Human Capital and Business Performance of Malagasy Entrepreneurs: The Influence of Perceived Behavioural Control and Transaction Costs

Abstract

Purpose – Human capital is crucial for enabling individuals to become productive members of society, which in turn stimulates economic growth. This study investigates the predictive role of human capital in business performance (BP), focusing on Madagascar, a country with high entrepreneurial activity but a low human capital index. The research transcends knowledge restrictions by examining the influence of specific dimensions of human capital, such as experiential knowledge (EK) and prior knowledge (PK), on business performance, particularly through the moderating role of perceived behavioural control (PBC) and the mediating role of transaction costs (TC). Demographic and personal experience factors such as biological sex, age, education, work experience, and entrepreneurial experience were also accounted for. Methodology – The study utilised a cross-sectional survey of business owners aged 18 and above operating in Analamanga, the central region of Madagascar. A sample of 465 self-employed individuals, distributed across four municipal areas, was surveyed using cluster sampling with a quota method. The research instrument was a structured interview questionnaire with five sections, based on questions that had been successfully tested in previous research. This non-experimental investigation applied bootstrapping techniques using the PROCESS Macro for SPSS to examine moderation and mediation effects, accommodating the non-normal distribution of the data. Findings – The findings reveal that perceived behavioural control moderates the positive relationship between experiential knowledge and transaction costs for the overall sample, as well as for women, individuals with no formal qualifications, and those with extensive work or entrepreneurial experience. However, PBC's moderating effect on the iv | P a g e relationship between prior knowledge and transaction costs was observed only among the group lacking formal academic qualifications, with a negative correlation identified between the two variables. Transaction costs were found to mediate solely the positive relationship between prior knowledge and business performance for those with a tertiary education certificate or higher qualifications. The results emphasise the importance of fostering experiential learning, nurturing self-efficacy, empowering women, providing targeted business skills training for individuals lacking formal education qualifications, and promoting access to higher education as critical factors in enhancing business outcomes in Madagascar.