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Human Resource Management Review 16 (2006) 467 – 477

Human resource management in smaller firms: A contradiction in terms?
Susan Marlow ⁎
Department of Human Resource Management, De Montfort University, Leicester, LE1 9BH, UK

Abstract Human resource management came into popular parlance in the late 1970s. as a managerial approach aimed at re-ordering the employment relationship to ensure employee efforts were strategically focused on achieving organisational performance and competitiveness in increasingly volatile markets. Since then there has been much consideration of whether HRM is a robust academic concept supporting a particular managerialist ideology, a status enhancing label for people managers, or a practitioner tool kit. There has also been a consideration of how HRM is articulated in small and entrepreneurial firms. This paper suggests that the concept of HRM is, in most instances, uncertainly theorised and, therefore, how it, whatever ‘it’ is, might be identified in such firms is challenging. Unless HRM is theorised in context with more care, there is a danger of it remaining a ‘fuzzy concept’ encouraging abstract empiricism which, rather than clarifying our understanding, only further muddies already muddy waters. In pursuit of this argument, in this paper current debates about the notion of HRM are considered as is how these fit with what is known about the management of labour in small firms. Consequently, the purpose of this paper is to question how appropriate it is to talk about HRM as an approach to managing labour in small firms. © 2006 Elsevier Inc. All rights reserved.
Keywords: Human resource management; Small firms; Entrepreneurs

1. Introduction The notion of Human Resource Management (HRM) as an ideological framework to effectively and efficiently manage labour took root as an academic theory, a practitioner's tool kit and a managerial profession in the late 1970s in Europe and Australasia (Beardwell, Holden, & Claydon, 2004). Ferris, Hall, Royle, and Martocchio (2004) suggest that in the USA the term has been used to describe labour management practices since the early part of the 20th century, but the finer distinctions between personnel management and HRM as a popular, descriptive label are not the concern here. Notwithstanding when it emerged, the notion of HRM as a contemporary approach to managing employees is now embedded in common parlance and this is evident from the umbrella use of the term in popular and academic literatures. As a result there has been a proliferation of articles, empirical research, textbooks and dedicated university degrees focused on this approach to ordering the employment relationship. This interest has also been accompanied by a trend to re-label the personnel function as HRM which, it has been argued, has implications for elevating both the status and role of this particular
⁎ Tel.: +44 116 2577236. E-mail address: [email protected] 1053-4822/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.hrmr.2006.08.004


S. Marlow / Human Resource Management Review 16 (2006) 467–477

managerial activity in organisations (Beardwell & Clark, 2004). However, that is not to say that the emergence and adoption of HRM has been unproblematic. For many years there has been considerable debate and some disquiet regarding the theory and practice of HRM. The purpose of this paper is to add to this debate by offering a critique of the conceptual standing of HRM. The argument is that without careful definition HRM can be seen as what Markusen (1999, p.870) describes as a ‘fuzzy concept’, which in turn promotes ‘sloppy thinking’. This argument will be explored through a consideration of the way in which the employment relationship in small firms has been analysed and a questioning of whether, in this context, an HRM framework can be adopted in an uncritical fashion. The search for HRM in small firms has been focussed on finding practices deemed to signal an HRM approach—usually those which reflect what occurs in large firms (Taylor, 2005). But doing so means that when such formal policies and practices through which HRM is articulated are not found, then the conclusion is often that labour management practices in small firms are somehow lacking. An alternative way of thinking could of course be that the uncritical and simplistic search for HRM in this context exposes the paucity of HRM theory. The purpose of this paper is to explore these options. There is now a growing literature around how size influences labour management in small firms (see Marlow, Patton, & Ram, 2005, for an overview). In the case of the UK, this is rarely conceptualised as an analysis of HRM, with some exceptions (see Bacon, Ackers, Story, & Coates, 1996). This is largely because mainstream debate suggests a normative version of HRM linked to strategy formation and performance enhancement; characteristics not considered to reflect the usually informal, idiosyncratic approach to labour management evident in many small firms (Ram, Edwards, Gilman, & Arrowsmith, 2001). However, this is not the case elsewhere; for example, the North American literature is more likely to examine small firm labour management practices within an HRM framework (see, for example, Entrepreneurship, Theory and Practice special edition; Fall 2000) and this is also evident to some degree, in Australia (Mazzarol, 2003). This raises the question as to whether there is some discernable degree of difference in kind regarding how employees are managed in small firms in developed nations or in fact, whether there is slippage in the conceptual underpinnings for such studies. The difficulty of definition is recognised by Katz, Aldrich, Welbourne, and Williams (2000 p.8) musing, “with so many ways to define HRM and the SME, almost anything could be studied. Therein lies our dilemma”. Indeed, this is a considerable dilemma. If basic concepts are not clarified or defined, then it becomes extremely difficult to develop coherent and comparable research endeavours that build understanding of a particular field of study. Doubts can be expressed about the utility of evidence resulting from studying concepts that have not been adequately defined. Indeed, in her critique of this problem in the field of regional studies, Markusen (1999) argues that poor theorising leads to the construction of ‘fuzzy concepts’, which are essentially vague and difficult to operationalise. Dependence on these fuzzy concepts leads to the collection of often irrelevant and poorly focused evidence. ‘Sloppy’ thinking emerges and this is used to inform policy, which in turn, is of little relevance or use. To some degree the study of HRM in small firms reflects this critique. The purpose of this paper is therefore to argue that analysing labour management practices using the vehicle of HRM in an uncritical and descriptive fashion can expose HRM to be fuzzy concept. Abstracted empiricism (Guest, 2001) results where the focus is on collecting data rather than clarifying concepts. Consequently, while more evidence emerges about how small firm owners and entrepreneurs manage the employment relationship, analysing this evidence in relation to existing theoretical frameworks, particularly those of HRM, is problematic. To explore these arguments in more depth, the first task is to briefly, but critically, consider differing interpretations of the term HRM. This may appear paradoxical in light of claiming that robust definitions of HRM are difficult to develop and locate. However, current and diverse literatures can be drawn on to identify the key themes and strands associated with an HRM approach whilst remaining alert to contrasting interpretations. By showing how HRM as a concept is fluid, we can then consider the evidence about the management of labour in small firms and do so recognizing the influence of context in terms of size and growth aspirations. By engaging with these debates, it then becomes feasible to consider the extent to which HRM as a concept is appropriate to analyse labour management in small firms, and Markusen's (1999) fuzzy concepts will be brought into play here. Finally, the arguments will be critically evaluated with the intention of stimulating debate about how small firms are recognised and encompassed within theoretical constructions of HRM. Is the smaller firm excluded because it does not fit dominating analyses and so becomes the ‘other’? Or should there be a greater critique of the narrowness, or poverty, of so-called global theories or meta-narratives of HRM?

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2. HRM—fact or fiction? In contemporary literature, there is a tendency to describe HRM as a particular labour management strategy that emerged in the late 1970s, finding popularity initially in the United States and then gradually being adopted within larger organisations across developed economies (Guest, 1987; Storey, 1992; Walton, 1985). Kaufmann (2001) took issue with this presumption and traced the antecedents back to the beginning of the 20th century. By adopting this historical approach, he offered a succinct overview of the foundations of the HRM approach noting that the institutional economist, Commons (1919), argued that capturing the goodwill of employees and directing this in a strategic fashion would have a positive impact on firm performance. This basic tenet is still relevant, but beyond this, consensus upon how HRM might be conceptualised and defined in more detail and complexity remains elusive. We can see this at the turn of the 21st century when Storey (2001) noted that controversy persists about the meaning of HRM and this, “turns on the imprecision, variability, ambiguity and contradictions which have been seen to imbue the construct” (p. 5). Drawing upon the extant literature, Storey (2001) argued that there was still considerable confusion amongst those using the term HRM about whether, “it is a generic term, simply denoting any approach to employment management… (or) as one specific and arguably minority form of approach to employment management” (p. XXX). This is a useful distinction as it would seem to address the crux of the problem and as such, deserves further consideration. It would be simplistic to argue that the definitional problem might be addressed by including all approaches to employment relations under the heading of HRM, as there is broad agreement that there is an ideological underpinning reflecting a managerialist approach. For example, there is a critical focus on those managerial actions aiming to improve competitiveness through the most efficient and effective management of employees. This can differentiate HRM from industrial relations (IR) where the emphasis is on a pluralist analysis of the structured antagonism between management and employees (Edwards, 2003). Recently, this approach has also been differentiated from an employment relations analysis, which it is argued, goes beyond the collective institutions of job regulation to recognise the growing individualism pervading the contemporary work place (Rose, 2003). However, this differentiation is still subject to considerable debate and Edwards (2005) has challenged these shifts in terminology arguing, “IR studies employment relations or the employment relationship… the relations of power, politics and contest that are central to the regulation of employment” (p. 266). In relation to HRM, Edwards' (2003) focus is on the relationship between HRM and IR. He dismisses the notion of HRM as a generic term subsuming IR and instead he suggests that HRM deals with personnel administration and therefore, “IR can retain analytical dominance, with HRM being seen as a particular technique to manage the inherent contradictions of the employment relationship…. The point is that HRM can then be seen to be an ideological intervention rather than a set of analytical ideas” (p. 4). This differs from Ferris et al. (2004) who state that, “IR is left with HRM as the only healthy viable avenue of inquiry for the immediate future” (p. 232). HRM is seen as an ‘approach’ to labour management rather than a means to analyse the employment relationship. The presumption is that the authority to order the employment relationship lies with management whose aim it is to engage the commitment of individual employees, either co-operatively or coercively, to enhance the competitiveness of the organization. Moreover, the employment relationship has to be ordered in a strategic manner to ensure alignment with organisational goals. So, HRM is still basically concerned with the effort–wage bargain. However, Taylor (2005), drawing on Townley (1993), suggests HRM is a managerial discourse that provides the “means to measure the many tangible and subjective dimensions of labour, with the promise of rendering individual behaviours predictable and individual labour calculable” (p. 22). Whilst it has been challenging to try to adequately conceptualise HRM as a theory, ideology or discourse (Legge, 2006; Taylor, 2005), this has not prevented a considerable body of literature to emerge with the aim to describe and prescribe HRM policy and practice. So, for example, in both Europe and North America, there are a multitude of texts in which the key elements of the employment relationship, (such as recruitment and selection, remuneration, training and development, consultation etc) are explored from what is described to be an HRM perspective, (Bratton & Gold, 1999; Schuler & Huber, 1993; Wilkinson & Marchington, 2005). While the authors do acknowledge and debate the prevailing conceptual problem, there is a tendency to work around it by maintaining a clear separation between the ‘problem’ of definition and the prescription of policy and practice. Consequently, in the analysis of discrete activities such as recruitment and selection, etc., the focus is on the process rather than the link between theory and action. This problem was evident in the 1980s and 1990s with ‘models’ of HRM to emphasise strategic alignment, (see Legge, 2006, p. 142–147, for a figurative overview). This approach is based on a highly rational underpinning to firm


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operations and offers little recognition of environmental volatility. There is also a presumption of a sophisticated level of corporate managerial complexity. The outcome is an engagement with prescription set in a rather broad, elastic notion of HRM, which can be applied generally to organisations regardless of their operational context. This rather fluid approach to HRM as a framework stretches the concept and leads Beardwell (1998) to question whether there is a “fracturing of practice” and “fragmentation of perspective” (p. 49). This is the case as differing versions of HRM are described from the processes, rather than their analysis in the context in which they are practiced. Versions do share a presumption of a managerialism to promote greater employee effort and while this offers some degree of coherence to debates, HRM as a concept still appears to be moulded to suit the occasion and in doing so loses a sense of focus and identity. Consequently, defining HRM through the practices that order the employment relationship does not satisfactorily develop a foundation upon which the concept underpinning the process can be ascertained. In fact, it becomes almost tautological as it suggests that if the processes used to manage employees are described as HRM, then HRM therefore exists. There has been considerable debate about this ‘problem’ and the result is the linking of different analytical frameworks to HRM that seek to offer greater coherence—for example, the resource-based view, the contingency approach, the universal approach (see Ferris et al., 2004, for an overview). Underpinning them is the use of a strategic approach to ensure that HRM policy and practice can facilitate enhanced performance by being sensitive to both the internal and external organisational contexts. As such, a strategic operationalisation of HRM policy and practice is essential if organisational competitiveness is to be gained or maintained. While there is little consensus about the efficacy of the different models that link HRM, enhanced commitment and high performance (see Guest, Michie & Sheehan, 2003, for a critical assessment), for the purposes of this argument, it is apparent that in linking HRM, strategy formation, enhanced commitment and high performance, we see an emergence of a sophisticated model of coherent managerial effectiveness. But there is little unequivocal evidence to support this link, which Legge (2001) describes as the “search for the Holy Grail of establishing a causal relationship between HRM and performance” (p. 23). In their critique of the impact of HRM on organisational performance in the USA, Kochan and Dyer (2001) acknowledge that “despite the outpouring of academic writing on ‘strategic human resource management’ little progress has been made in developing systematic theory or empirical evidence on the conditions under which human resources are elevated to a position where the firm see and treats these issues as a source of competitive advantage” (p. 273). In drawing upon a range of sources, it would appear that considerable effort has been made to link notions of HRM, strategy and performance (however, this latter might be defined and measured) in order to advance coherence. But this has not promoted clear theoretical propositions. This then leads to problems in accumulating a body of evidence to support the impact of adopting an HRM stance