This paper is also available from the publisher's website at www.skope.ox.ac.ukFor the last three decades there has been a tendency in most of the older industrial countries to see SMEs as ‘failing’ to invest in training. More recently, there have voices which have questioned this belief, not least from within the small business community. This is part of a wider realisation that SMEs are different from the larger enterprises when it comes to the use and value of formal training courses. This paper examines the issue in more detail. It argues that as organisations grow in size, the process of skill formation becomes institutionalised. This involves the processes of formalisation, differentiation and delegation which transform the context within which learning and skill formation take place. This means that learning and the associated skill formation process take on different characteristics in smaller and larger organisations. However, the institutionalisation of learning and skill formation does not necessarily have any impact on the outcome of the process either in terms of the effectiveness of the learning and training processes or the level of skills delivered. The paper concludes with a brief examination of the implication for policy
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