Abstract

Knowledge as a capability has implications from a knowledge management perspective that focuses on developing core competencies. Capability of knowledge transfer can be improved through competency-enhancing human resource management (HRM) practices. Based on the research gaps and theoretical background, we propose a model to test the relationship between HRM practices and human capital as the mediating variable. The sample population includes the employees of Islamic BPR in Central Java, Indonesia. The analysis was conducted using SEM. The results show that competency-enhancing HRM practices and human capital significantly increase knowledge transfer capability. Therefore, organisations need to implement more specific HRM practices while recruiting talent and retaining and developing their competencies. This helps avoid obsolescence of individual knowledge and increases the stock of organisational knowledge through knowledge transfer capability. This study provides insights related to the knowledge management literature by providing an interaction model between organisational policies and individual competencies in service companies.