To Invest or Not to Invest: Strategic Decision Making toward Investing in Human Resources

This study links the literature on strategic choice theory and human resource development (HRD) to explore the theoretical mechanisms that explain the unfolding firm-level processes leading to the strategic decisions of top management regarding HRD. This causal process is examined using data collected from 163 Korean manufacturing companies at three time points over a five-year period. Results confirm that environmental change and firm performance exert significant concurrent and longitudinal effects on top management support for HRD; in turn, top management support directly affects resource allocation to HRD. The analysis also demonstrates that the effect of top management's HRD support on actual resource investment in HRD is stronger when the relative level of human capital is high than when it is low. This study provides practical and theoretical insights into the strategic decision-making processes for HRD investment in organizations.