Human Resource Management Practices in Small and Medium-Sized Enterprises: Unanswered Questions and Future Research Perspectives

By Heneman, Robert L.; Tansky, Judith W. et al. | Entrepreneurship: Theory and Practice, Fall 2000 | Go to article overview

Human Resource Management Practices in Small and Medium-Sized Enterprises: Unanswered Questions and Future Research Perspectives


Heneman, Robert L., Tansky, Judith W., Camp, S. Michael, Entrepreneurship: Theory and Practice


A qualitative assessment is used to identify and describe the "gaps" between concerns entrepreneurs have about human resource management issues in growing small and medium-sized enterprises (SMEs) and the topics emphasized in the research literature on human resource practices in SMEs. Survey data from 156 young entrepreneurs, focus group data from 173 CEO/founders of fast-growth entrepreneurial firms, and 129 research articles were reviewed. Results revealed gaps and omissions in the literature, including the importance to entrepreneurs of developing high-potential employees that can perform multiple roles under various stages of organizational growth and the matching of people to the organizational culture. Recommended perspectives for future research are identified.

Small and medium-sized enterprises (SMEs) are vital to the U.S. economy. For example, of the 5,369,068 companies in the U.S. in 1995, 99.7% had fewer than 500 employees and 78.8% had fewer than 10 employees (USSBA, 1997). Even in larger firms (i.e., 500+ employees) entrepreneurial units (e.g., new product development teams) can be loosely construed as small businesses.

Given the importance of SME employees to the U.S. economy, it is disheartening to note that scant attention in the SME research literature is given to the study of human resource management practices. No matter where you look, in surveys (e.g., Hornsby & Kuratko, 1990), in reviews of the literature (e.g., Good, 1998), and in empirical studies (Heneman & Berkley, 1999), scholars are lamenting the dearth of information about human resource management practices in SMEs.

An equally important concern is the apparent mismatch between practitioner concerns regarding human resource practices and academic research. For example, a recent survey of 641 small business entrepreneurs identified labor shortages as their number one concern (National Federation of Independent Business, 1998). However, only a handful of research studies have ever been conducted on recruiting practices in SMEs (Heneman & Berkley, 1999). By comparison, literally hundreds of studies have been conducted on recruiting practices in large well-established organizations (Heneman, Heneman, & Judge, 1997).

The lack of information about human resources in SMEs is problematic for theory, research, and practice. Current human resource theory is often developed and tested in large organizations. As a result, little is known about the extent to which the theory extends to smaller entrepreneurial organizations. This is problematic given that a critical component of sound theory is the delineation of those circumstances, such as organizational size and structure, that serve as boundary conditions to the theory (Klimoski, 1991; Miner, 1980; Personnel Psychology, 1993).

In research, the size of the employer is with limited exceptions (e.g., executive compensation), often omitted in the study of human resource management practices. When size is used, it is most often only considered as a control variable. Given the observed differences in human resource practice effectiveness between employers of varying size (e.g., Deshpande & Golhar, 1994), it is clear that more attention should be given to the interaction between firm size and human resource practices. This is very difficult, however, absent sound theory and information on human resource practices in SMEs.

Because the theory, for the most part, does not extend to SMEs, the research that is used to test the theory and the limited insight derived from the research may not be relevant to the needs of practitioners. That is, human resource theory and the research being conducted may not be congruent with the actual human resource issues challenging SME practitioners in the field. Moreover, practitioners may be unaware of practical issues that they should be conscious of that can be identified and explained through academic research. …

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