Artikel 5

The International Journal of Human Resource Management, 2013
Vol. 24, No. 13, 2583–2607, http://dx.doi.org/10.1080/09585192.2012.744337
High-performance work systems and the change management process

in medium-sized firms
Edoardo Della Torrea* and Luca Solarib,c
a
Department of Business Administration, University of Bergamo, Bergamo, Italy; bDepartment of
Labour and Welfare Studies, University of Milan, Milano, Italy; cCalifornia Polytechnic State
University, San Luis Obispo, CA, USA
Both high-performance work systems (HPWS) and SMEs have received growing
attention in HRM research. However, the literature on HRM in SMEs has mainly
focused on the issues of ‘homogeneity’ versus ‘heterogeneity’ behaviours, on the one
hand, and on the antithesis between the ‘small is beautiful’ and the ‘bleak-house’
perspectives on the other. On the basis of original information acquired by means of a
survey performed on more than 100 Italian firms and an in-depth study of eight of them,
this study analyses the degree of adoption of HPWS and aspects related to the processes
of change towards HPWS in medium-sized firms. We consider the main theoretical
approaches that address the choices made by enterprises, paying particular attention to
the role of organisational culture. The main findings show that: (1) decision-making
power on work organisation is a prerogative of the owner and top management, while
HRM functions play an important role mainly in the proposal-making stage; (2) change
in smaller enterprises is managed autonomously by management, while worker
involvement prevails in larger enterprises; and (3) strategies for change concentrate
mainly on clearly identified occupational groups and they do not translate into a true
paradigm of change in organisational management as a whole. These findings have
major implications for future research and for the SME policy debate.
Keywords: high-performance work systems; institutional context; medium-sized
firms; organisational change management; organisational culture; organisational
innovations; SMEs
Introduction
The international literature of recent years has devoted close attention to the so-called
high-performance work systems (HPWS). According to the dominant view, HPWS
consist of a set of organisational practices that, if well designed and implemented, are
able to generate ‘win-win’ solutions for enterprises and workers. Opportunities to
participate in organisational choices (e.g. through the decentralisation of decision-making
practices and through worker consultation and involvement), skill development
programmes (training, multi-skilling, career opportunities) and remuneration incentives
linked to skills and results (performance-related pay, wage-premium) constitute the main
components of the general HPWS model (see e.g. Appelbaum, Bailey, Berg and
Kalleberg 2000). On this view, the competitive advantage for enterprises is achieved by
raising the level of the commitment of workers to the organisation, which enables gains to
be acquired in terms of labour productivity and product quality. For the workers,
*Corresponding author. Email: edoardo.dellatorre@unibg.it
q 2013 Taylor & Francis

2584 E. Della Torre and L. Solari
economic well-being and job satisfaction improve through the distribution of the
increased earnings and the increase in value of the human capital that they possess.
However, it should be noted that while the positive effects for enterprises of adopting an
HPWS have been clearly demonstrated (e.g. Huselid 1995; MacDuffie 1995; Ichniowski,
Shaw and Prennushi 1997), evidence of the beneficial effects for workers is more
controversial (Ramsay, Scholarios and Harley 2000; Appelbaum 2002; Geary 2003;
Green 2004; Macky and Boxall 2007). Some authors have consequently argued that there
is a tendency on the part of the advocates of HPWS to emphasise their positive results and
to gloss over the negative ones (e.g. Godard 2004).
Notwithstanding the uncertainty about the effects of HPWS on workers, the
empirical literature shows that their outcomes in terms of firm performance are positive,
not only for large companies but also for small- and medium-sized enterprises (Way
2002; Bloom and Van Reenen 2007; for the Italian case, see Della Torre and Solari
2011). However, as noted by Paauwe and Boselie (2005, p. 987), one of the drawbacks
of the HRM-performance literature is its neglect ‘of factors which seem to be
determinative in the shaping of HRM policies and practices, irrespective of whether they
have an impact on performance or not’ (emphasis in the original). This suggests that
closer attention should be paid in the management of change to the adoption of HPWS,
while the literature on SMEs has mainly focused on the issues of ‘homogeneity’ versus
‘heterogeneity’ behaviours, on the one hand (Scase 2003; Gilman and Edwards 2008;
Tsai 2010), and on the antithesis between the ‘small is beautiful’ and the ‘bleak-house’
perspectives on the other (Wilkinson 1999; Tsai, Sengupta and Edwards 2007; Dundon
and Wilkinson 2009).
Moreover, as noted by Cardon and Stevens (2004) in their exhaustive review, the large
majority of the papers that address the topic of HRM in non-large firms do not distinguish
between smaller and larger firms, and they lump small- and medium-sized firms into a
single category ranging from 1 to 250 employees. This may be problematic because ‘the
management needs of a firm of 1, 10, 50 and 250 are significantly different’ (Cardon and
Stevens 2004, p. 299). The studies that draw the distinction concentrate on smaller firms,
while, to our knowledge, there is no study that considers HRM issues in medium-sized
firms (i.e. ones with between 50 and 25 employees).
On the basis of the original information acquired by means of a survey performed on
more than 100 Italian medium-sized enterprises and an in-depth study of eight of them,
this paper investigates: (1) the level of adoption of HPWS in Italian SMEs, and the factors
affecting the decision to introduce new work practices; (2) the actors and the allocation of
decision-making powers with regard to processes of organisational change; and (3) the
procedures followed in managing and implementing of change.
The paper is organised as follows. The next section reviews the literature on the
characteristics and diffusion of HRM practices and HPWS among SMEs. Because of the
just-mentioned absence of studies focused on medium-sized firms, the literature review
will necessarily consider SMEs as a single category. We then consider the literature that
analyses the factors that influence the choices of enterprises with regard to the adoption of
HPWS; this stream of research on SMEs has emphasised the role played by the
organisational culture. The empirical part of the paper first describes the methodological
approach (mixed-methods) and the instruments used for the analysis, and then presents the
results of the analysis with regard to both the level of adoption of high-performance work
practices and aspects of the adoption and management of organisational change when
implementing those systems. The last part of the paper discusses the main results and
draws some policy implications.
The International Journal of Human Resource Management 2585
HRM and HPWS in SMEs

