EXPLORING THE ROLE OF HUMAN RESOURCE ACCOUNTING IN ENHANCING MSME PERFORMANCE IN GUJARAT

Abstract

Micro, Small, and Medium Enterprises (MSMEs) play a vital role in Gujarat’s economic development, contributing to employment generation, industrial output, and regional growth. In this context, effective management of human capital is crucial for sustaining competitiveness and fostering innovation. Human Resource Accounting (HRA) provides a systematic framework to identify, measure, and report the value of employees as strategic assets, rather than mere operational costs. This article explores the role of HRA in enhancing MSME performance in Gujarat by examining its significance, methods of valuation, and strategic implications for decision-making, planning, and performance measurement. The study highlights the challenges faced by MSMEs in adopting HRA, including financial constraints, lack of awareness, and methodological complexities, while also identifying opportunities for workforce optimization, employee retention, and organizational growth. By integrating human capital valuation with managerial and financial practices, MSMEs can transform their workforce into a measurable and valuable asset, driving productivity, competitiveness, and sustainable development. The article concludes with recommendations for MSMEs and policymakers to encourage wider adoption of HRA practices in the region.