Scielo RSS http://www.scielo.org.za/rss.php?pid=2222-343620200001&lang=pt vol. 23 num. 1 lang. pt http://www.scielo.org.za/img/en/fbpelogp.gif http://www.scielo.org.za http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100001&lng=pt&nrm=iso&tlng=pt BACKGROUND: Agricultural production is low in Nigeria as a result of low utilisation of farm inputs facilitated by farmers' inability to save and invest. Therefore, credit is needed by farmers to enhance their productive capacity and efficiency in agriculture AIM: Given the importance of credit to farmers, this study examined the nexus between households' access to credit and agricultural production in Nigeria SETTING: The study made use of data from the Living Standard Measurement Study-Integrated Survey on Agriculture (LSMS-ISA) consisting of 4210 households across the 36 states in Nigeria, as well as the Federal Capital Territory, Abuja METHODS: The study employs the propensity score matching (PSM) technique RESULTS: The main result from the study suggests that households who had access to agricultural credit facilities had yields that are thrice those of their counterparts who did not benefit from such facilities. In the event of a shock, the farmers who did not have a source of credit are often forced to adopt measures such as lowering consumption and selling assets, which in the long run worsen their poverty levels CONCLUSION: The study recommends that policymakers should address underlying factors that prevent access to credit for agricultural production, which is capable of raising the productive capacities of farmers http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100002&lng=pt&nrm=iso&tlng=pt BACKGROUND: South Africa's labour productivity at the shop floor remains an issue of central concern for business. It plays a role in the life of every person and the performance of every business, thus requiring the business to solve problems at the shop floor level. This sentiment underpins the concept of a shop floor management (SFM) system. An SFM system refers to the extent of control exercised at the shop floor level for commitment and involvement of shop floor employees aimed at improving productivity. It is a process that facilitates employee engagement. AIM: This study examines the influence of an SFM system for productivity improvement in automotive parts manufacturing companies in South Africa. Productivity in the South African's manufacturing sector is low compared to its counterpart industries in the Asian and Western countries. This sector experiences the lack in short to medium term growth in productivity. SETTING: The automotive parts manufacturing company that has adopted an SFM strategy for productivity improvement participated in the study. METHODS: The study objectives were achieved by examining the production and related experiences in the company. The collection of data was carried out in two phases. This includes the collection of results pre and post-SFM implementation from company records for spoilage, absenteeism and housekeeping rates. The pre-SFM results were quarterly data reflecting the company's performance over the three-year period prior to the implementation of the SFM. This company operates in the eThekwini District Municipality in KwaZulu-Natal RESULTS: The study established that housekeeping and SFM have no relation to labour productivity. However, it revealed the relationship of both absenteeism and spoilage rates with labour productivity. CONCLUSION: SFM is an employee engagement process that creates a working environment that encourage worker participation and commitment. CONTRIBUTION: The original value of this paper is its approach in uncovering strengths and weaknesses of SFM for productivity in South Africa. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100003&lng=pt&nrm=iso&tlng=pt AIM: This article explores the extent to which economic policy uncertainty (EPU) influences selected macroeconomic variables in South Africa (SA). METHODS: To this end, I construct a constant parameter vector autoregressive (VAR) model and a time-varying parameter (TVP) VAR model, where the latter model evaluates if the impact of uncertainty on the macroeconomic variables has changed over time SETTING: The models are estimated using quarterly South African data over the period 1990 to 2015, which include industrial production growth, consumer price inflation, 10-year government bond yield, real effective exchange rate, and economic policy uncertainty. Cholesky ordering of the variables are imposed to recover the orthogonal shocks. RESULTS: The results of the constant parameter VAR model suggest that an unanticipated positive shock to the uncertainty index results in a decline in industrial production and real effective exchange rate, while fostering an increase in the general price level and 10-year government bond yield. Time-varying impulse responses show that the impact of uncertainty shocks on the selected macroeconomic variables has declined systematically over time. This is perhaps intuitive as the new unanticipated information is gradually picked up by media over time and incorporated into rational agents' decision-making. CONCLUSION: The transmission of a positive uncertainty shock to the real economy has time-varying implications. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100004&lng=pt&nrm=iso&tlng=pt BACKGROUND: One of the most compelling arguments for regional trade and integration in Africa is that the African market is the most fragmented in the world, with only 16% of trade being within the continent. Furthermore, with 14 regional economic communities (RECs), the scale of integrated trading compared to the magnitude of trade is cause for concern. Africa could soon witness an important milestone on its path towards increased regional trade and improved integration with the implementation of the Tripartite Free Trade Agreement (TFTA) involving 26 countries. However, addressing overlapping memberships of the RECs and streamlining regulations, customs and border procedures can be a lengthy process AIM: In the meantime, this study aims to identify specific intra-regional trade opportunities among African countries to inform a more targeted approach to regional trade METHODS: This article uses a unique approach based on the Decision Support Model (DSM) to identify intra-regional trade opportunities between the TFTA countries, taking into account each country's import demand and export supply RESULTS: We determined 334 such opportunities among the 26 countries, of which 232 (almost 70%) are newly recognised as not being exploited CONCLUSION: This economic potential calls for policymakers to take a more proactive approach in their actions and recommendations by targeting these trade opportunities http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100005&lng=pt&nrm=iso&tlng=pt BACKGROUND: South Africa is challenged with high levels of unemployment, comprising many people with low levels of education and also individuals who have never held a job before. Despite having many vulnerable participants, interventions aimed at the unemployed generally exclude psychosocial training and are methodologically weak. AIM: The JOBS programme, a scientifically sound intervention, has been developed specifically to help people affected by unemployment to cope with the psychological effects. As a means of applying such a programme in South Africa, this study aimed to develop a framework based on the insights gained on the implementation and evaluation of the JOBS programme. METHODS: The study comprised a systematic review of literature regarding the JOBS intervention and its derivatives (n = 34). RESULTS: The results revealed that populations similar to the unemployed in South Africa had benefitted significantly regarding re-employment and mental health outcomes. CONCLUSION: Suggestions derived from the literature included aiming the programme at the most vulnerable unemployed in South Africa: the youth and long-term unemployed. Furthermore, expanding the programme by adding an entrepreneurial component may yield positive results, considering the lack of employment opportunities in South Africa. