Outward foreign direct investment and human capital development: A small country perspective

The purpose of this paper is to examine the pattern of outward foreign direct investment (FDI) by Irish MNCs, and more specifically, to investigate their approach to human capital development and how these correspond to foreign MNCs in Ireland. In particular, it seeks to investigate 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. The most senior human resources practitioner in these firms completed a questionnaire, through the personal interview medium, on various facets of their human resource management (HRM) practices. In total 260 usable interviews were completed equating to an overall response rate of 63 per cent. This represents a 78 per cent response rate for Irish MNCs, the primary focus of this paper, and 60 per cent for foreign MNCs.

Overall, Irish MNCs tend to 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, Irish MNCs were found to be significantly less likely to have formal management development programmes.

The study is the first large scale, representative survey to be conducted on MNCs in Ireland helping to address the research lacuna on Irish owned MNCs.