ABSTRACT
Although education, training, and experience have been extensively discussed and tested as the major cords of human capital, less has been discussed in behavioural capital. This chapter is dedicated to explaining the concept of behavioural human capital (BHC) with two major dimensions: attitude and personal attributes. Each dimension is further represented by various sub-dimensions and proposed a framework illustrating how BHC can impact a firm's absorptive capacity and innovation. The proposed framework was derived by integrating the dispersed literature from psychology, economics and management. To empirically test the proposed framework, we used the data collected from 614 manufacturing sector small and medium enterprises (SMEs) of Pakistan. Partial Least Square (PLS-SEM) was employed to test the two major hypotheses. The results overwhelmingly supported the direct and indirect (through absorptive capacity) role of behavioural human capital on a firm's innovation performance. Our results highlight the importance of BHC dimensions, namely attitude and personal attributes in the innovation process of a firm and strongly suggest firm's develop an inclusive human capital development strategy where BHC should also be equally focused.
