This study examined the effect of human capital management on the performance of spaza shops in South Africa’s informal sector, comparing locally owned and migrant-owned enterprises while exploring the moderating role of community leadership. Using a structural equation modelling approach and multiple regression analysis, data were collected from 359 spaza shop owners. Results indicate that human capital management significantly predicts performance in migrant-owned shops (β = 0.378, p < 0.01) but not in locally owned shops (β = 0.092, p > 0.05). The comparison of beta coefficients revealed that migrant-owned shops mobilise human capital more effectively than local shops. Moderation analysis showed that community leadership strengthened the relationship between human capital and performance for locally owned shops but had a weaker, non-significant effect for migrant-owned shops. The findings underscore the importance of targeted human capital strategies and contextual support mechanisms in enhancing the performance of informal-sector businesses. These insights have implications for entrepreneurs, policymakers, and support agencies seeking to improve sustainability and competitiveness in the informal economy.

Keywords: Human capital management; Spaza shops; Informal sector entrepreneurship; Community leadership; Business performance