Why Do Firms Adopt Profit-Sharing and Employee Ownership Plans?

Profit-sharing and employee ownership in companies have attracted considerable interest, yet there has been little research on factors predicting the adoption and maintenance of these plans. This study uses new data from a survey of 500 US public companies, and panel data on corporate financial variables, to examine factors predicting the presence and adoption of profit- sharing and employee stock ownership plans (ESOPs) in the 1975–91 period. Several findings support productivity-related motivations for such plans (including higher R&D levels among old profit-sharing firms, and recent adoption of job enrichment programmes among new profit-sharing firms), while others support flexibility-related motivations (including higher variance in profits prior to the adoption of profit-sharing plans and ESOPs). Unionized firms were less likely to have either type of plan in 1975, but equally likely to adopt them subsequently (often in concessionary contracts). Comparisons of cross-sectional and panel results illustrate advantages of panel data in disentangling the causes and effects of profit-sharing and ESOPs.     

Transaction costs and crop marketing in the communal areas of Impendle and Swayimana,KwaZulu-Natal

High transaction costs are detrimental to the efficient operation or existence of markets for inputs and outputs. The cost of information and the costs associated with the search for trade partners, the distance to formal markets and contract enforcement are likely to influence the marketing of food crops. This study hypothesises that the level of income generated from food-crop sales by small-scale farmers in the Impendle and Swayimana districts of KwaZuluNatal is influenced by transaction costs and certain household and farm characteristics. Regression analysis shows that the depth of marketing methods is significantly influenced by transaction cost proxies, such as cooperation with large commercial farmers and ownership of means of transport. Results from a block-recursive regression analysis show that the level of crop income generated is determined by the depth of marketing methods, the size of allocated arable land and off-farm income. Households with lower transaction costs, sizeable allocated land and off-farm income can be expected to generate higher income from food crops. Investment in public goods such as roads, telecommunications and an efficient legal system (to uphold commercial contracts), as well as farmer support services (input supply, extension, marketing information and research), would probably raise farm and non-farm income by reducing transaction costs. This would increase the effective demand for locally produced goods and services, thus contributing to rural employment and livelihoods within rural communal areas.     

Recreation Vehicles: The Economics of Ownership

A breakeven point analysis of selected modes of recreational travel in which the costs of ownership and travel use of representative self-contained recreation vehicles are compared with the costs of lodging and travel by private automobile.