Entrepreneurial Satisfaction with HR Performance: What really matters to Entrepreneurs?

Mehdi Rajeb, Daniel M. Sabet

Abstract


Despite the clear potential of improved human resource management practices, many firms in Bangladesh, particularly small and medium sized firms, have failed to take advantage of best HRM practices and continue to rely on informal personal and network based approaches to attracting, training, and incentivizing personnel. In fact, more formalized human resource (HR) management processes entail transaction costs and their benefits are not guaranteed, particularly in Bangladeshi context where HRM processes are not the norm.  Provided this uncertainty, this research evaluates whether entrepreneurs in Bangladesh who use HR management approaches are more likely to be satisfied with their employees than those firms who use more informal personal and network based approaches. Hence, the study also attempts to identify key human resource factors behind entrepreneurial satisfaction with employee performance. To explain entrepreneurial satisfaction with HR performance, the study is build up based on several constructs including human resource management index (indicates the level of HR practices in an enterprise), hiring practices, use of network in obtaining HR personal, hiring support from professional firms, growth and profitability of the firm, firm size, location etc.

The study is based on Overcoming Business Challenges Survey of managing directors and chief executive officers of 536 firms in three industries: real estate development, information technology (IT), and furniture manufacturing in Bangladesh. The survey adopted stratified random sampling techniques to select a sample of 536 firms among 1231 members of Bangladesh Furniture Industry Owners Association (BFIOA), 1110 members of REHAB and 517 members of Bangladesh Association of Software and Information Services (BASIS). A structured interview questionnaire was developed, pretested and used to collect the data.  Through descriptive analysis and multivariate regression analysis the study has concluded that entrepreneurs who adopt HRM policies will be more likely to be satisfied with their employees than those who do not and entrepreneurs who use network and personal HR strategies will be less likely to be satisfied with their employees. The study also identified several factors i.e., HR policy index, personal network, hiring support from head hunting firms, growth and profitability and location that have significant affect on entrepreneurial satisfaction.


Keywords


Human Resource; Entrepreneurship; Network; Industry; Policy.

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