Small- and medium-sized enterprises have received very little attention from HRM
scholars. Tansky and Heneman (2003, p. 299) stated that ‘SMEs have been treated as
second class citizens by authors in the human resource management literature for far too
long’. However, since the beginning of the new century the growing importance of SMEs
in the advanced economies has generated a new and growing interest among HRM
scholars (Bacon and Hoque 2005). At least in part, this new attention is due to the new
evidence forthcoming on the profitability of HPWS and also in SMEs (e.g. Way 2002).
Conceptually, the difference between advanced HRM practices and HPWS resides in the
systemic dimension of the latter: HPWS are seen as a set of complementary practices
grouped into three ‘bundles’, i.e. skill development, remuneration incentives and
opportunity to participate in organisational choices (Appelbaum et al. 2000). The expected
outcome of the complementary effects of these three bundles is superior firm performance:
A key distinguishing feature of HPWS is that the ‘system’ is more than the sum of its parts.
The argument is that sets of practices act synergistically to provide for additional positive
outcomes beyond those that might be expected from the individual elements. (Drummond and
Stone 2007, p. 193)
Despite this new attention to HPWS in SMEs, the debate on the possible configurations of
HRM practices in smaller firms struggles to advance. The main approach used to study
HRM in SMEs remains a comparison along a continuum that extends between the two
opposite ideal types of ‘small is beautiful’, at one extreme, and the ‘bleak-house’ at the
other (Wilkinson 1999). In the former case, smaller enterprises facilitate close and
harmonious working relationships with better communication, greater flexibility and low
levels of conflict. According to this view, HRM in small firms is characterised by a sort of
‘happy family’ and non-bureaucratic style of management where informal communication
flows between the employer and the employees facilitate the generation of commitment
and loyalty in the workforce (Dundon and Wilkinson 2009). By contrast, on the ‘bleak-
house’ view, smaller firms ‘are dictatorially run with employees suffering poor working
conditions and including inadequate safety conditions who have little involvement in the
running of the business’ (Wilkinson 1999, p. 208). From this perspective, the negative
approach to HRM in SMEs is characterised by an authoritarian style of management, a
hostile industrial relations climate, and a high level of absenteeism and turnover showing
the presence of hidden conflict (Dundon and Wilkinson 2009). Overall, the ‘small is
beautiful’ perspective argues that employment relations in smaller firms are better than in
large firms while, on the ‘bleak-house’ view, this is not the case, and the ‘happy family’
image conceals a reality in which smaller firms show the same lack of trust that
characterises larger firms, wages are below the minimum levels and flexibility largely
means instability because of the few procedures or systems within which to work
(Wilkinson 1999).
Despite their wide adoption, these two perspectives seem both too extreme and
probably unable to account for the heterogeneity revealed by empirical studies on the
management of human resources in SMEs. To analyse and thoroughly understand the
complexity of HRM in SMEs, Harney and Dundon (2006) proposed a theoretical
framework based on the ‘open systems’ theory, where firm size interacts with both internal
and external factors, such as ownership, unions, legislation, labour and product market
influences, resource dependency and relationships with customers. Their six case studies
on Irish SMEs confirmed the usefulness of such an approach, and their main findings may
be synthesised as follows:
HRM in SMEs is not a seamless garment but rather a quilt composed of a distinct mix of
policies and practices, in some cases uneven and contradictory, imbued with varying levels of
formality and informality, each reflecting the unique context from which they emerge.
(Harney and Dundon 2006, p. 69)
An interesting study carried out by Bacon and Hoque (2005) shows that there is a range of
factors, both internal and external to the workplace, which predicts the extent to which
sophisticated HRM systems are adopted in SMEs. The most important factor is the
composition of the workforce skill-mix: if the business requires highly qualified personnel
(as e.g. in the Hi-Tech sector) the probability that the management will adopt sophisticated
HRM practices is greater.
Despite these findings, the opposition between the homogeneity versus heterogeneity
views on SMEs behaviours in relation to HRM systems constitutes an important
component of the debate. These conflicting positions become apparent if we consider a
particularly well-studied industry such as the high-tech sector, i.e. a very particular,
knowledge-based industry in which employment relations and HR practices are strongly
influenced by the high skill level of the workforce. Tsai (2010) argues for the existence of
some sort of homogeneity in the adoption of HR practices among the 12 small firms that
she examined, while Gilman and Edwards (2008, p. 545) show that, although at first sight
this might also be the case for the four small firms that they studied, in-depth analysis
revealed that the firms adopted quite different behaviours in the HR practices adopted: ‘All
four companies deployed HR practices in three areas: teamwork, performance appraisal,
and increased flexibility. Yet, the extent and use of such practices varied enormously’.
Likewise, the results of Baron and Hannan (2002) quite strongly contradict the
homogeneity view. Baron and Hannan’s context was one in which the
companies were all young, founded in the same period, concentrated in a single locale, in a
narrow set of technology-based industries, and founded by a set of individuals [ . . . ] who are
tightly connected through social networks, patterns of career mobility, and other ties. (2002,
p. 13)
One would consequently expect these common characteristics to translate into
homogeneous patterns of employment relations as well. This, however, was not the
case, and the organisational blueprints appeared to be the outcome of the different beliefs
and intentions of the founders and the CEOs.
Finally, another important part of the debate stresses the role of informality in
employment relations in SMEs (Wilkinson 1999; Ram, Edwards, Gilman and Arrowsmith
2001). Gilman and Edwards (2008, pp. 547 –548) find that all the companies analysed
‘stressed the informality of their style’ and ‘believed that they have a very distinctive
organizational culture that they wish to retain at all costs’. Moreover, the managers
interviewed seemed quite sure that their organisational culture was definitely a function of
size. Wilkinson, Dundon and Grugulis (2007) showed that, in SMEs, the effects on
workers and the effectiveness of the adoption of employee involvement practices are
influenced by informal more than formal aspects, and that this particularly applies to
‘newer’ firms that have developed organisational cultures based on trust and open
communications. Other studies have also shown that the characteristics, the degree of
formality and the different types of informality of HRM practices in SMEs may vary in
relation to the different phases of the organisation’s life cycle (Leung 2003; Rutherford,
Buller and McMullen 2003). Overall, this evidence suggests that organisational culture in
SMEs is characterised by a high degree of informality, and that this is perceived as a
benefit of smaller size, so that the adoption of more formalised procedures and practices
may be seen as nonsensical in SMEs (since they would lose the advantages of small size).
However, it is quite widely recognised that informality in employment relationships

mainly concerns smaller firms, and that it tends to be replaced by more formal practices as
size increases and the firm develops: ‘When a firms employs more than 20 staff, the limits
of informality become apparent; informal networks of recruitment dry up; informal styles
of management communication are stretched; and ad hoc responses to personal issues
create problems’ (Wilkinson 1999, p. 255, quoting Roberts, Sawbridge and Bamber 1992).
As is evident from the above considerations, the main issues at the centre of the debate
on HRM in SMEs do not pay sufficient attention to the factors affecting the process of
adoption of HRM practices (Paauwe and Boselie 2005). The size of the enterprise is often
considered to be the most important factor in determining the human resources
management strategies pursued by firms, but this is in fact a matter that should not be taken
for granted (Dundon and Wilkinson 2009), as shown by some recent empirical findings
(Wilkinson et al. 2007; Scholarios et al. 2008; for Italy see Della Torre 2009a). In the next
section, to introduce the empirical part of the paper, we explore the current theoretical and
empirical explanations for the adoption of organisational change. After a brief general
overview, we focus on the cultural explanations that characterise the SMEs debate.
The adoption of HPWS by SMEs: economic and cultural explanations

The literature comprises two principal approaches to the study of the choices underlying
the decision of enterprises to introduce organisational and technological innovations
(Kennedy and Fiss 2009). The first, found mainly in the economics literature, is
constructed on the model of a rational actor, and it explains those choices in terms of the
search by enterprises for gains in efficiency that generate improvements in corporate
performance. The second emphasises the social dimension of organisations and their
desire to appear legitimate in the eyes of their stakeholders and other organisations (Strang
and Macy 2001; Kennedy and Fiss 2009).
As pointed out by Kennedy and Fiss (2009), the most important attempt to integrate the
two approaches is probably the ‘two-stage model’ developed by Tolbert and Zucker
(1983). According to this model, the first users of an innovation (early adopters) act on the
basis of the economic reasoning identified by the first approach, while those who adopt the
new practices at a later stage (later adopters) are interested mainly in the social benefits of
legitimation. Nevertheless, the two authors demonstrate that economic and social
considerations can coexist in the decisions to innovate taken by enterprises. Consequently,
early adopters are also motivated to achieve better corporate performance through gains
resulting from reputational advantages, while later adopters also introduce innovation to
avoid economic losses (Kennedy and Fiss 2009).
There is then a third (neo-institutional) approach that crosscuts the previous two. This
sees the institutional context as a fundamental determinant of the investments that
enterprises make in innovation (e.g. Bélanger, Lapointe and Lévesque 2002; Totterdill
2002; Paauwe and Boselie 2003). By adopting an approach that combines neo-
institutionalism and co-evolution and absorptive capacity theories, Paauwe and Boselie
(2005) develop a framework in which the rationale for adopting HR best practices may be
normative or economic according to the category (based on the time of adoption) to which
the adopter belongs. They speculate on the findings of the studies by Rogers (1985) and
Mirvis (1997) to identify three broad categories of adopters.
Leaders are open to change and therefore more than willing to develop and implement new
HR practices. Their drive is to gain competitive advantage based on economic rationality.
[ . . . ] The fast followers are also seeking for opportunities to achieve competitive advantage
through mimetic behaviour (competitive isomorphism) of leading firms [ . . . ] Presumably

