A three-fold framework for understanding HRM practices in South-Eastern European SMEs
| Published date | 04 April 2016 |
| Date | 04 April 2016 |
| DOI | https://doi.org/10.1108/ER-07-2014-0078 |
| Pages | 310-331 |
| Author | Alexandros Psychogios,Leslie Thomas Szamosi,Rea Prouska,Christopher Brewster |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations |
A three-fold framework for
understanding HRM practices in
South-Eastern European SMEs
Alexandros G. Psychogios
Hull University Business School, University of Hull, Hull, UK
Leslie T. Szamosi
Department of Business Administration and Economics,
International Faculty of the University of Sheffield, City College,
Thessaloniki, Greece
Rea Prouska
Department of Leadership, Work and Organisations,
Middlesex University Business School, Middlesex University, London, UK, and
Christopher Brewster
Henley Business School, University of Reading, Reading, UK
Abstract
Purpose –The purpose of this paper is to study particular structural and organisational factors
affecting the formality of human resource management (HRM) practices in small and medium-sized
enterprises (SMEs) in South-Eastern European (SEE) post-communist countries, in particular Serbia,
Romania, Bulgaria and the Former Yugoslav Republic of Macedonia in order to understand the
antecedents of formalization in such settings.
Design/methodology/approach –Adopting a quantitative approach, this study analyses data
gathered through a survey of 168 managers of SMEs from throughout the region.
Findings –The results show that HRM in SMEs in the SEE region can be understood through a
threefold framework which includes: degree of internationalisation of SMEs, sector of SMEs and
organisational size of SMEs. These three factors positively affect the level of HRM formalisation in
SEE SMEs. These findings are further attributed to the particular political and economic context of the
post-communist SEE region.
Research limitations/implications –Although specific criteria were set for SME selection, the
authors do not suggest that the study reflects a representative picture of the SEE region because
the authors used a purposive sampling methodology.
Practical implications –This paper provides useful insights into the factors which influence HRM
in SMEs in a particular context. The findings can help business owners and managers understand how
HRM can be applied in smaller organisations, particularly in post-communist SEE business contexts.
Originality/value –HRM in SMEs in this region has hardly been studied at all despite their
importance. Therefore, this exploratory research seeks to expand knowledge relating to the application
of HRM in SMEs in SEE countries which have their business environments dominated by different
dynamics in comparison to Western European ones.
Keywords Small to medium-sized enterprises (SMEs), Human resource management,
Internationalization, South-Eastern Europe, Organizational size, Sector
Paper type Research paper
Introduction
Small and medium-sized enterprises (SMEs[1]) are considered to be the backbone of
both developed and developing economies, with the potential to stimulate economic
expansion and to act as stabilisers in downturns (Varum and Rocha, 2013). In the
Employee Relations
Vol. 38 No. 3, 2016
pp. 310-331
©Emerald Group Publishing Limited
0142-5455
DOI 10.1108/ER-07-2014-0078
Received 1 July 2014
Revised 27 December 2014
7 April 2015
29 May 2015
Accepted 10 June 2015
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
310
ER
38,3
European Union (EU) there are approximately 20 million SMEs representing
99 per cent of all businesses and they represent key drivers for economic growth,
innovation, employment and social integration (European Commission Enterprise and
Industry, 2015). Because of this, SMEs attract a lot of attention in terms of policy
development and implementation. There is still, however, only limited empirical
research on how human resource management (HRM), in particular, is practiced in suc h
organisations (Massey and Campbell, 2013; Messersmith and Wales, 2013; Parker and
Verreynne, 2013; Varum and Rocha, 2013).
HRM in SMEs has mainly been studied in Western countries (Psychogios and
Wilkinson, 2007; Szamosi et al., 2010; Tsai et al., 2007) or in large economies of the East
(Bae et al., 2011; Zheng et al., 2006, 2009). Although some European research focuses on
understanding “the periphery”with a focus on the specific conditions affecting
management practices (Prouska and Kapsali, 2011) and HRM practices in particular
(e.g. Apospori et al., 2008; Clark, 1996; Nikandrou et al., 2005; Papalexandris and
Panayotopoulou, 2004), peripheral countries are often seen as passive recipients of
HRM expertise, partly because of a belief that HRM theories originating from
research conducted in large multinational organisations can be universally applied
(Brewster, 1999; Tsai et al., 2007). SMEs in transition and peripheral economies wo rk
under weak infrastructure and market conditions (Hoskisson et al., 2000; Prouska and
Kapsali, 2011) which significantly impacts business practices. In addition, the financial
crisis that began in 2008 has disproportionately impacted many countries operating in
the European periphery. Given that for such businesses the cost of labour is nearly
always their primary operating cost, it is important to explore how SMEs in these
business environments practice HRM (Doherty and Norton, 2013).
This study, therefore, explores HRM in SMEs operating in four post-communist
countries in peripheral South-Eastern European (SEE): Serbia, Romania, Bulgaria and
the Former Yugoslav Republic of Macedonia (FYROM). We investigate two issues in
relation to these peripheral business environments; first, the importance and formality
of HRM in these SMEs; and, second, the structural and organisational factors
determining HRM practice within them. This paper examines the literature concerning
the formalisation of HRM practices in SMEs and provides the rationale and context of
the study. We then successively present the research methodology, the research
findings, and we discuss these findings and draw conclusions for HRM theory
and practice.
Research background
SMEs are widely known for their informal, emergent and reactive approach to
managing HRM issues (Harney and Dundon, 2006; Kok and Uhlaner, 2001; Kotey and
Slade, 2005; Marlow, 2000, 2002), partly because of the owner-manager’s role in HRM
decisions (Singh and Vohra, 2009). HRM in smaller organisations is differently applied
than in larger organisations; and formality of HRM policies and practices increases
with organisational size (Cardon and Stevens, 2004). It is, therefore, important to
explore the factors affecting formalisation of HRM practices in SMEs if we are
to understand the challenges they face.
Formalisation of HRM practices in SMEs
SMEs do not generally have HRM departments and major decisions are usua lly made
solely by the owner or managing director (Fabi et al., 2009; Kotey and Slade, 2005;
311
Framework
for
understanding
HRM practices
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