Training & Organisational Level Outcomes – A Systematic Literature Review

Valerie Shanahan*, Thomas N. Garavan & Ronan Carbery

Valerie Shanahan*

Dept. of Personnel & Employment Relations Kemmy Business School

University of Limerick Republic of Ireland

Tel: +353(0)879401802 Email: Valerie.shanahan@ul.ie

Prof. Thomas N. Garavan, Edinburgh Napier Business School

Craiglockhardt Edinburgh Scotland

Tel: +353(0)61202176 Email: T.garavan@napier.ac.uk

Dr. Ronan Carbery Dept. of Personnel & Employment Relations

Kemmy Business School University of Limerick

Republic of Ireland Tel: +353(0)61233705

Email: Ronan.carbery@ul.ie

Submission type: Working Paper

Keywords: Training, Organisation Outcomes and Performance

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Training & Organisational Level Outcomes – A Systematic Literature Review

Abstract

Training is considered to be a fundamental component of any human resource management

(HRM) function in an organisation. It contributes to the cultivation and development of

human knowledge, skills, behaviours and attitudes. Although research on training and

development is something that is not new to organisation literature, it remains an area that

is weak in terms of theoretical underpinnings; it is methodologically difficult to measure;

and it provides a very complex argument at the organisational level of its value creation. In

this paper we conducted a systematic literature review (SLR) of 91 studies of training that

measured for it’s relationship with organisational level outcomes. We explored the context

of the training in these conditions, the methodological designs of the studies and the HRM,

organisational and financial outcomes reported. We identify a number of important

theoretical and methodological gaps in the current literature and make recommendations

for both research and practice.

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1. Introduction

There is a universal acknowledgement in the literature that training contributes to the

success of an organisation (Aragon & Valle, 2012; Kraiger, 2003). This is based on the

assumption that training plays a key role in enhancing it’s human capital, an important

source of competitive advantage. Organizations who are highly committed to training and

integrates such an approach into their culture, tend to be more competitive (Porter, 1990)

and reach higher levels of productivity and financial performance (e.g. Delaney and Huselid,

1996; García, 2005).

Everything changes over time and since 2007 the global economy has been volatile and

unwaveringly erratic. Budgets are tight, accountability is imperative, and favourable

business results are expected consistently. All organisations and all functions in an

organization face tremendous challenges to show value and the training department is no

different. However, the problem of evaluating the results of training effort on performance,

both at an individual and organisational level, and thus demonstrating its effectiveness, is

still perceived as a ‘black box’ needing to be unlocked (Glaveli & Karassavidou, 2011).

Organisations who wish to survive and compete in the present-day knowledge-based global

economy, have to acquire and develop world-class human resource (HR) competencies and

as well as practices necessary for managing such resources (Aradhana & Anuradha, 2005;

Moideenkutty, Al-Lamki, & Murthy, 2011; Pfeffer, 1994, 1998). This belief has subsequently

led to research surrounding the link between training (as a component of SHRM) and

organisation performance. A number of researchers who have conducted studies on this

research issue have confirmed the positive impact of SHRM (including training) on

organisation performance (see, for example, Razouk, 2011; Delery and Doty, 1996; Huselid,

1995; Macduffie, 1995; Moideenkutty et al., 2011; Wright and Boswell, 2002). However,

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there is also a group of researchers who have argued that the results of the SHRM–

organisation performance link are not encouraging, and that they are, in fact, ambiguous

(Guest, 1997; Paauwe & Boselie, 2005; Paauwe, 2009).

There are a number of transparent reasons for the existence of this problematic ‘black box’.

First, Institutions, conscious of the strategic role of training, have been promoting this

aspect over the last decade (EU, national institutions, etc). However, companies maintain an

ambiguous position regarding investment in training. They generally accept training as an

important means to improve workers’ productivity, a present demand for all companies.

But, in practice, they usually face this challenge with cost containment, including those costs

allocated to training. This paradoxical situation can be explained by the fact that companies

do not understand how investments in training can provide value, that is, the effect of

training on business results (Kraaijenbrink, 2011). Second, research on the effects of training

on results criteria remains scarce. Firms that do evaluate training use only self-administered

reports completed by the trainees. Very few measure the impact of training on performance

at an organisational level (Alliger, Tannenbaum, Bennett Jr., Traver, & Shotland, 1997;

Aragon & Valle, 2012; Kraiger, McLinden, & Casper, 2004). There has not been the same

degree of progress as there has been at the individual level of analysis (Rahman, Ng,

Sambasivan, & Wong, 2013; Tharenou, Saks, & Moore, 2007).

Although supported by both theoretical work such as the resource-based view (e.g.

Andersen et al., 2007; Priem and Butler, 2001; Wright and McMahan, 1992a) and some

empirical evidence (e.g. Becker and Gerhart 1996; Wright, Gardner and Moynihan 2003),

training still needs to prove its contribution to the organisation in a measurable way. To help

open up this black box we have endeavoured to create the first fully representative

systematic review and meta-analysis of the literature on training and organisational level

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outcomes. This is the first study since 2007 (Tharenou et al.) that reviews published work on

training and organisational level outcomes. It is the first systematic literature review of it’s

kind and it is extensive in terms of the research lenses it uses. Therefore, the objective of

this paper is to provide a fully-representative systematic review of published studies that

analyse the relationship between training and performance. It does this by first, explaining

the method used to undertake the SLR. Second, presenting the results of the studies by first

describing the organisation-level outcome results and describing them using the contextual

findings from the studies, the methodological designs and the evaluation methods used, as

well as the theoretical models that are represented to analyse the contribution to

organisation success. Third, discussing the findings and makes recommendations for both

theory and practice.