their rationality is based on economic considerations. Slow followers appear to look to their
branch of industry with respect to HR innovations [ . . . ] The considerations of the slow
followers might be based on normative rationality. In order to maintain fairness towards their
individual employees and legitimacy towards the society, in the end the slow followers are
forced to introduce a successful HR practice. (Paauwe and Boselie 2005, p. 998)
Interestingly, the authors argue that both the innovators and the fast followers achieve
some form of competitive advantage through early adoption of HR practices, but in the end
fast followers are more successful than leaders. Indeed, the latter have high R&D costs and
their strategy is more risky, while fast followers adopt only the practices that have been
proven to work well and to generate competitive advantages.
Of course these frameworks also apply to the decisions made by enterprises not to
adopt new HR practices. The economics literature tends to attribute these decisions to
uncertainty concerning the profitability of innovations (which require a long time to
introduce and particular conditions to be successful: see e.g. Pini 2005a), while the more
sociological approaches tend to attribute them to social and cultural resistances to change
(e.g. European Commission [EC] 2002; Geary 2003). In this case too, and especially in
SMEs, it is nevertheless likely that the two reasons coexist, and that one or the other
prevails according to the specific characteristics of each enterprise and of the context in
which it operates.
With regard to cultural explanations, the difficulties associated with making changes to
organisational culture established over the years are considered to constitute one of the
major obstacles to the introduction of HPWS. The non-monetary costs of transition are of
crucial importance here (Ichniowski et al. 1997). According to this theory, the new work
practices are much more common on greenfield sites and in enterprises that have recently
changed ownership, compared to those on brownfield sites. In enterprises that have old
organisational models, managers and workers have already invested a great deal in specific
work skills and relations, which would lose much of their usefulness with the introduction
of HPWP. Traditional organisational models are also characterised by high levels of
mistrust between managers and workers, which would therefore need to be eliminated
before innovating work organisation. Moreover, it has been demonstrated that the
dissatisfaction of workers who filled strategic roles in the old organisation, and who see the
usefulness of their roles placed in doubt with the introduction of new practices (e.g.
managers with respect to autonomous or semi-autonomous groups), is by itself sufficient
to make attempts to modernise the organisation fail (Batt 2004).
These studies therefore confirm the importance of non-economic factors in hindering
the diffusion of innovative practices in work organisation. Nevertheless, a study
performed on a sample of Italian firms has shown that neither the age of the enterprise nor
the length of service of the employees are significantly related to the degree of
organisational innovation in an enterprise, while a positive, but weak correlation has been
found with the level of education of the workforce (Della Torre 2009a). Therefore, what
seems also important is the presence of organisational resources able to offset the non-
monetary costs of innovation. The study also shows that the size of the firm is not
statistically significantly related to the level of adoption of HPWS.
With respect to SMEs, the role of organisational culture and especially the role of the
owner/founder/top management culture and blueprints, in determining the employment
model and the adoption of organisational change, have been documented by several
studies (e.g. Baron and Hannan 2002; Barrett and Mayson 2006; Drummond and Stone
2007; Gilman and Edwards 2008). In their research on the organisational blueprints in
high-tech start-ups in Silicon Valley, Baron and Hannan (2002) identified five basic
models (organisational blueprints) of how work and employment relations were organised
in the circa 200 start-ups analysed. The five models (star, commitment, bureaucracy,
engineering and autocracy) varied according to the different approaches taken by the
founders to three key dimensions of the employment relation: attachment and retention,
selection, and control and coordination. Their findings of greatest interest for our purposes
here showed that the founders embraced very different mental models of the ideal
organisational form, even if they had the same social, educational and professional
background and were all founders of high-tech companies located in the same part of the
country. Baron and Hannan’s analysis also showed that ‘One factor did seem to bear
directly on initial blueprints: the founder’s intended business strategy. In particular,
companies whose founders reported that they had intended to compete principally by
superior marketing, service, or customer relationships were significantly more likely to
choose the Commitment model at founding’ (Baron and Hannan 2002, p. 14, emphasis in
the original). This is in line with the importance of the venture design stressed by Barrett
and Mayson (2006, p. 444), who argued that the literature on SMEs often takes it for
granted that small and young firms are synonymous with entrepreneurial firms, but ‘Not all
small firms owners are entrepreneurs and not all small firms are entrepreneurial. Many
small firms are not the site for innovation while many small firm owners do not have
business growth as a goal’. Hence, according to this view, HPWS are adopted more
frequently in firms where the owner has some ambition for growth, while non-growth-
focused firms probably adopt more traditional, informal or bureaucratic work systems.
The adoption and management of HPWS in Italian medium-sized firms

SMEs are of great importance for the economic systems of most of the advanced
economies. According to the Italian Institute for Statistics, in Italy enterprises with fewer
than 250 employees account for 99.9% of the around 4.5 million enterprises in the country,
and for 79.9% of total employees (Istat 2010).
Despite their economic importance, there is a lack of studies on HPWS in Italian
SMEs. From a general perspective, a recent comparative study among Italy, the USA, the
UK, Germany and France found that Italian firms rank lowest in terms of practices able to
attract talent and the use of indicators and incentives for the systematic evaluation of
workers’ performance and definition of their economic rewards. By contrast, Italian firms
occupy high positions with respect to the importance given to the attainment of operational
efficiency through the construction of effective and well-structured business targets
(Bloom, Sadun and Van Reenen 2008). With specific regard to the degree of adoption of
high-performance work practices in a sample of about 250 Italian manufacturing firms,
Della Torre (2009a) found that about 75% of large firms (more than 250 employees), 66%
of medium-sized firms (50 –250 employees) and 50% of small firms adopt three or more of
the six practices investigated (i.e. autonomous teamwork, semi-autonomous teamwork,
job rotation, multi-tasking, training for multi-skilling and decentralization of decision-
making), thus recording a high level of diffusion of HPWS in non-large firms. Moreover,
longitudinal analysis of a sub-sample of 90 of those firms showed that, in the decade from
1995 to 2005, the use of high performance practices increased in SMEs more than in large
firms (Della Torre 2009b). These findings underscore the importance of more accurate
understanding of how small- and medium-sized firms approach HRM, and particularly of
how they manage the processes of adoption and implementation of high-performance
solutions.
Methods and data sets