particularly in respect of strategic integration and performance. Consequently, the degree to which HRM engenders greater employee commitment or enhanced performance remains uncertain. Moreover, a lack of coherent theory creates challenges in ascertaining how context, such as firm size, might shape the manner in which HRM is articulated. The problem of conceptual uncertainty and slippage is certainly not unrecognised within the HRM field of study, and it is well illustrated in a review article by Ferris et al. (2004). In their overview of theoretical progression in the debate in the USA HRM is defined as “both the science and practice that encompasses both the employer/employee relationship as well as its relevant actions, decisions and issue” (Ferris et al., 2004, p. 231). Legge (2006), however, disputes this and she suggests that “how are we to conceptualise HRM” (p. 26) is still a basic question. She argues that if there is to be a positivist stance adopted, then “the first requirement is a theory-derived conceptualisation of HRM and its precise specification as an independent variable. That said … positivists have not acted consistently, either at the level of theorising or in terms of specifying and measuring the concept of HRM” (p. 26). By adopting a positivist approach to HRM infers a broadening of the concept to recognise the diverse ways employment relations are managed. Consequently, ‘actions, decisions and issues’ would seem generic to any study of the employment relationship. This analysis of HRM developed over the 20th century, evidence in much of the argument Ferris et al. (2004) present, would seem counter-intuitive to European scholars. For example, it is suggested that in the earlier part of the 20th century, “attention to HRM focused mainly on personnel management… but from the end of World War II until 1970 the primary focus of HRM turned toward IR” (Ferris et al., 2004, p. 232). It appears HRM is indeed the generic study of the employment relationship encompassing all aspects and perspectives while personnel and IR are subsets. Unfortunately, the theoretical justification for this is not established, although Ferris et al. (2004) do acknowledge the difficulty of theory development within the field of HRM given its diverse and generic basis. The strategic alignment of HR policy and practice to enhance performance and so, competitive advantage is explored at some length and this serves to

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identify the distinguishing features of the HRM approach. The manner in which different models of strategic HRM and their relationship with firm performance contribute to the development of ‘middle range’ theories is considered more useful than trying to develop a grand theory. Yet, there are problems with this also, as it is assumed that theory building supports the emergence of concepts, which might then be explored through research. In this case, there is no clear evidence that that the adoption of strategic HRM is feasible or possible in most organisations (Hyman, 1987) and as mentioned earlier, the link between the adoption of strategic HRM and enhanced firm performance is weak (Legge, 2006). Moreover, to return to the point of this paper, the type of strategic alignment and the sophisticated HRM policies and practices required for organisations to ‘fit’ within such theories of HRM development are rarely evident in smaller firms. This raises the issue of whether a middle range theory can still have validity if it is also a partial theory as, in the case of the UK for example, where only half of the labour force works in large firms. 3. Fuzzy concepts Conceptual uncertainty is not limited to this field of study. There is debate in the field of regional studies about the problems of engagement between theory and concepts from which robust empirical evidence emerges (Grabher & Hassink, 2003; Hudson, 2003; Markusen, 1999). Markusen's (1999) critique of regional studies is based on an argument that seminal work on uneven development and industrial restructuring (Bluestone & Harrison, 1982; Massey & Meegan, 1982) has been supplanted by “a largely uncontested and increasingly obtuse dialogue relying on what I call ‘fuzzy concepts” (Markusen, 1999; p. 870). She defines a ‘fuzzy concept as “one which posits an entity, phenomenon or process which possesses two or more alternative meanings and, thus, cannot be reliably identified or applied by different readers or scholars. In literature framed by fuzzy concepts researchers may believe they are addressing the same phenomena but may actually be targeting quite different ones” (p. 870). She says the way to identify a fuzzy concept is to ask “how do I know it when it I see it?” (p. 870). Clearly unless there is a shared understanding of concepts or they are clearly defined then there is a danger of abstracted empiricism and ‘sloppy thinking’. Grabher and Hassink (2003) summarise this problem with the comment that, “vague definitions seriously limit the scope for empirically exploring and systematically developing further the various concepts in a comparative manner” (p. 699). Furthermore, if there is no engagement with the concept itself then the focus is often on the process rather than issues of structure and agency and as a result “processes themselves become causal agents” (Markusen, 1999, p. 870). In a critique of this stance, Hudson (2003) agrees that fuzzy conceptualisation leads to sloppy thinking, for which there is little excuse, if this reflects imprecise theorising. But he also goes on to argue that some imprecision may arise as a concept emerges and matures. This is because “concepts are social constructs which require social production, they are not ready formed objects ‘out there’ awaiting discovery” (Hudson, 2003, p. 743). Hence, he recognises that as debate progresses and further evidence is