Exploring the impact of various typologies of human capital on firms' productivity
World Journal of Entrepreneurship, Management and Sustainable Development
ISSN: 2042-5961
Article publication date: 6 May 2020
Issue publication date: 2 June 2020
Abstract
Purpose
Although the impact of human capital on productivity has long been discussed in prior studies, empirical evidence for African firms remains limited. The existing few studies have focussed on one type of human capital in isolation and failed to explore the distinct role of different types of human capital on productivity. The aim of this study is to examine the extent to which various typologies of human capital – schooling, on-the-job training (OJT) and slack time –, both in isolation and as a combination, contribute to the productivity of African firms.
Design/methodology/approach
To this end, a cross-sectional firm-level data set from 13 African countries was used. To unravel the casual relationship, propensity score matching (PSM) and multinomial endogenous switching treatment regression (MESTR) techniques were employed.
Findings
Results indicate that all typologies of human capital – schooling, slack time and OJT – have a significant and positive impact on firms' productivity. The findings of the study further point out that the highest payoff, in terms of increased productivity, is achieved when various typologies of human capital are used in combination, rather than in isolation, in the production process.
Practical implications
The policy implications are that productivity of African firms can be improved by increasing the general level of schooling; encouraging firm-sponsored OJT; and giving employees time to develop new ideas.
Originality/value
The present study provides important insights into the distinct role of different types of human capital on productivity. In addition, it provides empirical evidence for a region where empirical evidence is scant.
Keywords
Acknowledgements
The author is grateful for the helpful comments and suggestions provided by anonymous referees and editor of the journal.
Citation
Hussen, M.S. (2020), "Exploring the impact of various typologies of human capital on firms' productivity", World Journal of Entrepreneurship, Management and Sustainable Development, Vol. 16 No. 3, pp. 231-247. https://doi.org/10.1108/WJEMSD-12-2019-0095
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited