Human Capital and Sustainable Competitive Advantage: An Analysis of The Relationship Between Training and Performance
Human Capital and Sustainable Competitive Advantage: An Analysis of The Relationship Between Training and Performance
Human Capital and Sustainable Competitive Advantage: An Analysis of The Relationship Between Training and Performance
DOI 10.1007/s11365-008-0090-3
M. A. Sastre Castillo
Universidad Complutense de Madrid, Madrid, Spain
e-mail: masastre@emp.ucm.es
M. A. Sastre Castillo
Instituto Tecnológico Autónomo de México, Mexico City, Mexico
e-mail: msastre@itam.mx
140 Int Entrep Manag J (2009) 5:139–163
Introduction
A number of studies conducted in recent decades indicate that at present, the main
elements that distinguish organisations from each other are not tangible; rather, it is
intangible resources that are best able to meet the conditions necessary1 to become
competitive advantages that are sustainable over time.
According to these studies, the strategy of organisations should be based on
intangible resources, since it is these resources that provide greater differentiation
and due to the fact that they are not available in the marketplace; rather, they are
generally inherent to, and must be developed within, companies via a complex
process over a period of time.
With regards to intangible resources, consensus seems to have emerged in recent
years that people-related resources (human capital) can be considered one element
that explains the generation of larger economic rents. This is due to the fact that the
employees’ skills, abilities, knowledge and ability to adapt are scarce, valuable
intangibles that are hard to imitate and very difficult to replace. Furthermore, human
capital is an asset difficult to transfer from one organisation to another (Hall 1992)
and can be used in different areas of the business in a number of ways
simultaneously, without losing value.
As a consequence of current interest in this area of research, some research has
attempted to address this problem, suggesting that training is indeed an instrument
that allows the generation and accumulation of human capital. Most research
approaches this issue from a purely theoretical perspective and, to a lesser extent,
using empirical studies. Nevertheless, there are a number of reasons we believe this
area is a candidate for greater research.
Firstly, very few organisations (3%) measure the direct influence of training on
performance, due to the technical difficulty associated with its measurement (Sastre
Castillo and Aguilar Pastor 2003). If the academic world is able to demonstrate the
existence of such a relationship, managers will have a greater incentive to increase
investment in this area.
Furthermore, there is little research that focuses on the influence of training given
to personnel on results. Most research measures the effect of a set of human
resources practices; as a result, the training variable tends to be measured in a
simplistic manner and with a single indicator. Our research makes a special effort to
measure training using a multidimensional indicator of the same.
Similarly, there is little research that combines universalistic and contingent
approaches to explain such a relationship; most research favours one and emphasises
the negative aspects of the other. It is our understanding that our research constitutes
a relevant contribution inasmuch as it aims to compare the explanatory power of
both approaches, seeking to determine whether or not the strategy implemented by
organisations reduces the strength of said relationship. Therefore, our objective is not
1
For information on the criteria to be met by resources to be considered a sustainable source of competitive
advantage that generate rent, refer to research by Cool and Dierickx (1989), Barney (1991), Grant (1991), Amit
and Schoemaker (1993), Peteraf (1993), Black and Boal (1994) or Collis and Montgomery (1995).
Int Entrep Manag J (2009) 5:139–163 141
The universalistic approach says that there is a direct relationship between training
and performance. This perspective defends the existence of universally recognised
training practices, i.e. training practices that, introduced by any organisation
regardless of external or internal circumstances, will always have a positive effect
on performance (Rodríguez Pérez 2001).
As pointed out by Lee et al. (2005) to highlight that training has a greater
universalistic effect than other human resource practices, of the 16 best practices
studied by Pfeffer (1994), training is one of the few practices which was found to
have a consistently positive impact on results.
This result is also apparent in relation to both individual performance indicators (such
as sales volumes and productivity per employee) and organisation performance indicators
in research such as that conducted by Arthur (1994), Huselid (1995), Black and Lynch
(2001), Delaney and Huselid (1996), Koch and McGrath (1996), D’Arcimocles (1997),
Huselid et al. (1997), Kidder and Rouiller (1997), Barrett and O’Connell (2001), Bassi
et al. (2002), Aragón et al. (2003) or Tzafrir (2005). Nevertheless, the literature is
inconclusive: benchmark research such as that by Delery and Doty (1996) does not
detect a universalistic effect of training on the ROA and ROE of businesses in his
sample, while Úbeda García (2005) does not find a significant link with productivity
(which he attributes to an average period of investment in higher training, as a result of
which the likely effect on productivity did not emerge in his study). Even Hitt et al.
