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The Impact of Talent Management Practices on Employee Retention:

An Empirical Study on the SME Industry of Bangladesh

Tahmina Khanam.,

Farhana Foysal Satata

Tahmina Khanam, Associate Professor, Department of Management, University of Dhaka

Farhana Faisal Satata, Lecturer, South East University

DOI: https://dx.doi.org/10.47772/IJRISS.2025.914MG00213

Received: 27 October 2025; Accepted: 05 November 2025; Published: 21 November 2025

ABSTRACT

Small and Medium Size Enterprises (SMEs) are considered major contributor in the overall development of an

economy and Bangladesh is no different. But in case of retaining talent management SMEs are struggling with

their limited resources, poor employee branding and formal human resource management practices within their

organizations. This article investigated how the Talent Management Practices (TMP) influence the Employee

Retention (ER) in SME sector where the mediating variables were identified as Workplace Culture (WC) and

Employee Engagement (EE). TMP construct included identification of critical positions, compensation

practices, training and development and talent recruitment. Coupling with Resource-Based View Theory, the

study had taken seven hypotheses which examined the direct and mediated effect of TMP, WC, EE, and ER.

In order to examine the hypothesis the study conducted a survey on 425 employees and managers of SMEs of

the manufacturing, services, trading, and technology industries in Bangladesh. Smart PLS 4 was used to

analyse the data in order to measure model and structural model. All the offered hypotheses are confirmed in

the results demonstrating that TMP has a positive impact on ER but not only directly, but also indirectly

through WC and EE. The results of the analysis indicated that well-formulated talent practices and positive

work environment play constructive roles in employee engagement and retention, which eventually can ensure

the attainment of SMEs competitive advantage and corporate sustainability.

The theoretical contribution of the study is the contextualisation of TMP, WC and EE in the context of SMEs

in developing economy, and its contribution to the body of empirical evidence of mediating mechanism of

engagement and culture. The study suggested several recommendations for SME managers and policymakers

that can be used in developing effective low-cost methods of retaining talents. This study also highlights the

need of incorporating HR interventions to reflect their alignment with organizational culture and enhance

workforce stability, and organizational performance in resource-poor settings.

Keywords: Talent Management Practices, Employee Retention, Employee Engagement, Workplace Culture,

Small and Medium Enterprises (SMEs), Human Resource Management, Developing Economy, Bangladesh

INTRODUCTION

The recognition of Small and Medium-sized Enterprises (SMEs) as the mainstays of national economies due to

their contributions towards generation of employment, value addition, entrepreneurship, regional balance, and

socio-economic inclusiveness, is well acknowledged. Not only are SMEs the preferred mechanism of

structural transformation everywhere in the world, with approximately 90 percent of total firms, and over 50

percent of total employment, they are the cornerstone of development and competitiveness in emerging

economies, generating up to 40 percent of the GDP (Armeanu et al., 2015; Dhar et al., 2024; Hossin et al.,

2023; Payambarpour & Hooi, 2015). In Bangladesh, SMEs have been put on the same status with a strategic

priority sector. As the competition in business grows and the markets change at a fast rate, SMEs success and

survival at the long run largely rely on the success of the firms in drawing, nurturing and maintaining a

competent workforce. So organizational leaders in Bangladesh are under great pressure in ensuring that they

have a competent and motivated workforce. But these businesses have continued to experience a challenge of

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retaining talented employees. Employee turnover among the staff has become an acute problem to the SMEs

leading to higher costs in hiring, loss in organizational knowledge as well as impaired continuity in the

business (Abdullahi et al., 2022). As compared to large organizations, SMEs have little financial and non-

financial resources and thus they are limited in terms of providing competitive compensation, structured career

development, and employer branding programs. Such lack of ability to retain competent employees weakens

the performance of the organization, lowers its competitiveness and jeopardizes long term sustainability of the

SMEs in Bangladesh. To tackle this acute issue, it is important to have a comprehensive insight into talent

management practices in resource-scarce SME settings (Saleh & Atan, 2021). The approach of talent

management has been emerging as a strategic option in combating this problem incorporating recruiting,

training and developing, performance management, career development, and succession planning and aligning

human capital with the aims of the organization (Jayaraman, Talib, & Khan, 2018; Kontoghiorghes, 2016).

So this paper tried to answer some questions like (Q1) what is the impact of talent management practices on

employee retention mediated by workplace culture and employee engagement based on the evidence from

SME Industry of Bangladesh? (Q2) What will be the recommendations for enhancing talent management

approaches to improve employee retention?

Correspondingly, the objectives are to explore the impact of talent management practices on employee

retention mediated by workplace culture and employee engagement based on the evidence from SME Industry

of Bangladesh and propose practical recommendations for enhancing talent management approaches to

improve employee retention.

Despite the universal recognition of the significance of talent management the majority of the literature is

based on the analysis of the large businesses in the developed nations, creating a gap in the research on

developing and underdeveloped nations and resource-challenged industries like SMEs (Jayaraman et al., 2018;

Kontoghiorghes, 2016; Payambarpour & Hooi, 2015). The existence of this gap shows the necessity to

investigate the role of talent management practices (TMP) aimed at helping SMEs to retain people despite

financial, structural and operational limitations for carrying out such practices. So the significance of this

research is substantial for both theory and practice. Academically, it contributes to the literature on talent

management and employee retention in SMEs within a developing country context, offering localized insights

into effective HR strategies. Practically, the study provides SME owners, managers, and HR professionals with

evidence-based guidance for designing cost-efficient and impactful retention practices, even under limited

financial and structural resources (Abdullahi et al., 2022; Saleh & Atan, 2021).

In spite of these contributions, the study has its own limitations. First, it has used self-reported questionnaire

and therefore limits the applicability of findings to other SMEs sectors or contexts in Bangladesh. Second,

cross-sectional design limits the possibility to determine causal relationships between talent management

practices and employee retention. Finally qualitative insights lacks in this study.

