The dual pressures of youth and expansion: revisiting stage theories of growth in SMEs

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.

Human Resource Management (HRM) has become more important to strategic management, particularly as a result of its role in providing competitive benefit, advantage and the rush to competitiveness. Human Resources are seen as the available talents of people to an organization as potential contributors to fulfill the organization's mission, v ision, strategy and goals. Drastic changes occurred when machines and industry manufacturing methods were introduced in early 1900. Since machines and devices were introduced for manufacturing industries, laborers and workers expected very high output minimizing the labour cost. When a machine or device required several number of workers to operate its different functions, supervisory and control procedures were necessary and must for managing the workers owing to the factors like how different duties are assigned and allocated among workers, and to maintain worker relationships, communication, and job divisions. Factory authorities started to frame and design rules, regulations, work time schedule, job assignment methods and procedures, remuneration pay structures. They further designed proper and appropriate plans for getting a maximum output of the labour through job specialization. This trend was mostly influenced for the development of the theory called Scientific Management. Taylor (1856–1915) is called as the father of scientific management, who introduced several management principles and rules for organizations. This is one kind of first theoretical approaches for HRM during that period. The second theoretical approach of HRM is the human relation school developed by Mayo (1880–1949) and Roethlisberger through their Hawthorne research studies. The above theories are not classified as HRM theories, but they have a direct influence for the advancement and development of HRM theories. This review paper discusses on Human Resources Management (HRM) theories and effective human resource management models, HRM definition, nature of HRM, scope of HRM, role of HRM, importance of HRM, models and theories of HRM. Besides, HRM theories like universalistic theory, contingency theory, configurationally theory are discussed.

In the context of rapid digital transformation, small and medium enterprises (SMEs) increasingly recognize the necessity of adopting digital services to enhance their human resource management (HRM) capabilities. This study aims to investigate the mediating role of digital service adoption in improving HRM capacity among Vietnamese SMEs. The Resource-Based View draws upon the Technology-Organization-Environment framework; the research examines how leadership support, organizational readiness, policy mechanisms, perceived benefits, and organizational culture influence digital service adoption and HRM development. A mixed-method was employed, combining qualitative interviews with 30 digital transformation experts across five major cities in Vietnam and a quantitative survey of 1,000 SME managers from July 2024 to February 2025. Structural equation modeling was utilized to test 11 proposed hypotheses. The results demonstrate that digital service adoption significantly enhances HRM capacity and mediates the relationships between organizational factors and HRM outcomes. Leadership support is the strongest predictor of digital adoption and HRM capacity, followed by perceived benefits and policy mechanisms. These findings emphasize the importance of strategic leadership, organizational preparedness, supportive policies, and a digital-friendly culture in fostering successful digital transformation in HRM. The novelty contributes a novel integrated model bridging digital transformation and HRM theories and offers practical insights for SME managers seeking to strengthen workforce capabilities in emerging economies.

The escalating significance of human resource management (HRM) in small and medium-sized enterprises (SMEs) is underscored through a systematic review and bibliometric analysis of 144 documents from the Scopus database. This paper delineates the evolution of HRM practices within SMEs, identifying four core themes that are increasingly prevalent in scholarly publications. The study leverages content analysis, bibliometrics, and network analysis to map the intellectual structure of the field, providing a comprehensive overview of current trends and future directions. It highlights the necessity of integrating HRM practices as strategic organizational assets and emphasizes their role in enhancing efficiency across global SME networks (Davies, 2017). The growing body of literature suggests a shift towards recognizing the strategic importance of HRM in SMEs, with potential implications for enhancing organizational effectiveness in contemporary and future business environments. This research contributes to the theoretical discourse by testing various HRM theories in the SME context, offering a foundational perspective for understanding HRM challenges and practices in SMEs worldwide.

In this paper, an attempt has been made to identify the extent of formal experience of small and medium enterprises (SMEs) in the field of human resource management (HRM). It also views the manifestations of SME owners’ experience in human resource management practices as well as in recruitment processes. On the other hand, it attempts to see if there is a connection between informality and the experience of the owners in the field of HRMs. Qualitative methods were used in this study. A random sample selection technique was used in the sample selection. Five small and medium enterprises were selected for this paper and semi-structured interviews were conducted with the owners of these enterprises. For the evaluation of the results, topics and categories were defined and afterwards interpreted based on the research questions of this paper. The results of this study have shown that there is a correlation between the formal experience of owners in relation to the implementation of human resource management practices and the informality of the enterprise. In this study, it is understood that owners of small and medium enterprises do not have formal experience in the field of HRMs and recruitment processes. The lack of experience of the owners in these fields has resulted in these SMEs not having formal practices in HRM and has influenced the increase of informality. The results of this paper can be considered as the first in this regard which is done in the Republic of Kosovo, known as a country with a developing economy. We also consider that this paper will open the possibility to conduct other researches in relevant areas which have not yet been addressed in Kosovo. Therefore, this paper can be considered as the first contribution in this area.

