Highly Educated Employees and Firm Productivity: Agency Cost and Innovation Efficiency Channels in Chinese Listed Firms
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Published in Vol. 1 No. 4 (2026) of Sustainable Management Review.
Sustainable Management Review (SMR) is a multidisciplinary, peer-reviewed international journal dedicated to advancing research on sustainable management and sustainable development across disciplines. SMR welcomes sustainability-oriented studies from diverse academic fields, including but not limited to economics and management, public administration, culture, education, sociology, communication, law, environmental studies, biology, chemistry, materials science, engineering, water resources management, and other STEM-related areas. The journal encourages scholars to examine the application, transformation, and development of sustainability principles from organizational, social, technological, ecological, and institutional perspectives, thereby providing theoretical support and practical insights for more responsible, resilient, and future-oriented models of management and development.
ISSN3106-5805 eISSN3106-5813
About the JournalAbstract
This study examines the association between education-based human capital and firm productivity and investigates the organizational channels through which that association operates. Using an unbalanced panel of Chinese listed firms from 2007 to 2023, we measure human capital as the share of employees holding a master's degree or above and estimate total factor productivity with the Olley-Pakes method. Regressions with industry and year fixed effects show that a larger share of postgraduate-educated employees is positively associated with firm productivity. Mediation tests indicate that internal governance and operating measures, together with patent-based innovation efficiency, partly transmit this association. The invention-patent channel is stronger than the utility-model and design-patent channel, whereas the proxy for conflicts between controlling and minority shareholders has a negative indirect effect. Industry-level analyses suggest that the governance and operating channel is more pronounced in secondary industries, while the innovation channel is stronger in tertiary industries. The results show that the productivity value of highly educated employees depends on a firm's ability to incorporate their knowledge and skills into governance arrangements and substantive innovation. Because the research design primarily identifies conditional associations, the analysis does not make causal claims beyond the evidence.
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