Abstract:
Entrepreneurial firms are the engine of economic growth (Birch, 1987). Studies show HRM and SHRM practices in small entrepreneurial firms, even if diverse Cassell,Nadin, Gray, &Clegg, 2002), relate positively to performance (Chandler & McEvoy, 2000; Goss, Adam-Smith, & Gilbert, 1994; Hayton, 2003; Kotey & Slade, 2005; Sels et al., 2006). Longer term performance and social legitimacy, critical for their future as large firms are impacted by Strategic HRM policies and practices (cf. Delery & Doty, 1996; Dyer, 1984;
Gooderham, Nordhaug, & Ringdal, 1999; Lees, 1997), and must be insightfully set when small. However small South Asian firms are found lacking in formal HRM practices (McPherson, 1995) and 80% of Indian small firm respondents to a recent CII survey reported no formal HR department (Bose, 2007). This paper examines why small entrepreneurial firms in India do not implement formal HR practices. It is an ongoing study, however, preliminary findings in a specific sector show deliberate entrepreneurial action to limit operations in low technology, low margin business encouraging great lack of formal systems and practices prominently in human resources management.
