Scielo RSS <![CDATA[South African Journal of Economic and Management Sciences ]]> vol. 20 num. 1 lang. es <![CDATA[SciELO Logo]]> <![CDATA[<b>Determinants of the capital structure of Portuguese firms with investments in Angola</b>]]> BACKGROUND: This article seeks to complement the previous literature and clarify the particularities of the capital structure policy of firms with foreign direct investment in Angola. AIM: This article seeks to identify the determinants of the capital structure of Portuguese firms with direct investment in Angola and to understand whether the determinants normally considered by standard finance theory are in line with those used by firms when structuring their capital structure policy to participate in the specific market of Angola. SETTING: This article examines 26 large Portuguese firms with investments in Angola using econometric panel data for the period 2006-2010. METHODS: The study applied fixed and random effects methods and panel-corrected standard errors that maintain efficiency and unbiased behaviour even in the presence of panel-level heteroscedasticity and contemporaneous correlation of observations among panels. RESULTS: The results provide evidence that the determinants normally considered by standard finance theory are in fact - in terms of sign and coefficient dimension - those used by firms for structuring their capital structure policy when involved in the internationalisation process of entering Angola. Specifically, age, asset structure, return on assets and tangibility have a positive influence on the capital structure of Portuguese firms that have invested in Angola, while non-debt tax shields and liquidity have a negative influence on these companies' leverage ratios. When comparing our results with studies that have analysed the capital structure determinants of listed Portuguese firms - firms belonging to the PSI 20 Index and large firms in the Portuguese corporate sector - we found similarities in the sign and coefficient dimension of the determinants of capital structure. However, the profitability coefficient sign is in line with the trade-off framework (i.e. profitability is positively related to debt) but not with pecking order theory (i.e. profitability is negatively related to debt. CONCLUSION: Our results suggest that the high-growth Angolan market is seen by larger Portuguese firms as a low-risk diversification process because of the economic hardship Portugal has gone through, as well as cultural and linguistic similarities to Portugal. As such, the Angolan market is seen as an extension of the Portuguese domestic market that has increased potential. This scenario potentially reduces the firm default probability and the cost of debt. Maintaining the tax shield benefits of debt and decreasing the cost of debt - through a reduction in the default probability - have induced profitable firms to use more debt. <![CDATA[<b>Firm characteristics and excellence in integrated reporting</b>]]> BACKGROUND: Integrated reporting has attracted much attention in the past few years, and South Africa has taken the lead in its development worldwide. An annual survey is published by Ernst & Young regarding the quality of the integrated reports of the top 100 entities listed on the Johannesburg Stock Exchange (JSE). AIM: The study on which this article is based was aimed at determining whether the assessment of an entity's characteristics can predetermine the quality of the integrated report generated by that entity. SETTING: This article focuses on an analysis of the integrated reporting of the top 100 entities listed on JSE for the financial years ending in 2013, 2014 and 2015. METHODS: Comparison of categorical variables, mixed-model repeated measures ANOVA and generalised estimating equations were applied to identify the best classificators to distinguish between excellent integrated reporting and those reports where progress could still be made. RESULTS: The results show that the type of industry the entity finds itself in, the size and profitability of the entity, as well as the composition of the members of the board, have an effect on the quality of the integrated report. CONCLUSION: Our results indicated that the type of industry, size of an entity, the profitability and composition of the board of directors, all have an effect on the quality of the integrated reporting. Our evidence will assist current and prospective stakeholders in evaluating the expected quality of an entity's integrated report, through the evaluation of certain firm characteristics. <![CDATA[<b>Efficiency of international cooperation schemata in African countries: A comparative analysis using a data envelopment analysis approach</b>]]> BACKGROUND: Efficiency measurement by means of data envelopment analysis (DEA) in the non-profit sector has focused on the so-called Stage I of non-profit organisations, namely, fundraising efforts (which are the most influential determinants of raising funds in order to increase the amount of contributions). However, for the so-called Stage II of non-profit organisations, namely, spending the achieved resources to program services delivery, DEA studies are very scarce. In attempting to address this research gap and to the best of our knowledge, this investigation is the first study that applies DEA to the assessment of international cooperation schemata. Consequently, we offer a significant contribution to the literature by overcoming the limitations of other techniques used to assess the efficiency and providing new insight into the efficiency of targeted different international cooperation schemata (ICS) in international cooperation development projects. AIM: The purpose of this study is to evaluate and compare the efficiency of the ICS of developmental projects funded by the Spanish Agency for International Cooperation for Development. SETTING: Our setting is composed of different international cooperation projects funded with different schemata by the Spanish Agency for International Cooperation for Development between 2002 and 2006 in two African countries that are top priority targets of Spanish international aid: Morocco, and Mozambique. METHODS: Using a sample of 48 international cooperation projects carried out in two African countries considered priorities in the Spanish Cooperation Master Plan, we analyse project efficiency using DEA. RESULTS: The findings suggest that some schemata are more efficient than others when applied to international cooperation projects (ICS). Specifically, we find that permanent open-call subsidies are more efficient than non-governmental development organisation subsidies. CONCLUSION: Measures for evaluating international aid projects with respect to efficiency are problematic. The DEA method provides an ex-post meausure of efficiency that allows for the measurement in a specific and objetive way of the results achieved by each project and to propose corrective actions for the future. The comparison among ICS provides an opportunity to identify the conditions under which an ICs may achieve greater efficiency. <![CDATA[<b>Tax preferences, dividends and lobbying for maximum value</b>]]> BACKGROUND: The value of equity investments depends to some extent on the tax consequences for investors. When groups of investors have different tax preferences, this can lead to conflicting pressures on firms to either retain earnings or pay dividends. The findings of this study will be of interest to researchers of taxation and corporate governance alike, as they highlight the role that corporate shareholders play in the decisions of the firm. Investors and regulators will also be