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Article
Publication date: 2 April 2020

Benny Hutahayan

Analyze the importance of sustainable innovation strategy applied in manufacturing companies in Indonesia which affects the company's financial performance through several…

3268

Abstract

Purpose

Analyze the importance of sustainable innovation strategy applied in manufacturing companies in Indonesia which affects the company's financial performance through several mediating variables.

Design/methodology/approach

The population in this research was medium and large manufacturing company business units in East Java. Business units are part of a company considered as the profit center. The business unit as the unit of analysis in this research is part of the organization that: (1) is responsible for the production and marketing of a product or set of products; (2) is formed by product type; (3) has its own competitors which are different from competitors of other business units or divisions within a parent company; (4) has a manager who is responsible and has authority over the planning and implementation of strategies to achieve the specified profit target.

Findings

Innovation strategy has a significant effect on financial performance. Human capital does not significantly mediate the relationship between innovation strategy and financial performance. Capital performance and internal performance do not mediate the relationship between innovation strategy and financial performance. Management accounting information system does not mediate the relationship between innovation strategy and financial performance. Internal process performance mediates the relationship between innovation strategy and financial performance. Management accounting information system and internal process performance mediate the relationship between innovation strategy and financial performance.

Originality/value

The difference in findings confirms that this research needs to be conducted. On the other hand, there is no research that has comprehensively tested the mediating effects of Human Capital and Management Accounting Information System in the relationship between Innovation Strategy and Internal Process Performance and the Impact on Corporate Financial Performance. The originality of this research can be seen in the use of contingency theory which narrows the gap between the industrial organization (I/O) paradigm and the resource-based view (RBV) regarding competitive advantage and performance. Specifically, this research introduces innovation strategy, human capital, management accounting information system, and internal business process performance as the contingency factors that affect financial performance. Second, empirically, this research tries to reduce the gap in empirical research by offering new research model and new research establishment at the level of strategic business units (SBU) in manufacturing companies in East Java. This research is expected to be useful for policy decision making, especially for managers who want to improve strategic business unit's financial performance.

Details

Benchmarking: An International Journal, vol. 27 no. 4
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 5 April 2018

Muhammad Shahid Khan, Ilham Sentosa and Faryal Salman

Malaysia has set year 2020 as a targeted year to become the most developed nation and to transform the economy into knowledge based. Issue is to become developed nation…

Abstract

Purpose

Malaysia has set year 2020 as a targeted year to become the most developed nation and to transform the economy into knowledge based. Issue is to become developed nation, but without human capital development (HCD) process, the achievement of this vision would be difficult. Numerous studies articulated the direct impact of human capital on the country economic growth. Human capital is a significant factor to get competitive advantage, which is the need of the day for all countries as well as for organizations to survive in today’s tough competitive environment. Major objective of this research was to find the role of transformational leadership (TL) in human capital effectiveness with the effect of knowledge management (KM) strategies. The paper aims to discuss these issues.

Design/methodology/approach

A mixed research method is deployed in this study. Data are collected with the help of self-administrated questionnaire and a semi-structured interview. The structural equation modeling technique is used in the data; data are analyzed with the help of AMOS and Nvivo software.

Findings

The results revealed that transformation has a positive effect on KM strategies. Further, this study also identified that knowledge codification strategy and personalization strategy have a positive impact on human capital effectiveness.

Research limitations/implications

The results revealed that KM strategies play a vital role in human capital effectiveness. Therefore, the Malaysian healthcare industry should introduce KM strategies in order to enhance employees’ knowledge skills and ability. This study is only conducted in Malaysia; the future researcher can use a different method to test the current research model.

Practical implications

Knowledge codification and knowledge personalization strategy can contribute to the HCD process. This study can be generalized in the Malaysian healthcare industry. This kind of effort will add value into human capital. Hence, organization can get a competitive advantage with the help of human capital. TL style is the most appropriate style in the current era; this leadership has the ability to transform the system, which is the need of the day. Due to rapid changes in technology, a leader who believes in change can meet the challenges of twenty-first century.

Originality/value

KM strategies and their use have been a research issue for some time. Companies have also adopted knowledge management strategies tools to support and stimulate knowledge sharing in their organizations and to help employees to find the expertise they are looking for. But no research has been performed on the importance of KM strategies. This paper describes a unique and new framework that the authors devised to help companies to do just that.

Details

World Journal of Entrepreneurship, Management and Sustainable Development, vol. 14 no. 2
Type: Research Article
ISSN: 2042-5961

Keywords

Article
Publication date: 10 April 2017

Nopadol Rompho

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…

1069

Abstract

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.

Details

International Journal of Productivity and Performance Management, vol. 66 no. 4
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 4 September 2007

Larry Nash White

The purpose of paper one of the two‐article series exploration of human capital assessment is to examine the strategies by which library administrators can assess and…

1643

Abstract

Purpose

The purpose of paper one of the two‐article series exploration of human capital assessment is to examine the strategies by which library administrators can assess and benefit the human capital performance of their library and to lay the groundwork for the discussion of the strategic challenges of assessing and valuing human capital in article two.

