Measuring Human Capital as a Predictor of Financial Performance: An Evidence from Indian Private Sector Banks

2019 ◽  
Author(s):  
Nandan Velankar ◽  
Surbhi Pahuja
Keyword(s):  
Human Capital ◽  
Private Sector ◽  
Financial Performance

THE ROLE OF HUMAN CAPITAL IN GAINING AND SUSTAINING COMPETETIVE ADVANTAGE OF COMPANIES

2018 ◽  
Vol 28 (5) ◽  
pp. 1557-1562
Author(s):  
Visar Ademi
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Private Sector ◽  
Small Businesses ◽  
Formal Education ◽  
Good Practice ◽  
Education Institution ◽  
Business Community ◽  
Guest Speaker ◽  
Practical Training

In today’s global competitive arena the term “knowledge economy” is no mere slogan. It points to the very real fact that economic activities are increasingly knowledge intensive and that in this globalized world, success will come to those that are able to generate and harness knowledge in order to stay ahead of the pack. Research shows that in economies that do not have sufficient infrastructure, natural resources or may be designed as high cost base locations, comparative advantage has shifted to knowledge-based activities that cannot be transferred around the world without a significant cost. High knowledge and skills based economies will most likely be able to attract and retain investments in industries with a strong future. It is no secret that good education lies at the heart of economic growth and development. At the same time, improving the quality and relevance of education is enormously difficult not least because there is no one single policy measure that will do so effectively.Macedonia is not exclusion to this fact. The Macedonia’s employers and employees face a huge talent management dilemma. Analyses by all relevant institutions (World Bank, NGOs) and interviews with multiple representatives from the private sector companies indicate that while the labor pool is growing (supply side), it does not provide the skills needed by employers (demand side) so, that they could be competitive and further grow in today’s market. Employers are nearly unified in their criticism of an education system that produces graduates with limited practical experience and no soft skills transferable to the workplace. This is largely due to a lack of experiential education, competency based curricula, pragmatic guidance, which fails to meet the needs of the business community. The burden falls most often on employers to provide practical training, usually on the job. While in-company training is good practice, the scale of the skill gap requires a cost and internal training capability that many enterprises cannot afford, creating a disincentive for businesses to hire new employees.The dilemma has impacted job seekers (official unemployment in Macedonia is around 28% as of December 2017) and contributes to lower overall economic growth. It is especially problematic for micro and small enterprises (MSEs), which make up a large proportion of employment in Macedonia. MSE size and limited capacity makes their employees skills, experience and multitasking capabilities that much more critical for growth. Additionally, MSEs often lack the resources necessary to effectively train and maximize the productivity of their staff. As a result, sustained employment growth within Macedonia must include the development of a pipeline of skilled employees for microenterprises, including bolstering the capacity of small businesses to organize and train their workers. On the other side, the formal education institution dislike they way the private sector manages their employees. According to many of them, this is due to the fact that companies believe that their performance in the market is not directly linked with the human capital performance. In addition, education holds to the belief that private sector companies are not engaged enough in creating the next pool of talents in Macedonia. When they are invited to participate in the classrooms as expert of guest speaker, hire or engage students they show little interest. To conclude, the education institution believes that private sector companies in Macedonia consider the investment in human capital as a cost and not an investment.

The Influence of Human Capital on Financial Performance and Corporate Value

2019 ◽  
Vol 10 (1) ◽  
pp. 47-56
Author(s):  
MULYANINGTYAS MULYANINGTYAS
Keyword(s):  
Human Capital ◽  
Financial Performance ◽  
Firm Value ◽  
Stock Exchange ◽  
Learning Experience ◽  
Vital Role ◽  
Knowledge Capital ◽  
Corporate Value ◽  
Descriptive Approach ◽  
A Company

Human Capital (HC) reflects the knowledge capital of employees of an organization. In this era there was a huge changes in the economic field where human capital would be a factor of production that has a vital role. One way to increase human capital for companies is to increase expertise through learning experience programs. Profitability is a reflection of the financial performance of a company and a company that is well aware of the management of Human Capital, because the good and bad of Human Capital will affect the company's financial position directly and affect the company's profitability in the end. This study aims to determine whether the influence of human capital on firm value with financial performance as an intervening variable in the banking companies on the IDX registered in 2012-2016. This study uses two approaches, namely descriptive approach and explanatory approach. The technique of determining the sample of this study was purposive sampling carried out on banking companies which during 2012 to 2016 were listed on the Indonesia Stock Exchange.

