A systematic review of human resource management practices in small and medium-sized enterprises

– This study examines how small and medium-sized enterprises (SMEs) can align their human resource management (HRM) practices with the motivational factors of Generation Y, a demographic known for its distinct work expectations, including flexibility, career development, and digital engagement. The research employs a systematic review methodology guided by the PRISMA protocol, focusing on studies conducted within Europe over the past five years. An initial search yielded 580 articles, of which 52 were assessed, and ultimately 7 met the inclusion criteria for analysis. The findings indicate that Generation Y employees are driven by a desire for work-life balance, career development, and roles that align with their personal values. SMEs that offer flexible working conditions, structured career paths, and digital tools for engagement and feedback are more likely to retain this cohort. However, resource constraints in SMEs pose challenges, necessitating scalable and adaptable HRM strategies. The study provides practical recommendations, including the adoption of flexible work policies, digital engagement tools, and recognition programs, to enhance employee satisfaction and retention. The research highlights a gap in the literature regarding long term strategies for integrating these practices in SMEs. Future research should focus on developing cost-effective HRM solutions tailored to the specific needs of SMEs while addressing the unique motivations of Generation Y employees. Purpose – This paper explores how small and medium-sized enterprises (SMEs) can align their human resource management (HRM) practices with the motivational needs of Generation Y employees. It addresses the growing challenge SMEs face in adapting to generational shifts in workplace expectations, particularly around flexibility, purpose, and psychological safety. The goal is to synthesize existing research and highlight HRM approaches that support employee engagement, satisfaction, and retention within the constraints typical of SME environments. Design/methodology/approach – This study employs a systematic literature review following the PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) methodology. The review process included comprehensive searches in databases such as Google Scholar, Scopus, and Web of Science, focusing on articles published between 2019 and 2024. After applying predefined inclusion and exclusion criteria, 580 studies were initially identified, of which 52 were reviewed in detail. Ultimately, 7 peer-reviewed articles met all criteria and were analyzed to identify recurring HRM practices aligned with Generation Y’s motivational factors in SME settings. Findings – The review identified flexibility, career development, purpose-driven work, and digital engagement as core motivational drivers for Generation Y employees in SMEs. HRM practices that promote autonomy, clear growth pathways, and meaningful feedback were consistently associated with higher engagement and retention. Despite resource limitations, SMEs can adopt scalable solutions such as flexible work policies, low-cost digital tools, and supportive leadership structures. The findings also highlight the need for balance in feedback practices and the importance of aligning organizational values with personal values to foster long-term loyalty among Generation Y employees. Originality – This paper offers one of the few systematic reviews focused specifically on aligning HRM practices with Generation Y motivational factors in the SME context. By applying the PRISMA methodology, it consolidates fragmented academic findings into a structured overview of effective HR strategies for smaller enterprises. The study highlights a notable gap in existing literature and provides a foundation for future empirical research. Its value lies in offering practical, adaptable recommendations that SMEs can apply despite resource limitations, bridging the divide between generational expectations and operational realities.

This chapter explores HRM (Human Resource Management) practices in SMEs (Small and Medium Enterprises) in the MIST (Mexico, Indonesia, South Korea, and Turkey) economies. Researchers and consultancy firms such as Goldman Sachs have suggested that these nations will be potentially very strong trading economies for the next decade based on economic analyses. SMEs play pivotal roles in these nations as they contribute to a majority of their domestic employment and GDP (Gross Domestic Product). The focus of the chapter is based on a thorough investigation of secondary sources on HRM practices (recruitment and selection, training and development, performance management, and compensation) of SMEs in the MIST nations. Institutional theory and Strategic Human Resource Management (SHRM) perspectives are showcased in understanding these practices better. The findings of the study suggest that HRM practices adopted in the MIST countries, both individually as well as a cluster, reflect the aspects of universalistic, contingency, resources bases, and institutional perspectives of the Strategic HRM (SHRM) model. The evidence also indicates the simultaneous adoption of both convergence and divergence theories of international HRM. The chapter also presents a model of HRM practices adopted by the SMEs in the MIST nations. Theoretical and practical implications of findings are discussed and directions for future research are provided.

