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Effects of Human Capital and Long–Term Human Resources Development and Utilization on Employment Growth of Small–Scale Businesses: A Causal Analysis 1

The purpose of this study was to explore how three different human resource variables affect employment growth of small–scale enterprises: human capital of business owners, human capital of employees, and human resource development and utilization. The literature suggests different models of how these human resource variables affect business outcomes. Longitudinal data from 119 German business owners provided support for a main effect model indicating that owners’ human capital as well as employee human resource development and utilization affect employment growth. Moreover, human resources development and utilization was most effective when the human capital of employees was high. We conclude that human resources are important factors predicting growth of small–scale enterprises.