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The relationship between training and firm performance: A literature review

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Abstract

Although there are many advocates of training and its important role in improving firm performance, it has been criticised as faddish, or too expensive and not transferring to the job. In fact, some studies have failed to find the impacts of training on firm performance. This article aims to advance understanding of the effects of training on firm performance by reviewing theory and previous empirical studies on the relationship between training and firm performance. The paper aims to describe the important theoretical approaches and proposes a framework for analysing training and firm performance issues. Data from previous studies are used to assess the effects of training on firm performance. The analysis indicates that the relationship between training and firm performance may be mediated by employee knowledge and attitude. Furthermore, capital investment or organisational strategy does moderate the training performance relationship. Finally, the article discusses and identifies the limitations of previous studies and directions for future research on this topic.
RESEARCH AND PRACTICE
IN HUMAN RESOURCE MANAGEMENT
Thang, N. N., Quang, T. & Buyens, D. (2010). The Relationship Between Training and Firm Performance: A
Literature Review, Research and Practice in Human Resource Management, 18(1), 28-45.
The Relationship Between Training and Firm
Performance: A Literature Review
Nguyen Ngoc Thang, Truong Quang & Dirk Buyens
ABSTRACT
Although there are many advocates of training and its important role in improving firm
performance, it has been criticised as faddish, or too expensive and not transferring to the job. In
fact, some studies have failed to find the impacts of training on firm performance. This article
aims to advance understanding of the effects of training on firm performance by reviewing theory
and previous empirical studies on the relationship between training and firm performance. The
paper aims to describe the important theoretical approaches and proposes a framework for
analysing training and firm performance issues. Data from previous studies are used to assess the
effects of training on firm performance. The analysis indicates that the relationship between
training and firm performance may be mediated by employee knowledge and attitude.
Furthermore, capital investment or organisational strategy does moderate the training
performance relationship. Finally, the article discusses and identifies the limitations of previous
studies and directions for future research on this topic.
INTRODUCTION
Training is designed to provide learners with the knowledge and skills needed for their present job (Fitzgerald
1992) because few people come to the job with the complete knowledge and experience necessary to perform their
assigned job. Becker (1962) provides a systematic explanation of investment in human capital and associated
productivity, wages, and mobility of workers. Such investment not only creates competitive advantages for an
organisation (Salas & Cannon-Bowers 2001), but also provides innovations and opportunities to learn new
technologies and improve employee skills, knowledge and firm performance. In fact, there is an increasing
awareness in organisations that the investment in training could improve organisational performance in terms of
increased sales and productivity, enhanced quality and market share, reduced turnover, absence and conflict, (e.g.,
Huselid 1995, Martocchio & Baldwin 1997, Salas & Cannon-Bowers 2000). In contrast, training has been criticised
as faddish, or too expensive (Salas & Cannon-Bowers 2000, Kraiger, McLinden & Casper 2004), and there is an
increasing scepticism about the practice and theoretical underpinning of linking training with firm performance
(Alliger, et al. 1997, Wright & Geroy 2001).
Studies undertaken so far on training and firm performance relationship can be characterised as follows. Despite a
large number of single country studies that have estimated the effects of training on firm performance (e.g., Bishop
1991, Black & Lynch 1996, Bassi & Van Buren 1998, Boon & van der Eijken 1998, Fey, Bjorkman & Pavlovskaya
2000, Faems, et al. 2005, Zwick 2006), it is unclear whether the scientific theme of this research has been
adequate. Moreover, it has been difficult to find strong evidence of this theme in the human resource literature,
especially at the organisational level of analysis. Therefore, the major purpose of this paper is 1) to review the
emergence and attributes of the relationship between training and firm performance, 2) to develop and propose a
theoretical framework to fulfil requirement for analysing training and firm performance issues, and 3) to analyse
the relationship in both the theory and practice of the management of organisations in order to understand why it
has been readily supported as well as criticised by so many researchers and organisations.
This review is organised as follows. First, the article summarises some characteristics of general and specific
training, describes theoretical models linking training to firm performance, and develops and proposes a
framework for analysing training and firm performance issues. Second, the paper reviews the studies that have
estimated the effect of training on firm performance by using firm level data of a large sample of firms or detailed
data from one specific company. This study focus on research published from 1991 to 2007. Third, in explanation of
the review results the article briefly summarises advantages and disadvantages of both the approaches using data
from a large sample of firms and of one specific company, as well as measuring the effect on firm performance. The
paper also summarises how previous studies have measured and estimated the impact of training on firm
performance. Finally, the article discusses theoretical and methodological issues, limitations of prior studies, and
managerial implications for practitioners as well as providing suggestions and directions for future research on this
topic.
THEORETICAL FRAMEWORK
General and Specific Training
The importance of general and specific training is recognised by everyone. Chapman (1993) has pointed out that a
major development in the theory of training is the distinction between training relevant to a wide variety of tasks
and training which is more specific to the job and firm—general training and specific training. General training
raises a worker’s future productivity not only in the firm providing it, but also in other firms in the labour market.
Becker (1962) argued that workers rather than firms should pay the cost of general training because the employers
would not be able to capture any future return on their investment. Therefore, general training may be arranged in
a formal education group because it is valuable to a wide range of employers and can be obtained in other ways
than training in the firms. The firm should only pay for the firm specific component of training which does not help
the worker receive higher wages elsewhere. In contrast, specific training raises the worker’s productivity only in the
firm providing it either because they have special methods or because they use equipment with which workers must
become familiar. The returns on specific training might be lost when the relationship between employer and worker
dissolves. Thus, specific training is clearly associated with turnover. When employers expect workers to be with the
firm for a long time, they will offer training for workers since there is a longer period in which the firm can receive
returns from their investment.
Bishop (1991) has questioned Becker’s human capital theory whereby the worker pays the full costs of and receives
all the benefits of general training that is useful at another firm. His research shows that there are some reasons for
the employer to share the costs of general training with the worker. The most important reason why firms share
general training costs is government regulation. Workers can pay for general training by receiving reduced wages
during the training period. However, wage reduction during the general training would probably be forbidden by
wage and hours regulations because of minimum wage constraints. When undergoing technological change and
pressured by competitors a firm must decide whether to provide general training under minimum wage constraints
and predetermined wage structure. Besides the existence of a liquidity constraint, employers may voluntarily pay
for general training because of the unwillingness of most workers to pay large amounts of general training.
Therefore, firms will offer an optimal to induce workers to undertake general training by sharing the costs of
training.