PurposeThis paper aims to investigate the relationships among supply chain management (SCM) implementation, human resource management (HRM) practices and small- and medium-sized enterprises (SMEs) firm performance in Thailand. It further examines whether HRM practices have a mediating effect on such relationship.Design/methodology/approachA survey instrument was developed based on the literature review which then was verified by SCM expert opinions. Cross-sectional surveys of sample employees of SMEs in Thailand were undertaken by both direct and mail surveys. Of about 779 questionnaires distributed, 203 usable questionnaires were returned. Structural equation modeling (SEM) was performed to analyze the obtained data.FindingsThe statistical results reveal that SCM indirectly improves firm performance of small- and medium-sized firms through HRM practices. The latter, HRM practices, is found to fully mediate the impact of SCM implementation on SME firm performance. These results suggest that SCM cannot enhance SME firm performance if its implementation is undertaken without effective HRM practices.Originality/valueThis study identified the research gap in SCM areas by recognizing the scarcity of research on SCM in SMEs and by identifying and integrating HRM practices as a significant behavioral support system to SCM implementation in SMEs. Its results reveal that HRM practices fully mediates the impact of SCM on SMEs’ firm performance.

This article analyzes diverse aspects of human resource management as practiced in small and medium scale businesses. The significance of human resource management has increased with the expansion of businesses at different levels due to the liberalization of market and trades across the world. The role of human resources in corporate organizations is crucial in the sense that the strength of people determines the growth of businesses. Human resources are taken as the most precious asset of SME. To reach its values the business must pay a huge importance in human resource management. The implementation of enterprise strategy relies on the employee’s quality as reflected in the entire process of engagement in the world of business. This paper has aimed to demonstrate the implementation of human resource practice and their impact in Small and Medium Enterprise (SME) performance. The data used in the paper have been from secondary sources including articles, reports and dissertations. The existing literature demonstrates the management of human resources is aspiring in the business world. Both management and implementation of human resources has influenced the success of small and medium enterprises. Indeed, the commendable management of human resource helps three fundamental intents of each enterprise: surviving, increasing and raising their incomes. The paper investigates into the role of Small Scale Enterprises (SMEs) in the manufacturing sector that contributes to the growth of economy. Indeed, small-scale enterprises are important for modern economy as it widely contributes to employment growth as well. The development of a country depends on economic prosperity. Managing human resources in businesses can help to enhance the status of corporate world that aims to multiply economy of all aspects of society. As business establishments are human organizations, people are very indispensable in its existence and success. The study has explored that human resource development is significant to any organizations ranging from small to large scale enterprise because it is well known that no business can exist without human beings. It is recommended that SMEs business should clearly define recruitment policies in consistency with the existing laws of a particular nation. Besides, there should be consistency in training activities, the owners of SMEs business should ensure that training offered to employees at all levels is pertinent to their needs. Overall, human resource management practices play a significant role in affecting labor productivity in manufacturing companies.