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100006&lng=pt&nrm=iso&tlng=pt BACKGROUND: More than three decades of research have failed to achieve convergence on a method for the measurement of non-profit financial condition, with the literature reporting a bewildering array of financial dimensions, and more than 100 ratios and indicators AIM: This article offers a contribution to a broader discourse in non-profit financial analysis by recognising, and taking action in response to, the potential threat to research validity arising from the generally unchallenged presumption that accounting numbers provide a complete, unbiased and error-free representation of an entity's underlying economic reality. SETTING: The 23 South African public universities in continuous existence for the 10 financial years from 01 January 2007 to 31 December 2016. METHODS: From the non-profit financial analysis literature, three foundational models are identified, and 24 associated ratios are specified as candidate indicators of financial condition. These are calculated for each university from accounting numbers which have been adjusted in mitigation of inadequacies of the financial reporting rules. Principal component analysis is applied to evaluate the indicators, and eliminate those which lack significant association with the emergent dimensionality of financial condition. RESULTS: The financial condition of South African public universities is positively associated with liquid discretionary financial assets, which are interpreted as representative of financial resilience and defensive capacity in the presence of economic shock. Unrestricted equity has incremental relevance, suggesting that the universities derive financial benefits from a capital structure in which assets are funded through sources that are burdened with neither debt obligations nor donor restrictions. CONCLUSION: This research appears to be among the first to propose a dimensionality for non-profit financial condition that is developed on a foundation of responding to the need for mitigation of inadequacies in the financial reporting system. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100007&lng=pt&nrm=iso&tlng=pt BACKGROUND: Productivity of the South African work force remains an issue of central concern for business. It plays an important role in the life of every person and the performance of every business. Creating a working environment that encourages worker participation is one way to create the kind of workplace that attracts motivated work teams for productivity improvement. This sentiment underpins the concept of employee engagement. Employee engagement is the level of commitment and involvement an employee has towards their organisation and its values. AIM: This study examines the influence of employee engagement on labour productivity improvement in the automotive assembly organisations in South Africa. SETTINGS: The study objectives were achieved by examining the production and related experiences of an automotive assembly organisation that has adopted an employee engagement strategy for labour productivity improvement. The company operates in the eThekwini District Municipality in KwaZulu-Natal. It assessed if employee engagement is responsible for company's labour productivity. METHOD: The investigation was achieved by collecting quarterly data on absenteeism, employee participation in quality circles and labour productivity before and after the implementation of the strategy. RESULTS: Employee engagement does not have the ability to improve labour productivity in an automotive assembly organisation in South Africa. However, absenteeism rate has an influence on labour productivity resulting from the implementation of employee engagement CONCLUSION: South African organisations should revise their performance management systems and develop employee engagement strategies that help achieve new business goals. Consequently, this study uncovers the strengths and weaknesses of employee engagement for labour productivity improvement in South Africa. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100008&lng=pt&nrm=iso&tlng=pt BACKGROUND: There is an ongoing debate about the effects of bribery on economic performance, where strong arguments are made on the opposing sides. This article investigates the relationship between bribery and the level of workers' wages. The study is a variant of investigations into firms' compression of wages to pay for staff management mutually beneficial business practices. AIM: The aim of this study is to estimate the impact of bribery on the wage performance of formal firms. SETTING: The empirical assessment uses a unique firm-level data set comprising 1141 Nigerian manufacturing firms, some of whom paid bribes to corrupt bureaucrats. METHODS: The study utilised a standard ordinary least-squares estimation technique. To address the potential endogeneity and measurement error bias arising from bribery, we used industry-location average bribe rate as instrument. RESULTS: We find a significant negative effect of bribery on wages to the extent that a one percentage point increase in the rate of bribery reduces the level of wages paid to the workers by about 230 000 naira per worker per annum. A robustness check using the counterfactual evaluation framework of propensity score matching, supports the ordinary least-squares estimation. CONCLUSION: This study lends support to the firm level-based hypothesis that bribery has a detrimental long-term effect on firm performance. In particular, that employers using their monopsony power shift the burden of bribery to the workers through compressing wages. In addition, our results justify the enormous attention of the international community in combating bribery and corruption in Nigeria and other developing countries. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100009&lng=pt&nrm=iso&tlng=pt BACKGROUND: Namibia is an open economy where international trade accounts for a greater proportion of gross domestic product (GDP). Openness of the Namibian economy for the period 2010 to 2018 has been on average 111% of GDP. The high level of openness of the economy raised an important question on the relationship between export and economic growth in Namibia. Previous studies investigated the linear relationship between these two variables. The investigation was also done at an aggregate level. This raises important questions on whether the relationship between export and economic growth is asymmetric. It also raises an important question on whether this relationship is sector specific. AIM: In order to fill the gap in previous research, this study investigates the asymmetric or non-linear relationship between the main export sectors and economic growth in Namibia. A non-linear relationship between the two variables will indicate that negative and positive values of the explanatory variables have different effects on the dependent variable. This analysis is done for the main export sectors of the Namibian economy in order to ensure the policy recommendations are sector specific. SETTING: Standard economic theoretical models on the relationship between export and economic growth are used to test the non-linear relationship between the two variables. The study covers the period 2010-2018 and focuses on the three main export sectors (diamonds, manufactured food and live animal products) and growth of the Namibian economy. METHODS: This study uses non-linear autoregressive distributive lag in order to estimate the asymmetric relationship between the main export sectors and economic growth of Namibia. The estimation is done for the three main exporters of the Namibian economy RESULTS: The results indicate that there is a symmetric relationship between main export sectors and economic growth of the Namibian economy. The results show that an increase (positive values) in export of the three main export products will cause economic growth to improve. Negative values (decrease in export) will cause economic growth to deteriorate. CONCLUSION: The results suggest that estimating the non-linear relationship for different sectors of the economy (instead of estimating the relationship at aggregate level for total exports) will ensure that economic policies are sector-specific. The results further suggest that when exports are declining, expansionary policies will be the appropriate responses. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100010&lng=pt&nrm=iso&tlng=pt BACKGROUND: Quality financial reporting, which requires high quality auditing outcomes, aids the smooth functioning of capital markets. SETTING: The South African audit regulator argues that the key auditor attributes of independence and scepticism are dangerously compromised in South Africa, resulting in impaired audit quality. The regulator responded in June 2017 with the issuance of mandatory audit firm rotation (MAFR) regulations, effective April 2023. This ruling has caused considerable debate and opposing views in the audit industry. AIM: This study explores the state of auditor independence and the degree to which professional scepticism is being exercised by South African auditors of exchange-listed companies through an analysis of the perceptions of experienced key stakeholders. The findings contribute to the rationale behind the regulator's argument for the necessity and efficacy of MAFR. METHOD: The study uses a survey methodology across four key stakeholder groups experienced in matters concerning the audit process, auditor appointment and reliance on the audit outcome on the Johannesburg Stock Exchange RESULTS: Respondents do not believe that auditor independence and professional scepticism are impaired, nor that existing regulations and codes of practice need amendment. In addition, audit failures and corporate financial scandals are not believed to be a result of compromised auditor independence and professional scepticism, nor do longer audit firm tenures impair independence and professional scepticism. CONCLUSION: These perceptions provide evidence against the rationale for MAFR adoption and indicate that it may not be necessary or effective. The study contributes to the South African audit profession in its objective to maintain audit quality. As such, it is relevant to regulators, standard-setters and stakeholders in South African capital markets. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100011&lng=pt&nrm=iso&tlng=pt BACKGROUND: The aim of many public policies is to change behaviour. Governments tend to rely on regulations, taxes and subsidies to effect such change. These measures, which affect agents' economic incentives, have a mixed record. A key insight of the New Institutional Economics is that the efficacy of such formal institutions depends on the strength of their enforcement and the extent to which they are compatible with prevailing informal institutions. AIM: This article uses the road safety situation in South Africa as a case study to explore aspects of the relationships among formal institutions, law enforcement and informal institutions. SETTING: South Africa has a strong suite of road safety laws but poor road safety outcomes. METHODS: The article draws on ideas about the relationships between formal institutions, law enforcement and informal institutions to undertake a case study of the road safety situation in South Africa. RESULTS: The article argues that improved law enforcement cannot fully solve the problem; complementary changes to the informal institutions shaping the behaviour of road users are essential. CONCLUSION: Institutional economists have to take a greater interest in the insights of research in behavioural economics, behavioural and cognitive science and other disciplines in order to provide useful advice in settings where such change is an important policy objective. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100012&lng=pt&nrm=iso&tlng=pt BACKGROUND: Despite the positive role of trust as a complex 'glue' that keeps the parties of an alliance together, it is unclear how trust dynamics may play out among black and white business partners and what such trust experiences may mean for black economic empowerment in South Africa. AIM: The study reflects on the prospects for black economic empowerment by exploring trust experiences of managers involved in business alliances between traditional companies and previously disadvantaged institutions. SETTING: The study focused on managers involved in these alliances in the province of Gauteng in South Africa. METHODS: Twenty-five managers from mainstream companies (n = 7) and emerging companies (n = 18) were selected through purposive sampling. Q-sorting was applied to trust-related items, with follow-up interviews. Principal component factor analysis was used to analyse the Q-sorted data to reveal the managers' clustered perceptions about trust in business alliances. Interview data were thematically analysed to place the findings from the factor structure analysis in context. FINDINGS: The managers shared six nuanced conceptions of trust. Generally, the prospects for black economic empowerment appear greater in the groups characterised by integrity, revealing the centrality of honesty in these alliances. CONCLUSION: Exploring trust in black and white business alliances may help to disentangle the phenomenon of black economic empowerment in South Africa. In a way, managers' perceptions of trust may be used as a barometer for the functioning of these alliances because trust affects managerial behaviour and, ultimately, whether or not such alliances enhance the prospects for black economic empowerment. The study also offers new ways of thinking about and new ways of advancing theory and practice regarding black economic empowerment. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100013&lng=pt&nrm=iso&tlng=pt BACKGROUND: Ethical leadership is viewed as a challenge globally, with person-organisation fit, as well as hope and optimism, being regarded as an essential element of employee well-being and, ultimately, productivity. AIM: The aim of this study is to examine the relationship between the employees' perceived ethical leadership in the organisation and the employees' person-organisation fit, hope and optimism. SETTING: Employees of 30 organisations in South Africa were sampled and there were 1663 respondents. METHODS: A typical positivist methodology - based on an empirical approach, using a cross-sectional design and the quantitative analysis of the data obtained from the surveys - was utilised in this study. RESULTS: It was found that there is a strong, positive relationship between ethical leadership and hope and optimism (as a composite construct). It was further found that person-organisation fit mediates this relationship. CONCLUSION: Recommendations were made to enhance hope and optimism from an institutional (including human resources) as well as leadership level. Recommendations were also made for further research. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100014&lng=pt&nrm=iso&tlng=pt BACKGROUND: Organisations are investing time and resources in implementing play at work. However, the possible effect of play at work as an organisational intervention is largely unknown. AIM: This study aimed to determine the effect of a play-at-work intervention on psychological detachment, work enjoyment, employee performance, and workplace boredom of work teams. SETTING: The sample consisted of 26 telemarketing employees in the Northwest Province, South Africa. METHODS: A longitudinal, three-wave intervention study design was followed. The sample consisted of two work teams from a telesales company divided into the experimental group (n = 9) and the control group (n = 17). A play-atwork intervention consisting of different single-player and multi-player games was developed. Surveys were used to collect data prior to introducing the intervention, after one week of play, and again after the second week of the intervention. RESULTS: The results indicated that the play-at-work intervention positively influenced employees' psychological detachment during their lunch break. Team performance also increased when the play-at-work intervention was introduced. CONCLUSION: Employees who participates in play during their breaks will be more likely to psychologically detach compared to other employees. Also, organisations who implement play will have higher team performance compared to others. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100015&lng=pt&nrm=iso&tlng=pt BACKGROUND: The South African agricultural sector is facing regulatory uncertainty relating to land reform and distribution, restrictive labour policies and minimum wages. Corporate agribusinesses play an important role in the agricultural industry. Increasing political influence on their activities manifested in the lack of government support, and the uncertainty surrounding public policy threatens investment and growth in the sector. This calls for an intelligent integrated enterprise strategy that includes corporate political activity (CPA) SETTING: Four South African agribusinesses and two agricultural associations. AIM: The purpose is to explore the CPA adopted by corporate agribusinesses and agricultural associations in terms of enterprise strategy during times of regulatory uncertainty. METHOD: Qualitative data were collected through semi-structured interviews. A questionnaire, consisting of sections focused on regulatory uncertainty, responses to regulatory uncertainty and strategy, was completed during the interviews. RESULTS: The participants experience significant regulatory uncertainty. There is a clear distinction between the strategic approach to CPA followed by corporate agribusinesses and agricultural associations. The parties surveyed pursue a combination of CPA strategies. A desire for greater cooperation and shared prosperity with government is evident, supported by a strong sense of conducting business ethically, traced across the results. CONCLUSION: This article addresses the role that CPA plays in an integrated enterprise strategy - especially in times of regulatory uncertainty - such as the agricultural industry in South Africa is experiencing. It not only reports on the CPA approach of both corporate agribusiness and agricultural associations, but also describes the strategies agribusinesses follow during times of uncertainty. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100016&lng=pt&nrm=iso&tlng=pt BACKGROUND: The accounting for goodwill under the International Financial Reporting Standard 3 has become generally accepted as a basis for providing useful information to users of financial statements. However, the International Accounting Standards Board has conducted a review of the International Financial Reporting Standard 3, the focus of which is on the revision of the accounting for goodwill. AIM: This article adds to the discussion on the accounting for goodwill by examining its characteristics and considering how these can be used to inform changes to its recognition and measurement. SETTING: The principles of neoliberalism and stewardship, widely regarded as key drivers of developments in financial reporting, are used to frame the accounting for goodwill. METHOD: The research method makes use of correspondence analysis which is a method used to explain complex relationships in a simple diagrammatic manner. In the case of this article, the correspondence analysis is used to show how characteristics of goodwill interact with principles of neoliberalism and stewardship to reveal different perspectives on the accounting for goodwill. The sample selected was 55 chartered accountants, chartered financial analysts and business owners. The chartered accountants are in practice and academia. The reason for this is to give both an academic and practical perspective on the appropriateness of the accounting for goodwill. The reason for the inclusion of the financial analysts and business owners was to enrich the opinions received RESULTS: The research finds that the accounting for goodwill needs revision. CONCLUSION: A hybrid accounting model is revealed that proposes that goodwill be recognised as an asset in its own right (neoliberalism) and that it be amortised and the recognition of the effect of inefficient negotiation of the purchase price be recognised in profit or loss (stewardship). http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100017&lng=pt&nrm=iso&tlng=pt BACKGROUND: Primary labour relationships (PLRs) occur within supervisory relationships. Previous studies confirmed that compliance, fairness, good faith and trust were interrelated facilitators of positive perceptions of primary labour relationship quality. Many researchers regard trust as a primary requirement for effective implementation of formal and psychological employment contracts. AIM: This study investigated the nature and direction of relationships between subordinate employee perceptions of the levels of compliance, fairness and good faith in PLRs and levels of trust in PLRs. SETTING: Two interviewers adopted snowball sampling approaches to conduct structured interviews with 68 subordinate employees residing in Gauteng, South Africa. METHODS: The researcher adopted a mixed-method research methodology that included a thorough literature review, development of a structured interview, interviewing 68 voluntary participants and statistical analysis of data. RESULTS: Confident conclusions were drawn and discussed, and related limitations were explained. Specific recommendations for further research into the relationships and dynamics of trust-related phenomena in PLRs were made. CONCLUSION: It was confidently concluded that literature and empirical findings, jointly and separately, provided ample evidence of positive relationships between subordinate employee perceptions of the levels of trust and their perceptions of the levels of compliance, fairness and good faith in PLRs. Accordingly, it can be confidently expected that lower levels of trust will be related to lower levels of perceived compliance, fairness and good faith in PLRs, and higher levels of trust will be related to higher levels of perceived compliance, fairness and good faith in PLRs. Causality was not investigated in this study. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100018&lng=pt&nrm=iso&tlng=pt BACKGROUND: Exporting poses a challenge to the achievement of inclusive growth because there is a discernible wage inequality between exporting and non-exporting firms. The literature shows that exporting firms pay a wage premium relative to non-exporting firms, with the resultant wage gaps having widened over the years in line with expanding global trade. AIM: Limited research has been done on the distribution of wages within manufacturing exporting firms relative to non-exporting firms in South Africa and how wage differentials might contribute to wage inequality. This article disentangles these wage differentials using administrative firm-level panel data. SETTING: Exporting and non-exporting firms in the South African manufacturing sector. METHODS: By determining the wage differential in a firm at various percentiles, it is found that all employees (across the wage distribution) in an exporting firm earned a wage premium. This premium seemed to increase in magnitude towards the upper tail of the distribution, indicating that the wage differential did contribute to wage inequality. RESULTS: Much of the wage inequality could be explained by the size and labour productivity of a firm. This implies that larger, more productive firms are more likely to be exporters, whereas there was little evidence that wage inequality is driven by either the type of destination country or the quality of export products. CONCLUSION: The findings suggest that the resultant wage inequality is related to the process of exporting or simply a firm being in the export market. Alternatively, wage inequality could be attributable to a specific type of firm (employing a specific type of person with sought-after skills) that had this (unequal) wage distribution before it started to export. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100019&lng=pt&nrm=iso&tlng=pt BACKGROUND: An additional reportable arrangement was added to South African tax legislation by way of a public notice in section 2.6 of the Government Gazette no. 39650 of 3 February 2016 (hereafter referred to as the foreign services reportable arrangement provision). This reportable arrangement relates to service fee payments made by a South African resident (or non-resident with permanent establishment in South Africa) to a non-resident. The services include consultancy, construction, engineering, installation, logistical, managerial, supervisory, technical and training services AIM: The aim of this study was twofold: to critically analyse the reportable arrangement provision by examining undefined terminology contained in this provision and to develop a decision tree that may assist taxpayers in the application of this provision SETTING: Relevant South African literature and tax partners, directors and tax managers at leading audit and legal firms in South Africa METHODS: The study commences with a review of available South African literature in an attempt to define the terms 'arrangement' and 'anticipated', as applied in the foreign services reportable arrangement provision and continues with survey research to validate some of the conclusions drawn in the literature review RESULTS: From the literature review it was determined that although there are South African literature available providing persuasive value to the meaning of some of the undefined terms used in the foreign services reportable arrangement provision, there is no single consolidated source of information which clarifies the exact meaning of the terms in the context of this provision. Hence, survey research was performed to apply the available South African literature in the context of the foreign services reportable arrangement provision. The majority of the respondents in the survey research agreed and validated the assumptions and conclusions drawn from the literature review CONCLUSION: It is therefore submitted that the presented findings may contribute to the limited existing South African literature on the foreign services reportable arrangement provision http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100020&lng=pt&nrm=iso&tlng=pt BACKGROUND: The electricity distribution industry in South Africa is faced with numerous challenges that include distribution capacity shortages and backlog in investments AIM: This study was carried out to investigate the role of regulation in enabling investment in distribution capital expenditure SETTING: The study focusses on the licensed electricity distributors and the energy regulation institution in South Africa METHODS: Primary data for the study was collected through interviews with 16 Energy Regulator officials responsible for analysing and approving electricity distributor tariff applications. Secondary data was collected and analysed through a sample of 112 electricity distributors in South Africa RESULTS: It is established that the National Energy Regulator of South Africa has put a number of processes and methods in place to ensure that electricity distributors (EDs) are efficient in their operations and that the tariffs they charge customers are not excessive and are aligned to specific benchmarks as approved by the regulator. However, a majority of EDs are not performing according to the benchmarks. For instance, they are operating at a negative surplus, which does not allow them to make sufficient investment in infrastructure refurbishment and acquire new infrastructure. The study also discovered that EDs are spending the minimum 6% required by regulation on repairs and maintenance CONCLUSION: The conclusion of the study is that in the absence of a regulatory methodology that allows EDs to earn a required return on assets, benchmarks play a big role in ensuring that they are performing at the level required and that through the surpluses they generate, they can invest in the acquisition of new infrastructure for capital gain. However, regulation alone is not sufficient to ensure that capital investment is adequate; government intervention through infrastructure grants is also necessary and a private sector capital injection http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100021&lng=pt&nrm=iso&tlng=pt BACKGROUND: It is evident from Western literature that performance appraisal (PA) results in innovation. However, evidence of empirical research on the different models on the PA-innovation link is seemingly lacking within the South African environment. The South African context may be unique, given the legislative framework within which PA is administeredAIM: To provide clarity on the specific PA-innovation models within the South African contextSETTING: The PA-innovation relationship is contextualised within the South African context, across more than 50 organisations and more than 3000 randomly selected employeesMETHODS: A quantitative research approach was adopted, using a cross-sectional survey design as the study involved 3180 employees from 53 organisations. Seven variables were included in the model, namely PA, individual innovative behaviour (IIB), proactive personality (PP), transformational leadership (TL), corporate entrepreneurship (CE), work engagement (WE) and affective commitment (ACRESULTS: The results reveal that PA directly influences innovation. The PA-innovation relationship is mediated by WE and AC, with WE having the most significant effect. Furthermore, TL and CE moderate the PA-innovation relationship, with TL having the strongest effect and CE having almost no effect. Additionally, PP does not moderate the PA-innovation relationship. Managing employees with TL practices and instilling WE may be at the root of innovation in organisationsCONCLUSION: The research contributes to the body of knowledge on the PA-innovation link, and the outcomes of this study are expected to be of value to all stakeholders and may assist managers to appropriately assign resources to particular organisational variables, thereby enhancing innovation within organisations. This evidence-based information would help managers to increase innovative behaviour, performance, competitive advantage, organisational success, growth and organisational survival http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100022&lng=pt&nrm=iso&tlng=pt BACKGROUND: Ten years have elapsed since the launch of the International Integrated Reporting Council. Stakeholders increasingly question whether integrated reporting (IR) meets the objectives of decision-usefulness and accountabilityAIM: The primary objective of this study was to assess the usefulness of IR by examining the interrelations between the integrated reporting quality (IRQ), sustainability performance and financial performance of listed companies in South AfricaSETTING: The study is conducted in the country where integrated reporting is most established. The links between the IRQ of the Top 100 companies listed on the Johannesburg Stock Exchange and their environmental, social and corporate governance (ESG) scores and multiple financial indicators are investigated over the period 2013-2018METHODS: The EY Excellence in Integrated Reporting Awards was used as a metric to determine the sample companies' IRQ. These awards were ranked according to four categories, namely 'progress to be made', 'average', 'good' and 'excellent'. Sustainability (ESG scores), as well as financial performance data (accounting-based and market-based variables) were sourced from Bloomberg. The panel data set was analysed by conducting a mixed-model analysis of variance and panel regressionsRESULTS: A high level of IRQ was found to be significantly associated with high levels of ESG performance, as well as high earnings per share and high leverageCONCLUSION: It appears that IR strengthens managerial efficiency and legitimacy in the eyes of debt capital providers in South Africa, while equity capital providers do not provide a clear signal of approval http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100023&lng=pt&nrm=iso&tlng=pt It has been suggested that the South African Reserve Bank (SARB) is not doing enough to support economic growth and employment creation. There is confusion in the public debate, however, as three distinct concepts - the SARB's mandate, ownership and independence - are often inaccurately lumped together and misinterpreted. This clouds the debate, and hinders progress. This article attempts to focus and stimulate the academic debate by distinguishing between these three distinct, yet interrelated, concepts, and to clarify misunderstandings and misinterpretation. It also suggests some avenues through which each could be investigated further, and how different dimensions to the problem could be considered independently. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100024&lng=pt&nrm=iso&tlng=pt BACKGROUND: Academic literature has documented the benefits of technology for the tourism business. However, the influence of the fourth industrial revolution environment on the destination reputation, pre-visit experience, visit intentions and how these affect tourists' satisfaction and loyalty intentions have not received much attention, especially within the African contextAIM: The purpose of this study was to empirically test the effect of this environment on all these variablesSETTING: This study is one of the few empirical types of research conducted in an urban tourism destination centre in a South African contextMETHODS: The study employed a positivist quantitative research methodology. Primary data (N = 235) were collected from tourists who visited the Vilakazi Street precinct during October-November 2019, using the convenient probability sampling approach. For analysis, the study employed structural equation modellingRESULTS: There are positive relationships between the fourth industrial revolution environment and the online reputation and the pre-visit experience. These, in turn, have a positive effect on the intention to visit the precinct, which affects the tourists' feelings of satisfaction after actually visiting the centre. Satisfaction has a positive impact on their loyalty intentionsCONCLUSION: The findings create a space for future research by providing another framework for investigating the usefulness of new technology in the tourism industry, which can also extend to other industries. For managers, the findings can help in the creation of online advertisement strategies, online reputation management and online pre-visit experience enhancement http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100025&lng=pt&nrm=iso&tlng=pt BACKGROUND: Because of doubts about the sufficiency of convention indicators to continually gauge innovative outcomes at the firm level, a burgeoning stream of scholars has shifted their empirical efforts to the theoretical development of non-technical innovationsAIM: This study investigates the contribution of non-technical, innovative, entrepreneurial and marketing endeavours to the development of superior entrepreneurship through two types of firm capabilitiesSETTING: Over several stages, a structured questionnaire form was formulated. Firstly, an extensive review of previous similar research was performed to identify the adoptable scale items. After adjusting the scales based on the feedback from the pre-testers, the final questionnaire comprised 55 items measured on a five-point Likert-type scaleMETHODS: A total of 155 valid questionnaires, with the inclusion of late-responses, were obtained and this represented a response rate of 22%. Particularly, a conceptual model connecting market orientation, organisational learning, non-technical innovation and entrepreneurship was tested using partial least square path modellingRESULTS: In considering the criticality of innovation as the fulcrum of service-based delivery, our model advances the existing empirical approaches with a more intangible dimensionality of innovative efforts. Overall, the model distinguishes that small service firms engaging in dual modes of non-technical innovation strategically nurture intangible capabilities, which in turn provides them with enduring performance outcomes in outperforming competitorsCONCLUSION: The findings could assist small firms in accomplishing new value creation via non-technical innovations http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100026&lng=pt&nrm=iso&tlng=pt BACKGROUND: Based on the static mean-variance portfolio optimisation theory, investors will choose the portfolio with the highest Sharpe ratio to achieve a higher expected utility. However, the traditional Sharpe ratio only accounts for the first two moments of return distributions, which can lead to false portfolio performance diagnostics with the presence of asymmetric, highly skewed returns AIM: With many criticising the standard deviation's applicability and with no consensus on the ascendency of which other risk denominator to consult, this study contributes to the literature by validating the importance of consulting value-at-risk as the more commendable risk denominators for the Johannesburg Stock Exchange METHOD: These results were derived from a novel index approach that produces a comprehensive risk-adjusted performance evaluation score RESULTS: Of the 24 Sharpe ratio variations under evaluation, this study identified the value-at-risk Sharpe ratio as the better variation, which led to more profitable share selections for long-only portfolios from a one-year and five-year momentum investment strategy perspective. However, the attributes of adjusting for skewness and kurtosis exhibited more promise from a three-year momentum investment strategy perspective CONCLUSION: The results highlighted the ability to outperform the market, which further emphasised the importance of active portfolio management. However, the results also confirmed that active and more passive equity portfolio managers will have to consult different Sharpe ratio variations to enhance the ability to outperform the market and a buy-and-hold strategy http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100027&lng=pt&nrm=iso&tlng=pt BACKGROUND: Organisational citizenship behaviour (OCB) plays a substantial role in individual and organisational performance. AIM: The aim of the study was to investigate how moral intelligence and principled leadership can influence trust in the leader and OCB. SETTING: Data were collected from 300 employees from various organisations in South Africa. Purposive, non-probability sampling was used. METHODS: A theoretical model and hypotheses were developed to explain the structural relationships among the latent variables. Data were analysed by means of item analysis and confirmatory factor analysis conducted via structural equation modelling (SEM). RESULTS: High levels of reliability were found for the measurement scales. Good model fit was demonstrated for the measurement and structural models. Empirical support was found for the significant mediating effects of principled leadership and trust in leaders in the indirect relationship between moral intelligence and OCB. The Principled Leadership Scale (PLS) could be used in the selection or development of principled leaders to develop an ethical culture to combat the high levels of corruption that many organisations face. Principled leaders play a key role in creating an ethical and trusting work climate conducive for OCB. CONCLUSION: This study is the first to analyse the joint relationships among the specific latent variables in the structural model. Furthermore, the study provided the first supporting evidence for the concurrent validity of the newly developed PLS. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100028&lng=pt&nrm=iso&tlng=pt BACKGROUND: Undertaking degree studies while working can provide life-changing career opportunities. These studies, however, can introduce substantial work-life balance conflict, particularly for those with family responsibilities, with important implications for retention. AIM: The aim of this study is to test theory that predicts the effects of certain moderating and mediated influences on the relationship between work-life balance conflict and turnover intentions of professional staff undertaking evening degree classes at a selected South African university. SETTING: The sample was drawn from a large university in Gauteng, South Africa. METHODS: This study applies Hayes's PROCESS methodology to test the moderating effects of age, gender, numbers of dependent children, social support, engagement and levels of stress on the relationship between work-life conflict and turnover intentions. Further tests of mediation are performed to test the mediating influence of job satisfaction on the same relationship. RESULTS: Findings suggest a unique configuration of moderating and mediation influences relating to the work-life balance conflict for this cohort, particularly for those with dependent children. Those with more children who experience higher levels of work-life balance conflict are less likely to display higher turnover intentions. Individuals with higher levels of social support are however more likely to report higher levels of turnover intentions. CONCLUSION: These results support the conclusion that the relationships between work-life conflict and turnover intentions for working individuals undertaking evening degree classes in this context, display a different configuration of moderating influences from those expected in general working populations. Employers and other stakeholders should pay particular attention to these implications so as to ensure retention of scarce skills. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100029&lng=pt&nrm=iso&tlng=pt BACKGROUND: It was proposed that if we assess an individual's mental schema, it may facilitate a better understanding of the psychological contract formation process. This will add a theoretical contribution to the anticipatory psychological contract research, as it will enhance our understanding of the specific terms of the psychological contract, which are only present during the organisation entry phase. AIM: We aimed at developing and validating an instrument to measure the psychological contract expectation of university graduate labour market entrees. This information could enhance our knowledge of both the anticipatory psychological contract and psychological contract development. SETTING: The research was conducted on third-year students from two different campuses of a South African university. The sample consisted of a total of 316 participants. METHODS: We used an exploratory quantitative research approach to measure prospective employees' anticipatory psychological contract. The newly developed Psychological Contract Expectations Questionnaire (PCEQ) was administered and analysed RESULTS: Results indicated that some of the instruments within the PCEQ are reliable and valid to measure the anticipatory psychological contract of graduates. The descriptive statistics and correlation coefficient results clearly enhanced our understanding of how the anticipatory psychological contract works. CONCLUSION: Our research contributes to anticipatory psychological contract research by introducing the PCEQ questionnaire to effectively measure the anticipatory obligations, anticipatory expectations, entitlement and anticipatory state of the psychological contract of prospective employees' mental schema. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100030&lng=pt&nrm=iso&tlng=pt BACKGROUND: Consumers are increasingly demanding memorable experiences, thereby placing pressure on businesses to meet these demands. The provision of memorable experiences is particularly important to the tourism industry as its core business is to provide experiences. To stage these experiences, businesses must know which dimensions to include. For this purpose, cognitive dimensions present a reasonable starting point. AIM: The current research aimed to explain and examine the cognitive dimensions that have an influence on the memorability of three marine tourism experiences, namely whale-watching, shark-cage diving and visits to marine protected areas. Marine tourism is one of the most popular forms of tourism worldwide, but also a desperately under-studied field, particularly in South Africa. The results of the research will assist providers and marketers of these activities in satisfying the experience needs of marine tourists by focusing their offerings on those dimensions that will enhance the memorability of the experience. The results will also help fill the gap in knowledge of the cognitive dimensions impacting the memorability of marine tourism experiences. SETTING: The study was conducted in South Africa. METHODS: Data were collected from 444 respondents using an exploratory design, mixed method approach and survey methods. Data were analysed through frequency distributions, Pearson's product-moment correlations and multivariate analysis of variance. RESULTS: Knowledge, meaningfulness, novelty and social interaction positively influence the memorability of marine tourism experiences in South Africa. CONCLUSION: The results indicate that positive interrelationships exist among all the dimensions, suggesting that these dimensions all represent the cognitive domain. Furthermore, the results also indicate that all four dimensions have a positive influence on memorable marine tourism experiences. These findings are important for the enhancement of memorable marine tourism experiences. An understanding of the identified cognitive dimensions in a marine tourism experience will lead to a more memorable experience for consumers and can result in post-purchase behaviour such as a repeat purchase, loyalty and positive word-of-mouth recommendations resulting in increased profitability for the business. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100031&lng=pt&nrm=iso&tlng=pt BACKGROUND: Convincing employees to set aside their self-interests and commit to collective goals is essential for the effective functioning of organisations. It is critical that the impact of different managerial goal-setting styles, and the associated impressions of fair interpersonal treatment in the workplace, is understood from subordinates' perspective. This might clarify the psychological mechanisms involved in motivating subordinates to commit to organisational goals. AIM: The primary aim of this article is to determine the relationship between managers' goal-setting styles and subordinates' goal commitment. The secondary aim is to determine whether this relationship is mediated by interactional justice. SETTING: A total of 451 working adults completed an online or paper-and-pen survey. METHODS: A mediator model was conducted in structural equation modelling with maximum likelihood estimation and Bollen-Stine bootstrapping, with 5000 bootstrap resamples, to test the hypotheses. RESULTS: The perception that managers are deliberative had the greatest positive direct relationship with subordinates' goal commitment, followed by the directive style. Subordinates' perception of managers as complaisant, in turn, were unrelated to goal commitment (amotivational), whereas the perception of managers as hostile had a negative relationship with goal commitment. Informational justice, not interpersonal justice, emerged as the only mediating variable. CONCLUSION: Managers should be encouraged to actively seek feedback from subordinates on their goal-setting styles. Managers can accordingly adapt their behaviour to effectively motivate subordinates to commit to organisational goals. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100032&lng=pt&nrm=iso&tlng=pt BACKGROUND: South Africa has not fully recovered from the 2008 global recession. The World Bank has predicted that South Africa will be one of the worst performers in sub-Saharan Africa in 2020 with tepid growth of 1.3% which is far below the National Development Plan targets growth of 5.4% required a year to reduce unemployment, create decent jobs and generate enough revenue for social development. AIM: We aim to examine whether changes in the components of final demand (changes in government spending, household consumption expenditure, exports, investment spending) have a considerable effect on the sector's gross value added, job creation and tax revenue generation and whether there were changes in the exogenous final demand in die post-recession period. SETTING: We focus on building supply and use tables based on 62 different sectors of the South African economy. METHODS: An economy-wide Leontief multiplier-based model calibrated on a supply and use framework and a micro-simulation model is used to assess post-recession trends in macroeconomic, labour and fiscal multipliers for South Africa. RESULTS: The simulations show that during the post-recession era, the effect of exogenous shock in the economy, like an increase in investment spending, although positive, yields a smaller return in terms of tax revenue, job creation and economic growth. At sector level, the results show that the inter-industry links and industry-consumer links have therefore weakened. CONCLUSION: Our findings imply that the persisting low growth trajectory associated with weaker inter-industry linkages could be exacerbated, while the fiscal austerity measures associated with weaker forward and backword tax linkages could be prolonged. We recommend government should follow a priorities-based spending policy that yields optimal socioeconomic returns. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100033&lng=pt&nrm=iso&tlng=pt BACKGROUND: Prior to 1994, there were artificial restrictions on South African corporations as a result of isolation and sanctions. Thus, corporate unbundling activities in South Africa are still new relative to their overseas counterparts. Of recent, no study has vividly examined the long-run performance of spin-offs and sell-offs on the JSE Limited. In the most recent study on spin-offs and sell-offs, performance was investigated for less than 2 years. Long-run performance of spin-offs and sell-offs should be examined for at least 3 years in line with overseas literature. In order to fill the gap in previous literature, this study updates existing literature, and extends the investigation horizon to 4 years. AIM: This study seeks to investigate the long-run performance of spin-offs and sell-offs on the JSE Limited. SETTINGS: This study matches the performance of an event firm to that of a non-event firm. The matching was done at sector and industrial level, using the value of equity as a matching measure. Performance was examined between 2000 and 2016, for up to 4 years. METHODS: The method of analysis is the matching firm technique under buy and hold abnormal returns. The creation of shareholder's wealth was investigated for 26 spin-offs, 17 parent spin-offs, 16 sell-offs and 23 parent sell-offs. RESULTS: Abnormal returns are significantly positive for spin-offs, parent spin-offs and sell-offs for 1-4 years after unbundling. Only parent sell-offs failed to follow this path CONCLUSION: According to this study, spin-offs and sell-offs unlock shareholders' wealth for up to 4 years on the JSE Limited. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100034&lng=pt&nrm=iso&tlng=pt BACKGROUND: The development of services, infrastructure and logistics has contributed in reducing costs and delays in exchanges between countries, leading to a significant increase in global trade. AIMS: To provide empirical evidence of the relationship between trade facilitation and international trade through logistics performance. SETTINGS: We collected data every 2 years - 2010, 2012, 2014, 2016 and 2018 - over 8 years from 62 countries, including 33 lower-middle-income countries and 29 upper-middle-income countries. METHODS: Structural equation modelling is used to analyse the structural relationships between measured variables and latent constructs. RESULTS: Using mediation analysis, the results reveal a positive and statistically significant relationship between trade facilitation and international trade through logistics performance. CONCLUSION: The results draw the attention of policy makers that improved logistics performance facilitates the movement of goods and services between countries for both importers and exporters. Lower middle-income countries should encourage cooperation between the public and private sectors and focus their efforts on all aspects of the development of transport infrastructure services to improve the efficiency of international trade. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100035&lng=pt&nrm=iso&tlng=pt BACKGROUND: A review of the literature revealed that the demanding and often challenging nature of work increases the turnover intention of employees. This trend is especially evident within the South African financial services industry. AIM: The research goal was to explore and empirically test a theoretical model identifying the most salient causes of turnover intention among sales employees employed by financial organisations operating in the South African financial service industry. SETTING: The study was conducted on employees operating within the financial service industry in South Africa. METHODS: The current study collected quantitative data from 102 employees of insurance or banking or investment companies, using a web-based compilation of standardised questionnaires. This followed a previous study by the research group that collected quantitative and qualitative data from 122 employees operating in an insurance environment, using a combination of an open-ended questionnaire and standardised instruments. RESULTS: The results of the current study confirmed the significance of the paths between turnover intention and employee engagement, time wasted on non-core activities, perceived career development opportunities, and perceived supervisor support, mediated by perceived employee engagement. CONCLUSION: A replication of this study using a longitudinal research design is recommended in order to overcome the methodological limitations of the current study. The conceptual model developed in this study identified relationships that could be used as guidelines to effectively manage the retention of personal financial advisors in the financial service industry in South Africa. http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362020000100036&lng=pt&nrm=iso&tlng=pt BACKGROUND: The contributions of indigenous innovation and foreign direct investments (FDI) inflows are critical elements of economic growth and hence very important for developing economies. FDI inflows have been recognised as having a direct influence on innovation in host countries. The relationship between these two variables is explored and well documented in literature. However, these studies have focused on linear relationships between FDI and indigenous innovation, ignoring a possible asymmetric relationship between them AIM: The current study aims to analyse the existence of hidden cointegration and asymmetries between the two variables using a non-linear approach. SETTING: The focus of this study is on developing countries. Five countries are selected from the regions of Africa, Asia, Europe and South America. These countries are chosen on the basis of economic status (all countries are developing countries) and data availability METHODS: The study employs panel data of 20 developing countries from 1993 to 2017. The study employs the non-linear auto-regressive distributed lag model to test for an asymmetric relationship between the variables. The variables are deconstructed into their negative and positive components to identify possible hidden cointegration and asymmetries that exist between them. This method allows for the detection of long-run asymmetric relationships in a non-linear fashion. RESULTS: The empirical findings show that a long-run cointegration and asymmetric relationship exists between the negative and positive components of FDI and indigenous innovation. For the four regions, positive changes in FDI directly influence positive changes in indigenous innovation. Negative changes in FDI have no effect on the positive changes in indigenous innovation in the countries under study. However, negative changes in FDI influence negative changes in indigenous innovation across the four regions. CONCLUSION: FDI inflows have a positive and significant effect on indigenous innovation in developing countries, and reduction in FDI can lead to reduction in innovation output in the long term. Policy directions in developing countries will be effective if they are centred on non-linear relationships between the investigated variables.