Title: The role of human capital in firm performance: evidence from the engineering industry in Bangladesh

Authors: Khondoker Abdul Mottaleb; Tetsushi Sonobe

Addresses: Social Sciences Division, International Rice Research Institute (IRRI), DAPO Box 7777, Metro Manila, Philippines ' National Graduate Institute for Policy Studies (GRIPS), 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan

Abstract: Although consensus exists that industrial development is imperative in developing countries to reduce poverty and to attain sustainable economic growth, there is no consensus on how to develop industries in developing countries. Based on empirical findings, emerging literature on industrial development stresses the accumulation of human capital by expanding general education to foster industries in developing countries. Using primary data, the present paper empirically demonstrates that the application of modern production and marketing techniques is mainly determined by the general human capital of the entrepreneurs measured by their years of schooling. Consequently, relatively highly educated entrepreneurs perform better than others. Importantly, the findings hold true even after treating the years of schooling of the entrepreneurs as a function of their fathers' education and profession. The findings strongly suggest that international donor agencies should invest in human capital accumulation by expanding general education to develop industries in developing countries.

Keywords: industrial clusters; engineering industry; human capital; developing countries; innovation; Bangladesh; firm performance; industrial development; entrepreneurship; education.

DOI: 10.1504/IJEIM.2012.051958

International Journal of Entrepreneurship and Innovation Management, 2012 Vol.16 No.3/4, pp.245 - 262

Received: 30 Mar 2012
Accepted: 19 Oct 2012
Published online: 31 Jul 2014 *

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