The research described in this section used a mixed-methods approach (Creswell 2004)
that combined quantitative investigative tools (a survey in this case) and qualitative tools
(case studies with in-depth interviews) in a single research study design.
The first step of the research was to conduct the survey. Analysis of the data led to the
selection of eight enterprises for involvement in the case studies. The objective of the latter
was to analyse some of the characteristics of the organisational innovation processes
declared in the answers to the questionnaire in greater depth, with the dual purpose of both
further investigating and validating the results of the survey. Consequently, in this case the
use of the mixed-method approach followed both a complementary logic (i.e. it provided
additional elements for greater comprehension of the phenomenon) and a logic of
convergence (to consolidate the findings) in interpreting the results of the study (Yin
2003).
The population from which the sample was drawn for the quantitative analysis
consisted of 984 enterprises operating in the manufacturing and services sectors and with
employees between 50 and 250 at national level. All the firms involved belonging to
Assolombarda, which is the largest local association of the General Confederation of
Italian Industry (Confindustria – the national industrial employers’ association).
Assolombarda has a membership of more than 6000 enterprises located in the Milan
area, one of the top-ranked OECD metropolitan regions and the first contributor to national
GDP among the Italians cities (OECD 2006). It could be argued that membership of an
employer association might generate a bias in the results because it facilitates contacts
among the firms and increases their awareness of the new work practices. This is an
argument of particular relevance to SMEs, because unawareness of the potentialities of
HPWS is often indicated as one of the main reasons for the prevalence of traditional
practices in their HRM strategies (see Storey and Westhead 1997).] However, the
initiative described here is the first that Assolombarda has promoted to sensitise SMEs to
the importance of these issues; therefore, we have no reason to believe that membership
may be a distorting factor of the sample.
The enterprises that participated in the survey numbered 114 (12%). The survey was
conducted by the Assolombarda Research Department in the period April – June 2007 on
the basis of a written questionnaire sent to the owners of the enterprises.
In almost 70% of the cases the questionnaires were filled in by personnel with staff
functions, consisting mainly of human resource managers. Personnel with governance
functions and line functions were often involved in the cases of the smaller enterprises.
The final sample showed good representativeness if compared with the 2001 Italian
National Office for Statistics (ISTAT) census. The results of the Marbach test (1992),
reported in Table 1, showed that overall the sample had a probability greater than 90% and
Table 1. Results of the Marbach test.
Size of the Size of the Margin of Sample

sample population error u probability (%)
Manufacturing 74 1204 0.1127 89
Services 40 1582 0.1561 84
Total 114 2786 0.0917 91
50 – 99 54 1735 0.1340 87
100– 199 40 866 0.1545 85
200– 249 20 185 0.2117 79
was therefore acceptable. The best-represented sector was manufacturing (probability of

89%), while in terms of size classes the representativeness was higher for the smaller
classes.
The eight enterprises involved in the case studies were chosen on the basis of the results
of the quantitative analysis, with care taken to maintain the general degree of
representativeness of the different levels of adoption of high-performance practices
(firms were grouped into classes according to the number of practices used: from 0 to 4 ¼
‘moderate’, from 5 to 8 ¼ ‘medium’, from 9 to 13 ¼ ‘high’). These distinctions appear
particularly important because of the complementary logics (discussed above) that
distinguish HPWS from individual HRM practices. Selection was made of both enterprises,
which showed that they had completed the process of organisational change to an HPWS
(i.e. the ‘high’ class) and enterprises that were undergoing a ‘transition stage’ in which
organisational innovation was still partial, although substantial (i.e. the ‘medium’ class).
The case studies were performed by means of semi-structured interviews with top
management (mainly CEOs, general managers, human resource managers, directors of
production and IT managers) lasting around two hours. They focused on analysis and
reconstruction of the timing of the process of the adoption of practices (origins, timing,
roles and actors, difficulties, organisational learning, results). Particularly significant
extracts from the interviews are reported in the presentation of the results given below,
while the information sheets for each case study are available from the authors.
The major shortcoming of our research design concerned the definition of medium-
sized firms, which was only based on the number of employees (50 – 250) and did not
consider the financial and holdings aspects included in the official classifications (e.g. EC
2003). However, the large majority of previous studies on HRM in SMEs have not given
much importance to financial aspects; and, as in our case, they have used criteria related
primarily to the number of employees. Another relevant concern was the presence of
MNCs subsidiaries (see Box 1); this may be considered a limitation because of the idea
that MNCs transfer their HR practices from the headquarters to their subsidiaries in quite
linear manner. Our decision not to exclude MNCs’ subsidiaries derived from the existing
studies in the field, which argue that MNCs encounter several difficulties in performing the
transfer process, and that their influences on the subsidiaries are not obvious and depend
on the institutional and social context in which the subsidiaries are embedded (Ferner
2003; Edwards, Colling and Ferner 2007), as well as on their autonomy with respect to
their headquarters and on the characteristics of their prior HRM systems (Björkman and
Lervik 2007).
Degree of adoption
The changes brought about by the HPWS can be arranged along three main dimensions:
the ways in which work is organised; the ways in which work is coordinated within the
organisation; and personnel management policies (EC 2002). Table 2 provides an analysis
of the diffusion of the use of the 13 practices investigated, grouping them into ‘bundles’ on
the basis of the dimension of the work organisation in which they operate.
The diffusion found is quite substantial, especially with regard to personnel policies,
i.e. those practices designed to improve the quality of the services provided by workers.
More specifically, training for the acquisition of technical skills is the most widespread
practice in absolute terms, being present in 82% of the enterprises in the sample. The
second most common practice consisted of career development paths within the enterprise
using career progression mechanisms (80%).
(The names of companies are pseudonyms)

(1) MECCANO Spa is an enterprise that operates in the engineering sector producing ball valves. It has
a total of 57 employees and is not a member of a group of companies.
Persons interviewed: Finance Director (interview code MECC-FD)
(2) AUDIO Italy Srl is the Italian company of an American multinational, which operates in the field of
electro-medical equipment. It produces hearing aids. It is not listed on a stock exchange and is wholly
owned by its founder. It has a total of 61 employees.
Persons interviewed: Director of Production (interview code AUD-DP)
Head of Human Resources (interview code AUD-HR)
(3) DIAGNOSI Spa is the Italian subsidiary of Diagnosi Inc., a multinational, which operates in the
clinical diagnosis sector operating in 34 countries. It operates in Italy with 170 employees. After the
interview was performed, the company was acquired by another multinational company.
Persons interviewed: Head of Human Resources (interview code DIA-HR)
Chief Information Officer (interview code DIA-IT)
(4) FERRO ITALY Spa is a member of the British Ferro group of companies. It operates in the rail
transport sector and specialises in the design and creation of electrification systems for rail networks. It
has at total of 300 employees.
Persons interviewed: Finance Director (interview code FER-FD)
Head of Human Resources (interview code FER-HR)
(5) CHIM ITALY Srl is a multinational company, which operates in the chemical sector. It produces
and distributes industrial gas. It is part of a German group that is a world leader in the sector. It has
numerous production sites and branches in Italy where it has a total of 184 employees.
Persons interviewed: CEO (interview code CHIM-CEO)
Head of Human Resources (interview code CHIM-HR)
(6) METAL Spa designs and produces plant for the treatment of non-ferrous metals and, in particular
for the continuous casting of copper and aluminium rods for power cables and wires. It has around 170
employees and is a world leader in these technologies.
Persons interviewed: President (interview code META-PRE)
Director of Production (interview code META-PD)
(7) BOOK Spa is an enterprise that operates in the editorial sector. Its main business is the school
publishing. it has a total of 240 employees and in 2006 was acquired by a British editorial group.
Persons interviewed: CEO (interview code BOOK-CEO)
Head of Human Resources (interview code BOOK-HR)
Director of Information Technology (interview code BOOK-IT)
(8) TEX ITALY Spa produces polypropylene non-woven fabric, it has a total of 128 employees and
since 2007 belongs to an international company quoted at the London Stock Exchange.
Persons interviewed: Director of Production (interview code TEX-PD)
Box 1. Short description of the characteristics of the case studies.
The practices designed to decentralise decision-making powers to lower levels in an

