Organization Context and Human Resource Management in the Small Firm

• Published in: Small business economics 2001-12, Vol.17 (4), p.273-291
• Main Authors: de Kok, Jan, Uhlaner, Lorraine M.
• Format: Article
• Language: English
• Subjects: Business structures; Business studies; Corporate strategies; Economics; Employees; Formal training; Formalization; Human resource management; Human resources; Institutions; Job descriptions; Job performance evaluation; Job training; Labor contracts; Organization theory; Organizational behavior; Organizational research; Performance appraisal; Personnel management; Pilot projects; Small & medium sized enterprises-SME; Small and medium sized enterprises; Small business; Small businesses; Strategic management; Studies; Training; Transaction costs; Variables
• ISSN: 0921-898X; 1573-0913
• DOI: 10.1023/A:1012238224409

This paper examines the relationship between organization contextual variables and human resource management (HRM) practices in small firms. The proposed model is based on an integration of theoretical perspectives, including the resource-based approach, institutional theory, transaction cost economics (TCE), and concepts from strategic management. The model is explored empirically, with qualitative and quantitative analyses of data collected from a sample of sixteen small Dutch firms. Specific contextual variables examined include company size, the presence of a collective labor agreement, having a large firm associate, either as supplier, purchasing group or franchiser, and the company's strategic orientation toward growth (growth strategy). An important finding is the significance of having a large firm associate. Companies with a large firm associate are more likely to report having employer-based training programs. As predicted, company size is associated with more formal HRM practices, including greater regularity of performance appraisal and greater likelihood of employer-based training. A weak relationship is found between a more growth-oriented strategy and greater formality of these two HRM practices. Predictions based on collective labor agreements are not supported. The paper concludes that the findings warrant further research on the relationship between organization contextual variables and the formalization of HRM practices, although a clearer definition of the latter variable is needed in future research.