Firm training depends on job characteristics, firm characteristics and worker characteristics. Black and Lynch
(1996) summarised the differences between workers who receive formal training and those who do not. Workers
are more likely to receive training if their jobs have the following characteristics: high value added jobs where the
individual has great responsibility, cognitively complex jobs (e.g., professional, technical and managerial jobs),
sales jobs for complicated, changing and customised products, use expensive machinery on their job, regular, non
temporary jobs, full time jobs, and jobs where the skills learned are not useful at many other firms in the
community. Holding other worker characteristics constant, the likelihood and the amount of formal training in a
given year for workers depend on the characteristics of the jobs they hold, the firms for whom they work, as well as
the characteristics of the workers themselves. Therefore, firms usually analyse the training needs to determine
where training is needed and who needs to be trained.
Theoretical Models Linking Training to Firm Performance
The knowledge and skills of workers acquired through training have become important in the face of the
increasingly rapid changes in technology, products, and systems. Most organisations invest in training because they
believe that higher performance will result (Alliger, et al. 1997, Kozlowski, et al. 2000). However, the theoretical
framework for the relationship between training and firm performance has been subject to considerable debate.
Devanna, Formbrun and Tichy (1984) proposed a model which emphasises the interrelatedness and coherence of
human resource management (HRM) policies and performance. According to their model, training and other HRM
activities aim to increase individual performance, which is believed to lead to higher firm performance.
Guest (1987) developed a theoretical framework to show how HRM policies can affect human resources and
organisational outcomes. The strength of Guest’s model is it is a valuable analytical framework for studying the
relationship between HRM policies and organisational performance, because it is expresses pathways for more
careful, clear and ease of empirical testing. He saw commitment as a vital outcome, concerned with the goals
linking employees with firm performance as the goal of quality is important to ensure the high quality of products
and services. Therefore, training and development policy play an importance role in HRM and contribute to
improved strategic integration, employee commitment, flexibility and quality. HRM outcomes can then lead to high
job performance, high problem solving activity, high cost effectiveness, and low turnover, reduced absences and
fewer grievances.
Another theoretical framework which emphasises the interrelatedness and the coherence of HR practices, firm
strategy and firm level outcomes is presented by Wright and McMahan (1992). They present six theoretical models
from the fields of organisational theory, finance and economics. Three of them (resource based view of the firm,
cybernetic systems, and behavioural perspective) consider the relationship between training and firm performance.
First, is the resource based view. Firm resources include physical capital, human capital and organisational capital
that enable the firm to improve its efficiency and effectiveness. Its resources determine the strength of a firm in the
long term. In order for a firm’s resources to provide sustained competitive advantages, however, they must have
four attributes: 1) valuable, 2) rare, 3) imperfectly imitable, and 4) cannot be replaced with another resource by
competing companies (Barney 1991). Therefore, human capital is a primary source of sustained competitive
advantage to a firm because apart from the four listed criteria it cannot be duplicated or bought in the market by
competitors. Applying the resource based view to training suggests that training can provide knowledge and skills
for employees and in turn this may lead to high firm performance.
Second, are the behavioural perspective models. Employee behaviour plays an important role as a mediator
between strategy and firm performance (Schuler & Jackson 1987, Schuler 1989). The models do not focus on
knowledge, skills or abilities of employees, but focus only on employee role behaviours because the employee’s
attitudes, behaviours and commitments could affect the firm performance. Thus, the employee role behaviour can
be instrumental in the creation of a competitive advantage. HRM practices can be considered as an option to
promote the role behaviour more efficiently and effectively, especially HR training policy.
Third, a popular theoretical model applied to HRM literature is a cybernetic model of HR systems. It is based on
the general systems models and includes input from the environment (i.e., inputs of HR knowledge, skills, and
abilities), throughput (HR behaviours) and output systems (productivity, sale, job satisfaction and turnover). When
the model is applied to strategic HRM, Wright and Snell (1991) focus on two major responsibilities: competence
management (deals with individual skills required to implement a given organisational strategy) and behaviour
management (activities that seek to agree and coordinate attitude and behaviour of individuals for organisational
strategy and goals). Therefore, training will improve knowledge, skills, abilities and the behaviour of employees.
This in turn leads to positive organisational outcomes.
Recently, an excellent analytical framework, which uses a multi level approach to training, has been offered by
Kozlowski and Klein (2000). The multi level model bridges the gap between theoretical models of training needs
assessment, design, and evaluation, and the higher levels at which training must have an impact if it is to contribute
to organisational effectiveness (Kozlowski & Salas 1997). The model is focused on training transfer and is
embedded in two distinct transfer types: horizontal and vertical transfer. Horizontal transfer concentrates on
traditional models of training effectiveness. Kozlowski and Klein (2000) proposed ‘top down contextual effects’
which they described as a group and organisational factors, that can have direct and moderating effects on learning
and transfer. These effects have been the source of recent theory and research addressing the influence of
organisational factors on motivation to learn, transfer, and training effectiveness at the individual level of analysis.
Vertical transfer examines the link between individual training outcomes and organisational outcomes. There are
two distinctive forms of vertical transfer processes—composition and compilation. Composition concentrates on
individual contribution at the same content, while compilation focuses on individual contribution at the different or
diverse content.
To summarise, first, it is obvious that similarities exist between the normative models of HRM, whether it is the
United State of America (U.S.) perspective (Devanna, et al. 1984), or the British model (Guest 1987). These authors
have put training on a set of HRM policies and consider training as an important and vital policy for improving
knowledge, skills, attitude and motivation of employees. Second, the HR system is a complex set of policies
designed to manage labour in the organisation and integrate into organisational strategy in order to create high
performance for an organisation. Third, this review of theoretical models linking training to firm performance also
suggests that it is explicitly recognised that no organisation can attain its goals or organisational strategy without
labour that has the right knowledge, skills, abilities, behaviour, and attitudes. Therefore, training plays an
important role in improving the quality of employees directly and effecting on firm performance through HR
outcomes. Finally, organisational researchers studying training and firm performance need to consider the impact
of various dimensions of employee training programmes, the type of training methods and design, the type of
employees trained, and time spent by employees in training on the topic of firm performance.
A Framework for Analysing Training and Firm Performance Issues
Kozlowski, et al. (2000) suggests an approach to organisation improvement and development based on enhancing
the knowledge, skills and attitudes or abilities of the workforce. This paradigm may be accomplished through
training activities. From this perspective, training is effective to the extent that it directly contributes to the
strategy, objectives, or outcomes central to organisational effectiveness. The theoretical frameworks are not,
however, adequately addressed in current models. Thus, a theoretical model is proposed in the hope that it will
assist in understanding the relationship between training and firm performance.
To contribute to the theoretical literature, a theoretical framework was developed and proposed to fulfill the
requirement for analysing training and firm performance issues. This framework is shown in Figure 1 and Figure 2.
Figure 1 is based on the fundamental premises of training processes, HR outcomes and firm performance. Training
is predicated on contributing to higher level group and organisational objectives, results and performance. A
number of HR outcomes and firm performance, which are important in analysing the relationship, are enumerated
in the second and third box. Attention is drawn to some of the critical variables. Figure 1 shows that training affects
the overall knowledge, skills, abilities, attitudes, behaviours, and motivation of employees. HR outcomes have a
direct impact on firm performance. In Figure 2 this framework is more complex than that in Figure 1 because it
implies interactions between training and organisational strategies, and how these strategies relate to training and
firm performance relationships.
