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The study examined the main and interaction effects of size and firm type on a variety of informal and formal training programs in small and medium-sized enterprises (SMEs). Samples of 448 family and 470 nonfamily SMEs were separated into four size groups and differences were assessed using multivariate analyses of variance. The results point to prevalence of informal training for all sizes and an increase in adoption of formal, structured, and development-oriented training with increasing firm size (especially for firms with 20-99 employees). This pattern was evident for nonfamily but not for family firms. For family firms, formal training programs increased significantly during the critical growth phase only (20-49 employees). Gaps in employee training between the two types affirms were greatest at 50-99 employees but narrowed thereafter at 100-199 employees. The approach to employee training in family SMEs is in consonance with their slower growth, informal management styles, limited financial resources, and greater emphasis on efficiency compared with nonfamily SMEs.
Introduction
The perceived importance of training to improvements in productivity, sustained competitive advantage, and ultimately to firm performance has led governments in various countries to invest considerable resources into programs that encourage management and employee training in small and medium-sized enterprises (SMEs) (Patton, Marlow, and Hannon 2000; Lattimore et al. 1998; Westhead and Storey 1996). It is believed that training is a powerful agent to development of capabilities and to growth and profitability of the firm (Cosh, Duncan, and Hughes 1998). Chandler and McEvoy (2000) argued that firms that invest in employee training, engage in formal performance appraisal, and link these to incentive compensation are likely to have lower employee turnover, higher productivity, and enhanced financial performance. Ibrahim and Ellis (2003) suggested that training would enhance the survival rate of small firms and Reid and Harris (2002) noted that the most successful SMEs provide more employee training than average. Litz and Stewart (2000) established a link between employee training and superior firm performance. In addition, small business failure has been linked to poor management skills (Lattimore et al. 1998; Jennings and Beaver 1995). It is argued that management training should greatly improve SME survival and performance (English 2001; Lattimore et al. 1998). MacRae (1991) established that a major distinguishing factor between high-growth and low-growth...