organisation were on the other hand less common (a little more than one enterprise out of
three). Autonomous work groups were even less common (14.5%). Together with the
decentralisation of decision-making, these are probably the most extreme forms of
organisational ‘flattening’. In both these cases, the practices seem to require particular
conditions to be introduced, probably owing to the greater risks of failure connected with
their use.
Moreover, since the simple presence/absence of practices may fail to depict

exhaustively the patterns and nature of the HR policies adopted and implemented by a firm
(Gilman and Edwards 2008), we investigated the intensity with which the practices
adopted were used (second column in Table 2). The practices adopted most intensely
(i.e. involving at least 50% of workers) are information sharing, performance assessment
and employee involvement. Practices involving the coordination of activities are therefore
those in which enterprises involve the greatest proportion of workers, while the degree of
intensity of work management and organisation policies is decidedly lower (without any
great differences between the two bundles), which demonstrates that intervention in these
two areas is much more selective.
These results reveal strategies for change concentrated mainly in specific areas or in
clearly identified occupational groups, as was also found from the interviews (see Box 2).
The reasons why they do not extend further are various and may concern, for example, the
cost of change, or mistrust with respect to the management complexity of the new models
if extended to include everybody.
We have organised a path for designers who, in pairs, have done a four-week tour of all the
departments: workshop, control office, purchasing office, warehouse and assembly. This tour
is bringing benefits and a certain degree of standardisation to process, because the designers
see everything that happens and the possible problems that their work can produce if it does
not take account of the difficulties in construction. (META-PD)
The variable part of pay is for sales personnel only. There are no agents. Sales personnel are
ordinary employees because belonging to and identifying with the company are considered
decisive aspects. (AUD-HR)
Training for construction site personnel is constant, because these personnel often change
work. (FER-HR)
With regard to the number of practices adopted in each enterprise, Figure 1 shows that
almost 30% of the enterprises in the sample can be considered as innovative work systems
tout court, since they adopt nine or more of the practices analysed. Nevertheless, only 2%
of the enterprises adopt twelve of the practices, and none of those surveyed use all of them.
Table 2. Adoption and intensity of use of practices.

% of user Of which involving more than 50%
firms of employees (%)
Work organization
Autonomous work groups 14.5 28.6
Semi-autonomous work groups 38.9 27.9
Job rotation 32.7 27.3
Multi-skilling 60.2 16.4
Coordination of work
Decentralization of decision-making 37.5 24.3
Sharing of information 61.4 64.6
Employee involvement 50.4 55.6
Evaluation of employee performance 50.4 63.0
Personnel management policies
Specific technical training 82.3 42.2
Behavioural/relational training 50.9 25.0
Internal labour markets 80.7 14.8
Collective performance-related pay . 5% 57.1 13.3
Individual performance-related pay . 5% 61.5 26.6
(1) Short description of company history

(a) The foundation
(b) The actors in the foundation
(c) The main strategic, organizational and economic turning points
(d) Etc.
(2) Description of the technical transformation process (possibly visit and explanation)
(a) Nature of the technology used
(b) Specificities
(c) Layout and design
(d) Etc.
(3) Description of innovative organizational and HR practices used (possibly direct observation)
(a) Contents
(b) Extension
(c) Operational methods and procedures
(4) Analysis and reconstruction of the temporal process of adoption of practices
(a) Origin
† How and when the process of adoption began?
† What were the initial motivations? Did they change during the process? If so, why?
† What competitive situation the enterprise was experiencing?
(b) Phases
† It is possible to identify distinct phases in the adoption process?
† How they are temporally located?
† In what stage you are today in your opinion?
(c) Actors and roles
† Which actors were involved in the process of adoption?
† What was their role?
† They were already known to the organization?
† How they were identified?
† It was complicated to get in touch with them?
(d) Criticalities
† What problems were detected?
† What resources were needed?
† What resources could have been used?
(e) Learning Processes
† Did any organizational learning processes occur going from one practice to another?
† The quality of skills of employees involved has improved?
(f) Results
† What are the perceptions about the usefulness of those choices?
† What future goals of development?
Box 2. Grid used in the semi-structured interviews.
Two crucial stages in change processes seem to emerge from Figure 1: the first is the
transition from moderate use levels (up to five practices) to medium levels, and the second is
the transition from high-to-medium levels to the completion stage (more than nine practices).
This result is important because some findings on large enterprises have shown that it is
precisely in the intermediate stages that the benefits for enterprises (in terms of work
productivity) are most uncertain (Becker, Huselid, Pickus and Spratt 1997), and this may
therefore induce enterprises to question the effectiveness of continuing on the path of change.
The management of change