Figure 1 A framework for analysing training and firm performance issues
Figure 2 Training, organisational strategy, and firm performance
In the long run, striving to enhance HR outcomes will lead to favourable consequences for firm performance (i.e.,
financial and non financial performance). Therefore, to determine whether training enhances the performance of
the organisation, financial performance, or non financial performance, a process of HR outcomes and firm
performance assessment must be considered together in real situations in order to reach a consensus on its
meaning. With respect to the performance being used in this model a distinction can be made between financial
and non financial performance. Financial performance in this context is linked to indicators like return on
investment (ROI), return on assets (ROA), return on equity (ROE), return on sales (ROS), Tobin’s q, sales, market
share and productivity. Non financial performance includes labour turnover, absence of employees, conflict, quality
of product, service and innovation.
METHOD
Sample
In review presented in this paper the focus is mainly on research published in many different journals across a
number of disciplines from 1991 to 2007, that have assessed the relationship between training and firm
performance. Major psychological, managerial, or business journals (e.g., Personnel Psychology, Labour
Economics, Industrial Relations, International Journal of Human Resource Management and Journal of
Operational Management) and books (American Society for Training and Development) were scanned for articles
containing related information and data. In total, 66 studies were found that could be used for this purpose. All of
the identified studies are presented in Table 1.
Table 1 The studies of the relationship between training and firm performance
No Author/study Sample
size
Response
rate (%) Firm performance
A. Data from a large sample of heterogeneous firms
1Ahmad & Schroeder
(2003) 107 60
Training has positive effects on employee’s commitment
(r = .52**) and perceived operational performance (r = .
37**).
2Aragon-Sanchez, et al.
(2003) 457 9 Training has positive effects on quality (5 items, a = .73).
3Ballot, Fakhfakh &
Taymaz (2001) 290 Archival data Training led to increase ROI (288% for France and 441%
for Sweden)
4 Ballot, et al. (2006) 350 Archival data Training has positive effects on value added per worker
(17.3% for France and 7.3% for Sweden).
5Barrett & O’Connell
(2001) 215 33.5 General training has a significant positive effect on
productivity growth (r = .14**).
6 Bartel (1994) 495 Archival data Implementation of formal training raised productivity by
6 % per year.
7Barling, Weber &
Kelloway (1996) 20 N/A Training led to increase on credit card sales (r = .30) and
personal loan sales (r = .40*)
8Bernthal & Wellins
(2006) 127 Convenience
sample
Training has positive effects on operating cash flow/net
sales, operating cash flow/ total assets, profit margin,
ROA, ROE (global benchmarking study)
9Birley & Westhead
(1990) 249 Archival data Training raised sales (r = .27**) of the companies
10 Bishop (1991) 2,594 75
100 hours of formal training for new hire led to increased
ROI ranged from 11% to 38% and has positive effect on
turnover.
11 Black & Lynch (1996) 2,945 64
10 % increase in average education will lead to an 8.5 %
increase in productivity in manufacturing and a 12.7 % in
non-manufacturing.
12 Boon & van der Eijken
(1998) 173 N/A Training raised value added per employee and gross
output.
13 Bracker & Cohen (1992) 73 45 Training led to increase on sales, income, and firm
present value.
14 Cappelli & Neumark
(2001) 1,304 72 Training has positive effects on sales per worker,
productivity, labor efficiency.
15 Cho, et al. (2006) 78 36 Training has positive effects on turnover, labor
productivity, and ROA.
16 Delaney & Huselid 590 65 Training has positive effects on firm performance (r = .
No Author/study Sample
size
Response
rate (%) Firm performance
(1996) 06*) and market share (r = .19**).
17 Deng, Menguc & Benson
(2003) 97 54 Training raised export intensity and average export sale
growth over three years (r = .17**).
18 Ely (2004) 486 100
Training has positive effects on new sales revenue (r = .
16*), productivity (r = .21*), customer satisfaction,
quality and speed (r = .27*).
19 Faems, et al. (2005) 416 28 Training has positive effects on net profitability (r = .10),
voluntary turnover (r = .03), and productivity (r = .15**).
20 Fey & Bjorkman (2001) 101 28
Technical and non-technical training has positive effects
on overall firm performance (r = .44**, nonmanagerial
and r = .48**, managerial )
21 Fey, et al. (2000) 101 28
Technical and non-technical training has positive effects
on HR outcome(r = .23* to .51*) & overall firm
performance (r = .22* to .26*).
22 Garcia (2005) 78 19
Training led to sales per employee, employee satisfaction
(a = .79), client satisfaction (a = .70), owner/ shareholder
satisfaction (a = .71).
23 Gelade & Ivery (2003) 137 49
Training has positive effects on sales (r = .19**), clerical
accuracy (r = .18**), and customer satisfaction (r = .
37**).
24 Ghebregiorgis & Karsten
(2007) 82 42
Training has positive effects on sales per employee(r = .-
01), grievances (r = .05), voluntary turnover (r = .25*),
and absenteeism (r = -.01).
25 Guerrero & Barraud-
Didier (2004) 180 12
Training has positive effects on productivity (r = -.02),
objective profitability (r = -.04), and product & services
quality (r = .10*).
26 Harel & Tzafrir (1999) 76 35 Training raised market share (r = .53**).
27 Horgan & Muhlau
(2006) 392 5 Training has positive effects on work performance,
cooperation, and discipline.
28 Huang (2000) 315 36 Training has positive effects on sale growth, profit
growth, ROI, ROS, turnover, and market share.
29 Ichniowski, et al. (1997) 36 60 Training has positive effects on production line uptime
and overall customer satisfaction (r = .44**).
30 Kalleberg & Moody
(1994) 688 Archival data
Training has positive effects on market share (r = .22**),
product quality (r = .18**), customer satisfaction (r =
-.01), and employee relations (r = .10**).
31 Katou & Budhwar
(2007) 178 30
Training has positive effects on perceived effectiveness (r
= .56**), efficiency (r = .57**), innovation (r = .53**), and
product quality (r = .46**).
32 Khatri (2000) 194 24 Training has positive effects on sales growth (r = .08),
profit margin (r = .17**), and perceived performance (r
No Author/study Sample
size
Response
rate (%) Firm performance
= .18**)
33 Kintana, Alonso &
Olaverri (2006) 956 17 Training has positive effects on productivity (r = .04).
34 Koch & McGrath (1996) 319 7 Training has positive effects on sales per employee.
35 Lawler, et al. (1998) 491 26
Training has positive effects on productivity, customer
satisfaction, quality and speed (r = .13* to .28*),
profitability and competitiveness (r = .16* to .33*).
