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HRM and
Human resource management and innovation
innovation in SMEs in SMEs
Ludivine Adla
Grenoble IAE Graduate School of Management, 1519
Grenoble Alpes University, Grenoble, France
Virginie Gallego-Roquelaure Received 6 September 2018
IAE Lyon School of Management, Lyon University, UJML3, Lyon, France, and Revised 15 January 2019
14 October 2019
Ludivine Calamel 28 October 2019
Accepted 2 November 2019
Grenoble Ecole de Management,
Université Grenoble Alpes (ComUE), Grenoble, France

Abstract
Purpose – The purpose of this paper is to discuss the relation between human resource management (HRM)
and innovation in small to medium size enterprises (SMEs) through gift/counter-gift exchanges.
Design/methodology/approach – Using the theory of the gift/counter-gift, the authors study the case of a
French SME, specifically, a technological innovation project developed from 2013 to 2016. The authors
structure the data and create a model using the Gioia method.
Findings – The results reveal that the logic of giving evolves in three key stages: freeing up gifts, mobilizing
gifts and rethinking gifts.
Originality/value – These stages highlight the importance of an enabling organizational environment, gift/
counter-gift relationships and the role of a number of HRM practices.
Keywords Innovation, Qualitative, Qualitative research, Human resource management (HRM),
Small to medium size enterprises (SME), Gift
Paper type Research paper

1. Introduction
A 2015 study (FNEGE Barometer) shows that innovation is one of the main concerns of
managers. They want to better encourage and organize innovation within their company.
A BPI (public investment bank) report states that “the research intensity of SMEs is still
significantly higher than that of other categories of companies.” Innovation can, moreover,
condition the success or survival of companies, particularly in small to medium size
enterprises (SMEs) (Walsworth, 2010). Our research focuses on SMEs as organizations
conducive to innovation (CIS, 2014)[1].
Recent work has linked human resource management (HRM) and innovation (Meacham
et al., 2017). The challenge of HRM seems all the more important in an SME context as human
resources have proven to be one of the main obstacles to innovation (Strobel and Kratzer, 2017;
Madrid-Guijarro et al., 2009). For example, the latter is linked to employees’ considerable
workload (Larsen and Lewis, 2007) or their lack of training and/or qualifications (Tourigny and
Le, 2004). Moreover, due to SMEs’ limited resources (De Massis et al., 2018), managers are not
always in a position to implement costly HRM practices such as the introduction of financial
incentives. In addition, HRM is generally informal and intuitive in these organizations. It is
based on interpersonal exchanges (Storey et al., 2010) and is often centered on the leader.
This is a form of discretionary HRM: through their personal characteristics, their network and
their strategic vision, the leader plays a key role in HRM (Galang and Osman, 2014).
In line with Laursen and Foss’s (2014) work, we have chosen to focus on these Personnel Review
Vol. 49 No. 8, 2020
mechanisms through Mauss’s (1954) theory of gift/counter-gift. This theory is particularly pp. 1519-1535
well adapted to the context of SMEs. Given the many informal logics they contain (Volery © Emerald Publishing Limited
0048-3486
and Mazzarol, 2015), SMEs seem to constitute a particularly favorable environment for the DOI 10.1108/PR-09-2018-0328
PR exchange of gift/counter gift between actors; proximity, which characterizes SMEs,
49,8 encourages the development of strong relationships between its various members.
Moreover, innovation, based on a collective and interactive process, results from exchanges
of gift/counter-gift between actors (Alter, 2009). Therefore, suitable HRM policies need to be
put in place to encourage an exchange between actors (Caillé and Grésy, 2014) toward the
common objective. It should be noted that while HRM may have a strategic dimension in
1520 SMEs, it, due to its informal nature, it often remains based on mutual adjustments
(Wapshott and Mallett, 2015).
We define a gift as an interested and consented to gesture that is part of a relationship
between actors and generates mutual debt. A gift can take the following forms: support,
time, information, knowledge, advice, etc. It should be noted that this form of exchange can
follow both vertical and horizontal paths (Caillé and Grésy, 2014), i.e. between employees
and the manager or among employees.
The current paper aims to answer the following main research question:
RQ1. How does the relationship between HRM and innovation in SMEs evolve through
gifts/counter-gifts?
This question is answered through two sub-questions:
RQ1a. What are the gift/counter-gift trajectories that link HRM and innovation?
RQ1b. What are the effects of gift/counter-gift exchanges on the relationship between
HRM and SME innovation?
As part of a qualitative study, we have chosen to focus on a French SME that has developed a
technological innovation project. The results reveal that the gift logic is articulated in a process-
based way, through three key steps: freeing up gifts, mobilizing gifts and rethinking gifts.
In the first part of this paper, we discuss the literature on the existing links between HRM
and innovation in SMEs, through the gift/counter-gift theory. In a second part, we analyze the
case of an SME deploying an innovative project, and, in the last part, we discuss the results.

