Abstract
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
Highlights
Small and Medium Enterprise (SME) sector contributes more than fifty percent to its GDP in Japan, the third largest economy in the world
This study focused on four major aspects of Human Resource Management (HRM) practices and their relationships with labour turnover
It implies the idea that four HRM practices; employee staffing, training & development, performance management, and compensation management are having negative and weak relations with labour turnover
Summary
Small and Medium Enterprise (SME) sector contributes more than fifty percent to its GDP in Japan, the third largest economy in the world. The importance SME sector is often indicated by the very large share of the GDP they occupy and, the number of companies, total number of employees, value of shipments etc. There are 4.69 million SMEs in Japan, constituting 99.7% of all enterprises, accounting for 70% of all employment (Small and Medium Enterprise Agency, 2013). This sector is considered to be the backbone of their economy. Their relative importance as a share of the number of enterprises and the number of employees is declining compared with the situation at the beginning of the 2000s, there is no change in the fact. SMEs play a major role in revitalizing the local economy and increasing employment opportunities (Sato, 2013)
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