Literature Review

2.1 Introduction
The aim of this study is to investigate the human resource management (HRM) practices of small and medium-sized enterprises (SMEs) in China. This chapter intends to provide the reader with a theoretical basis of the study through reviewing the concepts, theories and past studies focusing on this research area. This chapter consists of four main sections. The first section is to review the definitions and concepts relating to SMEs and theories that explain SMEs. The second section is to review concepts, theories and practices about human resource management. The third section is to review the reference怎么寫？
 literature focusing on human resource management practices of SMEs. And the last section is to review the past studies focusing on human resource management practices of SMEs in China.

2.2 Definition of the Concepts of SMEs
2.2.1 Definition of the Concepts of SMEs in General
The definition of small and medium-sized enterprises (SMEs) varies in the different countries, because there are different criteria to defined SMEs in the different countries according to the different political, economic, social, cultural and market environments in these countries.

There are special criteria to differentiate SMEs from other companies in the European Union. In the European Union, a medium sized enterprise is a company with fewer than 250 employees while a small sized enterprise is one with less than employees, and the annual turnover of the enterprises should be less than €50 million (EU Commission, 2003).

In the United States, there is no distinctive way to identify SME, and typically it depends on the industry in which it competes (Phukan and Dhillon, 2000). Relative to the enterprises that dominate the industry, other companies are generally looked as SMEs in the Untied States.

As a developing country with the special political, economic and market environment, SMEs are also defined differently in China. According to the Law of Chinese Small and Medium Sized Enterprises published in 2002, the criteria of the number of employees, sales revenues and total assets are used to define SMEs based on the different industries in China. Although the criteria to define SMEs are different in the different industries, SMEs in China can be generally defined as the enterprises with less than 2000 employees, less than RMB 30 million annual sales revenues and less than RMB 150 million total assets (Law of Chinese Small and Medium Sized Enterprises, 2002 ).

2.2.2 Theories that Explain SMEs
As a phenomenon, small and medium sized enterprises (SMEs) receive more attention with the increasingly important role of them in economic development. Generally SME refers to a business that maintains revenues or a number of employees below a certain standard (Fernandez and Nieto, 2005). The amount of revenues and the number of employees are two general criteria used to measure SMEs from large companies. According to Martin (1999), the SME sector is segmented and categorized according to measurable variables such as size and industrial classification. The variables of size and industrial classification are important because the size or scale of the enterprises is restricted to the development of the industry (Martin, 1999). According to the different industrial classification, some enterprises are SMEs in some industries but the enterprises with the same sizes may be the large enterprises in other industries.#p#分頁標題#e#

It has been proved by many empirical studies (Laforet and Tann, 2006; Wagner and Hansen, 2005; Luczka, 2004) that most of SMEs have some disadvantages compared large companies in the same industry. These disadvantages are mainly focused on resource that on the one hand SMEs have difficulties in obtaining various kinds of resources such as funds, and on the other hand the attractiveness of SMEs to talents is weak relative to the large companies (Laforet and Tann, 2006). Moreover, it is much easier for the large companies to obtain the support from the government than SMEs based on their important roles in the industry (Wagner and Hansen, 2005).

But on the other hand, SMEs also have some advantages compared with the large companies. SMEs operate more flexibly than the large companies, which make SMEs more easily to adapt the changes of market environment and timely adjust their operation and strategic goals in terms of the changing environment (Luczka, 2004). And SMEs have a quicker response to the needs of the customers in the market, because their scale is relative small and it is more easily for them to change and improve their products according to new needs of the customers (Luczka, 2004).

In the past especially in the 1980s, the state-owned enterprises played an important role in the national economy of China. Upon the support from the government in the planned economy, these state-owned enterprises are generally large companies and have a dominate position in the industries in which they operate (Ma and Liu, 2007). At that period, the development of private enterprises was restricted by the government of China so that the development of SMEs was in the incipient stage and the general scale of SMEs was very small at that period.

With the transition from the planned economy to the market economy, China’s government began to reform the state-owned enterprises to push them to the market and encourage the development of the private enterprises (Ma and Liu, 2007). Because most of the small and medium sized enterprises in China are the private enterprises, so SMEs have been experiencing rapid growth in the past several years, and now SMEs are playing an increasingly important role in national economy of China and enhance much competition pressure on the state-owned enterprises in the different industries (Chen, 2007).

