The Impact of Human Capital Investment on the Profit Performance of
Micro and Small Businesses in Los Baños
Background of the Study
The business environment of today is dynamic and competitive. In which survival is the
answer for organizations that don't want to change since they might be forced to go from
existing to nonexistent. In order to thrive, businesses need to look into every possible way
to gain a competitive edge such by investing in human capital in order to guarantee that
workers possess the talents, expertise, and abilities required to function well in a dynamic
and ever-evolving work environment.
Micro and small enterprises play a significant role in many economies around the world,
contributing to job creation, innovation, and economic growth. They often face unique
challenges, such as limited access to financing, market competition, and regulatory
burdens, but they also offer opportunities for entrepreneurship and local economic
development. Overall, micro and small enterprises are the backbone of the economy,
driving growth, innovation, and prosperity.
Meanwhile, human capital investment means spending time and effort to make people
better at what they do. This could involve things like going to school to learn new skills,
getting training on the job, or even just taking care of your health so you can work better.
When individuals or societies invest in improving people's abilities and knowledge, it
usually leads to better jobs, higher incomes, and a stronger economy.
Hence, the objective of this paper is to look into the significance of human capital
investment in firm’s performance from the standpoint of micro and small enterprise
owner’s perception. Therefore, the following research questions are used to guide our
investigation: To what extent does the investment in human capital impact on
performance of a small enterprise? What is the perception of small business owners
regarding the relationship between human capital investment and the performance of
their firm? The business opportunities by having effective and efficient staffs?
Entrepreneurs personal experience and knowledge in investing in human capital?
Statement of the Problem
The researchers aimed to know the impact of human capital investment on businesses
performance and the experiences of entrepreneurs by applying it to their business.
The study is guided by the following questions;
1. What is the demographic profile of the business?
2. In what level of education attainment does employers have finished?
3. Does the level of education of the employers and employees affect their
performance in a business?
4. How does human capital investment contribute in the success of the business?
5. What is the relationship of human capital investment to:
a) Firm’s performance;
b) Employees performance
6. Does human capital investment helps in training of employees for greater
performance of SMEs and entrepreneurship?
7. Does the Efficiency of the SMEs and entrepreneurship develop by human capital
development?
8. Can human capital development helps to improve service delivery of the
employees?
9. Does human capital development sustain the performance of SMEs and
entrepreneurship firms in a challenging business environment?
Conceptual Framework
This study is being undertaken to examine the impact of human capital investment on
businesses profit performance.
Independent Variable Dependent Variable
Human Capital Business profit
Investment performance
• Training (importance, Human Capital
• Financial Performance
types, methods of Effectiveness
(profit growth, sales
trainings) growth,
• Innovation (technology • Non-Financial
adaption) Performance (customer
• Education (level of satisfaction, operating
education of employers
efficiency, productivity,
and employees)
efficiency, skills
• Knowledge
development, success
(background and
rate in new product
experiences)
launches, workflow
• Skills (level of skills) improvement)
