Effect Of Human Capital Development On Small And Medium Enterprises In Lagos State

1.1 Background of the Study

The survival of economy in this modern dispensation has been largely driven by Small and Medium Enterprises (SMEs) (Bako et al., 2021; Ogunleye et al., 2020; Okoh et al., 2022: a; Okoh et al., 2022: b). This is due to the innovation and competition that usually accompany the emergence of SMEs in the economy. Meanwhile, the sustainability of SMEs and other similar ventures better productivity through highly skilled manpower has been a function of human capital development(Ezeliora et al., 2020; Olowookere et al., 2022; Oloke et al., 2022; Akinbode et al., 2020). For SMEs to succeed, there is a need for the availability of substantial tangible and intangible resources. One of these resources is human capital.

The term human capital refers to the economic value of a worker’s experience and skills. Human capital includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality. As such, it is an intangible asset or quality that isn’t (and can’t be) listed on a company’s balance sheet. Human capital is perceived to increase productivity and thus profitability. The more investment a company makes in its employees, the higher the chances of its productivity and success. ‘Human development may be defined as an expansion of human capabilities, a widening of choices, ‘an enhancement of freedom, and a fulfillment of human rights. In the beginning, the notion of human development incorporates the need for income expansion. However, income growth should consider the expansion of human capabilities. Hence development cannot be equated solely to income expansion.

The constantly changing business environment that necessitates organizations to strive for competitive advantage, improved performance, long-term survival, and sustainability is facing increasing challenges (Mellahi and Sminia, 2009).

The reason is that in recent times, the effect of globalization has changed organizational focus to natural resources – which include physical assets such as technology – as the key factor that organizations use to measure strategic advantage (Bakotić, 2016). Accordingly, human resources and intellectual property are now the most significant resources that can be used to measure organizational competitiveness (Debrah, Oseghale, and Adams, 2018). Therefore, any organization with robust knowledge-based human resources is usually considered to have an edge and to be capable of securing better economic futures (Hadad, 2017).

The input such as human capital is a strategic catalyst for the enhancement of firm’s competitiveness and long-term continuity. The input such as human capital is a strategic catalyst for the enhancement of firm’s competitiveness and long-term continuity. However, due to the strong connection that exists between human capital development and SMEs growth, various studies have been conducted in different parts of the world with a view to identifying the direction and magnitude of human capital development and SMEs performance but none captured Lagos State, hence this study seek to over this gap.

1.2 Statement of the Problem

Over the years SMEs in Nigeria have faced the problem of HCD, irrespective of the abundant natural and human resources the country has been endowed with; especially in terms of agriculture (Penda, 2012). The country has failed to realize its full development potential through sustainable HCD and people-oriented development when compared to other developed economies of the world; which have adopted and utilized HCD strategies to improve their economic growth (Abeh, 2017). These countries include the United Kingdom (UK), Denmark, Norway, France, Germany, and Spain, and such developed countries take the issue of HCD and organizational management more seriously than developing countries; particularly Nigeria (Gray, 2006). The aforementioned countries strive to empower their employees in terms of training their workforce to enable them to perform their work effectively. This is unlike Nigeria where the issue of HCD within SMEs is not handled with serious commitment, something which has led a proportion of SME owners/managers to view employee training as an operational expense rather than an investment. In addition, others are unable to identify employee training needs, and others are either not aware – or are yet to be convinced– of the benefits of training (Abeh, 2017).

1.3 Objective of the Study

The primary objective of the study is to examine the effect of human capital development on small and medium enterprises in Lagos State.

The specific objectives is as follows:

Ascertain whether there is a significant relationship between human capital development and SMEs performance.

Determine the extent human capital development programmes are implemented among SMEs in Lagos State.

Investigate the effect of human capital development on the performance of SMEs in Lagos State.

1.4 Research Questions

The following question have been prepared for the study;

Is there a significant relationship between human capital development and SMEs performance?

To what extent are human capital development programme implemented among SMEs in Lagos State?

What are the effect of human capital development on the performance of SMEs in Lagos State?

1.5 Research Hypotheses

Ho: There is no significant relationship between human capital development and the performance of SMEs in Lagos State.

Ha: There is a significant relationship between human capital development and the performance of SMEs in Lagos State.

1.6 Significance of the Study

This study could be relevant to the performance and importance of human capital development in private business enterprises. The study could also be relevant to other organizations as it is an aid to enhance growth, planning and development on manpower issues. There is the need now than ever to re-discover the weaknesses and the strengths of employee in determining the level of motivating the employee may desire. The study will throw more light into the practice, managerial procedure and control of the human capital development, It would assist management to create a situation where the employee can grow likewise the organization can be satisfied with each other as both cannot exist without the other.

1.7 Scope of the Study

The scope of this study boarders on the effect of human capital development on small and medium enterprises. Geographically, this study will be delimited to SMEs in Yaba, Lagos State.

1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.9 Definitions of Terms

Human Resources:

The workforce of the organization that puts other organizational resources into proper use.

Training:

This is a systematic and organized procedure through which non-managerial personnel acquire technical knowledge and skills for a definite purpose.

Development:

This is a systematic procedure through which managerial personnel acquire better knowledge in carrying out their decision making roles.

Human Capital Management:

This is concerned with obtaining, analysing and reporting on data that informs the direction of value adding strategic, investment and operational people management decisions at corporate level and at the level of frontline management.

1.10 Organizations of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.