Design/methodology/approach

This paper uses a literature review to identify potential strategies and metrics for library administrators to assess human capital productivity.

Findings

Human capital is an increasingly essential element of organizational performance assessment. Effectively assessing library staff expenditures (which generally receives the largest expenditure allocations within the library's budget) and the resulting performance generated by the staff, who are the primary knowledge tools and providers of the library's services, is an ever increasing possibility to account for greater amounts of tangible and intangible organizational performance. Library administrators have multiple options for developing effective strategies and metrics by which to assess their libraries human capital performance.

Originality/value

Developing an effective human capital assessment process as a standard component of the library's performance and budgetary assessment processes would benefit libraries and their administrators by increasing the organizational performance information available for resource allocation decisions regarding library staff development, recruitment, and retention in the larger overall management decision making and planning processes.

Details

The Bottom Line, vol. 20 no. 3
Type: Research Article
ISSN: 0888-045X

Keywords

Article
Publication date: 13 October 2020

Min-Shi Liu and Nien-Chi Liu

According to human capital theory, companies derive economic value from the knowledge, skills and abilities (KSAs) of their employees. Research conducted by strategic human

Abstract

Purpose

According to human capital theory, companies derive economic value from the knowledge, skills and abilities (KSAs) of their employees. Research conducted by strategic human resource management has focused on how investment in human capital can create a competitive advantage for an organization. The purpose of the paper is, therefore, to investigate how the choice of different human capital acquisition strategies – “make or buy” – can influence employee attitudes and behavior.

Design/methodology/approach

This study explores the relationship between internal and external human capital strategies and employee’s attitudes and behavior in Taiwan's IC (integrated circuit) design industry. The cross-sectional dataset derives from a sample of 49 human resource departments and 497 employees from 25 different IC design companies.

Findings

The findings indicate that the decisions made on human capital strategies have an important influence on employee’s attitude and behavior. The results also show that a climate of trust and perceived organizational support is a cross-level mechanism for both human capital strategy and employees' attitudes and behavior.

Originality/value

There has been little research on the cross-level analysis of human capital acquisition strategies that can influence employee’s attitudes and behavior. This study verified that internal and external human capital strategies do affect employees' individual perceptions of organizational support via the organizational-level climate of trust, which in turn influences employees' attitudes and behavior. This cross-level mechanism indeed will facilitate new insights into the nature of strategic human resource management.

Article
Publication date: 4 March 2014

Wayne Cascio and John Boudreau

The purpose of this paper is to suggest that in the arena of human capital, risk-mitigation may overshadow risk-optimized decisions, and show how a more balanced approach…

2634

Abstract

Purpose

The purpose of this paper is to suggest that in the arena of human capital, risk-mitigation may overshadow risk-optimized decisions, and show how a more balanced approach can be achieved by understanding and applying frameworks from behavioral decision theory, as well as framing human capital risk using tools and frameworks that have a long history in other management arenas, such as finance.

Design/methodology/approach

Review risk-optimization frameworks in human resource and general management, distill key connections, suggest ways to enhance risk optimization for human capital, and offer suggestions for future research and practice.

Findings

For human capital, risk-mitigation may overshadow risk-optimization, a balanced approach can be achieved by applying behavioral decision theory and by using frameworks from other management arenas, such as finance.

Practical implications

Organizations must acknowledge and skillfully manage the connections between human capital and competitive strategy in this emerging arena of human capital risk, or they will miss key strategic opportunities.

Originality/value

Attention to human capital risk has largely emphasized minimizing or controlling unwanted outcomes, but the paper proposes that risk-optimization requires balanced attention to risk-taking as well.

Details

Journal of Organizational Effectiveness: People and Performance, vol. 1 no. 1
Type: Research Article
ISSN: 2051-6614

Keywords

Content available
Article
Publication date: 15 February 2021

Stephanie Douglas

This paper examines the role of human capital management strategy in shaping organizational resilience. Resilient organizations thrive in uncertain and adverse conditions…

1234

Abstract

Purpose

This paper examines the role of human capital management strategy in shaping organizational resilience. Resilient organizations thrive in uncertain and adverse conditions. The organization’s capacity for resilience can be developed through human capital management strategies that are focused on employee capabilities, training, and development. When individual capabilities and resilience are developed, those can be aggregated at an organizational level to develop the capacity in an organization for resilience.

Design/methodology/approach

A review of relevant studies and literature was conducted to develop strategies and insight into developing the human capital of an organization to support organizational resilience.

Findings

Supporting individual capability development and resilience builds the organization’s capacity for resilience. By shifting human capital management strategies to building capabilities and then skills, organizations develop individual resilience and then organizational resilience. The implications of how to build such human capital management strategies are presented.

Originality/value

This paper provides support and guidelines for building individual capability and resilience to enhance an organization’s resilience.

