The Influences of Human Capital Organizational Learning and

Organizational Competence on Performance

Winarno and Pribadi Widyatmojo

Universitas Pembangunan Nasional Veteran Yogyakarta

Keywords: Human Capital, Organizational Learning, Organizational Competence, and Organizational Performance

Abstract: This study has investigated the influences of human capital and organizational learning on organizational

competence and organizational performance in Higher Education Institutions. The study followed a survey

design and employed an evaluative quantitative analysis method. The testing model was Structural Equation

Modeling using Partial Least Square method. The results show that intellectual capital is the most important

indicator of human capital in increasing organizational performance that is reflected in the improvement of

learning system, personal skills are the most important indicators of organizational learning in improving

organizational performance as reflected by the improvement in the learning system, and the quality of

education and teaching is the most important indicator of the organizational competence in improving

organizational performance which is reflected by the learning system improvement. The quality of education

and teaching as the most important indicator of organizational competence is capable of mediating the

influence of organizational learning on performance. Organizational competence as the mediating variable of

the influence of human capital and organizational learning on performance is partial, and human capital serves

as a more dominant factor in improving organizational performance than organizational learning.

1 INTRODUCTION

The organization will achieve sustainable

competitive advantage and superior performance if

the organization has the competence (Barney, 1991).

Organizational competencies covering all strategic

assets both tangible and in a tangible asset such as

human capital, organizational reputation, and

managerial capacity (Prahalad and Hamel, 1990;

Rumelt, 1991; Barney, 1991; and Pateraf, 1993).

Intangible assets can contribute more to the

organization than tangible resources (Amit and

Schoemaker, 1993; Barney, 1991; and Conner, 2002).

Higher education that has intangible assets,

particularly the quality of human capital is a critical

success factor in achieving superior performance

organization. Due to the quality of human capital,

then the organization will increase the competence

impact on improving the competitiveness of the

organization

.Research at the University of Cambridge found

that human capital intellectual capital, social capital,

organizational capital, and knowledge) have a

significant effect on performance (Stiles and

Kulvisaechana, 2004). Other empirical evidence

conducted research at 34 universities in Europe

(Germany, Spain, France, Sweden, and the UK),

shows that human capital (education, skills, and

competence) significantly affects the performance of

both public and private universities (Hansson et al.

,2004).

This study aims to examine and analyze the effect

of (1) human capital on organizational performance,

(2) organizational learning on organizational

performance, (3) human capital on organizational

performance is mediated by organizational

competence, and (4) organizational learning on

organizational performance mediated by

organizational competence.

2 LITERATURE

2.1 Human Capital

Human capital is the term human capital is the

recognition that people in organization and business

are important and essential assets that contribute to

development and growth, a similar way as physical

Winarno, . and Widyatmojo, P.

The Inﬂuences of Human Capital Organizational Learning and Organizational Competence on Performance.

DOI: 10.5220/0009967605670573

In Proceedings of the International Conference of Business, Economy, Entrepreneurship and Management (ICBEEM 2019), pages 567-573

ISBN: 978-989-758-471-8

567

assets such as machines and money. The collective

attitude, skills, and abilities of people contribute to

organizational performance and productivity. Any

expenditure in training, development, health, and

support is an investment, not just an expense Stockely

(2003). Edvinson and Malone (1997) define that

human capital is individual knowledge, experience,

capability, skills, creativity, innovativeness.

Knowledge is the academic texts obtained through

education and skills is the ability to work to meet the

practical skills. Knowledge and skills do naturally,

but universities should deliberately increase it

through investment in human capital. Meanwhile

(Ancok,2002) defines that comprehensive human

capital includes :(1) intellectual capital, (2) emotional

capital, (3) social capital, (4) adversity capital, and (5)

moral capital. Therefore, in this study, the dimensions

of capital are capital that will be used from the fifth

dimension are used as an indicator of human capital.

Colleges who scored the pioneer development of this

nation must develop human capital concerns: (a)

intellectual capital, where universities develop the

willingness and ability to think to of something new,

(b) capital emotional, where the college develop a

positive attitude in the face of changes in the

organization, (c) Social capital, where universities

develop cooperation with other organizations to

achieve success, (d) Adversity capital, where

universities develop stoicism in the face of various

challenges, and (e) Moral capital, where the

university develop a good image for the organization.

2.2 Organizational Learning

Organizations that make learning organization is an

organization that has expertise in creating, retrieving,

and transferring knowledge, and modifying its

behavior to reflect new knowledge and experience.

