Relationships between training and firm performance for early industrializing economy : case of Tanzanian firms

Towo, Neema Robert (2020-03)

Thesis (PhD)--Stellenbosch University, 2020.


ENGLISH SUMMARY : Industrialization is among the recent key economic moves for most African countries to maximize productivity and create sustainable jobs. With respect to that, countries design policies to strategically invest in human resources through different practices, one being training. Normally, the average policy cycle has a stage of monitoring and evaluation. Since countries use their scarce finances to develop their human capita, it is necessary to evaluate the progress in the process for review purposes. This study is undertaken to observe training effect on firm performance considering the employees quality defined by education level, its effectiveness in relation to existing needs and employers’ perception and understanding the causes of effect variation across firms. The dearth of literature in developing economies, the mixed conclusions from the existing literature on the topic, and the existing need for process effectiveness models were among the motivation factors for this study. Using the case of Tanzanian firms, the World Bank’s Tanzania Enterprise Skills Survey dataset released in 2017, and the field data collected in the country’s strategic regions were used in the analyses. In Chapter 3, a systematic moderation model is used to analyse the interaction effect of human capital sources on firm performance measures. The results show regardless of the sector, size or performance level of the firm, for a positive magnitude to be realised from training, there should be inputs from other human capital sources such as education. In Chapter 4, a moderated parallel mediation model is employed to realise the effectiveness of the conducted training through matching the demanded and supplied skills. The results suggest that above a specific threshold point of training needs, the effectiveness of training on employees’ skills status is minimized. This implies that the supplied skills should match the existing needs among the key success factors of training effectiveness. In Chapter 5, qualitative analysis was done using the firms’ top managers and employees’ responses on the viability of training as a human capital development strategy for firm performance. From the thematic analysis findings, the managers agreed that training effects vary across firms due to: the nature and implementation of firms’ customized training policy, the need assessment process, the effectiveness success factors such as employees’ qualities, firms’ response to external shocks, and managers’ willingness to change. The study concludes that the relationship of training and firm performance depends on the process of effectiveness. Once effective training exists, one can continue arguing about the effect of training on the firm’s performance. This can be viewed as a two-stage training effect analysis towards firm performance as presented in the conceptualized model in Chapter 6, which is an output of all the findings in this study. It is recommended that the monitoring and evaluation of training initiatives should be done regularly, not only at the firm level, but also at a national level for adjusting the strategies employed where need be. However, the evaluation should consider process analysis for the decision-makers to understand which areas in particular requires extra attention.

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