Profit Sharing among Labour, Mudharib and Shahibul Maal under Mudharabah Contract: Evidence from Indonesia

Abstract

This paper aims to study the probability of changes in income distribution as a result of business practice of profit sharing agreement among production factors of workers/labour, managers (mudharib) and investors (shahibul maal) within the framework of mudharabah scheme. The ordered logit econometrics model was applied for this purpose. Data were taken from entrepreneurs/businessmen who applied the mudharabah scheme in Indonesia. The research result shows five variables that determine the probability of changes in distribution. These are business profits, company age, changes in the organisation, total employment and the level of mandate of mudharib.