2. Method

Based on previous research provided by Denyer & Neely (2004), Keupp et al. (2012)

Tharenou et al. (2007), Thorpe et al. (2005), and Tranfield et al. (2003) we conducted a

systematic review of the literature on training and organisational level outcomes. SLRs are

guided by a review question, from which keywords for the database searches are defined

(de Menezes & Kelliher, 2011). In this study, the review question was ‘a review of the

literature on training and organisational performance? The question, borrowed from

Tharenou et al. (2007) is the base on which the foundations of this systematic literature

review are built on. However, it has been readdressed since the 2007 study by providing

both an elaboration and extension of the work previously carried out. This will be addressed

in detail in the following section.

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Our SLR approach has a number of advantages. (1) we utilised a clear set of steps that can

be followed in future replication studies, (2) systematic literature reviews enable

researchers to provide evidence supporting arguments and (3) they enable the

generalisation of results and the critique of the accumulated knowledge on training. Figure

1 provides a summary of the review process undertaken to prepare this paper.

2.1 Conceptual Boundaries

Our research method commenced with the design of research objectives and the

positioning of conceptual boundaries. We start with a broad definition of training that

address issues related to organisational performance. Adb Rahman et al. (2013) as well as

many others use Goldstein’s (1986:837) definition of training: “the systematic acquisition of

skills, rules, concepts, or attitudes that result in improved performance”. There is a general

consensus in the literature that training leads to increased company performance (Aragon &

sanz Valle, 2013; Kraiger, 2003) and this underlying assumption suggests that training does

this by enhancing its human capital (Bartel, 1994) and its organisational knowledge

(Bollinger & Smith, 2001). Individuals rely on training to improve their current skills and

learn new skills (Mathieu et al., 1992). Organizations rely on training to enhance the

productivity and performance of their employees (Hornsby and Williams, 1990; Tobias,

1991).

[INSERT FIGURE 1 HERE]

We then defined the strategic context of the training research setting as any organisation,

be it public or in the private sector, manufacturing or service profit or non-profit, SME or

MNC that provides training to employees. The research setting is one of the key concepts

that defined the scope and boundaries of diversity training for the purpose of this review.

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We define the training variables and research design dimensions of organisational training

by including all types of learning, training and development, be it formal or informal, on its

own or park of a wider HRM bundle and undertaken by the organisation and used to

measure organisation-level outcomes directly. The HRM, organisation and financial

outcomes of training were defined using Tharenou et al.’s (2007) theoretical framework

which is discussed in detail in the next section.

In order to address these challenges, we approached the review of the literature in an

inclusive way adopting an interpretive stance (Örtenblad, 2010). This stance seeks to

‘understand what is done and/or written under the heading of the concepts’ and what they

‘mean in general terms’ (p.446). Our review did however pay particular attention to the

unique context of training where the process of exploring the phenomenon of HRD is said to

lack clarity (Rigg and Trehan, 2002). Consistent with suggestions that HRD is more likely to

be perceived and talked about (Sambrook, 2000) by organisations in the wider HRM

literature as ‘training and development’, it may be more productive to use ‘HRD’ and ‘T&D’

to mean one and the same. However, rather than become preoccupied with the fixed label

of HRD, the interpretive stance allowed us to research and understand HRD in more general

terms (Örtenblad, 2010) (i.e. using the terms ‘training’, ‘development’ and ‘learning’). This

approach afforded a degree of flexibility in the review process thus capturing relevant

literatures, whether labelled HRD or not. Given the multi-faceted treatment of HRD we

allowed for a range of alternative ‘labels’ to identify relevant studies (Easterby-Smith, et al.,

2012). This approach resonates with recent developments regarding the implementation of

management knowledge and practice (Ansari et al., 2010), where ideas are translated,

adapted and interpreted to fit specific organisation contexts (Benders and Van Veen, 2001).

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2.2 Data collection and analysis

We began the review process by collating data. In order to build a comprehensive database

of articles we applied the following inclusion criteria: First, in order to ensure broad

coverage of the literature that was reviewed, we decided that the search parameters would

focus on academic journal articles. We included peer-reviewed academic journal articles

only. Second, we conducted searches using electronic databases: Business Source Premier

(EBSCO), Google Scholar and Emerald, covering the period from September 2007 to May

2013 inclusive. Third, the levels of analysis was an important concern during our search of

the literature. It is essential to note that the outcome variables were measured at the

organisational level and this was an important concern during data collection. All studies

needed to have organisational level outcomes of training to qualify for inclusion. Too few

studies in the field of training have been conducted in this way. Individual level studies are

more prominent in the literature and this is something that needs to be addressed. It could

somewhat explain why there is no formal relationship measurement between both

concepts (training and organisational performance). A study was only included if

effectiveness was measured at the organizational level, either across organizations or large

intra-organizational units (e.g., plants, lines of operation, business units, stores, bank

branches). The number of organizations or organizational units forms the sample size

(Tharenou et al. 2007).

We included empirical quantitative articles in our review, as well as studies utilising

contrasting methodologies. Articles for inclusion were first identified by carrying out

database searches using search commands such as Training AND/OR Learning AND/OR

Development and Performance OR organisational outcomes OR organisational

performance. Strategic HRM or HRM was used in place of training as training can operate as

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an element of a HR bundle. Terms such as HRD (Human resource development) and

Strategic HRD were also used as a means to cover all terms used in the literature that

describe training or incorporate it. Papers were only selected if there was a visible training

variable that had direct effects (including moderating and mediating effects) on

organisational-level outcomes. Papers that examined training within an entire HR bundle,

without demonstrating individual effects for the variable were discarded as they were too

ambiguous. The organisational level variables that were used in this study are those that

were used in the 2007 Tharenou et al. paper. These include HR outcomes, Organisational

performance outcomes and Financial Outcomes. All of which will be discussed in detail in

the next section.

The search identified many articles, however, a total of 30 were deemed relevant following

application of the inclusion and exclusion criteria. Manual coding of the articles was

undertaken based on the following pre-defined themes: Authors Names, date of

publication, Theoretical Perspectives, Organisational Context, Training Type, Study

population, Methodology, Training Measure, Reliability, HR Outcomes, Performance

Outcomes, Financial Outcomes. This approach was used whereby the sources required

careful scrutiny, expert judgement and interpretation (Denyer & Tranfield, 2009; Nolan &

Garavan, 2013) by the authors in order to identify the thematic codes therein. For example,

Theoretical concepts were not always explicitly stated in many articles; therefore, while

coding the information, the authors used indicators from the information to form an

educated assumption of the theory that underlined the arguments presented.

