Hypothesis Test of Human Capital Investment Determinants on Institution’s Performance Using PLS-SEM Approach

Abstract

Accelerating the quality of education institutions remains a priority for Malaysian Government as it forms the foundation for building a high caliber talent in the labor market. Focusing on improving the quality of universities one of the main concerns is to develop the human quality through increasing the quality and resilience of human capital as the enabler towards competitive global market. In general, this paper recognizes the findings on the role of human capital investment (HCI) determinants and their significant contribution to institution’s performance. It also emphasizes the roles of HCI in institution's success and survival in a highly competitive business environment as highlighted in The Twelfth Malaysia Plan (2021-2025) and Malaysia Education Blueprint 2015-2025. Human capital strategically contributes to the quality of academics in turn affects issues such as inefficient labor markers in achieving the greater quality of Malaysia's education system specifically. Hence, to analyze the contribution of determinants a theoretical model was constructed underlined by Human Capital Theory, Resource Based View (RBV) and Malcom Baldrige criteria. Then to obtain the feedback a survey consisting of sixty (66) items with a seven (7) Likert scale was used as the measurement instrument to gather the data from 309 lecturers in UiTM. Data then were analyzed using Structural Equation Modelling approach on the SmartPLS3 platform. The result explained coefficient of determination (R2) value of 66.9% suggested that the variance of institution performance could moderately be explained by HCI determinants where knowledge, skill and training positively influenced the performance of the institution.