interested in the findings as they reveal more about the interaction between shareholders with conflicting interests. Lastly, changes in behaviour as a result of changes in tax legislation are of interest to those with fiscal responsibility. SETTING: A 2012 dividend tax change in South Africa, which simultaneously altered the tax preferences of individual and corporate investors, provides a unique opportunity to investigate firms' reaction to their investors' tax preferences. AIM: This article seeks to determine whether firms respond to changes in their investors' tax preferences in their decisions to either retain earnings or pay dividends. METHOD: The article investigates the responses of firms to the 2012 dividend tax change using multivariate regressions. RESULTS: Findings show that firms consider changes in the tax preferences of their investors in setting dividend policies. In addition, it appears that corporates have greater success in lobbying for beneficial dividend changes than individuals. CONCLUSION: Changes in investors' tax preferences impact on firms' dividend policy decisions. These decisions ultimately affect the value of the firm to its investors. <![CDATA[<b>Explore changes in the aspects fundamental to the competitiveness of South Africa as a preferred tourist destination</b>]]> BACKGROUND: Tourism is an evolving and changing industry, and keeping up with these changes requires an understanding of the forces and changes that shape this industry's outcomes. Tourism managers struggle daily to stay ahead in the competition to attract more tourists to destinations. Understanding the strengths and weaknesses of the past could shed light on the advantages of the future AIM: The aim of this study was to do a temporal analysis of the competitiveness of South Africa as a tourism destination SETTING: This research investigated the competitive position of South Africa as a tourism destination just after the 1994 elections and compared those results to the results of a similar study in 2014 METHODS: In this article, a frequency analysis revealed South Africa's strengths and weaknesses, after which t-tests indicated the relationship between the strengths and weaknesses of the destination and the factors that contribute to South Africa's competitiveness RESULTS: South Africa's strengths include the quality of the food and experience, scenery, variety of accommodation climate and geographical features. It is clear that respondents identified different attributes that contributed to the strengths of the destination in comparison with 2002, where the strengths were wildlife, scenery, cultural diversity, climate, value for money, variety of attractions and specific icons CONCLUSION: This research is valuable for South Africa because it informs tourism role players about what respondents perceive to be South Africa's strengths. Role players can then form strategies that incorporate the strengths to create competitive advantage. This article also indicates the areas in which the country has grown in the past decade as well as indicating which weaknesses remain a problem <![CDATA[<b>Identifying the determinants of South Africa's extensive and intensive trade margins: A gravity model approach</b>]]> BACKGROUND: The significance of the paper is twofold. Firstly, it adds to the small but growing body of literature focusing on the decomposition of South Africa's export growth. Secondly, it identifies the determinants of the intensive and extensive margins of South Africa's exports - a topic that (as far as the authors are concerned) has not been explored before. AIM: This paper aims to investigate a wide range of market access determinants that affect South Africa's export growth along the intensive and extensive margins. SETTING: Export diversification has been identified as one of the critical pillars of South Africa's much-hoped-for economic revival. Although recent years have seen the country's export product mix evolving, there is still insufficient diversification into new markets with high value-added products. This is putting a damper on export performance as a whole and, in turn, hindering South Africa's economic growth. METHODS: A Heckman selection gravity model is applied using highly disaggregated data. The first stage of the process revealed the factors affecting the probability of South Africa exporting to a particular destination (extensive margin). The second stage, which modelled trade flows, revealed the variables that affect export volumes (intensive margin. RESULTS: The results showed that South Africa's export product mix is relatively varied, but the number of export markets is limited. In terms of the extensive margin (or the probability of exporting), economic variables such as the importing country's GDP and population have a positive impact on firms' decision to export. Other factors affecting the extensive margin are distance to the market (negative impact), cultural or language fit (positive impact), presence of a South African embassy abroad (positive impact), existing free trade agreement with Southern African Development Community (positive impact) and trade regulations and costs (negative impact). In terms of the intensive margin (or the factors influencing the volume of exports), there are strong parallels with the extensive margin, with the exception being that the time involved in exporting has more of an impact than documentary requirements. CONCLUSION: Among the factors contributing to South Africa's exports having largely developed in the intensive margin are a general lack of market-related information, infrastructural weaknesses (both of a physical and technological nature) and a difficult regulatory environment - all of which add to the cost and time involved in exporting. Policymakers have long spoken about the need for the country to diversify its export basket, but now talk about needs to give way to action. The government and its economic partners need to arrive at a common vision of an export sector that will be able to expand into new products and markets, be an active participant in global value chains and deliver sustainable jobs. <![CDATA[<b>Unintended possible consequences of fuel input taxes for individual investments in greenhouse gas mitigation technologies and the resulting emissions</b>]]> BACKGROUND: South Africa is planning to introduce a carbon tax as a Pigouvian measure for the reduction of greenhouse gas emissions, one of the tax bases designed as a fuel input tax. In this form, it is supposed to incentivise users to reduce and/or substitute fossil fuels, leading to a reduction of CO2 emissions. AIM: This article examines how such a carbon tax regime may affect the individual willingness to invest in greenhouse gas mitigation technologies. SETTING: Mathematical derivation, using methods of linear programming, duality theory and sensitivity analysis. METHODS: By employing a two-step evaluation approach, it allows to identify the factors determining the maximum price an individual investor would pay for such an investment, given the conditions of imperfect markets. RESULTS: This price ceiling depends on the (corrected) net present values of the payments and on the interdependencies arising from changes in the optimal investment and production programmes. Although the well-established results of environmental economics usually can be confirmed for a single investment, increasing carbon taxes may entail sometimes contradictory and unexpected consequences for individual investments in greenhouse gas mitigation technologies and the resulting emissions. Under certain circumstances, they may discourage such investments