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THE DETERMINANTS OF HRM FORMALITY AND ORGANISATIONAL PERFORMANCE IN SMEs IN PAKISTAN

Burhan, Muhammad (2018) THE DETERMINANTS OF HRM FORMALITY AND ORGANISATIONAL PERFORMANCE IN SMEs IN PAKISTAN. Doctoral thesis, University of Huddersfield.

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Abstract

Given the important role of SMEs in strengthening a country’s economy, the HRM research in SME contexts carried out to date is scarce. The majority share of the literature concerning HRM practices has mainly focused on large organisations. Since SMEs differ from large organisations in multiple aspects (e.g., business strategy and resources), the findings of both are not comparable. Moreover, scant attention has been given to the HRM literature concerning Pakistani SMEs. Since SMEs are regarded as the back-bone of Pakistan’s economy, improved understandings of the sector’s approach to strategic planning and strategic human resource development and vital.

The purpose of this study is to unfold the determinants of HRM practices and their influence on organisational performance in Pakistani SMEs. Guided by institutional theory and RBV, the conceptual model posits significant associations between contextual factors (business sector, firm size, firm age, ownership type, business plan, exporting and provision of HRIS and HRM department/specialist) and HRM formality (including sub-components of recruitment, selection, training & development, performance appraisal, compensation & benefits). A significant positive and direct link between HRM formality and organisational performance is also proposed.

The research design is positivist and incorporates quantitative methods. Stratified sampling was used to include three major sectors of SMEs in Pakistan (services, manufacturing and trade). Primary data from 300 SME owners/managers were collected through a survey method using a structured questionnaire. Data were analysed using inferential methods such as analysis of variance and multiple regression.

Findings suggest that service SMEs employee more formal HRM practices than manufacturing and trade SMEs. In addition, manufacturing SMEs are found to be more formal than trade firms in terms of the adoption of HRM practices. Similarly, institutional contextual factors such as; firm age, ownership by a large organisation, business planning and provision of human resource information system and an HR department/specialist were found to be influential determinants of the adoption of HRM practices. However, firm size, ownership type (non-family owned) and the exporting characteristic of SMEs do not influence HRM formality. A positive and significant relationship was found between HRM formality and firm performance. The results also withstand for HRM-performance link when controlling for influential contextual factors of performance.

These findings extend the boundaries of prior literature concerning HRM practices in SMEs by addressing pertinent gaps from institutional and RBV perspectives. Firstly, most prior studies focus on manufacturing and service sectors and further HRM differences are revealed by including the trade sector in this study. Secondly, this is the first study in the comparative HRM literature that looks at differences in HRM practices across sectors while controlling for the effect of age and size of the firm. Thirdly, the conceptual framework includes eight contextual factors and puts forward a robust model to investigate the determinants of HRM practices in SMEs. Lastly, this study examines the influence of HRM practices on SME performance while controlling for influential contextual factors, an approach that is not only rare in prior literature but is also unique in the context of Pakistan.

Item Type: Thesis (Doctoral)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce
Schools: Huddersfield Business School
Depositing User: Rebecca Hill
Date Deposited: 03 Dec 2018 16:52
Last Modified: 07 Feb 2019 15:31
URI: http://eprints.hud.ac.uk/id/eprint/34751

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