Purpose: The expansion of coaching in firms reflects its potential use as a tool to improve the development of human capital and of the firm itself. Nevertheless, research into the effects of coaching is lagging some way behind practice and there is a need to establish a theoretical framework capable of explaining how the coaching process proceeds and its outcomes. The goal of this research is to analyze the effects of coaching in both, employees development, and organizational performance. Thus, we extend Joo’s (2005) conceptual model by adding social exchange theory and the resource-based view, so as to to develop a model that allow us to investigate coaching. Design/methodology/approach: We test our model on a sample of 498 Spanish firms. The hypotheses were analyzed using structural equations modeling. Findings: Our results confirm that coaching has an influence on both individual performance and organizational performance indicators. Besides, social exchange theory and the resource-based view, are a proper frameworks so as to study the effects of coaching. Practical implications: Coaching also helps firms to improve their competitive position. maximise benefits and minimise costs. We highlight several tips for practitioners in order to develop properly coaching processes. Originality/value: Coaching helps firms improve their competitive position via effects on organisational performance, sales increases and productivity growth.