and, when still undertaken, even lead to higher emissions. However, these results can be interpreted in an economically comprehensible manner. CONCLUSION: Under the usually given conditions of imperfect markets, the impact of a carbon tax regime on individual investment decisions to mitigate greenhouse gas emissions is not as straight forward as under the usually assumed, but unrealistically simplifying perfect market conditions. To avoid undesired and discouraging effects, policy makers cannot make solitary decisions, but have to take interdependencies on the addressee´s side into account. The individual investor´s price ceiling for such an investment in imperfect markets can be interpreted as a sum of (partially corrected) net present values, which themselves are a generalisation of the net present values known from perfect markets. <![CDATA[<b>The impact of coaching on the emotional and social intelligence competencies of leaders</b>]]> BACKGROUND: The development of the emotional intelligence of leaders has become an exceptionally popular enterprise. However, the empirical research conducted by practitioners to date does not provide convincing evidence of the effectiveness of emotional intelligence development interventions. Robust and informative research on the effectiveness of coaching to develop the emotional intelligence of leaders is lacking. AIM: The purpose of this study was to determine, describe and evaluate the impact of a theoretically substantiated coaching intervention on the emotional and social intelligence competencies of leaders in a financial services company. SETTING: The setting of the study is a financial services company in South Africa. METHODS: A mixed method approach using a quantitative and qualitative research design was considered appropriate. The quantitative research method consisted of a quasi-experimental design using a non-equivalent pre- and post test control group to measure the impact of the coaching intervention on a sample of 30 leaders. The Bar-On EQ-i scale was selected as a reliable and valid measure of emotional and social intelligence competencies. Wilcoxon's statistic was calculated to determine the statistical significance of score differences between the experimental (N = 30) and control (N = 30) groups. The qualitative research method was comprised of semi-structured interviews with six of the leaders and their supervisors. RESULTS: The statistical results indicated that coaching significantly impacted the emotional and social intelligence competencies of leaders in terms of their overall emotional quotient (EQ), intrapersonal competency, interpersonal skills, stress management, self-regard and empathy. The semi-structured interviews provided rich descriptive themes and evaluations that corroborated the quantitative findings. CONCLUSION: This research provided convincing empirical evidence of the positive impact of a long-term, spaced and goal-focused coaching intervention on the emotional and social intelligence competencies of leaders in a financial services institution. The finding suggests that a theoretically well substantiated coaching intervention and a robust empirical study can be effective in demonstrating the impact of coaching on the emotional and social intelligence competencies of leaders. However, the implications of the limitations pointed out in this study could have influenced the findings, and future research aimed at improving relevant research models should take these into account. <![CDATA[<b>Fractional Black-Scholes option pricing, volatility calibration and implied Hurst exponents in South African context</b>]]> BACKGROUND: Contingent claims on underlying assets are typically priced under a framework that assumes, inter alia, that the log returns of the underlying asset are normally distributed. However, many researchers have shown that this assumption is violated in practice. Such violations include the statistical properties of heavy tails, volatility clustering, leptokurtosis and long memory. This paper considers the pricing of contingent claims when the underlying is assumed to display long memory, an issue that has heretofore not received much attention. AIM: We address several theoretical and practical issues in option pricing and implied volatility calibration in a fractional Black-Scholes market. We introduce a novel eight-parameter fractional Black-Scholes-inspired (FBSI) model for the implied volatility surface, and consider in depth the issue of calibration. One of the main benefits of such a model is that it allows one to decompose implied volatility into an independent long-memory component - captured by an implied Hurst exponent - and a conditional implied volatility component. Such a decomposition has useful applications in the areas of derivatives trading, risk management, delta hedging and dynamic asset allocation. SETTING: The proposed FBSI volatility model is calibrated to South African equity index options data as well as South African Rand/American Dollar currency options data. However, given the focus on the theoretical development of the model, the results in this paper are applicable across all financial markets. METHODS: The FBSI model essentially combines a deterministic function form of the 1-year implied volatility skew with a separate deterministic function for the implied Hurst exponent, thus allowing one to model both observed implied volatility surfaces as well as decompose them into independent volatility and long-memory components respectively. Calibration of the model makes use of a quasi-explicit weighted least-squares optimisation routine. RESULTS: It is shown that a fractional Black-Scholes model always admits a non-constant implied volatility term structure when the Hurst exponent is not 0.5, and that 1-year implied volatility is independent of the Hurst exponent and equivalent to fractional volatility. Furthermore, we show that the FBSI model fits the equity index implied volatility data very well but that a more flexible Hurst exponent parameterisation is required to fit accurately the currency implied volatility data. CONCLUSION: The FBSI model is an arbitrage-free deterministic volatility model that can accurately model equity index implied volatility. It also provides one with an estimate of the implied Hurst exponent, which could be very useful in derivatives trading and delta hedging. <![CDATA[<b>A comparison of the value relevance of interim and annual financial statements</b>]]> BACKGROUND: This study tests the value relevance of interim accounting information. The study also explores whether the value relevance of annual and interim financial statements has changed over time. AIM: It explores whether the value relevance of interim financial statements is higher than the value relevance of annual financial statements. Finally, it investigates whether accounting information published in interim and annual financial statements has incremental value relevance. SETTING: Data for the period from 1999 to 2012 were collected from a sample of non-financial companies listed on the Johannesburg Stock Exchange. METHOD: The Ohlson model to investigate the value relevance of accounting information was used for the study. RESULTS: The results show that interim book value of equity is value relevant while interim earnings are not. Interim financial statements appear to have higher value relevance than annual financial statements. The value relevance of interim and annual accounting information has remained fairly constant over the sample period. Incremental comparisons provide evidence that additional book value of equity and earnings that accrue to