Training and organisational innovations in a local industrial system: empirical evidence from Emilia‐Romagna1

• Published date: 01 July 2007
• DOI: http://doi.org/10.1111/j.1748-8583.2007.00045.x
• Date: 01 July 2007
• Author: Massimiliano Mazzanti,Giovanni Guidetti

Training and organisational innovations in a

local industrial system: empirical evidence

from Emilia-Romagna1

Giovanni Guidetti, Department of Economics, University of Bologna

Massimiliano Mazzanti, Department of Economics, Institutions and

Territory, University of Ferrara

Human Resource Management Journal, Vol 17, no 3, 2007, pages 283–306

The article studies the driving forces of firm training using a survey-based dataset

of manufacturing firms in the Emilia-Romagna region, Northern Italy. The data are

derived from the responses to a structured questionnaire administered in 2002 to the

management of a representative sample of firms with more than 50 employees in the

highly industrialised province of Reggio Emilia. Firms’ training choices are analysed

using a theoretical/conceptual framework based on the notion of complementarity

among productive factors. Training is provided as long as it favours the

establishment of complementary relationships among the skills it develops and other

inputs. The main factors associated with training include structural characteristics,

HRM practices, workforce features, labour management and performance of the

firm. Training activities emerge as being positively associated with organisational

practices that affect the whole firm: workforce skill level, firm size, firm productivity

and labour flexibility. The role of HRM practices in driving training is brought into

question. These are key issues for the current debate on the development of local

systems in the European and Italian context. The high and joint relevance of

structural variables and labour demand-related factors shows that regional

industrial policies must support labour policies within an integrated policy effort

aimed at increasing potential firm productivity.

Contact: Giovanni Guidetti, Dipartimento di Scienze Economiche, Strada

Maggiore 45, 40125 Bologna, Italy. Email: guidetti@spbo.unibo.it

INTRODUCTION: THE HUMAN CAPITAL APPROACH

In his seminal contribution on training in firms, Becker (1975) draws the crucial

distinction between specific and general training and analyses its consequences.

Assuming perfect competition in both the labour and product markets and assuming

perfect information and perfect mobility of productive factors, Becker (1975) shows

that the funding of training for the acquisition of skills/knowledge that positively

affects employees’ productivity in the firm financing the training, as well as in other

comparable firms, does not occur; that is, employers do not fund general training.

Employers provide funding for specific training, that is, the acquisition of

knowledge/skills that will positively influence productivity in their firms. In this

type of training, the financial burden is shared by the employees, who benefit from

this training support; they share with the employer the financial burden of the direct

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 3, 2007 283

© 2007 The Authors.

Journal compilation © 2007 Blackwell Publishing Ltd., 9600 Garsington Road, Oxford, OX4

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training and opportunity costs. Thus, employers and employees are both regarded

as rational agents, maximising an objective function, within a set of constraints.

Training activities increase employees’ productivity, and the target for both

employees and employers is to maximise the remuneration arising from their

rent-seeking activities.

The economic literature has analysed the consequences of relaxing Becker’s (1975)

strict hypotheses related to perfect information and perfect competition in both the

labour and product markets. Stevens (1994, 1999) and Acemoglu and Pischke (1999)

show that the presence of turnover costs, imperfect information and imperfect

competition in either the labour or the product market favours the profitability to

employers of financing general training. Other contributions have pursued a slightly

different strategy (Acemoglu and Pischke, 1999; Lazear, 2003). These analyses regard

general training as being specific training or being complementary to specific

training. Both approaches see the financing of general training as being beneficial to

employers.

Economists have carried out much empirical analysis of the human capital

approach; a detailed survey of this literature is beyond the scope of this article.

However, we should mention that several articles deal with the propensity of

employers to provide training but focus on the distinction between formal and

informal training, neglecting its degree of specificity. This is because of poor

availability of appropriate data and the difficulties involved in measuring

empirically the degree of firm specificity of training programmes. In addition, almost

all the empirical literature on human capital considers the firm’s structural features,

such as size, sector, composition of the workforce, etc., as determinants of the

propensity to introduce training programmes. The relevance of these variables stems

from casual empiricism and is not explicitly rooted in any of the theoretical analyses

referred to in the previous discussion. In fact, the theoretical human capital literature

specifically addresses the effects of deviations from the standard assumptions of

perfect competition on the behaviour of maximising agents, ignoring the influence of

structural variables. The theoretical section of this article aims to fill this gap in the

literature by bridging the theoretical and empirical analyses.

The article is structured as follows. The first section develops a critical conceptual

framework where training and skills are conceived as critical elements in the analysis

of production processes. The second section presents the empirical evidence, based

on recent survey data, related to critical factors correlated with firm training

strategies and organisational practices in a local industrial system. The third section

concludes by examining the main implications of empirical results and providing

suggestions for regional policy.

HUMAN CAPITAL, TRAINING AND PRODUCTION: A CONCEPTUAL

FRAMEWORK

Complementarities in production

Milgrom and Roberts (1990, 1995) developed a formal model that refines

Edgeworth’s approach to complementarity among productive factors. In their

contributions, specific units of analysis are not defined; they refer either to

characteristic features of production (Milgrom and Roberts, 1995) or to ‘elements of

Training and organisational innovations in a local industrial system

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 3, 2007284

© 2007 The Authors.

Journal compilation © 2007 Blackwell Publishing Ltd.