Having analysed the degree of organisational innovation in enterprises and the reasons
why they introduce it, we now turn to aspects of how change is managed, the purpose
being to understand more fully how these processes take shape within organisations. The
data available allow considerations to be made concerning the protagonists of change, the
channels for access to innovations, the methods used to introduce them and the difficulties
encountered.
The actors
The large majority of the enterprises have a specific unit that works on HRM (70%). Since
these are SMEs, the presence of an organisational unit dedicated to HRM is already in
itself an indicator of the attention paid to it by enterprises (it is a significant financial
commitment), especially when one considered that, in many cases, the workforce is not
large enough to justify the presence of such a unit, and that savings can be made by
outsourcing the administrative part of the work.
What has been said is confirmed by the positive relation between the presence of a
human resources department and the size of the firm. Figure 2 also shows a rather clear
connection with the degree of organisational innovation. The human resources function
therefore seems to play an important role in the processes of organisational change even
for medium-sized enterprises. In those enterprises where innovative processes are more
intense, the human resources department is present in 88% of cases, while it does not reach
50% in those enterprises in which innovation is still weak. It should be borne in mind,
however, that in 12% of the most innovative enterprises, the process of change is
implemented and managed in the absence of organisational units for the management of
human resources.
If this last consideration is interpreted together with the fact that the final decision is
taken by top management – in more than 80% of cases the decisions are taken by CEOs or
a senior management committee, and only in 11% of cases are they taken independently
by HRM functions or the managers of the units involved in the change – a picture emerges
in which HR specialists play an important role at the proposal-making stage, but the
decisions are taken by the functions that decide the enterprise’s overall strategies.
This confirms the strategic role that these initiatives have in the view of top
managements, which declare that organisational innovation is performed mainly to
acquire competitive advantages, for example in terms of quality, specialisation in
production, customer relations and so forth:
Competitive pressure means concentrating a lot on the flexibility of the organisational
structure, which must respond to a generalised fall in prices. Human resource development is
therefore the main competitive tool. (DIA-HR)
Experience has taught us that you must specialise. Italy is not the right place for mass
production. It does not have the structures to keep up with some specific countries. (MECC-
FD)
Given the diversity of the demand, lean manufacturing has helped us. With lean
manufacturing you produce one piece at a time on the basis of the individual requirements of
the user. With a batch system of production, the multiplication of variations in the demand can
become a serious threat. The need to customise a product made it difficult to meet orders
rapidly. Today lean production can help with both types of requirement. (AUD-DP)
Access channels
The results just reported are also in line with the findings of an analysis of the channels of
access to innovation. The most frequent source, in fact, is the individual initiative of the
entrepreneur, which represents the main channel in 22% of cases. As also emerged from
16
14.9 14.9
14 14.0
12
10.5
10
9.6
8.8
8
6 6.1
5.3 5.3
4
3.5 3.5
2
1.8 1.8
0
Zero One Two Three Four Five Six Seven Eight Nine Ten Eleven Twelve
Figure 1. Percentage distribution of firms by number of practices employed.
the interviews, this is not a question of mere approval being given by top management to
policies recommended ‘from the bottom’. On the contrary, in most cases it is in fact the
entrepreneur who stimulates the change, and the central decision-maker (and the
owner/entrepreneur, in particular) plays a decisive role in the diffusion of the processes of
organisational change. The centrality of top management is also accompanied by the
widespread presence of an organisational culture oriented toward innovation:
CHIM Italy is organised as a matrix, because the boss believes in matrices. (CHIM-HR)
The cultural imprinting of the group has a natural influence in determining my organisational
approach. (CHIM-CEO)
The company was founded by two partners who both came from another company. They
wanted to avoid the mistakes made in that company and organised the work and the layout
very innovatively, for example by positioning the warehouse in the middle of the new factory
to divide the two environments, that of production from assembly and painting. (MECC-FD)
There has always been a lot of participation in the whole creative sphere at different levels and
an executive approach has never dominated. The cultural imprinting is heavily oriented
towards co-operation. This culture depends partly also on the type of work which is performed
and it is fostered by careful selection. (BOOK-CEO)
There is strong cultural imprinting in the ‘business partner’ type attitude which originates
from both the personal experience of top management and the company’s past. (FER-FD)
In more that 40% of all the cases, the initiative for innovation was generated from within
the company through the entrepreneur or personnel with specific responsibilities. It should
be considered, however, that the other actors in the enterprise’s market also play an
important role. Almost 30% of enterprises declared that they had come into contact with
the new work systems through their customers or by observing the behaviour of their
competitors. This latter fact suggests interesting scenarios of ‘positive contamination’ or
‘organisational isomorphism’ (Meyer and Rowan 1977) among actors in a given market.
Methods of introduction
With regard to the methods of introducing innovations, on the whole enterprises seemed to
prefer to manage the process autonomously (40% of enterprises introduced the
innovations unilaterally), but introduction by direct involvement of workers was also a
fairly common practice (more than a third of enterprises followed this method). The
involvement of trade union representatives was found in only a limited proportion of
enterprises (see Table 3).
A preference for unilateral management also emerged from the interviews, at most
with direct involvement of workers, while discussions with trade unions – even when they
occurred in a cooperative climate – were limited to bargaining over performance bonuses:
The team leader is appointed by management and people can move within each group as they
need to, even if the degree of flexibility reached is still not at the maximum level. (FER-HR)
The nature of the product and customer relations make training essential. Generally it is
proposed by central headquarters, with margins for manoeuvre at the local headquarters.
(DIA-HR)
There is an internal trade union representative with whom there is dialogue and discussion.
There is no conflict. The trade unions are consulted and trade union representatives work on
the production bonus. (MECC-FD)
The presence of the trade unions led to an internal performance bonus. (AUD-HR)
While unilateral action is generally the most common method, it is inversely proportionate
to the size of companies, and it is by far the method followed least by enterprises with a
100
90
87.9
80 84.2
70
71.1 71.4 70.6
60 65.4
50
48.1
40
30
20
10
0
50-99 emp. 100-199 200-250 Moderate Medium High
Degree of adoption of high-

Size class Total
performance practices
Figure 2. Percentage of firms with a unit dedicated to human resource management.

high degree of innovation. The latter seem to prefer the direct involvement of workers
(43%) or their representatives (33%), thereby demonstrating that they place much
importance on the consensus of workers for the success of the practices. This is an
important finding, which is in line with the literature that shows how the competitive
advantage resulting from the adoption of new organisational models can only be achieved
when the application of new practices gives rise to an increase in the commitment of
workers that is sufficient to convince them to offer the enterprise their own discretionary
effort (Appelbaum et al. 2000), or in other words ‘something extra’ which only the workers
themselves can provide.
Obstacles and adaptive action

As said, the existence of obstacles to innovation processes in work organisation is the most
common factor cited by supporters of HPWS to explain the behaviour of enterprises that
do not innovate their work systems.
In this regard, one interesting finding from a comparative viewpoint emerges from the
EC (2002) study cited. Organisations which had not introduced any work practices
represented 40% of the sample and were divided between ‘analytical rejectors’, i.e. those
which declared that they had made either an official or an unofficial assessment and ‘top of
the mind rejectors’, which did not conduct any assessment of the matter. The results show
a very rational approach by the organisations which ‘rejected’ HPWP mainly for strategic
reasons or reasons connected with resources (whether financial, professional or connected
with the absence of accessible best practice). Furthermore, a good 76% of organisations
using the new work practices surveyed encountered difficulties in implementation. The
problems mainly regarded larger sized organisations and those with higher levels of
innovation. Italian enterprises were among those, which encountered fewer problems
(only just over 60% had problems). The analysis also found that the two greatest obstacles
consisted of difficulties in overcoming the existing organisational culture and of resistance
to change by workers and their representatives.
Our survey did not investigate the underlying reasons for the failure to adopt new
practices by non-users, but a comparison with what has just been reported can be made
with regard to the difficulties encountered in the processes of introducing the new
practices. On the whole, the proportion of enterprises in our sample which encountered
difficulties or obstacles amounted to 49%, around 10 percentage points less than in the EC
study. Nevertheless, the greatest difficulties were also encountered in our sample by the
most innovative enterprises, which is indicative of the complexity that characterises the
introduction of ‘systemic’ change in an organisation.
On the other hand, the analysis by size class found that it was the smaller enterprises
that encountered the greatest difficulties (the proportion decreased as enterprise size
increased). This result may be linked to the circumstance that smaller enterprises do not
possess the organisational instruments necessary to introduce innovations well. As we
have seen, only a little more than half of them had an organisational unit dedicated to
HRM.
Table 4 also shows that the types of difficulties encountered are in line with the
observations made at European level. Overcoming the existing organisational culture
represents the greatest difficulty (found in 65% of enterprises that encountered difficulties).
Resistance by the managers of corporate functions was a problem in approximately 30% of
cases, while resistance by workers and their representatives taken together amounted to
38%. Surprisingly, legislative rigidity and collective bargaining rigidity were only reported
Table 3. How practices were introduced.
Degree of adoption of high-

