High Performance Management Practices and Sustainability of SMEs. Evidence from Manufacturing and Services-based Industries in Pakistan

Abstract

Prior research on high performance management practices (HPMP) has primarily examined the relationship between HPMP and firm performance in the context of large organisations. However, this study examines the relationship between HPMP and Sustainability outcomes (firm performance) in small and medium-size enterprises (SMEs) and also within a specific cultural background which is under researched. This research study is related to both theory and practice. The main relevance lies in analyzing the relationship between HPMP and sustainability outcomes in SMEs. This research study relates to theory by applying the resource-based view and configurational approaches used in this study. The study employed a quantitative methodology. Data were collected through a self-administered survey questionnaire. The questionnaire was adopted from a previous validated survey measuring HPMP in Australian SMEs. The target population consisted of SMEs operating in the city of Karachi, Pakistan. Stratified random sampling was applied to collect data from two stratums i.e. manufacturing and service-sector SMEs. A total of 703 firms were selected, contacted by phone, and invited to participate in this survey. Of these firms, 357 SMEs (50.78 percent response rate) accepted the invitation to fill out the survey questionnaire. Most of the respondents who agreed requested that the researcher to visit their organizations personally. The data were analyzed by using Structural Equation Modeling techniques including exploratory factor analysis. The findings indicate a positive significant relationship between HPMP and sustainability outcomes. The link between these HPMP and the sustainability of SMEs demonstrates the value and importance of HPMP in achieving sustainability.

High-performance work practices and organizational performance in Pakistan

“…This supports hypotheses one and five, shows the universal applicability of these two practices and demonstrates that firms that use wider pools of applicants and processes to select the most appropriate candidates are likely to benefit along many measures of firm performance (Armstrong et al, 2010;Lawler et al, 2011). The evidence was also consistent with studies investigating recruitment and selection practices in firms in Pakistan (Masood, 2010;Raziq and Wiesner, 2016).…”

“…However, recruitment and selection practices are changing in Pakistani firms: almost all big firms have online portals and a link is available for career opportunities, indicating their willingness to generate a wider pool and select the most suitable candidates. Studies have found that recruitment and selection in Pakistan plays a significant role in enhancing firm performance (Masood, 2010;Raziq & Wiesner, 2016). Drawing on these insights, we hypothesize: H1: In Pakistan, sophisticated selection and recruitment process will be associated with a) lower employee turnover rate, b) higher labour productivity and c) higher financial performance.…”

The Relationship between High Performance Work System and Continuance Commitment to Change: An Economic Exchange Perspective

“…However, researchers acknowledge the merits of systematic approach of HPWP called as high performance work systems (HPWS)"a group of separate but interrelated HRM practices, designed to improve employees competence, attitudes & motivation to enhance both individual and organizational performance" (Huselid, 1995;Delery, 1998;Combs, Liu, Hall, & Ketchen, 2006;Boxall & Macky, 2009). Where majority of the studies in literature have used HPWS to see its impact on organizational outcomes such as profitability (Wright, Gardner, Moynihan, & Allen, 2005) and productivity (MacDuffie, 1995;Askenazy, 2001) as performance indicators, a less succinct impression begins to unfold, raising questions about connecting HPWS with employees' level variables (Kroon, Van de Voorde, & Van Veldhoven, 2009) and financial sustainability (Raziq & Wiesner, 2016). The mainstream perspective suggests beneficial effects of HPWS on employees level outcomes (García-Chas, Neira-Fontela, & Varela-Neira, 2016).…”

HRM Research in Pakistan: Existing Approaches and Future Directions

“…This is also evident in the studies of Abbas and Yaqoob (2009), who find a positive impact of modern leadership development practices on employee performance, and Ahmad and Allen (2015) who find statistical proof for the impact of modern HRM practices on employee related outcomes like absenteeism, labor productivity, and turnover in Pakistani organizations. Similarly, this is also established by Adil (2015), who Journal of Management Sciences finds a significant impact of strategic human resource management (SHRM) on firm performance, and by Raziq and Wiesner (2016), who find a significant relationship between High Performance Management Practices (HPMP) and sustainability outcomes of SMEs in Pakistan.…”