generated, for as long as there is clear engagement with theoretical proposition, some uncertainty is acceptable. Broadly defined concepts might occasionally be essential to align a range of differing interests together in order to stimulate debate. So, if concepts are socially produced, change over time and influenced by context, then it is unlikely that they can be rigidly defined or, as Markusen (1999) suggests, demonstrated through the generation of replicable evidence. Rather, as Hudson (2003) argues, concepts will be subject to change and adjustment in order to establish validity and value a more productive approach might be to seek some “corroboration via convergence of evidence, perhaps of various types drawn from a variety of sources” (p. 743). The key elements in this debate therefore suggest that there is agreement around the notion that vague theorising about fundamental concept under consideration supports the generation of evidence focused largely upon process. Some conceptual uncertainty may be necessary or desirable as theory emerges, develops and matures. This indeterminacy must be acknowledged as Hudson (2003) suggests, it is the researcher's task to “demonstrate why it takes that meaning in that context” (p. 744) and have evidence clearly linked to these associations. Greater sensitivity in the links between concept, evidence and context is essential to progress understanding in a field of study. Drawing upon this short overview of the fuzzy concept debate, it is argued that this critique might be tentatively applied to the field of HRM. It would appear that the lack of any robust, consensual definition of HRM makes it difficult to coherently corroborate evidence in order to seek points of convergence. Moreover, it would appear that there is considerable interest in process at the expense of theory development; this is evident from the difficulty in identifying HRM in organisations in that there appears to be considerable discrepancies regarding how academic theory maps on to actual practice (Cully, Woodland, O'Reilly, & Dix, 1999). However, it is not the purpose of this paper to engage solely with debate regarding definitional problems concerning HRM indeed the difficult issue of conceptualisation has been,


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and remains, a critical area of contention where lively debate persists (see Legge, 2006; Storey, 2001; Taylor, 2005). Rather, it is the manner in which the employment relationship in small firms is understood as a result which is of critical interest. To progress this discussion, the extant literature on how the employment relationship is managed both by small firm owners and entrepreneurs is next considered. 4. Managing labour in small and young entrepreneurial firms Recently Ram and Edwards (2003) have commented that the literature dealing with labour management practices in small firms is “a key exemplar of analytical advance (where) research has made empirical and analytical progress” (p. 719). Their argument is premised on the growing sophistication of the research which has moved from the presumption of harmony, which dominated thinking until the mid-1980s, to the recognition of complexity in a context of informality. Such an advance was made possible by a growing body of qualitative evidence linking empirical findings to concepts such as informality and owner idiosyncrasy (Chandler & McEvoy, 2000; Heneman, Tanksy, & Camp, 2000; Marlow, 2002; Moule, 1998; Taylor, 2005). From the analysis of this literature, it is now possible to identify some general trends in labour management in small firms whilst remaining aware of heterogeneity associated with sector, age, location, growth trajectories, owner characteristics, etc. It appears that the employment relationship is influenced and shaped by the spatial and personal proximity between owner-managers and their employees with an emphasis therefore on the social relations of production. An idiosyncratic approach emerges and this mitigates the adoption of professionally informed policy and practice (Mazzarol, 2003; Wynarcyzk, Storey, Short, & Kensey, 1993). In a seminal work exposing the manner in which external market constraints interact with the social relations of production, Ram (1994) showed there was a ‘negotiated order’ of the employment relations in small firms. Subsequent research, reflecting this case study approach, also supports the existence of complex socio-economic webs which are critical in shaping labour management practices (Dundon, Grugulis, & Wilkinson, 1999; Holliday, 1995). Underpinning this discussion is the idea of a homogeneous outlook in small firms where the organisation is stable and bounded within the notion of smallness. This is not necessarily the case as an important group are those young entrepreneurial firms seeking to grow through expanding sales, employment and profit and so the focus of labour management must be on sustaining employee commitment during uncertainty. There are differences between entrepreneurs and those termed, ‘life style’ small firm owners (Deakins & Freel, 2003). The literature (Carter & Jones-Evans, 2000; Deakins & Freel, 2003) suggests that entrepreneurs share a number of common attributes such as a sensitivity to opportunity recognition (Hill, McGowan, & MacLaren, 1998); established managerial experience; and competencies and a positive attitude towards risk and change (Amit, Glosten, & Muller, 1993; Hill et al., 1998; Timmons, 1994). Entrepreneurs initiate change with the aim of challenging the status quo whilst maximising profit and generating new employment (Freel & Robson, 2004). Life style owners, however, focus on firm durability and sustainability, limiting the operational reach of the firm, either because of market constraints or by personal choice. Storey (1994) refers to the life style firms as ‘trundlers’ and the