HRM in the SME sector: valuable employees and coercive networks

Abstract

Although the productivity and survival of small and medium-sized enterprises (SMEs) may be enhanced if they adopt human resource management (HRM) practices, there is a far greater degree of informality in employment practices in SMEs than in larger workplaces. The aim of this paper is to assess the extent to which a range of factors both internal and external to the workplace predict the extent to which HRM practices have been adopted in SMEs. Using data from the 1998 Workplace Employee Relations Survey, the analysis reveals that differences in workforce skill-mix, unionization and the customer base are important influences, with the first of these influences being particularly strong. As such, we suggest SMEs may lack the capability to develop HRM practices, but they are more likely to adopt such practices if they employ highly skilled employees and are networked to other organizations

Keywords:

• SME
• HRM
• small firms

Acknowledgements

We would like to thank the Department of Trade and Industry, the Economic and Social Research Council, the Advisory Conciliatory and Arbitration Service and the Policy Studies Institute as the originators of the 1998 Workplace Employee Relations Survey data, and the Data Archive at the University of Essex as the distributor of the data. None of these organizations bears any responsibility for our analysis and interpretation of the data. We would also like to thank Ian Kirkpatrick and Paul Westhead for their helpful comments on an earlier version of this paper.

Notes

1 This is conducted within STATA by treating the variable EST_WT as a probability weight. See Purdon and Pickering (2001) for a comprehensive discussion of the use of weights within WERS 98.