36 Lyau & Pucel (1995) 131 55 Training led to increase value added per employee and
sales per employee.
37 Mabey & Ramirez
(2005) 179 N/A
Varies by training type led to increase operating revenue
per employee and reduce cost of employee (r = .05 to .
19*).
38 Martell & Carroll (1995) 115 26 Training has positive effects on perceived business unit
performance (r = .15**).
39 Meschi & Metais (1998) 102 44 Training led to increase return on investment.
40 Newkirk-Moore &
Bracker (1998) 152 49 Training led to raise ROA, ROE, overhead, spread, and
mixed results.
41 Ng & Siu (2004) 485 62 1 percent increase in managerial training induced
increase in sales from 0.13 to 0.32 percent
42 Ngo, et al. (1998) 253 20
Training has positive effects on perceived competitive
sales (r = .21**), new product development (r = .35**),
competitive net profit (r = .31**), employee satisfaction (r
= .32**).
43 Paul & Anantharaman
(2003) 34 76
Training has positive effects on ROI (r = .20**), net
profit, sale, productivity, quality (r = .29**), speed of
delivery (r = .12**), operating cost (r = .22**),
competence (r = .58**), and employee commitment (r = .
43**).
44 Rodriguez & Ventura
(2003) 120 5.4 Training has positive effects on ROA, total sales growth,
sales per employee, and turnover.
45 Shaw, et al. (1998) 227 36 Training has positive effects on voluntary turnover (r = .
19**).
46 Storey (2002) 314 22 Training led to raise GRATE (r = .01 to .15*), cash flow (r
= .06 to .14*), and profitability.
47 Thang & Quang (2005) 137 9
There is a positive association of training and
development with perceived market (r = .33**) and firm
performance (r = .45**).
48 Tzafrir (2005) 104 38
There is a positive association of training and
development with perceived market (r = .47**) and firm
performance (r = .66**).
No Author/study Sample
size
Response
rate (%) Firm performance
49 Vandenberg, Richardson
& Eastman (1999) 49 100 Training has positive effects on ROE (r = .02) and
turnover (r = -.30*).
50 Wiley (1991) 200 100 Training has positive effects on store net sales (r =
-.40**) and customer satisfaction (r = .31**)
51 Zheng, Morrison &
O’Neill (2006) 74 22 Training has positive effects on competency, turnover,
and employee commitment.
52 Zwick (2006) 2,079 Archival data
1 percent increase in training in 1997 could increase
average productivity in the period 1998-2001 by more
than 0.7 percent.
B. Data from a specific company survey
53 Bartel (1995) 1 1
Training was found to have a positive and significant
effect on ROI (49.7 %), job performance, and
productivity.
54 Krueger & Rouse (1998) 2 2
Reading, writing, and math has positive effect on ROI (7
%) in manufacturing company, turnover, absenteeism,
and job performance in both manufacturing and service
company.
55 Pine & Judith (1993)/
The Garrett Engine 1 1 Team work training led to increase ROI (125 %) and have
positive effects to equipment downtime.
56 Phillips (1994)/
Information Serv. Inc 1 1 Interpersonal skills training led to increase ROI (336 %)
and have positive effects to behaviors.
57 Phillips (1994)/
Financial Serv. Co. 1 1 Selection training led to increase ROI (2,140 %) and
reduction in turnover of branch manager trainees.
58 Phillips (1994)/ U.S
government 1 1 Supervisory skills training led to increase ROI (150%)
and have positive effects on the skills.
59 Phillips (1994)/ Midwest
Banking 1 1 Customer lending training led to increase ROI (1,988 %)
and net profit per loan.
60 Phillips (1994)/ Multi-
Marques 1 1 Time management training led to increase ROI (215 %)
61
Phillips (1994)/ Coca
Cola bottling Co. in San
Antonio
1 1
Motivation, perform, and appraisal training led to
increase ROI (1,447 %) and sales, reduced waste and
absenteeism.
62 Carnevale & Schulz
(1990)/ Vulcan Materials 1 1 Supervisory skills training led to increase ROI (400 %)
and have positive effects on production worker turnover.
63 Phillips (1994)/ Yellow
Freight System 1 1 Performance appraisal training led to increase ROI (1,115
%).
64 Phillips (1994)/
International Oil Co. 1 1
Customer services training led to increase ROI (501 %)
and have positive effects on tracked pullout costs and
customer complaints.
65 Phillips (1994)/ 1 1 Literacy skills training led to increase ROI (741 %) and
No Author/study Sample
size
Response
rate (%) Firm performance
Magnavox Electronic
Systems
have positive effects on tracked average monthly
efficiency.
66 Phillips (1994)/ Arthur
Andersen & Co. 1 1
Tax professionals training led to increase ROI (100 %),
and have positive effects on tracked fees and chargeable
hours.
The measurement of training and firm performance varied across the studies. Some studies use a single item to
measure training or performance, whereas others use multiple training and firm performance measures. For
example, Zwick (2006) used data on 2079 establishments from the Germany Institute for Employment Research to
analyse of the impact of training intensity on establishment productivity, whereas Krueger and Rouse (1998) used
data on two companies, a manufacturing company and a service company, to estimate the effect of reading, writing
and mathematics training on ROI, turnover, absenteeism and job performance. Therefore, there are a number of
challenges in reviewing the results of these studies because of a lack of consistency in their calculation and
measurements.
Procedure
To develop an integrated view on empirical evidence for the effects of training on firm performance, this article
used selective and descriptive analysis. This action followed opportunity to reanalyse the data from the previous
studies. For comparative reasons, the article divided previous studies into two groups: 1) previous studies using
data from a large sample of heterogeneous firms, and 2) previous studies using data from a specific company
survey. In the first group, there are 52 studies for the study review. The studies of this group have estimated the
impact on training on firm performance by using firm level data collected through mail, phone surveys or archival
data. In the second group, 14 were found to assess the relationship between training and firm performance. All
these studies collected primary data from the company’s personnel files or human resource departments. Some of
these studies held face to face interviews with managers to understand what type of training the companies
conducted and how the companies are measured, analysed or evaluated training results.
With respect to firm performance the article aimed to extract clear empirical evidence and discussions on the
unique effects of training on firm performance. Firm performance in the studies was reduced into two categories: 1)
financial firm performance (ROI, sales, productivity, profit, market share), and 2) non financial firm performance
(turnover, absenteeism, job satisfaction, motivation). However, some studies measured both financial and non
financial indicates at the same time. Clarifying the understanding training and financial performance (or non
financial performance) from the current literature and proposed directions for future research on this topic was
undertaken.
