Urban vs. Rural: Human Resource Management in SMEs

By Pearson, Terry R.; Stringer, Donna Y. et al. | Academy of Entrepreneurship Journal, July 2006 | Go to article overview

Urban vs. Rural: Human Resource Management in SMEs


Pearson, Terry R., Stringer, Donna Y., Mills, LaVelle H., Summers, David F., Academy of Entrepreneurship Journal


ABSTRACT

Human resource management (HRM) practices, support systems and personnel profiles were examined in urban and rural enterprises. The investigation is an exploratory descriptive study employing a discussion of the results of a questionnaire. The authors' hypotheses are that urban and rural small and medium sized enterprises (SMEs) would differ significantly in HRM practices, support systems, and personnel profiles. Data were analyzed using t-tests and chi-square tests, as appropriate, to detect statistically significant differences between urban and rural SMEs. No interventions were performed; data were self-reported responses to questions on a survey instrument. The research findings suggest the authors' hypotheses are generally incorrect. The results from the study may advance the concept that technology and information availability have developed equity in HRM activities and functions in both urban and rural enterprises. Moreover, rural firms are performing at a higher level of sophistication and experience in HRM practices, support systems and personnel profiles.

INTRODUCTION

The research study was developed to determine whether rural businesses, with smaller employee labor pools from which to recruit, use the same human resource management (HRM) functions and have a comparable amount of expertise to attract the necessary numbers of appropriately skilled prospective employees. The investigators will illustrate the current state of HRM practices, support systems, and personnel profiles in firms that typify the urban and rural American business climate. Webster (1979) defines urban as "characteristics of the city or constituting a city," while explaining rural as "of, like, or living in the country." This investigation begins with the question, "what is the state of HRM in rural America?" To further the goals of discovering differences between urban and rural enterprises, the investigation will include only small and medium sized enterprises (SMEs) to remove the effects which may be distorted by the inclusion of larger organizations. SMEs (small enterprises are defined as 0-49 employees and medium enterprises 50-250 employees for this study) have been recognized as forming an important component of our modern knowledge-based economies, but are different from large enterprises in many aspects (De Kok, 2003). It is the authors' contention that urban and rural firms are different in their HRM practices, support systems, and personnel profiles. This research instrument is the first step in the identification of human resource factors in urban and rural America in order to develop a collaboration of information for practicing managers.

Research on HRM and performance illustrates that HRM practices can impact performance, which further strengthens the need for HRM investigation (Boselie, 2002; Boselie, Paauwe & Jansen, 2001). Due to a number of trends (e.g., layoffs) and occurrences (e.g., threats of terrorism in larger cities) that have encouraged individuals to both leave urban areas and to begin their own businesses, it is somewhat discouraging and problematic to discover the dearth of research concerning HRM practices in rural organizations. Further, information regarding these same practices in SMEs are unclear (Heneman, 2000). This investigation of HRM personnel and practices in urban and rural enterprises proceeds as follows: the literature review; methodology; results; discussion; implications, limitations and future research directions; and conclusion.

LITERATURE REVIEW

An estimated one-fourth (22.5 percent) of the United States population lives in rural areas, defined as all places outside of metropolitan statistical areas (Fratoe, 1993). Rural communities have been depicted by such ideals as independence, freedom, self-reliance and life style traits which typically characterize the individuals that reside in rural America [Office of Advocacy-U.S. …

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