxes, secondly, not to support any particular

type or amount of taxes, but to simply explain taxes within a domestic system as

well as a regional and international system, and how it impacts on those being

informed.

Tax Programs

Bureau of Internal Revenue is doing its best in improving the system that

would enforce the tax laws, rules and regulations, and eventually hit hard tax

evaders. Here are some of the programs and tactics that are geared towards

strict tax compliance in the Philippines, discovering lapses, and track down tax

evaders:

Run After Tax Evaders (RATE). is a joint program of the BIR and

Department of Justice (DOJ) to investigate, prosecute and convict tax evaders

for their criminal and other violations of the Tax Code that the BIR would

deemed necessary (e.g. failure to file returns, failure to pay taxes, deliberate

under-declaration of income or over-declaration of expense by more than 30%,

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GRADUATE SCHOOL
Iloilo City

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non-remittance of withholding taxes, keeping more than one books of

accounts, making false entries on book, and more). Under this, taxpayers alleged

for tax invasion from routine audit examination of returns, confidential

information, third-party information, and other sources shall be subjected to a

preliminary investigation with the DOJ for determination of a probable cause. BIR

on the DOJ resolution of probable cause, the tax evader will then be criminally

charged before the regular courts. Finding the tax evader guilty may put them

behind bars. As of this writing, the Philippine tax authorities had already filed

more than hundreds of tax evasion cases and counting. (www.bir.gov.ph)

Oplan Kandado. This program started last January 2009 under Revenue

Memorandum Order No. 3-2009 intended to punish erring taxpayers by

temporarily shutting down business operations of taxpayers based on specific

grounds such as, failure to issue VAT receipt/invoice, failure to file VAT return,

understatement of VATable sales by 30% or more, or failure to register.

A closure order shall be issued by the BIR and will be lifted only upon

compliance as prescribed in the order (e.g. filing and payment of amended VAT

return, registration and payment of compromise penalties, and payment of

deficiency taxes with penalties). (www.bir.gov.ph)

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Tax Compliance Verification Drive in Philippines (TCVD). This is

commonly known to many as “tax mapping” where BIR officers in the Philippines

visits business establishments of taxpayers to verify compliance of taxpayers with

registration, invoicing, and bookkeeping requirements under existing tax laws,

rules, and regulations; This is not in itself a detailed examination but a simple

verification of minor tax compliance with administrative regulations. Each

violation carries an amount of penalty and violators may end up paying a lot

based on the number of violations. Failure to comply may force the Philippine tax

authority to use courts to impose civil and/or criminal liabilities of taxpayers.

(www.bir.gov.ph)

Factors Causing Non-issuance of Receipts

Value of receipts to the customer. Some customers think that receipts

or invoices are just a piece of paper and sometimes could cost them to dispose

these (Fooken, Hemmelgarn& Herrmann, 2014). But, according to the report of

(Star Micronics America, 2015) receipts have a critical value to such customers.

Some of these include: obtaining a refund easily since these serve as proofs of

purchases, reimbursements, reconciling or comparing bank statements and credit

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card transactions and obtaining tax credits. But, not all taxpayers are involve

in advantages of obtaining receipts since, not everyone have credit cards

(Bankrate, 2015), not at all times customer obtain refund and reimbursements

and not all people have business that can take advantage of tax credit given that

they are vat-registered. Because of this, by not asking of receipts and invoices

by customers, businesses are driven to engage in tax evasion (Fooken, 2014).In

fact, Romania in 2015 has introduced fiscal receipts or Vat lotteries

(Bogdan,Taşnadi, DG TAXUD & European Commission, 2015). According to

Fooken (2014), tax receipts lottery has the main target of altering and revamping

the perception of obtaining receipts and invoices by customers through making

such receipts and invoice more valuable to them. By the customers’ desire to be

involved in the lottery that results to always asking for receipts and invoices, it

would be formidable for the businesses to evade from paying the proper taxes.

Thus, the value of having receipts by the customer has a great relationship to

businesses be engaged in tax evasion.

Inadequate awareness and Understanding of Laws by

Businessmen. Before engaging in a business, there has to be regulations to

consider in order to be legally operating. An expert Advices of World Bank Group

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GRADUATE SCHOOL
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(2015) are to have the business registered, obtain licenses and permits.