2.3 Concepts and Theories of Human Resource Management
This section lists and reviews the basic concepts and theories about the human resource management (HRM), which is the basis the further analysis of the research. And keeping pace with the development of the high-technology, the computer and IT have changed the management methods and communication models, so the E-HR theory is prosperous. In the meantime, the 360-degree assessment provides people with a deeper understanding of the HRD . All these concepts, ideas, theories form an applicable practically framework for the investigation and analysis of human resource management practices of SMES in China.#p#分頁標題#e#

2.3.1 The review of HRM strategy
Based on the concept of managing behavior and competencies, researcher shows an integrative aspect of the human resource system . There are six basic human resource strategies, that is, Training, Selection, and Recruitment, Compensation, Development, work Design, Performance Management, Participation, are derived by juxtaposing the three basic aspects of a system (The three aspects refers to input, process, output) with the two strategic foci of HRM (behavior s and competencies). These HR strategies are referred to as Competence Displacement, Competence Acquisition, Competence Retention, Competence Utilization, Behavior Behavior Coordination, and Control .
To view the development in the long run, the topic of human resource management (HRM) has become one of the most documented in the literature about management (Boxall, 1995). Managers and policymakers now want to know how human resources (HR) are managed in different regions all over the world and how their counterparts in different parts of the globe react to or perceive similar pressures and concepts. Furthermore, the increased level of globalization and internationalization of business, the growth of new markets (such as in India, Eastern Europe, South East Asia, China, and Latin America), growth of new international business blocs and an increased level of competition among companies at both local and foreign level has led to an increase in comparative HRM studies (Brewster, Tregaskis, Hegewsch and Mayne, 1996; Clark, Gospel and Montgomery, 1999). It is also important to have a full understanding about the main determinants of HRM policies and practices in different national and regional settings . Rondeau and Wager (2001) focused on the ability of certain 'progressive' or 'high performance' HRM practices to enhance organizational effectiveness, noting growing evidence that the impact of various HRM practices on performance is contingent on a number of contextual factors, including workplace climate.

The researchers react positively to the challenges raised by the globalization of business and investigate a number of issues and problems which is associated with international business (Hendry, 1996). They have tried to testify and examine management from a cross national view point. This comparison of HRM practices and policies at a national level helps to examine the convergence and divergence thesis. The typical questions pursued by comparative researchers are (Pieper, 1990): (1) What is the effect of national factors such as government policy, culture, and education systems? (2) What are the differences and similarities? (3) What is put into practice? (4) What strategies are discussed? (5) How is HRM structured in individual countries? Researchers have also developed and proposed different models of HRM both between and within regions (Boxall, 1995; Brewster, 1995; Guest, 1997). A lot of models of HRM have a different base. As such, from the view of globalization, principles of HRM have been developed from a restricted sample of human experience to a wild level. During the infancy stage of HRM literature, such an ethnocentric approach was unavoidable and understandable and this may be an important factor in business. However, with the growth of a ‘‘global business village,’’ companies operating in different regions need appropriate information and guidance to develop their HRM practices and policies. For further developments in the field of HRM, it is important to have a framework, which can enable us to conduct such an analysis. Some researchers have emphasized a practical ‘best practice’ framework for diagnosing HRM practices. Hiltrop (1996) shows 11 dimensions of HRM, which can be used for evaluating the effectiveness of HR practices. These dimensions can also be used to benchmark HR activities and the relative influence of the best practices on organizational outcomes.#p#分頁標題#e#

The globalization promotes the development of the Human resource management development to some extent or at least the globalization is an important factor in HRM. With the perceived power to influence, and even override nationally specific HRM with transfer of common or best HRM practices, globalization leads to the convergence among different systems. The popular of this tendency may keep HRM more distinctive. With the developing of the economy and the gradual perfection of the institution, MNC has faced varieties of challenges .

The key issues in the process of globalization may be: what leads to the convergence; what practices are the ‘best’ for companies. Via the opening up and penetration of economies to external forces and influences, globalization has serious impacts on HRM. This comes from two aspects, with both local and foreign multinational enterprise operations and investment leading to exposure to other countries’ HRM practices, greater publicity and even direct importation. The Japan first imitating their practices in 1980s first attract the attention all over the world. (as in Ford’s ‘After Japan’ and Malaysia’s ‘Look East’ campaigns) and the so-called ‘Japanization’ of industries. Globalization’s universalizing tendencies and implications can be located within work of long antecedence (Kerr et al, 1962) and more recent exponents (Peters & Waterman, 1982; Womack et al., 1990). For management an implication is that there were ‘universal truths’, including in HRM, that could be applied everywhere . A central proposition is that because of political, technological forces, economic, social and now including globalization, there is a worldwide tendency for countries, and within them HRM, to become similar as the copying and transfer of practices, sometimes taken as ‘best practices’ and linked to benchmarking, was encouraged. In short, HRM systems would converge. The convergence all over the world is in process. Other than the globalization, the reason for convergence may be the development of institutional theory. Under this background, practices are adopted not because of ‘effectiveness’, but because of three specific social forces (McKinley et al., 1995). First, ‘constraining’ forces play an important role. This shift from overlooking practice to emphasizing in social constraints subsequently encourages firms to conform to legitimate structures and management activities. Second, ‘cloning’ forces, which pressurize firms to mimic the actions of leading companies in the face of challenge and uncertainty. Third, ‘learning’ forces, which are shaped through processes in educational institutions and professional associations, also are dominant.

