Determinants of employee training impact on organizational legitimacy and organizational performance

The International Journal of Human Resource Management ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: http://www.tandfonline.com/loi/rijh20 Determinants of employee training: impact on organizational legitimacy and organizational performance Nuria N. Esteban-Lloret, Antonio Aragón-Sánchez & Antonio Carrasco- Hernández To cite this article: Nuria N. Esteban-Lloret, Antonio Aragón-Sánchez & Antonio Carrasco- Hernández (2016): Determinants of employee training: impact on organizational legitimacy and organizational performance, The International Journal of Human Resource Management, DOI: 10.1080/09585192.2016.1256337 To link to this article: http://dx.doi.org/10.1080/09585192.2016.1256337 Published online: 14 Nov 2016. Submit your article to this journal Article views: 347 View related articles View Crossmark data Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=rijh20 Download by: [Kasetsart University] Date: 13 September 2017, At: 07:24

The International Journal of Human Resource Management, 2016 http://dx.doi.org/10.1080/09585192.2016.1256337 Determinants of employee training: impact on organizational legitimacy and organizational performance Nuria N. Esteban-Lloret, Antonio Aragón-Sánchez and Antonio Carrasco-Hernández Management and Finance Department, University of Murcia, Murcia, Spain Downloaded by [Kasetsart University] at 07:24 13 September 2017 ABSTRACT KEYWORDS Employee training; Employee training is one of the most studied human resource institutional pressures; practices, as it is considered critical for organizational success. competitive pressures; However, employee training and its impact on organizational organizational legitimacy; performance have usually been studied from an economic- organizational performance rational perspective, in terms of the economic and competitive advantages that companies can achieve by training employees. This study goes beyond the economic-rational approach and draws on institutional theory. We introduce contextual factors in the analysis of the determinants of employee training to complement the variables of competitive advantage and explain the relationship between employee training and organizational outcomes. Data were collected from 374 organizations using a questionnaire administered in Spain. The findings support the idea that both economic-rational and institutional determinants influence employee training. There are also two different kinds of outcome from training employees: organizational legitimacy improves at the same time as organizational performance. 1. Introduction The diverse environmental changes resulting from globalization mean that now- adays companies face increasing competition. Current circumstances require a dynamic approach, and this implies that a firm’s decisions on developing human resources play an important role in its adaptation to its environment. In this sense, employee training has become a critical issue in the success of organizations, contributing to sustainable competitive advantage (Koch & McGrath, 1996) and greater income (Hussi, 2004), quite apart from its role in helping the workforce to adapt to the constant changes around them (Bryan, 2006). Although the relationship between employee training and organiza- tional performance has been looked at closely in many empirical studies CONTACT  Nuria N. Esteban-Lloret  [email protected] © 2016 Informa UK Limited, trading as Taylor & Francis Group

Downloaded by [Kasetsart University] at 07:24 13 September 2017 2   N. N. ESTEBAN-LLORET ET AL. (Apospori, Nikandrou, Brewster, & Papalexandris, 2008; Bartel, 1994; Batt, 2002; Nikandrou, Apospori, Panayotopoulo, Stavrou, & Papalexandris, 2008; Ordíz & Fernández, 2005; Paul & Anantharaman, 2003; Tharenou, Saks, & Moore, 2007; Úbeda, 2005; Vlachos, 2008), it remains a controversial issue (Tharenou et al., 2007; Wright, Gardner, Moynihan, & Allen, 2005; Wright & Geroy, 2001). On the one hand, most research on employee training focuses on the effect side of the analysis, exploring the main rational-economic outcomes that improve organizational efficiency (Boselie, Dietz, & Boon, 2005; Tharenou et al., 2007), while little attention has been paid to non-economic outcomes. On the other hand, there is a lack of attention to the rationales for human resource practices (Kaufman, 2012) and employee training. In line with the dominant economic- rational approach, the assumption that underpins most empirical studies is that of employee training is efficiency-driven, in response to economic and competitive market pressures (Boselie et al., 2005). However, it might be necessary to consider the non-rational side of organizational behavior to find the reasons for companies adopting human resource practices (Subramony, 2006), and employee training in particular. In this line of reasoning, some authors called for alternative theoretical frameworks in the study of human resource practices and performance relation- ship (Boselie et al., 2005; Boxall & Purcell, 2003; Priem & Butler, 2001) in order to overcome the weakness of the theoretical framing of this relationship. To this end, contextual factors are needed to understand why companies adopt HRM practices and their relationship with organizational outcomes (Boselie, 2009; Gooderham, Nordhaug, & Ringdal, 1999; Paauwe, 2004 Stavrou & Brewster, 2005). Institutional theory provides a useful framework to fill this gap in the literature on employee training, and to include non-economic outcomes and the rationale for employee training. Institutional theory explores different contexts and motiva- tions for organizational behavior that go beyond the economic, including external social pressures. Organizations are embedded in institutional environments that influence the practices they adopt (DiMaggio & Powell, 1983) because they wish to conform to or fit in with their environment in order to obtain legitimacy (Scott, 2001) and, hence, the resources they need for their survival (DiMaggio & Powell, 1983; Tolbert & Zucker, 1983). This paper addresses the reasons why firms train their employees from two different points of view: the economic-rational and the institutional. It evaluates the complementarities between efficiency and legitimacy. The paper is structured as follows. In the next section, we review the econom- ic-rational approach used in the study of employee training. This is followed by an analysis of the principles of institutional theory related to employee training in order to propose the hypotheses. Next, we clarify methodology, analyze, and discuss results. Finally, the paper concludes by summarizing the main findings of the study and suggests possible future research.