RESULTS
Results from the Studies of Large Samples of Firms
In this section 52 studies that have estimated the impact of training on firm performance by using firm level data
from a large sample of firms are reported. The advantage of the previous studies is that it could be generalised to
other companies, whereas a case study could not express the problem in general. The statistics in part A of Table 1
show that most studies frequently estimated the effects of training on financial performance (47 studies or 90% of
the total studies used a large sample of firms), followed by both financial performance and non financial
performance (25 studies or 48% of the total studies used a large sample of firms) and non financial performance
(five studies or 10% of the total studies used a large sample of firms).
With respect to performance measurement methods some researchers (Bishop 1991, Bassi & Van Buren 1998, Fey,
et al. 2000), who estimated the effects of training on firm performance, have used a subjective measure of
performance. The disadvantage of a subjective measure is that research results are non comparable across
companies over time and depend on many assumptions. For example, Bishop (1991) used data on 2594 employers
for his study, and then generated tentative estimates of both the opportunity costs and the productivity effects of
training. Thus, the reliability of these estimates depends on the accuracy of the assumption regarding the cost of
training, as well as the accuracy of the subjective estimates of firm performance (Bartel 2000).
In order to overcome the limitations of subjective measures of performance other researchers (Black & Lynch, 1996,
Boon & van der Eijken 1998, Faems, et al. 2005, Zwick 2006) have used a firm level data set in a regression
standard Cobb-Douglas production function to estimate the impact of training on firm performance. They have
measured firm performance by net sales or value added. More specifically, Black and Lynch (1996) used data from
the National Center on the Educational Quality of the Workforce (EQW) National Employers’ Survey and measured
productivity by net sales, estimating a production function in which the dependent variable was sales, receipts or
shipments. In contrast Faems, et al. (2005) studied the effect of individual HR domains on financial performance
by using survey data from 416 small and medium companies and measured productivity by value added.
The kinds of training used for estimation differ throughout the studies. For instance, Barrett and O’Connell (2001)
estimated the productivity effects of general training, specific training, and all types of training combined. They
found that general training was more related to sales growth when the firms had greater investment in capital than
less. Alternatively, Ahmad and Schroeder (2003) estimated the effects of training in job skills and cross training on
operational firm performance. Their results showed that training was only related to operational performance
through its effect on organisational commitment within the plants, whereas Fey, et al. (2000) concentrated on the
influence of technical and non technical training on overall firm performance.
As regards the kinds of establishment assessed in the previously reported studies, Black and Lynch (1996) divided
companies into two groups: manufacturing companies and non manufacturing companies. Ng and Siu (2004)
collected data from 800 state owned manufacturing enterprises and non state owned manufacturing enterprises
from a survey in Shanghai to assess the effects of training on firm performance. Faems, et al. (2005) estimated the
impacts of training on firm performance of small and medium companies. Other authors used data from companies
in a specific industry for their estimation. For instance, Ichniowski, Shaw and Prennushi (1997) collected data from
41 steel production lines in Japan and the U.S., whereas Paul and Anantharaman (2003) collected data from 34
companies in the Indian software industry.
To summarise, the review of previous studies of large samples of firms provides an interesting picture of the
relationship between training and firm performance. The authors of this article tried to capture the effect of
training on firm performance by distinguishing kinds of training, companies, firm performance, using firm level
data from one or several sectors and different ways to measure performance. They might not, however, accurately
control for data, complex production processes, and other factors (e.g., new technology, a change in products, or
labour market conditions) besides training.
Results from the Case Studies
A total of 14 case studies, that estimated the influence of training on firm performance, was collected for review
purposes. The types of training differ across the studies. For example, Krueger and Rouse (1998) examined the
effects of reading, writing and mathematics training on ROI, turnover, absenteeism and job performance, whereas
Phillips (1994), in the case of the Coca Cola bottling company of San Antonio, estimated the impact of motivation,
performance and appraisal training on ROI, sales, reduced waste and absenteeism. ROI is one of the firm financial
indicators and appears in 100 per cent of the case studies in this section. It could also mean that training decisions
depend a lot on a return to this form of human capital investment. A summary of training types and firm
performance indicators of the fourteen case studies and major findings are presented in part B of Table 1.
All these case studies collected direct data from company records. The estimation methods of the impact of training
on firm performance vary, however, among these case studies. For instance, Bartel (1995), and Krueger and Rouse
(1998) estimated the influence of training on firm performance by applying an econometric framework to data from
these companies. Other researchers, such as Phillips (1994), in the International Oil case, and Pine and Judith
(1993) have used the experimental design method to measured actual firm performance (productivity).
Experimental design is an intelligent method and suitable for these cases because it could be used to successfully
quantify the outcomes of training programmes from company’s files. Another ten studies used a subjective method
to measure trainees’ performance.
In summary, the firm case study approach overcomes the problems of the large sample and a lack of insufficient
data for estimation. In addition, the approach considers training and measures firm performance in more detail as
well as accurately controlling other factors besides training (e.g., firm characteristics, new technology) that
influence firm performance. Another advantage of the case study approach (except the case studies of Bartel 1995,
and Krueger and Rouse 1998) is that it tracks the performance measures over a sufficient time period to reach an
exact and reliable assessment. However, these case studies could not avoid some problems such as companies not
wanting weak results publicised, the use of subjective evaluation of trainees’ performance or sample selection of
trainees for measurement and estimation and design assumptions.
Effects of Training on Financial Firm Performance
Based on the framework for analysing training and firm performance issues in Figure 1 and Figure 2, there are 61
previous studies that estimated the effects of training on financial performance (or 94% of the total of 65 studies). A
number of researchers (Black & Lynch 1996, Boon & van der Eijken 1998, Ballot, Fakhfakh & Taymaz 2001, Barrett
& O’Connell 2001, Faems, et al. 2005, Zwick 2006) have tried to estimate the impact of training on productivity,
whereas other researchers have studied the effect of training on sales (Bassi & Van Buren 1998, Ahmad & Schroeder
2003, Rodriguez & Ventura 2003, Garcia 2005). For instance, whereas Ballot, et al. (2001) found that training can
have positive effects on productivity (value added per worker), Bassi and Van Buren (1998) demonstrated that
training led to an increase in sales, quality and customer satisfaction.
Other previous studies have examined the influence of training on financial performance indicators such as ROI,
ROA, ROE or market shares (Bishop 1991, Bartel 1995, Huang 2000, Paul & Anantharaman 2003, Bernthal &
Wellins 2006). For example, Bartel (1995) found that training had a positive and significant effect on ROI, whereas
Bernthal and Wellins (2006) estimated impact of training on both ROA and ROE indicators. Most of these studies
estimated the effects of training not only on financial performance, but also on non financial performance,
concurrently. These observations may mean that the estimation results of each study depend on the research
purpose of the authors or research projects, performance measure method, and data collected.
