Research Possibilities in The Field of Human Resource Development in Small - Medium Enterprises in
Developing Countries: A Review and Research Agenda
Hana Hamidi * Universiti Malaysia Sarawak
Email: [email protected]
* Corresponding Author
Abstract
Purpose: Research in HRD in developing countries’ SMEs, although significant, proved to be limited. Although HRD is evident in various levels and forms of organizations, there is a tendency for researchers to favour large organizations study. The preference of studying HRD in large firms may put SMEs at a disadvantage from not gaining the benefits of properly conducted HRD research. Past literature review revealed that there is disconnect between theory and practice of system theory and thinking in HRD research and practice. One of the recommendations made by past researchers was to increase and articulate practical application of the systems theory and thinking in the scholarly literature, teaching and research of HRD. This literature review aims to do just that by first, taking a step back and investigate what is known in the literature about HRD in developing economies’ SMEs. This paper attempted a systematic approach to literature review to synthesize possible research agenda in this area, from the lens of System Theory.
Design/methodology/approach: A sample of 28 papers published in 25 journals from 1995 to 2017 was used.
Findings: The synthesis of these empirical and theoretical studies revealed that (a) a narrow range of theoretical and conceptualized perspectives were utilized; (b) Training and Development related topics remain the foremost research of interest among researchers; and (c) the dependency on quantitative methods when conducting HRD research as opposed to utilizing various methods which may provide insights to current issues on SMEs’ HRD. Several suggestions for future research topics were offered based on theory, methodology and content.
Research limitations/implications: This paper discussed the implications of findings for future research from theoretical, content and methodological perspectives.
Practical implications: The literature review serves as a guide for systematic literature review processes.
Originality/value: This paper discussed the research trends of SMEs in developing countries where information about this is greatly lacking. This paper utilized systems theory as its framework and a systematic literature review process was used to enhance the rigor of this study.
Keywords: Small-medium Enterprises, Human Resource Development, Systematic Literature Review, Developing Countries, Research Possibilities
Introduction
Human Resource Development (HRD) is an accepted maturing field, both in academia and practice. Organizations use HRD as a process to improve organizational performance and enhancing individual capacities through the accomplishments that result from employee development, organizational development, and career development programs (Jacobs, 2014).
Although HRD is evident in various levels and forms of organizations, there is a tendency for researchers to favour large organizations study (Hill & Stewart, 2000; Rowden & Conine, 2005).
In comparison to HRD research in general, the cumulative of HRD studies in SMEs is low despite being studied as a field over four decades ago (Nolan & Garavan, 2015). Three major reasons were identified for the preference to conduct HRD study in large organization context. First, the availability of specific departments handling HRD-related matters in large firms made research a more viable activity among researchers and practitioners (Das, Narendra & Mishra, 2014).
Second, higher financial budget for HRD activities in larger firms allows better implementation of HRD policies (Stone, 2012). Third, having a bigger number of employees, which include those with knowledge about implementing HRD (Abdullah, 2009) in larger firms, made practicing HRD a more feasible task. These three reasons led to higher research interest among HRD scholars about HRD in large firms. The preference of studying HRD in large firms may put SMEs at a disadvantage from not gaining the benefits of properly conducted HRD research.
The lack of research about HRD in SMEs is intriguing because a quick survey across developing nations’ income reveals that SMEs play an integral part to the global economy (OECD, 2012). For examples, in China, SMEs account for 98.9 percent of total number of businesses (Singh, Garg &
Deshmukh, 2010) while in Malaysia, 97.3 percent of establishments are SMEs (SME Corp Malaysia, 2014). SMEs drive gross domestic product (GDP) growth (Kongolo, 2010). SMEs are fundamentally important for economic health both in high-and low-income economies worldwide (OECD, 2012). The importance of SMEs in developing economies is not limited to their contribution in driving GDP growth alone. In the process of economic development, SMEs provide grounds for innovation and technological breakthrough (United Nations, 2014). SMEs are labour-intensive; they are the biggest employment opportunity providers in most developing countries (Hobohm, 2001). SMEs increase socio-economic status by alleviating poverty through provision of jobs, hiring from poor households and providing women with alternatives in generating income (Hobohm, 2001).
