Understanding the link between socially responsible human resource management and competitive performance in SMEs
| Published date | 03 September 2018 |
| Date | 03 September 2018 |
| DOI | https://doi.org/10.1108/PR-05-2017-0165 |
| Pages | 1211-1243 |
| Author | María Paula Lechuga Sancho,Domingo Martínez-Martínez,Manuel Larran Jorge,Jesús Herrera Madueño |
| Subject Matter | HR & organizational behaviour,Global HRM |
Understanding the link between
socially responsible human
resource management and
competitive performance in SMEs
María Paula Lechuga Sancho
Department of Business Organization, Cadiz University,
Jerez de la Frontera, Spain
Domingo Martínez-Martínez
Department of Financial Economics and Operations Management,
University of Seville, Seville, Spain, and
Manuel Larran Jorge and Jesús Herrera Madueño
Department of Financial Economics and Accounting,
Cadiz University, Cadiz, Spain
Abstract
Purpose –Regardless of the noteworthy growth in research and practice associating corporate social
responsibility(CSR) with humanresource management, littlehas been written in regardto one major dimension
of CSR in small- and medium-sized enterprises (SMEs), as CSR policies and practices are directed toward
employees. The purpose of this paper is to develop and test a conceptual framework connecting socially
responsible humanresource management (SRHRM) to competitive performance thatfits small business.
Design/methodology/approach –In order to get empirical evidence, structural equation modeling
technique was applied on the data from 481 Spanish SMEs.
Findings –Results confirm both the direct contribution of SRHRM to business competitiveness and the
multiple effects resulting from including two variables of additional interest for the relationship under study:
employee’s commitment and relational marketing.
Practical implications –One of the main research limitations is that the paper only reflects the perceptions
of owners/managers of SMEs. Although it was believed that the respondents give reliable and accurate
information about the way their firms are involved in CSR practices, there is a possibility that they might
provide incorrect or incomplete information.
Originality/value –The relationships proposed have never been studied before in context of SMEs. This is
a worthwhile endeavor, which makes an empirical contribution.
Keywords Quantitative, Corporate social responsibility, Business performance, Employee engagement,
Human resource management (HRM), Small to medium size enterprises (SME)
Paper type Research paper
Introduction
The relationship between corporate social responsibility (CSR) and human resource
management (HRM) has very recently become an interesting and productive/profitable area
of research (Baek and Kim, 2014). Actually, Voegtlin and Greenwood (2016) presented a
systematic review and conceptual analysis of 254 academic articles that specifically
included these two constructs. In their work, they found three main trends in CSR–HRM
research with regard to the CSR and HRM relationship: HRM as a component of CSR, CSR
as a component of HRM and CSR and HRM as mutually dependent.
While works in the field of human resources management have contributed to the
understanding and definition of effective human resources from an internal firm
perspective, recent attention has been focused on the impact of HRM on business, social and
environmental performance (Baek and Kim, 2014). HRM plays a significant role in how CSR
Personnel Review
Vol. 47 No. 6, 2018
pp. 1211-1243
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-05-2017-0165
Received 31 May 2017
Revised 8 January 2018
Accepted 10 February 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
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Competitive
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is understood, settled and communicated. It can promote commitment to CSR practices and
values and fosters CSR values to create socially responsible culture in the firm (Shen and
Zhu, 2011). Similarly, the way in which companies conceive and implement social
responsibility has undoubtedly implications for both employees and human resources
managers (Voegtlin and Greenwood, 2016). CSR can help, on the one hand, to motivate
employees, favor commitment and organizational identification (Shen and Zhu, 2011), and,
on the other hand, to define goals HRM can use to incentivize and reward employees or even
introduce standards for decent work (Mariappanadar and Kramar, 2014).
In this context, both concepts have been widely recognized as key sources of a firm’s
competitive advantage. Existing research advocates that HRM impacts businesses
performance through its influence on employee attitudes, commitment and behaviors and,
therefore, performance (Sels et al., 2006; Shen and Zhu, 2011). CSR studies go forward and
determine how the development of these practices contributes not only to directly generate
added value for the company but also bring out positive reactions from both internal and
external stakeholders. CSR aims to identify and satisfy the expectations of a broader group
of stakeholders in order to influence their perception of the company and to achieve
competitive advantages through the creation of “shared value”(Akremi et al., 2015). Indeed,
since Freeman (1984) promoted a CSR approach based on stakeholders, there have been
many studies arguing that the success of any organization depends directly on the
relationship that each company has with its stakeholders and the impact this generates on
the corporate image and reputation of entities. In this regard, many firms have adopted
formal certifications, such as SA8000, OHSAS 18001 or the Spanish Strategy for Social
Responsibility of Business 2014–2020[1], to communicate their ethical approach to human
resources and thus benefit from the positive feedback on their image and reputation
(Cantele, 2017).