Downloaded by [Kasetsart University] at 07:24 13 September 2017 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT   3 2.  Employee training rationales and related outcomes Although a variety of theoretical frameworks can be found in the literature on employee training (Tharenou et al., 2007), there are two dominant theories – human capital and the resource-based view (Boselie et al., 2005). These approaches emphasize the economic-rational factors in the analysis, which implies a vision of training in terms of increasing either human capital or capabilities in order to improve organizational performance (Barney, 1991; Boxall, 1996; Collins & Clark, 2003; Wright, McMahan, & McWilliams, 1994). Nevertheless, some authors consider the theoretical arguments underlying the training–performance relationship in empirical literature very simplis- tic (Fleetwood & Hesketh, 2008) and suggest considering alternative theoreti- cal frameworks. Priem and Butler (2001) also account for the weakness of the approaches used and point to broadening the theoretical arguments to understand organizational behavior on firms’ decisions and performance effects. Recent reviews of the literature have addressed this relationship by reflecting on other possible drivers in addition to those that are economic-rational (Boselie et al., 2005; Tharenou et al., 2007). Moreover, Gooderham and Nordhaug (2010:34) argue that human resource practices cannot be divorced from their institutional context, and that the influence of legislation, the role of the state and trade unions, and so on, should be taken into account. Stavrou and Brewster (2005) state that other cultural and institutional aspects need to be included in the analysis, particularly in uncertain environments where organizations are subject to external pressures from government and customer pressure to accept accreditation standards (Collins & Holton, 2004). Jayawarna, Macpherson, and Wilson (2007) draw attention to the lack of studies investigating why companies invest in training, and Kathri (2000) points to the role of mimetic behavior in incorporating training into companies, noting that some government agencies encourage companies to incorporate practices that are used in other countries. Subramony (2006) explores both rational and non-rational forces in the decision to adopt HR practices, while Mayo, Pastor, Gómez-Mejía, and Cruz (2009) attempt to shed light on the motives for adopting HR practices. Following this line of argument, and in particular the principles of context-based human resource theory (Paauwe, 2004), we extend the economic-rational argu- ments used so far and incorporate contextual reasons like those institutional theory proposes. This theory has been considered useful and a complementary alternative framework for understanding organizational decisions (Boselie, 2009; Oliver, 1997). It focuses on the influence of social context through institutional mechanisms. This approach is particularly appropriate for the study of human resources (Boon, Paauwe, Boselie, & Den Hartog, 2009; Gooderham et al., 1999; Wright & McMahan, 1992), and may help to explain the determinants and out- comes of HR practices (Yang & Konrad, 2011) such as training.

Downloaded by [Kasetsart University] at 07:24 13 September 2017 4   N. N. ESTEBAN-LLORET ET AL. Institutional arguments are used to explain imitation behavior and diffusion processes of organizational practices (Hargadon & Douglas, 2001; Pasamar & Valle, 2015) and human resource management (Bjorkman, Fey & Park, 2007; Boon et al., 2009; Farndale & Paauwe, 2007), supporting the complementariness between economic-rational theories and the contextual-based approaches. Thus, Oliver (1997) suggests that sustainable competitive advantage is not simply a function of market factors but also depends on social context. Deephouse (1999) follows this line of reasoning to propose a balanced approach between conformity to social expectations and differentiating market forces in establishing a corporate strategic position to gain sustainable competitive advantage. Other scholars have shown that institutional and rational forces can supplement each other rather than being mutually exclusive (Berrone, Gelabert, & Fosfuri, 2009; Budhwar & Debrah, 2001; Rothemberg, 2007; Yang & Konrad, 2011). Institutional theory widens the training–performance relationship analysis through the incorporation of contextual elements which could explain alterna- tive reasons for organizational behavior. Such motivations arise from the external social context, and go beyond the purely economic ones. Institutional theory argues that organizations reflect socially constructed reality in their structures (Meyer & Rowan, 1977) and that context, in turn, barely influences the behavior of organizations operating within it, leading to isomorphic behavior (DiMaggio & Powell, 1983) (Figure 1). Figure 1 shows the new elements that are to be considered into the analysis of the behavior of organizations from an institutional point of view, such as external Figure 1. Institutional approach determinants. Source: Own elaboration based on Scott (2001) and Paauwe and Boselie (2003).

