The Adoption of Formal HRM Practices by Small Firms in Africa

Abstract

Several studies in the extant literature indicate that there is a significant relationship between Human Resource Management (HRM) practices and firm performance (Arthur, 1994; MacDuffie, 1995; Huselid, 1995; Guest et al. 2003). Huselid (1995) found that investments in high performance work systems were associated with greater productivity and corporate financial performance. The study by Guest et al. (2003) suggests a "positive association between the use of more HR practices and lower labour turnover and higher profitability".  Although a large majority of the studies were carried out in large companies, some support has been found for a positive association between HRM practices and performance in small and medium sized firms (Kotey & Slade, 2005). Key words: HRM, small firms, practices