Achieving Peak Performance
New Horizons in Management series
Edited by Cary L. Cooper and Ronald J. Burke
Chapter 5: The Human Resource Practices of Small Businesses: An Examination of Performance Implications
Andreas Rauch INTRODUCTION It is widely recognized that the success and survival of small firms depends to a large extent on their human resources, which is why a number of studies have addressed the human resource management (HRM) practices in small firms (e.g., Tocher & Rutherford, 2009). In general, these studies indicate that the human resource practices of small and new firms are less sophisticated and more informal than those employed by larger enterprises (Cardon & Stevens, 2004). The more interesting question, however, is whether or not the HRM practices of small enterprises are related to their performance. Unfortunately, this is a relationship that has been addressed less frequently in empirical studies. Moreover, some scholars argue that HRM practices are less important in small firms as compared with larger firms, because their scarce resources make it more difficult for them to invest in human resources. The aim of this review is to contribute to this debate by investigating the relationship between the HRM practices and performance of small and medium-sized enterprises. Most studies investigating HRM practices focus on large firms. However, several special issues of well-recognized journals have called for more research on HRM in small enterprises (e.g., Entrepreneurship Theory and Practice, 2000, Vol. 25, Issue 1; Human Resource Management Review, 2003, Vol. 13, Issue 2; Human Resource Management, 2010, Vol. 49, Issue 2). The majority of papers published in these special issues argue that the HRM practices of small and new firms differ from those in large firms (e.g., Cardon & Stevens,...
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