Understanding the Effect of Human Capital and Firm Performance in Kenya: A Panel Data Analysis

Abstract

The global economy has shifted from being production-based to information-knowledge based. Thus, knowledge resources, and in particular human capital, are considered key drivers of competitive advantage and superior performance. It is from this background this study sought to examine the effect of human capital on firm performance. Data was drawn from 31 commercial banks in Kenya for the period 2008-2017 and was analyzed through descriptive and inferential statistics. The study found that human capital had a positive and significant effect on firm performance (β = 0.447, ρ-value 0.000<0.05). The findings have implications for practitioners and the regulator.