Explaining the role of human resource management in the performance of small to medium-sized enterprises

This thesis provides an explanatory account of HRM and performance in growth-oriented SMEs. HRM researchers hold a relatively emaciated understanding of the generative mechanisms and processes at work between HRM and performance in SMEs. A rationalisation of the employment relationship allied with the predominance of a scientific approach has led to a focus on what at the expense of understanding how and why HRM influences small firm performance. It is argued within this thesis that a metatheoretical reorientation is required to address the weaknesses of existing HR1v1 and performance research. This study adopts a realist and pragmatic approach to social research inquiry. A new conceptual framework is designed that builds on prior contextual studies (e.g. Edwards et aI., 2006, Hamey and Dundon, 2006, Gilman and Edwards, 2008) to include the dynamics of growth in SMEs. This allows for the exploration of how internal and external dynamics interact with performance and labour management practices in SMEs. The analysis begins by exploring the patterns of HRM practices across SMEs through the lens of High Performance Work Systems (HPWS), findings that inform a contextual analysis of five growing SMEs. This thesis draws some interesting conclusions. First, SMEs do not score highly on measures of HPWS take-up, particularly when one inquiries into actual practice as opposed to initial survey reports. No evidence' is found of Sills taking a high performance approach to performance. Second, one cannot conclude that SMEs are deficient or that one should condemn them as failing in some way. Traditional HRM metrics cannot be easily applied to small firms; they are simply not scaled down versions of larger firms. Third, therefore, we find that aspects of HRM are addressed in ways relevant to the small firm context. Fourth, the I : notion that the application of HPWS results in increased levels of performance is too simplistic; researchers must consider their relationship as mutually reinforcing. The case studies demonstrate the relevant processes, notably the effects of shocks in relation to business performance that led to responses which in turn implied changes to HR practices. An HPWS model would have meant little to these firms. Though the second point is correct, it does not follow that all is well at all times. The case studies demonstrate differing degrees of effectiveness in dealing with external shocks, and point to the importance of leadership. Ensuring the long term growth and sustainability of firms relies on more than entrepreneurial flair alone; it requires leaders to become effective champions of change.