Organizational learning impact on organizational

performance (Amulyoto, 2004; Njuguna, 2008) and

organizational learning as one of the determinants of

success in Non-Governmental Organizations

(Khakina, 2006). These studies concluded that

organizational learning had a positive impact on

organizational performance, but results could not be

generalized to other industries due to differences in

size efficiencies and knowledge needs. Baldwinetal.

(1997) Stated that members of the organization at all

levels, not just top management, continue to observe

the environment in an effort to obtain important

information, change strategies and programs

necessary to obtain the advantage of the changing

environment, and to work with the methods,

procedures, and evaluation techniques continuously

improved. Other research findings, there is an

influence of organizational learning knowledge

acquisition, information distribution, information

interpretation, and organizational memory jointly

positively affect organizational performance (Ouma

and Kombo, 2016). In order to achieve and maintain

a competitive advantage and high performance in a

business environment is changing rapidly,

organizations must be able to increase the capacity of

learning (Marquardt, 1996). This study uses six

dimensions of organizational learning developed by

Marquardt (1996: 30), i.e.:

a. Systems thinking, the conceptual framework, a

person to make the pattern more clearly and to

help him see how to change them effectively.

b. Mental model, the assumptions inherent in-

depth understanding of how the influence of the

outside world, and how people take action.

c. Personal skills, indicating a high level` of skill

or expertise. This requires long-term

commitment to continue to learn so to develop

expertise and skill in an organization devoted.

d. Teamwork, the skill that is focused on the

process of bringing together and building the

capacity of the team to create and produce

learning that members actually expected.

e. Expertise divided into a shared vision, the

expertise that each member of the organization

to focus its efforts on the development of a

vision to build a true commitment.

f. Dialogue, which is the ability to listen, share,

and high-level communication among members

of the organization. This skill requires the

freedom and creativity to explore the issues, the

ability to listen to each other deeply and suspend

his own

2.3 Organizational Competence

Competence can also be perceived as assets derived

intermediate company from increasing the

productivity of its resources, such as strategic

flexibility and protection of products and services the

company (Amit and Schoemaker, 1993).

Organizational competence is the ability to organize

work and deliver value; competencies include

communication, involvement, and commitment to

work along the boundaries of the organization

(Prahalad and Hamel, 1990; Kogut and Zander,

1992).

Competence of higher education in this study was

measured in accordance with the philosophy that

mandated by the government for higher education

institutions, namely: 1) quality of education and, 2)

ICBEEM 2019 - International Conference on Business, Economy, Entrepreneurship and Management

568

quality of research, and 3) quality of service to the

community. An assessment of the level of

performance can be measured from the higher

education success rate in achieving the first goal has

been set, from field activities.

2.4 Organizational Performance

Organizational performance is the effectiveness that

includes the achievement of organizational

objectives, the efficiency of which considers the

relationship between inputs and outputs necessary to

achieve the output, and the adaptations that reflect the

organization's ability to adapt to environmental

changes (Homburg et al., 1999). The performance of

an organization reflects how effective the

products/services produced and how the organization

can deliver to customers. Human resources (HR) in

the organization in charge of designing, producing

and continuing through services (Mathis and Jackson,

2001), therefore one of the objectives of human

resource management (HRM) is to create activities

that contribute to the achievement of superior

performance.

Accreditation standards are benchmarks that must

be met by higher education. Accreditation standard

consists of several parameters (key indicators) that

can be used as the basis of (1) the presentation of data

and information on the performance, the state, and the

higher education, as outlined in the instrument of

accreditation; (2) evaluation and assessment of

quality performance, and the state of college

education, (3) the determination of college eligibility

to hold its programs; and (4) The formulation of

recommendations for improvement and development

quality of higher education. Higher accreditation

standards include two core commitments, the college

commitments the institutional capacity (institutional

capacity) and the effectiveness of educational

programs (educational effectiveness), which

includes 15 accreditation standards, namely: 1)

Leadership, 2) Student, 3) Human resources, 4)

Curriculum, 5)Infrastructure, 6) Funding, 7)

Governance, 8) Management systems, 9) learning

systems, 10) Academic atmosphere, 11) Information

systems, 12) Internal quality assurance system.,13)

Graduates, 14) Research and community service, 15)

Study program.

Figure 1: Research Framework

3 RESEARCH METHOD

This research is explanatory research with a

quantitative approach to explain the relationship

between variables through hypothesis testing. The

sampling technique used was purposive sampling,

namely that the sample is based on certain criteria.