2.2.1. Tharenou et al.’s (2007) Contribution

The review aims to provide rigorous assessment of the literature by elaborating on the

Tharenou et al. (2007) study as well as extending it by including additional study concepts

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and variables. Therefore, papers from the Tharenou et al. (2007) study (1979-2007) were

also included. We collected these papers and with the exception of 6 (see table 1 in

appendices) we expanded the study variables used and integrated the old framework with

the new one we designed for our study (See table in appendices). By combining both tables

we get a fully informed and enlarged database on which to analyse and investigate.

Tharenou et al. (2007) also proposed a theoretical framework that links training to

organizational outcomes which we have incorporated in our study (Fig.2) Tis provides us

with the ability to draw exact comparison and build on the extensive work they have done in

2007. The theoretical framework states that training has a direct effect on HR outcomes and

an indirect effect on organizational performance that is mediated through HR outcomes.

They used Ostroff and Bowen's (2000) classification scheme of employee attributes to

represent HR outcomes as it encompasses all of the variables in the various models:

attitudes (e.g., collective employee satisfaction) and motivation; behaviours (e.g.,

performance-related), and human capital (e.g., workforce knowledge, skills and abilities).

According to Ostroff and Bowen (2000), employees' collective attitudes, behaviours, and

human capital should influence organizational performance. In turn, organizational

performance should lead to positive financial outcomes for the organization (Becker &

Huselid, 1998; Dyer & Reeves, 1995), mediating the relationship between human resource

outcomes and financial performance.

Fig.2

2.3 Study Variables: Training

HR Outcomes 1. Attitudes &

Motivation 2. Behaviours 3. Human capital

Organisational Performance

Outcomes Performance &

productivity

Financial Outcomes

Profit & financial indicators (ROE,

ROA, ROI)

C

V

V

C

V

V

C

V

V

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Our review of the literature on training and organisational level outcomes yielded a total

number of 92 suitable articles and a total of 91 studies undertaken [one paper published the

same statistics in two separate articles (Ubeda-Garcia, 2013a, 2013b)]. There are many

challenges in reviewing the literature as there seems to be little consistency in terms of the

method, training variable, outcomes measured and results yielded and although Tharenou

et al. (2007) provided a comprehensive review in their study, we have chosen to extend the

reach of their analysis by introducing other study variables that might inform the debate on

how training contributes to organisational effectiveness and bottom line results. We have

chosen to use contextual, theoretical and methodological study variables to inform the

discussion around this topic. In this section we discuss these variables.

Figure 3 provides a flow chart of the information gathered in the systematic literature

review.

Figure 1 The Flow of information informing our study

The variables for this study are broken down as follows:

•Country

•Sector

•Size of the Firm

•Ownership

•Study Population

•Type of Training

Context

•Theoritical Perspectives informing study

Theory •Data Type

•Training Measure & Design

•Type of Variable

Process

•HR Outcomes

•Performance Outcomes

•Financial Outcomes

Results

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2.3.1 Theoretical

Theoretical concepts were not always explicitly stated in every article; therefore, while

coding the information, the authors used the information provided to decipher a theory that

emphasized the arguments presented. Theories that were highlighted include the RBV,

Human Capital theory, Systems theory as well as all the three SHRM perspectives: the

Universalistic, Contingency and the Configurational (See Table 2).

2.3.2 Contextual

Contextual organisational variables are one of our biggest contributions in this review. By

understanding the context in which the organisation operates and it’s training activities

function, it will give us a greater insight into the identification of training and its

contribution at an organisational level. Take for example, by analysing training activity from

a country/national perspective, it can give us an opportunity for a comparative study and

provide us with a global focus and identify trends. Other useful contextual indicators include

organisational variables such as organisation sector/industry and organisation size. They

provide us with a series of environmental characteristics that might help us explain the

relationship of training and organisational outcomes and inform our study.

Contextual organisational variables used: Country, Sector/Industry, Size of the Firm & Status

(MNC, SME…), Ownership (Public or Private) and Study Population (See Table 2).

2.2.4 Methodological

In terms of methodological variables, we analysed all aspects of the data collection of the

studies, encompassing all information from study sample size and study type to training

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variable used and its reliability. In terms of data type, we inspected for cross sectional or

panel data. We looked for self-report or longitudinal data. We looked for binary, scale and

other measures of training activity, searched for who they were developed by and analysed

the reliability where reported. Finally we identified if the training variable was a predictor,

mediator or moderator variable (See Table 3).

2.2.5 Performance Outcomes

Research on training and organizational-level outcomes also varies as a function of the

outcome variables. We mirrored how Tharenou et al. (2007) selected their outcome

variables as we have used this data as a direct comparison with the studies we collected.

They categorised the variety of the outcome variables by using Dyer and Reeves' (1995)

four-category definition of organizational effectiveness for evaluating effects of HR

practices. They break down effectiveness outcomes into: (a) HR outcomes (b) organizational

performance outcomes (c) financial or accounting outcomes (d) if they are publicly listed

companies, stock market outcomes (shareholder returns, stock value). Studies in this review

used all types of these variables except for stock market outcomes which are rarely

measured and are the most far-removed theoretically from training (See Table 4).

3. RESULTS

The main aim of this paper is to discuss the training and organisation-level outcomes. In this

section we first review the results of the 91 studies that assessed the relationship between

training and the three categories of organisation-level outcomes: HR outcomes,

performance outcomes and financial outcomes. We then expand our investigation and

analyse first the theoretical foundations of training and organisation-level outcomes, then

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we examine for the effect, if any, contextual and methodological variables have on the

training – organisation-level outcome research. It must be noted that the review uses a

qualitative approach for the most part in addressing the study results.