In this paper chapter 1 has covered the introduction part. Chapter 2 covers literature review part, where the

conceptual background, hypothesis development, theoretical and conceptual frame work have been showed.

Chapter 3 covers the methodology where the research design, population parameter, sampling design,

measurement items, data collection technique and biasness test have been showed. In chapter 4 the Analysis &

the findings part have been discussed. This chapter has been divided into some important parts like

measurement method discussion and confirmatory factor analysis part. In chapter 5 insights about the overall

analysis and paper has been given in the discussion part. In chapter 6 the limitations and future directions have

been showed. And in chapter 7 the conclusion has been drawn.

LITERATURE REVIEW

Underpinning Theory

The research is also based purely on the Resource-Based View (RBV) of the firm. RBV assumes that

competitive advantage is attained and maintained when organizations create and utilize internal resources

which are not only valuable, but also rare, inimitable, and non-substitutable (Barney, 1991). Human capital has

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also been regarded as among the most important strategic resources as it is hard to imitate and comes with long

term organizational benefits (Wright, Dunford, and Snell, 2001).

The selective recruitment, talent training and development, performance management, career planning and

employee recognition are all the examples of Talent Management Practices (TMP) that can be viewed as

strategic resources in the context of SMEs in Bangladesh. Such practices strengthen the skills, knowledge and

commitment of employees, thus developing a special human capital base that does not easily get duplicated by

the competitors (Boxall and Purcell, 2016). Through such practices, SMEs create a pool of engaged and

committed employees and this enhances employee retention (ER).

RBV as well describes the indirect routes that were posited in this work. In cases where employees enjoy good

TMP, they become more work committed (WC) and engaged (EE), and both are intangible yet ascribed to

have great organizational value. The moods enhance the desire to stay in the organization among employees

hence the retention results. Based on this, WC and EE can be regarded as mediating variables in which TMP

are transformed into sustainable retention benefits.

Thus, RBV represents an overall strategic stance as to why SMEs are to invest in TMP. According to nurture

and retention of their workforce as an asset, not only do they minimize the turnover, but also they are

competent in the long term, and even survival of their organization.

Small & Medium Enterprise

According to the definition formulated by the central Bank of Bangladesh and National Industrial Policy 2016,

the SMEs are defined in terms of the size of fixed assets and employees. Small and Medium Enterprises

(SMEs) in Bangladesh are defined based on two main criteria: the value of fixed assets (excluding land and

buildings) and the number of employees. In the manufacturing sector, a small enterprise typically has fixed

assets ranging from BDT 75 lakh to BDT 15 crore or employs between 26 and 120 workers, while a medium

enterprise possesses assets between BDT 15 crore and BDT 50 crore or employs 121 to 300 workers. In the

services sector, small enterprises generally have 16 to 50 employees and fixed assets of approximately BDT 10

lakh to 2 crore, whereas medium enterprises employ 51 to 120 workers with fixed assets ranging from BDT 2

crore to 30 crore. If an enterprise meets the threshold of a larger category in either assets or number of

employees, it is classified in that larger category (Bangladesh Bank, 2016; Dhaka Tribune, 2019).

Talent Management Practices

Talent Management Practices (TMP) are strategic measures adopted by organizations to attract, develop, and

retain skilled employees essential for achieving organizational objectives (Payambarpour & Hooi, 2015).

SMEs in Bangladesh face particular challenges due to limited financial and structural resources, which

constrain formal human resource systems and long-term talent retention (Abdullahi et al., 2022). TMP

encompasses critical components such as Talent Recruitment Practices (TRP), Training and Development

(TD), Identification of Critical Positions (ICP), and Compensation Practices (CP) (Jayaraman, Talib, & Khan,

2018). Recruitment aims to attract candidates whose skills and values align with organizational goals;

however, SMEs often struggle with weaker employer branding and financial limitations compared to larger

firms (Poocharoen & Lee, 2013). Training and development (TD) strengthen employee competencies, yet

SMEs frequently rely on informal or on-the-job programs due to cost and time constraints (Saleh & Atan,

2021). Performance evaluations attempt to link learning outcomes to organizational objectives, but structured

appraisal systems are often absent (Kontoghiorghes, 2016). Identifying critical positions and succession

planning is also limited by flat hierarchies, creating a need for innovative career development initiatives to

retain high-potential employees (Tanton, 2007). Compensation and a supportive work environment remain key

retention factors, though SMEs frequently face difficulties matching larger firms’ financial offerings,

increasing turnover risk (Abdullahi et al., 2022; Payambarpour & Hooi, 2015). Given dynamic market and

technological pressures, SMEs require cost-efficient TMP solutions. Constructive workplace cultures, flexible

arrangements, and individualized development programs foster engagement and retention without heavy

financial dependency (Kontoghiorghes, 2016). Additionally, digital tools in recruitment, training, and

performance management enhance competitiveness despite resource constraints (Abdullahi et al., 2022).

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Overall, implementing effective TMP—including recruitment, training, role identification, and fair

compensation—enables SMEs to mitigate inherent limitations and sustain long-term organizational success.

Employee Retention

Employee retention refers to an organization’s ability to retain skilled employees and minimize turnover,

which is crucial for sustaining operational continuity and competitive advantage (Hausknecht & Trevor, 2011).

Turnover incurs costs such as recruitment, productivity loss, and disrupted team dynamics. Effective retention

strategies include competitive pay, career growth, supportive work conditions, and work-life balance

(Abdullahi et al., 2022). Psychological contracts, reflecting mutual expectations between employer and

employee, strengthen loyalty when perceived as fulfilled (Bal, de Cooman, & Mol, 2013; Meyer & Allen,

1997). In SMEs, limited resources constrain financial incentives and structured career paths, increasing

turnover risk (Payambarpour & Hooi, 2015; Tanton, 2007). Non-monetary mechanisms—engagement

programs, positive culture, and flexible arrangements—enhance retention, particularly when integrated with

talent management practices (Kontoghiorghes, 2016; Abdullahi et al., 2022).

Workplace Culture

Workplace culture encompasses common values, beliefs, and norms that influence the conduct of the

employees (Schein, 2010). Positive culture also promotes belonging, motivation, and performance (Schneider,

Ehrhart, and Macey, 2013), which is especially essential in SMEs due to their loose structure and proximity to

each other (Saleh and Atan, 2021).

There is an impact of culture on engagement, retention, and job satisfaction (Kontoghiorghes, 2016). Positive

climates of communication, acknowledgement and equity foster trust and psychological safety (May, Gilson,

and Harter, 2004) and unfavorable ones lead to disengagement and turnover. Culture can be a major point of

differentiation in SMEs which typically do not have formal HR systems because such companies rely on

informal practices that include flexible work, team building and feedback in their efforts to counterbalance

minimal incentives (Poocharoen and Lee, 2013; Payambarpour and Hooi, 2015).

Employee Engagement

Employee engagement (EE) is a work-related psychological state characterized by vigour, dedication, and

absorption in one’s tasks (Schaufeli et al., 2002). Engaged employees demonstrate higher commitment,

discretionary effort, and performance, making EE crucial for organizational success (Albrecht et al., 2015).

Talent management practices, including training, career development, performance recognition, and supportive

leadership, enhance engagement by providing employees with growth opportunities and fostering fairness

(Abdullahi et al., 2022; Collings & Mellahi, 2009). Workplace culture also shapes engagement by promoting

trust, open communication, and shared values (Schneider et al., 2013). In SMEs, where resources are limited,

flexible work arrangements and participative practices can significantly strengthen engagement, improving

retention and overall productivity (Payambarpour & Hooi, 2015; Kontoghiorghes, 2016).

Hypothesis Development

TMP boost ER improving firm-specific human capital and mutual employment relations. Existing studies

indicate that selective staffing, training, career development and performance recognition have been linked

with reduced turnover and greater retention intentions in any industry (Narayanan et al., 2019; Pandita & Ray,

2018; Amushila & Bussin, 2021). Empirical research also supports that TMP leads to support, commitment,

and fairness at the organizational level which have a direct negative impact on turnover intention. The

beneficial impact of TMP on ER is supported by evidence in a variety of settings (Batt, 2002; Sun et al., 2007;

Hausknecht and Trevor, 2011).

Therefore, drawing on accumulated empirical findings and theory, we advance the following hypothesis:

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H1: TMP are positively related to ER.

Job resources are offered by TMP that facilitate EE in terms of vigor, dedication, and absorption (Bakker and

Demerouti, 2017; Pandita & Ray, 2018; Ogbonnaya & Messersmith, 2019; Ismail et al., 2021). The literature

indicates that higher engagement rates are linked to developmental HR practices, career advancement, and

recognition, which are all positively related (Bailey et al., 2017; Ogbonnaya and Messersmith, 2019; Peccei et

al., 2021). The testimony in industries and culturally specific settings can be attested to the fact that structured

TMPs create greater engagement through fairness, support, and growth opportunities (Singh et al., 2020).

Accordingly, the hypothesis is the following:

H2: EE has a positive relationship with TMP.

EE among employees in terms of energy, commitment, and absorption has been associated with ER at a higher

level of affective commitment and organizational attachment (Bakker and Demerouti, 2017; Saks, 2019).

Based on the idea of Social Exchange Theory, by assigning employees meaningful work and supportive work

practices that encourage engagement, employees would in turn give back in terms of loyalty and less turnover

intentions (Cropanzano et al., 2017). The recent empirical data in industries show that employees who are

engaged are much less prone to turnover and more likely to become long-term members (Kim and Hyun, 2017;

Lee et al., 2019; Peccei et al., 2021).

So it can be hypothesized that,

H3: EE is positively related to ER.

The WC includes the common values and norms of behaviour that determine the interaction of employees

within organizations. TMP are considered the main actors of the development of positive cultures because they

introduce the culture of trust, learning, and collaboration into HR systems and procedures (De Boeck et al.,

2018; Thunnissen et al., 2018). Resource-Based View has it that TMPs improve human and social resources,

which helps to strengthen the cultural norms that are in line with the organizational goals (Afiouni et al.,

2017). Another empirical piece of evidence is that well-organized TMPs promote inclusive, innovative, and

high-performance cultures, even in resource-restricted SMEs (Gallardo-Gallardo & Thunnissen, 2016;

Mensah, 2019).

H4: TMP are positively related to WC.

WC gives the social and psychological background under which employees operate influencing their

motivation and behaviours. A supportive and inclusive WC has been established as a contributor to EE, as it

leads to trust, sense of belonging, and shared organizational and personal values (Albrecht & Marty, 2020;

Shuck et al., 2017). Based on the JD -R model, culture is a work resource that provokes a sense of vigor,

commitment, and absorption, whereas Social Exchange Theory argues that positive cultural characteristics

stimulate a mutual commitment (Bakker & Demerouti, 2017; Saks, 2019). It is confirmed that collaborative,

innovative, and service-oriented cultures have positive relationships with increased engagement regardless of

industries and context (Keyko et al., 2016; Mensah, 2019).

H5: WC is positively related to EE.

The practices of TMP do not just create competence and motivation in employees but also impact WC which,

in its turn, affects ER. By the means of the Social Exchange Theory, TMPs indicate fairness, support, and

value, which become internalised within WC, creating loyalty and trust that lead to decreased turnover (Saks,

2019). In terms of JD-R, WC is a situational resource that creates better attachment and retention (Bakker and

Demerouti, 2017).

Recent empirical research proves the mediating role of WC. According to De Boeck et al. (2018), talent

development was only effective in developing ER with the help of learning-oriented cultures. Thunnissen and

Buttiens (2017) demonstrated that WC moderated the correlation between TMPs and retention in public

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organizations, whereas Keyko et al. (2016) emphasized that supportive WC minimized attrition in healthcare.

In a broader sense, according to Albrecht and Marty (2020), when the HR practices are aligned with the

culture, the employee commitment and retention are reinforced.

H6: WC mediates the relationship between TMP and ER.

Job resources include TMP including recruitment, training, career opportunities, and recognition and are

known to improve EE, and this practice further enhances ER. Based on JD -R and the Social Exchange

Theory, TMPs indicate organizational support that positively increases engagement and decreases turnover

intentions (Saks, 2019; Bakker and Demerouti, 2017).

Recent research attests to the mediating effect of EE. Ogbonnaya and Messersmith (2019) discovered that

HRM systems enhanced retention indirectly via involvement by increasing the capacity of employees, their

motivation, and chance. Keyko et al. (2016) established that supportive leadership and development chances

increased nurse retention through engagement, and that Albrecht and Marty (2020) found that alignment

between Hr practices and employee requirements created engagement that predicted greater retention rates.

The evidence provided by cross-cultural researchers also demonstrates that EE mediates the impact of TMPs

on ER in a variety of industries and context (Lee et al., 2019).

H7: EE mediates the relationship between TMP and ER.

Conceptual Framework

From previous studies it was learned that TRP, TD, ICP and CP are the four most prominent TMP practices

that organizations generally performs (Abdullahi et al., 2022; Jayaraman et al., 2018). And it has also been

showed that these activities help to cultivate good WC. When these activities are performed employees feel

more connected with the organization EE also flourish (Payambarpour & Hooi, 2015; Kontoghiorghes, 2016;

Tanton, 2007). It means that each of the four TMP practices is correlated with WC and EE, which has also

been seen in previous paper distinctively. So in this study the relationships have been showed at once. In the

figure below, it can be seen that in the first phase the connection between TMP and the 2 mediators have been

showed. After that the connection of these two mediators with the dependent variable ER has been presented.

Last of all a direct relation of TMP and ER has been showed. So this research framework presents a strong

base that can contribute in the TMP field. Especially due to its context, as the study has been conducted on the

employees of SME industry.

Figure 1: Conceptual Framework

METHODOLOGY

Research Design

The given research is based on the quantitative research design, which aims at investigating how talent

management practices contribute to employee retention at SMEs in Bangladesh. Primary data was sought

through a structure survey designed to measure the primary data among employees and the managers in the

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identified SMEs through which the organizational practices and engagement of the employees and employee

retention could be evaluated in a systematic manner.

Population Parameters

The Ministry of Industries (2016) notes that there are approximately 7.8 million SMEs that add about 25% of

the country GDP and employ close to 31 million people accounting 40% of the workforce. The participants

who have been approached in the research are employees and managers in SMEs that are operating in

Bangladesh in the manufacturing, services, trading, and technology industries within Bangladesh.

Sample Size

The sample of this research was 425 individuals. This sample size will be sufficient, and appropriate in a

quantitative research especially in structural equation modeling (SEM) techniques e.g., SmartPLS. By this Hair

et al. (2019), it is recommended that the sample size should be at least 10 times more than the highest

structural paths aimed at a construct in the research model, so that it is possible to have robust statistical

analysis. The sample size of 425 is considerably more than that recommended, and this proves the validity of

results due to the high level of complexity of the model.

Also at a 95% confidence level but with a margin of error of 5%, Krejcie and Morgan (1970) give a commonly

used sample size determination table, indicating that a sample size of around 384 is good when the population

size exceeds 1 million. As such, the sample size of 425, which has been chosen, is more than sufficient as far

as ensuring this criterion is concerned; thus, further enhancing the ability of the results to be generalized to the

target population in Bangladesh.

Sampling Technique

The selection method used to pick SME and respondents is a purposive sampling technique. The specified

characteristics of the criteria the study should meet made such a non-probability approach the right choice: the

employees should serve at least half a year or rent the organization to give valuable insights into the

organizational practices, and the managers and the HR employees should be directly related to HR and talent

management functions. By doing so, the researchers will guarantee that subjects obtain enough exposure to

organizational policies and can offer valid and subjective ideas concerning the quality of talent management

practices in shaping employee retention (Etikan, Musa, & Alkassim, 2016).

Instrument Development

The scales used to construct the questionnaire were validated and had been employed in previous studies with

the dependence of TMP, ER, EE, and WC all being estimates on a five-point Likert scale. EE elements were

taken with modifications of Payambarpour and Hooi (2015) and focused on commitment and discretionary

effort whereas the items on ERewere taken with modifications of Tanton (2007) that valued intention to

remain and perceived organizational support. TMP sub constructs included TRP, TD, CP and ICP adapted and

borrowed roof Abdullahi et al. (2022) and Jayaraman et al. (2018) that measured the effectiveness of the hiring

process, developing skills, compensation fairness, and succession planning. Culture items in the work place

were fished out of Kontoghiorghes (2016) which cantered on support, recognition, and alignment at the

organizational values. The instrument was reviewed by experts and pilot tested (n = 30) which gave Cronbach

alpha of over 0.70, validating reliability and usefulness to measure talent management and its contribution to

SMEs in Bangladesh context.

Data Collection Technique

Survey questionnaires in hard and soft copy were used to encourage as many of them as possible to give their

opinions. The employees were informed of the essence of the study, and the fact that it was absolutely

voluntary. Questions were specifically addressed to the managers and HR professionals to obtain

organizational- level information on policy implementation, issues, and strategic HR responses. The other

methodological issues were timing and the availability of respondents. The surveys were sent out at times of

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normal work activity to reduce inconvenience and the survey was followed up with reminders to increase the

response rates.

Ethical Consideration

During research, ethical issues were strictly adhered to. Before the collection of data, the institutional ethics

committee gave approval so that ethical research standards were observed. All participants signed an informed

consent and had the choice of leaving the study with no penalty whatsoever. In order to ensure confidentiality,

each respondent was characterized with different codes and no identifiably personal data was taken. Data and

records were kept on password secured files which could only be accessed by the research team. The

respondents would be told that their answers would be collected only to conduct the research, and the

information would be reported in aggregate, hence being anonymous and eliminating the likelihood of a biased

answer (Bryman & Bell, 2015).

Analytical Procedure

The results of the data gathered among SME employees and managers will be analysed with the use of a

variance-based structural equation modelling (SEM) software SmartPLS 4 that fits complex models with

various constructs (Hair et al., 2022). The analysis will be carried out in two steps, measurement model check

and structural model test. Such aspects as the reliability and validity of constructs to be investigated in the

measurement model will include Cronbach alpha question measure, composite reliability, as well as average

variance extracted (AVE), whereas discriminant validity will be determined in terms of the FornellLarcker

criterion and HTMT ratios. Path coefficients, t-values and R 2 values will be used to test the hypothesized

relationships between the Talent Management Practices, Workplace Culture, Employee Engagement and

Employee Retention supported by bootstrapping of 5000 resamples as the structure model of the analysis. This

method will advance the quality discussions on the measurement characteristics and the forecasting

correlations and will permit a powerful test of direct and mediating impacts in the SME situation.

Common Method Bias

All of the data was collected in a single instant of time. In order to reduce common method bias (CMB), the

research employed various procedural and statistical techniques. Information was gathered from various

sources and guaranteed the privacy of the participants' responses. A pre-test was conducted with 25

academicians and professionals from SME sector to ensure a cleaner understanding of the items and to adapt

the questionnaire to the context in which it was to be applied. Their insightful opinions and insights were

carefully considered, and the questionnaire was further improved based on that. Each and every item was used

in a single-factor Harman's test (Eichhorn, 2014). The first component (or factor), which refers to the highest

eigenvalue, in Harman's single factor test has a percentage of variance that is compared to a threshold of 0.5.

The variance value, according to the result, is 31.679%, which is less than the 0.5 threshold value. Thus, it has

been demonstrated that this paper is free of common method bias. In line with the suggestions of Fischer and

Fick, and as per Podsakoff et al. (2003), numerous methods have been used to evaluate the possible impact of

common method bias. The single-factor test presented by Harman showed that no single factor explained over

50 percent of the variance. Moreover, full collinearity VIF scores were all less than the 3.3 limit and the

ULMC strategy indicated method factor loading was weak (<0.20) and did not significantly raise the explained

variance (ΔR 2 < 0.03). All these findings prove that a common method bias is not a significant issue in this

research.

Analysis & Findings

Measurement Model (Reliability and Validity)

We tested the validity of our theoretical model by using PLS-SEM 4. Initially, the validity and reliability of the

measures has been assessed and then a structural model was employed to evaluate the strength of the

hypothesized relationships among the variables. So at first here all the construct has been examined through

the lens of construct reliability and validity. To test reliability Factor loadings, Indicator multicollinearity

(VIF), Internal consistency (Cronbach alpha, RHO-A, Composite reliability) has been measured. Many

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scholars have provided some rules of thumb for explaining the measurement model results (Chin et al., 2003;

Gujarati, 1970). Based on the data in the table-1 and figure 2, it is clear that the factor loadings are more than

the threshold value of.708 (Chin et al., 2003; Gujarati, 1970). All the factor loadings are in between value .748

to .936.

Figure 2: Measurement Model

According to Hair et al. (2022), a common method for evaluating the formative collinearity of indicators is the

Variance Inflation Factor (VIF). VIF values greater than 5 suggest that there may be issues with predictor

construct collinearity (Hair & Alamer, 2022). From Table-1, it can be seen that the value of VIF for each and

every items is here below 5. It is in between 1.434 to 3.803. It means that there is no collinearity issue. To

measure the internal consistency Cronbach’s Alpha, composite reliability and rho_A value are measured that

ensures that the items generate consistent result.

Table 1: Internal Consistency (Measurements of the constructs)

Constructs

Items

Factor

Loadings

Cronbach's

Alpha

rho_A

Composite

Reliability

AVE

VIF

Talent Recruitment

Practices

TRP1

.844

0.825

0.832

0.884

0.668

2.254

TRP2

.864

2.302

TRP3

.793

1.591

TRP4

.766

1.592

Training &

Development

TD1

.865

0.855

0.859

0.911

0.777

2.16

TD2

.903

2.662

TD3

.873

1.967

Compensation

practices

CP1

.748

0.782

0.789

0.872

0.713

1.434

CP2

.827

2.063

CP3

.902

3.203

CP4

.891

3.217

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Identifying Critical

Position

ICP1

.908

0.863

0.889

0.916

0.784

2.707

ICP2

.936

3.2

ICP3

.808

1.837

Employee

Engagement

EE1

.799

0.849

0.908

0.698

2.171

EE2

.858

2.428

EE3

.866

2.228

EE4

.817

2.049

Workplace Culture

WC1

.776

0.789

0.864

0.748

1.617

WC2

.897

3.113

WC3

.887

3.108

WC4

.895

2.839

Employee Retention

ER1

.896

0.878

0.880

0.917

0.728

2.981

ER2

.831

2.436

ER3

.828

2.263

ER4

.855

2.342

+ AVE=Average variance extracted; ± VIF: Variance Inflation Factor

Here the result of Table-1 shows that in this study all the value of Cronbach’s Alpha, composite reliability and

rhoA are higher than the cut-off value of 0.70. These data demonstrate that the measurement model is

repeatable and dependable.

Discriminant validity and convergent validity are the two most important analysis of verifying whether

measuring items effectively reflect the corresponding measured constructs (MacKenzie et al., 2011). This

study measures the AVE (average variance extracted) to ensure convergent validity and cross loadings,

Fornell-Larcker Criterion and Heterotrait-Monotrait Ratio (HTMT) to measure discriminant validity. The

threshold value for AVE is 0.50 or higher (Hair et al., 2019; Bagozzi & Yi, 1988). Table-1 shows that the AVE

of the constructs falls in between 0.668 to 0.784 that are higher than the commended value of 0.50. Issues with

discriminant validity arise when an item performs better on a separate construct than its own parent construct.

If the item's loading difference is smaller than .10, it indicates that discriminant validity may be at risk. The

items are legitimate and appropriate for measuring the dimensions, since all factor loadings have exceeded the

value of cross-loadings, as shown in table-2.

ICP

TRP

CP1

0.748

0.856

0.406

0.322

0.637

0.476

0.643

CP2

0.827

0.49

0.27

0.305

0.353

0.354

0.419

CP3

0.902

0.567

0.385

0.381

0.486

0.427

0.511

CP4

0.891

0.538

0.336

0.342

0.486

0.4

0.486

EE1

0.536

0.799

0.34

0.232

0.432

0.34

0.466

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EE2

0.589

0.858

0.315

0.216

0.613

0.285

0.583

EE3

0.724

0.866

0.415

0.31

0.662

0.453

0.655

EE4

0.581

0.817

0.455

0.366

0.657

0.389

0.571

WC1

0.296

0.457

0.776

0.456

0.413

0.495

0.609

WC2

0.372

0.343

0.897

0.707

0.26

0.45

0.495

WC3

0.375

0.365

0.887

0.777

0.243

0.488

0.485

WC4

0.403

0.419

0.895

0.661

0.27

0.54

0.567

ICP1

0.434

0.321

0.643

0.908

0.288

0.637

0.481

ICP2

0.354

0.337

0.785

0.936

0.228

0.6

0.509

ICP3

0.259

0.236

0.553

0.808

0.091

0.477

0.341

TD1

0.555

0.646

0.357

0.209

0.869

0.22

0.512

TD2

0.484

0.625

0.262

0.163

0.903

0.223

0.491

TD3

0.515

0.627

0.292

0.256

0.873

0.412

0.619

TRP1

0.364

0.327

0.445

0.486

0.192

0.844

0.383

TRP2

0.465

0.328

0.556

0.709

0.206

0.864

0.492

TRP3

0.442

0.504

0.415

0.383

0.498

0.793

0.66

TRP4

0.33

0.28

0.452

0.546

0.157

0.766

0.403

ER1

0.607

0.659

0.537

0.449

0.595

0.491

0.896

ER2

0.524

0.623

0.463

0.362

0.54

0.482

0.831

ER3

0.507

0.55

0.615

0.466

0.467

0.488

0.828

ER4

0.458

0.509

0.522

0.458

0.5

0.593

0.855

According to Fornell & Larcker (1981), discriminant validity may be shown by taking the "square root" of the

AVE of each latent variable (Fornell & Larcker, 1981). Each latent variable's "square root" of AVE should be

larger than the correlations between them.

Table 3: Fornell-Larcker Criterion

ICP

TRP

0.844

0.735

0.835

0.419

0.46

0.865

ICP

0.403

0.341

0.751

0.885

0.589

0.718

0.345

0.24

0.882

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TRP

0.495

0.445

0.573

0.652

0.329

0.818

0.616

0.688

0.627

0.509

0.617

0.6

0.853

The result indicates that discriminant validity is well established. From the table it can be seen that the square

root of AVE for each latent construct is greater than its correlation with all other constructs, which is the main

condition of discriminant validity in case of Fornell-Larcker Criterion.

Table 4 : Heterotrait-Monotrait Ratio (HTMT

ICP

TRP

0.838

0.474

0.521

ICP

0.455

0.387

0.855

0.675

0.825

0.393

0.263

TRP

0.574

0.514

0.662

0.758

0.373

0.701

0.784

0.709

0.577

0.706

0.697

In 2015, Henseler et al. put up the idea of a heterotrait-monotrait ratio (HTMT) association (Henseler &

Fassott, 2010). Henseler et al. (2010) suggested a cut-off value of 0.90. In this study all of the constructs'

HTMT values are below the .90 threshold that can be shown from table 4.

Structural Model

Higher order validity table/ construct:

Table 5: Higher order validity table:

HOC

LOC

Outer Loadings

Outer Weights

VIF

TMP

0.815

0.312

1.84

ICP

0.715

0.349

1.767

0.778

0.442

1.537

TRP

0.734

0.207

1.966

+ HOC=Higher order construct; ± LOC=Lower order construct; § VIF: Variance Inflation Factor

To see the validity and reliability of higher order value two values should be checked. They are the outer

loadings and outer weights. Here in this paper we can see that the outer loadings for all the paths are positive

and greater than .70. And the outer weights are also in between the threshold value, which indicated there is no

issue related to the higher order value of our model. And VIF value is less than 5, which means there is no

multicollinearity issue.

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R-Square Value

Table 6: R-Square Value

R Square

R Square Adjusted

TMP

0.553

0.552

0.445

0.444

0.647

0.644

In the absence of collinearity problem, Hair et al. (2019), state that one should proceed to examine the R

Square value of the endogenous construct (Hair et al., 2019). As stated in each endogenous component, R

Square quantifies variance, which is a measure of the model's predictive ability (Hair et al., 2019). R Square is

another term for the sample's analytical capacity (Ringle et al., 2009). Greater explanatory power is shown by

higher R Square values. There is a 0–1 range for the R Square. According to Chin (1998), there are three levels

of R square criteria: significant (0.67), moderate (0.33), and weak (0.19) (Chin, 1998). According to the data in

the table (Table-6), WC has a moderate R square value of 0.434, EE has a significant R square value of 0.726,

and ER has a moderate R square value of 0.571.

Hypothesis Testing

Path Coefficients (Direct Effect):

Table 7: Path Coefficients

Hypothesis

Path

Beta Value (β)

Standard Deviation

(STDEV)

T Statistics

P Values

Result

TMP -> EE

0.758

0.03

24.93

0.00***

Supported

TMP -> WC

0.664

0.054

12.2

0.00***

Supported

EE -> ER

0.275

0.042

6.576

0.00***

Supported

WC -> ER

0.231

0.058

3.952

0.00***

Supported

TMP -> ER

0.405

0.069

5.856

0.00***

Supported

*Significant at p < 0.05; ** significant at p < 0.005; *** significant at p < 0.001

The direct effects of the hypotheses are shown in table-7, along with the beta and the accompanying t-values,

which are important in the context of the two-tailed t-test. The t-values were obtained via bootstrapping with

500 resamples.

As displayed in the Table-7, the relationships between GHRM bundle practices (which are Green Training,

green reward & compensation, green employee involvement and green performance measurement) and EE and

WC were positive, hence supporting H1 and H2. Next the relationship between EE and ER and the relationship

between WC and ER were also positive, hence, supporting H3 & H4. H5 has also been proved as significant

relationship has been found between TMP and ER.

Total Effect

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Table 8: Total Effect

Hypothesis

Path

Original

Sample (O)

Standard Deviation

(STDEV)

T Statistics

(|O/STDEV|)

P Values

Result

TMP -> ER

0.767

0.029

26.787

0.00***

Supported

*Significant at p < 0.05; ** significant at p < 0.005; *** significant at p < 0.001

And from table 8 represents the path, t-statistics and P values for H5 keeping consideration the effect of

mediator. All hypotheses we constructed have been supported here.

Analysis of Mediating Effect:

Specific Indirect Effect

Table 9: Specific Indirect Effects

Hypothesis

Path

Beta Value (β)

Standard Deviation

(STDEV)

T Statistics

Values

Result

TMP -> EE -> ER

0.208

0.032

6.444

0.00

Supported

TMP -> WC -> ER

0.153

0.043

3.531

0.00

Supported

*Significant at p < 0.05; ** significant at p < 0.005; *** significant at p < 0.001

Mediation analysis was performed to assess the mediating role of EE and WC in the relationship between the

independent variables (TRP, TD, ICP, and CP) and the dependent variable (ER). The direct effect of TMP on

EE (β=0.758, t=24.93, p = 0.000) and EE & ER (β=0. 0.275, t=6.576, p = 0.00) is significant. The results

(Table-9) revealed a significant indirect effect of TMP on ER through EE (H11: β=.208, t=6.444, p = 0.000).

With the inclusion of the mediator (EE & WC) the total effect of TMP on ER is also significant (β=0.767,

t=26.787, p = 0.000). This shows a complementary partial mediating role EE in the relationship between TMP

and ER. Hence, H6 has been supported.

The direct effect of TMP on WC (β=0.664, t=12.2, p = 0.000) and WC & ER (β=0.418, t=3.952, p = 0.00) is

significant. The results (Table-9) revealed a significant indirect effect of TMP on ER through WC (H11:

β=0.153, t=3.531, p = 0.000). With the inclusion of the mediator the total effect of TMP on ER is also

significant (β=0.767, t=26.787, p = 0.000). This shows a complementary partial mediating role EE in the

relationship between TMP and ER. Hence, H7 has been supported.

DISCUSSION

All the hypotheses given in the context of this study are strongly supported by the results in this study with a

positive association between TMP and ER either directly or indirectly through mediators consisting of WC and

EE. In particular, H1 and H2 show that effective TMP, such as talent recruitment, training and development,

determination of crucial positions and compensation practices provide positive impact on ER. This follows

research done by Abdullahi et al. (2022) and Tanton (2007) who also noted that structured talent management

improves the desire of employees to perform and minimize turnover. The SMEs in Bangladesh are having

small resources yet the application of strategic TMP helps them in having a promised and competent labour

force.

H3 is supported as ER has positive correlation with EE, meaning that active staffs have an increased tendency

to stay. This observation backs up Payambarpour and Hooi (2015) who were highlighting that engagement,

creates emotional and cognitive attachment that curbs voluntary turnover. On the same note, H4 and H5

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indicate a positive influence of TMP on WC and WC on EE. These findings confirm Kontoghiorghes (2016)

that an organizational culture that is conducive mediates the effect of the HR practices on employee outcome,

including motivation and commitment.

The meditating consequence of WC (H6) and EE (H7) further highlights the importance of the mechanisms in

which TMP has critical influence on ER. SMEs that foster desirable culture at the workplace and motivate

workers through their engagement record higher retention results. This result builds on previous study by Sun

et al. (2007) and Jiang et al. (2012) which stressed the importance of mediating organizational factors e.g.

culture and engagement in enhancing the power of HR practices on retention. The findings also indicate that

the priority of TMP over resources can contribute to the HR interventions in a way that SMEs become

competitive and stable, proving that such solutions can be relevant even though designed to meet their needs in

the context of the developing economies.

Further, the study presents contextual evidence on Bangladesh which is a developing economy where SMEs

have specific challenges to meet like financial constraints, lack of talents and higher turnover. In contrast to the

previous studies on the developed countries context (Abdullahi et al., 2022; Kontoghiorghes, 2016), the current

study demonstrates that, even in restricted setting of SMEs, a combination of strategic TMP with favourable

culture and engagement procedures results in the significant improvement of retention. In combination, these

results corroborate the theoretical arguments supported by Social Exchange Theory, Resource-Based View,

and Job Demands Relative of Job Resources Theory because it is possible to conclude that investments in

human capital (and those on the work environment) will generate mutual benefits between employees and

companies.

Theoretical Implications

This research has a number of theoretical implications as it places Resource-Based View (RBV) at the core of

a development in explaining the concept of employee retention with reference to TMP in SMEs working

within a developing economy. Conventionally, RBV insists that competitive sustainable advantage occurs

within the organizational assets that are both valuable, rare, inimitable and non-substitutable (Barney, 1991).

Most of the previous studies have focused on physical or financial resources, or analyzed human capital in

resource endowed large firms. Comparatively, this paper shows that in the SME environment of Bangladesh,

TMP per se i.e., selective recruitment, systematic development, career planning, and equitable payment are

essential strategic assets. This increases the application of RBV by demonstrating that intangible HR practices

can be resource based drivers of retention and long term competitiveness despite resource limitation.

The second theoretical implication relates to how resources are converted to sustained advantage. RBV has

been accused of being too vague on how the linkages between resources and outcomes take place. The current

research considers this gap by empirically confirming the mediating effects of WC and EE. Both WC and EE

turn out to be intangible, firm-specific capabilities that reflect the value of TMP and enhance their retention

impacts. By so doing, the study narrows down the explanatory ability of RBV, and it is implied that human

capital resources are not enough unless they are incorporated in the cultural and psychological environment

that renders them inimitable and durable. Therefore, the results are relevant to the current theoretical

discussion of the mechanisms of resources activation and exploitation in organizations.

Third, the RBV contextualization in SMEs of a developing economy enhances its boundary conditions. RBV

has been criticized in many occasions because it assumes that resources are available in large quantities and

also because it ignores institutional and cultural limitations. This study demonstrates that, despite its small

resources, SMEs can transform comparatively small investments in TMP into long-term benefits by creating a

positive culture and an active workforce. This demonstrates that RBV is a flexible and useful model in various

organizational and national contexts, as well as shows that the channels through which resources provide

retention benefits is dependent on the context.

Collectively, this study is beneficial to RBV in the sense that, it does not just show that human capital is a

strategic resource, but rather that its worth depends upon cultural and engagement-based processes in resource-

constrained settings. It answers the question of why theory by demonstrating why RBV is a suitable frame to

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use to explain retention in SMEs as well as why intangible resources related to HR are relevant to competitive

advantage and that the context is the key determinant of how resources are brought to bear.

Practical Implications

The results of the research in question can be used to improve the employment retention of workers based on

TMP directly by SME managers, HR professionals, and policymakers in this sector. To begin with, the SMEs

need to understand that planned TMP (in terms of the recruitment of talent, fall and development, gaps

analysis, and remuneration policies) is directly related to employee retention. It is possible to control the

turnover and ensure the stable workforce of SMEs preventing the loss of employees and enhancing the

organization outcomes through the systematic application of these practices (Abdullahi et al., 2022; Tanton,

2007).

Second, the importance of developing an effective WC should be discussed. Sub-cultures within organizations

which promote open communication, appreciation and an understanding of convergence between

employee/organizational values engender a culture of participation and commitment. Starting to incorporate

engagement activities like opportunities to build a career, mentorship, and participatory decision-making

reinforces the TMP-Employee Retention connection (Payambarpour & Hooi, 2015; Kontoghiorghes, 2016).

Third, the paper points out those low-cost, high impact HR interventions can be applied even by resource-

constrained SMEs. Example cross-employee training, flexible work schedules, and rewards through

recognition are just some examples of ways to significantly increase engagement and retention without large

monetary costs. Technology-enabled solutions may also be used to optimize the efficiency and consistency in

HR functions through their ability to support elements of recruiting processes, performance tracking and

employee feedback.

Moreover, based on these findings, policymakers may develop supportive policies and incentives to SMEs that

would allow smaller companies to implement a structured approach to talent management, including

subsidized training, HR consultancy services and workforce training initiatives. The use of these insights

allows SMEs to gain some continuous competitive advantages by using human capital in its optimal form so as

to increase productivity, lower turnover costs and satisfaction levels of employees. Finally, the research

indicates that the direct involvement in evidence-based TMP and engagement-driven approaches may do not

only help employees but also increase organizational resilience, thereby, allowing SMEs to succeed and

survive in unfavourable economic conditions.

Limitations and Future Research Directions

Despite the above contributions, this study has a couple of methodical and contextual limitations that must be

taken into consideration during interpretation of findings. The first reason is that the study used a cross-

sectional design that measures employee perception at only one time. Though this method offers some useful

information regarding the correlation between TMP and WC, EE and ER, it restricts our capacity to test the

cause-and-effect relationships and the degree to which these connections change over time. The future research

directions may involve the application of longitudinal designs to measure temporal dynamics and to set up

firmer causal inferences.

Second, in context of the study, the research specifically considers SMEs in Bangladesh, specifically those in

manufacturing, services, trading and technology sectors. Even though the present context imparts specific

knowledge on small and medium-sized businesses in developing economies, it is still possible that the same

study is not generalizable to large corporations, multinational corporations, and SMEs in other countries with

dissimilar culture levels and regulatory practices. Industry differences across countries: Future study may

spread the model to other areas or assess cross-country context situations to test TMP impact strength in

various economies and business models.

Third, the identified was based on employee/manager self-reported surveys, which can give rise to social

desirability bias or perceptual distortion. In spite of ensuring confidentiality and anonymity, it is possible that

the respondents would give positive responses that would not actually identify true claims by organizations.

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One way that future studies could enhance the validity of a self-reported survey is to triangulate results with

data collected by an organization, HR reports, or observation. Moreover, the role of mediators was typically

central: Workplace Culture and Employee Engagement were included, but there was a lack of mediating and

moderating variables (various leadership’s styles, organizational climate or technological readiness) among

others. These factors could help understand mechanisms of TMP-induced retention in more detail. Finally, the

paper concentrated on generic TMP structures such as recruitment, training and development, compensation

and identification of critical positions. The next step in the research would be to focus on the role of niche

talent practices (i.e., digital HR interventions, performance-based incentives, and talent mobility programs) to

determine their subtle impact, on employee engagement and retention. In overcoming these limitations, later

research will be able to extend this study in an attempt to further deepen these theories, increase

generalizability, and come up with more practical findings useful to SMEs in rapidly-changing business

environments.

CONCLUSION

This study demonstrates that Talent Management Practices (TMP) represent a critical source of sustained

competitive advantage for SMEs when viewed through the lens of the Resource-Based View (RBV). By

showing that the strategic value of TMP is realized through intangible mechanisms such as workplace culture

and employee engagement, the research establishes that human capital is not merely a resource but a capability

whose impact depends on how it is embedded and enacted within organizational contexts. In doing so, the

study addresses longstanding critiques of RBV by evidencing its relevance in resource-constrained

environments and highlighting the contingent role of institutional and cultural conditions. Ultimately, the

findings strengthen RBV’s explanatory power by clarifying why intangible, people-based resources are central

to talent retention, and by demonstrating that even small-scale investments in human capital can yield durable

competitive advantages for SMEs in developing economies.

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