PurposeThis study focuses on owner-managers’ paternalism and its effects on human resource management (HRM) in micro, small and medium enterprises (MSMEs) during COVID-19 pandemic. It aims to describe and discuss how owner-managers paternalism enhanced the sustainability of exemplary MSMEs.Design/methodology/approachA qualitative approach employing Heideggerian interpretive phenomenological methodology was used. Data were collected from 30 exemplary MSME restaurants using non-participant observation, document analysis and in-depth interviews with a purposive sample of 75 key informants: 30 owner-managers and 45 of their employees in 10 Thai tourist provinces over three time periods. Verbatim transcripts were coded using template analysis to generate distilled data summaries.FindingsFour HRM themes were identified: (1) staffing, (2) development, (3) performance management and (4) compensation. A proposed model was suggested to understand how owner-managers’ paternalism affects four HRM practices. Owner-managers use their authority, combined with high levels of benevolence and morality, through supportiveness and kindness for employees to meet both their work and personal needs. Specifically, their employees repay them through performance and loyalty. This reciprocal relationship positively impacts employers, employees and MSMEs.Research limitations/implicationsThe generalization of the study's outcomes is limited by the sample size and study methodology. The findings propose alternative HRM practices for Thai restaurants, therefore, generalization to all types of MSMEs and all areas of the world is not possible. In future research, it would be useful to consider a mixed-methods approach using large samples of MSMEs across the country or in other countries. Some small HR issues that were noted in this study, such as using the horoscope, astrology and zodiac as hiring tools, could be studied further. Future studies should explore the main thrust and relationship established between owner-managers and employees to drive MSMEs' performance.Practical implicationsThe findings may be used as guidelines for creating a deep bond between employers and employees to strengthen MSMEs and foster sustainability.Social implicationsImportant for instilling HRM practices in MSMEs. This paper provides policy implications for governments, relevant public agencies and other developing countries. They need to put forward for consideration of new strategies for migrant policy, in order to solve the shortage of labor in MSMEs. A well-considered policy could increase employee well-being during crises by bringing supportive strategies together.Originality/valueThis study expands knowledge of the effects of paternalism on HRM practices in shaping employer and employee relationships through social exchange theory (SET).

Research aims: This study aims to investigate the influence of Human Resource Management (HRM) practices on employee performance, with job satisfaction serving as a mediating variable, within the context of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia.Design/Methodology/Approach: Data were collected using structured questionnaires distributed to owners and employees of MSMEs in Indonesia. The sampling technique used was purposive sampling, resulting in a total of 130 valid responses. Data analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM) with the assistance of SmartPLS 4 software.Research findings: The results of the study indicate that HRM practices have a positive and significant effect on employee performance. Furthermore, job satisfaction significantly mediates the relationship between HRM practices and employee performance. These findings suggest that enhancing HRM practices can increase employee job satisfaction, which in turn leads to improved performance.Theoretical Contribution/Originality: The findings of this study can serve as a valuable reference for policymakers in designing programs and policies that support the enhancement of HRM practices within the MSME sector. Strengthening HRM practices can contribute to increased employee satisfaction and performance, which in turn promotes the overall growth and competitiveness of MSMEs in Indonesia.Practitioners/Policy Implications: The practical implication of this study highlights the importance for MSME managers to implement effective HR strategies aimed at enhancing employee job satisfaction. By prioritizing well-structured HR practices, MSME managers can foster a more motivated and productive workforce, thereby improving overall organizational outcomes.Research Limitations/Implications: This study focuses primarily on HRM practices and job satisfaction as the main variables influencing employee performance. However, it acknowledges that employee performance is also affected by other important factors, which were not examined in this research. Future studies are encouraged to explore these additional variables to provide a more comprehensive understanding of the determinants of employee performance within the MSME sector.

Small and Medium Enterprise (SME) sector is considered to be the backbone of Japanese economy. Its importance is often highlighted by the large share of the economy it occupies, whether in terms of number of companies, total number of employees, value of shipments or GDP. However, since last two decades many SMEs have gone out of businesses while firm entry rate is showing downward trend. According to some business advocates, one of the reasons for high rate of business failures in SMEs is due to its less attention to the human side of their businesses. Therefore, the broad objective of this study is to examine the role of Human Resource Management (HRM) practices in SMEs in Japan. Specifically, this study attempts to examine the relationship between HRM practices and labor productivity in manufacturing SMEs in Japan. Further, it aims to examine the mediating link of HR outcomes in between HRM practices and labour productivity. A structured questionnaire was developed and sent to 436 SMEs in Aichi Prefecture and 144 firms responded to the questionnaire resulting in 32 percent response rate. Based on the data analysis it was found that there is a strong positive relationship between HRM practices and labour productivity mediated by HR outcomes in manufacturing SMEs in Japan.

