Human Capital and Business Performance: An Empirical Approach Using Structural Equation Modeling

Abstract

The firmai¾´s human capital is a process referring to the sum total of individual and collective learning through training programs, experience and experimentation, among others. In-business ongoing training is one of the most important strategies for human capital development and it is crucial to sustain and improve workers' knowledge and skills. Many businesses use continuous learning strategy, encouraging employees to learn new skills continually to be innovative and to try new processes and work in order to achieve a competitive advantage and superior business results. This paper uses the Resource Based View and Capacities (RBV) approach to construct a hypothetical relationships model between Human Capital construct and business results. The test of the model is applied on transversal data. A sample of 266 business of Spanish sector service has been selected. A Structural Equation Model (SEM) is used to estimate the relationship between training, represented by two latent dimension, Human and Social Capital and economic business results. The coefficients estimated have shown the efficient of some training aspects explaining the variation in business results.