THE IMPACT OF HUMAN CAPITAL ON FIRM PERFORMANCE: AN EXPLORATION OF INNOVATIVE CAPABILITIES AND GOVERNMENT SUBSIDIES OF LISTED CHINESE MANUFACTURING COMPANIES

Abstract This research seeks to examine the mechanism by which human capital affects the performance of publicly traded firms. Specifically, it focuses on the effects of innovation capacity and government subsidies in Chinese manufacturing enterprises that are listed on the stock market. The sample is drawn from A-share manufacturing businesses that are listed on the Shanghai and Shenzhen stock exchanges between 2015 and 2022 and have implemented employee stock ownership schemes. The research used a fixed-effects model and stepwise regression methods to determine that there is a notable inverse correlation between human capital and company performance. Additionally, it was shown that innovation capacity partially mediates the link between human capital and firm performance. Furthermore, the presence of government subsidies did not have an important effect on the link between human capital and the capacity to innovate. These results enhance comprehension of the development of business investment plans and the efficient deployment of human resources. They also serve as a crucial foundation for policymakers to make adjustments to current subsidy programs.