The effect of human capital on organizational performance in the service industry 4.0: Mediation analysis from Indonesia

Abstract

The service industry is currently facing the era of Industry 4.0, which results in an increasing need for talents who master information and technology to increase company productivity. Innovation is one of the strategies that service companies need to improve in order to compete with other companies. Organizational learning is also a company’s effort that is used to determine and meet the increasingly diverse needs of consumers to improve company performance. This study aims to investigate the role of innovation and organizational learning as mediating variables between human capital and organizational performance. The sample consisted of 305 managers in the service industry of Indonesia using a purposive sampling technique, with the minimum sample size determined using GPower software. Data were collected using a self-reported questionnaire distributed online via a Google form. Furthermore, data were analyzed using structural equation modeling partial least squares with the SmartPLS 3 software. The results reveal that human capital significantly affects organizational performance, innovation, and organizational learning. Then, innovation and organizational learning have a significant effect on organizational performance. Furthermore, innovation and organizational learning act as mediators between human capital and organizational performance. These findings shed new light of the importance of effective human capital management in improving organizational performance. Furthermore, innovation and organizational learning are variables that can bridge the two relationships in the service industry. AcknowledgmentsThis study is funded by the Indonesia Endowment Fund for Education, Ministry of Finance of the Republic of Indonesia.