Financial Performance of ECIL, Hyderabad – An Analysis

2013 ◽  
Vol 3 (2) ◽  
Author(s):  
N. Jyothi ◽  
Dr. T. Satyanarayana Chary
Keyword(s):  
Public Sector ◽  
Performance Analysis ◽  
Private Sector ◽  
Financial Performance ◽  
Business Environment ◽  
Present Position ◽  
Short Term ◽  
Comprehensive Manner

Financial performance of individual organizations differ very significantly, however, the performance is distinguishable between public sector companies and private sector companies as their nature and size of investment and business environment is different . The ECIL is a very vast growing company which requires additional funds on a regular basis, whether internal or external. Particularly, the company needs both long term and short-term finances in view of its present position and enormous scope for improvement in the services provided. The present paper is a modest attempt to discuss the financial performance analysis of ECIL, Hyderabad in terms operating profits, capital employed ratios and turnover in a comprehensive manner over a period of 10 years.

scholarly journals The Influence of R&D Intensity on Financial Performance: The Mediating Role of Human Capital in the Semiconductor Industry in Taiwan

2020 ◽  
Vol 12 (12) ◽  
pp. 5128
Author(s):  
Tsung-Chun Chen ◽  
Yenchun Jim Wu
Keyword(s):  
Human Capital ◽  
Financial Performance ◽  
Capital Investment ◽  
Performance Metrics ◽  
Intangible Assets ◽  
Semiconductor Industry ◽  
Value Added ◽  
Positive Influence ◽  
High Tech ◽  
The Relationship

Knowledge transfer is a strategy used by high-tech companies to acquire new knowledge and skills. Knowledge can be internally generated or externally sourced. The access to external knowledge is a quick fix, but the risks associated with reliance on external sources are often overlooked. However, not acquiring such knowledge is even riskier. There have been a slew of litigations in the semiconductor industry in recent years. The acquisition and assurance of intangible assets is an important issue. This paper posits that internal R&D should take into consideration the knowledge intensity and capital investment in the industry. This study focuses on the relationship between intangible assets and financial performance. It sourced the 2004 to 2016 financial data of semiconductor companies in Taiwan for panel data modeling and examined case studies for empirical validation. This study found that the higher the R&D intensity (RDI) in the value-added component of human capital, the better the financial performance of the company. RDI has a positive influence on the accumulation of human capital and financial performance metrics, and such influence is deferred. Meanwhile, human capital is a mediating factor in the relationship between RDI and financial performance. RDI is integral to the semiconductor industry’s pursuit of business sustainability.

scholarly journals An industry analysis of the power of human capital for corporate performance: Evidence from South Africa

2015 ◽  
Vol 18 (4) ◽  
pp. 486-499 ◽  
Author(s):  
Carla Morris
Keyword(s):  
South Africa ◽  
Human Capital ◽  
Financial Performance ◽  
Market Performance ◽  
Value Added ◽  
Further Education ◽  
Bottom Line ◽  
Revenue Growth ◽  
Earnings Per Share ◽  
Capital Efficiency

Even in industrialised emerging economies, the value-generating competencies of a workforce, known as its human capital efficiency, are a key resource for commercial success. The objective of this research is to empirically investigate the relationship between human capital efficiency (as measured by value-added human capital) and the financial and market performance of companies listed on the Main Board and Alternative Exchange (ALT-X) of the Johannesburg Stock Exchange. Return on assets, revenue growth and headline earnings per share were used as financial performance indicators; while market-to-book ratio and total share return were used to measure market performance. Multivariate regressions were performed, with panel data covering 390 companies in the financial, basic materials, consumer services, consumer goods, industrial and technology industries from 2001 to 2011. First, human capital efficiency was found to have no effect on the market performance of listed companies in South Africa. Secondly, higher human capital efficiency was found to result in the extraction of greater returns from both tangible and intangible assets in all industries. Thirdly, higher profitability was found to be associated with higher human capital efficiency in almost every industry in South Africa, with the exception of the technology industry, where human capital efficiency was found to be independent of headline earnings per share. Finally, higher revenue growth was found to be positively associated with human capital efficiency in those industries which are not consumer-driven. In the consumer-driven industries, human capital efficiency contributes to bottom line profitability even though it is not a driver for revenue growth. Overall, the results of this study confirm that human capital efficiency enhances a company’s financial performance, whether it be through a greater capacity for production and service delivery, tighter cost controls or better use of company resources. Management in all South African industries are encouraged to develop the value-creating abilities of their employees through employer-driven personnel enrichment and training programs and by incentivising workers to pursue further education.

