Human Capital Diversity and Performance Consequences: A Firm-Level Analysis in sub-Saharan Africa

Abstract

While human capital diversity research has attracted a tremendous growing interest and academic debates over the decades, most of the scholarship focuses on demographic observable human capital heterogeneity of gender, age, culture, ethnicity as diametrically opposed to cognitive and job-related managerial education, experience and skill diversity. Also, there is no scholarship of diversity with respect to top managerial teams in the African context. To bridge this knowledge vacuum, the paper aims to investigate human capital diversity and performance outcomes of firms. Data were drawn from the World Bank Enterprise Survey that spanned from 2013 to 2015. The World Bank survey targeted business owners and top managers from 2,676 firms in Nigeria, 270 firms in Ghana and 848 firms in Ethiopia across eight strata of manufacturing groups. This study applied the proportion of managerial skill, education and experience as surrogates of diversity indices of the variables and subjected the data to regression analysis to establish the link between human capital diversity of managerial education, experience, skill and firm performance consequences. In this study, we found that managerial skill, education and experience diversity indices had positive significant effect on sales and productivity growths in manufacturing firms in the three African countries. The study discussed valuable theoretical and managerial implications.