HRM practices and policies in a cross-national background are influenced by both national and organizational culture, institutions, and industrial sector dynamics and others factors, such as age, size, nature, and life cycle stages of organization (Hofstede, 1993; Brewster, 1995; Jackson and Schuler, 1995; Sparrow, 1995). The direction and degree of effect of these factors varies from region to region (Locke and Thelen, 1995; Jackson and Schuler, 1995). For example, the response of unions to common competitive pressures (such as the introduction of new production technologies, large scale restructuring and re-engineering of organizations, and pressure to increase work flexibility) varies across different countries. Union membership has declined in countries such as the UK, France, or the US, whereas in Australia and Germany, it has remained stable.#p#分頁標題#e#

With the development of the globalization, there is a shift from manufacturing to services in HRM . First, the difference about manufacturing and services are presented. According to Standard Industry Classification (SIC) definitions, manufacturing establishments are engaged in the mechanical or chemical transformation of substances or materials into new products while service are engaged in providing a wide variety of services for individuals, business and government establishments, and other organizations. Perhaps most importantly, the literature has long noted important differences between manufacturing and services firms (McColgan, 1997). Service operations have unique characteristics which are rarely found in manufacturing including intangibility, inseparability of production and consumption, heterogeneity, customer participation, and labor intensity (Nie and Kellogg, 1999). The direct participation of customers in the service process adds complexity that is generally not found in manufacturing (Chase and Tansik, 1983). Moreover, direct customer participation means that service firms tend to have many more physical sites than manufacturers along with the unique challenges presented by wide geographic dispersion.

Intangibility is often considered as another fundamental difference between services and goods since a service cannot be touched, seen or tasted in the same manner as a manufactured product (Fitzsimmons and Fitzisimmons, 1997). Services also tend to have higher heterogeneity and thus can be either deliberately or accidentally customized between different service providers and customers in comparison to the greater process standardization of a typical manufacturer’s production. Services are likewise more perishable than physical products given that unused capacity is lost forever. Finally, services are typically more labor intensive in comparison to manufacturing (Heskett, 1986) and hence manufacturers can often realize more productivity gains through technological innovations (Quinn and Gagon, 1986).

Services make a lot of contributions to production, mainly through their direct contribution to total output and final demand, but to some extent also through their indirect contribution through other sectors. However, services are more independent from other sectors than the manufacturing industry. Most inputs which are necessary to produce services are derived from the services sector itself. Furthermore, their role as providers of intermediate inputs to other sectors is not yet as strong as that of the manufacturing sector. Dirk Pilat (2005) shows that a growing number of workers in the manufacturing industry are engaged in services-related occupations. A broad definition of service-related workers, up to 50% of manufacturing workers are in such occupations. He, using firm-level data the paper finds that, despite evidence on a growing number of services turnover within the manufacturing sector, manufacturing enterprises in most countries are not very diversified in their constituting establishment, i.e. they do not have many establishments engaged in services production. Canada is a notable exception in this respect. In other countries, it is likely that diversification primarily occurs at the level of the enterprise group. On the other hand, data on products suggest that manufacturing firms appear to derive a growing share of turnover from services, notably in countries such as Finland and Sweden .#p#分頁標題#e#

A prime example of this has been in the area of employee relations where ‘Human Resource Management’ has gained increasing acceptance in preference to ‘personnel management’. This change and improvement is happen under the background of the opening up and reforming in China. The market-oriented strategy is in great need of advanced management thoughts. HRM represents neither the latest management whim, nor simply the preference for a new label, but rather constitutes a key issue within contemporary work organizations. The researchers updates HRM gradually both in conceptual and empirical foundations. However, there are some different opinions. Some argue that HRM is no more than ‘good’ personnel management. Given the dearth of empirical evidence on HRM,
the original book and literature provide a valuable reference for personnel and other managers interested in gaining a more comprehensive understanding of the changes in approach which are occurring in the way people at work are managed. Up to now, more literature has found a lot of evidence to support the operation of HRM and it indeed provide a lot of benefits for the firms.

2.3.2 The review about competency management and 360-degree assessment
Competency management is one of modern human resources management central ideas and the position competency assessment is one of human resources management cornerstones. Stimulating occupational expertise and employability of employees appears to be advantageous for both organizational and employee results.

The concept of employability came into use around 1955 (Versloot, Glaude). But, it is only since the 1900s that employability has been studied empirically. Many reviews have shed light on the development of its conceptualization and definitions (Thijssen and Van der Heijden, 2003). Employability is studied from different angles and distinct levels (individual, organizational, and industrial) across a wide range of academic disciplines, such as business and management studies, educational science, psychology, human resource management, human resource development, and career theory. However, few studies have tried to integrate these different perspectives (Thijssen and Van der Heijden, 2003).

