Exploitative Training Versus Explorative Training : The Effect of Strategic Human Capital Investment on Organizational Performance

Despite being an important type of strategic human capital investment, employee training has not received consistent conclusions from scholars about its implications for organizational performance. In this study, we categorize employee training as either exploitative or explorative depending on whether the training expands the firm’s scope of knowledge and explore the different effects of the two types of training on two aspects of organizational performance, short-term performance and long-term competence. Using a quasi-experimental setting and a difference-in-differences (DID) method, we find that exploitative training is more effective in improving a firm’s short-term performance, while explorative training is more effective in enhancing a firm’s long-term competence. The findings of this study contribute to employee training research by firstly categorizing training into exploitative and explorative from the perspective of knowledge scope and showing the distinctive functions of the two types of training. This study also sheds light on practitioners by suggesting that firms can choose different types of employee training to maximize the return from strategic human capital investment according to their strategic orientations