Author:Ismail, Abdussalaam Iyanda


Of note is that Small and Medium Enterprises (SMEs) constitutes virtually 90 per cent of global businesses and provide more than 50 per cent of world employment (International Finance Corporation (IFC), 2013). It is held that SMEs plays a key role in bulwarking the devastating upshot of recent global financial crisis (European Commission, 2014). SMEs play a crucial role in the economic development, industrial development, job creation cum poverty reduction (International Finance Corporation (IFC), 2013; Mahmood & Hanafi, 2013; Eze, Eberechi, Chibueze, Osondu & Ayegba, 2016; Tom, Glory & Alfred, 2016). Thus, it becomes a backbone of world economic growth. Likewise, in Nigeria, SMEs is a catalyst for the economic growth (Eniola & Ektebang, 2014; Okoya, 2013), a major provider of employment and a significant contributor to the GDP (Etuk, Etuk & Baghebo, 2014; Shehu, 2014). Nigerian SMEs constituted 97% of the entire enterprises in Nigeria; it contributed about 47% to the Gross Domestic Product (GDP) while more than 50% of Nigerian's workers were employed by SMEs (Anudu, 2016; MSME survey report, 2010; Taiwo, Ayodeji & Yusuf, 2012).

Nevertheless, Nigerian SMEs is still facing a myriad of challenges ranging from high rate of collapse of SMEs, insufficient manpower (Mwobobia, 2012a & 2012b), shortage of technical savoir-faire, shortage of planning (Onugu, 2005), low human capital formation, low level of technology adoption to insufficient innovation (Nigeria Vision 2020 Program, 2009). The incessant collapse of SMEs is associated with absence of business strategy, poor recruitment exercise, lack of succession plan, lack of focus, poor market research, cut- throat competition, among others (Onugu, 2005) and lack of competitiveness, particularly during the economic crunch (Zakaria, 2013). Thus, Nigerian SMEs' performance should be improved to enable it to catch up with the SMEs' performance level of the advanced countries and to be able to actualize the initiatives under the Nigeria's Vision 2020 which will in turn facilitate Nigeria to become one of the top 20 economies in the world by 2020.

Moreover, in the past, economies of scale, access to capital and regulated competition were recognized to be the predictors of competitive advantage. However, recent streams of research have identified strategic human resource management as a basis of competitive advantage (Bamberger & Meshoulam, 2000; Seidu, 2011) and high performance (Seidu, 2011). Considerable stream of research has established that human resources and its management form a central part of the whole of firm's competitive advantage (Allen & Wright, 2007; Boxall & Purcell, 2003), and strategic HR that enhances task, targets and performance are formed through the effective adoption of High Performance Work System (HPWS).

The high performance work systems literature have reported a number of Human Resource (HR) practices that consistently lead to higher individual and firm performance (Werner, 2011). Also, it has been found that enhanced firm performance and organizational accomplishments are contingent upon systematically-bundled HPWS (Choi, 2014; Choi & Lee, 2013; Demirbag, Collings, Tatoglu, Mellahi & Wood, 2014). However, many studies have recognized vague process, otherwise known as 'black box' within the HPWS- performance link. These studies recommend usage of a mechanism through which the so called 'black box' could be unpacked (Chadwick & Dabu, 2009; Messersmith, Patel, Lepak & Gould-William, 2011). On this, Boxall (2012) reiterates the absence of issue in the direct HRM- Performance nexus, but he claimed that a lot remain unknown about the chain of nexuses that are persistent inside the 'black box' of HRM.

Besides, the recent trends in the world of business today have underscored creativity and innovation as a strategic objective of majority of organizations. Research has noted creativity-performance nexus (Gilson, 2008; Martinaityte, 2014), HRM-creativity interconnection (Binyamin & Carmeli, 2010; Byron & Khananchi, 2012; Chang, Jia, Takeuchi & Cai, 2014; Martinaityte, 2014) and HRM-performance link (Demirbag et al., 2014; Fan et al., 2014; Shin & Konrad, 2014). Based on this and in consideration of Baron & Kenny's (1986) supposition, creativity is logically and empirically fit to be the mechanism (mediator) through which the identified lacunas (i.e. black box) could be resolved.

Thus, this study aims to investigate the vague process in-between the HPWS- Performance link in the context of Nigerian SMEs.

Hypotheses Development

Based on the issues identified and explicated in the introduction of this research, there is need to examine the effect of HPWS on SME performance in the context of Nigeria (theoretical and contextual lacunas) and the mediating role of creativity in HPWS-performance nexus (theoretical lacunas). Finally, the need to upsurge Nigerian SMEs' performance constitutes the practical gap.