a company between interim and annual reporting dates are value relevant. CONCLUSION: The study was conducted over a long sample period (1999-2012), in an era when a technology-driven economy and more timely reporting media could have had an effect on the value relevance of published accounting information. To the best of our knowledge, this is the first study to evaluate and compare the value relevance of published interim and annual financial statements. <![CDATA[<b>Assembly of a conduct risk regulatory model for developing market banks</b>]]> BACKGROUND: The substantial penalties imposed on banks in the recent past for various conduct irregularities have given rise to a new type of risk called conduct risk. Conduct risk comes about when financial services companies conduct themselves in an inappropriate way towards their customers, resulting in a negative (economic) outcome for the customer. What makes the management and mitigation of conduct risk by banks so different is that it cannot be easily integrated into a bank's standard risk management framework. So far, the concept of conduct risk has not been formally covered by the Basel Accords. AIM: There are, however, global efforts by international organisations and local regulators to control it - with little clarity on the 'how'. The aim of this study is to explore this 'how.' SETTING: While regulators need to protect customers, resulting in a positive outcome for the customer, they must also ensure that banks take conduct risk management and its mitigation seriously. At the same time, any regulatory model for conduct risk needs to be incorporated into the existing bank regulatory strategy and methodology and assimilated with the profile of a country. METHODS: An exploratory model that regulators could use to keep conduct risk at bay is developed based on primary and secondary data and this is then applied to the South African, Kenyan and Malaysian milieus to determine what can be learnt about conduct risk in emerging economies. RESULTS: The model investigates the interrelationships between different goals that regulators ideally need to achieve and the findings show that regulators have a difficult task balancing these goals and at the same time achieving a positive outcome. CONCLUSION: Based on the model, the recommendation for regulators in the developing world would be to collaborate in their approach to conduct risk, as they might face similar difficulties and operate in a comparable context. <![CDATA[<b>A supply chain cost reduction framework for the South African mobile phone industry</b>]]> BACKGROUND: The costs incurred in the provision of products and services across the supply chain are on the rise in many industries, including the mobile phone industry. Despite this, there is limited information in South Africa on the perceptions of supply chain players regarding cost reduction in the mobile phone industry. Furthermore, there is currently no framework for reducing supply chain costs in the South African mobile phone industry. AIM: The purpose of this study is to explore supply chain costs in the South African mobile phone industry, and to develop a supply chain cost-reduction framework for the South African mobile phone industry. SETTING: This study explores supply chain costs in four mobile phone companies operating in the South African mobile phone industry, of which three mobile network operators and one mobile retailing group. It uses semi-structured interview data collected in 2011. METHOD: This study adopted a qualitative case study design to understand supply chain costs and develop a supply chain cost-reduction framework for the South African mobile phone industry. Eight semi-structured interviews with managers of mobile phone companies were conducted. The data were analysed with the help of Atlas.ti, using an adapted three-phased analytical framework as suggested by Miles and Huberman (1994) and O' Dwyer (2004). RESULTS: The study found that consolidation of strategic relationships through collaboration and strategic alliances between MNOs and other supply chain players is one of the ways to drive costs down across the supply chain. Outsourcing of some of the support activities and retailers' direct purchasing transactions from device manufacturers were also found to be other avenues for reducing supply chain costs in the industry. CONCLUSION: The study suggests that mobile network operators (MNOs) need to consolidate their strategic relationships by increasing the share of the network infrastructure, and emphasising the need to strive for operational efficiencies. This combined effort should result in significant cost reductions across the supply chain. The findings of this study provided some avenues that managers of mobile-phone companies could consider to drive costs down supply chain-wide and service end-users at lower rates. The findings of this study could also help regulating authorities to get insights into supply chain cost reduction and develop appropriate mobile phone policies in South Africa. <![CDATA[<b>Engagement of employees in a research organisation: A relational perspective</b>]]> BACKGROUND: Increasing work engagement in a sustainable way remains a challenge despite years of research on the topic. Relationships at work are vital to foster engagement or disengagement. While the relational model by Kahn and Heaphy is conceptually appealing to explain work engagement, it lacks empirical support. AIMS: The aims of this study were to investigate the associations among relational factors, psychological conditions (psychological meaningfulness, availability and safety) and work engagement and to test a structural model of work engagement. SETTING: A total of 443 individuals in an agricultural research organisation participated in a cross-sectional study. METHODS: Four scales that measured relational factors, the Psychological Conditions Scale and the Work Engagement Scale were administered. Latent variable modelling was used to test the measurement and structural models. RESULTS: The results confirmed a structural model in which relational facets of job design contributed to psychological meaningfulness. Emotional exhaustion (inverse) and co-worker relationships contributed to psychological availability. Supervisor relationships contributed to psychological safety. Psychological meaningfulness and psychological availability contributed to work engagement, while emotional exhaustion contributed to disengagement. CONCLUSION: The relational context is an important target for intervention to affect the psychological conditions which precede work engagement. To promote work engagement, it is vital to focus on psychological meaningfulness, psychological availability and emotional exhaustion. <![CDATA[<b>A critical analysis of the meaning of the term 'income' in Sections 7(2) to 7(8) of the <i>Income Tax Act</i> No. 58 of 1962</b>]]> BACKGROUND: Section 7 of the Income Tax Act 58 of 1962 (the Act) was introduced as an anti-avoidance measure to prevent tax avoidance by means of a donation, settlement or other disposition in various types of schemes. In terms of this section, in certain circumstances, 'income' is deemed to be income received by or accrued to a taxpayer. Despite the fact that the term 'income' has been used in Section 7 from the time that it was first introduced into the Act and the fact that it is defined in section 1 of the Act, there still remains uncertainty regarding the intention of the legislature and the actual meaning of the term in terms of Section 7. AIM: The objective of the study is to understand whether the term 'income', as used in Sections 7(2) to 7(8) of the Act, is used in its defined sense or if it should be ascribed a different meaning. SETTING: This article examines existing literature in a South African income tax environment. METHOD: A non-empirical study of existing literature was conducted by performing a historical analysis within a South African context. A doctrinal research approach was followed RESULTS: Possible interpretations determined include 'income' as defined in section 1 of the Act, namely 'gross income' (also defined) less exempt income, 'gross income', profits and gains or 'taxable income' (i.e. 