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The Effect of Human Capital on Profitability with Productivity as Intervening Variable

In: Proceedings of the Brawijaya International Conference on Business Administration, Taxation, and Tourism (BICBATT 2022)

Author

Listed:
  • Sri Sulasmiyati

    (Brawijaya University, Department of Business Administration, Faculty of Administrative Science)

  • Fathya Dina Adila

    (Brawijaya University, Department of Business Administration, Faculty of Administrative Science)

Abstract

Human Capital plays a crucial role in companies by providing valuable knowledge and skills, motivating employees, promoting competence, and fostering teamwork. Research has demonstrated that a strong Human Capital can enhance a company’s profitability and productivity. For this study, the variable being independent is Human Capital which is measured by Value Added Human Capital (VAHU). The variable being measured is profitability, which is represented by Return on Assets (ROA), while the variable that mediates this relationship is productivity, which is measured by Assets Turnover (ATO). The study aimed to determine the impact of VAHU on ROA and ATO, as well as the influence of ATO on ROA and the effect of VAHU through ATO as a moderator variable on ROA. Using a quantitative approach, the study analysed data from 21 companies in the trade, service, and investment sectors listed on the Indonesia Stock Exchange between 2017 and 2019. The results indicated that Human Capital had a direct and significant effect on both ROA and ATO. ATO had a significant impact on ROA, while VAHU also had a significant effect on ROA with ATO as a moderator variable. It is recommended that companies prioritize the effective management of their Human Capital to improve their productivity and profitability in the short and long term.

Suggested Citation

  • Sri Sulasmiyati & Fathya Dina Adila, 2024. "The Effect of Human Capital on Profitability with Productivity as Intervening Variable," Advances in Economics, Business and Management Research, in: Inggang Perwangsa Nuralam & Ari Darmawan & Agung Nugroho Luthfi Imam Fahrudi & Anni Rahimah (ed.), Proceedings of the Brawijaya International Conference on Business Administration, Taxation, and Tourism (BICBATT 2022), pages 154-165, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-240-8_19
    DOI: 10.2991/978-94-6463-240-8_19
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