Linking HPWS to SME Performance

HR system that boosts employee competencies, commitment and productivity is frequently referred to as HPWS (Appelbaum, Bailey, Berg & Kalleberg, 2000; Datta, Guthrie & Wright, 2005). Bundles of HR practices are more influential than individual practices in isolation (Choi, 2014; Chuang & Liao, 2010; Demirbag et al., 2014). Quite good number of studies has shown that HPWS influences organizational performance positively (Arthur, 1994; Huselid, 1995; MacDuffie, 1995; Sun, Aryee & Law, 2007).

Regarding configuration of HPWS practices, previous studies are devoid of consistency. Scholars (Kwang, Songan & Kian, 2008; Vlachos, 2008) adopted different practices. However, based on the fact that SMEs' success heavily relies on the inputs of highly committed, well-motivated and qualified employees and in consideration of AMO model, HPWS, in this work, connotes selective hiring, training and development, performance appraisal, succession planning and pay for performance. Notably, this composition is a blend of 'best practices', core HR practices, broads and peripherals HR practices. Hence, this configuration is logically sound, systematic and empirical-based.

Moreover, research (Porter, 1992) has shown that a blend of financial and non- financial measures to constitute performance measurement has become a widespread framework in many fields of study such as economics, strategy, finance and accounting. In addition, research (Chadwick et al., 2013; Faems et al., 2005; Georgiadis & Patelis, 2012; Messersmith & Guthrie, 2010; Ogunyomi & Bruning, 2016) has indicated that both the financial benchmarks and nonfinancial benchmarks are adopted and favored in small businesses.

Additionally, HPWS research is largely conducted in the western contexts (Boxall & Macky, 2009; Godard, 2004). Studies on HPWS in emerging economies (like Nigeria) are scanty (Gautam & Davis, 2007), as the available studies conducted in the context of SMEs do not focus on the effect of HPWS practices on performance (Chelliah, Sulaiman & Yusoff, 2010; Hilmi & Ramayah, 2008; Jajri & Ismail, 2009). Also, most of these studies have focused on large organizations and overlooked small organizations (Gringore, 2008; Bau & Dowling, 2007; Ukenna, Ijeoma, Anionwu & Olise, 2010).

Going by the above discussion, this research hypothesizes that:

  1. HPWS positively influences SME financial performance in Nigeria.

  2. HPWS positively influences SME non-financial performance in Nigeria.

    Explication on Vague Process In-Between HPWS-Performance Link

    Employee creativity is becoming more and more indispensable in the organization, given the increasingly volatile environments, high levels of competition and erratic technological change. Employee creativity denotes the extent to which employee develops ideas and demonstrates innovative behaviors in the accomplishment of his/her assigned tasks (Wang & Netemeyer, 2004). It also refers to the creation of a novel and fitting response, product or solution to a flexible duty (Amabile, 2013). Also, creativity denotes getting out of the comfort's zone of individual employee and then experimentation of new way or method of doing things with no fear of failure. Creativity can be induced via employee-oriented HPWS (Martinaityte, 2014).

    As discussed earlier, research has noted creativity-performance nexus and HPWS- creativity interconnection. Martinaityte's (2014) posits that a well-equipped HPWS can induce creativity, because it dictates the behavioral nuts and bolts to the employees for them to effectively accomplish organizational strategy. HPWS also offers the know-how, motivation and opportunities to involve in these behaviors. Although some researchers (Mainemelis, 2001; Shalley, Zhou & Oldham, 2004) perceive creativity to be a process claiming that it would be a considerably favorable direction for creativity research field to treat creativity as a process (i.e. a predictor of organizational outcome), extant research in the creativity literature claims that creativity is an outcome to which certain factors contribute. Nevertheless, this work regards creativity as a process and as an outcome. It has also become a fact that much is not known in respect of the effect of HPWS on creativity in both service and non-service contexts (Martinaityte, 2014).

    Besides, there have been some researchers (Binyamin & Carmeli, 2010; Shalley & Gilson, 2004) who have called for investigation in respect of HPWS-performance nexus, because of the scantiness of research in the area. Some, among the available studies, have established the positive nexus between the two constructs. For example, Raub & Liao (2012); Sung & Choi (2012) found positive relationship between creativity and unit profit in the context of service delivery and team financial performance in the Korean context respectively. Martinaityte (2014) vetted the nexus between creativity and financial performance and she came out with a result indicating the positive relationship between...

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