'income' less allowable expenditure, deductions and losses) and 'gross income' less related deductible expenses and losses. CONCLUSION: It was found that the meaning of 'income', for purposes of Sections 7(2) to 7(8), remains an uncertainty, and it is recommended that the wording of Section 7 be amended to reflect the intended meaning thereof. <![CDATA[<b>A comparison of South African and German extrinsic and intrinsic motivation</b>]]> BACKGROUND: Various researchers have identified a trend of individuals shifting their preference from extrinsic to intrinsic motivation. The authors aimed to research this phenomenon specifically within the context of two different cultures as to date, this had not been done. This research explored the differing levels of extrinsic and intrinsic motivation in Germans and South Africans. AIM: The main objective of this study was to investigate similarities and differences concerning extrinsic and intrinsic motivation in the workplace between German and South African cultures by examining individuals with working experience and tertiary education specifically. In addition, the research investigated differences in the motivation of respondents with regard to demographics such as gender, age and income. SETTING: The setting took place in South Africa and Germany. METHODS: In the study, exploratory factor analysis was utilised to prove validity of Cinar, Bektas and Aslan's two-dimensional measure of extrinsic and intrinsic motivation. Moreover, analysis of variance and t-tests were used to show differences among demographic variables. Descriptive statistics such as means, central tendency and Cronbach's alpha were also utilised. RESULTS: The results revealed preferences for intrinsic motivational factors for the whole sample with higher levels of intrinsic motivation for the South African respondents compared to German. respondents. Demographic characteristics played a minor role in determining levels of intrinsic motivation within individuals. Culture, however, played the biggest role in determining one's levels of intrinsic or extrinsic motivation. CONCLUSION: These findings play an important role in explaining differences in motivation between the two countries Germany and South Africa. It highlights the important role that cultural differences play in shaping one's form of motivation. <![CDATA[<b>The effect of leadership behaviours on followers' experiences and expectations in a safety-critical industry</b>]]> BACKGROUND: Motivation for this study was found in concern expressed by civil aviation organisations that specialists in the air navigation services provider sector require appropriate and beneficial organisational leadership to encourage, enable and manage transformation within this highly structured setting. Also, academic research puts emphasis on a need for investigations of the roles, expectations and requirements of followers in the leadership-followership relationship. Followers' experiences and expectations of leadership behaviours in an air navigation service provider (ANSP) organisation were investigated and served as orientation and setting applicable to this study. AIM: The aim of the research was to identify and understand how follower experiences and expectations of leadership behaviours in a safety-critical commercial environment can affect leadership training and growth. The above-mentioned motivated this investigation of leadership traits and behaviours within an explicit context and from a follower's viewpoint. SETTING: The setting for the study was twenty two Air Traffic and Navigation Services Company sites where followers' experiences and expectations of leadership behaviours in an air navigation service provider (ANSP) organisation were investigated and served as orientation and setting applicable to this study. METHODS: An ethnographic case study research style was adopted and followed because it allowed for an all-inclusive, holistic narrative report and interpretation. The samples for the quantitative and qualitative components of this study were parallel and methods employed addressed different aspects of the phenomenon, which allowed for a mixed methods research design. A one-way causality in the research design was observed because traits of followers that might influence leaders' behaviours were excluded. Data were collected by means of a Leader Trait and Behaviour Questionnaire completed by participants, individual interviews and focus group consultations. RESULTS: Research findings dispensed a deeper appreciation of followers' epistemological and ontological views, within a specified context, which were supported by a common need to achieve organisational safety objectives. A practical managerial benefit was found in the insights presented by followers of leadership, which can possibly benefit leadership development and training needs, along with training and advancement of followers. CONCLUSIONS: Research findings potentially add to enhancing understanding of leadership development theory, synonymous with a safety-critical commercial setting. A critical insight into the 'unexplored' leadership behaviour qualities found within a safety-critical milieu is subsequently offered. <![CDATA[<b>The contribution of public capital towards economic growth: A KwaZulu-Natal case study</b>]]> BACKGROUND: The adequate supply of infrastructure is essential to ensure increasing productivity and economic growth. Research found this relationship to be significantly positive. The external effects that spending on public capital has on the production function of private firms stimulates economic growth overall. This implies that public capital inputs should be incorporated into the production function. AIM: The way provincial or regional growth depends on infrastructure is investigated in this article and it is applied to data from KwaZulu-Natal province, as an illustration. SETTING: This study investigates the extent to which infrastructure in KwaZulu-Natal province in South Africa leads towards economic growth of the province. METHODS: From a theoretical framework, this article develops an endogenous growth model, which investigates the association between provincial public capital stock expenditure and economic growth. Data series for public capital formation are first developed to apply in this study and others to follow. Econometric techniques are then employed, using quarterly data between 2001 and 2015, to assess the set hypothesis that growth in expenditure on public capital leads to national economic growth. RESULTS: The empirical results support the argument of a positive relationship between provincial capital stock and economic growth in the long-term. The findings also suggests that the long-term causality or effect fades over time, albeit slowly. CONCLUSION: The nature and statistical significance of the long-term equilibrium relationship seems to be ambiguous at best. Some evidence of an equilibrium relationship in the short-term was, however, also observed. In conclusion, there also seems to be some causality between provincial