Human capital, social capital and organizational performance

Purpose – The aim of this paper is to evaluate the human capital and social capital of managers and the influence of these attributes on the performance of small and medium-sized Portuguese companies. Design/methodology/approach – The structural modeling approach was applied to a sample of 199 small and medium-sized companies aged between 3 and 15 years, from five different sectors of activity. Findings – It was found that human capital affects social capital, and that experience and cognitive ability influence personal relations and complicity. Organizational performance is strongly influenced by human capital through the cognitive ability of the manager. Practical implications – Based on these findings managers can gain a better knowledge about how to improve the performance of their firms, for example through adjustments in communication methods or strategic decision capacities. Originality/value – This work is innovative in the sense that it confirms the influence of human capital on social capital, and shows that it is cognitive ability that affects organizational performance.