Information problems and company behaviour vis-à-vis continuous management training

Information Problems and Company Behaviour vis-a-visContinuous Management TrainingJon Barrutia,2 Jon Landeta,1 Andres Araujo,1 and Jon Hoyos2

1 Institute of Business Applied Economics, University of Basque Country, Bilbao, Spain2 Department of Finance Economics II, University of Basque Country, Bilbao, Spain

Abstract

The purpose of this study is to examine the degree and type of information the company holdson training, and to what extent the lack-of-information firms suffer in two senses, information onmanagerial resources and information on training supply, tends to condition their behavior vis-a-vismanagement training. Data from more than 300 Spanish companies with 50 or more workers are usedto examine the connection between information asymmetries and company behavior in relation tocontinuous management training. The empirical study revealed that company readiness to engage incontinuous management training appears to be significantly conditioned by all variables related to theexistence of information on managers and training supply. Based on these results, underinvestment inmanagerial training would be associated with those cases in which information is unavailable or notdistributed uniformly and transparently. This study contributes to the existing training literature byproviding a novel link between information asymmetries (firm managers; firm training offerings) andtheir ability to influence training investment rates. C© 2012 Wiley Periodicals, Inc.

Keywords: Continuous management training (CMT); Business behavior; Competitiveness; Lack ofinformation; Adverse selection

1. INTRODUCTIONWhy do firms support continuous training of theirmanagerial staff? Or to put it another way, why dothey sometimes hinder it? On what does their behav-ior depend? Firms, managers, and society are all awareof the importance of training for effectively and ef-ficiently developing management. This commitmentis reflected in the increasing level of pre-employmenttraining managerial staff now receives (Araujo et al.,

Correspondence to: Jon Hoyos, Department of FinanceEconomics II, University of Basque Country, AvenidaLehendakari Agirre, 83, 48015, Bilbao, Spain, Phone: 0034946013726, Fax: 0034 946013710; e-mail: [email protected]

Received: 18 March 2011; revised 13 July 2012; accepted 15July 2012

View this article online at wileyonlinelibrary.com/journal/hfm

DOI: 10.1002/hfm.20532

2006) and it is even greater in areas related directly tobusiness management.

However, this wide acceptance appears not to be asconsistent in the area of continuous management train-ing (CMT). Firms and management generally acceptthat there is a positive link between managers’ level ofqualifications and their contribution to the company’ssuccess, and they are aware of the need for CMT for on-going development and training, especially in a highlydynamic and competitive context (Castanias & Helfat,1991, 2001; Pickett, 1998), yet this conviction is notreflected to the same extent in their actions, and this isespecially true of firms.

Although the benefits of training programs tofirms have been continuously examined empiricallythrough the link between training and organizational-level outcomes (Delaney & Huselid, 1996; Nikandrou,Apospori, Panayotopoulou, Stavrou, & Papalexandris,2008; Tharenou, Saks, & Moore, 2007; Ubeda, 2005),

Human Factors and Ergonomics in Manufacturing & Service Industries 00 (0) 1–13 (2012) c© 2012 Wiley Periodicals, Inc. 1

Information Problems and Company Behavior Barrutia et al.

even in the particular case of training for managers(Powell & Yalcin, 2010; Storey, 2004), studies are still re-quired into how and why there is, in some cases, an un-derinvestment in training (Brunello & De Paola, 2004;Hansson, 2007). In fact, there are important differ-ences in the average amount invested in CMT betweendifferent countries, between managerial staff with dif-ferent pre-employment qualifications, between man-agerial staff of different ages, and even between firmsthat share the same managerial staff and operate insimilar industrial and geographical contexts (Cedefop,2004, 2009; Cotec, 2005).

Several theoretical frameworks attempt to explainwhy these differences occur. From a global perspective,some researchers have focused on the relationships be-tween training processes and culture factors (Lievens,Harris, Van Keer, & Bisqueret, 2003; Yang, Wang, &Drewry, 2009). On the other hand, authors such asStorey and Westhead (1997) and Storey (2004) explainwhy training provision is lower in small than in largefirms. According to this argument, called ignorance ex-planation, small-firm owners are assumed to underes-timate the business benefits of providing training formanagers. In our view, one possible explanation for thisunderinvestment is a problem of lack of informationthat some firms suffer.

From this framework, one factor that might explainbusiness behavior with regard to continuous trainingfor managers is the results firms expect to gain fromsuch an activity. These expectations are affected by thedegree and nature of the information the firm possesseson management training, essentially with regard to thedifferent training options on offer (personal, general,specific, etc.), the offerings existing on the market, andthe specific target group for the training (What tier ofmanagement? How many? Who?, etc.).

