Human capital elements influencing job creation in small- and medium-sized enterprises

Abstract

Background: A substantial body of research supports the notion that small- and medium-sized enterprises (SMEs) play a crucial role in promoting job creation. Small- and medium-sized enterprises in South Africa, however, do not create as many jobs as expected despite several government programmes and interventions aimed at assisting them in achieving this national goal.
Aim: This study aimed to determine which elements of human capital–general or specific–have the most influence on SME job creation.
Setting: The scope of this research is limited to entrepreneurs who own SMEs that employ fewer than 201 employees and are based in South Africa.
Methods: This study employed a quantitative cross-sectional design. Data were collected through an online survey using random sampling, resulting in a sample size of 297. Ordered logistic regression analysis was conducted to test the study hypotheses.
Results: The findings showed that applied prior work experience and experience similar with the current business have the most influence on SME job creation. Conversely, technical training and prior experience in unrelated work negatively influence job creation.
Conclusion: These insights underscore the importance of intentional career planning during employment to ensure that accumulated experience supports future entrepreneurial ventures and enhances job creation potential.
Contribution: The study contributes to entrepreneurial development by highlighting the practical value of gaining relevant work or industry experience through employment before starting a business, as a means to enhance job creation outcomes.