An Empirical Study on the Influence of Internal and External Effects of Human Capital on Business Performance

Abstract

Human resources is one of the important driving forces for the company's business performance growth; therefore, this has caused companies to pay attention to the concept of human capital and human resource management of human capital structure. For a company, the value of the company does not come entirely from physical assets, but also from intangible assets; therefore, the education and skills of employees are critical. This study selects annual data of China's 33 listed energy companies from 2012 to 2017, and uses revenue capacity and return on investment in human capital as the dependent variable, employee’s education years, educational Gini index, average employees’ compensation, average top managements’ compensation and ratio of skillful employees to total employees as the independent variables, to employ panel data methods to empirically study the impact of human capital on business performance from the perspective of internal and external effects. The empirical results show that the employee’s education years and educational Gini index in the company's internal effects have a positive impact on business performance. On the other hand the average employees’ compensation and average top managements’ compensation in the company's in the company's external effects have a positive impact on business performance. The conclusion of this study: is that human capital of Chinese listed energy companies plays an important role in business performance.