The Perception of HRM Practices by Founders and by Non-Founders of Small Firms (Clinical Report‪)‬

INTRODUCTION The economy of the United States contains approximately 15 million business firms. Almost 98 percent of these firms employ less than 500 workers and are considered to be small businesses (Baumback, 1988). These smaller firms provide the economy with jobs, new products, and stability. However, these small businesses also have a high failure rate. More than 50 percent fail during the first five years of business life. These failures have a variety of causes, but the primary reasons are poor management and a lack of adequate resources (Peterson, Kozmetsky, and Ridgway, 1983). Gaskill, Van Auken, and Manning (1993) determined that the critical role of managing invades the entire process of running the firm, as managerial decisions affect the planning process, finances, HRM decisions, and decisions on growth. Previous research has shown that a human resource management (HRM) program can contribute to the solution of these common problems (Foulkes, 1980; Misa and Stein, 1983). The difficulties of attracting good employees and then managing them effectively and productively are two factors that small firm owners face. These problems and the contribution of HRM in solving them are discussed in the following section of the paper.