Downloaded by [Kasetsart University] at 07:24 13 September 2017 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT   5 actors, beliefs, cultural values and symbols. These new elements mean that a mixed range of organizational objectives, efficiency, and legitimacy can be considered and reveal that organizational behavior is largely determined by the social context and the pressures that arise from it. Established values and standards in the environment determine firms’ behavior because they seek approval in the environment in which they operate in order to be legitimized. In this sense, legitimacy is considered as consistency between socially accepted values and organizational values (Scott, 2001). Thus, the institutional approach builds upon the legitimacy concept which reflects the organizational search to adapt to social expectations because acceptance supports the success and survival of organizations (Meyer & Rowan, 1977). 2.1.  Institutional and competitive rationales for employee training Training employees have traditionally been considered to be motivated by the need to secure the best economic results. However, some authors indicate that there are other motives that go beyond the search for efficiency, and in particular that there may be an equally important search for legitimacy (Subramony, 2006). According to Scott (2001), adoption of human resources practices, such as training, can be a response to regulatory, normative, and cognitive pressures that arise from the institutions. Such institutional influences can affect the corporate decision to train employees. However, the influence of institutional pressures does not nullify the influence of competitive pressures derived from an economic- rational approach; rather, they can complement each other (Bansal & Roth, 2002; Deephouse, 1999; Yang & Konrad, 2011). 2.1.1.  Coercive pressures affecting employee training Firms’ behavior can be coerced through norms established by governments or authorities particularly when they are linked to punishment systems (Scott, 2001). Thus, any kind of law or official regulation followed by supervising systems to guarantee compliance and sanctions in case of non-compliance influences the organizational behavior of firms that pursue compliance as a means to obtain legitimacy. In this sense, human resource practices often originate in social expectations or legal requirements (Budhwar & Sparrow, 2002), such as corporate training in some countries (Farndale & Paauwe, 2007), or in the influence of trade unions and works councils (Paauwe, 2004). Although in Spain there is no law that forces companies to train employees nor are there sanctions for a failure to adopt training programs, as occurs in France, the main institutional actors (the state, autonomous communities, and social agents (employers and unions)) exert a kind a coercive pressures on corporate employee training decisions.

Downloaded by [Kasetsart University] at 07:24 13 September 2017 6   N. N. ESTEBAN-LLORET ET AL. For example, some national institutions, such as the Fundacion Tripartita, were founded by the government, employer associations, and unions to promote train- ing among companies. They recommend and provide support to companies in order to train their employees but they do not oblige companies. However, this organism exerts a coercive pressure on companies due to the continuous advices to train employees and the deployment of funding systems to train employees. Regarding the way employee training is funded in Spain, it should also be noted that all companies contribute to the funding system. On the one hand, through the established percentage of salaries (obligatory contribution of .7%, described as an investment to reduce accidents at work and occupational diseases), and on the other, through the contribution paid to the social security system every year which delimits the available amount of subsidized training. Both elements encourage companies towards adopting training programs, as they are compelled to spend some of their resources on this issue. Moreover, unions influence the employee training offered by companies (Booth, Francesconi, & Zoege, 2003; Green, Machin, & Wilkinson, 1999) through their role in the collective bargaining agreements, including articles related to the need to train all type of employees as a fundamental element of interest to the employ- ees and organization. This kind of bilateral agreement between the unions and the company fosters the adoption and use of organizational practices (Boselie, Paauwe, & Richardson, 2003) such as employee training systems (Comacchio & Scapolan, 2004). According to these arguments we propose Hypothesis 1A: H1A: Coercive pressures positively influence employee training effort. 2.1.2.  Normative pressures affecting employee training A second mechanism that conditions organizational behavior is derived from the agreement on the socially preferred behaviors which build regulatory systems that describe how things should be done (Scott, 2001). Regulatory system in the institutional environment comes about mainly as a result of professionalization (Greenwood, Suddaby, & Hinings, 2002), which means that consultants, profes- sional associations, and accreditations spread acceptable values, norms and beliefs in organizations. Professional associations of human resource managers contribute to spread values, establish common standards for human resource practices (Farndale & Brewster, 2005), and promote the diffusion of those practices, such as employee training. Björkman, Fey, and Park (2007) point to the importance of norms and rules that stem from human resource managers associations, like the American Society for Training and Development, which exert a kind of normative pressure on firms to train their employees. This normative influence favors the establish- ment of conventional behavior regarding the need and importance of employee training. Sharing the standards and conventions between decision-makers in

