Development And Testing Of A Model For The Formalisation Of Human Resource (Hr) Practices In Family-Owned Accomodation Smes In South Africa

Abstract

This study sought to develop and test a model for the formalisation of human resource practices among family-owned accommodation Small and Medium-sized Enterprises (SMEs) in South Africa. This is against the background of extant literature indicating that (1) the family-owned accommodation SMEs have become work intensive and their success depends heavily on the proper management of the social and technical skills of employees, (2) human resource practices in SMEs in general are reactive and informal unlike those in larger companies, and (3) the calls by policy makers to formalise SMEs to widen the government tax bracket, create employment and redress the legacy of apartheid inequalities. Such calls have not been adequately addressed by previous studies that focused on drivers of formalising HR practices among SMEs using single and limited factors in individual studies. As a result, this study takes a holistic approach through a sustained exploration of how personal and environmental factors interact with selected factors that are critical in decision making as espoused by the Unified Theory of Acceptance and Use of Technology (UTAUT) model to influence the decision to formalise HR practices by owner-managers of family-owned accommodation SMEs in the Free State Province of South Africa. The selected factors are Effort Expectancy, Performance Expectancy, and Facilitating Conditions. Basing on the UTAUT model, an explanatory structural model depicting the proposed interaction was developed. Data was collected conveniently from a sample of 206 owner-managers of family-owned accommodation SMEs in the Free State Province of South Africa. The model was then tested using Structural Equation Modelling (SEM). The findings of the study indicate that the decision to formalise Human Resource practices in family-owned accommodation SMEs is driven by both the owner-manager’s personal characteristics and factors within the operating environment. Specific factors such as Availability of institutional support, Performance Expectancy, Effort expectancy and Facilitating conditions emerged as salient factors that drive the decision to formalise HR practices in family-owned accommodation SMEs. In turn, these factors are driven by the owner-manager’s Level of Education, SME Size and SME Location. Finally, the study contributed to the field in various ways. Theoretically, it adds on to the literature on decisions to formalise HR practices by adopting and modifying an existing model and testing it within the HR context of family-owned accommodation SMEs. Practically, the study provided insights into the drivers of the actual decision to formalise HR practices in family-owned accommodation SMEs. These drivers may be useful to HR practitioners and policy-makers in their designing of appropriate initiatives that will assist family-owned accommodation SMEs to formalise HR practices in South Africa and beyond.