3.1 Training and Organisation-level Outcomes

Unsurprisingly consistent with the 2007 study, organizational performance outcomes (72

studies or 79% of the sample) were the most reoccurring outcome assessed, followed by

financial outcomes (39 studies or 44% of the sample) and then HR outcomes (30 studies,

34% of the sample). Of the studies to be reviewed, most calculated the independent link of

training to organizational outcomes. Very few studies used training to conduct tests for

mediating effects (4 studies). Very few also used training as a moderator variable (2 studies)

but interestingly in both cases also test for direct relationships with organisation-level

outcomes. However, there were many studies that assessed the effect of training in

association with other factors e.g. training as a component of a HR bundle, training and its

fit with business strategy, training as a construct of an internal labour market etc.

3.1.1 HR Outcomes

30 studies reported relationships between training and HR Outcomes. HR outcomes are

classified as follows: (a) employee attitudes (employee ratings of their satisfaction,

involvement, commitment or grievances) and motivation, all aggregated to the

organizational level; (b) behaviours (usually objective measures of retention, turnover or

absenteeism); (c) human capital (e.g., collective skills and competencies); (d) general HR

outcomes (multi-item scales combining measurement of several HR outcomes such as

motivation, retention, absenteeism, and development); and (e) perceptual HR outcomes.

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Employee attitudes and motivation: 10 studies in total reported on actual changes in

attitudes and motivations in employees as a result of training. There were a number of

reoccurring positive and significant relationships reported: four studies measuring

organisational commitment (Ahmad & Schroeder, 2003; Fisher & McPhail, 2010; Paul &

Anantharaman, 2003; Zheng, Morrison, & O’Neill, 2006) and four studies measuring job

satisfaction (Costen & Salazar, 2011; Fisher & McPhail, 2010; Gurbuz & Mert, 2011). Among

the studies measuring attitudes and motivations is just one study that reported a non-

significant relationship between employee grievances and training (Ghebregiorgis &

Karsten, 2007). This represents the only negative relationship between attitudes and

training.

In terms of behaviours, Fisher & McPhail (2010) reported that employees intention to leave

reduces the more training they receive. This argument is strengthened by 7 other studies

that report a significant relationship between training and retention and turnover (Costen &

Salazar, 2011; Darwish, Singh, & Mohamed, 2013; Gelade & Ivery, 2003; Gurbuz & Mert,

2011; Ngo, Turban, Lau, & Lui, 1998; Paul & Anantharaman, 2003). Three studies reported a

negative relationship with turnover (Cho, Woods, (Shawn) Jang, & Erdem, 2006;

Vandenberg, Richardson, & Eastman, 1999; Zheng et al., 2006). One study measured for

training and voluntary and involuntary turnover (Shaw, Delery, Jenkins, & Gupta, 1998).

Their findings would suggest that organisations that invest in training have higher levels of

both. The inability to retain competent and skilled employees has been identified as a

barrier to organisations' success (Darwish et al., 2013) therefore it is unsurprising that

retention and turnover were widely measured. Higher levels of training contribute positively

to lower levels of turnover and higher levels of retention.

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With respect to human capital, there were six studies in total that measured the

relationship between training and specified collective skills and competencies. In

organisations that provide more training, the more extrinsic and intrinsic benefits employee

receive (Glaveli & Karassavidou, 2011), the more competent staff they have (Zheng et al.,

2006) the more operator skills they will possess (Wright, Dyer, & Takla, 1999) and the more

skills, knowledge and motivation they will have (Fey & Björkman, 2001). However, two

studies have reported that the more training provided the less competent staff will be (Paul

& Anantharaman, 2003; Zheng et al., 2006) and the less able to problem solve they will be

(Muñoz Castellanos & Salinero Martín, 2011a). On the majority the more training delivered

to employee the more competent they are to undertake their tasks and the more skills and

abilities they have to perform those tasks effectively.

In terms of perceptions, some studies reported the employees perceived benefits of HR

outcomes they received from training. These perceptions included all three attitudes,

behaviours and human capital (García, 2005; Guerrero & Barraud-Didier, 2004; A. A. Katou

& Budhwar, 2006; A. Katou & Budhwar, 2007; Paul & Anantharaman, 2003). `

Overall, we recognise that there is an unquestionable association between training and HR

outcomes and in the majority of case this relationship is significantly positive, especially in

terms of job satisfaction and commitment, both perceived and actual.

3.1.2 Organisation Performance Outcomes

Tharneou et al. (2007) have classified performance outcomes as follows and review the

results of the studies for the outcomes in this order: (a) productivity (objectively-measured

labor productivity/value added per employee, productivity growth/gains, labor efficiency,

export growth); (b) sales (objectively-measured sales per employee, sales output, sales

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growth, new sales); (c) quality (objectively-measured waste/defects, accuracy; customer

satisfaction and other responses as assessed by customers aggregated to organizational

level); (d) general performance outcomes (overall performance as an objective single item

measure or by combining information on several facets such as productivity, quality,

customer satisfaction; growth); (e) and perceptual measures of organizational performance.

Almost all of the studies measured for organisation performance outcomes.

16 studies measure productivity. 23 studies out of 72 measured reported the significance of

sales volume as a consequence of training levels. Of these 23 studies 13 studies reported

positive significant relationships, 6 reported negative relationships and 3 were ambiguous.

For productivity measures, 50 studies in total measured for a variety of productivity

indicators. Of these, 38 (76%) reported a positive significant relationship with training. 11

(22%) indicated a negative or non-significant relationship and 2 studies were ambiguous.

Finally in terms of quality indicators, 20 studies measured for the significance of training in

quality improvement. Of these, 16 (80%) measured a positive significant relationship,

reported a negative or non-significant relationship and 2 were ambiguous indicating mixed

results.

