Individual vs. Bundle HRM Practices: Effects on SMEs’ Performance
Individual vs. Bundle HRM Practices: Effects on SMEs’ Performance

Summary/Abstract: This study aims to assess the impact of HRM practices, such as recruitment and selection, training and development, communication and information sharing, compensation and reward, job design, and performance appraisal, on the performance of small and medium-sized enterprises (SMEs). We analyze these practices by examining their individual effects, as well as by strategically combining them to improve SMEs’ financial, non-financial, and organizational performance. We employed a quantitative approach to conduct this study, using self-administered questionnaires. The study analyzes data collected from 153 manufacturing SMEs to explore the relationships between HRM practices and SMEs’ financial, non-financial, and organizational performance. First, we find that using HRM practices individually has a limited impact on the financial and non-financial performance of SMEs. Next, we find that HRM practices, as a set of bundles, have a direct positive relationship with SMEs’ organizational performance. The research findings suggest that SMEs that implement HRM practices as a bundle achieve greater performance and competitive advantage than those that apply them individually. This study makes a valuable contribution to understating the complex relationship between HRM practices and the performance of SMEs in the manufacturing industry.

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