(2001) find that investment in training first has a negative effect on results then a
positive effect, as knowledge and skills acquired are applied to the job.
Thus, advocates of this approach consider that all organisations can and should
adopt a set of training policies. The logic underlying this idea is based on the notion
that the return on training will be greater than the investment, since it will increase
productivity (theory of human capital).
This effect is explained by the fact that if employees sense an interest on the part
of the organisation in offering them training, demonstrating trust in them and an
intention to count on them in the long-term, they will respond by making a greater
effort and being more efficient in the course of their duties. In resource and capacity
theory terms, this could constitute a barrier to mobility and lead to an improvement
in the performance of the organisation inasmuch as the company can appropriate this
increase in rent (Lee and Miller 1999; Úbeda García 2005).
Under these circumstances, training would be an important element in the
creation of human capital. This argument, based on equilibrium theory, is also
supported by Tzafrir (2005), who says that investment in training can create a moral
debt among employees who receive said training.
Nevertheless, Tzafrir (2005) also believes that investment in training can have
negative performance. For one, it is clearly a cost for the business, especially if the
business is not able to secure reciprocal commitment from the employee. Two, it
represents a risk for the company: if the employee decides to leave the organisation,
142 Int Entrep Manag J (2009) 5:139–163
capital generated in conditions with a high degree of causal ambiguity and a long-
term intangible assets, inasmuch as it is not transferable or replaceable with another
asset and is difficult to replicate.
Although we relieve that these studies partially measure training efforts, it is our
view that there are sufficient grounds for formulating our second working
hypothesis.
H.2. The effort made by companies in terms of training has a positive impact on
the sustainability of income over time.
Unlike the universalistic approach, the contingent approach takes into account the
influence of certain variables that moderate the relationship between training of
personnel and performance.
In the literature on human resources strategic management, strategy is the main
contingency variable taken into consideration, given that conceptually the
relationship between strategy and human resources policy is one of the most
attractive approaches, giving rise to the so-called external adjustment or alignment
approach (Sastre Castillo and Aguilar Pastor 2000).
Some works argue that there is a positive relationship between the training of
personnel and performance, but that the intensity of said relationship depends on the
strategy implemented by the company (Pfeffer and Baron 1988; Peck 1994; Osterman
1995; D’Arcimocles 1997; Bartel 2000; Hitt et al. 2001; or Kruse et al. 2004).
Some authors, using the competitive strategies of Porter, emphasise that
companies that adopt a differentiation strategy based on quality or innovation invest
more in training (Schuler and Jackson 1987; or Kydd and Oppenheim 1990) or
obtain better performance from the same.
In this aspect, some works have focussed on the effect on employees on an
individual level through job satisfaction and the attitude, commitment and
productivity of employees (Pfeffer and Baron 1988; Arthur 1992; Procopio and
Fairfeld-Sonn 1996; Murray and Raffaele 1997; Black and Lynch 2001; or Bayo
Moriones and Merino Díaz de Cerio 2002). In this research, companies that adopt
differentiation strategies obtain better performance from training, given that it is
strategies that require more involvement from personnel in order that their attitude
and initiative constitute an important source of competitive advantage.
Better performance on an individual level should translate into an increase in
profitability for the company, as we saw in work by Peck (1994). In the work of
Martell et al. (1996) we saw a contingent effect, despite our expectation of a
universalistic relationship with performance, since training had a positive effect on
business units that have a low-cost strategy and a negative effect on those with a
strategy based on differentiation.
On the basis of a similar justification, other authors use Miles and Snow competitive
strategies typology to highlight that extraction companies obtain better performance
from investment in training (Raghuram 1994). Nevertheless, nor do Delery and Doty
(1996) observe the contingent effect of training on ROA or ROE that is apparent in
other human resources policies taken into consideration.
Thus, we set out the hypotheses on the effect of training on income and its
sustainability, but this time as part of a contingent approach:
H.3. The positive relationship that exists between training and income is
moderated by the business strategy adopted by the firm.
144 Int Entrep Manag J (2009) 5:139–163
H.4. The positive relationship that exists between training and sustainability of
income generated over time is moderated by the business strategy adopted.