Perceptual measures were noted as a popular method of analysis (40%). 20 studies

measured perceptions of organisational outcomes. This is interesting (discussed in notes)

3.1.3 Financial Outcomes

Tharenou et al. (2007) have classified these outcomes as follows: (a) profit/profitability (b)

return as return on equity (ROE), assets (ROA), investment (ROI), or capital; (c) general

financial outcomes (reports of measures such as cash flow, total assets, liquidity, market to

book ratio, and overall measures of financial performance); and (d) perceptual measures of

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financial outcomes. 38 studies (42%) have investigated the relationship between training

and financial outcomes. 12 studies reported positive significant relationship between

training and general financial performance measures. 5 found significant negative

relationships between training and financial performance (Adnan, Abdullah, & Ahmad,

2011), perceived financial performance (Wright, Mccormick, Sherman, & Mcmahan, 1999)

market growth (Andersen et al., 2007), solvency and liquidity (Faems, Sels, De Winne, &

Maes, 2005) and store net income (Wiley, 1991).

14 studies measured for profitability and only 6 report a positive significant relationship

between training and profitability (Bernthal & Wellins, 2006; Chand & Katou, 2007; Khatri,

2000; Miron & McClelland, 1979; Park & Jacobs, 2011; Paul & Anantharaman, 2003). Others

(3) reported non-significant positive relationships (Faems et al., 2005; Guerrero & Barraud-

Didier, 2004; Muñoz Castellanos & Salinero Martín, 2011b; Storey, 2002) and others (4)

reported negative relationships (Adnan et al., 2011; Andersen et al., 2007; Birley &

Westhead, 1990; Guerrero & Barraud-Didier, 2004).

A number of studies measured for the ROA, ROI and/or ROE and yielded positive results

(Aragon & Valle, 2012; Bernthal & Wellins, 2006; d’Arcimoles, 1997; Darwish et al., 2013;

Paul & Anantharaman, 2003). Non-significant and negative studies were also present

(Andersen et al., 2007; Cho et al., 2006; Delery & Doty, 1996; Kwon & Rupp, 2013; Meschi &

Metais, 1998; Vandenberg et al., 1999) as was an ambiguous study reporting mixed results

(Newkirk-Moore & Bracker, 1998).

3.2 Theory & SHRM Perspectives in the Training-Organisation-level Outcome Relationship

Training and organisational-level outcomes research has drawn on a wide range of theories,

models and perspectives (see table 1 in appendices) that are widely employed by strategic

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HRM (SHRM) scholars. The papers we reviewed for the most part highlighted particular

theory/theories that informed the overall study (e.g. Chand 2011 and Costen & Salazar,

2011) however some gave very little attention to a theoretical explanation. After

undertaking a detailed analysis of the papers in question we ascertained which theoretical

perspective was underlining the arguments.

Wright and McMahon (1992) outlined a convincing conceptual framework that incorporates

six theoretical models. This framework explores the linkage between HRM practice and

organisational-level outcomes. According to their framework and the theoretical models,

HRM practices influence the HR capital pool and HR behaviours; HR behaviours then lead to

firm-level outcomes (Tharenou et al., 2007). We use four of the theories presented in this

research as well as others cited in the most recent literature to explore the current

perspectives on the topic. In doing this we have identified theoretical categories: (1)

strategic models (2) social models, (3) SHRM perspectives.

3.2.1 Strategic Models

First, Wright and McMahon (1992) state that strategic theories are informed by proactive

strategically intended decisions. They originally claim the resource-based view (RBV), the

behavioural perspective, the cybernetic systems model and agency theory as the macro

theories that impact strategic decision making in HRM. All four of these were very much

present in the studies examined for this article. The most common being the RBV. However,

we have identified human capital theory as another well recited theory that more often

than not is used to balance or compliment the RBV in the research and can be, without

question, included in the strategic models group.

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The resource-based view: A significant proportion of the articles have drawn on either or

both the RBV and human capital theory (n=71). The RBV has been instrumental in the

development of training initiatives. It has shifted in the literature from a focus on exploiting

external opportunities to developing internal resources and competencies as a means of

gaining competitive advantage. RBV has been suggested as one perspective that provides a

rationale for how human resources could provide a potential source of sustainable

competitive advantage (Wright & McMahon, 1992) when it possesses resources that add

positive value to the firm, are unique, imperfectly imitable, and cannot be substituted with

another resource by competitors (Tharenou et al., 2007). Applying the resource-based view

to training suggests that training can be viewed as an investment in human capital that

provides employees with unique knowledge, skills and abilities that add value to the firm

and enable the performance of activities required to achieve organizational goals, thus

resulting in positive organizational-level outcomes (Ostroff & Bowen, 2000). The RBV was

mainly used in articles that studied general/formal training (Gurbuz & Mert 2011; Thang &

Quang 2011; Ukenna, Ijeoma, Anionwu & Olise 2010; Ghebregiorgis & Karsten, 2007; Cho,

Woods, Jang & Erdem 2006; Thang & Quang 2005; Ng & Siu, 2004; Wright et al. 1999; Bartel

1994; Wiley 1991) and management training and development (Abd Rahman et al. 2013;

Aragon & Sanz Valle 2013; Sheehan, 2012; Anderson, Cooper & Zhu 2007; Berthal & Wellins,

2006; Mabey & Ramirez 2005; Deng, Menguc & Benson 2003; Newkirk-Moore & Bracker

1998) to measure it’s impact on organisational performance. Studies that used the RBV as a

theoretical lens tended to have strong significant relationship between training and

organisation-level outcomes overall. In terms of HR outcomes: 17 studies highlighted a

positive significant relationship between training and HR outcomes and 5 studies explained

not significant relationship. This would suggest the RBV is a strong theory for explaining the

21

robust relationship between both variables. With respect of Organisation Performance

Outcomes and the RBV theoretical lens, 36 studies highlighted a positive significant

relationship between training and organisation performance outcomes and 20 studies

explained non-significant relationships. This finding suggests that in terms of the OP

Outcomes, applying RBV doesn’t quite guarantee positive outcomes. Finally in terms of

financial outcomes, the RBV studies emphasise 18 studies with a positive significant

relationship with financial outcomes and 11 studies with non-significant relationships.