To summarise, the review results indicated that there was a significant difference between types of training, types of
financial performance indicators and impacts of training on financial performance indicators in these studies. In 61
studies (94% of the total studies) related to financial performance indicators, these authors seem to concentrate on
measuring firm performance by financial indicators and most of them demonstrate that training has a positive and
significant influence on financial indicators.
Effects of Training on Non Financial Firm Performance
According to the framework in Figure 1, 36 studies examined the impact of training on non financial performance
(or 55% of the total of 65 studies) such as turnover, quality, absenteeism and customer satisfaction. With respect to
turnover, Bishop (1991), in his study on newly hires showed that formal training led to lower labour turnover,
whereas Krueger and Rouse (1998) reported that reading, writing and mathematics training had a positive effect on
turnover. A majority of other studies also found that training had a positive effect on labour turnover. These results
suggest that turnover has a powerful effect on employer decisions to provide training to employees. High turnover
implies that investment in training for their employees is inefficient because many of those trained moved to other
companies. Thus, companies may pay quite a high price for this turnover in terms of lower sales.
Other studies have estimated the impact of training on quality, absenteeism, and customer satisfaction. One
possible explanation why these non financial performance indicators were more popular is that when considering
the competitive advantages that a firm is thought to possess people usually think about high quality or justifying the
customer’s needs. Thus, many studies have tried to measure firm performance by these indicators. For instance,
Ghebregiorgis and Karsten (2007), and Krueger and Rouse (1998) demonstrated that training had a strong effect
on absenteeism rate reduction. Aragon- Sanchez, Barba-Aragon and Sanz-Valle (2003), and Katou and Budhwar
(2007) found that training has a positive effect on quality, whereas Ely (2004), and Lawler, Mohrman and Ledford
(1998) reported that training has a significant and positive effect on customer satisfaction.
To summarise, it is not surprising that firms invest in training in order to improve non financial performance. It
may mean that some non financial performance indicators also play an important role in organisational strategy.
Therefore, some studies have estimated and measured the influence of training on non financial performance.
However, when these studies measure the impact of training on non financial performance by a subjective method
(e.g., workers’ reactions to the training, impact of training on workers’ behaviour), the results of these studies may
not be totally accurate.
DISCUSSION
As expected, training has a variety of positive effects on the financial and nonfinancial firm performance. These
effects might be much broader than the results of many previous studies suggest. It means that these effects are of
considerable importance in terms of both theory and managerial implications. Therefore, it is necessary to identify
and develop potential ideas for discussion and provide suggestions and directions for future research on this topic.
The reviews see a first opportunity for future research in the theoretical explanation of why training might help to
increase firm performance. As presented in the theoretical framework for analysing training and firm performance
issues (that are shown in Figure 2), training has directly improved HR outcomes (e.g., knowledge, skills, abilities,
attitudes, behaviours and motivation of employees). By directly linking training with firm performance, however,
almost studies have ignored the potential mediating role of these HR outcomes on the relationship. Thus, an
important question is whether training unequivocally affects HR outcomes, which in turn impacts on firm
performance level. Highlighting this feature provides a point of departure for future research, namely, to test the
mediating effects of HR outcomes, which could be useful in unravelling the relationship between training and firm
performance. In addition, although training activities are acknowledged to play an important role in linking
employees with firm performance, the specific form (universal perspective or contingency perspective) of the
relationship between training and firm performance is still debatable.
Second, although the presented review shows that training can have positive and significant effects on firm
performance in specific sectors (the steel and software industries), there are only two studies which follow this
approach (e.g., Ichniowski, et al. 1997, Paul & Anantharaman 2003). Corresponding research in other sectors (e.g.,
food and tobacco, textiles and clothing, chemicals and petroleum, banking and finance) will probably have different
effects or views on the relationship between training and firm performance. Therefore, future research might
estimate the impact of training on firm performance in other specific sectors in order to provide another potentially
interesting result on the relationship and contribute to the current literature within the field.
Third, the previous studies (presented in this paper) have estimated the effects of training on firm performance in
many specific jobs and countries. However, most of these studies have been implemented in developed countries
(e.g., Bishop 1991, Barrett & O’Connell 2001, Aragon-Sanchez, et al. 2003, Faems, et al. 2005), whereas the
relationship between training and organisational performance is not adequately addressed and studied in
developing countries. In addition, the impact of training for different types of employees (e.g., worker, supervisor,
office staff, manager) and their performance might vary according to job characteristics and locations. Therefore,
there is an opportunity for future research to examine the influence of training on firm performance relative to
features of job characteristics, as well as a specific country.
Fourth, a number of researchers (e.g., Bishop 1991, Fey, et al. 2000) have used a subjective method for their
studies, whereas other studies (e.g., Bassi & Van Buren 1998, Aragon-Sanchez, et al. 2003, Rodriguez & Ventura
2003) have a low response rate in terms of questionnaires or lack reliable data for estimation. The results of
estimates depend on the accuracy of the assumptions, while low response rates and a lack of data may lead to
incorrect results. Thus, the methodological limitations of these studies present opportunities for future research.
Clearly, future research will present challenges for carefully designed questionnaires, well chosen sample sizes,
suitable data collection techniques and measurement of variables, and a well chosen estimation framework.
Finally, this research may be important for practitioners dealing with training and firm performance in the
workplace. Training is a valuable path to follow when an organisation would like to improve its performance, and in
the light of the presented review together with the framework for analysing training and firm performance issues,
managers could find some interesting clues to the advantages of training. For instance, a company could measure
types of training for their employees (workers, supervisors, managers) in order to gain a better understanding of
how different types of training influence financial and non financial performance indicators. Managers could then
decide when and how to provide training programmes for their employees in order to obtain their best
performance.
CONCLUSION
This study provided a review of the literature on human resource training and its effect on firm performance, and it
developed and proposed a framework for analysing training and firm performance issues in order to assess the
advantages and disadvantages of many previous studies (e.g., research design, measurement of variables and firm
performance or estimation method), to suggest directions for future research, and improve the accuracy of the
research results in the future on this topic. The paper reviewed the important theoretical models and proposed a
framework for analysing training and firm performance issues. Data from previous studies were used to assess the
effects of training on firm performance. There were two approaches to gauge the impact of training on firm
performance, namely the studies that use firm level data from a large sample of firms and the case study approach.
Based on the firm performance measures used in previous studies firm performance was classified into financial
firm performance and non financial firm performance. The review offers new directions for future research that has
potential to guide practitioners and managers to decide on their human capital investment plans and provide
training for their employees.
AUTHORS
Thang Ngoc Nguyen is a Lecturer at the University of Economics and Business, Vietnam National University,
Hanoi, Vietnam. His research interests include human resources management, training and development,
employee and firm performance, and the labour market.
Email: thangnn@vnu.edu.vn
Quang Truong is Professor of Organisational Behaviour and Human Resource Management at Maastricht School
of Management, The Netherlands. His current research interests relate to human resource management and
organisational change in emerging economies.
