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 11: Growing Pains: Managing the Employment Relationship in Medium-Sized Enterprises

Susan Marlow and Amanda Thompson


Susan Marlow and Amanda Thompson Introduction There is a growing body of literature on the management of labour in small and medium-sized enterprises (SMEs), usually defined as those with fewer than 250 employees (DTI, 2004). However, the bulk of this literature focuses on small firms, which are those with fewer than 50 employees. This literature is said to represent, ‘a key exemplar of analytical advance [where] research has made empirical and analytical progress’ (Ram and Edwards, 2003: p. 719). Whilst mindful of heterogeneity within the sector, the evidence suggests informal management of the effort-wage bargain (Holliday, 1995; Marlow, 2003; Marlow et al., 2004; Moule, 1998; Ram and Edwards, 2003; Ram et al., 2001). Arguably this informality arises and persists from the spatial and social proximity between employers and employees. Additionally owner–managers have limited awareness or regard for formal policy and practice, which in turn leads to a devaluing of HRM and a consequent reluctance to delegate labour management to professionals (Marlow, 2002; Marlow et al., 2004; Mazzarol, 2003; Ram et al., 2001). Since 1998 the UK Workplace Employment Relations Survey (WERS) has paid attention to SMEs including firms with as few as 10 employees in 1998 and five employees in 2004. The findings from these surveys indicate that while the extent of formalization varies within and across smaller firms, in general, formality increases with organizational size, (indicated by employee numbers and financial performance) (Cully et al., 1999; Kersley et al., 2006). Informality arising from social and spatial...

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