Chapter 5: Human Resource Management in Small and Medium-Sized Enterprises

2023 marks the 50th anniversary of the publication of E.F. Schumacher's classic treatise Small is beautiful: A study of economics if people mattered. While the argument has been critiqued and ideologically dissected in the intervening years, the book has proved remarkably prescient. Notably, it highlighted small enterprise as a, if not the, fundamental unit of analysis for the conduct of business. For Schumacher small firms were ‘growing’, ‘highly prosperous’ serving to ‘provide society with most of the really fruitful new developments’. Indeed, despite the perception of ‘inescapable necessity’ of gigantic organisations, Schumacher deftly noted that ‘as soon as great size has been created there is often a strenuous attempt to attain smallness within bigness’ (1973, p. 53). Second, Schumacher questioned the dominance of economic discourse founded exclusively on growth and profit, thereby illuminating a sustainability agenda and multi-stakeholder focus that is now all too familiar. According to Schumacher the ‘fateful error of our age’ is ‘our inability to recognise that the industrial system, with all its intellectual sophistication, consumes the very basis on which it has been erected’ (1973, p. 16). Perhaps unsurprisingly, Schumacher finds smalls units to be less harmful to the natural environment because, although more numerous, their individual force will always be relatively small. Equally, he argues that the dynamics of size positively impacts the community and employment relationship, enabling greater employee participation and autonomy, something that is lost once an enterprise exceeds a certain size threshold (1973, p. 221).