Talent development: a driver for strategic flexibility, innovativeness and financial performance

Abstract

PurposeThe purpose of this study is to build a theory presenting talent development as a driver for innovativeness and strategic flexibility, and how these organizational capabilities affect financial performance.Design/methodology/approachAs a methodological approach, this study uses a rich combination of literature review and exploratory interviews with managers and academicians. Moreover, a conceptual framework is tested by confirmatory factor analysis and finally structural equation modelling using the survey data from 462 Greek firms.FindingsThe results show the positive effect of talent development on strategic flexibility and innovativeness. Moreover, strategic flexibility is an influential firm capability for innovativeness and financial performance. This study also reveals the significance of innovativeness on financial performance.Research limitations/implicationsThis study explores talent development and two certain organizational capabilities, but many other topics that affect business performance remain unexplored. The role of environmental characteristics could also be examined as a moderator in the proposed relationships.Practical implicationsThis study offers clear implications for managers, proving that talent development is a major driving force behind strategic flexibility, innovativeness and financial performance in order for managers to allocate resources, and to develop and execute these capabilities as an integral part of business strategy.Originality/valueThis empirical study contributes to the literature by developing a research conceptual framework of three underdeveloped firm capabilities, investigating and explaining both their correlations and dynamic nature and their role in financial performance improvement.

Investing in talent

“…Investment in talent, particularly at the middle organizational level, is shown by Kafetzopoulos (2022) to have a direct and positive impact on innovativeness. By improving talent, firms can realize new avenues of revenue and growth, by allowing employees to utilize skills they have learned and refined.…”

“…Firms can do this by developing and refining effective crisis management strategies and policies. Kafetzopoulos (2022) argues that the central tenet of such is the development of talent, which can produce significant competitive advantage for a firm as well as grow a pool of employees which are better able to spot and react to uncertainty and crisis. What Kafetzopoulos (2022) has also identified is a link between talent development and firm innovativeness and strategic flexibility.…”

“…Kafetzopoulos (2022) argues that the central tenet of such is the development of talent, which can produce significant competitive advantage for a firm as well as grow a pool of employees which are better able to spot and react to uncertainty and crisis. What Kafetzopoulos (2022) has also identified is a link between talent development and firm innovativeness and strategic flexibility. These are considered key elements to how a firm is able to respond to external and internal pressures, but which can only successfully be deployed when employee talent levels are high enough.…”

The role of talent development on business performance in Islamic rural banks

“…Numerous advanced technologies, such as Big Data, Artificial Intelligence (AI), Internet of Things (IoT), advanced manufacturing, robotics, and blockchain have been introduced to replace the traditional works in a new efficient way. Some scholars have documented talent development as a driver for strategic flexibility in Greek firms (Kafetzopoulos, 2022;Kafetzopoulos et al, 2022) and relate the strategic flexibility and business performance in emerging economies (Direction, n.d.;Yang et al, 2015;Xiao et al, 2021). Other academics link the firm's level of innovation and its degree of flexibility (Khin and Ho, 2018;Nassani and Aldakhil, 2021).…”

“…This study gives contribution in three ways. First, majority of previous studies only investigate the individual relationship between strategic flexibility and innovativeness (Hewapathirana and Almasri, 2021;Kafetzopoulos, 2022), while this study develops a framework that integrates the correlation between strategic flexibility, digital readiness, and innovativeness which has not been exposed by previous studies. Second, this study offers a managerial perspective for Islamic rural banks in relation to talent development, while previous studies in this sector focused on financing quality (Rizky and Mongid, 2022) and customer satisfaction (Wibisono and Harto, 2018).…”