Email: Truong@msm.nl
Dirk Buyens is currently Academic Dean of Vlerick Leuven Gent Management School, Belgium. He is also a
Professor at Gent University. His research interests include competency management, human resources
management, learning and development, career management and development, employee performance and the
labour market.
Email: Dirk.Buyens@vlerick.be
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... On-the-job training, a popular form of industrial training, is incorporated into workers' normal work, meaning that they learn particular skills by doing specific jobs or tasks, while off-the-job training usually requires employees to be away from their normal work to participate in designated training programs outside of the firm (ECDVT 2014). The workplace is a significant site of formal and informal learning opportunities, brought about by the nature of work and employees' social interaction within the workplace (Caldwell 2000;Thang, Quang, and Buyens 2010;Nguyen, Truong, and Buyens 2011). However, much workplace learning is informal and low cost (Rainbird 2000), which employers provide for low-skilled employees in low value-added production chains. ...
... The results of the regression analysis suggests that there are some positive correlations between pre-VSD programs and technological transformation and organisational improvement. Nonetheless, VSD programs had no effects on growth and other variables of transformation, which seems to be inconsistent with those of previous studies that showed a close link between VSD programs (specifically in-VSD) and growth and transformation of firms (Acemoglu and Pischke 1999a;Nguyen, Truong, and Buyens 2011;Thang, Quang, and Buyens 2010). The reason can be that this study did not observe the number of VSD participants, but instead identified the most frequent programs, resulting in an indicator measuring the variety of VSD programs. ...
... Also, our study only focussed on formal pre-and in-VSD programs which entail some kind of certification, while excluding informal learning or on-the-job training activities. Nevertheless, the finding regarding the positive effect of VSD (variety) on technological change is supported by previous studies underlining that skills training of employees could raise the productivity and facilitate adopting and using new technologies in firms (Acemoglu and Pischke 1999b;Blundell et al. 1999;Nguyen, Truong, and Buyens 2011;Thang, Quang, and Buyens 2010). ...
Research
Full-text available
In recognition of the importance of a well-trained workforce for socioeconomic development, the Rectangular Strategy Phase IV has put human resource development at the forefront of the Royal Government of Cambodia’s (RGC’s) development priorities (RGC 2018). The Industrial Development Policy (IDP) 2015-2025 was adopted as a guide to advance Cambodia’s manufacturing industry as a key economic sector for sustainable and inclusive high economic growth, and to overcome the skills gaps and shortages in skilled labour that are purportedly a bottleneck to socioeconomic development. Against this backdrop, theoretical and empirical studies have suggested increasing the pool of skilled workers by equipping young people and existing workers with labour market-relevant knowledge and skills as an ideal solution. However, the contribution of this promising skilled labour increment to Cambodia’s industrial sector and overall economy has rarely been investigated. Therefore, the main aim of this paper is to study the skills shortage and its effects, as well as the contribution of skills development at both the industrial and national level, by using two separate analytical methods. https://cdri.org.kh/wp-content/uploads/WP122_Skill4industry_final.pdf
... Firm performance can be enhanced through enriching skilled HR. HRM practices can bring about skills, ability and motivation (Delaney and Huselid, 1996) which have been found to enhance overall firm performance (Delaney and Huselid, 1996;Ferguson and Reio, 2010;Islam and Siengthai, 2010;Osman et al., 2011;Thang et al., 2010). Prior studies found that effective HRM has a positive relationship on organizational performance (Fabling and Grimes, 2010;Jimenez-Jimenez and Martinez-Costa, 2009). ...
... The results confirm that HRM practices are critical as an intervention measure or mediator to enhance firm performance in SMEs in Thailand. This finding is congruent with prior research which found that the relationship between HRM practices and firm performance is positive (Sofijanova and Zabijakin-Chatleska, 2013;Delaney and Huselid, 1996;Ferguson and Reio, 2010;Islam and Siengthai, 2010;Osman et al., 2011;Thang et al., 2010). This finding also is consistent with those by Gowen and Tallon (2003) and Fawcett et al. (2008), which assert that HR is the most important resource of an organization that directly affects any activities based on firm policies. ...
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Purpose-This paper aims to investigate the relationships among supply chain management (SCM) implementation, human resource management (HRM) practices and small-and medium-sized enterprises (SMEs) firm performance in Thailand. It further examines whether HRM practices have a mediating effect on such relationship. Design/methodology/approach-A survey instrument was developed based on the literature review which then was verified by SCM expert opinions. Cross-sectional surveys of sample employees of SMEs in Thailand were undertaken by both direct and mail surveys. Of about 779 questionnaires distributed, 203 usable questionnaires were returned. Structural equation modeling (SEM) was performed to analyze the obtained data. Findings-The statistical results reveal that SCM indirectly improves firm performance of small-and medium-sized firms through HRM practices. The latter, HRM practices, is found to fully mediate the impact of SCM implementation on SME firm performance. These results suggest that SCM cannot enhance SME firm performance if its implementation is undertaken without effective HRM practices. Originality/value-This study identified the research gap in SCM areas by recognizing the scarcity of research on SCM in SMEs and by identifying and integrating HRM practices as a significant behavioral support system to SCM implementation in SMEs. Its results reveal that HRM practices fully mediates the impact of SCM on SMEs' firm performance.
... Firm performance can be enhanced through enriching skilled human resources. HRM practices can bring about skills, ability, and motivation (Delaney and Huselid, 1996) which have been found to enhance overall firm performance (Delaney and Huselid, 1996, Ferguson and Reio, 2010, Islam and Siengthai, 2010, Osman et al., 2011, Thang et al., 2010. ...
... The results confirm that HRM practices are critical as an intervention measure or mediator to enhance firm performance in SMEs in Thailand. This finding is congruent with prior research which found that the relationship between HRM practices and (Sofijanova and Zabijakin-Chatleska, 2013, Delaney and Huselid, 1996, Ferguson and Reio, 2010, Islam and Siengthai, 2010, Osman et al., 2011, Thang et al., 2010. This finding also is consistent with those by GowenIII and Tallon (2003) and Fawcett et al. (2008) which assert that human resource is the most important resource of an organization that directly affects any activities based on firm policies. ...
Article
Full-text available
Purpose This paper aims to investigate the relationships among supply chain management (SCM) implementation, human resource management (HRM) practices and small- and medium-sized enterprises (SMEs) firm performance in Thailand. It further examines whether HRM practices have a mediating effect on such relationship. Design/methodology/approach A survey instrument was developed based on the literature review which then was verified by SCM expert opinions. Cross-sectional surveys of sample employees of SMEs in Thailand were undertaken by both direct and mail surveys. Of about 779 questionnaires distributed, 203 usable questionnaires were returned. Structural equation modeling (SEM) was performed to analyze the obtained data. Findings The statistical results reveal that SCM indirectly improves firm performance of small- and medium-sized firms through HRM practices. The latter, HRM practices, is found to fully mediate the impact of SCM implementation on SME firm performance. These results suggest that SCM cannot enhance SME firm performance if its implementation is undertaken without effective HRM practices. Originality/value This study identified the research gap in SCM areas by recognizing the scarcity of research on SCM in SMEs and by identifying and integrating HRM practices as a significant behavioral support system to SCM implementation in SMEs. Its results reveal that HRM practices fully mediates the impact of SCM on SMEs’ firm performance.