Could CSR improve the financial performance of developing countries’ firms? Analyses of mediating effect of intangible resources

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohamed Hamdoun ◽  
Mohamed Akli Achabou ◽  
Sihem Dekhili
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Financial Performance ◽  
Competitive Advantage ◽  
Mediating Effect ◽  
Social Dimension ◽  
Content Type ◽  
Intangible Resources ◽  
The Impact

Purpose This paper aims to examine the link between corporate social responsibility (CSR) and financial performance in the context of developing countries. More specifically, the mediating role of a firm’s competitive advantage and intangible resources, namely, human capital and reputation are studied. Design/methodology/approach The study considered a sample of 100 Tunisian firms. The analysis makes use of the structural equation modelling method to explore the relationship between CSR and financial performance, by including mediator variables. Findings The results confirm that CSR has no significant direct effect on financial performance. In particular, they indicate that the social dimension of CSR has a negative impact on performance. However, CSR does have a positive impact on competitive advantage via the two intangible resources considered, human capital and company reputation. Research limitations/implications The research fills a gap that occurred in the previous literature. In effect, previous studies focussed only on the direct link between CSR and financial performance. In addition, it enriches the limited literature on CSR strategies in the context of developing countries. However, further studies should explore the opposite relationship, i.e. the impact of financial performance on CSR strategy. In addition, the authors believe that amongst other potential research avenues, it would be interesting to study the moderating role of the activity sector. Practical implications From a practical point of view, this study suggests new applications with respect to the link between CSR and financial performance. To enhance their company’s financial performance, managers need to ensure that intangible resources are managed efficiently. Originality/value The paper contributes to the literature by examining how a firm’s intangible resources mediate between CSR and competitive advantage and how competitive advantage mediates between intangible resources and financial performance. Second originality is related to the study of the link between CSR and the financial performance of business organisations in the context of a developing country.

Intellectual Capital Investment, Stakeholders' Value, Firm Market Value and Financial Performance: The Case of Tunisia Stock Exchange

2013 ◽  
Vol 12 (02) ◽  
pp. 1350010 ◽  
Author(s):  
Hedia Fourati ◽  
Habib Affes
Keyword(s):  
Human Capital ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Capital Investment ◽  
Positive Impact ◽  
Stock Exchange ◽  
Value Added ◽  
Market Value ◽  
Market Valuation ◽  
Using Data

The purpose of this paper is to investigate the role of intellectual capital investment in improving the firm's market value, stakeholders' value and financial performance. Using data drawn from 21 listed companies in Tunisia Stock Exchange, we conducted two studies. On one hand, from using Charreaux (Charreaux (2006). La valeur partenariale: Vers une mesure opérationnelle. Cahier de FARGO no. 1061103, November) measure of stakeholders' value, we demonstrate that financials come to present the weakest stakeholders' value and clients monopolises in term of value acquisition due to a weak ability of negotiation of firms. On the other hand, we construct a regression model of Pulic's value added intellectual capital investment (VAIC) as the measure of the value added from intellectual capital, in market valuation and financial performance. Our results stressed the fact that there is a positive impact of intellectual capital by human capital efficiency and capital employed efficiency on improving firm's market value. Nevertheless, financial performance measured by ROA is still justified by the traditional measure relying on capital employed efficiency. Indeed for Tunisian quoted firms, human capital investment is a pilar for ameliorating firm market valuation of financial performance.

scholarly journals Board diversity and financial performance: A graphical time-series approach