At present, socially responsible human resource management (SRHRM) is emerging as a
concept basically devised from two areas of research, the HRM and the budding CSR.
Both of them are inevitably linked because of the socially responsible practices that have
been formulated for stakeholder “employees,”taking into account the guidelines of the HRM
focused on promoting and improving employee well-being.
Just as economic, social and environmental practices attributed to a socially responsible
firm that has a positive impact on firm performance through stakeholders expectations
achievement and the consequently concatenation of positive reactions (Serebour and
Ansong, 2017), the SRHRM should have positive effects not only on employees but also on
other stakeholders.
Taking into account the crucial role of small- to medium-sized enterprises (SMEs) in the
European economy (Vo, 2011) and the fact that, as it occurs in other business management
areas, the greatest part of the SRHRM empirical research has been focused on the field of
large companies (Cantele, 2017), considerable research is needed to enhance SME CSR field.
SME have a number of intrinsic peculiarities and structural, social and functional
characteristics that make them different by nature from large companies and, as such, CSR
in SMEs does not take the same form or meaning as their counterparts ( Jenkins, 2006).
Furthermore, empirical research confirms that, both, HRM and CSR practices tend to be
fairly ad hoc and informal in small firms (Sels et al., 2006).
By combining the perspectives of SRHRM and CSR in SMEs, the purpose of the present
study is to develop and test a conceptual framework linking SRHRM to competitive
performance that fits small- and medium-sized businesses as well as it attempts to shed
light on the existence of underlying mechanisms that contribute to clarify the causal
nexus between these variables (Vo, 2011). The main question is whether the development
of an intensive SRHRM is profitable for smaller organizations. For the development and
optimization of the conceptual framework, we rely on resource-based view (RBV ) theory.
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Using structural equation modeling (SEM), our paper analyses multiple effects derived from
including two variables of great interest in the analysis of organizational competitiveness:
employee’s commitment and relational marketing.
To fulfill these objectives, a review of some of the most significant theoretical
background information found on this relationship within the scope of SMEs is presented.
Additionally, employee’s commitment and relational marketing are considered as mediating
variables and the hypotheses to contrast are specified. The fourth section contains the
methodological issues, the discussion of the sample, the questionnaire design and the
statistical technique followed. Finally, main results are shown in section five, followed
by a discussion of the primary findings and conclusions with implications for academics
and practitioners.
Socially responsible human resource management from SMEs perspective
An overview of HRM literature in the last decade shows how CSR is gaining momentum
(Morgeson et al., 2013). Although CSR has become a multifaceted concept Dahlsrud (2008), it
has usually been defined using either the three classical dimensions perspective of corporate
social performance (Carroll, 1979) or the stakeholders approach (Freeman, 1984), or both
of them.
In particular, European Commission (2011) defined CSR as a process to integrate social,
environmental, ethical, human rights and consumer concerns into their business operations
in close collaboration with their stakeholders in order to accomplish two objectives.
First, CSR should try to maximize the value creation of interest groups and, second, to
identify, prevent and mitigate the adverse effects on the environment. CSR therefore
involves the development of practices, policies and strategies that take into account the
consequences of the organization’s behavior on a variety of stakeholders to improve their
social performance, gain organizational legitimacy and achieve long-term competitiveness
aims (Newman et al., 2016). In this regard, certain academic researchers in management
and organizational behavior domains suggest employees as central stakeholder of CSR
(Fenwick and Bierema, 2008) and recognize that one of the major dimensions of CSR is one
that targets at policies and practices related to employees. Even more, if attention is paid to
stakeholders conceptualizations made by Clarkson (1995, p. 106), as those who “have or
claim, ownership, rights or interests in a corporation”; or by Freeman (1984, p. 6), as those
who “can affect or be affected by the achievement of the organization’objectives,”there is no
other group of interest more obvious than employees.
From a strategic perspective, employees are the keystone of any socially responsible
corporation since they make up the internal structure of organizations, they are responsible
of carrying out the business activity and also constitute the main mechanism by which
firms establish relationships with all the other stakeholders (Cantele, 2017). Thus, if
managers had to give strategic priorities to both internal and external stakeholders’
expectations, needs or interests, they should be aware that responsibility toward external
groups requires to address the major issues concerning employees. Moreover, because
employees could be regarded as the main resource thorough which a corporation interact
with the market, external stakeholders should pay attention to the development of
socially responsible initiatives toward human resources throughout the firm’s value chain
(Aguilera et al., 2007).
The relevance of employees, as a key stakeholder for a strategic and effective CSR
implementation, has motivated certain researchers to focus their attention on those
policies and practices toward employees which are performed by “socially responsible”
firms (Orlitzky and Swanson, 2006; Newman et al., 2016; Shen and Benson, 2016; Shen and
Zhang, 2017; Barrena et al., 2017). In particular, taking as starting point the literature
related to HRM and CSR, Orlitzky and Swanson (2006) and Shen (2011) developed a new
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