Outward Foreign Direct Investment and Human Capital Development: A Small Country Perspective

Abstract:     
This paper summarily examines the pattern of outward foreign direct investment (FDI) by Irish MNCs and more specifically investigates their approach to human capital development. In particular it investigates training and development expenditure, adoption of succession planning, use of formal development programmes for senior management 'potential', and also the presence of a specific 'key group' development programme. Data were obtained through the largest, most representative study ever conducted on multinational companies (MNCs) in Ireland. In total 260 usable interviews were completed equating to an overall response rate of 63 per cent, 78 per cent for Irish MNCs, the primary focus of this paper, and 60 per cent for foreign MNCs. Overall Irish MNCs compare favourably with their foreign counterparts in terms of the human capital development mechanisms examined. Only one statistically significant association was found regarding differences between Irish and foreign owned MNCs in terms of the mechanisms being analysed. Irish MNCs were found to be significantly less likely to have formal management development programmes in place than foreign MNCs.

Keywords: outward foreign direct investment, Ireland, multinational companies, training and development, succession planning, management development, key group

JEL Classification: M12

Accepted Paper Series