Employability is believed to accommodate some or all of these parts, such as career development, learning, cognitive suitability, de-specialization flexibility, adaptation to changes and mobility, relying on the angle from which the concept is researched and, consequently, it is not a concrete construct. Fugate (2004) who recently thoroughly studied its conceptual foundation from a career angle, use the term variegated. Apart from the large variety of employability definitions, one might be able to distinguish a link between the conceptualization of employability and certain historical work and organizational developments in Western countries (Van Lammeren, 1999; Versloot et al., 1998), in relation to the transition from an industrial to a postindustrial society (Thijssen and Van der Heijden, 2003).#p#分頁標題#e#

Employability is a symbol used to address work-related problems related to this transition. Until the 1970s, employability was about employment participation and was accompanied by the so-called flexibility of society. The government was considered the actor responsible for achieving the target of full employment and a decrease in the collective burden (Thijssen and Van der Heijden, 2003). Changes are taking place at a faster rate and in increasing numbers, undermining organizational strategy and planning, and which the organizations should be potentially able to flexibly anticipate on.

The reason for the popularity of competency programs maybe is the belief that traditional job-based management systems may impede an organization’s speed and agility in the face of today’s globalization and rate of change challenges. By contrast, a competency-based system should be organized around the capabilities and capacities needed to create customer value.
Employability is a critical requirement for enabling both sustained competitive advantage at the firm level and career success at the individual level. Competency-based approach to employability derived from an expansion of the resource-based view of the firm is proposed. A reliable and valid instrument for measuring employability is presented (Claudia, 2006). The measurement based on five-dimensional conceptualization of employability is designed. Since the five dimensions of employability explain a significant amount of variance in both objective and subjective career success. The validity of this tool is promising. This instrument facilitates further scientific HRM study and is of practical value in light of job and career recruitment, staffing, assessments, career mobility, and development practices. Recent specification of HR competencies has the potential to influence the professional development of all HR practitioners.

Recent management research suggests that competence development of Human resource professional is linked to both individual and firm success (Becker, Huselid, and Ulrich, 2001, Ulrich and Brockbank, 2005). More broadly defined competencies for HR professionals are necessary (Mary, 2006).

There are some researches paying much attention to the competency of the workers. They want to find the basic factors in HRM about the employer. A lot of research has been got and confirm the importance of the competency of the employers. Highly employable workers (Van Dam, 2004) are very necessary for organizations in order to meet fluctuating demands for numerical and functional flexibility (Marginson, 1989). If some enterprises are lack of the employers with high quality, the development of these companies is very hard. In addition, employability enables employees to cope with fast-changing job requirements in this new era. London and Greller (1991) refer to “loosening of organizational commitment (to markets, tradition, and employees), accommodating a more volatile and competitive environment” (adapted from Baerveldt and Hobbs, 1988), and job content becoming more demanding, in terms of technical knowledge and skills. More factors have been found in the process of management.#p#分頁標題#e#

Many companies now use some form of multi-criteria or 360-degree assessment process to measure managerial competencies specifically suggested that within competency programs, supervisory judgments about individual capabilities may not be as accurate as those of other, perhaps more qualified observers, especially “peers and technical experts”. Traditional top-down assessment (TDA) systems consist of one person, the direct supervisor, conducting a periodic evaluation of the employee’s competence or performance over a specified time period. Traditionally, TDA has been the most widely used approach to performance assessment in organizations (Mount and Goff, 2000) and in decision-making processes concerning who will be promoted (Powell and Butterfield, 1997). While 360-degree systems were originally used for developmental purposes, they are increasingly being used for administrative decision making (Greguras, Robie, Schleicher and Goff, 2003). Lucia and Lepsinger (1999) are among the many consultants recommending a 360-degree assessment approach to the measurement of competencies. Three-hundred-sixty-degree assessment programs gather performance information from subordinates, peers, supervisors, and (occasionally) customers. Borman (1997) asserts that two assumptions underlie these programs: (1) each source of rating offers at least somewhat unique information concerning the performance and (2) evaluations from different sources exhibit incremental validity beyond that of any single source. Others suggest that 360-degree assessment is less likely to be susceptible to rater bias than single-rater systems (Bernardin and Tyler, 2001), that receiving assessment from people with different relational perspectives provides a more comprehensive perspective (Yammarino and Atwater,1993), that assessment is less likely to be ignored if subordinates and peers are included (London and Smither, 1995), and that 360-degree assessment fits better than traditional TDA given today’s downsized, more horizontal, team-based organizations (Murphy and Cleveland, 1995). However, the incremental validity evidence discussed earlier makes a compelling case for the use of 360-degree assessments for decision making. Individuals in organizations that use 360-degree assessment for administrative (rather than just developmental) purposes can use these findings to help persuade other employees and managers of the importance, relevance, and validity of conducting 360-degree (as opposed to just top-down) assessments. Individuals can emphasize that although the 360-degree assessment requires more time and energy on the part of managers, employees, and human resource professionals, such assessments provide incremental validity beyond that of TDA. This message can be communicated at several points during the 360-degree assessment process (Christine, 2006).

