The Fundamentals of Human Capital

Abstract

This chapter explains the overview of human capital; human capital and economic growth; human capital, innovation, and knowledge management; human capital and research and development (R&D); human capital, political regime, and foreign direct investment (FDI); human capital, employment, and labor markets; the measure of human capital; and the challenges and implications of human capital in the digital age. Human capital refers to knowledge, skills, and abilities acquired by an individual, traditionally through education and work experience. Human capital has a positive relationship with entrepreneurial success, business growth, and economic development. Creating an organization that relies on human capital for competitive advantage involves designing every organizational system with an essential approach to attracting, developing, retaining, and motivating the highly qualified people. The chapter argues that developing human capital has the potential to enhance organizational performance and gain sustainable competitive advantage in the digital age.