The Impact of Middle Manager Training on Productivity: A Test on Italian Companies

• DOI: http://doi.org/10.1111/irel.12174
• Date: 01 April 2017
• Author: Roberto Gabriele,Sandro Trento,Elena Feltrinelli
• Published date: 01 April 2017

The Impact of Middle Manager Training on

Productivity: A Test on Italian Companies

*

ELENA FELTRINELLI, ROBERTO GABRIELE, and

SANDRO TRENTO

This paper presents panel evidence on the productivity effects of middle man-

agers’off-the-job formal training in Italy. It is based on a rich and reliable

panel dataset covering all sectors of the Italian economy over the period

2006–2011. We employ panel data techniques and self-selection models to

show that off-the-job formal training for middle management has a significant

nonlinear exogenous effect on total factor productivity. Moreover, results indi-

cate that middle managers’off-the-job formal training is more effective in lar-

ger firms and that different training methods have heterogeneous effects on

productivity.

Introduction

Much research has shown that human capital investments are essential

for firms to maintain high competitiveness levels, face continuing technolog-

ical changes efficiently, and reap the benefits of such changes. Recently,

this observation has been evidenced by the effort that institutions and

countries are undertaking to improve and promote human capital invest-

ments by giving priority to training activities. Training,

1

among various

human capital strategies, represents one major activity to improve skills and

abilities, which in turn increases one’s human capital accumulation (Becker

1964).

The literature on training outcomes is extensive. Both empirical and theoret-

ical studies can be generally classified into the following three branches on the

basis of the level of analysis: individuals, firms, and economies. Evidence for

*The authors’affiliations are, respectively, University of Trento, Trento, Italy. E-mail: elena.feltrinelli@

gmail.com; University of Trento, Trento, Italy. E-mail: roberto.gabriele@unitn.it; and University of Trento,

Trento, Italy. E-mail: sandro.trento@unitn.it.

1

Training is defined as “a planned initiative taken by the organization to impart the job knowledge and

skills and also to modify the attitudes and behaviors of employees in ways consistent with the goal of the

organization”(Noe 2010).

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individuals has a strong and coherent background.

2

Many studies confirm that

individuals profit from training because it can positively influence their perfor-

mance and because it produces better paid, more stable, and more satisfaction-

providing jobs (Bloom and Van Reenen 2007; Zwick 2005). In the past two

decades, research interest has shifted from the individual level to the organiza-

tional level, and the debate has increasingly opened to the study of firms’

potential returns on training investments. Although it is difficult to assess and

isolate the impact of training on firm performance, a number of empirical

results demonstrate that training has a significant positive effect (e.g., Bartel

1994, 2000; Dearden, Reed, and Van Reenen 2006) and suggest that it directly

enhances firm performance by raising the general level of skills. At the

national level, the evidence is less clear, but does suggest investment in human

capital has a positive effect on productivity growth, propensity to innovate,

and success in research and development (R&D)

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(Gospel 2005).

This study considers the literature concerned with the effects of training on

direct measures of firm productivity, and it focuses on training for middle

management in Italy, conducted as off-the-job formal training. The uniqueness

of the research lies in the distinctive feature of its target, which is the middle

manager. This choice is dictated by the importance accorded to this profes-

sional role in explaining productivity gaps among firms. Recent cross-sectional

studies argue and demonstrate that the way in which a firm is managed

strongly influences its performance (Bloom and Van Reenen 2007, 2010). Sev-

eral contributions suggest that improving management skills is effective in

helping firms outperform their competitors (Bailey et al. 1992). Furthermore,

the importance of management quality, as far as the persistence of relative pro-

ductivity is concerned, appears to be more determinant than worker quality.

Contemporary theory argues that organizational performance is heavily influ-

enced by what happens in the middle of the organization, rather than at the

top, and that middle managers are positioned as key strategic actors (Currie

and Procter 2005). Given adequate support, middle managers can enact sub-

stantial strategic changes in mature manufacturing firms (Jones 2005), regu-

larly attempt to influence strategy, and often provide the impetus for new

initiatives (Floyd and Wooldridge 1992).

2

Noe and Wilk (1993) identify three types of individual benefits that can be gained from training: per-

sonal benefits (through the improvement of job performance), career benefits (through the identification of

career objectives, achievement of career objectives, and creation of opportunities to pursue new career

paths), and job-related benefits (through the improvement of their workplace relations). Moreover, Geale

(1995) concluded that additional individual benefits from training include career advancement, mobility, job

security, pride, job satisfaction, and personal fulfilment.

3

See for example Jenkins (1995); Mankiw, Romer, and Weil (1990); Gemmell (1995); Krueger and

Lindhal (2000); Toner (2011); and Pianta (2005).

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