Also, some of the common legalities are to comply for Certificate of Registration

(COR), Tax Identification Number (TIN), and Authority to print receipts and

invoices from the Bureau of Internal Revenue (BIR) to be able to print receipts

and invoices. Moreover, new businesses as new taxpayers are required to attend

seminars (World Bank Group, 2015). As its nature, businesses are assumed to

maximize profit and to do this, they have to reduce cost or expenses as

Vranceanu (2013) had said.

Taxes are administrative expenses of a business. In the first place, in

reducing tax dues, there is legal and illegal way. The legal way is side-steeping

from payment of tax resulting to tax advantage is tax avoidance. On the other

hand, the illegal way of reducing tax payments by escaping from it through

reducing of tax base and concealing other income is tax evasion (GIZ Sector

Programme Public Finance, 2010). But, sad to say, as said by Sumartaya and

Hafidiah (2014), some taxpayers are unaware of this and fell to reducing tax

liabilities illegally.

Since tax seminars are being conducted in starting up a business, there

should be no reason of excuses of not paying proper taxes. Although seminars

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are being conducted, it is still a question if they totally do understand the

taxation laws, the function of tax in the state, and how are these revenues

spent. As noted by Thiga and Muturi (2015), one of the variables that set tax

evasion among taxpayers is the lack of understanding of the taxation laws.

Because of this, although businessmen are aware of the requirements and some

regulations in the inception of their businesses, lack of understanding of tax laws

includes that the businesses or tax payers are not aware of the stiff penalties in

violating the authorities’ regulations toward implementing strict tax compliance.

Specifically, regulations in tax compliance do include the issuance of receipts or

invoices to make sure that liabilities or tax dues are being paid correctly (Aquino,

2015). In other words, tax evasion is being induced due to inadequate

understanding and awareness in laws and regulations of businesses by not

issuing of receipts and invoices.

Perceived Behavioral Control

People are motivated to do things if they know that they have such abilities

and skills that are required to do these and specially, given that there are no

constraints in performing any particular behavior. As described by Shaharuddin &

et. Al (2012), the perception of individual whether it is formidable or easy for him
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GRADUATE SCHOOL
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to execute such behavior is called perceived behavioral control. In the

economic research of Ham & et al., (2015), perceived behavioral control was

explained in the theory of IcekAjzen (1991) that it greatly impacts the intentions

in doing things because it pertains to individual’s perception in their abilities to

perform such behavior. For this reason according to Kusumawati, Halim, Said

&Mediaty (2014), perceived behavioral control is one of the factors of individual’s

intention of whether said individual would comply for a particular behavior or

not.

In relation to tax, perceived control behavior has a great influence in

taxpayers’ behavior towards tax compliance. Accordingly, present researches of

Damayanti (2012) proved that perceived behavioral control has a significant

effect in taxpayers’ tax compliance. Moreover, perceived behavioral control

becomes greater when other factors are present like past experiences, skills,

adequate needed resources and opportunities (Ham & et al., 2015). With this

they are not formidable in declaring the right amount of tax liabilities

(Shaharuddin & et. Al., 2012). Therefore, businesses would be thinking that

since they were not caught in their past experiences in not complying with tax

with such “skills” that they had possessed, they are again confident in doing tax
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non-compliance again. Non-compliance involves not issuing receipts and

invoices since these prove that transactions happened and taxes be imposed

(Aquino, 2015). Because, perceived behavioral control is a factor of individual’s

intention of whether said individual would comply for a particular behavior or not

(Kusumawati et al., 2014), businesses perception of their ease and difficulty in

not issuing receipts and invoices, greatly influences on their regular issuance of

receipts. Hence, the more behavioral control perceived by businesses perceived

that they can afford of not issuing receipts and invoices, the more likely they will

do it again and again, resulting to tax evasion.

Knowledge

Knowledge defined. According to Epetimehin & Ekundayo (2011),

knowledge is an invisible or intangible asset, in which its acquisition involves

complex cognitive processes of perception, learning, communication, association,

and reasoning.

Knowledge basically refers to a collection or a body of information. This

could mean that the information is embedded in the form of theories, processes,

systems, or it could be voiced in form of opinions, theories, ideas, and analysis.