Again this doesn’t appear to be a strong theoretical framework for explaining this

relationship.

The relationship between human capital and the RBV has been explored in the literature on

SHRM (Barney and Wright, 1998; Becker and Gerhart, 1996; Boxall, 1996; Boxall and Purcell,

2000; Hitt et al., 2001; Kamoche, 1996; Lado and Wilson, 1994; Richard and Johnson, 2001;

Wright et al., 2001) and RBV is typically used as a backdrop and seeks to frame HRM

questions into the RBV framework.

The theory of human capital is also seen as fundamental in an organisational setting. Human

Capital constitutes people’s qualities, abilities, skills, talents, and experiences that make

them economically productive (Verkhohlyad & McLean, 2011). The basis of human capital

theory is that investments made in educating and developing the workforce and developing

their skills will pay dividends to an organisation that is pursuing improvements in economic

viability. Hence, the objective of training is to educate and develop people within the

collective relations of the organization, with the intention of increasing employee

productivity and organizational effectiveness (Metcalfe, 2005).

18 studies used human capital theory as a theoretical framework that also measured for HR

outcomes. Of these, 15 studies reported a significant positive relationship between training

22

and some HR outcomes, and 6 studies reported negatively. 32 studies that examined

training and organisation performance outcomes using human capital theory had significant

positive relationships, while 17 reported negative results. There were six studies that

reported mixed results. And finally, human capital theory features in 12 studies that report a

significant negative relationship between training and certain financial outcomes and 11

studies that report a positive significant relationship.

The behavioural perspective (Schuler & Jackson, 1987; Wright & McMahan, 1992b)

examines the link between competitive strategy and HRM practices by suggesting that

employee behaviours mediate the relationship. Applying the behavioral perspective to

training suggests that training will result in positive organizational outcomes to the extent

that it results in employee behaviors that are required by the organization's strategy (Wright

and McMahon, 1992). Eight studies in total relate the relationship between training and

organisation outcomes using this perspective.

The cybernetic systems models also known as input–throughput–output models (Wright &

McMahan, 1992) are widely used in the literature. We identified eight studies that use open

system models to portray organizations as transforming inputs that consist of employees'

knowledge, skills and abilities (KSAs); the throughput is employee behaviors; and output

includes productivity, satisfaction, and turnover. Included under the cybernetic approach is

an open systems model of the HR system in which employee competencies (inputs) lead to

behaviors (throughputs) which then lead to affective and performance outcomes (outputs)

(Wright & MacMahon).

It must be noted that only one study used transaction cost theory in their argument (Ahmad

& Schroeder, 2003).

23

3.2.2 Social Models

Two studies (Glaveli & Karassavidou, 2011; Tzafrir, 2005) used Social Exchange Theory to

reinforce the uses of HRM practices to mediate the relationship between trust and

organisational performance. Social exchange emphasizes relationship development over

time, and indicates that a successful social exchange circle involves trust and uncertainty

(Tzafrir, 2005). Training regarded as providing benefits to employees may be considered as a

social exchange between the organization and its employees (Glaveli, 2011). Interestingly,

only one study (Kwon & Rupp, 2013) examines the impact of Social Capital Theory in the

firm considering its usage in broader HRM and management literature has increased over

the last decade. The study did however provide significant positive results between training

and organisation and HR outcomes.

3.2.2 SHRM Perspectives

The majority of the theories discussed so far imply a direct linear relationship between

training and organizational outcomes. However, theories of SHRM (e.g., resource based

theory, behavioral theory) imply that other types of relationships also need to be

considered. The literature on SHRM provides alternative perspectives of the relationship

between HR practices and organization-level outcomes that are generally referred to as the

universalistic, contingency, and configurational perspectives (Delery and Doty,

1996 and Ostroff and Bowen, 2000). These perspectives can also explain different types of

relationships between training and organizational-level outcomes.

According to the universalistic perspective, some HR practices such as formal training are

work practices that are believed to be linked to organizational effectiveness for all

organizations that use them (Delery and Doty, 1996 and Ostroff and Bowen, 2000). The

24

basic premise of the perspective is that greater use of training will result in better

organizational performance. This is in effect the primary perspective taken in most studies

on training and organizational-level outcomes, in which training is predicted to have a

positive relationship with organizational outcomes. The general premise of the contingency

perspective is that the relationship between a specific HR practice (i.e. training) and

organizational performance is contingent on key contextual factors, particularly an

organization's strategy (Delery & Doty, 1996). Thus, organizations adopting particular

strategies require certain HR practices that will differ from those required by organizations

with different strategies. When applied to training, the contingency perspective suggests

that extensive formal training will be most effective when used in combination with certain

organizational strategies (e.g., Schuler, 1989). The configurational perspective suggests that

there are ideal types or configurations of HR practices that form HR systems that lead to

superior performance (Ostroff & Bowen, 2000). In high-performance systems, HR practices

need to be complementary and interdependent, working together to develop valuable,

unique human capacities to increase organizational effectiveness (Barney & Wright, 1998).

When applied to training, the configurational perspective suggests that training will enhance

organizational effectiveness when it is used in conjunction with other, complementary HR

practices than when used independently. Thus, when firms invest in training, training must

be consistent with other HR practices.

In summary, the SHRM literature suggests that the nature of the relationship between

training and organizational-level outcomes might be universalistic, such that HR outcomes

mediate the relationship between training and organizational performance; and/or it might

be moderated by organizational factors such as firm strategy (contingency perspective);

25

and/or it might be moderated by other congruent HR practices (configurational perspective)

(Tharenou et al. 2007).

3.3 An explanation of the Organisation Context in the Training-Organisation-level

Outcome Relationship

Our analysis indicates that the majority of organisations in our study that reported on the

organisation ownership were private (N=19). Most studies didn’t indicate either public or private

(N=61) and only five were public sector organisations. A small proportion used organisations in both

private and public sectors (N=6).

