Building high performance employment relationships in small firms
| Pages | 506-519 |
| Published date | 21 August 2007 |
| DOI | https://doi.org/10.1108/01425450710776317 |
| Date | 21 August 2007 |
| Author | Carol Atkinson |
| Subject Matter | HR & organizational behaviour |
Building high performance
employment relationships in
small firms
Carol Atkinson
Manchester Metropolitan University Business School, Manchester, UK
Abstract
Purpose – The purpose of the paper is to present research into the employment relationship in small
firms and to examine its link to high performance. A psychological contract framework is adopted, it
being argued that this supports a more nuanced analysis than existing perspectives on the small firm
employment relationship which are limited and do not give sufficient insight into performance issues.
Design/methodology/approach – The paper employs a case study approach, carrying out 41
interviews involving both owner managers and employees in three firms. A critical incident technique
(CIT) is adopted in the interviews.
Findings – The paper finds that high performance derives from a relational psychological contract
and that transactional contracts impact negatively on performance. It is also demonstrated that,
contrary to what is implied in much of the existing small firm literature, small firms are capable of
building relational contracts.
Research limitations – The research in this paper is drawn from a small-scale study and is not
generalisable. It does, however, provide a basis for a more detailed study of the small firm employment
relationship.
Practical implications – The research in the paper demonstrates the value of building a relational
psychological contract in order to drive high performance. It also gives insight into how this can be
done in the small firm context and the importance of the owner manager approach to this.
Originality/value – The paper presents more nuanced ways of exploring the small firm
employment relationship than already exist and also considers the issue of performance, which is
under-researched in this context.
Keywords Psychologicalcontracts, Performance management,United Kingdom, Small enterprises,
Employee relations
Paper type Research paper
Conceptual overview
Small firms are widely recognised as being of significant importance in the UK, both in
terms of their financial contribution to the economy and in terms of their impact on the
lives of the millions of employees who work within them (TUC, 2003). Despite this,
there has been relatively little research into small firms, and a specific lack in terms of
the employment relationship (Wilkinson, 1999) or high performance issues, most such
studies being situated in larger firms (see, for example, Purcell et al., 2003).
Work on the employment relationship in small firms has a tendency to treat small
firms as a homogeneous group, early research, the Bolton (1971), for example,
suggesting that small firms were superior workplaces for many employees due to their
informality and harmonious mode of operation. While challenge to this perspective has
arisen, what has replaced it continues to adopt an homogeneous approach to the sector,
for example, Rainnie (1989), the argument is that, in fact, small firms are often
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0142-5455.htm
ER
29,5
506
Received September 2006
Revised January 2007
Accepted January 2007
Employee Relations
Vol. 29 No. 5, 2007
pp. 506-519
qEmerald Group Publishing Limited
0142-5455
DOI 10.1108/01425450710776317
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