Human Capital, Self-Efficacy and Firm Performance: A Study of Bumiputera SMEs in Malaysia

Abstract

SMEs represent more than 90 percent of the establishment in many countries including Malaysia. However, from 98.5 percent of SMEs establishment, only 37 percent represent bumiputera SMEs. Human capital and self-efficacy are identified as internal factors of the organisation and function as a possible solution to address bumiputera SMEs’ difficulties. Hence, the primary objective of this study is to investigate the mediating effect of self-efficacy in the interaction between human capital and the SMEs performance in Malaysia. This study has investigated 203 Malay-owned small and medium enterprises. Structural Equation Modelling (SEM) was employed to analyse the data. The results demonstrated that human capital and self-efficacy influence each other and have a significantly positive impact on firm performance. Mediation simultaneously affirms that the relationship between human capital and firm performance is mediated by self-efficacy. This study concluded that these two internal factors can provide a holistic model to improve bumiputera SMEs performance in Malaysia.

The role of human capital in the foreign market performance of US SMEs: does owner ethnicity matter?

“…Their distinctive “ethnic” traits add to a firm’s human capital assets and propel a competitive advantage which is difficult to emulate. Our study findings are also consistent with previous results which found that in the context of SMEs, human capital does not directly affect firm performance but rather needs to be mediated by self-efficacy (Zuhir et al , 2019), defined as self-confidence in its own competence to complete an action. People from ethnic minorities could add self-efficacy to the SME human capital base, enabling SMEs to achieve better performance and competitive advantage.…”

The Role of Technology Usage in Mediating Intellectual Capital on SMEs Performance During the Covid-19 Era

“…Many researchers argue that a variety of factors could cause this situation. First, many previous studies have extensively described the direct effect of intellectual capital on firm performance (Zuhir, Surin, & Rahim, 2019;Maharani & Fuad, 2020;Ahmed et al, 2020). Second, several previous studies used a structured review approach to the existing literature on the relationship between internet use and corporate development (Zhong et al, 2020), Third, Using the OLS approach, This research paradigm has typically used simple descriptive and association methods to achieve short-term goals and solve immediate problems (Bartelsman et al, 2018;Fernandes et al, 2019).…”

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“…Hence, this study suggest that firm need to intensify their internal sources such as human capital and self-efficacy in order to sustain. Human capital is important to generate a lot of useful ideas, but to ensure the realization of these ideas is far more important to achieve firm goal [7]. This is because self-efficacy help to ensure the continuous effort of the firm even they face with the difficult situation [16].…”

“…Whereas, [6] argue that human capital does not have a direct relationship with firm performance [6]. This study claims that without the self-efficacy value, a motivation can wane, the interest gradually fades and they are not committed in pursuing their goals [7]. This is because every phase of entrepreneurial process needs different motivation [5].…”