Details

Development and Learning in Organizations: An International Journal, vol. 35 no. 5
Type: Research Article
ISSN: 1477-7282

Keywords

Article
Publication date: 4 April 2019

Alix Valenti and Stephen V. Horner

Human capital has been traditionally viewed in terms of how an individual’s investment in knowledge, skills and abilities can lead to higher pay or promotions. More…

1515

Abstract

Purpose

Human capital has been traditionally viewed in terms of how an individual’s investment in knowledge, skills and abilities can lead to higher pay or promotions. More recently, human capital has been regarded as a unit-level resource using the term “human capital resources” to consider the aggregate effects of human capital. The purpose of this paper is to examine the collective human capital present in a firm’s board of directors as a valuable resource leading to superior firm outcomes.

Design/methodology/approach

The study examined the effects on firm innovation of the scientific expertise of corporate directors, average board tenure and the presence of a firm’s founder on the board. Data from a sample of pharmaceutical firms were analyzed with the dependent variable, innovation, measured as patent applications and both individual and unit-level human capital measures of the predictor variables.

Findings

The results show that the presence of a founder-director is positively related to innovation and more pronounced when combined with the board’s scientific expertise. Board tenure shows a relationship to innovation and is more evident in combination with the board’s aggregate level of scientific expertise. The effect of directors’ scientific expertise is also greater when measured at the board level of scientific expertise.

Research limitations/implications

Future studies should examine these relationships within a broader context extending the research to other industries thereby incorporating wider variation in both the antecedents and measures of innovation. In addition, future studies might investigate a likely non-monotonic relationship of board tenure with strategic outcomes, recognizing the non-linear nature of effects of board tenure.

Practical implications

In addition to the theoretical and empirical implications, this research may also inform practicing managers charged with constituting their boards of directors and provide some guidance for the recruitment and retention of board members. The research may also assist top managers and investors in knowing when the presence of a founder on the board is useful and supportive of the firm’s strategic direction.

Originality/value

The study extends scholarly understanding of human capital theory beyond the top management team to boards of directors demonstrating the importance not only of directors’ individual capital but also how it combines with that of other directors. Moreover, it enhances understanding of board characteristics beyond the bounds of demographic characteristics to show that additional qualities affect firm strategy. This research also informs managers, boards and investors how boards might be more effectively constituted to impact firm strategy.

Article
Publication date: 1 October 2002

Gerald Z.D. Huang, Matthew H. Roy, Zafar U. Ahmed, Judy S.T. Heng and Joyce H.M. Lim

Singapore’s economic success has largely been fueled by foreign direct investment from multinational corporations (MNCs). These companies brought with them not only their…

4514

Abstract

Singapore’s economic success has largely been fueled by foreign direct investment from multinational corporations (MNCs). These companies brought with them not only their capital and technology, but also their managerial prowess. The latter has been a key ingredient in propelling Singapore to its current economic success. New competition and rising costs are forcing local businesses to look for new strategies to succeed. One way is to benchmark the human capital strategies of MNCs. This study employs a survey of the human resource policies of both MNCs and promising Singaporean enterprises. The results show stark contrasts in the philosophical and practical applications of human resource strategies. Insights into Singapore’s human resource practices are uncovered and key success factors for promising local companies are discussed.

Details

Benchmarking: An International Journal, vol. 9 no. 4
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 1 March 2006

Susan Cantrell, James M. Benton, Terry Laudal and Robert J. Thomas

Over the past three years Accenture developed and applied a new measurement tool that assesses the maturity of an organization's human capital development processes

7889

Abstract

Purpose

Over the past three years Accenture developed and applied a new measurement tool that assesses the maturity of an organization's human capital development processes, benchmarks the processes' performance against other organizations, and determines the relationship of each process to bottom line business results. It is designed to help executives make significantly more informed choices about their investments in human capital. This article aims to look at this tool.

Design/methodology/approach

The tool, known as the human capital development framework, now has been tested in more than 60 organizations. This case describes how one organization used it to help turn around a struggling division.

Findings

Results of the initial implementations of the framework suggest that financial performance improves as a company improves its scoring in those critical human capital processes with strong relationships to financial success. As an organization moves from one benchmarking quartile to the next in these processes within the framework scoring, its capital efficiency – or the ratio of total annual sales to the capital invested in the operations of the business by shareholders and creditors – improves from 10 to 15 percent.

Practical implications

The framework outlined in this article provides a tool that enables company leaders to make clear‐eyed assessments of the payoff from human capital investments. It helps organizations diagnose their strengths and weaknesses in key human capital practices, to set investment priorities and track performance, and to establish an empirical link between human capital investments, business practices, and overall business performance.

Originality/value

Those organizations in the study with more mature human capital processes have better financial performance than those organizations with less mature processes. Specifically, those organizations that focus on processes devoted to three key areas – creating a people strategy aligned with the business strategy, providing supportive work environments, and developing employees by giving them ample opportunities to learn and grow – achieve far greater economic success than those that do not.

Details

Strategy & Leadership, vol. 34 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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