In order to explain the hypothesis put forward, the study has focussed on a single
sector so as to avoid problems of underlying heterogeneity when comparing the
effects of a human resources practice on productivity when activities are diverse
(Black and Lynch 2001).
The sector chosen was Spain’s private security services sector. This decision was
based on a number of factors. Firstly, this sector is in services, with its intensive use
of labour, where the client’s perception of quality basically depends on the person
providing the service, since there are not many alternatives for differentiation that do
not involve the service directly provided by the person providing said service.
Secondly, it is a sector with characteristics ideal for isolating the effect of training
from the effects of other human resources practices that can affect performance.
Finally, as a result of regulations governing the sector, training is security is
highly standardised in terms of the types of courses offered to security guards. This
enabled us to achieve a level of accuracy in the measurement of training unusual in
this type of study.
The study covered a five-year period, from 1996 to 2004.
Teniendo en cuenta los objetivos y el enfoque de nuestra investigación, hemos
pretendido obtener una muestra representativa que finalmente está compuesta
por 40 empresas, lo que supone el 44,94% de la población objeto de estudio. En
general no se trata de empresas de gran tamaño, que por otro lado son las más
representativas en la Unión Europea (Ribeiro 2005), pero tampoco deseabamos
tener empresas demasiado pequeñas, y exigimos un mínimo de 50 empleados,
con el fin de incrementar la probabilidad de que las organizaciones
pertenecientes a la muestra desarrollasen políticas de formación mínimamente
formalizadas e integradas en las estrategias empresariales.
Taking into account the objectives and approach of our research, we have
sought to obtain a representative sample made up of 40 companies, or 44.94% of
the population. In general, they are not very large enterprises, that, on the other
hand, they are the most representative in the European Union (Ribeiro 2005), but
we did not desire to work with too small, and we require a minimum of 50
employees, in order to increasing the probability that the organizations belonging
to the sample, developed formal (and integrated in the business strategies) politics
of training.
The indicators used (geographical location, size, age in years, number of
employees) appear to indicate that the sample used is representative of the
population the object of research, accounting for 88.74% of the sector’s turnover,
89.15% of its assets and 88.54% of its workforce.
For each variable, we have nine values per company in the sample (corresponding
to the years of the study). Thus, we will have 360 observations per variable.
Int Entrep Manag J (2009) 5:139–163 145
To obtain the required information and increase the validity of the research, we
used a triangulation process that combined information from additional sources, such
as public bodies, internal documents from the companies involved, institutional
records (FORCEM), sector associations and specialist publications and magazines.
Measures
Our study takes into account four types of variable: independent variables, moderator
variables (for contingent hypotheses), dependent variables and control variables.
Moderator variables are considered control variables for universalistic hypotheses.
Independent variable
We have one independent variable: the training of personnel. We should point out
that given the importance of this variable in our study, we have made a greater effort
in how this variable is measured.
Most works use a single criterion to measure training. For the most part, time
invested in training per employee is used (Walton 1985; Schuler and Jackson 1987;
Pfeffer and Baron 1988; Arthur 1992, 1994; Kochan and Osterman 1994; Peck
1994; Holzer 1995; Delery and Doty 1996; Martell et al. 1996; Huselid et al. 1997;
Ichniowski et al. 1997; Murray and Raffaele 1997; Aragón et al. 2003; McGahan
and Porter 2003; Goval and Welch 2004; or Kruse et al. 2004).
Another common indicator tries to measure the scope of training through the
percentage of employees that receive training (Pfeffer 1994; Raghuram 1994;
McDuffie 1995; Delaney and Huselid 1996; Bukowitz and Petrash 1997; Aragón et
al. 2003; Black and Lynch 2001; Bayo Moriones and Merino Díaz de Cerio 2002;
Ordiz Fuertes 2002; Kruse et al. 2004; or Tzafrir 2005).
Another criterion used is the type of courses offered (Schuler and Jackson 1987;
Raghuram 1994; Delery and Doty 1996; Koch and McGrath 1996; Huselid et al.
1997; Kidder and Rouiller 1997; McEvoy 1997; or Goval and Welch 2004).
Some distance behind in terms of training measures are indicators such as the cost
of training courses (Delaney and Huselid 1996), expenditure on training as a
percentage of salary costs (D’Arcimocles 1997) and the duration of training
programmes (Barrett and O’Connell 2001; or Aragón et al. 2003).
