Does training facilitate SME's performance?

Abstract

This study explores relationships between small- and medium-sized enterprises (SMEs) foreign direct investment (FDI), FDI-related training programs and organizational performance. To determine if the implementation of training programs mediate the relationship between FDI and SME performance, and if the alignment between training needs and training implementation leads to higher SME performance, we collected large-scale company-level data (N = 816) from within Taiwan.

Research results suggest that FDI leads to higher SME performance. This relationship was partially mediated by the implementation of FDI-related training programs. Unexpectedly, the results also suggest that higher levels of training need attenuate the positive relationship between FDI-related training implementations and SME performance. This implies that the alignment between SME training needs and training implementation may be of a more complicated nature than was previously thought. Practical implications and suggestions for future research are also identified.

Keywords:

• FDI
• SME
• training implementation
• training need

Notes

1. To make the results of mediation test more robust, we performed a Sobel test to test the statistical significance of the mediated relationship (see Sobel 1982; O'Driscoll, Pierce and Coghlan 2006). The results of the Sobel test confirmed significant mediating effects of FDI on SME performance via FDI-related training implementation (Z = 1.08, p < .05).