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The Longitudinal Return on Investment on Training to Support Innovation in the Workplace

Summary (PDF 26 KB) Full Report (PDF 996 KB)

Dr. Jennifer Percival
Faculty of Business and Information Technology, University of Ontario Institute of Technology
and
Dr. Brian Cozzarin Department of Management Sciences, University of Waterloo

Goal

The purpose of this project is to determine the cumulative return on investment that diverse types of workplace training provide with respect to profitability, labour productivity, probability of innovation, and intensity of innovation in the workplace. The project goes on to investigate which forms of workplace training are complementary to one another in order to help organizations maximize their return on training to meet strategic goals such as increased innovation in the workplace.

Methodology

The analysis used control variables for the size of the organization, the industry in which it operates, and its initial level of innovative activity. By using the longitudinal dataset, the cumulative effect of training, as well as any time lag that may exist on the improvement of productivity or intensity of innovation will be included.

After using factor analysis to reduce the number of training variables, we provide a constrained regression model to determine complementary and substitute practices to increase the profitability or labour productivity in an organization. Both a 3 factor model (General training, Professional and Technology Training, and Apprenticeship) and a more refined 5 factor model (In-class general training, On-the-job general training, Technology training, Occupational Health and Safety training, and Apprenticeship) have been developed to support the analysis. 

Findings

Each industry displayed unique sets of training practice usage as well as regression results for the importance of these practices on the various performance measures. Based on the constrained regression results, we identify that, depending on the industry where a firm operates and the size of the firm, the combination of training practices which should be implemented simultaneously to support innovation differs widely. By implementing the proper fit of training practices, managers can significantly increase the return on training investments for their firm.

 

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