2.3.3 The review about IHRM, flexible firm and E-HR
In Maddy Janssens (2003) article, he illustrated the IHRM from a wild perspective. An exportive, integrative or adaptive approach represents three basic aspects for IHR managers, reflecting a comprehensive method to IHRM. However, in practice, IHR managers may have the option to select for a mix of the three ways. For the IHR function contains a few of tasks and is oriented towards different employees, choices differ for the different tasks or employee groups. For instance, Luthans and colleagues (Luthan et al., 2001) advised IHR managers to set up a contingency matrix for IHRM. The horizontal row of the matrix represents the different sample of HR tasks such as recruitment and selection, training, compensation, labor relations, and job design. Different countries of the MNC are being placed. The pragmatic value of such a matrix is that it can be used to organize the existing entity of knowledge and experience and to constantly remind IHR professionals that different HR tasks may require different choices for different countries.#p#分頁標題#e#
Many companies emphasize that their senior managers must not only possess technical skills but also need to have a broad understanding of history, culture, sociology, and human relations. Consequently, the selection criterion often set for this employee group is global awareness or global mindset, referring to openness to other cultures, multiple language skills, tolerance and flexibility (Harris and Morran, 2001). Another example refers to training & development, which may differ for higher and lower level managers. UCB, a Belgian company in the film, chemical and pharmaceutical industry, developed its own ‘global leadership program’ for its higher level managers. Its purpose is to broadly develop these managers by offering expertise in different functional areas as well as intercultural communication and negotiation skills. Corporate HR further decided that the 3-week program takes place in Asia, North America and Europe, the three regions in which the company is active. Moreover, they selected trainers coming from these different areas as well as local experts from each region to discuss its cultural, political and socioeconomic context. While this program for higher level managers reflects an integrative approach, training, and development for lower level managers reflects an adaptive approach with local HR managers being responsible for this HR task. In the 1980s, a good deal of attention was paid to the issue of labor use strategies. Much of the discussion focused on the Institute of Manpower Studies (IMS) core-periphery model depicting the so-called flexible firm, adopting financial, functional and numerical forms of flexibility (Atkinson, 1985).

Suffice it to say that in the context of the early 1980s it was increasingly asserted that organizations were adopting a labor management stance which put more emphasis on the use of 'flexible' or nonstandard forms of labor contract (such as part-time, temporary contract, agency labor and self-employed subcontractors of services) as compared with the traditional full-time employment contract with no specified time duration.
In the flexible-firm model the lines of segmentation are horizontal within the organization and that the divisions between the core and the periphery may become deeper, with implications for labor market structure and for industrial relations processes. The model needs to be understood at a political level, as part of a wider `post-industrial' vision; and that the observed increase in flexibility offers the model no support because of its `non-strategic' nature. `Flexibilization' of management and company organization in order to increase entrepreneurial behavior is a vital and hitherto neglected component of economic restructuring. It is argued that flexibility operates on a different level from flexible specialization and other varieties of `post-industrialism' and that to consider them together confuses rather than illuminates the debate. On the second, it is argued that the criticism relies on an unnecessarily restrictive view of strategy. Rather than being regarded as `plans', strategies should be regarded as `patterns' in decision-making. On the basis of this alternative conception the paper suggests ways in which the flexible firm model might be recast.#p#分頁標題#e#

With the innovation of the latest advanced technologies which offer the potential to streamline many HR functions, businesses are making use of the information technology to design and deliver their HR practices. This trend is not surprising given the substantial benefits which can emerge from integrating information technology into HR function. The resent survey predicts that making use of the new technologies can reduce the HR transaction cost by 75% (Cedar, 2001).

There is no doubt that information changes our lifestyle to a large extent. On the other hand, Information technology has been cited as a critical driver of HR’s transition from a focus on administrative tasks to a focus on serving as a strategic business partner. This strategic role not only accumulates a valuable dimension to the HR function, but also changes the competencies that define the success of HR professionals. Through making an interview with 19 firms, the implication for the development of HR competencies and identify learning strategies that HR professionals can utilize to fulfill their changing roles and responsibilities is got (Bradford, 2006). Furthermore, The institution of Management and Administration (IOMA) found that 70% of companies claimed that technology improve the quality of HR service and 67% reported that E-HR has led to improvements in organizational efficiency (IOMA, 2002).

As the growth of information technology, most of the administrative function can be finished through advanced technology hosted by the enterprise and the other institute (Lawler and Mohrman, 2003). Up to now, most technology substitute the routine boring tasks, there is a chance for HR professionals to be a strategic partner (Brockbank, 1999; Ulrich, 1997). A lot of new expert in areas such as change management, strategic business partnership and employee advocacy is appearing (Ulrich, 1997).

Recently, some researcher use data collected through making a interviews with senior HR professionals from 19 Fortune 500 companies to testify the relationship between E-HR and the reshaping of the professional competence in HRM. The result shows that information has been identified as an impetus of HR’s transition to becoming a strategic business partner (Lawler and Mohrman, 2003). The research on E-HR has proved the function of E-HR from the perspective of the theoretic and in practice. More and more enterprises are inclined to adopt this new method to resolve and improving the management of enterprise. A practical implication can be draw from the analysis above. That is, an important implication of this competency shift is that as companies implement E-HR initiatives, they also will need to pay attention to how best to prepare HR staff for their new roles and responsibilities. The shift predicts utilizing development activities that provide HR professional with the competencies necessary to be successful in an E-HR environment. The key to creating the capacity for strategic application of the expertise is integrating two competency domains.#p#分頁標題#e#

2.4 Review Literature on HRM Practices of SMEs
Human resource management practices have attracted much attention from many researchers and much past research has been done to investigate the topics relating to this research area. Especially with the growing importance of small and medium-sized enterprises (SMEs) in the economy, many issues about SMEs such as strategic management and human resource management have become increasingly important in the research. More and more researchers begin to not only pay attention to human resource management practices of large enterprises, but also attach enough importance to HRM practices of SMEs.

Brand and Bax (2002) did a research focusing on the growing importance of strategic human resource management (SHRM) for small and medium-sized enterprises (SMEs). They did this research upon the background that many small encounter serious human resource problems, while at the same time these human resource play a vital role in developing and sustaining their competitive advantages. In this research, the authors explored specific issues concerning small firms in HRM literature, and concluded that the available knowledge on human resource management in small firms is highly descriptive and fragmented. The findings of the research suggested that the strategic labour allocation process model (SLAP) should be applied as a tool to analyze human resource problems in SMEs, because this model focuses on the balance between the supply of and the demand for labour on a firm level. In the research, it was proved through the application of the SLAP model to produce two strategic scenarios for Dutch SMEs presently confronted with a tight labour market.
Kasturi et al (2006) did a research to investigate the relationship between HRM systems architecture and firm performance based on the evidence from SMEs in a developing country, because the authors believed that the effects of human resource management (HRM) on firm performance can be examined at the systems architecture (i.e. guiding principles or philosophy), the policy, or practices levels. In this research, the authors used a unique dataset of 44 small and medium-sized enterprises in Tamil Nadu city of India and them presented a regression analysis of the relationship between human resource management philosophies and measures of firm performance. It was found in the research that the attitude of the firm’s owner(s) towards its employees is a major determinant of the firm’s profitability, and on the other hand, the effect of human resource management philosophy on productivity is smaller, albeit still highly significant. Moreover, the findings of the research also suggested that at least for small and medium-sized enterprises (SMEs) in the developing countries, HRM systems architecture is the guiding principle that affects a firm’s performance.

Cassell et al (2002) reported on empirical work recently conducted about the use and effectiveness of human resource management practices in small and medium sized enterprises (SMEs). The authors did this research through a telephone survey conducted with 100 senior managers of SMEs to ascertain their use of a range of human resource practices and the extent to which they had found those practices successful or failed in aiding the achievement of their companies’ objectives. Besides this telephone survey, an additional in-depth interviews were also conducted by the authors with the senior managers from a further 22 SMEs. Moreover, a model is provided that identifies the key criteria that underlie the adoption of human resource management practices, and the implications of the model are discussed. The findings of the research indicated that there is considerable diversity amongst SMEs in relation to their use of human resource practices#p#分頁標題#e#
Wilkinson (1999) did a research to investigate human resource management practices of SMEs focusing on employment relations in SMEs. Although most of the HRM literature is based on large firms despite the growing significance now accorded to smaller firms, in this research the author explored employment relations in SMEs and argued that the existing literature tends to polarize into a “small is beautiful” or “bleak house” perspective. So this research examined some of the key issues in relation to employment relations in SMEs. The findings of the research showed that compared with the large enterprises, SMEs also have to face many problems involved with their employment relations, though the size of their enterprises and the scale of employees is relatively smaller.

Reid and Adams (2001) did a survey of practices within family and non-family firms, because small firms were generally neglected by the studies. Much of the literature relating to human resource management (HRM) has attempted to demonstrate that the “human resource” is the most valued asset in a company. Large companies have revolutionized their approach to the training and development of their personnel in order to maximize their “competitive edge”. Hotly debated is whether investment in good HRM is lined to commercial business. However, very little is known about HRM practices within a family business. This research describes the HRM practices of SMEs (both family and non-family businesses) in Northern Ireland. In this research, comparisons between the groups are made by authors and the findings of the research indicated that family businesses practices of human resource management are very different from their non-family counterparts. Implications for the training and development of these two groups question whether family businesses need to be treated as a “special case”.

