ESTADO DE RESULTADOS

For over twenty years, much of the entrepreneurship literature has focused on defining entrepreneurship and identifying individuals’ motives for becoming an entrepreneur (e.g. Allen, Langowitz, & Minniti, 2006; Bygrave & Hofer, 1991; Carland, Hoy, Boulton, & Carland, 1984b; Cartwright, 2002; Casson & Godley, 2005; Davidsson, 1989; Dean, Shook, & Payne, 2007; McGrath, MacMillan, & Scheinberg, 1992; Stevenson & Gumpert, 1985; Zahra, 2007). After that, the emphasis of entrepreneurship research shifted from the entrepreneur to the entrepreneurial process as academics agree to develop a better theory of entrepreneurship (Davidsson, Low, & Wright, 2001; Gartner, 2001; Low, 2001; Shane & Venkataraman, 2000). However, as a small body of literature suggested that management values and practices may play an important role in the ultimate success of small- and medium-sized firms much remains unknown (Messersmith & Guthrie, 2010; Way, 2002).

Additionally, there is much to explore and to understand around the integration of entrepreneurship and the influence of human resource management on firm performance by the investigation of multiple firms in a single industry. This could

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provide a specific context and allow insight into multi-levels of research data in the individual (entrepreneur) level and the organisational outcome level. Furthermore, entrepreneurship has received much attention as a research topic, yet there lingers doubt as to what it really means to be an entrepreneur. In this present research, entrepreneurship is simply defined as the creation of new enterprise (Low & MacMillan, 1988).

The present research is focused on small organisations, which represent the majority of New Zealand businesses, without addressing the issues of Who is an entrepreneur? and Which firms are entrepreneurial? Shane and Venkatraman (2000) suggest that, to explain entrepreneurship, researchers should focus their attention on individuals and opportunities while also taking into account the environmental effects. Therefore, rather than simply analysing the connection between entrepreneurship and HRM practices, this present research has attempted to examine the following issues: firstly, under which conditions entrepreneurial factors (including traits, skills, and motivation) impact on organisational behaviours and firm performance; and secondly, how HRM practices are used as an entrepreneurial instrument to manage human resources by the participants in this study. The next chapter explores the literature in more depth regarding HRM.

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Chapter Three: Human resource management (HRM)

3.1 Introduction

Human resource management originated from the human relations movement in the early twentieth century due to research by Frederick Winslow Taylor in the 1880s and 1890s. Taylor’s philosophy of scientific management (Taylorism) implies a scientific way to managerial decision making, and aims to increase efficiency (such as standardisation in the design and use of tools which had shown to be the most effective in a given context). Rather than the tradition approach (e.g. rule of thumb, personal opinion, or hearsay), Taylor’s scientific management is based on proven fact (e.g. research and experimentation) (Locke, 1982). It was one of the earliest efforts to apply science to management. His theory analysed and synthesised workflows with the objective to improve economic efficiency, especially labour productivity. The principle of scientific decision making and techniques such as time study, standardisation goal setting, money as a motivator, scientific selection, and rest pause have been accepted in contemporary management.

One of the key aspects that concerned Taylor was the relationship between management and labour. One of the extensions of scientific management in relation to task is the technique of management by objectives (MBO) which developed more openly from the concepts of feedback, performance measurement, and cost accounting. Another widely used term is organisational behaviour modification involving goal-setting with feedback. Taylor anticipated that specific (quantitative)) challenging goals lead to better performance. The tasks were assigned and set by time study to be achievable only by trained his first class workman (Locke, 1982). Taylor also argued that employees should learn their skills from the manager and objectively evaluate training. According to Locke (1982), the key difference between Taylor's and Mayo's views was on the interests of management and the worker. Taylor viewed a problem as caused by poor management which could be reduced by scientific management, whereas Mayo viewed it as a reflection of an ingrained human need.

After that, Elton Mayo is known as having pioneered the influence of human relations or social factors on worker motivation and is known for his Hawthorne Studies of the 1930s. The study showed the significance of groups in affecting the behaviour of individuals at work. He carried out a number of examinations to

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improve productivity; for example, changing lighting conditions in the workplace. However, he found that work satisfaction depended on an informal social pattern within the work group where norms of cooperation and higher output were established because of a feeling of importance, whereas physical conditions or financial incentives had little motivational value. He suggested that the work group formed by employees could be used by management to advance the organisation. In short, the Hawthorne Studies found that motivations where unrelated to financial compensation and working conditions, whereas attention and engagement yielded more productive workers.

Concurrent studies, such as those by Abraham Maslow, Max Weber, and Frederick Herzberg, formed the basis for studies in organisational behaviour and organisational theory, giving rise to this applied discipline. By the time sufficient theoretical evidence existed to make a business case for workforce management, changes in the business setting and in public policy had transformed the relationship of employer and employee, and the discipline was formalised under the label industrial and labour relations. During the second half of the twentieth century, union membership declined significantly, while workforce management continued to expand its influence within organisations. Industrial and labour relations were being referred specifically to issues concerning collective representation, and many firms began referring to the profession as personnel management.

Drucker (1954) initiated the thought of an employee as a human resource, which has unique quality because only a human resource can be utilised by itself: other resources must be utilised by managers. He proposed constructive actions to promote employee motivation and to generate jobs that challenge and grow employees because the personnel management of his day did not meet expectations. Four years later, Bakke further explained why the human resource function went beyond the work of the personnel or industrial relations function (Marciano, 1995). According to Marciano (1995), “from 1965 until 1970, the terms human resource or human resource management (HRM) do not appear to have been much used in academic writing” (p.224) but the idea had been well accepted in management circles. Then during the mid- to late 1970s, the definition of HRM changed and was taken from personnel management and re-theorised in the 1980s (Marciano, 1995). For example, the most influential theory by Beer, Spector, Lawrence, Mill and Walton (1984) viewed HRM as the study of management decisions and actions

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which impact the relationship between the organisation and workers. HRM outcomes are commitment, competence, congruence, and cost effectiveness. After the late 1980s, the British adopted HRM and critiqued it. HRM exists in several versions today, and has become a legitimate field of research in its own right (Marciano, 1995).

In the twenty-first century, advances in transportation and communications greatly facilitated mobility and collaboration of workers. Firms started viewing employees as assets which were unique and sources of competitive advantage, rather than machine-like devices. HRM practices appear to ensure that employees get involved in the organisation activities and work hard to achieve the business objectives and goals. The essence of HRM is to organise and manage the human resource in an organisation.

A Kotey and Slade (2005) finding shows that as the number of employees increases, there is a move toward division of labour, hierarchical structures, increasing documentation, and more administrative practices. They also found that HRM practices in small firms cannot be explained by static models, and that the variety of small firm practices are related to various firm sizes. Similarly, Aldrich and Ruef (2006) further illustrated that large organisations have HRM departments for selection, and a distinction between employees and non-employees in selection. Recruiting and HRM practices are expected to become more formalised and impersonal as businesses grow and age.

This chapter begins by reviewing strategic human resource management literature and its theories. Then, the links between HRM practices and firm performance are identified, followed by consideration of best practice under high performance work systems (HPWS). HPWS is defined, and detailed, providing the empirical evidence of research in relation to small- and medium-sized organisations. The chapter concludes with a summary.