A recent article by Nolan and Garavan (2015) laid out a systematic review of literature about HRD in SMEs, the first published article to do so. However, only a handful of articles regarding HRD in developing countries’ SMEs made into their list of reviewed articles. Out of 107 developing economies as listed by United Nations (2014), only eight articles based on research in developing economies were considered in the list of 117 sample articles. Meanwhile, more than half of the reviewed articles were studies conducted in the United Kingdom (67 articles). The gap between the number of articles addressing HRD practices in developed nations’ and developing economies’
SMEs based on the work of Nolan and Garavan (2015) prompted the author to investigate the extant of HRD research in SMEs in countries of developing economies. If SMEs in countries of developing economies are important contributors to the economic and social development of respective countries as discussed in various studies and economic reports (Pandya, 2012; Keskin et al., 2010; OECD, 2010), surely more should be known about HRD in SMEs of developing economies.
HRD, Change and SMEs
HRD is recognized as one of the perceived critical success or failure factors of SMEs (Nirjar &
Tylecote, 2005). Some of the highlighted HRD issues in SMEs are lack of experienced employees in the market, lack of skilled manpower in the market, lack of low cost training facilities, inaccessibility and unavailability of training facilities in the local community (Temtime & Pansiri, 2004). It is also acknowledged that even though the importance of HRD is recognized, SMEs seem to only pay lip service when it comes to the implementation of HRD (Chidi & Shadare, 2011). Since SME operators generally have very little knowledge on HRD itself, those who attempted to do so were found to be doing so haphazardly, without utilizing proper steps (Chidi &
Shadare, 2011).
Factors that lead to successful SMEs are often discussed in the literature. A study by Chittitaworn et al. (2011) identified five significant factors that lead to successful SMEs in Thailand. These factors are (i) SMEs’ characteristics such as size, number of employees, type of industry, (ii) customer and market, (iii) the way of doing business, (iv) resources and finance, and (v) external environment. Chittitaworn et al. (2011) believed that new SME operators should make themselves informed about these factors to help them prepare themselves when considering running an enterprise. However, apart from being informed about these successful business factors in SMEs, SMEs operators should also be able to adapt to changes for their business to thrive in the market.
Changes may affect business, and sources of change may come from internal or external factors (Prediscan, 2004; Stanleigh, 2008; Chittitaworn et al., 2011; Prediscan & Roiban, 2014). General forces of organizational change are driven by merges and acquisitions, innovation, technology, reengineering, globalization and decline in sales or market share (Stanleigh, 2008). Examples of internal sources of change in SMEs include type of ownership, board composition, top management teams, employees, organization structure, information system, and culture (Prediscan
& Roiban, 2014; Brunninge, Nordqvist & Wiklund, 2007). Commonly discussed external forces of change are economic, technological or technical, political, legal, demographical, socio-cultural and natural forces (Prediscan, 2004). Whether SME operators realize or not, changes in enterprises could affect more than just one business aspect or process. Changes often have a domino effect to the organization (Cawsey & Deszca, 2007; Bratton, 2015). Unlike large firms, SMEs are often not equipped with the right resources and knowledge to respond to changes happening in and surrounding their enterprises (Hill & Stewart, 2000).
The inability to adapt to changes often brought failure to SMEs (Bowen, Morara & Mureithi, 2009). Those who were aware about the need to adapt to changes tried to be proactive in implementing change in the organization. It was reported that many change initiatives in organizations also failed (Stavros et al., 2016). There are various reasons as to why change efforts failed in organizations. Popular reasons include (i) the lack of communication which results in resistance to change among employees, (ii) weak management, (iii) the lack of attention given to the human dynamics of change, and (iv) the lack of knowledge of the underlying processes of change (Iveroth, 2010; Iveroth & Bengtsson, 2014; Iveroth & Hallencrentz, 2016).
As change is inevitable, SMEs may consider utilizing HRD as part of their business plan to help them face the effects of change. After all, “HRD is used to help implement some broader set of changes, which themselves are linked to some aspect in the environment” (Jacobs, 2014, p. 35).