entrepreneurial ones as ‘flyers/ gazelles,’ thus emphasising the differences between each category in terms of employment and sales growth orientations. Others support this, saying “entrepreneurs are different from small firm owners… (who are) concerned primarily with securing an income to meet their immediate needs, whereas entrepreneurs have higher achievement motivation and risk taking, and are inclined to growth, innovation and change” (Zhao, 2005, p. 26). As such, it might be supposed that in small growth-oriented firms there are differing labour management challenges than in the ‘life style’ ones. It might be expected that the way entrepreneurs manage their employees would differ. Entrepreneurs, as defined above, form a very small segment of the small firm sector in the UK and Europe (Deakins & Freel, 2003; Storey, 1994), so evidence regarding their approach to labour management is slim. A recent US review of literature on this issue noted that there are, “key HR challenges in emerging ventures, including establishing firm identity and legitimacy, attaining critical skills and capabilities, maintaining flexibility and developing sustainable practices” (Cardon & Stevens, 2004, p. 297). It would be expected that operating under conditions of newness, smallness, growth and risk would influence the manner in which labour is managed. Drawing upon what is briefly described as a functional HRM framework, Cardon and Stevens (2004) review a considerable range of papers on recruitment and selection, compensation, training and development, performance management, organisational change and labour relations in small firms. Their conclusion is of informal, ad hoc, arbitrary and uncertain labour management. Moreover, they suggest that there is an emphasis on recruiting employees who ‘fit in’ with existing cultural mores and a lack of any formal collective channel for employee voice in these firms.

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Growth-oriented firms face many challenges and it appears that where labour management is concerned, there is a need for flexibility to facilitate change and also, an ability to engender trust from employees regarding the vision and abilities of the entrepreneur (Deakins & Freel, 2003). Arguably anticipating uncertainty, seeking flexibility and managing change does not support a labour management stance based upon formal, bureaucratic policies and procedures. Maintaining employee confidence during uncertainty requires entrepreneurs to inspire employees and ensure they share the vision for the firm; such an approach will inevitably require informal, idiosyncratic approaches which will eventually be tempered as the firm matures. It therefore appears that whilst entrepreneurs and life style owners mean eventually there will emerge differing approaches to managing the employment relationship, during the time the firm remain small there are considerable similarities. Evidence does support this idea and shows that there are distinct characteristics of the employment relationship in small firms regardless of growth ambitions (Cardon & Stevens, 2004; Gilman, Edwards, Ram, & Arrowsmith, 2002; Ram et al., 2001). Formally constituted policy and practice informed by contemporary expertise is unlikely to be found in small firms where owners take control of the employment relationship. But, as firms grow, by the virtue of increasing complexity, this responsibility will eventually be delegated to a professional. In a detailed, but now somewhat dated examination of managerial labour markets, Wynarczyk et al. (1993) clearly identified that in successful growth firms, managerial tasks were delegated to professional specialists—the first appointment usually being a finance manager and the last, an HR professional. In more recent analyses of the delegation of labour management, Ardichvili, Harmon, Cardozo, Reynolds, and Williams (1998) and Mazzarol (2003) also found that owners were reluctant to relinquish control of the employment relationship until the firm had grown quite substantially (employing more than 120 employees) at which point they were no longer able to cope personally with the increasing complexity and responsibilities. This preference for retaining control of the employment relationship is not only linked to reducing indeterminacy but also, to a lower regard for the skills required to formally manage the employment relationship. In my study of managing employment regulation in small firms (Marlow, 2002) it was found that owners readily agreed specific professional accreditation was necessary to manage financial issues. However, in the case of employees, most felt this could be adequately managed by a non-professional as the social relations of employment were considered crucial and these were an outcome of the personal relationship between owner and employee. Whilst recognising the sector's heterogeneity, there is broad support for the argument that the management of labour in both life style and entrepreneurial small firms shares characteristics of informality, individuality and idiosyncrasy arising from the preference of owners to manage the employment relationship personally. This then leads to the question about the degree to which the activities of these owners might be analysed within an HRM framework. Of interest here is whether uncritically describing labour management in smaller firms in the context of HRM either exposes the paucity of the concept or alternatively, the managerial shortcomings of owners and entrepreneurs. Finally, the impact of this conundrum needs to be considered if there is to be further progress in developing an appropriate and sound analysis of the employment relationship in small firms. 