Human capital and export performance of small and medium enterprises in Pakistan

Abstract

Purpose

This study examines the influence of human capital, overall and by dimensions, on the export performance of small and medium enterprises (SMEs) in the manufacturing sector of Pakistan. The study also investigates the role of absorptive capacity in the relationship between human capital dimensions and export performance.

Design/methodology/approach

Data from 586 manufacturing sector SMEs were collected for analysis. The study applied covariance-based structural equation modeling (SEM) to estimate the hypothesized relationships.

Findings

As a whole, human capital was found to exert a direct and indirect impact on export performance, particularly for the medium-sized firms and for firms with medium to high levels of export intensities. Nevertheless, not all dimensions of human capital mattered for export performance. Education and training were found to pose the greatest influence on export performance of those firms.

Research limitations/implications

The results suggest that when devising appropriate policies for SMEs, the impact of different dimensions of human capital need to be considered for addressing challenges related to the internationalization of firms. In short, developing the right human capital is essential for SMEs to compete at the international level.

Originality/value

Unlike previous studies, this study decomposed the influence of different dimensions of human capital on export performance and assessed the mediating role of absorptive capacity. The study is also among the pioneering studies in SMEs sector of Pakistan to analyze the role of absorptive capacity in the relationship between various dimensions of human capital and export performance.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-03-2019-0198

Citation

Mubarik, M.S., Devadason, E.S. and Govindaraju, C. (2020), "Human capital and export performance of small and medium enterprises in Pakistan", International Journal of Social Economics, Vol. 47 No. 5, pp. 643-662. https://doi.org/10.1108/IJSE-03-2019-0198