In this regard, if we look at the third ContinuousVocational Training Survey (CVTS3) for the EuropeanUnion (Eurostat, 2007), it can be seen that, among thereasons given by firms in 2005 for not providing con-tinuous training for their employees, two appear to berelated to a lack of information suffered by the firmin two areas: 1) a lack of knowledge of the courses onoffer and 2) a lack of information on the needs of theirhuman capital, in terms of capabilities and skills. In2005, 15% of firms in EU-27 (those that did not pro-vide training) cited a lack of suitable CVT courses inthe market as one of three main obstacles preventingthem from investing in continuous training. Ten per-cent mentioned the enterprise’s difficulty in assessing

staff skill needs and shortfalls as one of three mainobstacles detected. These percentages were higher inSpain: almost 25% in the first case (the highest figurein the EU-27), suggesting that the problem of trans-parency in educational offerings is especially acute inthis country, and 12% in the second case, also abovethe EU-27 average (Figure 1).

Altogether, the fact that uniform transparent infor-mation is not available causes problems for decisionmaking, which may partly explain some enterprises’attitude to management training. In some cases too,this situation may be a symptom of adverse selection(Akerlof, 1970; Stiglitz & Weiss, 1981).

The purpose of this study, therefore, is to exam-ine the influence exerted on company behavior towardCMT by a greater or lesser knowledge of managers’ ca-pabilities and needs, and of the quality of the existingtraining supply. Knowledge of the reality of this influ-ence leads public administration and company trainingsuppliers to increase information on training marketsand on their managers, bringing about a correspond-ingly increased commitment by companies to contin-uous training and, ultimately, an improvement in theirefficiency and results.

2. APPROACH TO THE PROBLEM2.1. Theoretical Reference Points

In this study, viewing training as an investment andclassing it as a factor in the generation of results thatcan be used by the company, falls within the frame-work of the theoretical reference points human capital,resource-based view, and new institutional economy,as summarized next.

Human capital theory (G. S. Becker, 1964; Schultz,1961) presents training as an investment that economicagents make with the expectation of recovering it laterin the form of greater income stemming from higherproductivities attained from higher training (see alsoGenaidy, Karwowski, & Christensen, 1999).

The resource-based view (RBV) (e.g., Amit & Schoe-maker, 1993; J. B. Barney, 1986, J. Barney, 1991;Diericks & Cool, 1989; Grant, 1991; Peteraf, 1993)starts out from the assumption that each companystores up a set of resources and capabilities that makeit different from other companies and attains differ-ent degrees of effectiveness and competitiveness. Manystudies (Barney & Wright, 1998; B. Becker & Gerhart,1996; Boxall, 1996; Kamoche, 1996; Lado & Wilson,

2 Human Factors and Ergonomics in Manufacturing & Service Industries DOI: 10.1002/hfm

Barrutia et al. Information Problems and Company Behavior

Figure 1 Reasons for nonprovision of CVT to employees (as a percentage of total organizations where training was notprovided). Spain and EU-27, 2005.

1994; Lepak & Snell, 1999, 2002; Mueller, 1996; Teece,Pisano, & Shuen, 1997) suggest that people consti-tute the resource with the greatest potential for provid-ing sound, sustainable competitive advantages, becausetheir particular characteristics make them a resourcethat is particularly difficult to imitate or replicate.Castanias and Helfat (1991, 2001) also provide aparticular analysis of managers as strategic resourcesfrom this perspective (see also Karwowski et al.,1994; Genaidy, Karwowski, & Rehim, 2007; Layer,Karwowski, & Furr, 2009).

Third, the contributions of the new institutionaleconomy regarding problems of information asym-metry, adverse selection, and moral hazard (Akerlof,1970; Jensen & Meckling, 1976; Stiglitz & Weiss, 1981;Williamson, 1975) allow us to interpret the behaviorsof the agents involved (company and managers) fromthe standpoint of each agent’s reduction of risk fromopportunist behavior by the other.

In consequence, according to human capital theory,firms invest in management training in the degree towhich they expect to recover such investment due to theincreased profit stemming from greater managementcapability. Since, in line with the resource-based view,managers are a valuable and scarce resource, they mayconstitute a source of competitive advantage and begenerators of significant profit, justifying investmentin improving these resources. But, to make correct

decisions, companies need to have enough informa-tion regarding managers’ needs and capabilities andconcerning the quality and reach of the offer. With-out this, their training investment will be restricted oreliminated. In this regard, the behavior of the differ-ent agents within the management training “scenario”can be explained through information asymmetriesand the processes of adverse selection and moral haz-ard, described by the new institutional economy, whichcondition the effectiveness of investment in specific andhighly competitive managerial resources. The expres-sion “investment in specific human resources, condi-tioned by the level of information,” explains the definedarea of study. To approach the problem under study,it must be explained that the central interest of theresearch lies in business behavior toward continuousmanagement training (CMT).

2.2. Definition of the Problem andHypothesis

Accordingly, in the current study, to identify the prob-lem precisely, we need first to define certain concepts.These are as follows:

We take company behavior to mean firms’ ac-tions and attitudes in terms of readiness (R) to en-gage in manager training, realized through policiesor common forms of action, observable through the

Human Factors and Ergonomics in Manufacturing & Service Industries DOI: 10.1002/hfm 3


investment made in this type of training and theresponsibility taken on in the training activities formanagers, in terms of providing funding, furnishingtime and proposing training activities. In this study wemake this behavior dependent on the firm’s expecta-tions of generating valid results from these actions andattitudes.

We shall take continuous management training tomean a programmed series of actions performed withactive managerial staff or pre-executive staff to provide,adapt, or develop knowledge, skills, and attitudes thatenable them to improve their management capabilityand quality. This training may be performed either in-side or outside the firm, by internal or external trainers,in working hours or leisure time, instigated at the firm’sor managers’ initiative. So, the recipients of CMT arethe group of individuals in a company who alreadyhave or are preparing themselves to take on managerialresponsibilities, and the training received may be bothspecific and operational, as an explicit part of manage-ment development programs, taking place at a strate-gic level. The latter training category is unquestionablywhere the concept of strategic resources investment ac-quires its fullest meaning, but we understand that bothapproaches of a more operational kind (training) andthose of a more strategic type (development training)are affected by the level of information a company pos-sesses, and that is why we analyze them jointly in thiswork.

The Generation Expectation (GE) represents the pos-sibility that the effort made by the firm to facilitateand finance CMT will translate into a real increase inmanagerial capability. This expectation is created onthe basis of the information available to the firm ofthe determining elements of the educational process:managers and training providers.

The proposed relationship of behavior can thereforebe expressed schematically as follows:

R = f (GE) → GE = f (I) → R = f (I)

R: Readiness to invest in managerial trainingGE: Expectation of generating valid resultsI: Relevant information for the decision available to

the firm

The relationship we propose represents a part of abroader theoretical model (Araujo et al., 2006) whichrelates company readiness to invest in managerial train-ing and the overall information the company handles.In particular, we assume that this level of information

can be analyzed from two perspectives. On the onehand, in terms of the expectations of appropriatingthe benefits of these capacities and, on the other hand,in terms of the expectations of generating managerialcapacities because of training. The latter is what webring up in this case although the other one (appropri-ability problems) has been widely discussed in recentpublications (Landeta, Barrutia, & Hoyos, 2009)

From this perspective, it is assumed that a lack of asuitable assessment of training needs may hamper theeffectiveness of training implementation (Montesino,2002), so firms should try to achieve a better matchbetween training needs and training implementation(Chi, Wu, & Lin, 2008; Hansson, 2007; Noe, 2005).In short, we view business behavior as depending onthe information existing in the firm on managerialcapability for learning and on educational offerings.

With regard to this first factor, we can say that adeep knowledge of its managers tends to condition thefirm’s training effort. Knowing what each of their man-agers knows, what they want and what they are capableof, also means knowing what they don’t know, whatdoesn’t interest them, and what they will not be capableof doing. By comparing the current set of managerialskills and the managerial skills the firm considers nec-essary, both in the present and in the future, the firmcan estimate the gap or differential that may be coveredthrough training. Knowing a manager’s learning capa-bility to acquire the skills that he or she lacks allows thefirm to determine rationally whether training is thebest way of covering its managerial needs. Knowingwho wants and is capable of acquiring the managerialskills that the firm needs is a necessary condition for en-suring the effectiveness and efficiency of managementtraining, and this guarantee should lead to optimallevels of investment in this subject. A lack of this typeof information, however, can trigger mechanisms ofadverse selection, with the firm ultimately supportingonly the type and amount of training that any manager(including those of a “more limited” capability) maybe capable of assimilating: those that anyone might beinterested in (general, “user-friendly” courses) or areasthat are unknown to all (fads or fashions of doubt-ful effectiveness), even if their impact on the necessarymanagerial skills may be merely marginal.