5. Discussion and conclusions Drawing together the diverse arguments around this issue, there seems to be agreement that HRM has specific characteristics differentiating it from other analyses of the employment relationship. It has an underlying managerialist ideology and this is articulated as shaping the employment relationship to either engender greater employee commitment, enhance productivity and so strengthen organisational competitiveness, or to treat labour as a resource. Adding further detail to this foundation is rather difficult as some commentators suggest there is a critical role for sophisticated, strategic integration which then underpins high-performance outcomes (Schuler, 2001). Such high-performance models are often linked with best practice models of HRM deemed essential to engender employee commitment to maximise effort (Huselid, 1995). Alternatively, there are analyses of ‘hard’ HRM, which in fact, utilises coercion and surveillance to motivate commitment to productivity (Legge, 2006). Moreover, it has been suggested that a guiding principle of the HRM approach is a unitarist stance with a clear focus upon individuality but again, evidence from the UK suggests that those organisations claiming to have adopted an HRM approach do in fact recognise trade unions and so, reflect a pluralist perspective (Cully et al., 1999). So, given these diverse and contrary articulations of HRM, it is difficult to identify a robust conceptual framework with which to analyse the contemporary employment relationship. In an attempt to frame this critique Markusen's (1999) work has been useful to argue that HRM is a fuzzy concept. This would seem apposite as there is limited agreement about the conceptual basis for HRM. Moreover, much of the


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evidence is of process (i.e., policy and practice) at the expense of analysis. The conceptual weakness exposed here has been recognised for some time (see Legge, 2001, 2006) but the purpose of this paper has been to consider the implications of utilising HRM as a concept to analyse the employment relationship in small firms. The difficulty of engaging with this debate is usefully illustrated by Heneman et al. (2000) who considered the manner in which the extant literature regarding HRM practices in entrepreneurial firms reflect the actual concerns and interests of the owners themselves. The authors preface their findings with the observation that, Current human resource theory it often developed and tested in large organizations. As a result, little is known about the extent to which the theory extends to smaller entrepreneurial organizations. This is problematic given that a critical component of sound theory is the delineation of those circumstances such as…size…that serve as boundary conditions to the theory (Heneman et al., 2000; p. 12). Reflecting much of the arguments outlined above, Heneman et al. (2000) agree that using theory inappropriate to context is problematic, and thus, they support Markusen's (1999) position. Moreover, they suggest that this leads to a lack of congruence between the concepts underpinning research endeavours and the consequent research questions generated and the evidence realised. Heneman et al. (2000) therefore make a comparison between the extant evidence describing HRM in smaller and entrepreneurial firms and findings from focus groups of CEOs from growth firms on labour management challenges. Unsurprisingly, there were some gaps between the key issues of interest and concern identified by the CEOs and those outlined in the literature. This led Heneman et al. (2000) to suggest that “growth oriented CEO/founders do not seem to be concerned with traditional human resource management practices” (p. 18). In fact, the focus group participants were more concerned with identifying people who were able to ‘fit’ the organisation in a social and productive fashion. Their emphasis was upon reducing dissonance for new recruits and identifying flexible, proactive employees who were willing and able to undertake a range of tasks. These results are not inconsistent with other case study research where a detailed and nuanced picture of the employment relationship has been constructed (for example, Moule, 1998; Taylor, 2005). It is interesting to note that although there is sensitivity to the problem of conceptualising HRM, particularly in the respect of its application to small firms, much research attempts to identify ‘traditional’ HRM practices. It might be suggested that if prevailing models of HRM are poorly conceptualised and also drawn from practices evident in large firms, attempting to find evidence of HRM in small firms will not be particularly productive. As Heneman et al. (2000) comment, “the literature appears to be rich in prescriptions, limited in sound descriptive surveys and sparse in analytical research” (p. 20). The argument in this paper is that this arises because prevailing HRM analyses lack coherence through vague and ill-defined concepts which are then problematically applied to the particularistic nature of labour management in small firms, whether they are entrepreneurial or life style oriented. There are a number of broad implications which arise from the consideration of how HRM theory might be used to analyse labour management in smaller firms. Firstly, if HRM is presumed to be a process which consists of certain policies and practices described in text books, it would appear that most small firms, whether life style or entrepreneurial, are not engaging with HRM. As Taylor (2005) argues, there is then an assumption that “managerial practice in smaller organisations remains stubbornly rooted in an alternative way of thinking and acting…the smaller organisation is cast lacking” (p. 34). If such a presumption is right, then it suggests that the solution for small firm owners is to adopt a normative version of HRM, drawn from practices in large firms to demonstrate an orthodox approach to labour management. As such, there is no