PurposeThis study aims to determine the current state of research on sustainability in the context of human resource management (HRM) practices adopted by small and medium-sized enterprises (SMEs), identify the most important gaps and propose an agenda for future studies.Design/methodology/approachThrough a systematic literature review (SLR), this study comprehensively examines the relevant literature on sustainability-related aspects of HRM in SMEs. It includes descriptive and thematic analyses of 29 research articles published in high-ranked academic journals selected from 506 records retrieved from four major databases (Scopus, Web of Science, ScienceDirect and EBSCOhost).FindingsThe findings suggest a growing interest in sustainability-related HRM in SMEs after 2020. Notably, most studies focused on green and social sustainability concerns, with limited attention to the triple bottom line (TBL) perspective. A detailed examination revealed variations among the three streams of research in terms of methodology, location of studies, nature of sustainability-HRM linkage and placement of HRM practices in research models. Despite these differences, positive effects of HRM practices on sustainability integration seem evident, including impacts on employee competences, behaviors and company-level outcomes.Originality/valueThis article is the first to systematically review the literature on the sustainability-HRM nexus specifically for SMEs. It contributes by identifying thematic clusters, methodological trends, contextual aspects and outcomes of sustainability-HRM integration, thereby laying the groundwork for future research.

The Impact of HRM Practices on Supply Chain Management Success in SME

Small and medium-sized enterprises (SMEs) require effective human resource management practices to sustain their competitiveness. However, the small business literature indicates the focus on human resource management practices as a mean to improve effectiveness and competitiveness of SMEs has received little research attention. The purpose of this paper is to contribute to a better understanding of human resource management practices among SMEs. Following the views presented in the literature, this paper prescribes six useful human resource management practices that can assist SMEs to improve their competitiveness as well as performance.

Human resource management (HRM) practices in small and medium-sized enterprises (SMEs) to increase employees’ job satisfaction are on the rise. Given that SMEs often adopt highly formalized HRM practices of large companies, for example, in the case of annual performance appraisals, we investigate the relationship between the degree of formalization of annual performance feedback and employees’ job satisfaction in the SME context. Using an experimental survey study design (N = 166) in a German SME, we find that employees receiving annual performance feedback with a high degree of formalization report lower job satisfaction directly after the annual performance feedback than those who are still to receive their feedback. In contrast, in the case of annual performance feedback with a low degree of formalization, employees report higher job satisfaction right after the annual performance feedback than employees before the feedback. Moreover, we find that employees’ feedback orientation is an important moderator in this relationship.

Small- and medium-sized enterprises (SMEs) are one of the engines for inclusive economic growth. Yet little is known about the contribution of human resource management (HRM) practices to the success of SMEs. This study empirically examines how HRM practices determine different categories of innovation of SMEs in the context of a transition economy. Using a longitudinal dataset and applying the instrumental variable methodology to correct for endogeneity problems, our study uncovers that HRM practices positively affect the quality of employed human and physical capital assets of SMEs. More importantly, we find that that HRM practices significantly contribute to the launch of new products and improvement of existing products. In addition, we also find that the adoption of HRM practices facilitate labour productivity and value added. Taken together, these findings highlight that HRM practices are a strategic resource for innovation and development of SMEs in transition economies by rewarding them with higher-quality capital assets. JEL: L25, O15, O31

