Effects of socially responsible human resource management (SR-HRM) on innovation and reputation in entrepreneurial SMEs

Abstract

This work focuses on the importance of responsible human resource management, and its link to innovation and reputation, which are deemed to be relevant intangible assets for all firms, although particularly for entrepreneurial SMEs, and which are of particular interest since they have remained relatively unexplored despite their key role in the business fabric. Specifically, we present an explanatory model comprising three variables; the latent independent variable is socially responsible human resource management (SR-HRM), and the corresponding endogenous variables are reputation and innovation. In order to empirically validate the conceptual model developed, we design a survey which has been answered by a representative sample of entrepreneurs of their own firms. Using partial least squares (PLS), we analyse both the measuring model as well as the structural model. Results prove satisfactory and allow us to confirm the direct positive and significant relation between socially responsible human resource management and reputation, as well as the causal relation when innovation acts as a mediating variable.