Orientation: This study explored the composite business success index (CBSI), a novel framework designed to enhance small and medium enterprise (SME) competitiveness in South Africa by integrating financial and cultural metrics. Research purpose: The aim was to introduce CBSI as a tool for assessing small and medium enterprise performance, combining financial indicators like the cash conversion cycle (CCC) and Altman Z-score with cultural metrics such as the Configurational Accuracy Score for a more holistic evaluation. Motivation for the study: Small and medium enterprises in South Africa face significant challenges, including financial instability and misalignment of organisational culture. Existing performance models often fail to address these non-financial factors, which CBSI integrates into one evaluative tool to improve both financial health and cultural alignment. Research design, approach and method: A pragmatist research approach integrated quantitative and qualitative methodologies, including financial data from small and medium enterprise statements, semi-structured interviews with small and medium enterprise owners and experts and questionnaires to collect cultural data for insight into the role of culture in small and medium enterprise success. Main findings: Composite Business Success Index proved effective in predicting small and medium enterprise performance. Higher CBSI scores (> 0.65) were associated with successful small and medium enterprises, while lower scores (< 0.50) indicated areas for improvement, highlighting the link between financial stability and organisational alignment. Practical/managerial implications: The CBSI offers small and medium enterprise leaders actionable insights for enhancing financial performance and organisational culture, boosting competitiveness and long-term sustainability. Contribution/value-add: By integrating both financial and cultural metrics into a single framework, the CBSI provides a novel tool for assessing and developing small and medium enterprise performance for the small and medium enterprise managers.

At present, China's small and medium enterprises (SMEs) develop rapidly, they play an important role in developing regional economy, creating employment opportunities, meeting consumers' demand, innovating management system and other aspects. They become an important component of China's national economy. This thesis analyzed the status and characteristics of SMEs in China, deeply discussed the problems and costs of SMEs' human resource management, it proposed that SMEs should put emphasis on human resource development, establish a variety of incentive mechanisms, strictly control the costs of human resource management and set up an effectively warning mechanism in human resource management and so on, SMEs will create competitive advantages through strengthening human resource management.

The enormous business competitiveness at a global scale and the constant search for sources of competitive advantage have led several scholars and practitioners to implement their studies to pay attention to the potential of HRM in the success of companies. Portugal, like others European countries, is not set apart from the question of HRM. However, it is rare and recent to find empirical literature on practice of HRM in Portugal, and even more scarce to find literature that focuses on SMEs. This study clarifies the situation of SMEs in the Portuguese context, serving as a basis for discussion on HRM in SMEs in an international context. This chapter looks to understand the role of recruitment and selection on Human Resource Management (HRM) at Small and Medium Enterprises (SMEs) in Portugal, as well as contribute to a better knowledge of this area, still little studied. More particularly, it aims to understand the level of implementation of recruitment and selection. Data was collected by questionnaire from 512 small and medium enterprises in Portugal, and from these, 3 hypotheses were formulated and tested using the SPSS program. From this study, the authors conclude that HRM is not yet a reality in SMEs. Recruitment and selection are the HRM practices more commonly used in SMEs, but in an informal way.

Human capital is vital for any organization for the attainment of organizational objectives. Developing the human capital thus becomes a critical conduit to the attainment of organizational objective. There has been an increase in the number of Small and Medium Enterprises (SMEs) in Zimbabwe and human resource management has become very critical. The human resource is the only resource that can provide competitive advantage amongst rivals. This paper seeks to highlight the challenges faced by small and medium enterprises in effectively implementing human capital development (HCD). Qualitative research methodology was used as the main research approach in the study. Two small and two medium mining organisations were conveniently identified in Gweru and used as case studies. Data was gathered mainly through the use of face to face interviews with 12 participants. It was obtained that both small and medium enterprises view human capital development as very important in their operations. However they pointed out that they cannot employ HCD effectively as they have limited financial resources, lack of skilled staff, lack of expert knowledge on human resource issues as well as lack of effective employee retention strategies. The researcher recommends that the small and medium enterprises forms partnerships with other organisations so as to mobilise resource and also for knowledge sharing.

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).

This study assesses the Human Resource Management (HRM) competencies of small and medium enterprise (SME) managers in Tangub City, Philippines, focusing on five key HRM areas: training and evaluation, career planning and development, reward schemes, recruitment and selection, and appraisal systems. A concurrent mixed-methods approach was employed, combining a quantitative survey of 275 employees and qualitative interviews with 10 participants. The findings reveal significant gaps in HRM competencies, particularly in training and evaluation and career planning, with managers showing a lack of proficiency in these critical areas. These deficiencies are attributed to limited resources, insufficient training, and the managerial overload commonly faced by SME leaders. The study concludes that for SMEs to improve HRM practices and employee satisfaction, managers must pursue targeted training and advanced educational opportunities. This research contributes new insights into the HRM challenges faced by SMEs in developing economies and offers practical recommendations for improving managerial competencies through structured training programs and academic development. The findings provide valuable implications for policymakers, educational institutions, and future researchers aiming to enhance HRM practices in SMEs.

