To invest or not to invest: strategic decision making toward investing in training and development in Korean manufacturing firms

Abstract

This study draws on the literature on strategic choice theory and training and development (T&D) to explore the theoretical mechanisms that explain the strategic decisions of top management, thereby leading to the T&D investment of firms. The current theoretical framework was examined using cross-lagged data collected from 163 Korean manufacturing companies at three time points over a five-year period. Results confirmed that firm performance and environmental change exert significant effects on top management strategic orientation toward T&D, which in turn, lead to financial resource allocation to T&D. The analysis also demonstrated that the effect of top management strategic orientation toward T&D on actual financial investment in T&D is stronger when the current level of human capital is high but not when it is low. This study provides meaningful practical and theoretical insights into the firm-level strategic decisions on T&D investment in organizations.

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