With regard to management training offerings, aprofound knowledge of managerial composition andcharacteristics is another necessary condition for en-suring managers’ effectiveness and efficiency. Knowingwho performs the training, in what way, how they do



Figure 2 Generation Expectation and readiness toengage in CMT: behavior hypotheses.

it, at what price, and under what conditions is basicinformation for rationally choosing the most suitablemethod of training for the needs of the firm (and itsmanagers). On the contrary, a lack of knowledge ofthe educational market (internal or external) can alsoresult in actions of adverse selection in the firm: be-cause they are incapable of distinguishing the qualityof each educational agent’s offerings, and are unwillingto risk paying good money for something that mightnot be worth it, they will only be prepared to pay therate equivalent to a low-quality supplier, and for thatprice will only obtain bad suppliers, with which thetransforming potential of training will be lost.

Thus, to sum up, the type of information availableboth on the educational offering and on the manage-rial capabilities determine a given business behavior(Figure 2). The ultimate challenge of this work is there-fore to determine the relational dynamic between in-formation and behavior. We are also aware that certainproblems in information might be signs of “adverseselection.” To plot this relational dynamic more ac-curately, we have formulated the following behaviourhypotheses (BH):

BH1: A firm’s degree of knowledge of its managers’characteristics is positively related to com-pany readiness to run continuous manage-ment training.

BH2: A firm’s degree of knowledge of the manage-ment training offerings is positively related tocompany readiness to run continuous man-agement training.

3. METHODOLOGY3.1. Sample and Data Gathering

To verify the hypotheses posed earlier we took a popu-lation of all companies with 50 or more workers and a

TABLE 1. Technical Data Sheet for the Study

Population 1,334 Basque firms with ≥50employees

Geographical coverage Firms with headquarters in theBasque Country

Information sources *Duns & Bradstreet Spainbase (pub. 2003)

*UPV-EHU and APD databaseType of sampling Random sample, with

proportional affixation bysize

Sample size / reply rate 326 valid surveys / 24.43%Sample error / level of

confidence±4.82%with a confidence

level of 95% (p = q = 0.5)Survey date February 17, to March 1, 2005Preferred interlocutor HR or training manager

registered business address in the Autonomous Com-munity of the Basque Country (Spain). Companies ofa smaller size were therefore ruled out, on the under-standing that they are not usually able to set up a formalunit to handle their human resources and often fail tohave a defined training policy, which means that theirparticular contribution to the objectives of this studywould potentially be limited.

The sample group of firms interviewed was selectedat random, though the size proportions previously ob-served in the sample framework were maintained. Toensure the greatest reply index possible, the selectedsample was obtained by means of telephone interviews,with an average duration of 14 minutes. The calls weremade during the month of February 2005 (Table 1).The shorter reply time involved as well as direct ac-cess to the desired interlocutor are only some of thereasons that make the telephone interview the mostappropriate formula for obtaining the data required(Brand, 1984; Brierty & Reeder, 1991), especially giventhat, as a group, senior managers tend to have littletime or enthusiasm to respond properly to postal sur-veys or personal interviews. To guarantee the qualityand comparability of the data across the firms, ques-tions were mainly set in the shape of short propo-sitions regarding which interviewees had to expresstheir level of agreement, of knowledge, and the ex-tent to which their firm carried out certain actions,giving their reply using a 5-point Likert scale, whichfacilitated correct interpretation and response by tele-phone. In addition, the questionnaire had previouslybeen tested with a pilot group of 12 companies, and as



a result, some questions were reformulated or elimi-nated. After the results were obtained, a qualitative hy-brid Delphi dynamic was executed (Landeta, Barrutia,& Lertxundi, 2011) with a selection of companies par-ticipating, the objective being to interpret the data, dis-cuss the theoretical propositions, and propose meansfor improving CMT. No errors were detected in eitherthe formulation or the interpretation of the question-naire.

3.2. Variables

The survey included measurements of multiple vari-ables; as well as analyzing the Generation Expectation–Readiness for Training relation, research was based on awider theoretical framework to explain in global termsfirm behavior with regard to the training of their man-agers.

Two variables were used to measure the firm’s readi-ness to invest in training. On the one hand, we choseto include one of the indicators most commonly usedby the theoretical-empirical literature in this field: thepercentage of managers trained out of the total (Aragon,Barba, & Sanz, 2003; Bayo-Moriones & Merino, 2002;Black & Lynch, 2001; Delaney & Huselid, 1996; Ordiz,2002; Pfeffer, 1994; Russell, Terborg, & Powers, 1985).Together with this objective variable, we included an-other of a subjective type where, using 5-point Likertscale items (1 = no, never 5 = yes, always), we askedthose surveyed to rate their response to the follow-ing statement on the firm’s investment in educationalmatters: the firm meets the cost of CMT.

