The Relationship of Human Capital, Innovation, and Corporate Performance (A Study of Small and Medium Rattan Businesses in Palu City Central Sulawesi Province)


Human capital, from the perspective of finance, is an intangible fixed asset, which is able to create corporate value and provide contributions in the form of knowledge and also experience into a certain product or future asset of the company. From the perspective of human capital strategic management, it is the organization’s resource with the ability and capability to become their main source of competitive advantage. Human capital has the power to be the source of competitive advantage in the form of knowledge, experience, and also individual soft skills such as creativity, which cannot be imitated by other parties. Human capital has an important role in the continuity of a company, because human capital continuously contributes ideas and new suggestions for the product or service through creativity. Human creativity may be in the form of events that can change the product to meet the preference of the market and to be able to compete with their competitors’ products. This will definitely influence the corporate performance; customers’ satisfaction with the product will result in a positive effect on the corporate performance by increasing the sales level, which also affects the profitability of the company. The success of the corporate performance can be measured by the increment of sales, ROA, ROE, and profitability as the indicators of success. However, the feedback of the success of corporate performance in reality starts from the human capital, which is creative in product innovation. With creative product innovations, even in the maturation stage of the company’s product life cycle, new products or product lines of previous products can be developed. The aim of this research is to examine the relationship between human capital, innovation, and corporate performance, be it in big companies or even small industries.



Keywords: human capital, innovation, and corporate performance

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