The organisations studied include a broad variety: MNCs, Large national organisations, medium sized

organisations, SMEs and micro organisations. The industries are focused mainly on general

manufacturing (N=29) and services (N=8) and in particular the financial sector (N=10), hospitality,

leisure and tourism (N=6) or mix of all. Other specific sectors mentioned include distribution,

logging, petro-chemical, computer software and retail.

Finally the county of study was also examined. EU Countries (N=22), Non EU Advanced (N=35)

including USA (N=25). BRICS countries make up a further 10 studies (China, Russia and India) while

other developing countries make up the count (N=12).

4. Theoretical & Methodological Gaps (workings)

With the growing body of research on training and organizational-level outcomes,

consistent with Tharenou et al. (2007) there remains issues with our understanding of how,

when, and why training relates to organizational-level outcomes. In this section we identify

mainly theoretical and methodological issues that exist in the literature.

4.1 Theoretical perspectives

26

This review indicates that training is positively related to organizational-level outcomes.

However the reasons for this positive relationship are still very vague. Also, there is

satisfactory evidence that training leads to both individual and organizational outcomes.

However, we are still unclear of which theory to employ to help our understanding of how

individual-level outcomes lead to organizational level outcomes (Tharenou et al. 2007).

4.2 Methodological perspectives

A major problem and source of inconsistency across studies has been the type of training

measure used. The measures of training have tended to be general rather than specific,

limiting understanding of what kind of training improves organizational effectiveness. In

addition to differences in the content of training measures across studies, the way that

training has been measured also raises concerns about reliability and validity.

4.3 Publication distribution

The majority of the studies were published in HRM and general management published

works. The International Journal of Human Resource Management (IJHRM) published by far

the most papers measuring training and organisation level outcomes (N=34). The Strategic

Management Journal (N=3), Thunderbird International Business Review (N=2), Personnel

Psychology (N=4) Journals of Applied Psychology (N=1) and Managerial Psychology (N=1).

Surprisingly only six of the total training dedicated journal carried studies that measure for

the training organisational-level outcome relationship. These are the European Journal of

Training and Development (N=2), the International Journal of Training and Development

(N=2) and Human Resource Development Quarterly (N=2). The highest rated management

academic journal (Impact Factor: 5.608) the Academy of Management Journal published

three studies in the area (N=3). We have also seen studies published in other areas in the

literature such as marketing, economics and hospitality. This fragmented approach in terms

27

of what discipline it resides in is evident of the wide-spanning impact training has in terms

of value creation for the organisation.

5. Conclusions

Training and it’s potential value creation for the organisation is a significant research area in

human resource development, human resource management and in organisational

psychology. This paper presents a review of the studies that highlight that impact between

training and organisation outcomes. The results highlight the continually weak and

fragmented training literature in terms of theoretical underpinning, methodology and

concrete performance outcomes. Current conceptualisations are also highly individual-

focused and research training primarily from the perspective of the individual rather than

the team or organisation.

This SLR has both strengths and weaknesses. It is the most fully-representative SLR of it’s

kind that looks at training and organisation-level outcomes. From a limitations perspective,

many of the studies included in the review comprised many different types of training

activities. We have tried to resolve these ambiguities, but acknowledge that we may have

lost some nuance in comparing studies for the review. Our review does not escape the

limitation of publication bias. We focused on published studies and ignored unpublished

work, findings presented in book chapters and at conferences. We are confident, however,

that the review can make a meaningful contribution to theory, practice and policy. It is

constructed to inform both researchers and practitioners of some of the issues that need to

be addressed to make a stronger case for the value of training in organisations.

28

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Zheng, C., Morrison, M., & O’Neill, G. (2006). An empirical study of high performance HRM practices in Chinese SMEs. The International Journal of Human Resource Management, 17(10), 1772–1803. doi:10.1080/09585190600965282

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Identify key research themes in the training and organisational outcome literature to date

Discuss theoretical, conceptual and methodological deficiencies within the HRM/HRD literature

Discuss key contextualised approaches that help address the unique challenges surrounding the study of training & organisation level outcomes value creation

Draw further insights from the literature to advance HRM/HRD research

Broadly define the relationship between training and organisational level outcomes

Define the strategic context of organisational training

Define the training variables and research design dimensions of organisational training

Define and categorise the HRM, organisation and financial outcomes of training

Search Boundaries

ABS ranked journals

Primary and secondary subject areas

Electronic databases

Cover Period 2007- May 2013

Search Terms Training AND/OR Learning AND/OR Development and

Performance AND/OR

organisational outcomes AND/OR

organisational performance.

Papers were only selected if there was a visible training variable that had direct effects (including moderating and mediating effects) on organisational-level outcomes.

Papers that examined training within an entire HR bundle, without demonstrating individual effects for the variable were discarded as they were too ambiguous.

Papers were only selected if they measured at the organisational level of analysis and not the team or individual.

An independent literature search on training and organisational level outcomes (and its variants) using Google Scholar was compared with the above search results

Cross-comparison of coding results

Revisiting articles for recoding

Ensuring inter-rater reliability

Researcher A Researcher B

Establishing the

Research

Objectives

Defining the

Conceptual

Boundaries

Setting the

Inclusion Criteria

Applying the

Exclusion Criteria

Validating Search

Results

Independent

Data Coding

Validating Data

Coding

Figure 1. A Summary of the SLR Method Used (2007-2013)

36

List of papers in Study

Study Year Journal

Abd Rahman, Ng, Sambasivan and Wong 2013 European Journal of Training & Development (EJTD) Chen, Hsu & Huang 2013 Global Journal of Business Research Darwish, Singh, Mohamed 2013 The International Journal of Human Resource management

(IJHRM) Kwon & Rupp 2013 Journal of Organizational Behavior Percival, Cozzarin & Formaneck 2013 International Journal of Training and Development (IJTD) Ubeda-Garcia, Marco-Lajara, Sabater-Sempere & Garcia-Lillo

