High performance work practices in small firms: a resource-poverty and strategic decision-making perspective
Brigitte Kroon
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Karina Van De Voorde
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Jules Timmers
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K. Van De Voorde Behavioural Science Institute, Radboud University
, PO Box 9104, 6500 HE Nijmegen,
The Netherlands
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B. Kroon (&) K. Van De Voorde J. Timmers Department of Human Resource Studies, Tilburg University
, PO Box 90153, 5000 LE Tilburg,
The Netherlands
High performance work practices (HPWPs) are human resource management practices aimed at stimulating employee and organisational performance. The application of HPWPs is not widespread in small organisations. We examine whether the implementation of coherent bundles of HPWPs (aimed at employee ability, employee motivation or at the opportunity to perform) depends on the scarcity of resources, as reflected in the size of the company, and on strategic decision-making in small firms related to the owner's expertise and attitudes. In our research, a total of 211 employees from 45 small organisations were asked to rate the presence of HPWPs in their organisation. These averaged perceptions were linked to information provided by the owner-managers on the size of their firm and their own expertise and attitudes. The findings support that smaller but coherent bundles of HPWPs can be found in small organisations and that the implementation of these bundles depends on available resources, strategic decision-making and the combination of the two. These findings highlight the need to integrate the notions of resource poverty and strategic decision-making to understand the uptake of bundles of HPWPs within small firms.
1 Introduction
Research into human resource management (HRM)
and performance in small firms has embraced the
investigation of the presence of high performance
work practices (HPWPs). HPWPs are modern
employee management practices, such as formal
employee training, high pay levels, group-based
performance pay and self-directed teams (Appelbaum
et al. 2000). It is claimed that increased
implementation of HPWPs results in better performing
organisations in terms of financial and employee outcomes
(Combs et al. 2006). However, the uptake of the
package of HPWPs has been found to be quite low in
small firms (Kauhanen 2009; Way 2002). One of the
unresolved issues is whether this low uptake is the
result of smaller firms simply doing a bit of everything
but in a less sophisticated manner than larger firms
(Dandridge 1979; Mayson and Barrett 2006), or that
smaller firms deliberately adopt smaller sets of related
practices instead of the whole package of HPWPs. This
avenue has not been explored much to date.
In order to understand this issue in greater depth, we
turn to the theoretical foundation of HPWPs.
Appelbaum et al. (2000) argued that a combination of three
bundles of HR practices is theoretically involved in
building a HPWP system (HPWPS). These bundles
are: employee ability-enhancing practices (such as
training and skill development) (A), employee
motivation-enhancing practices (including high pay, career
development and topdown information sharing)
(M) and practices that give employees the opportunity
to go the extra mile (such as employee involvement
and teamwork) (O). Together, these are referred to as
the AMO model of HPWPs. Although no distinction is
made between these elements in most research, Boxall
and Macky (2009) have recently theorised that each
component of the AMO bundle is aimed at different
goals, which in turn suggests that it may be possible to
find organisations where only Ability or Motivation or
Opportunity practices dominate (Toh et al. 2008). This
concept of focussed bundles of HPWP could advance
the debate on HRM and performance in small firms.
In the remainder of this paper we focus on two
theoretical perspectives on the uptake of bundles of
HPWS in small firms. First, we examine the
straightforward assumption that the average uptake of ability
and motivation practices is less in smaller
organisations than in larger firms. The logic for this assumption
lies in the notion of resource poverty (Welsh and
White 1981). Compared to larger firms, small firms are
more constrained by limited resources. In terms of
financial resources, the low uptake of HPWPs in small
firms has been related to the high costs involved in
implementing all of the practices (Sels et al. 2006). In
addition, the simple structure of smaller organisations
allows for quick and relatively informal
communication styles, which may conflict with the greater
formality and relatively more time-consuming nature
of the HPWP approach (Jack et al. 2006).
The second and more profound theoretical
perspective holds that small firm owners, for various
strategic considerations, adopt smaller but coherent
bundles of HPWPs. Here we turn to the notion of
strategic choice and the effect of the human capital of
the owner on strategic decision-making in small firms
(Child 1997). Given that most small firms do not
employ a specialist HR professional, decision-making
concerning HRM normally rests in the han (...truncated)