Optimizing SMEs’ business performance through human capital management

Abstract

Small medium enterprises (SMEs) provide the basic foundation for Indonesian economic and social development. SMEs employ a large number of the human capital and foster entrepreneurial side of individuals. Based on opportunity approach, SMEs can create high level of human capital and entrepreneurial competencies. This study aimed at explained the relationship between human capital and entrepreneurial competencies on the SME business performance. Study was conducted on SME’s in Central Java, Indonesia. Based on quantitative approach, this research used survey instrument by delivering questionnaire. The Statistical Package for Social Science (SPSS) was used to analyze the data. The result showed the significant relationship between human capital, entrepreneurial competencies and SMEs performance. This suggests that SME entrepreneurs should give attention to learning activities. This study’s findings contribute to SMEs literature and human capital theory.