Knowledge is a complex concept that attracts many philosophers, researchers of

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other disciplines, and practitioners. Different typologies have been

developed but the only consensus is the notion that knowledge is more than just

mere data and information (Omotayo, 2015). Furthermore, Wang & Noe (2010)

define knowledge as information processed by individuals including ideas, facts,

expertise, and judgment relevant for individual, team, and organizational

performance. Knowledge is the insights, understanding, and practical know-how

that people possess. It is the fundamental resource that allows people function

intelligently.

Dimensions of knowledge. Blackler (1995) stated that, knowledge has

five distinct forms: (a) embodied, (b) embedded, (c) embrained, (d) encultured,

and (e) encoded.

Embodied. Blacker (1995) defines embodied knowledge as knowledge that

is gained through training of the body to perform a task. Several authors have

also pointed out that it is impossible to totally disembody this knowledge from

people (Hislop, 2013; Strati, 2007; Yakhlef, 2010).

Embedded. Embedded knowledge is a knowledge that is found in routines

and systems. Organizational common tasks, routines or the common ways

people go about their jobs can hold embedded knowledge, as the routines
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facilitate learning amongst the employees that go beyond their job tasks.

Hislop (2013) confirms this fact by stating that knowledge is embedded, and

inseparable from, practice. Thus workers who carry out these practices also

embodied the knowledge that is embedded in work practices (Yakhef, 2010).

Embrained. Embrained is defined as the knowledge that a person can

possess, but has difficulty expressing in words or sharing with other. It is further

described as a knowledge that one cannot easily write down, talk about with

others, or represent with pictures or other tools. It is gained through experience

over time and may reflect one’s perceptions, opinions, values, and morals.

Encultured. Encultured knowledge is describe as asset of knowledge that

is shared among groups of people who share a similar environment or culture,

such as what is accepted, what actions and opinions are considered normal, and

what behaviors are expected of people.

Encoded. Encoded knowledge is a form of knowledge that can be easily

written down, expressed in words or diagrams, and is transferrable through

multiple channels and means. Procedure manuals, guidelines, process diagram,

flowcharts, recipes and instructions are all examples of encoded knowledge,

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because they are encoded in a physical form that is understandable by a lot

of people.

Therefore in organization, it can be said that organizational knowledge is

embodied and embrained in the staff, embedded in routines/common tasks,

encultured among the staff, and encoded in manuals, guidelines and procedures.

Nonaka & Takeuchi (1995), further argued that knowledge can be

distinguished in two dimensions: (a) tacit, and (b) explicit knowledge.

Tacit knowledge. Tacit knowledge is highly personal (held within the

holder), subjective, difficult to formalize, articulate and communicate fully,

experience based, contextualized, job specific, transferred through conversation

or narrative, not captures by formal education or training and may even be

subconscious but capable of becoming explicit knowledge (Hislop, 2013). It is

hard to verbalize because it is expressed through action based skills and cannot

be reduced to rules and guidelines. According to Omotayo (2015), tacit

knowledge is embrained knowledge and is at the ontological dimension in which

its explication requires the use of metaphors and an extensive process of

socialization.
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Explicit knowledge. Explicit knowledge in contrast is formal and

systematic; can be codified, collected, stored, and disseminated. It is not bound

to a person and primarily the character of data. Explicit knowledge is what can

be captured and shared through information technology. It can be codified into

formal information that comes in tangible forms as written books, documents,

manuals, white papers, guidelines, blueprints, technical specification, scientific

formulas, databases, organizational designs and policy manuals. It can be easily

formalized and documented, articulated, expressed in words or numbers, and

shared formally, as people are aware of it. As it can be processed, transmitted,

and stored relatively easily, it is not difficult for organizations to capture this

knowledge in repositories, systems, or operating technologies and share it

throughout the organizations.

Koenig (2012), however describes this characterization of knowledge into

explicit and tacit rather than too simple. He suggests that knowledge is better

described as explicit, implicit, and tacit. Explicit means information or knowledge

that is set out in tangible form. Implicit is information or knowledge that is not

set out in tangible form but could be made explicit, while tacit is information or
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knowledge that one would have extreme difficulty operationally setting out

in tangible form.

Though dimension knowledge exists, the transfer is still in large part a

transfer of information. Knowledge is the product of the interaction of explicit

and tacit knowledge and the process of creating knowledge results in a spiraling

of knowledge acquisition. It starts with people sharing their internal tacit

knowledge by socializing with others or by capturing it in digital analogue form.

Other people then internalize the shared knowledge, and that process creates

new knowledge. These people, with the newly created knowledge, then share

this knowledge with others, and the process begins again.

