In some countries, such as India, profit sharing is mandated by law. Thus, companies have to distribute some of their profits to the employees. Which of the following is the key reason for this requirement?
A) These countries are corrupt, and thus they require foreign firms to bribe the workers.
B) This is a requirement for all new foreign investments, as mandated by the United Nations.
C) It is done to punish these companies for colonialism.
D) It allows for a redistribution of wealth at the firm level.

Question

Quizplus · Accepted Answer

Mandating profit sharing is a way to ensure that some of the wealth generated by a company is distributed to its employees, rather than being entirely held by the owners and managers. This can help to reduce income inequality and spread the benefits of economic growth more broadly. It is not related to corruption, foreign investment mandates, or punishing companies for colonialism.

In Some Countries, Such as India, Profit Sharing Is Mandated