The Role of Human and Social Capital on Small Enterprise Growth· Evidence from Sri Lanka

This paper aims to examine the effect of entrepreneur's human capital and social capital on the growth of small enterprises in Sri Lanka. The data have been collected from 97 manufactur­ ing enterprises that employ less than 50 employees in Colombo district of Sri Lanka. The hypoth­ eses derived from human capital and social capital theories were tested in order to assess the re­ lationship among human capital, social capital and the small enterprise growth. The results sug­ gest that human capital and social capital are important factors in determining small enterprises grolVth. The small enterprises play a very important role in the economies of both developed and developing countries. It is the sustained growth of these businesses that creates the new jobs and other benefits sought by communities while, at the same time hold out to their owners the possibility of wealth, variety, self-fulfillment, and independence (Dobbs & Hamilton, 2007). Human capital and social capital are associated with the performance and related to subsequent growth. Empirical studies support the existence of relationship between the human capital and social capital and firm growth. The majority of those studies have taken in to consideration of only one dimension i.e human capital or social capital. It is therefore important to study the impact of both two dimensions simultaneously on firm