recognition of how context shapes the employment relationship such that what diverges from normative applications should not automatically be considered subversive without due consideration to circumstance. Secondly, the attempt to conceptualise labour management in small firms as HRM exposes the superficiality of the theory if it just means that all forms of labour management should be mapped onto the HRM approach. If the term is used uncritically, it merely becomes an umbrella label for a strategy, tactic or practice used to order the effort wage bargain and so, in losing definition, it loses any analytical foundation. In reviewing such arguments, it would appear that despite protestations that little is known about the employment relationship in small firms (Katz et al., 2000) it is not so much a lack of evidence regarding how labour is managed but a problem of presuming that this evidence should be cited in an HRM framework. This would seem to add strength to the notion of HRM as a fuzzy concept as if it is problematic to define terms, it is then difficult to establish what might be included or excluded from the debate. This is not to suggest that small firms should remain excluded from the broader debate but that a more carefully considered framing of HRM is essential; recent work by Taylor (2005) does address this issue in an interesting fashion. He likens the search for normative models of HRM in small firms to the hunting of

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the snark (a mythical creature with the potential to transform into a dangerous beast) and instead he conceptualises HRM as a managerial discourse shaped by the culture and context of the organisation. In this fashion he reflects Hudson's (2003) suggestion that conceptual fuzziness can be addressed by considering why a concept “takes that meaning in that context” (p. 744). Indeed, the notion of context become critical and an important tool to address ‘fuzziness’. If there is a desire to analyse HRM in small firms, then contextualised definitions become necessary to give meaning to the debate. For example, Taylor (2005) takes some care to explore HRM as a discourse created and maintained by both employees and employers in his case study examples. By developing an initial conceptualisation of HRM which draws upon firm size, social proximity and informality, Taylor is able to identify and discuss not only how practices and policies emerge, but how they are actively managed. In the analysis of the employment relationship, the importance of context is also recognised by Edwards (2005), who argues convincingly for ‘context-sensitive’ research which is then able to support a more “theoretically informed way of working” (p. 269) to explore why things occur as they do. Consequently, when exploring labour management in small firms, it should be possible to position the analysis within a contextual framework that recognises how employees and employers create, maintain and change their employment relationship within an environment of smallness. This analysis might then be viewed through an HRM ‘lens’, sensitive to context with the ensuing findings moving beyond abstracted empiricism. By adopting a more rigorous approach, the particularistic employment relationship in small firms becomes more exposed so underlying relationships with broader concepts, such as the effort–wage bargain, become more transparent. If this is then established, the reasons why, for example, formal employment regulation or strategic HRM is likely to be alien to small firm owners becomes more apparent. As such, engaging with, and even challenging, contemporary analyses of HRM when conceptualising them in small firms will ensure that ensuing research questions adopt a more theoretical and contextualised approach which, in turn, will ensure outcomes have greater policy relevance. In conclusion, there is a growing body of evidence about the management of labour in small firms as well as a wealth of literature about the emergence of HRM and the manner in which it is articulated through policy and practice. A lively debate persists about the validity and robustness of the conceptual grounding for HRM as an approach to analyse the contemporary employment relationship. Satisfactorily bringing these areas together is difficult as the concept either has to be stretched to incorporate informality, flexibility and ad hoc approaches, or small firm owners and entrepreneurs must be encouraged to adopt normative HRM, or small firms must be excluded from debate or even held up as examples of poor practice. There are alternatives to such scenarios and the work undertaken by Taylor (2005) which engages with HRM to critically evaluate how the concept is operationalised within the small firms context rather than claiming HRM to be difficult to find in small firms, is one way of approaching this. Research exploring labour management in small firms should clearly establish the theoretical constructs in which evidence is based rather than uncritically drawing upon descriptive models of HRM. Another productive route is to analyse the changes in entrepreneurial firms as they grow and how this impacts on the management of the employment relationship as it will inevitably shift from a reliance on a personal approach incorporating informality and flexibility to a more formally constituted basis. Consequently, the definition of HRM would shift within the context of the firm's growth and complexity. Clearly, there is considerable scope to critically evaluate how what we know about labour management in small firms and how it adds to the manner in which HRM is conceptualised in the wider sense. But this will only be possible if careful consideration is afforded to strengthening theory, rather than drawing upon process, to advance debate. References
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