Although SMEs around the world may be facing the same effects as what SMEs in developing economies would, this literature review would be focusing on past studies on SMEs in developing economies due to the lack of information about HRD and SMEs in those countries, as illustrated by previous literature review by Nolan and Garavan (2015). To help HRD scholars and researchers
conduct future relevant studies about HRD in SMEs in the context of developing countries, it is the goal of the author, through this review, identify future possible research topics in this area. To achieve this, system theory is used to provide a framework for identifying past studies about HRD in SMEs for ease of categorization and reference. The rationales for using system theory as the lens for this systematic literature review are discussed in the section below.
System Theory in HRD
One of the most accepted foundational theories in HRD is system theory (Jacobs, 1990; Swanson
& Holton, 2009, Yawson, 2013, Jacobs, 2014). System theory as used in the HRD context originated from Karl Ludwig von Bertalanffy’s General Systems Theory (GST). System theory is unlike most single, formal theory per se; rather it comprises a set of models, principles and laws that apply to all constructs in complex, related structures. System theory is trans- and interdisciplinary in nature (Straussfogel & Schilling, 2009). Due to this nature of system theory, the theory is viewed as fitting in HRD study and accepted as the underlying unifying theory in HRD (Yawson, 2013). “The goal of system theory is to explain things, natural or artificial, as that of systems and the interplay of their respective constituent parts” (Jacobs, 2014, p. 22). The basic components of systems include inputs, processes, outputs and feedback or feed forward (Figure 1). HRD is a process or system within the larger organizational and environmental system (Swanson, 2001). From this theory, HRD has the potential of harmonizing, supporting and shaping the larger systems, in which the organization operates (p. 304). System theory captures the complex and dynamic interactions of environment, organizations, work process and group or individual variables operating at any point in time and over time (p. 305). System theory “might be the best approach for understanding HRD, its boundaries, and those things that seem to have the strongest connections to it (Roth, 2004, p. 14).
Yawson (2013) revealed that there is disconnect between theory and practice of system theory and thinking in HRD research and practice. He further debated, despite being acknowledged as a crucial component of research and practice in HRD, the apparent lack of application of both systems theory and thinking by HRD practitioners, professionals, researchers and students raised questions about the contradicting accepted theory and its practicality. One of the recommendations made by Yawson (2013) was to increase and articulate practical application of the systems theory and thinking in the scholarly literature, teaching and research of HRD. This literature review aims to do just that by first, taking a step back and investigate what is known in the literature about HRD in developing economies’ SMEs.
The following framework is used to help the author conduct the literature review by adopting the system theory input-output-process-feedback loop. Input in this review refers to the articles found in journals, based on keywords discussed in the Method section, which addressed HRD activities in SMEs in developing countries. Another form of input is the list of developing economies as listed by United Nations. Output refers to the HRD programs as discussed by Jacobs (2014), employee development (in this review, used interchangeably with the term training and development), organizational development, career development, and workplace learning (which is added to represent learning component). Process refers to the themes and trends identified from these selected articles. Feedback or feed forward refers to the recommendation for future research based on the analysis of the review.
Figure 1: The Framework of This Literature Review.
Method
This paper attempted a systematic review to search, choose and analyse past studies about HRD in developing economies’ SMEs. Systematic literature review (SLR) is “a review of a clearly formulated question that uses systematic and explicit methods to identify, select, and critically appraise relevant research, and to collect and analyse data from the studies that are included in the review. Statistical methods (meta-analysis) may or may not be used to analyse and summarise the results of the included studies’ (Higgins & Green, 2011). Detailed descriptions about how the materials were identified and selected are discussed in the following sections.
Searching for The Literature
Guidelines from Torraco (2005) and Callahan (2010, 2014) were used in developing this review.
In searching materials for review, three databases were used. They were Business Source Complete, ABI/INFORM Complete and Academic Search Complete. The searches were conducted between the dates November 15 2015 and May 2017. Boolean keywords and phrases used in the database search were (Human Resource Development) AND (developing countries or developing nations or third world) AND (small and medium enterprises). To ensure that searches were exhaustive, repeated searches using the keywords “Training and Development”,
“Organizational Development”, “Career Development” and “Workplace Learning” were conducted to replace the keyword “Human Resource Development”. The results were filtered so that they were limited to full text, peer reviewed and scholarly journals. The published date range was limited from January 1995 to 2017, based on Nolan and Garavan’s findings that no literature on HRD in SMEs was found prior to 1995. Whenever possible, the results were also filtered by countries, where the list of developing economies by United Nations (2014) was used. The searches resulted in 335 possible articles.
