Assessing the carry-over effects of both human capital and organizational forgetting on sustainability performance using dynamic data envelopment analysis

Many studies have documented that human capital, which is a result of professional knowledge accumulation, continuously improves sustainability performance over time. Organizational forgetting is the loss of such professional knowledge, and it results in lower sustainability performance. Thus, human capital and organizational forgetting can be respectively treated as good and bad carry-overs. Both human capital and organizational forgetting may reflect business cycle fluctuations. The data envelopment analysis model has not been employed to examine the impact of either human capital or organizational forgetting on sustainability performance in multi-stages. The aim of this study is to develop a three-stage approach to incorporate the carry-over effects of both human capital and organizational forgetting and the effects of business cycle fluctuations on overall and term sustainability performance using data from Taiwan’s 16 major industrial sectors. The study finds that the carry-over effects of human capital and organizational forgetting lead to accurate estimations of sustainability performance and illustrates that the development of the industrial economy is a critical factor for adjusting human capital. Governments should implement economic stabilization policies and increase investment in education and safe capital to improve human capital accumulation and enhance sustainability performance