The role of human resource management practices in shaping social capital and enhancing financial performance of SMEs

The aim of this study is to investigate how the activities of human resource management affect the indicators of social capital and the financial performance of small and medium-sized enterprises (SMEs) in Uzbekistan. Since SMEs are very important in the economy of Uzbekistan (they provide 78% of employment and 54% of GDP in 2024), it is important to identify what factors affect their success. Data were collected from 250 managers and employees of 80 SMEs in the Tashkent, Samarkand, and Bukhara regions via standardized questionnaires and were analyzed via structural equation modeling (SEM) and SmartPLS software. Preliminary results indicate that human resource management practices (training, employee involvement, and reward systems) significantly and positively impact increasing social capital (communication networks, organizational trust, and norms of cooperation). And lastly, augmenting social capital indirectly (with a path coefficient of 0.45) and directly (with a coefficient of 0.32) affects financial performance. Policy-makers and SME managers can effectively utilize such insights in initiating human resource development programs and strengthening intra-organizational team work.