Chapter 2: Toward an Understanding of Strategic Human Resource Management in Entrepreneurial Firms: Opportunities for Research and Action

This chapter provides a framework to comprehend the impact of strategic human resource management in entrepreneurial organizations. As entrepreneurial firms face a multitude of challenges in today’s rapidly changing economy the chapter deviates from the often followed functional approach and takes a strategic approach to managing human resources in private entrepreneurial firms. In doing so, the chapter conducts an extensive review of literature from the fields of strategic human resource management and entrepreneurship and tries to elucidate the underlying mechanisms of the HR practices—firm performance relationship in an entrepreneurial context. In this regard, the importance of people management practices, employee competencies and behaviors, knowledge climate and entrepreneurial sophistication are highlighted, and the chapter endeavors to provide a preliminary framework that has the potential to provide direction for further research and knowledge creation.