We then estimated the information making up theGE of results from the two orientations presented inthe hypotheses:

1. Information on managers: Instead of asking in-terviewees directly for this information, which wouldprobably have given us very subjective answers of littlevalue for statistical aggregation and analysis, we insteadasked about managerial management practices, in gen-eral, and training management in particular, since werealized that we could use these practices to get truth-ful information on managers’ capabilities and interests.We selected three practices in management administra-tion: 1) the process commonly used for recruiting andselecting managers, 2) the process for assessing man-agerial performance, and 3) the process for remuner-ating managers. In the case of the first two, we askedabout the degree to which these processes are actuallycarried out, also using a 5-point Likert scale (1 = not

at all, 5 = very high), while in the case of the third pro-cess, we asked for the approximate percentage of thetotal management payroll, which proved to be vari-able. With regard to management training practices weasked for the frequency (1 = never, 5 = always) withwhich managers from the firm formally draw up theirown training plan and the frequency with which thequality of the training activities they have developed isassessed.

The starting presupposition is that firms that haverigorous managerial selection processes have, from theoutset, good information at their disposal concerningthe capabilities and limitations of the managers theyhire or promote. Similarly, if they carry out manage-ment performance evaluation processes they are privyto updated information about those capabilities. Thefact that a significant component of salaries is variableobliges firms to assess the contribution of their man-agers to be able to justify such salary variations, andthat should produce a greater awareness of their capa-bilities. Finally, the designing of management trainingplans and the evaluation of training actions have adirect relation with knowledge of managers’ capabil-ities and training needs and of their evolution overtime.

2. Information on the training on offer: Again, we didnot ask directly about the subject, but instead askedinterviewees to assess the level of quality and suitabil-ity (1 = very bad, 5 = excellent) of the four systemsmost widely on offer in management training: externaland on-site training, online training, internal training,and in-company training. The answers, or rather, thenonanswers, gave us additional binary information onthe interviewees’ knowledge of the offering in the foursystems (answer = they have information [1], no an-swer = they have no information [0]). Using this in-formation, we created a new variable defined as firm’sdegree of information on the training supply (1 = no in-formation, 5 = a lot of information) assigning a valueof 1 if the firm had no information or knowledge ofany of the four training offers described earlier, 2 ifthey had information on at least one of the trainingoffers, and so on up to 5 for companies that displayeda knowledge of the four systems.

3.3. Statistical Analysis

In the data analysis and interpretation phase, themethodology and steps used were as follows:



TABLE 2. Spearman Correlation Analysis

Indicators of the Firm’sReadiness for Continuous

Management Training

Variables A B

Degree of formalization of the recruitment processes Coefficient 0.188∗∗ 0.149∗

Sig. (bilateral) 0.002∗∗ 0.014∗

Degree of formalization of the performance assessment Coefficient 0.131∗ 0.122∗

processes Sig. (bilateral) 0.030∗ 0.040∗

Percentage of variable remuneration Coefficient 0.176∗ 0.142∗

Sig. (bilateral) 0.014∗ 0.046∗

Existence of training schemes Coefficient 0.267∗∗ 0.213∗∗

Sig. (bilateral) 0.000∗∗ 0.000∗∗

Assessment of training activities Coefficient 0.272∗∗ 0.309∗∗

Sig. (bilateral) 0.000∗∗ 0.000∗∗

Degree of information on the training on offer. Coefficient 0.145∗ 0.067Sig. (bilateral) 0.01∗ 0.231

aPercentage of managers who have performed some continuous training activity in 2004.bThe firm meets the cost of managers’ continuous training.∗∗The correlation is significant at a level of 0.01 (bilateral).∗The correlation is significant at a level of 0.05 (bilateral).

1. Exploratory analysis of the variables (frequencytables, measures of central tendency, measuresof data dispersion, analysis of normality, etc.)

2. Spearman correlation analysis to estimate thedegree of relationship between the variablesmaking up the GE and the variables used tomeasure the firm’s readiness to invest in man-agement training

3. Cluster analysis, allowing us to classify thecompanies in the sample into differentiatedgroups according to their propensity for in-vestment in management training to checkwhether these groups display statistically dif-ferent behavior in the independent variablesdescribed.

4. Nonparametric Mann–Whitney U test for twoindependent samples, performed on the resultsof the two sub-groups of firms of high and lowpropensity previously extracted from the clus-ter analysis to test whether companies with thegreatest propensity for investment in manage-ment training do indeed display significantlydifferent results for the explanatory variablesproposed (information on managers; informa-tion on the training supply).

4. RESULTSWe began our analysis by calculating the Spearman cor-relation matrix to analyze the degrees of relationshipbetween the variables establishing the firm’s level of in-formation and its propensity for management training(Table 2).

By analyzing the correlation matrix, we deduced thatall the relations are significant (except the correlationbetween the degree of information on the offering andindicator b of readiness), and—as was to be expected—that the strongest relationship is with the variables thatprovide the firm with specific information on man-ager’s skills needs (existence of training schemes andassessment of training activities).

To create independent groups of firms that differconsiderably according to their degree of propensitywith respect to investment in CMT, we made a clus-ter analysis using the explanatory variables of propen-sity that were already typified in the previous cate-gory. Specifically, we proceeded to make a mixed ortwo-stage analysis, by means of which a hierarchicaltype cluster analysis was made—through agglomer-ation and through Ward’s algorithm—using squaredEuclidean distance as a similarity measurement. Thisis how we identified the number of groups to be used for



TABLE 3. Final Centers by Cluster Obtained in the Cluster analysis as a Function of Readiness to Engage in CMT

N = 326 Conglomerates–ReadinessValid = 312 to Engage in CMT ANOVA

(A) (B) (C)Variable High Medium Low F Sig

Percentage of managers trained (2004) 4.46 1.51 1.71 569.645 0.000The firm assumes the cost of continuous management training 4.66 4.74 2.40 252.214 0.000Number of firms 189 81 42

determining the initial seed set (centroids of groups)that will intervene later on in a nonhierarchical con-glomerate analysis (k-means algorithm). This opera-tion will enable us to maximize the homogeneity ofeach group and the heterogeneity between some con-glomerates and others.

The analysis shows the existence of three differenti-ated groups among the 326 firms forming the sam-ple (312 are valid), depending on their propensityfor training their managerial resources. The ANOVA(analysis of variance) shows that there are significantdifferences for the two variables included among thethree groups formed through the cluster analysis. Thecomposition and description of each group is as follows(Table 3):

Group A (high readiness) comprises 189 firms,whose final centers are at high levels in both variables.These are firms that are firmly committed to continu-ous training for their management staff, training prac-tically 100% of them, with the firm always—or nearlyalways—meeting the cost of this training.

Group B (medium readiness) contains 81 firms,whose final centers stand at opposing extreme valuesfor each of the two variables, indicating the level of pro-clivity to promote management training. This secondcluster includes firms in which a very small percent-age of managers performed some programmed educa-tional activity in 2004, although the firm in practicallyall cases paid for the cost of the investment.

Group C (low readiness) is made up of 42 firmswith low levels of investment in managerial training.As well as having provided training to only a very smallproportion of their managerial staff during 2004, thesefirms say that they do not meet the associated cost.

To check whether there are significant differencesin the means of the independent variables (man-agerial management practices—recruitment and selec-

tion processes/performance assessment/variable remu-neration; managerial training management practices—training schemes/training assessment; and degree ofknowledge of the offer) in the groups formed by thedependent variable, we used the Mann–Whitney U

test (nonparametric test for two independent samples).This test is an excellent alternative to the difference ofmeans test (t-test) when 1) the assumptions on whichthe t-test is based (normality and homoscedasticity)are not fulfilled; or 2) it is not suitable to use the t−testbecause the level of measurement of the data is ordi-nal. In our case, that both of these conditions were metmade use of this test recommendable.

The grouping variable is made up of the groupsof firms with the greatest propensity (Group A—189firms) and least propensity (Group C—42 firms) forcontinuous training of their managers.

Observing the table of statistics (Table 4), specificallythe asymptotic significance, we may conclude that thefirm’s propensity to invest in training for managersappears to be significantly conditioned (i.e., the nullhypothesis is rejected) by all the variables shown re-lating both to the firm’s degree of knowledge on thecharacteristics of its managers (BH1) and the firm’sdegree of knowledge on the training on offer (BH2):

– The existence of training schemes (p < 0.01)– The degree of assessment of training activities

(p < 0.01)– The degree of formalization of the recruitment

and selection processes (p < 0.01)– The degree of formalization of the managerial

performance assessment processes (p < 0.05)– The managers’ percentage of variable remuner-

ation (p < 0.05)– The degree of knowledge of the educational

offer (p < 0.01)



