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Do organizations spend wisely on employees? Effects of training and development investments on learning and innovation in organizations.

Sung SY, Choi JN - J Organ Behav (2013)

Bottom Line: The present study examines the effects of training and development on organizational innovation.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.Copyright © 2013 The Authors.

View Article: PubMed Central - PubMed

Affiliation: School of Business, Nanjing University Nanjing, China.

ABSTRACT

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.

No MeSH data available.


Theoretical framework of organizational innovative performance
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fig01: Theoretical framework of organizational innovative performance

Mentions: This study also examines learning practices as critical intervening processes that account for the link between training and development investments and innovation (Figure 1). Organizational efforts for training and development nurture knowledge and expertise among employees and generate their commitment to learning (López, Peón, & Ordás, 2006; Noe et al., 2010). Organizational learning is a central process for innovation, which promotes the absorption and utilization of external knowledge and integrates internal knowledge by allowing effective transfer and application of knowledge among organizational members (Chen & Huang, 2009; Subramony, Krause, Norton, & Burns, 2008). Similar to a recent study conducted by Di Milia and Birdi (2010), we are particularly attuned to learning that takes place at three levels in organizations: individual, interpersonal, and organizational learning. Training investment may invigorate learning at multiple levels, thereby leading to organizational innovation (Bontis et al., 2002). In addition, the current model suggests that the link between learning and innovation may be more pronounced in organizations with more innovative climates. By investigating the role of climate at the organizational level, the current study expands the literature on climate, which has mostly focused on the role of climate as a promotional context for group performance (González-Romá, Fortes-Ferreira, & Peiró, 2009). Each relationship proposed in the research framework is explained later in detail.


Do organizations spend wisely on employees? Effects of training and development investments on learning and innovation in organizations.

Sung SY, Choi JN - J Organ Behav (2013)

Theoretical framework of organizational innovative performance
© Copyright Policy - open-access
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC4282068&req=5

fig01: Theoretical framework of organizational innovative performance
Mentions: This study also examines learning practices as critical intervening processes that account for the link between training and development investments and innovation (Figure 1). Organizational efforts for training and development nurture knowledge and expertise among employees and generate their commitment to learning (López, Peón, & Ordás, 2006; Noe et al., 2010). Organizational learning is a central process for innovation, which promotes the absorption and utilization of external knowledge and integrates internal knowledge by allowing effective transfer and application of knowledge among organizational members (Chen & Huang, 2009; Subramony, Krause, Norton, & Burns, 2008). Similar to a recent study conducted by Di Milia and Birdi (2010), we are particularly attuned to learning that takes place at three levels in organizations: individual, interpersonal, and organizational learning. Training investment may invigorate learning at multiple levels, thereby leading to organizational innovation (Bontis et al., 2002). In addition, the current model suggests that the link between learning and innovation may be more pronounced in organizations with more innovative climates. By investigating the role of climate at the organizational level, the current study expands the literature on climate, which has mostly focused on the role of climate as a promotional context for group performance (González-Romá, Fortes-Ferreira, & Peiró, 2009). Each relationship proposed in the research framework is explained later in detail.

Bottom Line: The present study examines the effects of training and development on organizational innovation.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.Copyright © 2013 The Authors.

View Article: PubMed Central - PubMed

Affiliation: School of Business, Nanjing University Nanjing, China.

ABSTRACT

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.

No MeSH data available.