Do organizations spend wisely on employees

Topics: Human resource management, Learning, Innovation Pages: 20 (10888 words) Published: August 24, 2014
Do organizations spend wisely on employees?
Effects of training and development investments on
learning and innovation in organizations


School of Business, Nanjing University, Nanjing China
College of Business Administration, Seoul National University, Seoul, Korea

The present study examines the effects of training and development on organizational innovation. We specifically suggest that the training and development investments of an organization affect its innovative performance by promoting various learning practices. We empirically tested our hypothesis by using time-lagged, multi-source data collected from 260 Korean companies that represent diverse industries. Our analysis showed that corporate expenditure for internal training predicts interpersonal and organizational learning practices, which, in turn, increase innovative performance. The data also revealed that the positive relationship between interpersonal and organizational learning practices and innovative performance is stronger within organizations that have stronger innovative climates. By contrast, investment in employee development through financial support for education outside an organization poses a significant negative effect on its innovative performance and no significant effect on learning practices. The present study provides a plausible explanation for a mechanism through which the investment of an organization in employees enhances its innovative performance. Copyright © 2013 The Authors. Journal of Organizational Behavior published by John Wiley & Sons, Ltd.

Keywords: training and development investments; learning practices; innovative climate; innovative performance

Increasing endorsements on the strategic value of developing human capital in organizations encouraged scholars to investigate the relationship between training practices and various performance measures (Tharenou, Saks, & Moore, 2007). Empirical studies in this domain focused on the effects of training on productivity (Barrett & O’Connell, 2001), financial performance (Glaveli & Karassavidou, 2011), and employee motivation (Castellanos & Martín, 2011). Unfortunately, the link between training practices and organizational innovative performance has been largely ignored (Nguyen, Truong, & Buyens, 2010). Except for a few recent studies that treat training as a component of effective HR systems (Chen & Huang, 2009; Shipton, West, Dawson, Birdi, & Patterson, 2006), the independent effect of training on organizational innovation has yet to be investigated (Tharenou et al., 2007). This is rather surprising, given the prevailing emphasis of a firm’s innovative capability in achieving competitive advantage and sustainable growth (Kang, Morris, & Snell, 2007; Lau & Ngo, 2004). To address this gap, the present study investigates the effects and underlying mechanisms of the investment in developing human resources on organizational innovation.

Innovation often results from the ability to utilize existing knowledge and information to generate different combinations and reconfigurations (Cantner, Kristin, & Schmidt, 2008). The training and development investments

*Correspondence to: Jin Nam Choi, College of Business Administration, Seoul National University, Shinlim-dong, San 56-1, Gwanak-gu, Seoul, 151-742, Korea. E-mail:
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.

Copyright © 2013 The Authors. Journal of Organizational Behavior published by John Wiley & Sons, Ltd.

Received 08 April 2012
Revised 26 July 2013, Accepted 30 July 2013

Research Article

Journal of Organizational Behavior, J. Organiz. Behav. 35, 393–412 (2014) Published online 9 September 2013 in Wiley Online Library...

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