TABLE 4. Mann–Whitney Distribution Contrast Test

Distribution Contrast Test

Sum of Ranges Mean

Variables Groups Group A Group C Z Statistic p-Value Group A Group C

Managerial Administration PracticesDegree of formalization of the

recruitment processesGroup A –Group C

16,321.5 2,399.5 −3.188 0.001∗∗ 3.79 3.09

Degree of formalization of theperformance assessmentprocesses

Group A –Group C

18,040 3,075 −2.054 0.040∗ 3.58 3.11

Percentage of variableremuneration

Group A –Group C

8,875 1,565 −2.440 0.015∗ 2.33 1.79

Management Training PracticesExistence of training schemes Group A –

Group C23,491 2,844 −4.944 0.000∗∗ 3.03 1.76

Assessment of training activities Group A –Group C

22,998 2880 −5.085 0.000∗∗ 4.16 2.78

Information on Training SupplyDegree of knowledge of the

educational offerGroup A –Group C

23,115.50 3,680.50 −3.136 0.002∗∗ 3.63 2.90

Group A: high propensity for training; Group B: low propensity for trainingEvaluation of the item: 1–5 Likert scaleMann–Whitney U test. Level of significance: ∗p < 0.01; ∗∗p < 0.01.

In short, the correlation analysis and nonparametrictest performed enable us to confirm that the hypothesisof behavior initially proposed herein is fulfilled: BH1:There is a positive relationship between the firm’s de-gree of knowledge of its managers’ characteristics and itspropensity for management training and BH2: There is apositive relationship between the firm’s degree of knowl-edge of the characteristics of the management training onoffer and its propensity for same.

5. DISCUSSIONFrom the results of this research, we deduce that theasymmetries of information that exist in both inter-nal and external training markets limit the behaviorof the agents. Indeed, we observe a positive relationbetween an increase in a firm’s knowledge of its man-agers’ characteristics and needs, and of training offers,and the degree to which it is ready to engage in CMT.These results bear out the suppositions of other au-thors that there is an underinvestment in continuoustraining within the business field, and corroborate our

hypotheses that one of the causes triggering this lackof investment is a lack of information.

Furthermore, the positive nature of the relationstested (better information equals more continuoustraining) indicates that—at least within the frameworksample studied—if companies had more informationon the needs of their managers and the real possibilitiesof educational agents, they would invest more in man-agement training, since the increase in the capabilityand involvement of their managers would compensatefor the cost of their training.

These results seem, therefore, to relate company be-havior with the explanatory proposal derived from theresource-based view, which would justify investmenttargeted at covering shortages in a firm’s strategic re-sources (of managers, in this case), for which purposeit must necessarily know what these shortages are andwho can put them right. In other words, the infor-mation available and the perceived need constitute twodetermining factors affecting the firm’s behavior in thisfield.

Similarly, the explanation that items from the hu-man capital theory and the new institutional economy



makes perfect sense, because the firm conditions itsinvestment to the expectations it has of recovering thisoutlay through improvements in managerial capacity,and when it does not know or is uncertain whether itsinvestment will generate this increase in capacity, be-cause it does not possess sufficient information aboutthe capability and needs of its managers, or about thequality of training supply, it does not invest or investsless. In short, we can observe that the synthetic expres-sion articulated in the theoretical investment section,“investment in specific human resources, conditionedby the level of information,” provides a good explana-tory framework for what the data say is occurring.

This research also indicates that the asymmetries ininformation on the training market involve a certaindegree of adverse selection. Although adverse selectionhas not been tested, there appear to be symptoms of itsexistence in that we find that the companies least likelyto train are those that have least information on boththeir managers and on the general offer. One of the ef-fects of adverse selection is that the amount demandedis lower than if it did not occur. This phenomenon ap-pears to be occurring: the least-informed companiesdemand less training. The other effect is that the trans-actions performed tend not to provide the anticipatedsatisfaction. In order to test this symptom, we wouldneed information on the satisfaction obtained by themost-informed demanders as compared to those leastinformed.

Whatever the case, the influence of the informationasymmetries studied exclusively affects the company’sknowledge of the capabilities of its managers and of ex-ternal and internal training agents. We have not stud-ied the information asymmetries resulting from thecompany’s lack of knowledge of those individuals’ in-tentions and, therefore, of the risk of opportunisticbehavior from them, which might also influence thefirm’s behavior (Landeta et al., 2009).

Finally, that the degree of information a companypossesses with regard to its managers, on the one hand,and to training supply, on the other, constitute vari-ables that condition the level of investment in training,which, in general, is lower than it would make underconditions of complete information (optimal), impliesthat by carrying out strategies aimed at increasing thelevel of information it is possible to impact favorablyon the level of investment and, at the same time, oncompany results, to the degree to which this investmentis closer to the optimal level.