Selecting the Articles
For the possible articles to be included in the final list of reviewed articles, several inclusion and exclusion criteria were set to ensure that the materials selected were relevant to the purpose of this review. To do this, the abstract of each article was read. Articles must address HRD issues and components. Those that solely discuss SME development from other perspectives (such as purely economics or business perspectives) than HRD are excluded. SMEs operated in other than developing countries were also excluded. Theoretical papers, empirical studies and evaluation reports were in the final list.
Input
• Articles published about HRD in SMEs in developing
economies
• List of developing economies from
UN
Process
• Employee Development
• Organizational Development
• Career Development
• Workplace Learning
Output
• Current status and themes
• Common theories used
• Common forms of methodology
• Extent to which SMEs are involved
with ED, OP, CD and WPL
Feedback
• Recommendation for future studies
Results and Discussion
Characteristics of Articles
Out of 335 possible articles, only 28 articles were useable for the final review. There was a mix of quantitative (n=15) and qualitative studies (n=8), as well as articles that used a combination of qualitative and quantitative (n=4) methods. One (n=1) conceptual paper made it into the list.
Included in the list were two (2) evaluations of HRD programs.
Out of UN’s list of 107 developing economies, only 28 articles from 14 countries were found.
These developing countries were Botswana (n=2), Nigeria (n=2), India (n=3), Mexico (n=1), Malaysia (n=8), Thailand (n=2), Philippines (n=2), Indonesia (n=1), Korea (n=1), Vanuatu (n=1), Uganda (n=1), Barbados (n=1), Taiwan (n=2), and South Africa (n=2). Most authors are from respective countries with a few collaborations from different countries such as US and Malaysia (Rowden & Ahmad, 2000) and, Uganda, Nigeria and India (Oyelaran-Oyeyinka & Lal, 2006).
Although many of the authors are from organizational studies such as HRD, HRM, management or business-related background, they are also from other disciplines such as engineering (Anuar &
Mohd Yusuff, 2011), construction (Kamal & Falanagan, 2014), urban planning (Beerepoot, 2008).
HRD Theories in SMEs
The theories used as the basis of the studies found in the articles came in multiple forms. Although five articles did not specify the theories from which their studies were derived (Temtime & Pansiri, 2004; Aldaba, 2012; Tambunan, 2008; Lee, 2006; Abdullah, 1999), other authors used Human Capital Theory (Chidi & Shadare, 2011), Dynamic Capabilities View (Daou, Karuranga & Su, 2013), Resource-based View (Greenidge et. al, 2012), Organizational Theory (Tan & Lim, 2012;
Osman Ho & Galang, 2011), learning theory (Sooraksa, 2012; Beerepoot, 2008; Mbambo &
Cronje, 2007; Oyelaran-Oyeyinka & Lal, 2006) and strategic management (Huang, 2011;
Hirschsohn, 2008). This finding strengthens the claim that HRD researchers did not make full use of theories (Lynham, 2000). Interestingly, none of the articles reviewed used System Theory as the framework of their study. This is aligned with Yawson’s (2013) argument that there is a gap between the acceptance of system theory as a foundation theory of HRD and the articulation of system theory in HRD’s theory and practice.
Scarce Organization Development and Career Development research in SMEs
As illustrated in the summary of articles reviewed, it has come to the attention of the author that no articles regarding the topic of OD and CD in developing economies’ SMEs appeared in the list.
The lack of research in OD and CD in SMEs in developing economies may be attributed by several reasons. Rigg and Trehan (2004) argued that representationalist perspectives of organization have dominated research into HRD within SMEs, by narrow definitions of HRD as training and by quantitative research methods. Furthermore, it is a common perception among SME operators that the cost of conducting OD or CD intervention is expensive, especially when it involves consultancy fees (Hanson & Loubin, 1995). The level of awareness of the importance of OD or CD among developing countries’ SMEs is unknown. For these reasons, discussion about OD and CD will be removed from the following sections.
