Employee Training Decisions, Business Strategies and Human Resource Management Practices: A Study by Size of Business

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October 2006

Rova Rabemananjara and Chris Parsley, Small Business Branch, Industry Canada


The aim of this study is to investigate in detail the proposition often found in the literature that small businesses train their employees less than medium-sized and large businesses. The small business population is much more heterogeneous than that of medium-sized and large firms in terms of motivation because it includes not only growth firms but also foundation firms, which may be less interested in growth. To account for differences in training rates by firm size as a result of different motivations, the business populations are segmented according to different business strategies and different human resources practices of firms.

Using the 2001 Workplace and Employee Survey of Statistics Canada, this study shows that small businesses are less likely to provide training activities to their employees than medium-sized and large businesses. However, it is clear that once they commit to investing in employee training, small businesses do so as intensively as medium-sized and large firms. Moreover, the decision of whether or not to train their employees is clearly related to the business strategies employed by the firm. In particular, the incidence of training in small businesses that pursue an innovation and growth strategy is closer to the incidence of training in medium-sized and large firms than that of other small businesses. In addition, firms that have incentive schemes, use technology intensively or are innovative also exhibit a much higher incidence of training across all firm sizes.