Human Capital as a Measure of Competitive Advantage

by Shamsul
Investment in Humen
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Human Capital as a Measure of Competitive Advantage


Why Should Nations and Companies Invest in Human, Social and Psychological Capital
We frequently hear from experts in management and economy who encourage companies and nations to invest in human beings and social and psychological capital. These calls depend on the question of governments fixing a sufficient amount of money to provide basic skills and education to the workforce. It also includes asking the companies and governments to prepare a network based on social relationships and to increase the value curve by investment in research and development. Before discussing how these parameters would benefit nations and firms, we would first describe the meaning of human beings and social and psychological capital.

Human Capital:

It is in the same manner that physical infrastructure and capital of finance are the production elements. The success of any firm is based on its skilled workforce. It also means that firms require well-educated, skillful, efficient, and serviceable workers. Experts in management and business tell us about this capital of humans. In the same way, a skilled and educated workforce enhances companies’ output, and nations also take advantage by having an active pool of efficient and capable workers. It is the same way as firms want to appoint these workers. It depends on the nation to give them primary education along with skills through subsidized education. Also, the skills provision by establishing vocational training institutes or collaborating with private organizations in a Public-Private Partnership. It is abbreviated as PPP model to provide primary education to the workers.

Social Capital:

Next is social capital is the consequence of networking relationships among communities and individuals and the knots that connect them in broader society. We often ask why it is important for companies and nations to have social capital along with human capital. The reply is that it is the same way as the firms require educated and skilled workers. The society becomes flourishing and well-performing needs persons and workers to be tightly knit into the textile of society. This social capital will provide more productivity, precision, less crime, and the development of communities based on self-sustainment and incubators of emotionally, physically, and mentally fit and genius individuals.

Third, as we know that human capital and social capital give us an effective workforce and outcomes. The next revolutionary step for companies and nations is when they own an actual number of human beings and social capital by moving up the value chain by encouraging research, occupying patents, innovating, and moving towards the development of an economy that possesses all of the parameters. Therefore, it is necessary to consider that intellectual capital is essential to firms, similar to human and social capital, and needed by firms and nations to participate in the race to achieve and deliver the best economic value.

Human Capital:

It is evident from the fact that human capital gives higher efficacy and productivity, and social capital gives emotionally strong workers. Intellectual capital takes nations and economies into that orbit where they face challenges only from those who are masters in these three parameters of remarkable value creation. The West has relative ascendence over the East, which is continuing. One of the reasons that the West successfully invested in these three capitals while the East is performing catch-up and is now struggling to emulate them in their journey for growth of the economy. 

Companies Investment in Workforce:

Why are search engines like Microsoft and Google, besides Apple, AT&T, and 3M, still competitive and profit-making? Why some firms like these are more prosperous in producing patents and introducing them better than the remaining competitors? Furthermore, why did Facebook initiate such values and be considered one of the most significant projects apart from the smartphone and search engine and the discovery of the personal computer? The solutions to all these sums are present in the fact that these companies were first invested in their workforce or incubation and creation of human capital. Next, they were in a situation to create that atmosphere like in college.

The ideas that were free to flow and generated by their workers are the basis of social capital. The third reason is that these companies were able to increase the curve and, indeed, manage to increase the curve to gain the fruits of intellectual capital after the first two kinds of capital.

Investment in Education and and Training:

Similarly, why is the United States such a prominent force in the global economy, whereas even the People’s Republic of China and India, which possess a high percentage of the educated workforce, still need to compete against its dominance? The purpose behind this is that the United States of America and Europe have invested more in the education and training of people instead of skilling their people over the last century and a half. Due to this, they are now taking the profits of such investments. Furthermore, these countries have enabled themselves to rise and maintain the value curve by establishing a human capital system that encourages creativity and innovation, except stifling them.

Additionally, whenever they feel that their dominance in an economy is facing a problem, these States have always created more excellent ideas to make themselve organized. We can learn from the offshoring of production to China and moving back-office projects to India. In this way, they have maintained their attention on value creation by utilizing three kinds of capital in such a way that the rest of the globe cannot perform so even nowadays.

As persons, we also can guarantee that we perform our bit to increase the establishment of human capital. We can achieve this target by investing in ourselves and generating networks with our families, peers, communities, and co-workers. In this way, we can be more intelligent emotionally, and then by continuous improvement and quitting nothing to chance or becoming self-satisfied, thereby living with creativity where goals move freely. Furthermore, we can all be willing partners in the success of these capital companies by making knowledgeable choices that carry better results for everyone concerned.

Advancement and catch-Up the Curves

After studying the success stories of firms that invest in human capital, we can now know how countries and competitors in the emerging world catch up with the dominant countries and companies. The first move is to provide education for all without the distinction of gender, race, or class, as well as by updating the education system significantly. So that rather than memorization, creativity, and innovation are motivated. Next, despite creating class-dependent and clan-dependent relationships alone, there should be attention to network formation. They should not make differences on gender, ethics, class barriers, and racial factors.

This means that social capital should must be away from the restricted constraints resulting from these components. Third, the government should finance development and research processes and motivate highly competent scientists and researchers to start their jobs instead of frustrating and disappointing them. That usually happens in Asian countries, especially when people search for employment and greener pastures in Western countries.

However, this segment is like an idealist rant; some of these parameters have already been happening inside Asia, China, the South East, and, to a lesser percentage, Latin America. Therefore, the countries and their economies are becoming challengers against the dominance of Western countries. Which needs to be more unexpectedly considered in the value creation trajectory. Furthermore, some Indian firms have already succeeded in realizing these kinds of capital by overall recorded leaves, which are much needed. It is the situation that when India begins establishing these assets, it can become a potent force with which to calculate.

Cessation Thoughts

In the long run, human capital, social, and psycho-social capital are different from financial and psychological capital in the way that they can be prepared even by those with the decrease of the latter as complex performance, determination, and openness culture can all move to value creation. The conclusion is that we do not require billions of US dollars to invest, and only by creating use of the possible resources, companies, and nations can we no doubt gain prosperity like the Western countries, and their individuals have the advantage of a higher standard of living.

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