Published Online:October 2025
Product Name:The IUP Journal of Management Research
Product Type:Article
Product Code:IJMR011025
DOI:10.71329/IUPJMR/2025.24.4.5-13
Author Name:Arun R Bhosale and A N Tamragundi
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:5-13
The study investigates the causal relationship between Human Capital Investment (HCI) and the financial performance of the top 25 companies listed on the Bombay Stock Exchange (BSE) from 2014-15 to 2023-24. Utilizing panel data regression analysis, the study examines the impact of HCI on return on assets (ROA), return on equity (ROE), and return on capital employed (ROCE), while controlling for firm size, leverage, and capital intensity. The results reveal a significant positive causal relationship between HCI and all three financial performance metrics. The strongest explanatory power was observed for ROCE, followed by ROA and ROE. The findings, robust to diagnostic testing, emphasize the critical role of strategic HCI in enhancing profitability and operational efficiency, providing valuable insights for managers and investors to optimize human capital investments for sustainable corporate success.
Human capital is a key driver of business growth and long-term success. Organizations invest in their workforce through hiring, training and motivating, expecting these efforts to generate future benefits and support sustainable operations. In a highly competitive global market, improving employee productivity is essential for organizations to create value and achieve a competitive edge.