2013 IJHRM

Ubeda-Garcia, Marco-Lajara, Sabater-Sempere & Garcia-Lillo

2013 EJTD

Aragon & Sanz Valle 2013 IJHRM Ji, Liu, Zhu & Cai 2012 IJHRM Long, Wan Ismail & Mohd Amin 2012 IJHRM Sheehan 2012 IJHRM Adnan, Abdullah & Ahmad 2011 World Review of Business Research Costen & Salazar 2011 Journal of Human Resources in Hospitality & Tourism Fisher & McPhail 2011 The Service Industries Journal Gardner, Wright & Moynihan 2011 Personnel Psychology Glaveli & Karassavidou * 2011 IJHRM Gurbuz & Mert * 2011 IJHRM Liao, Rice & Martin 2011 IJHRM Muñoz Castellanos & Salinero Martín 2011 IJHRM Park & Jacobs 2011 Human Resource Development Quarterly (HRDQ) Thang & Quang 2011 Research and Practice in Human Resource Management Chand 2010 IJHRM Ukenna, Ijeoma, Anionwu & Olise 2010 European Journal of Economics, Finance and

Administrative Sciences Katou 2009 Journal of Behavioral & Applied Management Eerde, Tsang & Talbot 2008 IJHRM Chi, Wu & Lin 2008 IJHRM Gooderham, Perry and Ringdal 2008 IJHRM Sharma & Gadenne 2008 Journal of Strategic Marketing Ghebregiorgis and Karsten 2007 IJHRM Katou and Budhwar 2007 Thunderbird International Business Review Anderson, Cooper and Zhu 2007 Asia Pacific Journal of Human Resources Chand & Katou 2007 Employee Relations Ballot, Fakhfakh and Taymaz 2006 British Journal of Industrial Relations Bell and Grushecky 2006 Journal of Safety Research Bernthal and Wellins 2006 Human Resource Planning Cho, Woods, Jang and Erdem 2006 International Journal of Hospitality Management Horgan and Mühlau 2006 IJHRM Katou and Budhwar 2006 IJHRM Kintana, Alonso, and Olaverri 2006 IJHRM Tzafrir 2006 Journal of Managerial Psychology Zheng, Morrison, and O'Neill 2006 IJHRM Zwick 2006 Industrial Relations Audea, Teo and Crawford 2005 IJHRM Faems, Sels, De Winne, and Maes 2005 IJHRM García 2005 IJHRM Mabey and Ramirez 2005 IJHRM Thang and Quang 2005 IJHRM Tzafrir 2005 IJHRM Ely 2004 Journal of Organizational Behavior Guerrero and Barraud-Didier 2004 IJHRM Hatch and Dyer 2004 Strategic Management Journal Ng and Siu 2004 IJHRM

37

Ahmad and Schroeder 2003 Journal of Operations Management Aragón-Sánchez et al. 2003 IJHRM Deng, Menguc, and Benson 2003 Thunderbird International Business Review Gelade and Ivery 2003 Personnel Psychology Paul and Anantharaman 2003 IJHRM Storey 2002 The International Journal of Management Science Ballot, Fakhfakh and Taymaz 2001 Labour Economics Barrett and O'Connell 2001 Industrial and Labor Relations Review Black and Lynch 2001 The Review of Economics and Statistics Cappelli and Neumark 2001 Industrial and Labor Relations Review Fey and Bjórkman 2001 Journal of International Business Studies Fey, Bjórkman, and Pavlovskaya 2000 IJHRM Huang 2000 IJHRM Khatri 2000 IJHRM Harel and Tzafrir 1999 Human Resource Management Vandenberg, Richardson, and Eastman 1999 Group and Organization Management Wright, McCormick, Sherman, and McMahan 1999 IJHRM Bassi and McMurrer 1998 Training and Development Bassi and Van Buren 1998 American Society of Training and Development Meschi and Metais 1998 Management International Review Newkirk-Moore, and Bracker 1998 IJTD Ngo, Turban, Lau, and Lui 1998 IJHRM Shaw, Delery, Jenkins, and Gupta 1998 Academy of Management Journal Boon and van der Eijken 1997 Netherlands Offical Statistics - Research Paper D'Arcimoles 1997 Organization Studies Ichniowski, Shaq, and Prennushi 1997 The American Economic Review Murray and Raffaele 1997 HRDQ Barling, Weber, and Kelloway 1996 Journal of Applied Psychology Black and Lynch 1996 The American Economic Review Delaney and Huselid 1996 Academy of Management Journal Delery and Doty 1996 Academy of Management Journal Johnson 1996 Personnel Psychology Koch and McGrath 1996 Strategic Management Journal Martell and Carroll 1995 Human Resource Management Bartel 1994 Industrial Relations Holzer, Block, Cheatham, and Knott 1993 Industrial and Labor Relations Review Wiley 1991 Human Resource Planning Birley and Westhead 1990 Strategic Management Journal Russell, Terborg, and Powers 1985 Personnel Psychology Miron and McClelland 1979 California Management Review

38

Table 1. Reasons for the exclusions of papers from Tharneou et. al’s (2007) review

Author Journal/Book Details Reason for Exclusion

Bracker& Cohen (1992) Journal of Small Business

Strategy

Vol 3, p1-14 Failed attempts to get access to

paper

Fraser, Storey, Frankish

& Roberts (2002)

Environment and Planning C:

Government and Policy

Vol 20 (2), p

211-233

Failed attempts to get access to

paper

Kalleberg and Moody

(1994)

American Behavioral Scientist Vol 37, p 948-

962

Failed attempts to get access to

paper

Lawler, Mohrman&

Ledford (1998)

The CEO report San Francisco ISBN:

10: 0787943975

Published in a book (Jossey-Bass)

Lui, Lau & Ngo (2004) Management International

Review

ISBN: 978-3-

409-12644-1

Published in a book (Springer)

Lyau&Pucel (1995) Performance Improvement

Quarterly

Vol 8(3), p 68-

79

Failed attempts to get access to

paper