Human Capital impact on productivity in Chinese enterprises: analyzing the mediating role of innovation

Abstract

Human capital can increase productivity by enhancing the innovation, creativity, and technological levels of enterprises. However, it can threaten productivity if inappropriately designed and structured since education and training consume resources like time and finance. This research investigates the impact of human capital on productivity among enterprises in China between 2008 and 2015, using a fixed-effects model. In addition, it measures this impact among enterprises with different levels of productivity levels using the quantile regression technique. Moreover, it examines the moderating role of innovation in this impact by employing the moderating regression method. The results confirm the beneficial impacts of human capital including education, technical skills, and work experience on productivity in Chinese enterprises in the comprehensive analysis. This impact differs in enterprises with various levels of productivity as workers with doctorate and master degrees and middle technical skills indicate higher constructive impacts on productivity. The results of the mediating examination reveal the considerable mediating role of innovation in this impact. These findings highlight the importance of human resource management in enterprises and imply that enterprises with high productivity levels involve complex and advanced systems needing further educated and skillful workers. Therefore, managers should promote investment in human resources and R&D endeavors to escalate productivity, especially in enterprises with higher levels of productivity and technology at the microeconomic level.