EFFECT OF HUMAN CAPITAL ON SME PERFORMANCE - SERVICE INDUSTRY IN KLANG VALLEY, MALAYSIA

A good SME performance is extremely important to every countries. This is because SME help the country improve the economic level by implementing on innovation process and technology [1]. In Malaysia, there are having a total of 907,065 of SMEs and consists of 98.5% of businesses are established by the SMEs. Thus, the most popular SME sector in Malaysia is services sector, it is consist of 89.2% [2]. Therefore, every SME need a good human capital to help them achieve goals and objectives in order to form a stable GDP in Malaysia [3]. This study investigated the effect of human capital on SME performance – service industry in Klang Valley, Malaysia. The dimension used in the study consist employees' experience, employees' knowledge and employees' skill. Thus, 200 sample questionnaires were generated and distributed to the SME in Klang Valley in order to examine the effect of human capital on SME performance. The target population in the current study is focusing on the service industry of SME and targeted respondent are majority male and female, age 20 and above. The findings indicated that employees' knowledge and employees' skills have a significant positive effect on SME