Business and Management INK

What European SMEs Can Teach Us About Innovation and Informal Human Resource Management

December 16, 2024 144

In this article, co-authors Desiree Meurs, Marise Born, Yolanda Grift, Maaike Lycklama à Nijeholt, and Joop Schippers offer a sneak peek into the inspiration behind their research article, “Informal human resource management and innovation: Insights from European SMEs,” published in The International Small Business Journal: Researching Entrepreneurship.

When we started our research on innovation within small and medium-sized enterprises (SMEs), we were driven by the observation that many of these companies struggle to innovate effectively. There is an increasing pressure on smaller companies to remain competitive in global markets, often with fewer resources than larger corporations. Despite the overwhelming attention for strategies to stimulate innovation in the Human Resource Management (HRM) literature, the focus is mostly on formal HRM (for example recruitment procedures) and on large companies. Our curiosity led us to explore whether the key to innovation might lay elsewhere, namely on informal HRM. Informal HRM (IHRM) in our study is defined as an interrelated flow of informal activities, said differently, as a ‘bundle’ of informal practices. IHRM can include practices such as mentoring and peer feedback. So we formulated our research question: which IHRM-practices contribute to the innovativeness of European SMEs?

Challenges and Surprising Findings

One of the most challenging aspects of this research was navigating through the data from the European Company Survey 2019 to find an answer to our research question. What surprised us was the counterintuitive finding that a strong focus on relatedness (informal interaction) may negatively influence innovation performance in SMEs. In SMEs, a very informal atmosphere may lead to consensus-building over constructive debate, which could stifle creative thinking and new ideas. This finding suggest that while human-centered HRM is essential for fostering innovation, it needs to be carefully managed.

The Innovative Aspect of the Research

The study to our view is innovative because it highlights the unique needs of SMEs. Such as an engaging work environment that allows employees to apply their competence. These needs call for a tailored approach to IHRM that acknowledges employees’ specific challenges and strengths. By identifying the IHRM-practices regarding competence and autonomy that effectively support innovation performance, this research provides actionable insights for small business leaders, so that they can  compete with larger firms in terms of innovation.

Insights Beyond the Published Work

One area that we could not entirely cover was the influence of the broader legal and regulatory context of different countries. Research shows that innovation rates vary significantly across Europe. These are influenced by, for example, individualistic versus collective cultures.  It could be an interesting angle for future research to enhance the understanding of the national impact.

Advice for New Scholars

We recommend new scholars to look beyond traditional large company research settings. Understanding the different dynamics in SMEs requires a willingness to engage directly with these organizations. We encourage new researchers to consider mixed-method approaches, including case studies, to capture the complexities of IHRM in SMEs.

In conclusion, our research underscores the importance of a balanced approach to IHRM in SMEs and offers guidance for business leaders in SMEs to drive innovation performance.

Desiree Meurs (pictured) is a researcher at the Knowledge Center for Business Innovation at Rotterdam University of Applied Sciences. In addition to her research experience, she has extensive experience as a lecturer in various disciplines and has contributed to various practice-oriented and international scientific publications. Marise Born, PhD is an endowed professor of industrial and personnel psychology at VU University Amsterdam and Extraordinary Professor at Optentia, North-West University, South Africa. She has research interests in personnel selection, cross-cultural psychology, test development and assessment for work-related purposes, and personality and individual differences. She is also currently the chair of the Board of Foundation NOA and has advised over 20 PhD candidates. Yolanda Grift, PhD is an assistant professor of law, economics and government at the Utrecht University School of Economics. As a researcher, in recent years she has focused on the influence of employee participation on business results and on the development of school careers in secondary school. She is a committed teacher and researcher with expertise in a wide variety of areas, including applied microeconometrics, institutions for collective action, and mobility and migration. Maaike Lycklama à Nijeholt, PhD is a professor of finance & business innovation at Rotterdam University of Applied Sciences. She is a published researcher and is currently focused on work in acquisitions, soft controls, and innovative forms of financing. Joop Schippers, PhD is a professor of law, economics and governance at Utrecht University School of Economics. He has been affiliated with Utrecht University for over forty years and has a research focus on various aspects of the labor market. He is a multidisciplinary researcher and has conducted copious amounts of research for Dutch and European employers.

View all posts by Desiree Meurs, Marise Born, Yolanda Grift, Maaike Lycklama à Nijeholt, and Joop Schippers

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