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The effects of human resource management on small firms' productivity and employees' wages

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  • Andries de Grip
  • Inge Sieben
Abstract
This paper analyses whether employees and firms differently benefit from particular human resource (HR) practices. The focus is on small firms that may be badly informed on the impact of HR practices on firm performance. In this study on Dutch pharmacies, it is found that firms do not reward employees' skills according to their contribution to firms' productivity, as (1) employees are over-rewarded for their sector-specific skills and under-rewarded for the productivity enhancing effect of their computer skills and (2) employees' work experience positively affects their wages but does not have real productivity effects. Moreover, it is found that training employees in case of vacancy problems seems to be an adequate HR practice, since it increases productivity without affecting the average wage level. The opposite holds for offering higher wages to newly recruited employees. Furthermore, we find that only the employees benefit from performance evaluation interviews, whereas employing many employees by temporary contracts appears to have a negative effect on productivity, without affecting the wage level.

Suggested Citation

  • Andries de Grip & Inge Sieben, 2005. "The effects of human resource management on small firms' productivity and employees' wages," Applied Economics, Taylor & Francis Journals, vol. 37(9), pages 1047-1054.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:9:p:1047-1054
    DOI: 10.1080/00036840500092074
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    Cited by:

    1. Nick Zubanov & W.S. Siebert, 2009. "Management economics in a large UK retailer," CPB Discussion Paper 125, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Annemarie Künn-Nelen & Andries de Grip & Didier Fouarge, 2013. "Is Part-Time Employment Beneficial for Firm Productivity?," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1172-1191, October.
    3. Vu Hoang Nam & Hiep Ngoc Luu, 2022. "How Do Human Resource Management Practices Affect Innovation of Small- and Medium-sized Enterprises in a Transition Economy?," Journal of Interdisciplinary Economics, , vol. 34(2), pages 228-249, July.
    4. Lozano-Reina, Gabriel & Sánchez Marín, Gregorio, 2019. "Prácticas de recursos humanos y rendimiento empresarial: Explorando el modelo AMO en las PYME españolas," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 3(1), pages 67-85, January.
    5. Ruth Stock-Homburg, 2008. "Die Rolle des marktorientierten Personalmanagements im Rahmen der Umsetzung marktorientierter Strategien: Eine empirische Untersuchung," Schmalenbach Journal of Business Research, Springer, vol. 60(2), pages 124-152, March.
    6. Francesco D. Sandulli & Paul M.A. Baker & José I. López-Sánchez, 2014. "Jobs mismatch and productivity impact of information technology," The Service Industries Journal, Taylor & Francis Journals, vol. 34(13), pages 1060-1074, September.
    7. Chowdhury, Sanjib & Schulz, Eric & Milner, Morgan & Van De Voort, David, 2014. "Core employee based human capital and revenue productivity in small firms: An empirical investigation," Journal of Business Research, Elsevier, vol. 67(11), pages 2473-2479.
    8. Siebert, W. Stanley & Zubanov, Nick, 2008. "Management Economics in a Large Retail Organization," IZA Discussion Papers 3645, Institute of Labor Economics (IZA).

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