Challenge accepted : A qualitative study on how small firms can manage human resources when growing

Abstract: Business growth has been a widely interesting topic among researchers throughout the years. Most research has emphasised growth as an outcome that considers different measures to growth, whereas the outcome of growth that reflects upon managing challenges when growing and growth as a process that refers to how firms adapt internally whilst growing have been much more neglected. As an organisation grows, human capital has been suggested as one of the most critical aspects to manage when firms need to develop knowledge, competencies, and skills beyond what already exists within the organisation. Small firms in comparison to their larger counterparts seldom have specific departments to manage human resources, which leaves room for interesting areas to understand how small firms can manage processes to develop human resources beyond those already existing as firms grow. As small firms grow and encounter various challenges in need of management, absorptive capacity considers means for managers to address growth challenges by realising the value of new and external knowledge to produce dynamic capabilities, which in turn enable firms to align resources to the changing environment of a growing organisation. Previous research highlights the need to develop a practical understanding of internal processes that managers apply when managing a wider range of competencies. The purpose of this study serves to create an understanding of how small firms that encounter growth challenges can manage human resources to develop necessary skills and competencies beyond existing means as organisations grow. To develop this understanding, this study develops a conceptual framework based upon human capital, absorptive capacity and dynamic capabilities with the guiding research question: How can small firms manage human resources when growing? Through a qualitative study with data collected through semi-structured interviews, this study concludes that small firms can manage human resources through various processes, in which organisational culture should serve as a foundation throughout the entire process of managing human resources. This study also concludes that as organisations grow, it is important to be aware of and question current processes to efficiently address challenges in changing environments. Furthermore, this study considers the importance of being an attractive firm and to manage human resources through means of defining a market to attract and acquire human resources when growing. With previous research highlighting the need to develop a more practical understanding of processes that managers utilise when managing a growing organisation, this study contributes to existing literature by emphasising the role of the manager throughout the process of managing human resources. The study also provides practical reasonings for small firms to remain efficient and survive in a market dominated by competition of larger organisations with financial resources to outcompete smaller and less established firms.