The Determinants of Human Capital Effectiveness of Islamic Banking in East Kalimantan - Indonesia

Abstract

The aim of this study is to evaluate the impact of human resource practices, organizational culture and transformational leadership on organizational learning, knowledge management and human capital effectiveness of Islamic banking in East Kalimantan. The study uses 130 samples from 934 employees of Islamic banking in East Kalimantan population. Partial Least Square modeling is employed to confirm the theory as well as describe the relationship between variables.The result of this study showed that human resource practice, organizational culture and transformational leadership respectively have positive and significant influence on organizational learning.  However, human resource practice variable has no positive and significant influence on knowledge management. While organizational culture, transformational leadership and organizational learning variables showed positive and significant impact respectively. Human resource practice, transformational leadership and organizational learning variables showed no significant impact to the human capital effectiveness, while organizational culture and knowledge management variables displayed significant impact to the human capital effectiveness.  It can be stated that efforts to improve of human capital effectiveness of Islamic banking in East Kalimantan can only be done through improved organizational culture and knowledge management.This study limitations were based on a cross-sectional design, therefore further research suggested to use a longitudinal design to confirm the causal relationships between variables. Prior research still have differences in measuring human resource practices that are relevant to knowledge management, and carried out in different industrial sectors. The scarcity in the context of human capital effectiveness, which no study has investigated, is the Islamic organization culture in several companies. This study addresses this gap by finding new models with creating Islamic value in developing organizational culture.

Keywords: human capital effectiveness, human resource practice, knowledge management, organizational culture, organizational learning, transformational leadership