The Interplay of Corporate Governance, Human Capital, and Innovation in Driving Firm Performance

Article Sidebar

PDF
Published: 2026-06-02
DOI: https://doi.org/10.70102/4nabw664

Main Article Content

Jorge A. Restrepo Morales
filiación: I.U. Tecnológico de Antioquia,
Eduar Antonio Rodríguez Flore
Dirección de Investigación e Innovación, Universidad Autónoma del Perú,
Luis Fernando Garcés Giraldo
Escuela de Posgrados, Universidad Continental, Perú,
Alejandro Díaz Peláez
filiación: Universidad Simon Bolívar;
Ana Luz Ramos-Soto
Profesora-investigadora de la Universidad Benito Juárez de Oaxaca; Coordinadora de la Agencia de
Carlos Guillermo Vargas Febres
Universidad Autónoma del Perú;

Abstract

(Purpose): In the modern economy, understanding the drivers of firm performance is critical. This study investigates the complex pathways linking corporate governance, strategic human capital management, and innovation to performance, addressing how governance structures translate into tangible results. (Methods): Drawing upon an integration of agency theory, the resource-based view (RBV), and human capital theory, we developed and tested a structural model. The model was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) on cross-sectional data from a sample of 3500 firms form FAEDPYME(Results): The findings indicate that corporate governance has a modest direct effect on innovation (β = 0.148) but a more significant indirect influence channeled through strategic human capital management (indirect effect). Human capital management emerged as the most powerful direct driver of innovation (β = 0.452). Subsequently, innovation was confirmed as a strong, positive predictor of firm performance (β = 0.464), explaining 21.6% of its variance. (Discussion): The results demonstrate that the primary value of effective governance lies in its ability to foster an environment where strategic human capital policies can thrive. It is this investment in people, enabled by good governance, that fuels the innovation necessary for achieving superior performance. These findings underscore the need for an integrated strategic approach that aligns governance with human capital and innovation efforts.

Article Details

Issue

Vol. 6 No. S1 (2026): Volume 6, Issue S1, 2026

Section

Articles

How to Cite

The Interplay of Corporate Governance, Human Capital, and Innovation in Driving Firm Performance (J. A. R. Morales, E. A. Rodríguez Flore, L. F. Garcés Giraldo, A. D. Peláez, A. L. Ramos-Soto, & C. G. Vargas Febres, Trans.). (2026). International Journal of Aquatic Research and Environmental Studies, 6(S1), 245-252. https://doi.org/10.70102/4nabw664

References

1. Aguilera, R. V., & Cuervo-Cazurra, A. (2021). Corporate governance in international business: The road ahead. Journal of International Business Studies, 52(4), 787-804.

2. Balsmeier, B., Fleming, L., & Manso, G. (2017). Independent boards and innovation. Journal of Financial Economics, 123(3), 536-557.

3. Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99-120.

4. Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. National Bureau of Economic Research.

5. Bell, S. J., & Martin, J. S. (2021). Innovation and Human Capital Policy. National Bureau of Economic Research.

6. Beugelsdijk, S. (2018). The impact of high-performance work systems on innovation. Journal of Management, 44(4), 1435-1460.

7. Crossan, M. M., & Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A systematic review of the literature. Journal of Management Studies, 47(6), 1154-1191.

8. Damanpour, F. (1991). Organizational innovation: A meta-analysis of effects of determinants and moderators. Academy of Management Journal, 34(3), 555-590.

9. Damanpour, F., & Gopalakrishnan, S. (2001). The dynamics of the adoption of product and process innovations in organizations. Journal of Management Studies, 38(1), 45-65.

10. Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of Management, 16(1), 49-64.

11. Georgiev, G. S. (2024). Human Capital Disclosure & Corporate Governance: The New Evidence. Emory Law Journal, 73, 947.

12. Gospel, H., & Pendleton, A. (Eds.). (2015). Corporate governance and human resource management. Now Publishers Inc.

13. Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics, 133(2), 662-676.

14. Hill, C. W. L., Jones, G. R., & Schilling, M. A. (2014). Strategic management: Theory & cases: An integrated approach. Cengage Learning.

15. Holmstrom, B. (1989). Agency costs and innovation. Journal of Economic Behavior & Organization, 12(3), 305-327.

16. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.

17. Laursen, K., & Salter, A. (2006). Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms. Strategic Management Journal, 27(2), 131-150.

18. Lev, B., & Schwartz, A. (2019). The End of Accounting and the Path Forward for Investors and Managers. John Wiley & Sons.

19. Manso, G. (2020). The impact of corporate governance on innovation. Journal of Economic Surveys, 34(5), 1048-1073.

20. Mincer, J. (1974). Schooling, experience, and earnings. National Bureau of Economic Research.

21. O'Sullivan, M. (2000). The innovative enterprise and corporate governance. Cambridge Journal of Economics, 24(4), 393-416.

22. Rajan, R. G., & Zingales, L. (2000). The governance of the new enterprise. In X. Vives (Ed.), Corporate Governance: Theoretical and Empirical Perspectives (pp. 201-227). Cambridge University Press.

23. Rosli, M. M., & Sidek, S. (2013). The Impact of Innovation on the Performance of Small and Medium Manufacturing Enterprises: Evidence from Malaysia. Journal of Innovation Management in Small & Medium Enterprise, 2013, 1-16.

24. Sapra, H., Subramanian, A., & Subramanian, K. V. (2014). Corporate Governance and Innovation: Theory and Evidence. Journal of Financial and Quantitative Analysis, 49(4), 957-1003.

25. Scherer, F. M. (1992). Schumpeter and plausible capitalism. Journal of Economic Literature, 30(3), 1416-1433.

26. Serrasqueiro, Z., & Georgieva, D. (2021). The Human Capital Management Movement in U.S. Corporate Law. Iowa Law Review, 106, 1231.

27. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533.

28. Tien, C., Chen, C. N., & Chuang, C. M. (2021). The effects of CEO duality on corporate innovation: A meta-analysis. Journal of Business Research, 129, 136-146.

29. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171-180.

30. Wright, P. M., McMahan, G. C., & McWilliams, A. (1994). Human resources and sustained competitive advantage: a resource-based perspective. International Journal of Human Resource Management, 5(2), 301-326.

31. Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 27(2), 185-203.