Downloaded by [Kasetsart University] at 07:24 13 September 2017 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT   7 employee training supports the implementation of employee training (Stirpe, Trullén, & Bonache, 2013). Besides the formal influence of professional associations, professional networks through which managers are linked exert an informal normative influence and are becoming ever more important (Brandes, Hadani, & Goranova, 2006; Guler, Guillén, & Macpherson, 2002). Companies and managers involved in social net- works share beliefs and values about the benefits and proper organizational behav- iors such as employee training that promote their adoption (DiMaggio & Powell, 1991). In this line, SMEs that are members of multiple business advisory networks are more likely to train their employees than are non-members of such networks (Bacon & Hoque, 2005). It was also found that networks of managers influence the adoption of work–life balance practices (Pasamar & Valle, 2015) and HPWS (Murphy & Southey, 2003). This means that participating in professional networks, being a member of trade associations, and keeping in touch with international consultants (Som, 2007) will increase the likelihood of training program adoption. Based on the above, we propose Hypothesis 1B: H1B: Normative pressures positively influence employee training. 2.1.3.  Mimetic pressures affecting employee training Mimetic pressures are related to the imitation of certain behaviors that are com- monly accepted among companies as valid and are given value because they are essential to reference frameworks (Scott, 2001). Sometimes companies’ response to environment pressures is to mimic leader companies or those that are considered pioneers and successful in the application of certain practices or strategies. Moreover, this imitating behavior has proven to be a determining factor in the behavior of other businesses (Delmas & Toffel, 2004; Teo, Wei, & Benbasat, 2003; Tolbert & Zucker, 1983) and also in the adoption of human resource practices (Kostova & Roth, 2002; Osterman, 1994; Pasamar & Valle, 2015). Since such imitative behavior is more likely in situations of uncertainty, deci- sions about training are likely to mimic those of successful companies that have a training plan and are followed as role models (Aerts, Cormier, & Magnan, 2006; Combs, Michael, & Castrogiovanni, 2009). Given the uncertainties about the con- tribution of employee training to performance (Tharenou et al., 2007), firms tend to imitate successful firms by adopting the same practices. Although imitation might not be clearly justified on the grounds of efficiency, a firm may be influenced by mimetic pressures to reduce perceived risk and to pursue status-conferring legitimacy (Liu, Ke, Wei, Gu, & Chen, 2010). Moreover, when most of the organ- izations in a shared environment give importance to specific actions, this would explain and determine adoption (Brandes et al., 2006; Fennell & Alexander, 1987; Honig & Karlsson, 2004; Magán & Céspedes, 2007). Based on these arguments we propose Hypothesis 1C: H1C: Mimetic pressures positively influence employee training.

Downloaded by [Kasetsart University] at 07:24 13 September 2017 8   N. N. ESTEBAN-LLORET ET AL. 2.1.4.  Competitive pressures affecting employee training Besides the influence of any or all of these forms of institutional pressure, the adoption of employee training could be related to other factors that determine the decision. Complementarity with the rational-economic approach, which is a fea- ture of institutional theory (Boselie, 2009; Clemens & Douglas, 2005; Deephouse, 1999; Oliver, 1997; Paauwe, 2004), considers that there may be two complementary mechanisms (Bansal & Roth, 2002). One that drives employee training decisions based on institutional pressures to obtain social approval and in turn, greater legit- imacy, and a complementary mechanism related to the influence of competitive pressures, so that economic-rational factors would drive firms’ decisions to train their employees to obtain an improvement in economic performance. Based on the above arguments, we propose that economic-rational elements may influence the decision to train employees. So Hypothesis 1D can be expressed as: H1D: Competitive pressures positively influence positively employee training. 2.2.  Employee training and organizational outcomes The institutional conception of organizations that are embedded in a broader context in which they seek the approval of the socially constructed environment in which they operate in pursuit of legitimacy (DiMaggio & Powell, 1991; Paauwe & Boselie, 2007) is the driving force of this framework. Thus, legitimacy is considered as consistency between organizational values and socially accepted values (Scott, 2001) and becomes the main concept of institutional theory, just like efficiency in the economic-rational approach, as it relates to the way in which organizations adapt to social expectations to gain acceptance. This social support guarantees the success and survival of organizations (Meyer & Rowan, 1977). According to Suchman’s concept of legitimacy, there are three different sources of legitimation that stem from three different dynamics in the process of social approval. Pragmatic legitimacy relates to the instrumental value of the organiza- tion for stakeholders to the extent that it serves their self-interest. Moral legitimacy indicates that the organization has acceptable and desirable norms and values. Finally, companies achieve cognitive legitimacy when their objectives and activ- ities are in line with social values. Regardless of the source of legitimation, legitimacy lies in the perceptions of dif- ferent actors and stakeholders (Baum & Oliver, 1991). These actors can be grouped as external or internal, according to their origin, so companies can simplify the sources of approval to which they appeal (Kostova, 1999; Ruef & Scott, 1998). Much attention has been paid to explaining and theorizing external legitimacy, the legitimacy granted to organizations in their environments by stakeholders such as customers, suppliers, and government regulators (Meyer & Rowan, 1977; Meyer & Scott, 1983; DiMaggio & Powell, 1991). However, this is not the only type

THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT   9 Downloaded by [Kasetsart University] at 07:24 13 September 2017 of legitimacy that a company needs to grow and survive. Securing the support of internal stakeholders is of fundamental importance for organizational stability and effectiveness (Brown & Toyoki, 2013; Drori & Honig, 2013). With this in mind, two different set of actors can be distinguished in the legit- imation of companies that train their employees, external (government, unions, competitors, associations, and public opinion), and internal (managers, work- ers, and shareholders). When all or some of these actors give support to the organizations, it reinforces relationships between them (Certo & Hodge, 2007; Thomas, 2005). This means that training employees based on legitimating reasons in response to social pressures can be an economically effective decision due to the strengthening of the relationship with main actors. In light of the above, the institutional and rational economic approaches can be considered as complementary because obtaining greater legitimacy would lead to improvements in economic terms. We then propose the following hypotheses: HHH222ABC::: Employee training effort positively influences external legitimacy. Employee training effort positively influences internal legitimacy. Employee training effort positively influences organizational performance. Moreover, organizational improvements are also considered from the insti- tutional point of view because those organizations that are legitimate in their environment guarantee their survival (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Meyer & Scott, 1983). In line with this institutional premise, although com- panies take decisions on employee training in response to the compliance with institutional actors with the aim of obtaining legitimacy, through the attaining of social approval they strengthen relationships with these actors, which often leads to better economic results (Harris, 2007), so ensuring its survival (Baum & Oliver, 1991). This consideration of legitimacy as a means rather than an end (Dacin, Oliver, & Roy, 2007) supports the idea that the more legitimacy, the stronger the rela- tionships with institutional actors (Certo & Hodge, 2007; Thomas, 2005) and the more organizational performance will be. This leads us to propose the third Hypothesis: HH33AB:: External legitimacy positively influences organizational performance. Internal legitimacy positively influences organizational performance. All the hypotheses are shown in Figure 2. 3. Method A questionnaire was mailed to the training managers of a sample of Spanish companies with more than 150 employees in all sectors of industry and services. Companies of this size were chosen because it was thought that they would have more formal methods for their human resource practices, which is to say that

Downloaded by [Kasetsart University] at 07:24 13 September 2017 10   N. N. ESTEBAN-LLORET ET AL. the processes would be more regulated, systematic, and documented (Nguyen & Bryant, 2004). In the end, 374 valid, completed questionnaires were collected. 48.5% of com- panies in the sample have between 150 and 250 employees, and 51.5% more than 250 employees. Non-response bias was assessed by comparisons of the values of all variables between early and late respondents. No significant differences were detected in any of the comparisons. Variables were measured as follows. Multidimensional scales based on previous proposals were used to assess insti- tutional pressures (Appendix 1). Coercive pressures were derived from DiMaggio and Powell (1983), Boselie et al. (2003), Harcourt, Lam, and Harcourt (2005) and Som (2007). Normative pressures are derived from DiMaggio and Powell (1991) and Campbell (2006) and finally, mimetic pressures are based on Kostova and Roth (2002), Teo et al. (2003) and Brandes et al. (2006). Competitive pressures were measured by a subjective indicator following Paauwe (2004) proposal and using the competitive factors most frequently asso- ciated with training in the literature, such as qualifications of human resources, productivity, and engagement (Appendix 1). Training effort is measured by the percentage of trained employees in the course of a year. This indicator has been widely used to assess the incidence (intensity) of employee training (Boselie et al., 2005; Tharenou et al., 2007). Two dimensions of legitimacy were measured using multi-item scales that reflect the perception of the company on the relationships with external and internal actors, who are seen as the source of legitimacy (Appendix 1). Scales are adapted from the proposals made by Ruef and Scott (1998), Kostova and Zaheer (1999) and Dacin et al. (2007), as well as the main empirical works on organiza- tional legitimacy (Certo & Hodge, 2007; Thomas, 2005). Figure 2. Hypothesis summary. Source: Own elaboration.

