Role of Human Capital Development in Firm Performance: The Mediating Effect of Innovation, A Case of Manufacturing Firms in Plateau State, Nigeria

Abstract

An organization’s competitive strategy is strengthened when it has a greater specialized human expertise above its competitors. The main objective of this study is to examine the role of human capital development on firm performance in Plateau State, Nigeria and the mediating effect of innovation. A cross-sectional and ex-post factor research design was used for the study. The population consists of 231 owners/managers of MSMEs in Plateau State, Nigeria. A sample size of 146 was used. The partial least square structural equation model (PLS-SEM) was used. The findings of the study revealed that although there is no significant direct relationship between human capital development and firm performance, there is a significant relationship between human capital development and innovation and between innovation and firm performance. Innovation was also found to mediate the effect of human capital development on performance. The study recommended, amongst other things, that organizations should be innovative.