2015 ◽  
Vol 18 (3) ◽  
pp. 425-448 ◽  
Author(s):  
Cobus CH Taljaard ◽  
Michael JD Ward ◽  
Chris J Muller
Keyword(s):  
Time Series ◽  
Human Capital ◽  
Financial Performance ◽  
Demographic Data ◽  
Gender Diversity ◽  
Fiduciary Duty ◽  
Share Price ◽  
Theoretical Frameworks ◽  
Data Set ◽  
Board Diversity

Directors need to guide and govern companies on behalf of and for the benefit of shareholders and stakeholders. However questions remain as to whether boards with higher levels of diversity amongst directors are better equipped to fulfil their fiduciary duty than boards with lower levels of diversity. This research examines whether increased levels of diversity within boards are associated with improved financial performance to shareholders. From the literature, several theoretical frameworks that could explain why increased diversity might or might not lead to improved board performance were noted. Share returns and directors’ demographic data were collected for a sample of the largest 40 companies listed on the JSE from 2000 to 2013. This data was analysed using Muller and Ward’s (2013) investment style engine by forming portfolios of companies based on board-diversity constructs. Time-series graphs of cumulative portfolio market returns were analysed to determine if the diversity dimensions tested were associated with improved share performance. The results show that racial diversity within boards is not associated with financial performance. However, increased gender diversity and younger average board age are shown to have strong associations with improved share price performance. These findings are mainly attributed to agency-, resource dependency, human capital and signalling theories. Increased diversity is seen to bolster independence and lessen agency problems. Rising diversity levels also enlarge boards’ external networks, allowing diverse stakeholders’ needs to be accommodated and limiting dependence on strategic resources. Finally, as human capital is increased, the collection of different skills and experiences are associated with better performance. The results, based on a more robust methodology and improved data set, provide additional support to previous studies.

HC and financial performance with two HRM strategies

2017 ◽  
Vol 66 (4) ◽  
pp. 459-478 ◽  
Author(s):  
Nopadol Rompho
Keyword(s):  
Human Capital ◽  
Regression Analysis ◽  
Financial Performance ◽  
Lead Time ◽  
Design Methodology ◽  
Strategy Choice ◽  
Content Type ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to examine the relationship between levels of human capital and financial performance of firms that use two distinct human resource management (HRM) strategies. Design/methodology/approach A survey of 128 HRM managers was conducted to assess differences in human capital between firms using different HRM strategies. A multiple regression analysis was used to investigate the relationship between firms’ human capital and financial performance. Findings The results show that companies employing a make-organic strategy have a higher level of human capital than companies employing a buy-bureaucratic strategy. There was no relationship between the level of human capital and long term financial performance of firms with both make-organic and buy-bureaucratic strategies. Research limitations/implications This research contributes toward understanding the effect of HRM strategy and facilitates an optimal strategy choice depending on the organization. However, this study did not consider the lead time between changes in human capital and the effect on financial performance. Practical implications The research encourages firm managers to understand the value of human capital, preparing them for changes in the future. Originality/value This study is among the first to investigate the relationship between human capital and financial performance considering different HRM strategies.

scholarly journals Do Remittances Enhance Financial Development in Transitional Markets?

2019 ◽  
Vol 22 (4) ◽  
pp. 73-89
Author(s):  
Kunofiwa Tsaurai ◽  
Patience Hlupo
Keyword(s):  
Human Capital ◽  
Stock Market ◽  
Private Sector ◽  
Financial Development ◽  
Positive Influence ◽  
Transitional Economies ◽  
Human Capital Development ◽  
Domestic Credit ◽  
Capital Development ◽  
Market Capitalisation

The paper explored (1) the impact of remittances on financial development and (2) whether the interaction between remittances and human capital development had an influence on financial development in transitional economies using the dynamic GMM approach, with data ranging from 1996 to 2014. Remittances were found to have had a non‑significant positive influence on financial development in transitional economies when stock market turnover, stock market value traded, domestic credit to the private sector by banks, and public bond sector development were used as measures of financial development. When stock market capitalisation, domestic credit to the private sector by financial sector, and private bond sector development were used as measures of financial development, remittances had a non‑significance negative effect on financial development. Using all other measures of financial development except stock market capitalisation (which produced a negative sign), the interaction between remittances and human capital development had an insignificant positive influence on financial development. Transitional economies are therefore urged to avoid over‑relying on remittance inflow and human capital development as sources of financial development.

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