The effect of human resource practices on firm performance in Chinese SMEs: An empirical study in manfacturing sector

Previous studies suggest that strategic human resource management (SHRM) is beneficial to firm performance. The SHRM literature draws on three dominant modes of theorizing: universalistic, contingency and configurational perspectives. At present, most of empirical researches on these three perspectives are based on the North American environment, and many scholars focused on large enterprises as sample of empirical studies. We know it is possible that some SHRM practices which are effective for western enterprises are not effective for enterprises in Asia because of the different environment and culture, and the studies on the relationship between SHRM and firm performance in small and medium enterprises are rarely while they have significant values in social practices as well as in theory. The purpose of this study is to testify the universalistic perspective of view by examining the positive relationship between certain SHRM practices and firm performances in Small and medium manufacturing enterprises located in different parts of the People's Republic of China.;Based on the universal approach, the relationship between SHRM practices and organizational performance have been examined. The finding indicated that certain SHRM practices are better than other Human resource practices, the former have positive relationship with the organization performance no matter what the firms' strategy are. More specifically, The empirical result through relationship analysis revealed that with innovation level controlled, some strategic human resource practices in incentive compensation, training, selective hiring, performance evaluation and information sharing have significant positively effect on at least on organization performance factor. Furthermore, the regression analysis validated that incentive compensation, training, job security and social and sport activates has significant effect on organization performance. This finding supports the proposed hypothesis of our study.;To the best of our knowledge, this is the first large-scale study (200 questionnaires survey) on the relationship between HRM and Small and Medium enterprise performance in the context of the People's Republic of China. The result developed in this study adds valuable insight to the existing strategic Human resource literature by identifying the means through which the SHRM practices leads to a firm's success in Chinese SMEs in manufacturing sector. The current study makes a theoretical contribution to support the universalistic perspective and resource based view in the Asia society, which has different environment from North American's. Practically, this study provides guidance about how to build an effective human resource management system to improve the organization performance by identifying the specific SHRM practices for SMEs in Chinese manufacturing industry.;Different from most previous studies conducted in a Western context, this study examined data of China, and thus examined a very different cultural and institutional environment. Although this study obtained valuable results, the limitations of the subjective data, limited sample, number of measurement items and the cross-sectional design were discussed. In a future study, more work on revealing the influence of other unexplored factors to better understand the determinants of firm performance should be done, and future studies could also analyze configurational and contingency perspective of HRM and their effect on firm performance.;In this study, human resource management practices data and firm performance data of 38 Small and medium manufacturing enterprise were collected from a questionnaire survey by using the list of china top 1000 high growing SMEs in manufacturing industry as sample and the snowball strategy that utilized contacts of contacts. We identified several SHRM practices and the organizational performances and setup the primary hypothesis that: The practices of Incentive compensation, Training, selective hiring, performance evaluation, organization, sharing information, job security and Social activates and sports will lead to higher level of organizational performance. Through the statistical software SPSS 15, we used the relationship analysis to build a matrix of correlations between the SHRM practices and the organization performances, as well as regression analysis to validate the conclusions already left reflected the correlation matrix.