Small and medium-sized enterprises (SMEs) are widely recognized as the backbone of developing and emerging economies, contributing substantially to employment creation, innovation, poverty reduction, and overall economic growth. Despite their importance, SMEs continue to face persistent performance and survival challenges, particularly in volatile and resource-constrained environments. Among the various factors identified in the literature, human capital has emerged as one of the most critical yet complex determinants of SME performance. Human capital encompasses the education level, skills, experience, knowledge, and competencies of owners, managers, and employees, and it operates not as a static resource but as a dynamic asset that evolves over time. This article develops a comprehensive, theory-driven analysis of how human capital influences SME performance across different stages of the enterprise life cycle, drawing strictly on the provided body of literature. By integrating insights from human capital theory, intellectual capital frameworks, organizational life-cycle models, and strategic human resource management perspectives, the study offers an in-depth conceptual and empirical synthesis that explains why and how human capital matters differently at various stages of SME development.
The article adopts a qualitative, integrative research design based on systematic theoretical elaboration and comparative analysis of prior empirical studies conducted across Africa, Asia, and other emerging economies. The findings reveal that education, experience, and skills of SME owner-managers play a foundational role in early-stage survival, while structured human capital development, knowledge management practices, and formalized HRM systems become increasingly important as firms transition to growth and maturity stages. Furthermore, the study highlights that intellectual capital components—human, structural, and relational capital—interact dynamically with life-cycle challenges, shaping competitive advantage and long-term performance outcomes. Contextual factors such as institutional environments, access to training, and cultural norms significantly moderate these relationships.
By synthesizing fragmented empirical evidence into a coherent life-cycle-based framework, this article contributes to both theory and practice. It advances academic understanding by bridging human capital and SME life-cycle literatures, while offering actionable insights for policymakers, educators, consultants, and SME owners seeking to enhance performance through targeted human capital investments. The study concludes that sustainable SME performance in developing economies depends not merely on the presence of human capital, but on its continuous development, strategic alignment, and adaptation to evolving organizational needs.
