The relationship between strategic innovations, human capital and performance: An empirical investigation

This empirical study investigates Human Capital (HC) and the performance of manufacturing Small and Medium Enterprises (SMEs) in Yemen, with the application of new econometric methods to analyse the data. It makes several contributions to the literature, the first of which is the provision of evidence concerning the major role of HC as a moderating variable in the relationship between strategic innovation (SI) and performance. The second contribution pertains to its pioneering status in examining the direct relationship between SI and the performance of SMEs in a Middle Eastern country. The findings also indicate the that an increase in HC, that is the firm's internal human knowledge, SI also increased; when the differences in SI investments and HC remained constant, knowledge-intensive, labour-intensive and capital-intensive firms were found to be at the same level of innovation. Lastly, a significant relationship was found between SI and SME performance, with HC moderating the relationship.