| dc.description.abstract | The purpose of the study was to establish the effect of human capital, social capital,
employee empowerment and quality of decisions on the performance of commercial
banks and insurance firms in Kenya. Specifically the study sought to establish the
influence of human capital on the performance of insurance firms and commercial banks
in Kenya; The relationship between human capital and quality of decisions; The influence
of quality of decisions on firm performance; Whether the influence of human capital on
firm performance is moderated by social capital and employee empowerment; If the
influence of human capital on firm performance is mediated by quality of decisions and
the joint effect of human capital, social capital, employee empowerment and quality of
decisions on firm performance. A census survey was carried out on all the 43 licensed
commercial banks and 45 insurance firms in Kenya. Out of the 88 firms that were
targeted, 54 responded, constituting a response rate of 61%. Hypotheses were tested
using regression analysis and Pearson's Product Moment Correlation analysis.
Descriptive statistics were computed for organizational data and the main characteristics
of the study variables. Data was presented in form of tables. The findings revealed that
the influence of human capital on non-financial measures of firm performance was
statistically significant. There was a positive and moderate relationship between human
capital and quality of decisions. The influence of quality of decisions on non-financial
measures of firm performance was statistically significant. Social capital and employee
empowerment do not moderate the influence of human capital on firm performance, but
they both have a mediating effect. The findings also revealed that the influence of human
capital on firm performance is mediated by quality of decisions. The results confirmed
that the joint effect of human capital, social capital, employee empowerment and quality
of decisions on non-financial firm performance was greater than the individual effects of
human capital and quality of decisions on non-financial firm performance. This study
contributes to understanding the link between human capital and firm performance, while
at the same time confirms the findings of previous studies that have found a significant
link between human capital and firm performance. Nishantha (2011) found that
social capital moderates the relationship between human capital and firm
growth. This study has contributed to existing knowledge by empirically confirming that
social capital and employee empowerment are not moderators but mediators of the
relationship between human capital and firm performance. The study also brings out an
increased understanding that the combinative effect of the study variables is greater than
the individual effects. Organizations can enhance their performance by building their
human capital base through rigorous selection procedures and matching the right people
with the right jobs. Work experience should be considered alongside academic
qualifications during selection. Firms should strengthen their social networks and
linkages so as to maximize on resources that may be obtained through such networks.
Organizations should increase the level of employee empowerment because
contributions by engaged employees are believed to have a significant impact
on business productivity, revenue and the organization's overall effectiveness.
Employees with the relevant knowledge, skills and competencies should be encouraged
to obtain and share information through the established social networks to achieve greater
synergy in increasing competitiveness. | en_US |