Size class performance practices
Total
50 – 99 100– 199 200 –250 Moderate Medium High
Worker involvement (%) 38.6 29.4 44.4 44.4 29.2 43.4 36.5
Trade union involvement (%) 9.1 26.5 38.9 5.6 18.8 33.3 20.8
Unilateral management (%) 52.3 44.1 16.7 50.0 52.1 23.3 42.7
100.0 100.0 100.0 100.0 100.0 100.0 100.0
by a minority of firms. It is possible that this type of obstacle arises primarily at the stage
when enterprises must decide whether or not to introduce new practices, while in the
subsequent stage, when the innovations have already been introduced, it is cultural
obstacles that are most manifest.
There is trade union and cultural rigidity. People have the habit of doing things in a certain
way. Any request to change is received badly and with suspicion. Additional requests
immediately arrive from people (e.g. monetary rewards). That is true at all levels. Innovation
for others is fine, but not when it is for you in person. Naturally, the phenomenon is more
serious in the workshops where the old factory worker culture is still strong even if our
personnel are more specialist operators than manual factory workers. (META-PRE)
Problems arise because some intermediate figures are sceptical about attributing greater
autonomy to lower levels. These are isolated cases which will disappear with personnel
turnover and which the company tries in any case to solve through selective and incisive
action. (FER-HR)
These results confirm the claims in the literature analysed in the first part of the paper
concerning the importance of non-economic factors in determining the outcomes of
organisational change to high performance solutions. These are factors that must be
considered carefully, because they may annul the benefits that enterprises can draw from
the changes introduced (Batt 2004).
Finally, one last consideration concerns the adaptive action taken after the introduction
of innovations. As Ansari and colleagues recently noted, existing theories say little about
what happens after innovations have been adopted. Nevertheless, the new practices cannot
be considered to be ‘off the shelf’ solutions, and it is likely that they will require adaptation
after they have been introduced if they are to have significant effects and be appropriate to
a specific organisational context (Ansari, Fiss and Zajac 2010). On the same line of
reasoning, Drummond and Stone found that the work systems used in 13 highly successful
SMEs were quite dynamic:
They had evolved progressively as the firms grew and changed. Indeed, the logic of HPWS
suggests that such systems, if they are effective, are necessarily transformational [ . . . ] to
remain effective through time it [the HPWS] must be capable of evolutionary change, and
capable of maintaining its coherence and relevance throughout these changes. (2007, p. 200)
The enterprises in our sample confirmed this view: as many as 70% of them took action to
adapt the use of practices. This percentage reached 84% in high innovative intensity
enterprises, which we have said were those that encountered the greatest difficulties.
In most cases the intervention occurred on an annual basis (51%), but in 40% of cases
intervention was even more frequent, reaching monthly rates for almost 10% of
enterprises.
Discussion and implications for future research

Both HPWS and SMEs have received growing attention in HRM research. However, these
two topics have been treated primarily as separate issues, while little attention has been
paid to HPWS in SMEs. On the basis of original information acquired by means of a
survey conducted on more than 100 Italian SMEs and an in-depth study of eight
enterprises, this study shows first that about one-third of the enterprises in the sample may
be classified as HPWS, adopting nine or more of the thirteen innovative HR practices
considered. However, it should also be noted that about one-half of the firms (46%) were
in an intermediate phase and cannot be considered either innovative or traditional. This
finding is consistent with Baron and Hannan’s (2002) evidence that about one-third of
their sample did not fit into any of the primary categories that they identified, suggesting
that closer attention should be paid to SMEs of this kind because of the greater risks of
negative outcomes associated with the adoption of unclear organisational models (Baron,
Hannan and Burton 2001).
The results described above also reveal strategies for change concentrated mainly in
specific areas or in clearly identified occupational groups. The changes concern first all the
process stages on which the success of an enterprise depends and critical professional
areas. They do not translate into a true and genuine paradigm of change in organisational
management as a whole. This confirms the presence of variance in HRM practices within
firms (Wright and Boswell 2002) and suggests avoiding naı̈ve interpretations that consider
HRM strategies in SMEs as a single setting across different occupational groups. Lepak
and Snell (2002) strongly advanced our knowledge about how different HR configurations
(commitment-, productivity-, collaborative- and compliance-based) are used for different
occupational groups in large firms (more than 200 employees). Our findings show that
different strategies are also used in medium-sized enterprises, and they suggest that the
variability of HRM systems within firms is a promising line of inquiry for future research
on SMEs. The need is not only to gain better understanding of how the different
configurations are used in a pure descriptive manner, but also to identify which bundles of
practices (or HRM configurations) are more effective and more satisfactory for different
Table 4. Percentage of firms that have encountered difficulties in introducing organisational

innovations and type of difficulty.
Enterprises that have encountered

difficulties Type of difficulties encountered % of enterprises
Size class Difficulties in overcoming the 65
existing organisational culture
50 – 99 employees 57% Resistances from the managers 29
of various functions
100– 199 employees 47%
200– 250 employees 32% Lack of skilled human 24
resources
Degree of adoption of Resistances from workers 20
high-perf. practices
Moderate 37% Trade union resistances 18
Medium 45% Insufficient financial resources 14
High 63% Bargaining rigidity 4
Legislative rigidity 2
Total 49%
occupational groups (e.g. core/non-core employees, knowledge-/job-based employees,

etc.) in SMEs.
Our analysis also showed that the final decisions on work organisation in SMEs are a
prerogative of top-management (entrepreneur/owner, CEO and senior management
committee), and that it is only in rare cases that HRM functions or the managers of the
units involved in the change make decisions autonomously. The overall picture that
emerges is one in which the human resource function plays an important role at the
proposal-making stage, and subsequently in the management of innovations, but the main
decisions are taken by the functions that decide the overall strategies of the enterprise.
These findings are consistent with past results on the importance of the founder/owner in
determining employment relationship in SMEs (Baron and Hannan 2002), and they
reinforce the call for a more entrepreneurship-founded perspective on HRM in the SMEs
debate (Katz, Aldrich, Welbourne and Williams 2000; Barrett and Mayson 2006). The
need for advances in this perspective becomes apparent if we consider the gap between the
current literature on HRM and the perception by entrepreneurial leaders about what human
resource issues are important in SMEs (Heneman, Tansky and Camp 2000). However, our
study also shows that HRM policies have a high degree of formalization: about 70% of the
firms surveyed had an organisational function formally devoted to the management of
employment relationships, and the percentage shows a clear relation to the size of firms
(ranging from 64% in smaller firms to 84% in larger ones). Therefore, future research
should also abandon the view of SMEs as an undistinguished field of analysis; for some
aspects, such as the degree of formalization of the HRM function, medium-sized firms are
more similar to large firms than to small ones. Hence, considering firms with 10 employees
in the same way as firms with 200 employees may have detrimental effects on the
development of the non-large firms HRM field of knowledge.
The importance of the firm’s size also emerges with regard to the methods used to
introduce the new work practices. On the one hand, smaller enterprises and those with a
low level of adoption of practices prefer a unilateral approach; on the other, larger
enterprises and those with a more advanced level of adoption display a greater degree of
worker participation and involvement (or trade union involvement). The literature
suggests that the risk of the innovations failing is greater in the former case. Some studies
have found that the advantages resulting from the use of HPWS have not always been
achieved whatever the circumstances, but only when certain conditions of complemen-
tarity are satisfied (e.g. MacDuffie 1995; Ichniowski et al. 1997), and when it follows a
participatory decision-making and implementation process in a general climate of ‘good’
industrial relations (Cristini, Gaj, Labory and Leoni 2003; Telljohan 2003; Pini 2005b).
The presence of fairly strong trade unions that are recognised as such by management may
also favour the adoption of concrete (and not just ‘cosmetic’) worker empowerment
practices (Vidal 2007). However, once again, these studies refer to large firms, whereas we
need evidence that clarifies whether these findings also hold for small and/or medium-
sized firms and/or what others aspects characterise the relationship between methods of
introduction and performance in non-large contexts.
Overall, our result are consistent with those of the other studies discussed in the first
part of this paper, in the sense that both internal (e.g. organisational and top-
management culture, middle-management resistance to change) and external (e.g.
customers, competitors) non-economic factors influence the adoption of HPWS in
medium-sized firms. Economic explanations that focus merely on the financial costs of
organisational changes tell us only a small part of the SMEs story: new approaches that
integrate neo-institutional with strategic management theories (Paauwe and Boselie
2005) or adopt an open systems perspective (Harney and Dundon 2006) seem better able
to advance our understanding of organisational choices regarding the adoption/rejection
of HPWS.
The HPWS and SMEs policy debate: some implications