Sample grouping criteria are (1) Rector and Vice-

Rector for the University and the Institute, (2)

Director and Vice-Director for the Academy and

Polytechnic. The total population of 116 private

universities, where the sample is based on private

higher education, which has 50% of accredited study

programs as much as 53 private universities. The

method used in this study was Structural Equation

Modeling by using Partial Least Square (Ghozali,

2006). This method was chosen because the study

involved a series of causal relationships between the

variables of human capital, organizational learning,

organizational competence, and performance.

4 ANALYSIS AND DISCUSSION

4.1 Analysis of Research Model

Testing the research hypotheses proposed in this

study by using Partial Least Square(PLS). PLS is a

structural equation model (SEM) based on

components or variance (variance). As with SEM,

PLS analysis involves two stages, namely:

The Inﬂuences of Human Capital Organizational Learning and Organizational Competence on Performance

569

Figure 2: PLS Result of Structural Model

Source: Primary Data Processed, 2018

4.2 Hypothesis Testing

4.2.1 Direct Effect Testing

The results showed that both the direct effect, either

direct effect of human capital on organizational

performanceas as well as a direct effect of

organizational learning on organizational

performanceisa significant (Table 1)

Table 1: Direct Effect Testing in Inner Model.

Influence

Between

Variables

Inner Weight t-statistic P values Description

Human Capital

 Organizational

Performance

0.454 9.870 0.000 Significant

0.263 6.262 0.000 Significant

Source: Primary Data Processed, 2014

Table 1 and Figure 2 shows that the results of

hypothesis testing as follows:

a. Testing the direct effect of Human Capitalon

Organizational Performance, inner weight

coefficient values obtained at 0.454, with at-

statistic values for 9,870, and p-value of 0.000.

Since the value of t-statistics > 1.96, and the p-

valueof < 0.05, then there is a positive

significant direct effect between Human

Capitalto Organizational Performance. That is,

the higher quality of human capital, the higher

the Organizational Performance. This shows

that the first hypothesis which the higher the

human capital can improve the organization's

performance proved.

b. Testing the direct effect of Organizational

Learning on Organizational Performance, the

value of weigh coefficient of the inner

workings of 0.263, with at-statistic values for

6,262, and p-value of 0.000. Since the value of

t-statistics > 1.96, and the p-value of < 0.05,

then there is a positive significant direct effect

on Organizational Learning to Organizational

Performance. That is, the higher the Learning

Organization, the higher the Organizational

Performance. This suggests that the second

hypothesis which the higher Learning

Organization can improve the Organization’s

performance proven.

4.2.2 Indirect Effect Testing

a. Organizational Competence Mediates the

Influence of Human Capital On Organizational

Performance

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Table 2: Organizational Competence Mediates the

Influence of Human Capital on Organizational

Performance.

Table 2 shows the effect of human capital on

organizational performance( a), the effect of human

capital on organizational competence (c), the

competence of the organization on the organization

performance (d), and the effect of human capital on

organizational performance without organizational

competence (b), where (a) has a smaller coefficient

(down) from the influence of human capital on

organizational performance without organizational

competence(b), it can be said that the organizational

competence as a mediating is partially (partial

mediation). This proves that human capital can

improve organizational performance directly and also

through organizational competence. Thus, it can be

said that the hypothesis (H3) that states the higher

human capital will, the higher organizational

performance mediated by Organization competence

proven.

b. Organizational Competence Mediates the

Influence of Organizational Learning On

Organizational Performance

Table 3 shows the effect of organizational

learning on organizational performance (a), the effect

of organizational learning on organizational

competence (c), the effect of organizational on the

organizational performance (d), and the effect of

organizational learning on organizational

performance without organizational competence (b),

where (a) has a smaller coefficient (down) from the

influence of organizational learning on organizational

performance without organizational competence (b),

it can be said that the organizational competence as a

mediating is partially (partial mediation). This proves

that organizational learning can improve

organizational performance directly and also through

of organizational competence. Thus, it can be said

that the hypothesis (H4) that states the higher

organizational learning will, the higher the

organizational performance mediated by

Organization competence proven.

Table 3: Organizational Competence Mediates the

Influence of Organizational Learning On Organizational

Performance

Source: Primary Data Processed, 2018

5 DISCUSSION

The results of this study found that the learning

organization can directly improve organizational

performance. Besides supporting research Marquardt

(1996) found that the learning organization (systems

thinking, mental models, personal skills, Teamwork,

Expertise shared the vision, and dialogue/discussions

can improve organizational performance.

