Effect of Investment in Human Capital Development on Organisational Performance: Empirical Examination of the Perception of Small Business Owners in Nigeria

Abstract

Numerous extant studies linking human capital and organizational performance abound, but few focused on the small scale business context. Thus a study towards determining the nature of relationship between the two construct among small scale enterprise owners is thoughtful. Drawn from literature, four variable measures – skills, education, knowledge, and training – were used to predict and explain the human capital effectiveness construct. Thus, four hypotheses (one for each variable measure) were formulated linking each variable measure to the human capital effectiveness construct. The construct, organizational performance, was divided into two sub-constructs, financial organizational performance and non-financial organizational performance to formulate two additional hypotheses linking each to human capital effectiveness. Twenty-five small scale business owners were purposively selected in Awka metropolis of Nigeria. A structured five-point likert type questionnaire was designed and distributed and a 100% return rate was recorded. ANOVA, t-test, multiple regression analysis, simple regression analysis, and pearson’s correlation coefficient were all employed to conduct relevant analyses. While keeping constant other factors that can impact on organizational performance, the study singled out human capital and it was shown that a high intercorelation exist among the four variable measure predictors of human capital effectiveness. A key finding of this study is that, training and skill are stronger predictors of human capital effectiveness over and above knowledge and education. This study, in no small measure, provides penetrating insight for small scale business owners in the area of human resources management. Managerial implications, limitations and opportunity for further research are discussed