Small and Medium Enterprise (SME) sector is playing a significant role in Japanese economy. However, over the last two decades, SMEs have no longer been a thriving source of growth. The firm entry rate has downward trend while exit rate has trended upward in recent years and considerably exceeded the entry rate. One of the reasons for the high rate of business failures in SMEs, is due to its less attention to the human side of their businesses when compared with their counter parts of large enterprises. High voluntary turnover is considered to be the one of critical problem for SME owner/managers among many other human resource issues. Therefore, the objective of this paper is to examine the relationship between Human Resource Management (HRM) practices and voluntary turnover in SMEs in Japan. Specifically, this study attempts to examine the relationship between HRM practices and voluntary turnover shedding some lights on the mediating effect of the link in between HRM practices and turnover rate. A structured questionnaire was developed and sent to 436 SMEs in Aichi Prefecture and 144 firms responded to the questionnaire resulting in 32 percent response rate. Based on the data analysis it was found that there is negative but weak relationship, partially mediated by HR outcomes, between HRM practices and voluntary turnover rate in manufacturing SMEs in Japan.DOI: http://dx.doi.org/10.4038/suslj.v13i1.7668Sabaragamuwa University Journal 2014; V. 13 No. 1 pp 17-31

PurposeBuilding on the little guidance in the existing literature regarding the relationship between human resource management (HRM) practices, entrepreneurial orientation and firm performance, this study aims to generate theoretical propositions that underpin an integrative framework following a systematic literature review, then to test such a framework within the context of a small and medium enterprise (SME) to demonstrate how employees’ knowledge and competencies are translated into added value while fostering the company’s entrepreneurial capabilities and culture.Design/methodology/approachFor the purpose of this research, a systematic literature review was adopted to build the propositions underpinning an integrative theoretical framework linking HRM practices, entrepreneurial orientation and firm performance. A single case study approach was then followed to test the propositions of the integrative theoretical framework within the context of an SME, while adopting a triangulation methodology for data collection, including questionnaires, interviews and archival data. Data analysis was conducted following the procedures of a pattern-matching methodology.FindingsThis research confirms the strategic role of HRM practices in fostering the firm’s entrepreneurial orientation and capabilities, while nurturing, enriching and bundling employees’ knowledge, skills and distinctive competencies within the context of a company’s innovation-driven strategy. HRM practices through a strategic alignment with the company’s business strategy, contribute to shaping up organizational attitudes, behaviors and cultural determinants that are, in turn, conducive to better innovativeness, risk propensity and initiative-taking. Theoretical and empirical evidence shows how such corporate entrepreneurialism is then translated into adding value activities, individual and group productivity and overall organizational performance.Research limitations implicationsThis research generates meaningful insights on how HRM practices contribute to shaping up corporate entrepreneurship attitudes and transforming them into both individual and organizational results while building on conceptual assumptions and empirical evidence. The authors believe such insights have the potential to lay the foundations of a comprehensive theoretical model that disentangles the complexities and the dynamics of how strategically-oriented HRM interventions could help an organization redirect its employees’ competencies into innovation and entrepreneurial capabilities to generate a competitive advantage in an ever-changing business environment. Future research should emphasize mainly on multiple case study approaches and ethnographic methodologies for the sake of result generalizability and holistic understandings.Practical implicationsThis research draws significant conclusions for SMEs to cope with the change and the fierce competitive dynamics affecting current business environments. To consolidate and further develop their strategic positioning, this research suggests that SMEs could leverage distinctive individual and group competencies, through strategically aligned HRM actions and investments, to foster learning and generate entrepreneurially-oriented cultural values and management style conducive to innovation, performance and competitive advantage.Originality/valueThis research offers integrated and holistic views of how HRM practices affect organizational performance while leveraging on learning to create the necessary cultural and managerial conditions for corporate entrepreneurialism. This research builds on both theoretical propositions and empirical evidence to lay the foundations of a comprehensive model linking HRM practices, entrepreneurial orientation and firm performance. From a practical perspective, the research findings suggest new human resource developmental venues while placing much emphasis on the value of creating the innovation-driven managerial culture and fostering entrepreneurially-oriented attitudes to achieve better performance results.

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.