This research supports previous research

(Khandekar and Sharma, 2006; Wang and Lo, 2003;

Said, 2002; Absah, 2007; and Therin, 2003), which

This study also supports the theory of organizational

learning of Argyris (1976), which reveals that

organizational learning is a process to detect and

correct errors to improve organizational performance.

And also supports the theory of organizational

learning Senge(1990) which revealed that the

organization must continually expand their capacity

to create the desired performance, through new

patterns and development of ideas, where collective

aspiration released, as well as the organization

The Inﬂuences of Human Capital Organizational Learning and Organizational Competence on Performance

571

continues to learn how to create learning together.The

implication of this research for organizations is to

improve organizational performance, so

organizations must continue to develop and enhance

organizational learning, including creating a

continuous opportunity to learn, develop inquiry and

dialogue, encourage collaboration and group

learning, establish various systems to obtain and

share learning, empower members of the

organization towards a common vision, and Connect

the organization to its environment.

The results of this study also found that

organizations that invest in improving the quality of

human resources can gain a competitive advantage

and high performance. This research supports

research (Redmon, 2005; Stenberg & Slater, 1982),

who found that human capital (intellectual capital,

emotional/social and moral capital/spiritual)

influence on organizational competence. The findings

also indicate that organizational competencies

mediate the effect of human capital on organizational

performance. Therefore, organizations in the field of

investment in human resources should be able to

increase the competence of an organization in order

to support the improvement of organizational

performance.

Another result of this study also found that

organizational learning and empowering members

can enhance organizational competencies,

organizational competencies which use RBV

consisting of: rare, valuable, not easily imitated and

not easily replaceable, and competence of the

organization can improve organizational

performance. This research support (Said, 2002) that

has been done by the findings that organizational

learning can improve organizational competence (the

ability of market analysis and quality of service) on

the private higher education. While in this study,

although the competence of the organization refers to

the quality of the implementation of the college, in

college, it contains the ability to analyze the market

and good quality services for students and the

community.

Research in public and private universities in

India (Bhatnagar,2006) found that the competence of

the organization includes the teaching and services

that affect the performance of organizations, both

public and private universities. Therefore, of this

research have to find a way to develop a learning

organization that can improve both organizational

competence in the field of education and teaching,

community service, in order to encourage the

improvement of organizational performance.

6 CONCLUSION

Many studies have tried to show the relationship

between human capital and performance. An

important finding of this study is that contingency

models and best practices can complement each other

to create conditions for effective human resource

management. This research found that investment in

human resources is a determinant of organizational

success, especially in higher education. Human

capital conceptualization is related to the

fundamentals of economic and firm performance.

According to this research, organizational

performance influenced positively by human capital

considerations, especially intellectual capital

Organizational learning influences organizational

performance, which reflects an improvement in

learning systems. Thus, the higher the organizational

learning, the higher the organizational performance.

This is consistent with organizational learning theory,

which states that good organizational learning can

improve organizational performance. Quality of

education and teaching is an important organizational

competency in improving organizational

performance reflected increased learning system.

Proven organizational competence partially mediates

the influence of human capital on organizational

performance. In other words, the higher the human

capital can increase organizational performance

mediated increase organizational competence.

Organizational competence as a mediating is partial.

Basically, it is changing the whole workforce as

the most valuable asset, thus creating the way for the

organization for greater achievements through

creativity and innovativeness. Therefore, companies

should bring some effective and useful plans for

investing in the various aspects of human capital and

organizational learning. It not only direct firms to

achieve greater performance but also makes firms to

remain competence for long term survival.

7 RECOMMENDATION

Based on the analysis and discussion, the suggestions

put forward in this study are:

1. The results of this study indicate that human

capital affects the competence and performance

of the organization, so that university leaders

must increase, human capital, especially

intellectual capital through the provision of

study permits or following study assignments

for lecturers to continue their studies both

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Masters (S2) and Doctor (S3), in order to

improve competence (quality of education and

teaching) and its performance.

2. Organizational learning that is carried out by

universities can enhance improve personal

skills. Related to the learning system, such as

personal skills. Therefore, higher education is

recommended to conduct organizational

learning such as character education, scientific

publication training, comparative studies to

other universities, and others.

8 RESEARCH LIMITATIONS

AND FUTURE RESEARCH

This study was conducted on Private Higher

Education, which has accredited programs 50% or

more. Variables examined only the relationship was

human capital and organizational learning to

organizational competence and performance. Future

studies can be conducted on all Private Higher

Education with a wider scope such as Private Higher

Education throughout Indonesia. While the research

can be developed the relationship between human

capital and organizational learning with the

competitive advantage of the organization's

reputation or other company.

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