... Singh and Mohanty (2010) found that training practices are strongly linked to employee performance. Similarly, Thang (2010) revealed a positive link between training and firm performance, suggesting that employee knowledge and attitude affected the relationship between training and performance. Moreover, Khan et al. (2011) found that training enhances employee and organizational efficiency and effectiveness. ...
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Abstract Background: There is widespread agreement that training and performance are positively associated in the prior studies. However, there is a lack of empirical evidence to establish the mediating role of the workplace environment in the relationship between training and performance. Objectives: The purpose of the study was to examine the relationship between training effectiveness and work performance and the mediating role of the workplace environment. Methods: We used consecutive sampling to select respondents, adopting a descriptive cross-sectional research approach with a sample of 205 Nepalese commercial bank employees across five different commercial banks. To assess the role of the workplace environment in the relationship between training effectiveness and work performance, a self-administered structured questionnaire with 12 items was developed. Data were analyzed using SPSS and analysis of moment structures. The characteristics of the respondents were examined using descriptive statistics such as frequency distribution, and the link between training effectiveness and performance was measured using mean value analysis. Exploratory factor analysis was used to identify the factor structure of the measure used in the study and examine internal reliability. Confirmatory factor analysis and structural equation modeling were used to demonstrate the link between the three components, test the hypothesis, and mediation effect. Results: The findings of training related data indicated that 45.4% of the respondents perceived that training was highly influential, 60.0% were satisfied with the training provided, 43.9% of the respondents reported that their organization focus on both on and off-the-job training, 57.6% felt that training is crucial and 82.4% perceive that training has improved their performance and respondents positively perceived the relationship between training effectiveness and work performance. The exploratory factor analysis revealed that items on work performance, workplace environment, and training effectiveness have higher internal reliability. The hypothesis test results showed a positive association between training effectiveness, job performance, workplace environment, and work performance, and training effectiveness has the highest impact on work performance. Similarly, the results also depicted that the workplace environment mediates training effectiveness and work performance. Conclusion: The study concluded that the more effective the training, the better the employees’ work performance. As a result, greater emphasis requires improving the context and process of training from the employees’ perspective. The study also concluded that the workplace environment affects training effectiveness and work performance. Therefore, it is essential to note that Nepalese organizations should provide practical training and create a favorable work environment for better work performance.
... On-the-job training, a popular form of workplace training, is incorporated into workers' normal work, in which workers learn a particular skill by doing a specific job or task, whereas off-the-job training usually requires them to be away from their normal work to participate in designated training outside of the firm or workstation (ECDVT 2014). A workplace is a significant site of formal and informal learning opportunities, brought about by the type and nature of work and employees' social interaction within the workplace (Caldwell 2000;Thang, Quang and Buyens 2010;Nguyen, Truong and Buyens 2011). However, most workplace learning is informal and low cost (Rainbird 2000), provided for low-skilled workers in low value-added production chains, reflecting that most low-skilled workers will miss high-order skills training opportunities in most cases. ...
Research
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Industrial development is central to Cambodia’s economic development as it plans to upgrade the country’s status to an upper-middle-income country by 2030 and to a high-income country by 2050. Equipping the workforce with the skills and competencies that match industrial needs requires a great deal of continuous efforts and resources. In this regard, this paper aims to look into the linkage between skills and transformation based on employers’ perspectives. It explores insights into how companies perceive and utilise the skills and qualifications of their employees to overcome changes in technology, products and work organisation. These new insights will enable TVET providers, policy-makers and other key stakeholders to develop a holistic skills development intervention that is responsive and relevant to the Cambodian labour market. This paper is based on the analysis of data from 36 qualitative interviews with managers and production heads or representatives from 18 companies in the E&E, garment and food processing sector. Nvivo 12 software was employed for coding and thematic analysis of the employers’ perceptions of skills and qualifications in relation to job requirements, the relationship between skills and transformation, and human resource strategies to cope with the skills requirements posed by transformation. https://cdri.org.kh/publication/exploring-insights-into-vocational-skills-development-and-industrial-transformation-in-cambodia
... According to Escrig-Tena et al. [29], a proactive behavior for the workforce is a necessary prerequisite for innovation. Organizations can also facilitate their employees' learning by investing in training and knowledge development programs to expose employees to broader perspectives, expertise and deeper insights, thus building their capacity to find creative solutions in their tasks [30]. Employees' skills, attitudes, knowledge, and competencies are generated through training and development, which then leads to improved productivity, effectiveness and efficiency in organizations [31]. ...
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In the modern business environment spearheaded by digitalization, organizations are faced with the challenge of maintaining a competitive edge despite constant dynamic changes. Organizations therefore, have to adopt new, improved and modern ways of doing things. This can be achieved through proper knowledge management within the organization, which is an antecedent of innovation. Innovation is one of the crucial means for tackling the digitalization challenge as it enables organizations to maintain their competitive edge. Although extant studies have extensively studied learning in projects, there is a lack of concrete examples of the correlation between learning and improving innovation in the digitalization context. This article is based on a qualitative study aimed at examining the organizations' preconditions of learning in achieving innovation in digitalization projects focusing on the perspective of the project team members. Data was collected through open-ended questionnaires with a total of 97 respondents and analyzed using NVivo qualitative software. The findings revealed two viewpoints regarding the perception of learning for innovation. The preconditions for learning for innovation in digitalization were also identified. Moreover, the immediate outcomes of learning were identified that can be utilized in assessing whether employees are actually learning given the necessary preconditions are established. is given and that r efe rence m ade to the publicat ion, to its date of issue, and to the fact that repr int ing pr ivile ges we re granted by perm iss ion of Sc iKA-Assoc iat io n for Prom otion and Dissem inat ion of Sc ient if ic Knowledge. An exa mination of the preconditions of learning to facilitate innovation in digitalization projects: a project team members' perspective International
... Mobiliza o coñecemento, acelera a resolución de problemas cotiáns e fai que as persoas se convertan en elementos activos no contexto do proceso corporativo de aprendizaxe. Este concepto está apoiado por Thang et al., (2010) que consideran que, para acadar os seus obxectivos, as organizacións deben contar con traballadores que teñan coñecementos, aptitudes, competencias, comportamentos e actitudes, todo o que se considera condicións de emprego e desempeño (Contreras Cueva et al., 2014). ...
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