International Handbook of Entrepreneurship and HRM
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International Handbook of Entrepreneurship and HRM

Edited by Rowena Barrett and Susan Mayson

This invaluable reference tool has been designed in response to the growing recognition that too little is known about the intersection between entrepreneurship and human resource management. Paying particular attention to the ‘people’ side of venture emergence and development, it offers unique insights into the role that human resource management (HRM) plays in small and entrepreneurial firms.
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Chapter 10: Formalizing Relationships? Time, Change and the Psychological Contract in Team Entrepreneurial Companies

Lynn M. Martin, Shaheena Janjuha-Jivraj, Charlotte Carey and Srikanth Sursani Reddy


Lynn M. Martin, Shaheena Janjuha-Jivraj, Charlotte Carey and Srikanth Sursani Reddy Introduction In this chapter the main focus is the ‘formalization’ of human resource management (HRM) practices and processes in the growing small firm. More formal HRM practices, such as regular performance appraisal and employer-based training programmes, are usually associated with larger organizations (De Kok and Uhlaner, 2001). Larger firms are generally more formal and bureaucratic in their practices than smaller firms, and this can be seen in their approaches to recruitment (Barber et al., 1999) and training (Storey, 2004). Smaller firms, on the other hand, are characterized as operating in informal ways and adopting more formal modes only when forced to do so by breakdowns in communication and other pressures (Vinten, 1999). Despite the growing importance of strategic HRM, the available knowledge about HRM in small firms is highly descriptive and fragmented (Brand and Bax, 2002). Nankervis et al. (1996) found little empirical evidence on HRM strategies and practices in small and medium enterprises (SME) while Marlow (2000) suggests that there is little information on how or if SME owners make strategic use not only of their own skills but also of their management team to achieve business aims and growth. There are, however, studies showing that more formalized HRM may be connected to improved performance in small firms. Carlson et al. (2006) show HRM practices such as training and development, recruitment packages, use of performance appraisals, and competitive compensation are important for high sales growth firms. Beaver and...

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