Performance Management in Small and Medium Size Enterprises in China

The recent development and issues of small and medium size enterprises (SMEs) attract increasing attention from many researchers. However, the existing literature mainly focus on general management issues of SMEs, such as human resource and marketing etc.. There is little study conducted from the perspective of performance management for SMEs. Thus in this thesis, we focus on performance management in SMEs in China, and try to explore the possible effective performance management models for them.

We firstly review the key issues commonly discussed in the existing SME studies. Based on the literature, we identify several main issues that are related to performance management of SMEs. We also notice that effective performance management models are often closely related to organizational structure. Thus we carry out reviews of organizational structure theories, especially Minzberg's configuration theory. Adjustments and refinements of the performance management six steps are carry out with the help of literature reviews of SME issues and Minzberg's configuration theory. After that, a further focused exploratory research is carried out. A questionnaire is designed and distributed in an industrial-based area of China, 300 local SMEs were participated in the survey. The questionnaire is mainly designed to investigate the actual performance management practice of SMEs as well as their current issues. Both qualitative and quantitative data is collected and analyzed. The analysis result shows that performance management practices in fast-growing SMEs are largely consistent with our adjusted performance management six steps. Meanwhile, we also identify some emerging issues in many sample SMEs through open questions of the questionnaire. After further discussions with some SME executives, we found that the management issues of '90s employees' are quiet severe in local SMEs, and traditional performance management approaches failed to deal with these issues. However, some new management approaches are reported to be helpful to improve the situation but not yet been studied academically. Thus we carry out a follow up study in order to explore the new approaches and try to explain the mechanism by leader member exchange theory. A semi-structured interview is designed and carried out in a local SME which adopted the new management approaches. The result provides some evidence for the proposed mechanism, which could be helpful for further studies.