Knowledge Management and Project-Based Knowledge. According to

Reich, Gemin, Sauer (2012) “it represent knowledge management as consisting

of three dimensions- knowledge stock, enabling environment, and knowledge

practices. It proposes that knowledge is generated through a range of

knowledge practices, using knowledge stock as input and operating within an

enabling environment. Taken together, knowledge management influences the

creation of three key types of project-based knowledge and also influences the

alignment between these types of knowledge.”

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Knowledge management. The management activities required to

source the Knowledge Stock, create the Enabling Environment, and manage the

Knowledge Practices to result in an aligned set of project based knowledge. Each

of these elements is described below with relevant supporting literature. (Reich,

Gemin & Sauer 2012)

Knowledge Stock. The concept of Knowledge Stock represents the total

cognitive capacity available to the project at the individual, group, and project

organization levels. The importance of knowledge stock has been recognized

within the literature on knowledge loss and failure to learn. The concept of

knowledge stock is comprised of two parts. The first is the store of knowledge

that is possessed by or embodied in members of the project, including vendors

and consultants as well as that inherent in project processes and designmethods

including explicit knowledge represented in documents, models, designs, and

other repositories and meta-knowledge such as knowledge maps. The second

part is the potential to increase knowledge including the project’s absorptive

capacity-the ability to absorb a diverse range of knowledge and make use of

them, and its access to sources of knowledge external to the project such as

knowledge networks.
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GRADUATE SCHOOL
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Combining these two aspects into a definition- Knowledge Stock within

an in IT - enabled business projects is the relevant domain knowledge of the IT

team, the Business team, and the Governance team.

Enabling environment. Prior research conducted by Johnson, P.,

Johnson, H., Waddington, & Shouls (1988) they had identified two broad

conditions that promote effective knowledge practices. One is technological, the

other social. Together these comprise the Enabling Environment.

The technological conditions that support Knowledge Practices consist of

physical resources, typically the IT infrastructure including the communications

infrastructure, project website, shared repositories and other elements of a

technology based knowledge management system. The social conditions relate

to organizational resources, typically the project’s organizational structures and

processes can be seen as defining the formal knowledge channels that support

knowledge transfer and creation. These include arrangements such as

committees, working groups, and liaison groups that help define who will be

involve in group-based knowledge practices and in what ways. There is also a

cultural or project climate element to the social conditions that influences how

readily learning and knowledge sharing occur within the project.

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GRADUATE SCHOOL
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Knowledge practices. The authors also identify this as “the activities

that generate usable knowledge, either explicit or tacit forms. The knowledge

management literature offers high level models of knowledge practices using

concepts such as socialization, internalization, combination and externalization.

However, these concepts are difficult to operationalize and have not been used

in project management research. The best known operationalization of

knowledge practices is Faraj and Sproull’s expertise coordination. It has several

dimensions, namely knowledge appreciation, knowledge “mapping”, and

knowledge sharing. Based on the most influential aspects of expertise

coordination in the context of multiple teams in an IT project, we define

knowledge practices as “actions taken to map and share knowledge within and

between the IT, business, and governance teams in an IT-enabled business

project.

Project-based knowledge. Markus, 2004 (as cited in Reich, B, H.,

Gemino, A., & Sauer, C. 2012) emphasis on the technical artifact, the

organizational transformations which are needed to implement it and the role of

sponsors in achieving business value leads us to focus on three areas of domain

knowledge: knowledge of desired business value (developed by the sponsors or,

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COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

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in our terminology, the governance team), knowledge of the organizational

solution(developed by the business team), and knowledge of the technical

solution (developed by the IT team). Our belief is that knowledge management

creates specific bodies of knowledge within a project; knowledge that is

essential to the successful completion of project goals. Some of this knowledge

will remain tacit, but much of it needs to be made explicit, so that it can be

examined, verified, shared and made correct and complete.