capital stock and provincial gross domestic product in the short-run. <![CDATA[<b>Subconscious responses to fear-appeal health warnings: An exploratory study of cigarette packaging</b>]]> BACKGROUND: Tobacco smoking has serious health and financial implications for both smokers and non-smokers. A wide range of measures have been used over many years to combat this scourge. One of these measures is social marketing communication campaigns. Whether these campaigns are effective has been the subject of some debate. Some of the questions that arise are: What kind of advertising appeals (for instance, informational versus emotional) should be used? Which elements should form part of such campaigns? Some argue that pictures are more effective. Others believe that text-based messages are more effective. Regardless of how these campaigns are structured, they have very little chance of success if they are unable at least to cause arousal (activation) among the target audience. Not only does emotional arousal increase engagement, enhance information-processing and render communication memorable, it also helps to increase the mental accessibility of related knowledge AIM: In this exploratory study, the ability of fear-based pictures and text messages on cigarette packaging to create emotional arousal among consumers is explored. METHODS: Galvanic skin response and eye-tracking methodologies were used. RESULTS: The results indicate that both fear-based pictures and fear-based text messages activated arousal among consumers. CONCLUSION: The extent of arousal is influenced (at least to some extent) by both gender and whether or not the viewer is a smoker. <![CDATA[<b>Non-bank financial institutions and economic growth: Evidence from Africa's three largest economies</b>]]> BACKGROUND: In order for the post-2015 world development agenda - termed the sustainable development goals (SDGs) - to succeed, there is a pronounced need to ensure that available resources are used more effectively and additional financing is accessed from the private sector. Given that traditional bank lending has slowed down, the development of non-bank financing has become imperative. To this end, this article intends to empirically test the role of non-bank financial institutions (NBFIs) in stimulating economic growth. AIM: The aim of this article is to empirically test the existence of a long-run equilibrium relationship between economic growth and the development of NBFIs, and the causality thereof. SETTING: The empirical assessment uses time-series data from Africa's three largest economies, namely, Egypt, Nigeria and South Africa, over the period 1971-2013. METHODS: This article uses the Johansen cointegration and vector error correction model within a country-specific setting. RESULTS: The results showed that the long-run relationship between NBFI development and economic growth is relatively stronger in Egypt and South Africa, than in Nigeria. Evidence in respect of Nigeria shows that such a relationship is weak. The nature of the relationship between NBFI development and economic growth in Egypt is positive and significant, and predominantly bidirectional. This suggests that a virtuous relationship between NBFIs and economic growth exists in Egypt. In South Africa, the relationship is positive and significant and predominantly runs from NBFI development to economic growth, implying a supply-leading phenomenon. In Nigeria, the results are weak and mixed. CONCLUSION: The study concludes that in countries with more developed financial systems, the role of NBFIs and their importance to the economic growth process are more pronounced. Thus, there is need for developing policies targeted at developing the NBFI sector, given their potential to contribute to economic growth. <![CDATA[<b>Conceptualising primary labour relationship quality</b>]]> BACKGROUND: A typology of desirable social conditions in supervisory relationships suggested that such conditions may also be desirable in other forms of labour relationships. A literature review confirmed that trust, compliance, fairness and good faith can be confidently regarded as universally desirable social conditions in all forms of individual or collective labour relationships between employers and employees. AIM: The purpose of this study was to determine if primary labour relationship quality (PLQ) can be confidently conceptualised as a social construct that strongly relates to the perceived levels of compliance, fairness and good faith in supervisory or primary labour relationships. SETTING: A combination of random and convenience sampling approaches was implemented to collect PLQ related data from 454 voluntary respondents, who were subordinate employees in the Tshwane region. METHODS: A quantitative research methodology was adopted. This included conceptual definition of the PLQ construct, objective measurement of PLQ levels of voluntary respondents in an adequately sized sample, factor analysis and testing for relationships and differences in means between variables RESULTS: Data analysis results confirmed that it can be confidently concluded that the conceptual definition of PLQ was valid, and that positive PLQ perceptions of subordinate employees were significantly related to at least two other forms of desirable organisational outcomes. CONCLUSION: PLQ perceptions can be confidently defined as a distinct subjective quality estimate that is assimilated from unique expectations and perceptions of the levels of compliance, fairness, good faith and trust that a supervisor displays in a labour relationship with an immediate subordinate. <![CDATA[<b>Micro-enterprise predicament in township economic development: Evidence from Ivory Park and Tembisa</b>]]> BACKGROUND: In South Africa, the idea that the township economy needs to be 'revitalised' has begun to gain significant political traction. The Gauteng provincial government has responded to this challenge by setting out a strategy that promises to channel resources and create opportunities for micro-enterprises. The paper responds to development interventions such as this through interrogating the nature of the challenges facing micro-enterprises that need to be overcome in South African townships. AIM: In response to the developmental need to stimulate micro-enterprise growth in South African townships, the paper poses the question: what approaches are most likely to have a positive impact on township businesses, given current micro-enterprise dynamics? SETTING: Primary research was undertaken in two neighbouring townships in Gauteng province, in Ivory Park and Tembisa. METHODS: The data comprises a geospatial census of enterprise activities, a survey of select firms and qualitative interviews with business owners. The research utilised a small-area census approach to obtain data on business activities within an area of approximately 2km² in each site. The census enumerated 2509 micro-enterprises in Ivory Park and 1722 micro-enterprises in Tembisa. Firm interviews were conducted with business owners in four sectors: grocery retail, liquor retail, hair care and early childhood development centres. RESULTS: The business census identifies a strong similarity in the structure of the townships' informal micro-entrepreneurship despite the considerable differences in the socio-economic status of the respective case sites. The enterprise survey highlights the resource constraints of township businesses and thinness of local markets. Interviews with entrepreneurs reveal four main pathways through which individuals enter into self-employment with the most dynamic enterprises established by inward investing