Human Capital Efficiency, Cost Management Practices, and Financial Performance of Pakistan’s Textile Firms

Abstract

The cost management practices and the efficiency of human capital have now become an important factor of organizational competitiveness and financial performance especially in labour-intensive sectors like the textile industry. The textile industry in developing economies such as Pakistan is a major source of employment, export revenue and industrial development, but it is still struggling with the models of increasing productions, low productivity and unstable international market. This paper will discuss the correlation between the efficiency of human capital and cost management practices and the financial performance of the textile companies in Pakistan. Based on the human capital theory and the approaches of strategic cost management, the research paper points out the significance of how the efficient use of the skills, knowledge, and experience of the employees and the introduction of systematic cost control mechanisms can be beneficial in promoting the profitability and sustainability of firms. The synthesis of the previous empirical data and its situationalization in the context of the textile industry in Pakistan allows the study to give insights as to how it is possible to enhance the financial performance of the firm through the strategic investment in the human capital and effective control of costs. The results add value to the existing literature because it highlights the importance of integrating human capital efficiency with cost management in enhancing the performance of firms in the emerging economies.