Do organizations spend wisely on employees

Do organizations spend wisely on employees?
Effects of training and development investments on learning and innovation in organizations
SUN YOUNG SUNG1 AND JIN NAM CHOI2*
1
2

Summary

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

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

Introduction
Increasing endorsements on the strategic value of developing human capital in organizations encouraged scholars to investigate the relationship between training practices and various performance measures (Tharenou, Saks, &
Moore,

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