Szamosi et al (2004) did a research to focus on developing an understanding and benchmarking, human resource management (HRM) issues in small and medium sized enterprises (SMEs) in South-Eastern Europe. The importance of SME’s in helping transition based economies develop is critical, but ar the same time the research indicates that the movement toward westernized business systems has a dramatic impact on the human resources within such businesses. Toward addressing this linkage, critical HRM issues related to work outcomes, measures of satisfaction, and managerial support were studies with a sample of nearly 300 employees from 21 SMEs in a country in South Eastern Europe (the Former Yugoslav Republic of Macedonia). The data suggested that SMEs are not currently giving their employees what they want from their job (e.g. career development, participation in decision making) and that women are treated differently than men creating an imbalance within the workforce. These findings of the research drawn from the data are very useful to recommend for SMEs on how to move forward as transition unfolds.

Hill et al (2000) conducted a research to draw on case study research into human resource development (HRD) within three small organizations in the north-west of England. The research positions the investigations within an overall framework of doctoral research, defines how the term small to medium-sized enterprise (SME) has been used, and summarizes the research design. The main content of the paper discusses the characteristics and values of SMEs in general and explores how these might influence the HRD policies and practices developed by them. A comparison of an HRD model typically found in small organizations with one typically engendered through the adoption of the Investors in People standard is presented. Findings and conclusions about HRD in the three case-study organizations are reported to include a description and comparison of the three cases’ own HRD models. The paper concludes with some suggestions for further research.

Saru (2007) did a research to study human resource development (HRD) and organizational learning issues in a small expert organization through a qualitative single case study conducted in one Finnish SME. The research is descriptive in nature and the aim is to find out whether the existing HRD and OL practices are relevant and appropriate in the small context. The findings of the research revealed that small organizations do consider HRD to be an issue, even though it may not be as visible or official as in larger companies, and the HRD, OL or strategy issues merge into the territory of just one man. Current literature has established that the models designed for larger organizations are not directly applicable to the small context. From the SME perspective, the research suggested that there is a lot a small organization can do in terms of human resource practices, even without vast resources. And the research also suggested that further research should concentrate on findings out what model SMEs use for the development of human resources.

As the volume and complexity of employment legislation increases, small and medium-sized enterprises (SMEs) without access to internal human resource expertise are increasingly vulnerable to litigation and its associated costs. The disproportionate impact of employment regulation on the small firm has long been a concern of SME owner-managers and is expected to increase as a result of the recent rapid expansion of labour law in the UK. Harris (2000) considered evidence from a recent survey of small businesses, which examined their main employment concerns and the sources of advice they use on employment relations matters. The survey’s findings illustrate the particular challenge increased employment rights presents to the smaller organisation. It identifies a need for more intensive support tailored to the specific circumstances of individual firms in developing proactive approaches to human resourcing which not only comply with but also reflect the spirit of the legislation.
Karami et al (2008) did a study to examine the nature and impact of human resource capabilities and involvement on the firm’s performance in the SME sector, based on an empirical survey of Chief Executive Officers (CEOs) and their perception of the HR involvement in strategy development in high tech SMEs operating in the electronics industry in the UK. Postal questionnaire is the main data collection instrument for this research, and a combination of qualitative and quantitative approaches has been employed for data analysis. The findings of the research showed that increasing the core competencies of the firm, in particular in HR, is the key element to the success of the firm. Moreover, it was posed that the growing involvement of the HR in the development and implementation of business strategy will lead to the increased effectiveness of the organization and the industry as a whole. Lastly, in order to increase firm performance and to benefit from HR capabilities, it was recommended that practitioners and SME CEOs should increase the involvement of their HR specialists in the processes of strategic management in their firms.#p#分頁標題#e#

2.5 Review Literature on HRM Practices of SMEs in China
In the past, much research relating to human resource management was focused on practices in the western developed countries, because enterprises paid enough attention to HRM practices in these countries. But with the rapid development of the economy and the increasingly important role of human resource management in the developing countries such as China, many enterprises in the developing countries have attached importance to their practices of human resource management and much and much research has been done to focus on HRM practices in the developing countries.

Cunningham and Rowley (2007) did a research to emphasise the development, importance and pressure on the under researched area of Chinese small and medium sized enterprises (SMEs) and human resource management (HRM) and provide a review and research agenda especially relating to the debate on convergence vis-a-vis divergence. This research examined recent research papers that are discussed and possible convergence and the pressures on HRM and its practice in Chinese SMEs. In this research, key elements in Chinese HRM are highlighted and four main dimensions of HRM are compared in terms of western and Chinese characteristics and their cultural impacts and problems based on a conceptual framework to locate influences on Chinese HRM. The findings of the research indicated that the continuing influences on HRM suggest that a distinctly Chinese HRM approach combining western practice with Chinese characteristics may be one way for SMEs in China to develop, and it is central to a better understanding of Chinese SMEs and helps fill some of the gap in the analysis of HRM in Chinese SMEs.