We believe that in order to measure investment in training, a multidimensional
measure should be used. Some works, such as that of Delaney and Huselid (1996),
create a training index from three items. Nevertheless, one or more of these is
subjective (the perception of the effectiveness of training); furthermore, the index is
obtained from the median of the values obtained in the items used.
Using the methodology proposed by Danvila del Valle and Sastre Castillo (2005),
for our study we have chosen three different dimensions to determine this variable:
different training courses given, the number of hours of attendance per year per
employee at training courses given and the annual investment in training by the
company per employee.
We believe that these dimensions represent the training courses given (variety of
training courses given), the frequency with which a company offers courses (the
146 Int Entrep Manag J (2009) 5:139–163
Indicators Component 1
number of hours of attendance per year per employee at training courses given) and the
cost for the company of this providing this training (annual investment per employee).
Using the data on the three indicators, we have conducted a factorial analysis to
make the variable operational when it comes to explaining the hypotheses. The
method use to conduct the factorial analysis is the principal components analysis
(PCA). The performance obtained (Table 1) are satisfactory, since a single factor
explains more than 70% of the variance in investment in training.
Dependent variables
Income This is the dependent variable of hypotheses one and three in our model.
Some works, such as that by Tzafrir (2005), use subjective variability indicators of
performance in different aspects.
Others use objective economic indicators, either measurement or accounting
indicators (Huselid 1995; Huselid and Becker 1996; or Huselid et al. 1997). Rogers
and Wright (1998) point out that universalistic yield measurements have focussed
almost exclusively on financial and accounting indices.
Nevertheless, Martín-Alcázar et al. (2005) proposal to combine a broader set of
indicators with different origins and relative weightings depending on the particular
characteristics of the organisation seems difficult to implement in a quantitative study.
In view of this, we have chosen to use an objective indicator based on accounting
information, in order to avoid errors in method, cited as common by Becker and
Gerhart (1996), that are made when human resources policy and performance are
valued in a subjective manner by the same person in the company’s management.
Of the accounting measures used, EBITDA is probably the most widely used in
works in this area (Balkin and Gómez-Mejía 1990; Terpstra and Rozell 1993;
Kochan and Osterman 1994; Huselid 1995; Wood and Albanese 1995; Delery and
Doty 1996; Huselid and Becker 1996; Rajagopalan 1996; White and Miles 1996;
Youndt et al. 1996; Bacidore et al. 1997; Bukowitz and Petrash 1997; Huselid,
Jackson and Schuler 1997; Lee and Miller 1999; Purcell 1999; Hunter 2000; Richard
and Johnson 2001 and Saá Pérez and García Falcón 2002).
Specifically, the measure used in our study was EBITDA/number of employees2;
therefore, it is expressed in terms of euros per employee.
2
EBITDA: Earnings Before Interests, Tax, Depreciation and Amortization.
Int Entrep Manag J (2009) 5:139–163 147
This measure is not an absolute figure, but rather a ratio that divides an
accounting measure into the size of the company during the same period, to prevent
the size of the company from being able to distort what we are trying to verify. The
size of a company can influence performance; this has been confirmed in a number
of studies. In this way, we can compare companies of different sizes.
Sustainability of income This is the dependent variable of hypotheses two and four in
our model. The measure that represents this variable is customer loyalty. Values of this
measure are expressed in terms of months.
Numerous empirical studies (Arthur 1994; Huselid and Becker 1996; Bukowitz and
Petrash 1997; Huselid et al. 1997 and Richard and Johnson 2001) have linked the
training of personnel and performance using social indicators, aiming to find out
whether a greater effort in terms of training results in a long-term competitive
advantage over time, enabling us to produce better performance. The main measures
are: customer loyalty to a company, the work environment, and staff turnover. More
specifically, some authors approximate the sustainability of income, measuring the
effect on customer (Delaney and Huselid 1996) and employee satisfaction and loyalty
(Huselid 1995; or Kochan and Osterman 1994).
Using this measure, we can determine whether the training given to personnel
retains and strengthens loyalty among customers, creating a sustainable competitive
advantage over time that it will result in greater revenues. In this way, a high level of
customer loyalty will reveal a company that meets the expectations of its clients. A
low level of customer loyalty, on the other hand, would indicate a company that
initially offers attractive services but which, with time, fails to meet its obligations or
is unable to address the new needs of its clients.
Moderator variables
Product differentiation strategy This type of strategy will use the possession of quality
certificates as a measure. Thus, we have a dichotomous variable (YES/NO) that will divide
companies into two groups, depending on whether or not they possess a quality certificate.
Many works have measured the quality of the service provided using the client’s
perception of the quality of service: questionnaires, percentage of complaints and claims,
surveys on the level of satisfaction, expectation compliance indices, etc. Nevertheless, in
recent years these criteria have been criticised on a number of occasions due to the high
degree of subjectivity inherent in these measures and the ease with which companies can
manipulate data obtained from the same.
In view of this, we have sought objective variables that are contrastable and not
subject to manipulation; certificates issued by external bodies and the introduction of
quality assurance systems meet these criteria. A number of authors have conducted
their research using these measures, among others: Terpstra and Rozell (1993);
Lloréns (1996); Kidder and Rouiller (1997); Kroll et al. (1999) and Bayo Moriones
and Merino Díaz de Cerio (2002).
148 Int Entrep Manag J (2009) 5:139–163
Cost leadership strategy This strategy will use the price of services provided as a
measure. The average hourly cost of security services, both armed and unarmed, has
been used as an indicator. It is a continuous variable, expressed in euros.
Prices have also been used in a number of empirical studies: Huselid and Becker
(1996); Koch and Mc Grath (1996); Lloréns (1996) and Bassi et al. (2002).
Nevertheless, the price level normally used is valued subjectively by the executives to
whom the survey is addressed, due to the impossibility of knowing the prices of
products of companies in the sector, especially in the case of multi-product companies.
It is our understanding that the average hourly price used for security services,
both armed and unarmed, is objective, free of measurement error and well-suited to
the purposes of our study.
Control variables
The last type of variable is the control variable. The objective of these variables is to
find out about different aspects that can influence the dependent variables. By
including them in the model, we aim to find out with greater precision the effect of
the independent variable on the dependent variables.
The control variables initially used in our empirical work are: whether or not the
company is part of a multinational group, the size and age of the company, its market
share and the year to which the data used relate. After conducting an exploratory
analysis of the variables, we decided not to use the following variables: whether or
not the company is part of a multinational group and market share.
In the case of the variable whether or not the company is part of a multinational group,
the sources of information used in our research only tell us whether a company has offices
overseas or only in Spain. Thus, we have a dichotomous variable (YES/NO) that will
divide companies into two groups, depending on whether or not they have offices
overseas. In other words, a multinational is considered to be any company with an office
outside Spain, regardless of the number of offices overseas or how long they have been in
operation. This method of measurement leads to companies with characteristics similar to
local companies but which have one or more offices overseas being classified as
multinationals. For this reason, this variable distorted performance and, although this
variable was originally used, it was later decided to remove it from the analysis.
The market share variable, meanwhile, was seen to be highly multicollinear to the
size variable. For this reason, it was decided to leave the size variable on its own and
remove this variable from our analysis.
Size We have used the number of employees as the unit of measurement for this
variable. According to the main private security sector associations, size is a determining
factor for the smallest companies in the sector, for whom it is very expensive to invest in
training for their employees. For this reason, we have used companies with more than 50
employees in our empirical study, since companies with fewer than 50 employees tend
to limit their training to that which they are obliged to provide under the law.
Age of the company This variable tells us the number of years each company in the
sector has been in operation, i.e. the age of each company in years. It should be
remembered that companies in our sample must have been operating in the sector for
Int Entrep Manag J (2009) 5:139–163 149
at least 10 years. On the other hand, private security companies were authorised by
law in Spain in 1974. This would suggest to us that all of the companies in our study
were created within a 20-year period.
Year of data used This variable selects the data used according to the year to which
they relate. We will use this control variable exclusively in hypotheses 1 and 3 of the
model. The reason we have removed this variable from hypotheses 2 and 4 is the
existence of a clear relationship between the loyalty variable (measured in months)
and the year of the data used. This is due to the fact that for each year that passes, all
companies that retain their clients automatically increase loyalty by 12 months.
Therefore, it does not make sense to include this variable in hypotheses 2 and 4.
In light of the objectives of our empirical study, we have conducted the calculation
of the main descriptive statistics of each variable in the model: average, median,
standard deviation, minimum and maximum; as well as the bivariate correlations of
variables in the model (Tables 2 and 3).
