Human Capital and Entrepreneurial Income: The Mediating Role of Motivation and Access to finance

Abstract

This study examines the relationship between human capital and entrepreneurial income, with a particular focus on the mediating roles of entrepreneurial motivation and access to finance. Drawing on human capital theory, the study argues that education, skills and experience alone may not fully translate into higher entrepreneurial income unless supported by psychological and financial mechanisms. A quantitative research design was adopted and data were collected from registered small and medium enterprise entrepreneurs. The analysis was conducted using SPSS, employing descriptive statistics, correlation analysis, regression analysis and mediation analysis.

The results reveal that human capital has a strong and positive direct effect on entrepreneurial income (β = 0.57, B = 0.62, t = 6.20, p < 0.001), explaining 32.5% of the variance in income (R² = 0.325). Correlation results indicate significant positive associations among all variables, with human capital correlating with entrepreneurial income (r = 0.57), entrepreneurial motivation (r = 0.52) and access to finance (r = 0.48). Mediation analysis further demonstrates that entrepreneurial motivation significantly mediates the relationship between human capital and entrepreneurial income (indirect effect = 0.18, t = 3.60, p < 0.001). Similarly, access to finance is found to be a significant mediator (indirect effect = 0.15, t = 3.00, p = 0.003). Importantly, the serial mediation path involving entrepreneurial motivation and access to finance is also statistically significant (indirect effect = 0.008, t = 2.67, p = 0.008), indicating a sequential mechanism through which human capital enhances income.

Overall, the findings suggest that while human capital directly improves entrepreneurial income, its impact is substantially strengthened when entrepreneurs are highly motivated and have better access to financial resources. The study contributes to entrepreneurship literature by highlighting the combined psychological and financial pathways through which human capital translates into income generation.