Labour flexibility practices in Dutch SMEs
| DOI | https://doi.org/10.1108/PR-02-2019-0086 |
| Date | 15 November 2019 |
| Pages | 791-807 |
| Published date | 15 November 2019 |
| Author | Jan De Leede,Linda Drupsteen,Esther Schrijver,Anneke Goudswaard,Nihat Dağ,Joost Van der Weide,Sarike Verbiest |
| Subject Matter | HR & organizational behaviour,Global HRM |
Labour flexibility practices in
Dutch SMEs
Jan De Leede
University of Twente, Enschede, The Netherlands
Linda Drupsteen and Esther Schrijver
Windesheim Flevoland, Almere, The Netherlands
Anneke Goudswaard
Windesheim Flevoland, Almere, The Netherlands and
Department of Healthy Living,
Netherlands Organisation for Applied Scientific Research,
Leiden, The Netherlands
Nihat Dağand Joost Van der Weide
Windesheim Flevoland, Almere, The Netherlands, and
Sarike Verbiest
Department of Healthy Living,
Netherlands Organisation for Applied Scientific Research, Leiden, The Netherlands
Abstract
Purpose –The purpose of this paper is to understand how small and medium enterprises (SMEs) cope with
the need for labour flexibility. Most previous studies ignore the labour flexibility practices of SMEs, especially
in times of economic growth and tight labour markets.
Design/methodology/approach –A multiple case study approach is applied, with ten Dutch SMEs located
in one small province with a similar labour market. A survey was executed as an intake, followed by 48
interviews with the entrepreneurs, HR and other managers and employees, and two focus groups in each
company. The findings are based on an analysis of the approved case descriptions.
Findings –SMEs, like big companies, do not rely on one flexibility practice. Volume fluctuations are
countered with all flexibility strategies, the mix fluctuations and the product innovations are mostly
countered with flexible functions and flexible production technology. In general, the data suggest that
flexibility strategies of SMEs can be characterised as ad hoc, reactive and with a short-term orientation.
Research limitations/implications –Future research should include other sectors and regions enabling
to generalise the findings. Future research should have a longitudinal design to include the pathway
dependencies of flexibility practices.
Practical implications –This study identifies the need to analyse flexibility demands; reduce flexibility
demands before investments in flexibility practices; create production process flexibility; invest in labour
flexibility practices only after the first three steps are taken; and develop basic and more advanced levels of
flexible contracts, flexible functions and flexible working times.
Originality/value –This study contributes to the authors’knowledge on the use of labour flexibility
practices in SMEs. In addition, it brings empirical data on how these labour flexibility practices relate to the
needs for flexibility and how they relate to other sources of organisational flexibility, such as a flexible market
approach and flexible production technologies. Dynamic capabilities should include the suggested
operationalisation of the flexibility practices.
Keywords Qualitative, SMEs, Dynamic capabilities, Case studies, Labour flexibility
Paper type Research paper
Personnel Review
Vol. 49 No. 3, 2020
pp. 791-807
Emerald Publishing Limited
0048-3486
DOI 10.1108/PR-02-2019-0086
Received 25 February 2019
Revised 19 June 2019
19 August 2019
30 August 2019
Accepted 8 September 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
© Jan DeLeede, Linda Drupsteen,Esther Schrijver, AnnekeGoudswaard, NihatDağ, Joost Van der Weide
and Sarike Verbiest. Published by Emerald Publishing Limited. This article is published under the
Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and
create derivative works of this article (for both commercial and non-commercial purposes), subject
to full attribution to the original publication and authors. The full terms of this licence may be seen at
http://creativecommons.org/licences/by/4.0/legalcode
791
Labour
flexibility
practices in
Dutch SMEs
Introduction
Small- and medium-sized enterprises (SMEs) are an important part of today’s economies as
they account for more than 99 per cent of the enterprises in the EU and for around two-
thirds of total employment in the EU. Although SMEs are heterogenous it is acknowledged
that smaller workplaces are characterised by several key features, such as the role of the
entrepreneur, the familial culture, the resource poverty and the financial structure (Welsh
and White, 1981; Schmelter et al., 2010). Consequently, research on human resource
management (HRM) in large organisations cannot properly explain HR practices in SMEs.
One of the challenges of SMEs is their ability to cope with demand fluctuations (Wilkinson,
1999; Matejun, 2014; Whyman and Petrescu, 2015; Kotey, 2017). Given their impact on the labour
market, it is relevant to know how small enterprises deal with flexibility. Do they use the same
set of labour flexibility options like large companies have (Cassell et al., 2002), e.g. agency
workers and temporary employment, overtime, annualised hours and functional flexibility? Or
do they rely on informal flexibility, such as a flexible attitude of employees, due to the familial
nature of many small companies? To what extent is leadership within SMEs equipped to make
the most effective decisions in the area of HR and labour flexibility (Mesu et al., 2013)? In the
Dutch context, one of the most flexible economies of EU given the large share of part-time and
flexible work arrangements and labour contracts (Hartog and Salverda, 2018), one contextual
factor must be incorporated in the analysis: the tight labour market. After the crisis of 2008–2009
and some years of economic standstill, the Dutch economy has seen an economic growth since
2015 with a declining unemployment rate from 7per cent to under 4per cent in 2018 (CBS, 2018).
The last couple of years, certain parts of the labour market, like ICT, construction, healthcare,
technology services and high tech showed growing shortages. How do SMEs survive in this war
for talent (Krishnan and Scullion, 2016)? Our research focus is on the characteristics of the labour
flexibility strategies of SMEs in the Netherlands, in times of economic growth and labour
shortages. The main question is “How do SMEs’labour flexibility practices fit with the need for
flexibility and their other flexibility strategies, within the context of tight labour markets?”
Our theoretical framework is based on the dynamic capabilities approach (e.g. Wang and
Ahmed, 2007; Pisano, 2017), rooted in the resource based view of the firm. In short, the
resources of the firm deliver competitive advantage. Competitive advantage does not come
from new products solely, because firms cannot survive on one-off innovations, however, it
does come from the ability to develop new products (Teece et al., 1997; Teece et al., 2016).
The same applies to SMEs, the need for continuation of small- and medium-sized companies
is not only one-off innovations, it is also about continuously responding to changing market
demands and fulfilling the needs of customers. Wang and Ahmed (2007) distinguish
between adaptive, absorptive and innovative capabilities. Due to our focus on labour
flexibility, we want to further develop the concept of adaptive capabilities.
Building on the dynamic capabilities approach and especially the adaptive capabilities,
our central concept is the balance between the flexibility demands and the flexibility
practices a company does apply (Volberda, 1996; De Leede and Goudswaard, 2008). This
balance should be effective, efficient and sustainable. The firm’s adaptive capabilities must
offer the identification of the flexibility demands, and the effective choice within the full
range of flexibility practices in order to meet the flexibility demands by the market.
Theory on labour flexibility in SMEs
The literature on HRM and labour flexibility is mainly based on evidence from large
companies insteadof SMEs (Cassell et al., 2002; Schmelter et al., 2010; Krishnan and Scullion,
2016; Looise et al., 1998). SMEs are small compared to large companies, small in numbers of
employees and smallin financial terms, like turnoverand profit. Commonly, small companies
are defined as having up to 49 employees on their payroll, while medium-sized companies
have 50–249 employees (OECD, 2005). Apart from size, SMEs differ from large companies in
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