Downloaded by [Kasetsart University] at 07:24 13 September 2017 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT   11 A global indicator of performance (profitability of sales, overall profitability, and financial performance) was used to measure firm performance. It was measured as the average value for each year from 2007 to 2011 (Appendix 1). The analysis also takes into account other variables that are identified as influ- encing employee training in the literature. These control variables included in this research are Age of the firm; Size, measured as the number of employees; and Sector effect, estimated by a dummy variable that takes the value 1 if the company is in the service sector and 0 otherwise. 4. Results A two-step model procedure was followed for the evaluation of the measurement model as recommended by Anderson and Gerbing (1988). First, we estimate the measurement model using confirmatory factor analysis (CFA). Then we test the goodness of fit of the measurement scales (Anderson & Gerbing, 1988; Fornell & Larcker, 1981) (Appendix 1). CFA adjustment measures were estimated using EQS v.6.3. There is a good and robust fit for the measurement model (Satorra–Bentler χ2 (224) = 345.50 (p = .001), NFI = .92, NNFI = .96, CFI = .97, IFI = .97, RMSEA = .04). The NFI, NNFI, CFI, and IFI statistics are higher than .9 and RMSEA is less than .08, as recommended in the literature. All individual indicators for each item have signif- icant values of the standardized coefficient at a confidence level of 95% (p < .05). Thus, the model is suitable for measuring the constructs specified. The model was also assessed for construct reliability. All constructs have a com- posite reliability over the cutoff of .70, as suggested by Straub (1989). To assess the discriminant validity (Barclay, Higgins, & Thompson, 1995), it is recommended to use the average variance extracted (AVE) (Fornell & Larcker, 1981). To this end, we compare the square root of AVE (diagonal of Table 1) with the correla- tions between constructs (off-diagonal elements of Table 1). As can be seen, the square root of the AVE for all constructs is greater than the correlation between them, suggesting that each construct relates more strongly with its own measure than with others. Table 1. Descriptive analysis and discriminant validity of the measurement scales.    Mean Standard 1 2 3 4 5 6 7 deviation 1 Coercive pressure 2.73 .90             2 Normative pressure 2.68 1.21 .41*** .82           3 Mimetic pressure 2.97 1.08 .28*** .46*** .84         4 Competitive pressure 3.82 1.06 .21*** .31*** .48*** .85       5 External legitimacy 2.63 .88 .43*** .45*** .52*** .33*** .82     6 Internal legitimacy 3.48 .94 .27*** .36*** .54*** .65*** .49*** .82   7 Organizational 2.12 .83 .19*** .27*** .37*** .47*** .30*** .51*** .89 5.57 performance *p < .1; **p < .05; ***p < .01.

12   N. N. ESTEBAN-LLORET ET AL. The means and standard deviations and correlations between variables of the model (Figure 2) are presented in Table 2. Significant positive correlations between the main variables are observed. There is a good fit of structural equation model, which shows fit parameters accord- ing to the values recommended in the literature (Satorra–Bentler χ2 (285) = 491.71 (p = .000), NFI = .89, NNFI = .94, CFI = .95, IFI = .95, RMSEA = .05) (Appendix 1). Table 2. Means, standard deviations, and correlations. Standard 1 23 2 3 4 5 6 7 8 Mean deviation 1 Industry .50 .50 1 2 Age 3.22 .78 −.20*** 1 3 Size 5.80 .83 .08 1 Downloaded by [Kasetsart University] at 07:24 13 September 2017 4 % Trained 56.39 31.57 .17*** .06 −.03 1 employees 1.21 .06 1.08 5 Coercive 2.73 1.06 −.01 −.07 .03 .15*** 1 pressure .88 6 Normative 2.68 .94 −.08 .01 −.02 .27*** .41*** 1 pressure .83 7 Mimetic 2.97 5.57 .15*** .02 .02 .27*** .28*** .46*** 1 pressure 8 Competitive 3.82 .07 .07 .03 .33*** .21*** .31*** .48*** 1 pressure 9 External 2.63 .08 −.05 .09 .27*** .43*** .45*** .52*** .33*** 1 legitimacy 10 Internal 3.48 .17*** .02 .01 .29*** .27*** .36*** .54*** .65*** .49*** 1 legitimacy 11 Organizational 2.12 .08 .03 −.03 .39*** .19*** .27*** .37*** .47*** .30*** .51*** performance *p < .1; **p < .05; ***p < .01. Table 3. Direct and indirect effects in the structural model. Dependent variables Inde- % Trained External legitimacy Internal legitimacy Organizational pendent employees performance variables Direct effects Direct Indirect Direct Indirect Direct Indirect effects effects effects effects effects effects Coercive .14*** (2.72) − .10** (2.42) − .12** (2.51) − .09** (2.47) pressures .17*** (2.83) .32*** (4.30) − .12** (2.50) − .14** (2.51) − .10** (2.46) Normative .50*** (6.41) pressures − .22*** (3.43) − .27*** (3.43) − .20*** (3.31) − Mimetic − − .35*** (4.17) − .43*** (4.15) − .31*** (4.15) pressures − .13 (1.01) .70*** (6.26) − .85*** (8.49) − .58*** (2.68) − Competitive −.12 (1.04) pressures .12 (.93) − − − − −.14 (1.55) − % Trained − − − − .16 (1.03) − employees .09 (1.61) .09 (1.02) −.09 (.80) .11 (1.02) −.07 (.74) .09 (1.10) External .17* (1.68) −.08 (1.04) .07 (.62) .10 (1.04) .03 (.38) −.09 (1.18) legitimacy .07 (.73) .03 (.23) .10 (.93) .04 (.44) .09 (1.17) .08 (.93) Internal legitimacy Age Size Industry Notes: Goodness of fit of robust structural model: Satorra−Bentler χ2 (285) = 491.71 (p = .000), NFI = .89, NNFI = .94, CFI = .95, IFI = .93, RMSEA = .05. t values in parentheses. *p < .1; **p < .05; ***p < .01.

Downloaded by [Kasetsart University] at 07:24 13 September 2017 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT   13 Estimated structural parameters show a positive and significant influence of the institutional pressures on the percentage of trained employees (Table 3). Coercive pressures have a slightly positive effect on employee training (λ = .14, p < .01), which leads us to accept Hypothesis 1A, in the sense that there is a kind of coercion deriving from institutions such as Fundacion tripartita or unions, which is in line with previous work (Farndale & Paauwe, 2007). We can also accept Hypothesis 1B, since a positive effect is found of normative pressures on the percentage of employees trained (λ = .17, p < .01). This means that profes- sional associations, research universities, and professional institutions play a role in shaping norms and values that have a positive influence on the number of employees trained. This result is consistent with the results of Greenwood et al. (2002), Som (2007), and Mazza and Alvarez (2000). Finally, mimetic pressures have the most important effect on the percentage of trained employees (λ = .32, p < .01), so Hypothesis 1C is also accepted, as leading companies in the sector positively influence employee training. In view of these results, we can conclude that institutional pressures explain why companies train their employees. Competitive pressures also have a positive and significant effect on the percent- age of trained employees (λ = .50, p < .01), which allows us to accept Hypothesis 1D. It can be stated that traditional economic rationales together with institutional ones can shape HRM supporting the idea of complementarity (Boon et al., 2009; Boselie, 2009), instead of being mutually exclusive as determinants of the organ- izational decision to implement training programs. Related to the effects of employee training, it is found that the percentage of trained employees has a positive and significant effect on both the external and internal legitimacy and organizational outcomes (Table 3), confirming Hypothesis 2 and ensuring that organizational legitimacy and improvement of organizational outcomes can go hand in hand. Moreover, no significant influence of legitimacy, either external (λ  =  −.14, p > .1) or internal (λ = .16, p > .1), on performance (Table 3) is found, which leads us to reject Hypothesis 3. These results are contrary to our expectations based on institutional arguments which suggests that organizational legitimacy lead to organizational performance and survival (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Meyer & Scott, 1983). Table 3 also indicates that all the pressures have a positive and significant indirect effect on every indicator. 5.  Discussion and conclusions This study explores the double rationale behind the adoption of employee training and its subsequent effect on organizational outcomes. According to econom- ic-rational and institutional approaches, the results identify the influence of both competitive and institutional pressures in the adoption of employee training and

Downloaded by [Kasetsart University] at 07:24 13 September 2017 14   N. N. ESTEBAN-LLORET ET AL. also the effect on legitimacy and organizational performance. Consequently, this paper contributes to the literature on employee training by presenting a theoretical argument relating to the rationales that drive the adoption of employee training and shows a direct link between institutional context and employee training. The study thus extends the shared economic-rational basis of employee-performance studies (Tharenou et al., 2007) and contributes to a better balance in the debate in the HRM arena (Boselie, Brewster, & Paauwe, 2009). Employee training has been widely studied on the assumption that it is a human resource practice driven by economic reasons for companies that seek competitive advantages (Boselie et al., 2005), but empirical evidence on the rationales behind the adoption has not previously been explored. Some scholars (Boselie, 2009; Paauwe, 2004; Paauwe & Boselie, 2007; Stavrou & Brewster, 2005) advocate looking at the institutional context to better understand the adoption of HRM practices and suggest a combination of both rationales to provide a more complete explana- tion of adoption and outcomes. Following this reasoning, the results of this study support the influence of both rationales in the adoption of employee training. Coercive pressures originating from political or regulatory influences drive the adoption of employee training. In line with previous studies, union influence (Booth et al., 2003; Green et al., 1999), collective agreements (Boselie et al., 2003; Comacchio & Scapolan, 2004), and some particular pressures that stem from the Spanish context (national agreements on lifelong learning and training funding system) have a positive, albeit moderate, influence on employee training. Normative pressures that stem from collective expectations of what is appropri- ate and legitimate behavior influence employee training decisions through mem- bership of professional HR associations, advice from consultants and belonging to networks of managers, as has previously been shown (Farndale & Paauwe, 2007; Pasamar & Valle, 2015; Som, 2007). Finally, important mimetic behavior has been found. There is a positive influ- ence of the perceived success of competitors on the adoption of employee training in Spanish companies. The importance of mimetic behavior has also been observed (Brandes et al., 2006; Fennell & Alexander, 1987; Honig & Karlsson, 2004) and particularly in the HRM arena in the Spanish context (Magán & Céspedes, 2007; Pasamar & Valle, 2015). The predominance of mimetic behavior could be due to the fact that the last to adopt a practice often does so for institutional reasons (Love & Cebon, 2008). According to Combs et al. (2009), ambiguity about the economic effectiveness of training explains this mimetic behavior of firms, as they come to believe that by providing training to a greater number of employees, as leading companies do, they will improve organizational results. The importance of the competitive context has been also assessed in this study. It was found that competitive factors that stem from market competition are extremely influential, as is the need to obtain competitive advantage through efforts in employee training. This has been the underlying assumption of the majority of empirical studies on employee training (Boselie et al., 2005). The