This study examines the financial management of Micro Small and Medium Enterprises (MSMEs) in Indonesia and Malaysia which are the drivers of the economy in both countries, but this sector has not been able to become an independent sector and become the foundation of the national economy in both countries. The problem is that financial management in Micro Small and Medium Enterprises (MSMEs) ignores the importance of financial management standards, the problem is that poor financial management makes Micro Small and Medium Enterprises (MSMEs) insignificant in advancing the economy. The method used is descriptive qualitative with a case study approach. Data were obtained from MSME actors by distributing questionnaires and interviews. The results of this study indicate that MSME financial management in Indonesia is not as good as Micro Small and Medium Enterprises (MSMEs) in Malaysia, meaning that Malaysia has better MSME management, this can be seen from various research indicators, namely: planning indicators, budget use, recording, reporting and controlling. Micro Small and Medium Enterprises (MSMEs) in Indonesia and Malaysia when compared to Indonesian Micro Small and Medium Enterprises (MSMEs) do not have good planning, have not carried out standard records, standardized reporting, are not concerned with standard financial statements, balance sheets, profit and loss, cash flow, do not have or install systems in their business units, such as control of systems and procedures, billing records of sales notes, it is very clear that Micro Small and Medium Enterprises (MSMEs) in Indonesia have not done so. Meanwhile, from the other side, when compared to Indonesian MSME respondents, the level is very small, more so for micro cart businesses, small shops that are not in the form of their own buildings, the context is very small. In Malaysia, micro, small and medium enterprises are not comparable to the conditions in Indonesia, while in Malaysia, the Micro Small and Medium Enterprises (MSMEs) already have a more appropriate place. Thus, it is easier for Micro Small and Medium Enterprises (MSMEs) in Malaysia to get banking support, while Micro Small and Medium Enterprises (MSMEs) in Indonesia are still difficult to upgrade and are still difficult to enter the bank compared to Malaysia.

In Thailand, small and medium enterprises (SMEs) have played a significant role in promoting economic growth and sustainable development. Thai SMEs constitute a major source of employment, generate significant earnings, and contribute to the country's gross domestic product (GDP). Accordingly, the 4th SME Promotion Master Plan (2017-2021) has put a significant emphasis on upgrading Thai SMEs and increasing their growth potential. However, Thai SMEs still have problems and limitations, for instance, almost all are small enterprises, few medium enterprises, management system limitations, only a minority of SMEs able to compete in the international market, and a continuous trade deficit. Furthermore, the COVID-19 pandemic has further the slowdown in the economic growth of SMEs. (The Office of SMEs Promotion, 2022). Therefore, SMEs need to continuously improve and develop organizational performance to compete in the domestic and international markets. It is important to understand how SMEs can continue to grow and compete in the markets. Previous research in the business management literature indicates that there are several factors that account for the development of SMEs including CEO Attributes, leadership styles, and human resource management. Recent research also reveals that in order to survive the new normal imposed by COVID-19 and the market competition, several SMEs have adopted technical innovation and marketing and processes innovation (Akpan et al., 2020; El Chaarani et al., 2021). Keywords: Entrepreneurial Leadership; Intellectual Capital; Innovation; Organizational Performance

Retention of human and intellectual capital is crucial for IT companies. However little is known on how IT that are start-ups and SMEs (Small and Medium enterprises) integrate the human capital expectations, specifically regarding sector’s IT reputation on Big Companies. Despite the fact that human resources management (HRM) is very much explored by the scientific community in big companies, with large samples and large human resources department, research in SMEs remains scarce. This paper intends to describe and discuss the strategies that are used on these companies to retain knowledge. We present a qualitative study with semi-structured interviews and focus group with four technological SMEs from the North region of Portugal. Results curiously suggest that some social responsibility practices are more operationalized in SMEs than the practices considered central to HRM. This possibly can be explained by their lower complexity in implementation (e.g. flexibility of timetables vs. developed training programme) assisted by the flexibility and size of SMEs. It was also concluded that the informality of practices is associated with positive socio-relational mechanisms. In these contexts with low technical knowledge of HRM, it may have more positive results than a formalization system that can be a burden that is sometimes unaffordable for SMEs. The companies with the highest prediction of sustainable growth in the medium term present the beginning of a formal HRM system based on organizational trust mechanisms and, additionally, internal social responsibility practices can act as anchors that start the process of building a more technical and conscious human resources management that can work on the development of retaining knowledge.

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.