Human resource practices, employee attitudes and small firm performance

Abstract

This article uses the matched employee-employer dataset from the Workplace Employment Relations Study of 2011 (WERS2011) in Britain to empirically examine the direct relationship between human resource management (HRM) practices and small and medium-sized enterprise (SME) performance in the United Kingdom, as well as the potential moderating effect of organisational commitment/job satisfaction on the HRM-performance linkage. We find a positive and direct relationship between the use of certain formalised human resource (HR) practices and SME performance, measured by financial performance and labour productivity. More importantly, we find that the positive relationship between HR practices and financial performance varies between SMEs with high job satisfaction and low job satisfaction, and that the relationship is weakened in SMEs with high job satisfaction. The results suggest that certain HR policies and practices may improve small firm performance, especially within firms with low levels of commitment and satisfaction.

High-performance work systems and innovation in Vietnamese small firms

“…Although Lai et al (2017) uncovered that the relationship between HPWS and outcomes in SMEs is contingent upon employee job-related attitudes, our study differs in several respects.…”

“…Drawing on matched, multi-source data across 133 SMEs from knowledge-intensive industries based in Vietnam, our work speaks to the prerogative these firms have to continuously learn, advance and innovate in order to overcome competitive pressures and resource deficits through the effective deployment of their human resource base (Sheehan, 2014). Smaller businesses often differ in their approach to people management relative to larger counterparts, preferring a more fluid and informal approach, a flexible workplace structure and less hierarchical working relationships (Lai et al, 2017;Marlow et al, 2005). Nonetheless, our data reveal that employee perceptions of HPWS are integral for innovation within small, as well as larger firms, to the extent that they equip individuals with a determination to achieve mastery and overcome challenge (Gong et al, 2009).…”

“…Given that HPWS are picked up by employees as anticipated by senior management, they can be a useful tool in a small firm's competitive armoury. Yet, although SMEs are in many ways the ideal site for HPWS because of the direct communication, flatter hierarchy, greater flexibility and clearer impact of each employee on organisational performance (Sels et al, 2006: 84), empirical research on their effects is at an early stage relative to larger counterparts (Drummond and Stone, 2007;Lai et al, 2017).…”

“…On the other hand, a more critical thread permeates thinking in this area. It is speculated that HPWS may have less influence in a SME setting than in larger organisations because small businesses are predisposed to informal rather than formal management practices (Lai et al, 2017;Marlow et al, 2010). Lai et al (2017) for example, revealed that HPWS may compensate for a poor-quality work environment rather than foster it.…”

“…First, evidence pertaining to the HPWS and performance relationship within small, rather than large, organisations, remains mixed; a significant body of work points to a positive relationship with performance outcomes (Bryson and White, 2018;Sheehan 2014;Aït Razouk, 2011). Yet, other studies present a more complex scenario (Lai et al, 2017;Sels et al, 2006). Reflecting on these mixed results, it is notable that the field has yet to reflect wider developments within strategic HR literatures that bring employee perceptions of HPWS centre stage (Bowen and Ostroff, 2004;Liao et al, 2009).…”