ABSTRACT Human capital plays a crucial role in providing organizations with lasting competitive advantages. As a result, prioritizing investment in human capital becomes essential for maintaining long‐term competitiveness. However, such human capital investments often come with inherent challenges, leading to ongoing debates among academic and industry professionals. This research focuses on examining how investments in human capital influence the sustainable competitive advantage of firms. The study draws on data from 6460 companies across 54 countries over the period from 2002 to 2021. In addition to assessing this primary relationship, the study also investigates whether gender‐based pay disparities, particularly the gender wage gap, affect the strength of the connection between human capital investment and sustained competitiveness. The initial analysis demonstrates a positive relationship between human capital investment and firms' ability to maintain a competitive edge. These findings hold even when alternative measures are used and after controlling for potential endogeneity using two‐stage least squares (2SLS) and entropy balancing methods. Furthermore, the study highlights that the gender pay gap acts as a moderating factor. Specifically, the positive impact of human capital investment is found to be stronger in firms where the gender wage gap is narrower.
Islam et al. (Sun,) studied this question.