An investigation of the impact of human capital and supply chain competitive drivers on firm performance in a developing country

Abstract

Purpose This paper aims to determine the effect that human capital and key competitive drivers such as quality, agility, and cost have on firm performance, whether this effect is related to the firm’s outsourcing strategy, and whether the firm size is relevant in explaining such relationships. Design This study uses structural equation modeling to test the hypothesized relationships for small to medium enterprises (SMEs) and large organizations using a custom survey based on a review of the literature and completed by 404 firms in the Valle del Cauca agro-industrial region in Colombia. Findings Human capital strategies are essential for the effective deployment of operational agility, quality, and cost management strategies, which impact firm performance through effective outsourcing strategies. These relationships, however, do not hold the same across firms of different sizes. Specifically, outsourcing practices are lacking amongst SMEs in the studied region. The study is limited to a specific region, with infrastructure and connectivity limitations that hinder or undermine otherwise potentially valuable third-party logistics strategies. Practical implications This paper contributes to the theory and practice in supply chain competitiveness by extending current knowledge of the impact of human capital and key competitive drivers on firm performance, highlighting regional specificities that could hinder firms’ competitiveness, and by presenting a novel, quantitative methodology seldom used for these topics.