Do Human Resource Practices Enhance Organizational Commitment in SMEs with Low Employee Satisfaction?

Date01 September 2013
DOIhttp://doi.org/10.1111/j.1467-8551.2012.00814.x
AuthorStewart Johnstone,George Saridakis,Rebeca Muñoz Torres
Published date01 September 2013
Do Human Resource Practices Enhance
Organizational Commitment in SMEs with
Low Employee Satisfaction?
George Saridakis,1Rebeca Muñoz Torres2and Stewart Johnstone1
1School of Business and Economics, Loughborough University, Loughborough LE11 3TU,
Leicestershire, UK
2Department of Economics and Quantitative Methods, Westminster University, London NW1 5LS, UK
Corresponding author email: G.Saridakis@lboro.ac.uk
This paper considers a large matched employee–employer data set to estimate a model of
organizational commitment. In particular, it focuses on the role of firm size and manage-
ment formality to explain organizational commitment in British small and medium-
sized enterprises (SMEs) with high and low levels of employee satisfaction. It is shown that
size ‘in itself’ can explain differences in organizational commitment, and that organiza-
tional commitment tends to be higher in organizations with high employee satisfaction
compared with organizations of similar size with low employee satisfaction. Crucially, the
results suggest that formal human resource (HR) practices can be used as important tools
to increase commitment and thus, potentially, effort and performance within underper-
forming SMEs with low employee satisfaction. However, formal HR practices commonly
used by large firms may be unnecessary in SMEs which benefit from high employee
satisfaction and positive employment relations within a context of informality.
Introduction
Employment in small and medium-sized enter-
prises (SMEs) within developed economies has
been explored at length over the past two decades
(see, for example, Barrett and Rainnie, 2002;
Holliday, 1995; Rainnie, 1989; Ram, 1994; Ram
et al., 2001; Tsai, Sen-Gupta and Edwards, 2007;
Wilkinson, 1999); a recurring theme being that
human resource management (HRM) is typically
more informal in SMEs compared with the em-
ployment practices associated with large corpo-
rate organizations (Marlow, 2005; Marlow,
Taylor and Thompson, 2010). In a recent analysis
of SMEs in the UK, Storey et al. (2010) reveal
how management formality increases as the firm
grows (see also Kaman et al., 2001; Kersley et al.
2006; Kitching and Blackburn, 2002). An im-
portant finding of Storey et al. (2010) is that for-
mality in the employment relationship results in
a significant decrease in job satisfaction, especially
in small single-site SMEs (for similar results see
also Idson, 1990; Tsai, Sen-Gupta and Edwards,
2007). This suggests that management formality
may generally be deemed undesirable in such
organizations; it is this intriguing finding that
prompted our research.
Given that there are degrees of formality in
both small and large organizations, as well as a
heterogeneous range of SMEs, the overarching
issue driving our research is whether formal HR
practices are always undesirable in SMEs? This
is of interest because previous studies have sug-
gested that, as small firms grow, pressures to
formalize and professionalize management prac-
tices arise (Jennings and Beaver, 1997; Roberts,
Sawbridge and Bamber, 1992). Following recent
empirical work (e.g. Brown, McNabb and Taylor,
2011; Green, 2008; Storey et al., 2010), we ex-
plore this issue by employing a large matched
bs_bs_banner
British Journal of Management, Vol. 24, 445–458 (2013)
DOI: 10.1111/j.1467-8551.2012.00814.x
© 2012 The Author(s)
British Journal of Management © 2012 British Academy of Management. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT