Cultural Relationship and HRM Practices in Indonesian SMEs

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue VII, July 2019 | ISSN 2454–6186

Cultural Relationship and HRM Practices in Indonesian SMEs

Ferdinandus Sampe
Post-Graduate Accounting – Faculty of Economic and Business , Atma Jaya Makassar University – Indonesia

Abstract— Culture is a critical aspect in the relationships between individuals in an organization especially in SMEs (Small and Medium Enterprises). A relatively small number of employees and a tendency for decision making to be focused on the owner lead to culture influences being imposed on HRM practices. This study therefore was aimed at investigating cultural relationships and HRM practices in Indonesian SMEs.
Data was collected in two stages. In January 2018, a preliminary survey of small service firms in South Sulawesi was conducted to find out what aspects of HRM practices were used in managing employees and whether cultural aspects had any relationship to the practices. The first stage result revealed that HRM practices were applied in managing firm activities and that cultural aspects did influence the HRM practices. From March to April 2018, the study then proceeded with a further survey and interviews of SME’s managers or their owners. The areas of activity that were covered were service, manufacturing and trading firms. One hundred and twenty questionnaires were hand-delivered and 87 were completed and returned. Following this, 15 SMEs managers/owners were interviewed. The collected interview data was then compiled and analysed to produce a descriptive record of the interviews.
The findings revealed that cultural relationships between managers/owners and employees lead to informal HRM practices. Moral obligation and family relationship were the dominant bases for HRM decision making. The study supported the findings from previous studies that HRM practices in SMEs tend to be informal and based on a mutual understanding between employees and managers/owner.
The study offers empirical support for using a cultural background when using HRM practices. In addition, cultural values need to be considered in order to create good working relationship in SMEs and aspects of effective HRM practices based on Western culture may not be suitable for Indonesian enterprises especially in the case of SMEs
The study represents the application of HRM practices in South Sulawesi cultural background at specific time. Future research could include longitudinal, cross-cultural studies and wider geographical coverage.

Keywords— culture, cultural relationship, HRM, SMEs

Read More