Task–Related Knowledge. Johnson, P., Johnson, H., Waddington &

Shouls (1988) identified that “Task-related knowledge refers to the

understanding of the individuals to its assigned task or job. It is represented in a

person’s memory and that this knowledge can be described by a Task Knowledge

Structure (TKS). The method of analysis has been developed for carrying out

analyses of real world tasks. Task Knowledge is represented in conceptual or

general knowledge structures in long term memory. This is akin to the

theoretical position taken by in assuming that knowledge of frequently occurring

events is structured into meaningful units in memory. Empirical support for our

assumption that people possess something akin to TKSs can be found in the

work of who conducted a series of experiments which show that people

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GRADUATE SCHOOL
Iloilo City

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recognize and use structures of events, such as the order, the sequence and

the importance of activities within the event sequence to understand, explain

and make predictions about those events. Further support for our view that task

knowledge is represented in long term memory comes from the work on text and

story comprehension by in which general knowledge structures relating goals to

causal and enabling states, plans for achieving goals, intermediate states and

alternative solutions or paths are all represented in a conceptual knowledge

structure for the events of the story.”

Factors affecting person’s knowledge. According to Meyer (1990),

“education institutionalizes theories of knowledge and theories of expertise in

society. Academic fields constantly produce new “truths” about the process of

development and new strategies speed the process of modernization.”

Education. Meyer (1990) also identified that “education is the principal

instrument in preparing citizens for better professional training and helping them

adjust normally to their environment. These days, it is doubtful that the only

child may be reasonably expected to succeed in life if he is denied the

opportunity to an education. Learning begins after birth. This calls for early

childhood care and initial education that can be provided through arrangement
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GRADUATE SCHOOL
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involving families, communities, or institutional program as appropriate. The

fundamental aim of education is the transmission and enrichment of common

cultural and moral values. It is in these values that the individual and society

find their identity and worth.

Education is essential to the Filipinos’ life as a nation. Education must be

encompassing by embracing people of all ages, gender and ethnic and social

background. Education for community literacy should be a tool for a human

development and self-reliance but not a compensatory social policy to alleviate

poverty. Education appears as a possible panacea for the problems of the

problems of the world. Among other things, the education system should deliver

equity, productivity, citizenship, tolerance, and development.”

Task elements. Johnson, P., Johnson, H., Waddington, & Shouls, (1988),

stated that “a TKS is composed of a number of task elements which differ in

representativeness. This is similar to the notion of representativeness used by

and to describe the relations between objects and their categorical

representation in memory. We assume that a TKS includes knowledge about

objects (both physical and informational) and their associated actions. This is

based on earlier work by. These objects and their associated actions differ in
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GRADUATE SCHOOL
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how representative they are of the TKS of which they are a part. One

implication of this is that the procedures containing these representative objects

and actions are more central to the TKS than other procedures. Empirical

evidence for the notions of procedural centrality and action/object

representativeness in task behavior can be found in who found that for tasks

such as borrowing a book from a library there were particular segments which

were more central to the particular instantiation of going to the library and more

representative of the class of similar tasks. It is interesting to note that

frequency of occurrence alone was not a reliable indicator of object and

associated action representativeness nor procedural centrality.”

Theory of Task Knowledge Structure. According to Johnson, P.,

Johnson, H., Waddington, & Shouls (1988) A Task Knowledge Structure is a

“summary representation of the different types of knowledge that are recruited

and used in task behavior. A TKS is related to other TKSs by a number of

possible relations.

Within Role Relations. One form relation between TKSs is in terms of

their association with a given role. A person may take time on a number of

roles, for example “author”, “referee”, “teacher” etc. There are tasks associated
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GRADUATE SCHOOL
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with each of these roles. For each task that a role may be required to

perform there will be a TKS. Those tasks

Entrepreneurship knowledge. Simply put, entrepreneurial knowledge refers

to an individual’s appreciation of the concepts, skills and mentality expected of

an entrepreneur (Jack & Anderson, 1999, p. 118). Massad and Tucker (2009)

articulate that this knowledge can be acquired and developed through consistent

exposure to entrepreneurship activities. Accordingly, entrepreneurial learning is

associated with the development of entrepreneurial knowledge. Turker (2009)

identifies two distinct types of entrepreneurial knowledge that complement each

other when determining new venture creation processes. The first type of

knowledge relates to individuals’ ability to recognize entrepreneurial

opportunities. This involves the discovery and evaluation of new venture

opportunities. Recognizing business opportunities involves being able to identify

a market or a group of people facing a particular problem. Solving this problem

often involves the development of an innovative or new approach. For instance,

an Enactus student (or entrepreneur) might recognize that a farming cooperative

run by a group of widows in a certain township is experiencing difficulty in

accessing profitable markets. The entrepreneur recognizes that by helping the

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GRADUATE SCHOOL
Iloilo City

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farmers brand their produce, she can link them to a local grocery store. By

so doing, the entrepreneur effectively acts as both a consultant and liaison,

which entitles her to a small commission. Using the farming cooperative example

above, the second type of knowledge refers to successfully exploiting the

identified opportunity. The entrepreneur develops a viable business model, which

involves the formation and development of a profitable business around the new

venture opportunity. Both these types of knowledge are expected of

entrepreneurs.

