Effect of Human Capital on Organizational Performance: A Literature Review

The current decline in the various economies of the world has resulted in human capital gaining wider importance with increasing globalization and saturation of job market. For increasing the economic growth by giving more time and putting in more effort, both developed and developing countries are emphasizing on human capital development. To get into the international arena, human capital development is one of the basic solution. For this, the firms need to invest necessary resources for developing human capital which is having greater impact on performance. This paper review effect on human capitals have direct impacts on firm performance from various critical perspectives. Firm performance is viewed in terms of financial and non-financial performance. Finally, this paper proposes an initial model that explains the relationship between human capital and firm performance