Evaluations of human resource practices as determinants of SME performance

Abstract

This study postulates that the application of distinctive human resource (HR) practices is a significant predictor of SME performance. Empirical data collected from 286 manufacturing and services in Malaysia using a stratified random sampling technique was analyzed as part of a broader study on the relationships between organizational learning (OL) capability, organizational contextual variables and small and medium enterprises (SME) competitiveness. The hypothesized relationships among the constructs under study were analyzed using a 2-stage structural equation modeling (SEM) technique via AMOS 6.0. Using Standardised regression weights, goodness-of-fit values and amount of variance in SME performance explained by HR practices, shows that the hypothesized model M1 achieved a satisfactory fit with the sampled data. HR practices exerts a significant positive effect on SME performance (13 = .449; p < 0.01 ), accounting for 15 percent of the explained variance in SME performance. As such, hypothesis H1 which postulated that HR practices construct is a significant predictor of SME performance and is therefore supported.