FROM HUMAN RESOURCE DEVELOPMENT TO BUSINESS PERFORMANCE: A THEORETICAL MODEL OF KNOWLEDGE AND CAPABILITY TRANSFORMATION IN VIETNAMESE SMALL AND MEDIUM-SIZED ENTERPRISES

Abstract

This study develops an integrated theoretical model to explain, along a transformation pathway, how human resource development contributes to business performance in small and medium-sized enterprises in Vietnam. Drawing on the resource-based view, human capital theory, and dynamic capabilities theory, the model argues that human resource development does not exert a direct effect on business performance, but generates value through three closely interconnected mediating mechanisms. The first mechanism is a learning-oriented human resource system that facilitates knowledge acquisition and sharing. The second mechanism is a knowledge-based business strategy that guides resource deployment and the creation of competitive advantage. The third mechanism is the level of information technology application in management and operations, which amplifies and diffuses knowledge utilization. Together, these three mechanisms promote knowledge integration, transform individual knowledge into organizational capabilities, and foster innovation. The study further emphasizes the moderating role of transformational leadership in strengthening the effectiveness of the entire system by fostering a shared vision, learning motivation, and organizational adaptability.