Personal attitudes. Personal attitude refers to individuals’ perceptions of the

personal desirability of performing entrepreneurial behavior. According to

Nicolaides (2011), an attitude towards an act is the degree to which a person

has a favorable or unfavourable evaluation or appraisal of the behavior in

question. The later authors seem to have derived their views on personal

attitudes from Ajzen’s (1991) Theory of Planned Behavior (TPB) model. The TPB

pre-supposes that individuals’ attitudes towards certain actions are subjective

conscious phenomena. In the context of entrepreneurship, PA, therefore, refers

to the degree to which individuals hold a positive or negative valuation towards

entrepreneurial behavior (Miralles, Riverola & Giones, 2012). As such, it is both a

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GRADUATE SCHOOL
Iloilo City

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mental affair that deeply lies within oneself. At the same time, the

environment can also influence it. In summary, personal attitude is a mentally

prepared state for any known subject

Business Owners Profile

Sex. There were many studies about tax knowledge based on gender

preferences some of this is the study of Fallan on 1995, he conducted a

studyon the Gender Exposure on Tax knowledge which reports on findings of ge

nder differences on a test of tax knowledge assessing business outcomes. He

found out that test performance is infuenced by business owners exposure to tax

knowledge and to item the content of the test. Men and women learned

tax differently. (Fallan, 1999)

Age. Some argued that even in their young age in business they can still

build their own future (AshleyH, 2013). Older tax payers may be more

experienced and familiar with tax system that they can plan their taxation wisely

contrary to younger taxpayers (Wenzel, 2002). But this was argued by Browning

and Zabriskie which they said, that those younger individual are more ethical

(Ross and McGee, 2011). However, Akaah said, among the factors of non-

compliance, age is not a factor (Ross and McGee, 2011).

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GRADUATE SCHOOL
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According to Hai and See (2011), age variable has an activist

influence on noncompliance behaviour. However in their study it did not mention

which group of age is more prone to tax non-compliant. The researchers will

however include this factor as a determinant in tax non-compliance.

Educational Attainment. Some of the world’s top entrepreneurs drop out

on their higher education and afterwards create their own business like Mark

Zuckerberg who created Facebook. Nevertheless, qualifications in accounting,

marketing and business administration will remain useful throughout not only the

life cycle of an entrepreneurs business, but their career as well

(Hellewell,2013).Ross and McGee (2011) said, if ones possesses higher

education, the higher his respect to consider such laws and more hesitant to tax

non-compliance, and versa. Nevertheless, this was contradicted by the result of

Stulhofer, that with education level, tax non-compliance increases.

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GRADUATE SCHOOL
Iloilo City

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Chapter 3

Research Design and Methodology

This chapter consists of three parts: (1) Purpose of the Study and Research

Design, (2) Method, and (3) Data Analysis Procedure.

Part One, Purpose of the Study and Research Design, restates the objectives

of the study, describes the research design, and identifies the variables used in

the research.

Part Two, Method, describes the participants, the sampling procedure

employed in their selection, the data-gathering instruments, and the procedures

employed in the conduct of the research.

Part Three, Data Analysis Procedures, Explains how the data were statistically

treated and analyzed.

Purpose of the Study and Research Design

Generally, this study aims to determine the knowledge and attitudes on BIR

Oplan Kandado Program among business owners in Iloilo City when classified

according to sex, age, civil status, educational attainment, years in business and

seminars attended.
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GRADUATE SCHOOL
Iloilo City

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The descriptive-survey research was employed, utilizing research-made

instrument duly validated and reliably established to gather data.

According to Efron & Ravid (2013), descriptive research represents the

current conditions of the topic under investigation without trying to change or

manipulate them. This study summarizes existing phenomena by using numbers

to describe groups or individual.

