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