Employment systems in small firms: A multilevel analysis

Abstract

This exploratory study draws upon the perspectives of employees and managers from 50 small Australian firms to build a more complete and nuanced view of the interaction of human resources and capabilities with firm performance. Specifically, it uses a mixed methods multilevel design that elicits employee perspectives of employment systems and chief executive officer (CEO) assessments of firm performance. Results show that higher performing firms had better rated employment systems, with a cluster of human resource practices which included greater informality, employee engagement and participation. The views of employees were more discriminating and diagnostic than those of CEOs. The article discusses the implications of these findings for the study of employment systems and human resource management in small firms.