In view of the correlations found, a multicollinearity analysis was conducted
between variables observing the condition index (CI) and the variance inflation
factor (VIF). The VIF was low in all cases; nevertheless, we obtained a high CI,
which would indicate the presence of multicollinearity. The problem this could
create is that one or more of the essential variables of the model may not appear as
significant, even if they are, concealing its relationship due to the effect of the
existence of multicollinearity. However, this did not occur in our case, as in
Correlations
1. Training 1
2. Price 0.708** 1
3. Quality 0.695** 0.539** 1
4. Training×price 0.998** 0.701** 0.695** 1
5. Training×quality 0.868** 0.593** 0.665** 0.886** 1
6. Size 0.244** 0.136** 0.156** 0.257** 0.321** 1
7. Age 0.094 0.189** 0.282** 0.104* 0.156** −0.119* 1
8. Year 1997 0.000 −0.008 0.000 0.001 0.000 −0.013 −0.103 1
9. Year 1998 0.000 −0.024 0.000 0.002 0.000 −0.017 0.000 −0.250** 1
10. Year 1999 0.000 −0.029 0.000 0.000 0.000 0.009 0.103 −0.250** −0.250** 1
11. Year 2000 0.000 0.020 0.000 −0.001 0.000 0.038 0.206** −0.250** −0.250** −0.250** 1
12. Year 2001 0.000 0.018 0.004 −0.003 0.003 0.051 0.221** −0.250** −0.253** −0.258** −0.252** 1
13. Year 2002 0.000 0.025 0.008 −0.007 0.006 0.062 0.229** −0.250** −0.261** −0.263** −0.265** −0.272** 1
14. Year 2003 0.000 0.021 −0.002 −0.008 −0.002 0.069 0.234** −0.250** −0.267** −0.271** −0.265** −0.274** −0.279** 1
15. Year 2004 0.000 −0.009 0.003 −0.009 −0.004 0.079 0.240** −0.250** −0.271** −0.284** −0.285** −0.288** −0.292** −0.289** 1
16. EBITDA/N of 0.535** 0.351** 0.390** 0.537** 0.511** 0.158* 0.247** 0.191** 0.174* 0.112 0.005 0.008 0.115 0.129 0.008 1
employees
17. Customer loyalty 0.690** 0.476** 0.556** 0.683** 0.579** 0.089 0.188** 0.172 0.061 0.052 0.186** 0.375** 0.395** 0.397** 0.397** 0.399**
Source: Original
***p<0.01. N=360
Quality certificates are also an element that differentiates the service provided,
and have a positive effect on customer loyalty. Unlike price, which is insignificant in
our model although the coefficient is negative like was expected, this criterion is
important in ensuring customer loyalty.
Furthermore, size has a negative effect on the dependent variable. In small
companies, accessibility and face-to-face contact with the client is more fluid and the
relationship between client and supplier is essential in companies that provide
intangible services, as is the case of security; as a result, small companies are better
able to ensure the loyalty of their customers. es razonable pensar que las empresas
más asentadas en el sector han conseguido obtener una cartera de clientes
fidelizados. Likewise, age presents a significant effect, in this case positive, on the
Source: Original
***p<0.01; **p<0.05. N=360
Int Entrep Manag J (2009) 5:139–163 153
loyalty, is reasonable to think that the oldest firms of the sector have managed to
obtain greater loyalty of their clients.
H.3. The positive relationship that exists between training and income is curbed
by the business strategy adopted.
This third hypothesis seeks to explain whether the strategy adopted by companies
shapes the relationship between training and income. Thus, in this hypothesis we
contend that strategy is a moderator variable. In our empirical study, we will analyse
product differentiation strategy and cost leadership strategy. As with the first
hypothesis, we will use training as the independent variable and income as the
dependent variable.
Product differentiation strategy We will seek to explain whether companies that adopt
a quality differentiation strategy seek a competitive advantage that generates greater
income through a greater focus on training.
We begin the study by conducting an exploratory analysis. First, we divide the
companies in the sample into two groups, as a function of the dichotomous variable of
quality orientation; in other words, according to whether the company has or does not
have a quality certificate, to later determine via a variance analysis whether there are
significant differences with regards to efforts made in terms of training between the
companies in both groups, given that companies with certification invest more in training.
We then conducted a regression analysis (Table 6). The results of this analysis indicate
that the training variable and the interaction of training by product differentiation
strategy (training×quality) have a highly significant positive effect on variable income,
both in isolation (steps one and two) and as a whole (steps three and four).
