In prosperity and adversity? The value of high-performance work practices for SMEs under conditions of environmental hostility and social embeddedness
International Journal of Manpower
ISSN: 0143-7720
Article publication date: 22 November 2022
Issue publication date: 31 May 2023
Abstract
Purpose
Taking a resource-based view, the authors analyse the effect of high-performance work practices (HPWPs) on the performance of small- and medium-sized enterprises (SMEs) under conditions of environmental hostility, and consider how this relationship is influenced by managers' embeddedness in social networks. The authors argue that high perceived levels of environmental hostility strengthen the strategic value of HPWPs in SMEs, whereas high levels of manager embeddedness in social networks weaken this contingent relationship.
Design/methodology/approach
These hypotheses were tested in a sample of 249 SMEs, from two Spanish industries related to food production, using linear regression with two- and three-way interaction effects.
Findings
The study results show that the implementation of HPWPs benefits SMEs' performance in hostile environments. However, the dark side of managers' social capital could undermine any such benefit, especially if there is a high degree of network closure. In hostile contexts, such closure appears to limit managers' willingness to depart from the common practice of reducing investment in human resources.
Practical implications
Contrary to predominant beliefs that managers facing economic adversity should reduce costs by cutting investment in personnel development, this study indicates that supporting HPWPs enhances a firm's objective financial performance.
Originality/value
This study advances our understanding of the specific conditions under which HPWPs sustain SME performance. It also introduces the dark side of managers' social capital into considerations of this relationship. The study findings provide new insights that are counterintuitive to business practice.
Keywords
Acknowledgements
This publication has been co-financed by the European Regional Development Fund (FEDER) and by the Department of Economic Transformation, Industry, Knowledge and Universities of the Junta de Andalucía within the framework of the FEDER Andalucía 2014-2020 operational program. Specific objective 1.2.3. «Promotion and generation of frontier knowledge and knowledge oriented to the challenges of society, development of emerging technologies» within the framework of the reference research projects (UPO-1258353, P20_00856 and UAL2020-SEJ-D1872). FEDER co-financing percentage is 80%. In addition, it has also been co-financed by the R+D+i projects: PID2020-114751RB-I00, PID2020-117313RB-I00 and PID2020-119663GB-I00. All projects are funded by MCIN/AEI/ 10.13039/501100011033.
Citation
Martínez-del-Río, J., Perez-Luño, A. and Bojica, A.M. (2023), "In prosperity and adversity? The value of high-performance work practices for SMEs under conditions of environmental hostility and social embeddedness", International Journal of Manpower, Vol. 44 No. 4, pp. 618-634. https://doi.org/10.1108/IJM-12-2021-0707
Publisher
:Emerald Publishing Limited
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