Role of Human and Structural Capital On Performance Through Human Resource Practices in Indian Microfinance Institutions: A Mediated Moderation Approach

Abstract

Although much has been written about the effects of human capital (HC) on firm performance, little attention has been paid to the interactive effect of HC and structural capital (SC) on performance through human resource practices (HRPs). The population of this study is consisting of Indian microfinance organizations. Nonetheless, in the process of bringing financial stability which is critical for MFIs to expand their outreach, they sometimes gradually tend to drift from their social mission. Keeping the mission drift in mind, performance is understood in terms of both financial and social performance. The structural model has been tested using partial least squares (PLS) as the statistical tool. The results show that HC and SC have a significant impact on performance. Further, the finding of this research shows a mediated moderation of HRP and SC to performance. This implied organization of assorted combinations of HC and SC would have distinct HRPs or organization of varied HC would have diverse HRPs and organization of discrete SC would process HRPs differently and thus resulting in different level of performance.