entrepreneurs. Spatial considerations exert an influence on the position of enterprise sectors, whilst access to land and business infrastructure are notable constraints. CONCLUSION: Reflecting on the evidence, the paper concludes with making a call for a more low-geared development approach, focusing on lessening the legal, institutional and regulatory obstacles to enterprise growth as a first step. Municipalities have an important role in liberalising the spaces and places where township informal enterprises can and should be permitted to trade as well as creating a more favourable business environment. The challenges of crime and finance demand more purposeful action from the national government. <![CDATA[<b>The impact of social grant dependency on smallholder maize producers' market participation in South Africa: Application of the double-hurdle model</b>]]> BACKGROUND: Social grants have become an increasingly popular means of improving the welfare of poor households in South Africa and beyond. While the goals of these transfers are to alleviate current poverty as well as to improve human capital capacity, they also have unintended effects, positive or negative, on beneficiary households. A question that has not been adequately addressed in the literature is the role that social grants play in the efforts to commercialise smallholder farming. AIM: The aim of this study was to examine the impact of social grant dependency on the incentives of smallholder maize producers to participate in the market. SETTING: The study was done in the rural areas of four districts (Harry Gwala, Umzinyathi, Umkhanyakude and Uthukela) in the KwaZulu-Natal province, South Africa. METHODS: The study adopted a quantitative research design. A total of 984 households were randomly selected from the four districts, of which 774 had planted maize in the previous season. The analysis was done on the 774 farmers who had planted maize. The double-hurdle model was used for statistical analysis. RESULTS: The results show a negative association between social grant dependency and market participation, suggesting that social grant-dependent households are more subsistent, producing less marketable surplus. Moreover, households with access to social grants sold less quantities of maize in the market, indicating reduced selling incentives. CONCLUSION: The study indicates that social grants reduce the incentives of smallholder farmers to commercialise their production activities. The results suggest that, while policies aimed at reducing transaction costs would increase smallholder market participation, attention should be paid on how to reduce social grants' dis-incentive effects. To reduce spill over effects to unintended household members, the study recommends offering part of the grant as 'in-kind support', which is specific to the intended individual beneficiary. <![CDATA[<b>The role of quantity surveyors in public-private partnerships in South Africa</b>]]> BACKGROUND: Quantity surveyors play an important role in providing cost and contractual advice in the built environment. This article seeks to investigate the current extent of their involvement in public-private partnerships (PPPs) in South Africa. AIM: The study intends to establish factors that influence quantity surveyors' participation in PPPs. METHODOLOGY: A mixed-methods research approach was followed by firstly conducting a survey amongst South African quantity surveyors in order to determine their level of participation in PPPs. For triangulation purposes, a case study was also conducted. RESULTS: The results of the research show that, although quantity surveyors have the corresponding skills and competencies required in a PPP project, their current involvement in PPPs in South Africa is limited and that there is a greater role they can play in future. CONCLUSION: Quantity surveyors are uniquely positioned to play a bigger role in the implementation of PPPs in South Africa. <![CDATA[<b>Ethical perceptions of employees in small retailing firms: A case of indigenous-owned fast-food outlets in Zimbabwe</b>]]> BACKGROUND: Although the subject of ethical business practices has a well-established tradition in large corporations where shareholder value maximisation is largely dependent on such entities' conduct of good business ethics, its investigation in small businesses in agile, economically depressed economies such as that of Zimbabwe has targeted business owners and managers but excluded their employees. Given the middleman role that employees of emerging indigenous-owned retail firms play in the distribution chain from manufacturers to the consumers, the ethical perceptions of these employees are critical to the leveraging of businesses' strategic orientations. Employees are the coal face of the firm, withering intense competition from these firms' rivals and achieving the firms' strategic orientations (profitability, market share, business growth and survival). In order to meet stakeholder expectations simultaneously largely depends on the ethical conduct of such employees. AIM: The overall aim of this study is to contribute to ethical theory and literature by demonstrating how employees' ethical perceptions and behaviour shape the strategic orientations of the business. To achieve this aim, the study sought to: (1) establish the typical ethical dilemmas that employees of these retail firms faced in their daily tasks, (2) assess how they responded to these ethical challenges, (3) ascertain whether demographic factors such as age, level of education, gender and their position in the organisational hierarchy influence their reaction to ethical dilemmas; and (4) determine these employees' overall perceptions of ethical issues within their organisations. SETTING: The study was conducted on employees of an indigenous-owned fast-food firm operating in two cities in Zimbabwe. METHODS: A survey was conducted on 108 employees working in two cities. A structured questionnaire was developed and administered to the employees. RESULTS: The results suggested that a majority of the respondents were ethically conscious and could make ethical choices. In addition, most respondents deemed the ethical scenarios presented to them as morally wrong, suggesting that the surveyed employees wished to engage in ethical behaviour. However, while the respondents were deemed to be ethically astute in their individual capacities, they seemed to lack an in-depth knowledge of the ethical policies of their organisation. CONCLUSION: The study concludes that owners and managers of small firms should provide interventions to cascade ethical policy to the lower ranks of the organisation to enhance the ethical perception amongst employees of these firms. The study implication is that an institutional top-down approach is critical to embedding ethical sensitivity into employees without which employees may continue to speculate about the business ethics of their organisation. <![CDATA[<b>The empirical relationship between the managerial conduct and internal control activities in South African small, medium and micro enterprises</b>]]> BACKGROUND: Although South African small, medium and micro enterprises (SMMEs) play an imperative role in the stimulation of the national economy, previous research studies show that these business entities have severe sustainability problems as approximately 75% of them fail after being in operation for only 3 years. The latter dispensation is pinned on the belief that South African SMMEs make use of inadequate and ineffective internal control systems. AIM: Since a system of internal control comprises five inter-related elements, while