Islamic Human Capital and Firm Performance: An Evidence of Small and Medium Enterprises in Bahrain

Abstract

This paper discusses on the human capital concept in Islamic perspectives and its relationship with business firm performance. There are emphases of Islamic principles on every well-known variables of human capital in conventional views. Muslims owner-managers seem to overlook and forget the importance and valuable elements of Islamic human capital which they rarely adopt in their business operations. Four variables of experience, motivation, business training and education are tested using the multiple regression analysis in relation with firm performance. The study approach is evidence-based positivism and employs quantitative deductive hypotheses testing methods. The sample size (N) is 140 Muslims'owner-managers of small and medium enterprises randomly picked from Bahrain. It is found that the three variables of experience, motivation and training are have significant relationship with firms' growth, while another variable (education) has insignificant relationship. This findings may add knowledge to the small and medium firm performance literature especially in Islamic views, help policy makers in their decision making and assist the owner-managers to improve their performance.

Factors affecting small and medium family businesses' internationalisation in Saudi Arabia

“…The results of this study are consistent with the findings of Reuber and Fischer (1997), Athanassiou and Nigh (2002), Rafiki and Abdul-Wahab (2013) and Rafiki et al (2014) affirm the positive relationship between managers' experience and internationalisation.…”

“…H3 Training positively influences family business internationalisation. The results of this study have also affirmed the findings of Carpenter and Fredrickson (2001), Rafiki and Abdul-Wahab (2013) and Rafiki et al (2014) of the positive relationship between training and internationalisation.…”

“…Consequently, the decision maker's global orientation and market conditions (home and export markets) are important factors (Moen, 2002). In a related study conducted in the Middle East, Rafiki et al (2014) also found that the experience and training of a firm's human capital add a positive influence on the firm's performance. This further shows the importance of experience in internationalisation.…”

Conventional vs. Islamic banks in dual-banking systems: business model, outlay stratagems and economic performance

“…The hypotheses that expected IHC to be positively related to market-based performance are supported for Islamic banks. These findings are in line with the previous research into the relationship between IHC and firms' market value (Boselie et al, 2001;Bosma et al, 2004;Colombo and Grilli, 2005;Nawaz, forthcoming;Rafiki et al, 2014;Subramaniam and Youndt, 2005). These findings indicate that the Islamic banking business model, which is based on ethical values defined by Shariah law, requires additional knowledge resources to interpret and employ Shariah in practice; therefore, these banks constantly invest in their human capital-base, which reflects positively on their market performance.…”

Modeling Sustainability Model of Islamic Microfinance Institutions

“…Putri (2013) found that when employees can enhance their competences, success within an organisation is easily obtained, or in other words, organisational success is positively affected by human capital. Rafiki et al (2014) found that the growth and performance of an organisation can be influenced by Islamic human capital. Furthermore, a comprehensive approach that incorporates moral responsibility, skills and knowledge has been involved in Islamic human capital development.…”