Method

Respondents. This study is confined within Iloilo City. The population of the

study is comprises of ______ businesses registered at BPLO of the City

Government of Iloilo. To narrow the focus of the paper, the researchers

prioritized those businesses which is already operating to atleast 3 years. To limit

the number of six hundred twelve (612) registered businesses in Iloilo City which

belong to the scope of the study, the researchers used 105 as the respondents

of the study, using 10 percent margin of error with 99 percent confidence level.

Table 1 shows the distribution of the participants based on their sex, age,

civil status, educational attainment, seminars attended and years in business.

Table 1

Distribution of the Respondents

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COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

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Category F %

A. Entire Group
B. Sex
Male
Female
C. Age
Below 21 years old
21 - 30 years old
31 - 40 years old
41 - 50 years old
Above 50 years old
D. Civil Status
Single
Married
Seperated
Widowed

E. Educational Attainment
High School Graduate
College Graduate
College Level
Master’s Graduate
F. Years in Business
3 - 5 years
6 - 10 years
11 - 15 years
15 years and above
G. Seminars Attended
NONE
1-5
6-10
More than 10
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COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

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Data Gathering Instrument. The research instrument used in this study

is a researcher-made questionnaire for the business owners in the Iloilo City.

This is designed to determine the knowledge and attitude towards BIR Oplan

Kandado Program among business owners in Iloilo City.

The questionnaire is divided into three parts. Part One is designed to know

the participant’s sex, age, civil status, educational attainment, years in business

and seminars attended.

Part Two contains 20 statement assessing the participant’s knowledge

towards BIR Oplan Kandado Program. A score of 1 is given to each correct

answer.

To interpret the participant’s obtained score, the following numerical scale

and corresponding interpretations is used:

Scale Interpretation

18 - 20 High level of knowledge

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COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

42

14 - 17.99 Average level of knowledge

10 - 13.99 Low level of knowledge

Part Three is composed of 20 statements that measures the participant’s

attitude towards BIR Oplan Kandado Program.

The responses were given the following numerical equivalent:

Score Response

5 Strongly Agree

4 Agree

3 Undecided

2 Disagree

1 Strongly Disagree

Strongly agree meant that the participants conformed to a great extent

with the idea or situation conveyed by the item.

Agree meant that the participants conformed to the idea or situation

conveyed by the item.

Undecided meant that the participants either conformed or dissented with

the idea or situation conveyed by the item.

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GRADUATE SCHOOL
Iloilo City

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Disagree meant that the participants dissented with the idea or

situation conveyed by the item.

Strongly Disagree meant that the participants dissented to a great extent

with the idea or situation conveyed by the item.

To interpret the scores, the researcher used the following scale means:

Scale Interpretation

2.34 - 5.00 Positive

1.67 - 2.33 Neutral

1.00 - 1.66 Negative

Procedure. Permission to conduct the study will be obtained from the office

of the dean of the College of Business and Management. The data-gathering

instruments will be distributed and retrieved personally by the researcher. The

participants will be given an enough time to complete the data and answer the

questions. Upon retrieval of the complete instruments, data will be encoded,

tallied, tabulated, analyzed and interpreted using appropriate statistical tools.

Data Analysis Procedure

The following descriptive and inferential statistics will be use to analyze and

interpret data:
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COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

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Frequency count. The frequency count will be use to ascertain the

number of participants belonging to a specific category as well as the number of

responses to a particular item in the questionnaire.

Percentage analysis. Percentage analysis will be use to find out what part

of the total participants belongs to certain category such as sex, age, civil status,

educational attainment, years in business and seminars attended.

Mean. Means will be utilize to determine the participant’s assessment of

their attitude towards BIR Oplan Kandado Program.

Stardard deviation. The standard deviation will be use to ascertain the

homogeneity and heterogeneity of participant’s knowledge and attitude towards

BIR Oplan Kandado Program.

Mann-Whitney U test. Mann-Whitney U tests will be use to test if there

are any significant difference is existing among the participants as classified

according to sex.

Kruskal-Wallis test. Kruskal-Wallis tests will be use to test if there are

any significant difference is existing when classified according to age, civil status,

educatuinal attainment, years in business and seminars attended.

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COLLEGE OF BUSINESS AND MANAGEMENT
GRADUATE SCHOOL
Iloilo City

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Pearson’s product moment coefficient of correlation

(Pearson’s r). Pearson’s r will be use to identify any significant relationship

between the participants’ knowledge and attitude towards BIR Oplan Kandado

Program.