By simultaneously considering efforts made in terms of training and the interaction
of training and quality, the model moderately increases its explanatory power.
Source: Original
***p<0.01. N=360
154 Int Entrep Manag J (2009) 5:139–163
On comparing the result obtained with the model of hypothesis one (universalistic
approach), we see that R2 is practically the same one. The moderating effect of the
quality orientation only explains a small proportion of the result obtained from the
universalistic effect of training, such that the companies most focussed on quality
obtain better performance from investment in training that are seen in larger
increases in profits than those from investment in training by non-certified
companies.
Furthermore, the age variable also has a positive influence on income, due to the
experience effect of more established companies. This relationship is similar to that
found in hypothesis one.
Cost leadership strategy As in the preceding strategy, the starting point was an
exploratory analysis in which companies in the sample were divided into two
groups, depending on whether they were above or below the value of the median. By
grouping the companies in this manner, we sought to determine whether there are
significant differences in investment in training between companies in one group and
those in the other. For this reason, we conducted a variance analysis in which
training was used as the dependent variable and the factor that divides the companies
into two groups as a function of price was used as the independent variable.
The results obtained show that the average values of the price variable differ
significantly between the two groups in question. It was also shown that companies
that have higher prices offer more training.
Later, we conducted a regression analysis (Table 7). The results indicated that
taken separately, the training variable (step 1) and the interaction of training with
cost leadership strategy (step 2) have a highly significant positive effect on the
dependent variable. Nevertheless, if we analyse the combined effect of both
variables (steps 3 and 4), we can see that the interaction of training with cost
Source: Original
***p<0.01. N=360
Int Entrep Manag J (2009) 5:139–163 155
Source: Original
***p<0.01; *p<0.1. N=360
156 Int Entrep Manag J (2009) 5:139–163
combined effect of both variables (steps 3 and 4), we can see that training continues
to have a positive influence on the dependent variable, while the interaction of
training with product differentiation strategy now has a negative effect, albeit less
significant.
Comparing the results obtained in hypothesis two, put forward by the
universalistic perspective, with the results obtained on this occasion, we can see
that there is no improvement in the explanatory power of the model, since R2 is
virtually identical. What is apparent is an interesting effect explained by the
universalistic effect of training on customer loyalty.
It is the case for all companies that customer loyalty depends to a large extent on
employee training, although not to the same degree across all companies.
For companies with quality certificates, training is not such an important factor in
ensuring customer royalty, since their customers also perceive and value other
aspects of the company’s approach to quality that encourage them to remain with
that supplier of services.
On the other hand, companies that are less focussed on quality have in training
their only strong point when it comes to ensuring customer loyalty; as a result, the
effect of training on customer loyalty is even greater.
Furthermore, the age variable also has a positive influence on the sustainability of
income, due to the experience effect of more established companies.
Source: Original
***p<0.01; **p<0.05; *p<0.1. N=360
Int Entrep Manag J (2009) 5:139–163 157
we saw in the results of the third hypothesis), but is earning the loyalty of its
customers. Nevertheless, the effect is modest.
Finally, age has a positive influence on the dependent variable due to the
experience effect.
Conclusions
The results obtained in the research have interesting implications both on a practical
level and for academic discussion on the universalistic or contingent nature of the
effect of training on performance.
In the management sphere, it confirms the idea that training, despite being a direct
cost for the company, generally has a positive impact on performance. Studies that
reinforce this finding should create an awareness among top executives that training
should not be considered a cost, but rather an investment that can produce a positive
return.
This finding is consistent with resource and capacity theory, which defends the
view that training is the main way of creating human capital: a valuable, scarce
resource that is hard to imitate (due to the existence of causal ambiguity) and hard to
replace. Furthermore, it tends to have positive effects on the extent of commitment
felt by the employee to the organisation, averting the risk of transferability, the only
factor that can qualify the positive effect of training on performance.
With regards to the hypotheses of our research, the first of these is put forward as part
of a universalistic approach. The contrasting of these hypotheses shows that companies
that make a greater effort in terms of training obtain greater economic returns.
If the increase in training is seen by the customer as a source of value-added, they
will be prepared to pay more for the service. Thus, if the cost of the increase in
training feeds through to prices, company income will grow.