also taking into consideration that management is ultimately responsible for the internal control in their respective business entities, which is greatly influenced by their managerial conduct, this research study placed focus on determining the relationship which exist between the managerial conduct and the internal control activities evident in South African SMMEs. SETTING: This study was conducted in the Cape Metropole, South Africa by obtaining responses from 240 stakeholders of SMMEs: 120 members of management and 120 employees. METHODS: In order to achieve the latter, quantitative data were collected through a questionnaire and analysed accordingly through both descriptive statistics and inferential statistics. RESULTS: From the results, a very weak negative statistically significant relationship was identified between the managerial conduct and the internal control activities evident in South African SMMEs. CONCLUSION: Essentially, management and employees should revisit the internal control activities evident in their respective SMMEs through placing emphasis on those internal control activities which can be built on their control environment. <![CDATA[<b>The impact of monetary policy on household consumption in South Africa: Evidence from vector autoregressive techniques</b>]]> BACKGROUND: This article adds to scarce sub-Saharan African and South African literature on monetary policy transmission mechanisms by looking into: (1) the Keynesian interest rate channel of monetary policy transmission in South Africa, focussing on the behaviour of household credit and household consumption; (2) using the time-varying parameter vector autoregressive (VAR) techniques with stochastic volatility to capture the time-varying nature of the underlying structure of the South African economy to see whether it performs better than the constant parameter VAR in so doing and (3) policy implications emerging from the findings of the study. AIM: In testing the hypotheses of the interest rate channel of monetary policy transmission, the aim is to see how household credit and ultimately household consumption have evolved in South Africa: (1) before inflation targeting (1994-1999), (2) after inflation targeting (2000-2007) and (3) during the global financial crisis (2007-2012) in response to different monetary policy positioning. SETTING: We focus on three periods: post transition from apartheid, during inflation targeting and during the global financial crisis, periods which saw changes in the monetary policy stance in South Africa METHODS: Quarterly data from 1994Q1 to 2012Q4, constant parameter VAR and time-varying parameter vector autoregressive (TVP-VAR) techniques are used in this study. The use of the TVP-VAR is to capture the time-varying nature of the underlying structure of the South African economy and also to investigate whether it performs better than the constant parameter VAR in so doing. RESULTS: The results show that household credit and consumption declined and stayed negative post transition and after inflation targeting - periods of monetary tightening in South Africa - but increased during the global financial crisis, which saw expansionary monetary policy measures aimed at mitigating the negative output gap in South Africa. CONCLUSION: These changes in household credit and consumption across the different time periods show evidence of the cost of credit effect of monetary policy on household consumption in South Africa. They further reflect the impact of different structural changes and exogenous shocks on monetary policy conduct in South Africa and its pass through effect on household consumption in South Africa. We further conclude that the time TVP-VAR with stochastic volatility performs better than the constant parameter VAR in capturing the time-varying nature of the underlying structure of the South African economy. <![CDATA[<b>An investigation into the future of discretionary trusts in South Africa: An income tax perspective: Part 2</b>]]> BACKGROUND: Trusts have long been used as an estate planning mechanism, including the avoidance of estate duty and donations tax. In the 2016 National Budget the Minister of Finance indicated that Government was proposing several legislative measures during 2016/2017 to prevent individuals from using a trust to avoid estate duty (and donations tax to a certain extent). Unexpectedly, the 2016 draft Taxation Laws Amendment Bill and the final Amendment Bill did not give effect to any of these proposals, but introduced other less drastic measures to control the abuse of trusts for tax purposes, albeit with the same stated purpose. AIM: The main aim of the study was to clarify the reform proposals (albeit unclear and consequently based on certain assumptions) and to compare the reform proposals with the final amendments. This comparison will shed some light on the fairness and appropriateness of the final amendments and, more importantly, on the possibility that the reform proposals published by National Treasury in February 2016 not included in the final amendments will be enacted in the future. This investigation will assist tax practitioners and taxpayers in effective tax and estate planning, given that the reform proposals and final amendments have a possible impact on the future of discretionary trusts in South Africa. SETTING: This article examines existing literature in a South African income tax environment. METHODS: In order to meet this objective a qualitative approach based on a literature study of pure theoretical aspects was used. RESULTS AND CONCLUSION: It was found that should the reform proposals become law, many trusts would become ineffective from a tax-planning perspective and these changes might erode other benefits trusts offer, jeopardising the future of discretionary trusts in South Africa. <![CDATA[<b>The probabilistic innovation theoretical framework</b>]]> BACKGROUND: Despite technological advances that offer new opportunities for solving societal problems in real time, knowledge management theory development has largely not kept pace with these developments. This article seeks to offer useful insights into how more effective theory development in this area could be enabled. AIM: This article suggests different streams of literature for inclusion into a theoretical framework for an emerging stream of research, termed 'probabilistic innovation', which seeks to develop a system of real-time research capability. The objective of this research is therefore to provide a synthesis of a range of diverse literatures, and to provide useful insights into how research enabled by crowdsourced research and development can potentially be used to address serious knowledge problems in real time. SETTING: This research suggests that knowledge management theory can provide an anchor for a new stream of research contributing to the development of real-time knowledge problem solving METHODS: This conceptual article seeks to re-conceptualise the problem of real-time research and locate this knowledge problem in relation to a host of rapidly developing streams of literature. In doing so, a novel perspective of societal problem-solving is enabled. RESULTS: An analysis of theory and literature suggests that certain rapidly developing streams of literature might more effectively contribute to societally important real-time research problem solving if these steams are united under a theoretical framework with this goal as its explicit focus. CONCLUSION: Although the goal of real-time research is as yet not attainable, research that contributes to its attainment may ultimately make an important contribution to society.