6. CONCLUSIONS ANDIMPLICATIONS OF THE WORKMost attention on human resource management hasfocused on the nonmanagerial workforce. Researchon the management of managers, meanwhile, is muchmore limited (Gilbert & Boxall, 2009). Specifically, themain conclusion of this work is that the provision of in-formation on the characteristics of both managers andavailable training offerings, determines a firm’s readi-ness for continuous training. At least within the sam-ple framework studied, a shortage of such informationleads to less investment in continuous training thanwhen there is no such lack of information. Therefore,actions that tend to increase the information availableto firms have a positive influence on their educationalspending and, according to most of the theoretical andempirical evidence available, their competitiveness.

According to the results and findings, a number ofmeasures related to two main (mutually complemen-tary) lines of action have proved to be effective in re-ducing the asymmetries of information within this in-ternal and external training market, where investmentinvolves some risks:

1. Those related to managerial staff : Running train-ing programs, assessing training activities, formalizingmanagerial recruitment and selection processes, as wellas processes for assessing their performance and intro-ducing practices of variable remuneration have shownto be effective mechanisms for increasing a knowledgeof managers’ characteristics and motivations, and thusof their interests and frailties. For their part, firms knowthat proper procurement and management of infor-mation on their managers, through relevant manage-ment practices, provides them with valuable informa-tion for detecting their needs and efficiently designingtheir educational initiatives. In addition, knowledgeof the training supply can be improved by assessingand recording their own experiences, and sharing themwith other companies that are clients of training activ-ities; this would also lead to an improvement in theefficiency of their training and, consequently, in theircompetitiveness.

2. Those related to the educational offer: Developingmechanisms that provide information on the qualityand contents of the training available on the market,such as accreditation and approval of training firms, in-dependent directories of suppliers, websites with eval-uations by user companies of the training services and



providers, forums of training client companies, and in-ventories of educational capabilities (for internal train-ing). In this regard, training agents must be aware thata lack of market transparency has a negative impact onvolume and harms the highest-quality suppliers most.Therefore, these educational agents of the highest qual-ity and capability must lead initiatives that will providecompanies with the information they need for deci-sion making; properly specifying, adapting, and dif-ferentiating the offerings; and distinguishing suppliersthrough their level of quality and the composition oftheir offer. Valid initiatives for this purpose might in-clude promoting external accreditation, rankings, andtransmission of customers’ experiences.

These conclusions therefore have some importantpublic and business implications, in that they demon-strate that information transparency has positive re-sults on propensity for management training. Theseimplications also extend to public institutional per-formance. Likewise, for public bodies the most directimplication is that if they want to enhance the com-petitiveness of companies through training, they needto promote measures that foster program assessment(e.g., through public accreditation), as well as promotea culture among firms in which managers and trainingactivities are assessed.

7. LIMITATIONS AND FUTURERESEARCHThe sample is of a cross-sectional nature and not dis-criminated. It is valid for the overall objective of thiswork but has not enabled us to analyze the companyresponse in terms of the degree of variation in invest-ment in continuous training in circumstances of priorvariations in available information, or to analyze dif-ferentiated behaviors that might derive from differentkinds of companies, manager levels, or types of train-ing, for example. Nor have we been able to differenti-ate company behavior in terms of the operational orstrategic purposes of CMT.

The information was obtained through telephoneinterviews. It was, in our opinion, the most effectivealternative for the aims and conditions of the study,but this way of collecting data imposes an approach in-volving short easily produced questions and answers,with no consultation of external data and restrictionson the amount of time taken to find the right response.Nevertheless, these aspects were taken into account

when designing the questionnaire, and in the qualita-tive methodologies that were applied afterward, so theeffects of this limitation were, at least partially, miti-gated.

Some of these limitations could be overcome in fu-ture investigations. Longitudinal studies, performedover broader geographical areas and using larger sam-ples, allowing us to differentiate company behaviors interms of the referred variables, might contribute valu-able knowledge. Equally, this analysis could actually becarried out from the managers’ perspective, measuringtheir readiness to engage in continuous training in linewith the information they possess concerning trainingsupply and the firm’s capability and intentions to applyand recognize the results of such training.

In addition, investigations geared to discover and as-sess the effectiveness of different practices that mighthelp to reduce existing information asymmetries be-tween continuous training agents (firms, managers,suppliers) could prove to be of great academic and,above all, practical interest. Knowledge of these prac-tices should lead to a sharing of information of rele-vance for training decisions adopted by managers andbusiness people, an increase in continuous traininginvestment toward near to optimal levels and, in con-sequence, improvements in the profitability of com-panies and in the income and promotion prospects oftheir managers. In this regard, too, investigations thatmade it possible to situate this optimal training levelin relation to a known variable (total expenditure onhuman resources, for instance), and for different busi-ness contexts, would provide a valuable reference fortaking decisions in companies.

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Information problems and company behaviour vis-à-vis continuous management training

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