In the classic “make” vs. “buy” debate, our results are in line with those of Hatch
and Dyer (2004), which confirm that the development of human capital through
training has an effect that cannot be compared with the acquisition of human capital
via the recruitment of personnel with experience, and that companies that adopt this
strategy lose significant ground in terms of yield.
Some research has failed to appreciate the positive effect of training on
performance. In the case of Úbeda García (2005), the author attributes this effect
to his way of measuring productivity, which is his indicator of performance. In
research by Delery and Doty (1996), we believe that the problem lies with the
excessively simplistic method used to measure training.
Nevertheless, results are conclusive when a greater effort is made to measure
efforts made in terms of training, taking different dimensions of training into
account, as in our work or in work done by Aragón et al. (2003).
Hypothesis two, also put forward as part of a universalistic approach, comple-
ments the contributions made by the previous hypothesis; the contrast of this
hypothesis shows that income obtained is not merely temporary but rather
sustainable over time, inasmuch as we have found significant differences in the
greater loyalty of customers towards companies that are more concerned with their
personnel and as a result make a greater effort in terms of training.
158 Int Entrep Manag J (2009) 5:139–163
This has been the focus of lesser study in the literature, which has primarily
focussed in measuring the impact of training on individual or performance
indicators. In this case, however, it has focussed on short-term yields. Only Delaney
and Huselid (1996) incorporate customer loyalty into his perceived business yield
indicator, although together with six other indicators.
Moreover, we have found that smaller companies have greater customer loyalty,
due to the fact that in smaller companies accessibility and direct contact with
customers is a much more fluid affair. We also found that the relationship between
customer and supplier is essential for companies that provide intangible services, as
in the case of security services companies.
Acceptance of these two first hypotheses supposes that training results in the
creation of human capital as a source of sustainable competitive advantage and
allows a company to generate higher income in the short- and long-term.
Having verified the universalistic effect of training on performance, we thought
we should strive for a deeper understanding of the nature of such a relationship,
taking into account possible moderating effects that qualify the interpretation of
results. This would involve a significant contribution from research to the current
body of knowledge on the subject.
In order to achieve this objective, we have analysed whether greater alignment or
adaptation between training policy and the strategy adopted by the company leads to
better performance. In other words, we aim to find out whether the influence of
training on performance increases or decreases depending on the type of strategy, or
even whether the application of a particular strategy could prove counter-productive.
Thus, hypotheses three and four are put forward as part of a contingent approach.
We conducted both variance analyses, which showed that companies that have a
quality certificate and which offer services at higher prices make a greater effort in
terms of training, a position already defended by Schuler and Jackson (1987) and by
Kydd and Oppenheim (1990). Research by Kidder and Rouiller (1997), on the other
hand, found that more training helps in the better introduction of quality systems.
Nevertheless, there is little research that demonstrates that this relationship
between strategy and effort in terms of training affects the variability of results.
Thus, when verifying hypothesis three, on comparing the result obtained with the
result obtained using the model of hypothesis one (universalistic approach), we do
not observe increment of the R2 upon considering the moderating effect of the
quality neither of the prices.
In the first of these cases, both training and the interaction of quality with training
have a significant effect in the final model, whether separately or taken together. The
contingent effect only serves to confirm that, even though training is positive in all
companies, the impact of training on performance is slightly greater in those
companies that have a quality certificate. This result is in line with expectations and
contradicts the findings of Martell et al. (1996), who found that the training had a
negative impact in business units that had adopted a strategy based on
differentiation.
The result obtained is also found to contradict Martell, Gupta and Carroll’s
findings when the moderating effect of prices is analysed. These authors recorded a
positive effect for training in companies with low costs. In our research, the
explanatory power of the model does not does not improve that of the universalistic
Int Entrep Manag J (2009) 5:139–163 159
have ruled out all small companies in the subsector, which often limit themselves to
providing only training required by law. Thus, our study does not reflect the effects
of training on these smaller companies.
Another limitation stems from the fact that our research has measured efforts
made in terms of training, and considered the diversity of courses offered, but
without differentiating between generic and specific training given. As a result, we
cannot verify whether, as found in research by Barrett and O’Connell (2001), generic
training is more productive than specific training.
Finally, we should consider the possibility of an inverse causal effect, i.e. that
companies that have made a greater effort in terms of training have made this effort
due to the fact that they have been allowed to by their results. This is a common
limitation is studies with a universalistic approach, since the application of these
practices is a direct outcome of good results. Measuring this possible effect could be
an interesting line of research in the future.
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