Downloaded by [Kasetsart University] at 07:24 13 September 2017 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT   15 results for both competitive and institutional rationales for employee training support the theoretical approach used, in the sense that institutional pressures and competitive pressures may be complementary rather than mutually exclu- sive. This supports the theoretical case that has been presented by Oliver (1997), Paauwe and Boselie (2005) and Berrone et al. (2009). Since there are two different logics behind the adoption of employee training – competitive pressures and institutional pressures – it is reasonable to suggest that there are also two types of objectives that firms pursue when training their employees. While the economic-rational perspective emphasizes improved organ- izational outcomes, the institutional perspective argues that companies train their employees to increase their legitimacy, as Meyer and Rowan (1977), Scott (2001) and Paauwe (2004) indicate. In relation to the effects of employee training, the present study confirms that the percentage of trained employees has a positive and significant influence on organizational performance, although it has a greater effect on the external and internal legitimacy of the company. This result justifies the approach of institu- tional theory in the sense that companies perform training, not only for reasons of organizational efficiency, but also in an attempt to gain legitimacy by conform- ing to social expectations to gain acceptance. This result is consistent with those obtained by Meyer and Rowan (1977), Suchman (1995), and Rao, Henrich, and Davis (2001). In short, it is conceivable that firms train their employees not only with the intention of pursuing improvements in their results, but also to conform to socially accepted norms and values. Unexpectedly, the results do not confirm an anticipated positive effect of inter- nal and external legitimacy on organizational performance, which one would expect from the institutional argument that organizations are legitimized by their environment and can thereby ensure their survival (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Meyer & Scott, 1983). This result is consistent with Barreto and Baden-Fuller (2006) for Portugal. This could be a consequence of the fact that training is excessively geared to obtaining legitimacy, ignoring other specific business needs, which means that the effects of training are poorly internalized, as De Kok (2002) and Hillebrand, Nijholt, and Nijssen (2011) have argued. It might be that firms that train their employees in response to institutional pres- sures to develop training programs to conform to the environment, resulting in an unsatisfactory implementation in terms of efficiency and performance. In that sense, the beginning of the economic crisis and restrictions on company budgets could have had a negative influence on the number of employees trained. Another explanation may be that the impact of legitimacy on performance is subject to a delay, so there is no immediate effect. However, further work will be needed to examine the reasons for this finding, which is not consistent with those from studies conducted in many other countries.

Downloaded by [Kasetsart University] at 07:24 13 September 2017 16   N. N. ESTEBAN-LLORET ET AL. This work confirms that a broader perspective on the study of training and its influence on organizational outcomes, by incorporating the contextual approach of institutional theory, gives a more complete picture of the factors that influ- ence employee training. This study incorporates an institutional perspective to complement the economic-rational approach and provides empirical evidence of this complementarity, whatever the level of effort a company exerts in training employees. It also examines the effect of training on indicators of legitimacy and organizational performance. The present study is the first piece of research that examines these relationships in the Spanish context in operational employees, providing interesting results about the reasons for firms to train their employees, and about the effect of training on indicators of external and internal legitimacy and the performance indicators of the organization. The findings of this study have a number of implications for company manage- ment. This study may provide practitioners with guidelines for improving legit- imacy and performance through employee training. Managers should be aware of the duality in the motives for employee training, and also of the outcomes they are hoping to achieve. This means that employee training can be more effectively focused if managers know why they train employees, and are clear about what they hope to achieve as a result of training. Given the predominant influence of institutional pressures, and particularly mimetic pressures, managers should seri- ously consider competitive forces when implementing training programs in order to meet organizational goals, rather than merely submit to institutional pressures. In this way they can benefit from organizational legitimacy by improving its links with organizational performance. This study has a number of limitations. First, this exploratory study has a cross-sectional design. This makes it impossible to examine the influence of institutional pressures on the training effort in the medium and long term. It also makes it impossible to examine a possible delay between legitimacy and organizational performance. Second, the measures of institutional legitimacy and pressures are the perceptions of a single informant. Although precautionary steps were taken to obviate the possible problems of bias arising from collecting data from a single source, the individual perception of pressures do influence and legit- imacy might not accurately represent the overall influence on training decisions. Thus, future research should collect data from multiple informants in the top management teams. Third, this study uses perceptual measures of legitimacy and pressures which are subjective. It is possible that their effects have been overstated. To overcome this problem, it would be wise to consider objective measures of insti- tutional pressures and social acceptance (legitimacy). Finally, we have assumed that institutional and competitive reasons for training employees are independent. However, there may be some interconnection between the institutional and the competitive environment that could lead to a variety of mixed reasons for training employees. We consider that interdependence between pressures could have more influence on the way employee training is implemented than on the number of

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