Purpose The purpose of this paper is to increase our understanding of why firms, specifically small to medium‐sized enterprises (SMEs), participate in a programme for competence development and why firms use different strategies for competence development. Design/methodology/approach A study of 17 SMEs that all received support from the European Social Fund, Objective 3 programme. The collection of data is based on semi‐structured interviews with management/owners, internal project leaders, employees and union representatives, feedback seminars with representatives from the studied enterprises, and on analysis of documents. Findings The findings demonstrate that all SMEs reported driving forces for competence development relating to both external organizational conditions and internal organizational conditions, to at least a certain degree. Furthermore, there appears to be a strong relationship between observed patterns of driving forces and the strategy for competence development used by the firm. Practical implications The SMEs that experience a relatively stronger driving force for competence development initiate problem‐solving efforts to design and implement more elaborated strategies for competence development. The SMEs that experience a lesser degree of driving force for competence development implement less elaborated strategies for competence development. Originality/value The paper finds that both external and internal organizational conditions are important in understanding why SMEs undergo competence development programme. Furthermore, the importance of external and internal organizational conditions is not only limited to why the companies participate in a programme for competence development, but also for how they participate, i.e. the strategies used for competence development.
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