Revisiting Human Capital and Firm Performance: A Systematic Review

Journal
ORP Working Paper
Series
2303
Type
working paper
Date Issued
2024
Author(s)
Dimitris Giamos
;
Abstract
The concept of human capital refers to the knowledge, skills, and abilities of a workforce. The relationship between human capital and corporate performance has garnered both attention and debate, particularly since the COVID-19 pandemic. The present work synthesizes findings from 21 studies on this topic. The objective of this paper is to identify the main theories of human capital, document the different variables that are at play, report the measurement and significance of the human capital–performance relationship. We find that human resource management (HRM) practices are a precursor to effectively building human capital in organizations with relevant impact on both operational and financial performance. Furthermore, we outline how human capital acts as a mediator, translating the impact of HRM practices into discernible corporate performance outcomes. This also reveals that the interrelation between human capital and performance is contingent upon specific organizational attributes and the strategy it is embedded in. Finally, we offer a roadmap for prospective research trajectories in this domain. Future researchers are encouraged to mobilize novel theoretical frameworks, adopt more sound measures in the context of research, and re-open the discussion on human capital valuation.
Publisher
Oxford Initiative on Rethinking Performance, Saïd Business School, University of Oxford
URL
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