A good deal of the recent literature on HPWS addresses the role of national policy
programmes designed to promote and diffuse new work practices (e.g. Totterdill 2002;
Payne 2004). Since the end of the 1990s, in fact, academic interest has been accompanied
by growing attention from various supranational organisations, which have repeatedly
invited national governments to adopt initiatives in this regard (EC 1997, 1998; OECD
1999; ILO 2002). These are usually programmes that involve close co-operation between
public policy-makers and social partners during both the formulation and the
implementation stages, and they therefore require a general rethinking of the strategies
of the institutional actors involved (employers’ associations, trade unions and public
actors) (Bélanger et al. 2002). Italy stands out in this respect for the complete absence of
any initiative in this direction (Leoni 2008).
Overall, it is very difficult in reality to understand to what extent HPWSs have spread
in these countries and the magnitude of the contribution made by national programmes and
international initiatives to support their adoption. According to Sisson (1999), for
example, the effects of international initiatives (at least in the short term) were virtually
nil; the countries that had introduced specific policy measures during the 1990s to support
the adoption of HPWS had done so by completing the previous courses of action and
independently from the initiatives promoted by the EC.
The need for a public policy programme to foster the adoption of innovative work
practices has also been stressed by the literature on SMEs. Barrett and Mayson (2006,
p. 444), for example, emphasised the importance of bringing the two topics of
entrepreneurship and HRM in SMEs jointly onto political agendas because ‘[s]mall
business development is one way of re-dressing social and economic exclusion’. Apart
from this general consideration, one of the high-performance practices that have received
the closest attention in the policy literature on HRM in SMEs is training, owing to its
well-documented importance for the competitive success of all kinds of firms and the lower
investment in training programs by smaller firms compared with larger ones (Storey and
Westhead 1997). Kotey and Folker (2007) maintain that government intervention should be
more effective for smaller firms because they do not have the resources needed to train their
employees. Kotey and Folker add that such interventions should be tailored to the specific
needs of the industry sector and should minimise employee absences from work. On
analysing management training in SMEs, Storey and Westhead (1997, p. 63) stated that
‘The key issue for policy is whether it is ignorance or market forces that lies at the heart of
the low take-up rate of training among small firms’. This point appears to be of crucial
importance because it is precisely in the former case that the issue of policies that encourage
training investment by small firms is relevant. After an analysis of the disadvantages for
both firms and suppliers in investing in the training of managers in SMEs, Storey and
Westhead conclude that
The lower management training participation rates recorded for small firms could [ . . . ] reflect
the particular circumstances of small firms themselves and those supplying the training, rather
than implying an ignorance on the part of small firm owners about the benefits of training. In
other words, the lower take-up of training by SMEs reflects market forces, rather than
ignorance. (1997, p. 68)
Another critical issue in the policy debate has been highlighted by Drummond and Stone
(2007), who emphasised the need to pay closer attention to the transferability of HPWS
from one company to another. The two authors criticised the validity of government
policies that promote HPWS as a list of best practices able to generate positive returns in
every situation. They argued that empirical evidence suggests that this simplistic view
may be problematic and unprofitable, especially in small firms. Their analysis of
successful SMEs showed that
the systems in place in these businesses are, without exception, endogenous [ . . . ], invariably
closely related to the nature of the firms [ . . . ], [and] far from static [ . . . ] Each of the practices
that ultimately constituted the HPWS bundle were all selected, empowered and mediated
through a single set of core cultures and values. (Drummond and Stone 2007, pp. 200–201)
The findings of the present study largely support these latter warnings: the ignorance
argument and the best-practices approach both appear rather inconsistent for Italian
medium-sized firms. The managers surveyed seemed aware of the potentialities of HPWS,
and the difficulties that they encountered in the adoption of new work-practices were
primarily related to middle-management resistance to changes. This suggests that policy
interventions in this area should direct their efforts to promoting a more open-minded
approach to organisational change, i.e. a culture of change, by middle managers. However,
according to some evidence relative to the Italian context, the antecedents of middle
management’s resistance to change reside in its (negative) perceptions of the cost/benefits
of change and in the (limited) extent of its participation in the change process (Giangreco
and Peccei 2005). Therefore, policy programmes should also be directed to the central
actors of change, namely the owners and the top management, with the aim of developing
a more advanced culture of participation. The involvement of middle managers in the
change process significantly reduces their resistance, and top managers should become
familiar with the techniques for sharing these processes with lower level managers.
Finally, the high frequency of interventions to adapt the use of high-performance practices
recorded in our sample highlights the usefulness of programmes that provide HR managers
with the more advanced technical skills required for the implementation of HPWS.
Conclusion
Part of the new attention paid in recent years by HRM scholars on SMEs is related to the
emerging evidence on the profitability of HPWS also in SMEs. However, the debate on the
possible configurations of HRM practices in smaller firms is still focused on the issues of
(1) ‘homogeneity’ versus ‘heterogeneity’ behaviours, and (2) the antithesis between the
‘small is beautiful’ and the ‘bleak-house’ perspectives.
This paper has contributed to the advancement of knowledge by analysing the processes
of change to high-performance organisational solutions in medium-sized firms. Some of the
findings confirm the existing knowledge, e.g. the prominent roles of organisational culture
and owner/top-management vision, while others offer new insights for future research,
e.g. the variability of HRM systems within firms and the relationship between methods
of introduction and performance. Overall, our results suggest that SMEs are highly
diversified, and that they should be considered from a more segmented perspective with
respect to size to avoid misunderstandings of the phenomena investigated.
Acknowledgements
This work is based on some of the results of a research project conducted jointly by the
Assolombarda Research Department and the Work Training and Welfare Research Centre of the
University of Milan. We are grateful to the participants at the 22nd SASE meeting, in particular Matt
Vidal and Adrian Wilkinson, and at the XI Italian Workshop of Organization Studies for their helpful
suggestions. We would also like to thank the anonymous referees of the journal for their very useful
comments. The usual disclaimers apply.
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The International Journal of Human Resource Management, 2013

Vol. 24, No. 13, 2583–2607, http://dx.doi.org/10.1080/09585192.2012.744337

High-performance work systems and the change management process

*Corresponding author. Email: edoardo.dellatorre@unibg.it

q 2013 Taylor & Francis

HRM and HPWS in SMEs

However, it is quite widely recognised that informality in employment relationships

The adoption of HPWS by SMEs: economic and cultural explanations

through mimetic behaviour (competitive isomorphism) of leading firms [ . . . ] Presumably

The adoption and management of HPWS in Italian medium-sized firms

Methods and data sets

Table 1. Results of the Marbach test.

Size of the Size of the Margin of Sample

was therefore acceptable. The best-represented sector was manufacturing (probability of

(The names of companies are pseudonyms)

Persons interviewed: Director of Production (interview code TEX-PD)

Box 1. Short description of the characteristics of the case studies.

The practices designed to decentralise decision-making powers to lower levels in an

Moreover, since the simple presence/absence of practices may fail to depict

Table 2. Adoption and intensity of use of practices.

(1) Short description of company history

Box 2. Grid used in the semi-structured interviews.

The management of change

Figure 1. Percentage distribution of firms by number of practices employed.

Degree of adoption of high-

Figure 2. Percentage of firms with a unit dedicated to human resource management.

Obstacles and adaptive action

Table 3. How practices were introduced.

Degree of adoption of high-

Discussion and implications for future research

Table 4. Percentage of firms that have encountered difficulties in introducing organisational

Enterprises that have encountered

occupational groups (e.g. core/non-core employees, knowledge-/job-based employees,

The HPWS and SMEs policy debate: some implications

EC (1998), Modernising the Organization of Work – A Positive Approach to Change (Kom(98)

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