Recommendations for Future Research Theory – Future Directions
The findings indicate that there are still articles being published without using strong use of theory,
to Nolan and Garavan’s (2015) findings and should this problem be addressed; the strong use of theory can be a platform to enhance the credibility of the field (p. 10). In a way, this gap may contribute to the problem of little growth of theorizing in field of HRD, especially with regards to small firms. Even if theories were used, authors tend to over-rely on a small number of theories (Resource-based view, learning theory, organization theory, Human Capital theory).
Furthermore, few innovation attempts have been made neither to extend the existing theories, nor did these authors adopt more current ones. These theories as listed above, although are important, good and relevant to the HRD in SME context, only address certain aspects of the business. What HRD research needs here is a theory that can look and address the links and the effects the HRD process in the SMEs. For example, the reviewed articles do not address how HRD programs were evaluated and if feedbacks about employee performance after attending the said programs have improved. Based on the review, it is recommended that future studies adopt System Theory Applied to HRD (Jacobs, 2014) as the basis of future research that will allow for greater coverage, breadth and depth of HRD in SMEs studies. This recommendation is since System Theory is one of the foundational theories in HRD (Jacobs, 2014), and works with organizations of various forms. Organizations, no matter how small, operate within several processes, which are interconnected to each other. It is this view that makes System Theory suitable for SMEs because regardless of their size, all SMEs operate in an input-process-output-feedback manner/loop, which are the basic components of Systems. Without having a proper structure (regardless of how few their number of employees are), the business is operating in chaos. Furthermore, to strive and compete, SMEs are not invincible to change. In fact, for SMEs to flourish, owner-managers should consider embracing change or initiating change as proactive measure against competitors. To do so, they should understand that a single change in their operation would cause domino effect to the rest of the organization structure. Changes in the organization structure, no matter how small, must be supported by making changes to their entire business processes, failing to do so will cause accumulated problems in the long run and complicate problems.
Content – Future Directions
Training and Development has been the central discussion for HRD in SMEs everywhere. Studies have looked at various aspects of T&D. Further research is needed to understand the processes that owners take in deciding which training is deemed as important, and how does that decision link to the outcome of the organization. How are training anticipated when facing change? How useful are training as provided by training providers and government agencies? Again, from System Theory perspective and HRD programs, how are the selection of training attended made?
The findings also highlighted the various SME and HRD definitions used in the articles. Special attention must be given when generalizing the use of these terms for future research as the context may have significant difference. Replicate studies across countries, industries and firm size must be conducted to see if these variations produce different results. The use of HRD definition is also inconsistent. In searching for relevant materials for future studies, other keywords such as employee development, human capital development, and talent development can be used.
Academic researchers are encouraged to work with practitioners to see if there are new terms used in the real world just to keep themselves abreast with these types of changes.
The success of trainings in SMEs is questionable. Further research to understand this situation may shed some light into what causes this ineffectiveness. What are new ways in which SMEs may utilize trainings? What are the things that researchers (with collaboration of various parties)
can do to increase awareness of continuously developing employees or themselves for long-term benefit? After all, SME owners are fully aware of how competitive the industry is out there.
Influences of culture are also an interesting finding that appeared in the findings. Understanding how culture influence the behaviour of owner-managers, and employees are vital in developing more culture-sensitive models of HRD in developing countries’ SMEs. This is a call for the development or use of a more culturally sensitive instruments or measurements during the research.
Methodology – Future Directions
As evident by the difficulty in finding high quality materials about HRD in developing countries’
SMEs, this review is also a call for HRD researchers to rigorously conduct high quality research to fill in the gap of limited publication in this topic. The findings revealed a dependency on quantitative method and the use of basic statistical analysis tools. Quantitative studies offer little understanding of the overall issue - lack of research in SME HRD (Curran, 2000). Researchers are encouraged to move beyond analysing based on secondary data and published reports from government agencies and start to empirically look for evidence. By doing so, scientific explanations and connections could be made and further steps in theorizing HRD in SMEs can be done. Researchers should also move beyond using basic descriptive statistics, such as in describing the profiles of SMEs and use more sophisticated testing tools to fine connections among the variables. Similarly, researchers are encouraged to use qualitative method, such as conduct more case studies; adopt action research and ethnography approaches that will increase understanding of HRD in SMEs by going deeper in the subject. Also, mixed-method approach may present findings that could compare the analysis from quantitative and qualitative approach.
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