The 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.
As 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.
The 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.
This 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.
This 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.
This 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.
