Impact of Human Capital Development on the Managerial Workforce of SMEs in Sabah, Malaysia

Noraini - Abdullah, Nurul Fatihah Rosli

Abstract


Globalisation and entrepreneurship expansion have led to the emergence of Small and Medium Enterprises (SMEs) in economic development. These would contribute to a country’s national income, poverty reduction and thus increase the standard of living in underdeveloped rural and urban areas. However, restrictions on SMEs performances, capital flows and entrepreneurship activities have not been studied extensively. The goal of this study is thus to investigate the factors affecting the performances of these SMEs. Factors under study were Entrepreneurship Orientation (EO), Human Resource Management (HRM), Marketing Orientation (MO), and Information and Communication Technology (ICT). Data were collected from 200 questionnaires distributed to the SME’s services sector in Kota Kinabalu, in Sabah, Malaysia where only 129 were usable; hence, a successful response rate of 64.5%. Structural equation modelling (SEM) using partial least squares (PLS) method is conceptualized and executed. The data were analyzed and interpreted using the Statistical Package for Social Science (SPSS) version 20.0 and SmartPLS 3.0. The results found that male entrepreneurs constituted 61.2% with a low women participation of 38.8% in the SMEs managerial workforce. Potential human capital development can be focused based on age and education. Human resources management (HRM) had highly contributed to the SMEs performances with 0.928 (composite reliability) and 0.773 (path coefficient), and then followed by MO and EO. ICT was found to have a significant impact, but its hypothesis was not supported. This study thus suggested that entrepreneurial investment in ICT could further help the SME’s owners or managers managed their businesses effectively and efficiently.


Keywords


Small and Medium Enterprises (SMEs), Partial Least Squares (PLS), Structural Equation Modelling (SEM), human capital development, managerial workforce.

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