Zhao (2008) conducted a research to investigate the status quo of human resource management of SMEs in China and try to find out suggestions for Chinese SMEs in improving their human resource management. With the development of the society, modern management has entered a new era on the basis of human management and management science has developed toward the aspect of management art. In the new century, the competition between enterprises has been more and more intense and the core of the competition is focused on the competition of human resources. It is more and more important for enterprises to have a good human resource management in order to succeed in the market. It was found that most of enterprises especially SMEs in China have not realized the important role of human resources in the development of their enterprises and the importance of managing human resources to the competition of enterprises in the market. The research suggested that upon the background of network, verbalization, diversification and globalization, small and medium sized enterprises in China should make necessary changes in many aspects such as goals, ideas and ways of human resource management in the future in order to survive in the intense competition.
Based on the past research on human resource management of SMEs, Jin (2008) did a research to investigate human resource management of Chinese SMEs on a new vision of globalization. China is gradually involving in world economic system upon the background of economic globalization, and globalization has brought many impacts on many SMEs in China. Human resource management is particularly important to SMEs compared with the large enterprises, but it was found in the research that Chinese SMEs have shortages in many aspects of human resource management such as bias ideas of HRM, inefficient development of human resource and lack of scientific system of human resource management. In order to face the challenges of globalization, the findings of the research indicated that Chinese SMEs must gradually perfect their human resource management. It was suggested that Chinese SMEs should change their ideas about human resource management, pay attention to the training of employees, establish the effective system of motivation, and foster the good culture of the enterprise.#p#分頁標題#e#

Many SMEs in China face various kinds of problems involved with their human resource management. Some SMEs in China have gradually realized the importance of human resource management and tried to perfect their management of human resource, but most of these enterprises failed to have achieve a good effect on their human resource management. Liu (2008) did a research to focus on the dilemma of SMEs in China on the aspect of human resource management and present recommendations for Chinese SMEs to solve their dilemma. It was found in the research that SMEs have become the important forces to drive the development of China’s national economy and society, but the development of SMEs is not stable. The shortage in human resource management has become the important factor to restrict the development of SMEs, especially in the period of quick expansion for the enterprise. Facing the current dilemma of Chinese SMEs, the author presented some recommendations. Firstly, Chinese SMEs should pay more attention to their human resource management. Secondly, SMEs should perfect their system of performance appraisal and perfect their system of motivation. Thirdly, Chinese SMEs should try to constitute the scientific plan of training and construct good organizational atmosphere. These recommendations are useful for Chinese enterprises to realize value added of human capital and maintain the sustainable development of the enterprises.

Zhang and Zhang (2008) also did a study to investigate the current practices of human resource managements of Chinese SMEs. The authors thought that human resource management plays a core position in modern enterprise management. But due to the speciality of growth and development, SMEs generally have many problems in the aspect of human resource management, and this to a large extent has become one of the important factors to negatively affect the development of SMEs, especially in the developing countries such as China. The research found out three main problems involved with the current human resource management of Chinese SMEs. These problems include lack of enough importance toward human resource management, lack of relevant talents in human resource management and lack of enough atmosphere in the interior of the enterprise. Three recommendations were also presented in this research by the authors for Chinese SMEs to better manage their human resources. The first is to enhance the importance of both the enterprise and the employee to human resource management. The second is to foster more professional talents in human resource management through training. The third is to establish a good organizational culture in the interior of the enterprise.

The research Peng (2007) directed focused on the bottleneck problem of human resource management of Chinese SMEs. Similar to the finding of some past studies, the author also thought that as one of the important forces in national economy of China, the existence and development of SMEs in China has be negatively affected by some problems in their human resource management. But different from the findings of some past studies, the author found that the basic factor leading to the bottleneck problem of human resource management for SMEs is their organizational structure and cultural. In most of SMEs in China, the department of human resource management does not have an important position in organizational structure. And lack of good organizational culture makes it difficult for most of SMEs to realize the importance of human capital to the development of their enterprise.#p#分頁標題#e#

2.6 Conclusion
This chapter not only reviews the concepts and theories relating to SME, human resource management (HRM), but also reviews many past studies focused on this research area to summarize findings from these past studies. The findings from the literature show that human resource management has become an increasingly important issue to influence the development of the enterprise not only in the western developed countries, but also in many developing countries like China. SMEs are experiencing rapid development in China and playing a more and more important role in national economy and the society of China, but they have to face many problems involved with their human resource management and HRM has become one of the most important factors to restrict the development of SMEs in China. Based on these findings summarized from http://www.ttc-switch.com/Thesis_Writing/
the literature, this research will do a further investigation to examine the human resource management practices of SMEs in China.

Here you should provide what are the most important points from this chapter to remember when reading the following chapter. Do the information presented above contradict each other at some points? How can this be explained? Are there areas were information are still missing and how will you paper address one of these subjects? Which knowledge from the literature review was used in order to design and interpret the empirical study?