2. Literature review
The relationship between HRM and innovation in SMEs
Innovation can be defined as “an iterative process initiated by the perception of a new
market and/or new service opportunity for a technology-based invention which leads to
development, production, and marketing tasks striving for the commercial success of the
invention” (Garcia and Calantone, 2002, p. 112). The various stages of innovation are subject
to several internal and external contextual factors. These factors are linked to the specific
characteristics of SMEs, such as strong proximity, staff versatility and organizational
flexibility and they can act as either levers for or obstacles to innovation. The innovation
strategy of SMEs is most often of an emerging nature (De Jong and Marsili, 2006). However,
leaders that adopt a strategy of innovation that is both formalized and planned obtain better
results (Fréchet and Goy, 2017).
SMEs’ weaknesses in terms of human resources have been identified as a major obstacle,
specifically the lack of training or qualifications of employees working within this type of
structure (Madrid-Guijarro et al., 2009), managers’ attitudes toward risk and change
(Madrid-Guijarro et al., 2009) and the lack of employees’ expertise (Hewitt-Dundas, 2006). As
a result, managers are led to question their HRM organization when they want to drive
innovation within their organization.
In order to understand the relationship between innovation and HRM in SMEs, we
consider the specificities of HRM practices in this context: we are interested in formal or
informal practices that relate to the implementation of HRM activities (recruitment, training,
communication, etc.). In SME contexts, different perspectives on HRM are available in the HRM and
literature; on the one hand, HRM is said to be centered on the leader (Lai et al., 2016) and on innovation
the other, it can be more relational (Psychogios et al., 2016). Below, we discuss each in SMEs
perspective in turn.
In the first approach, HRM practices are generally informal and focused on the leader
(Lai et al., 2016). Recruitment is most often carried out by word of mouth, using the leader’s
personal and professional networks ( Jack et al., 2006). The result is a relatively arbitrary 1521
career advancement, solely at the leader’s decision. Finally, it should be noted that, like other
HRM practices, evaluation is subjective and “on-the-job” training and tutoring are generally
preferred. The compensation policy is discretionary: SMEs do not always have
compensation grids (Wapshott and Mallett, 2015). As a result, bonuses are awarded at
the executive’s discretion. This leader-centric perspective reflects informal and arbitrary
HRM practices in view of the central role played by the manager, whose decisions are
essentially based on subjective criteria.
Paradoxically, in the second perspective, researchers stress that the informal nature of
HRM practices favors SME employees’ strong commitment to the company’s project
(Psychogios et al., 2016). This results in healthier relationships between employees and
managers (Psychogios et al., 2016). Wage earners thus benefit from better quality
employment and are more involved in decision making (Tsai et al., 2007). Informal HRM is
commonly found in SME contexts (Lai et al., 2016). This HRM is sometimes characterized by
gift/counter-gift exchanges that allow co-construction (Adla and Gallego-Roquelaure, 2019).
This involves, for example, developing a document summarizing the different HRM
practices and the values of the organization. However, Psychogios et al. (2016, p. 322) show
that “the degree of formality of HRM depends on the three key factors: the geographic
operation of SMEs (international vs local range of operations), the sector (manufacturing vs
services and retail) and organizational size (large vs small).”
By deploying innovation-oriented practices, SME managers can transform their HRM
into a real lever (Curado, 2018; De Massis et al., 2018). Hayton (2003) showed that HRM
supports innovation strategy when practices encourage collaboration, risk taking and
experimentation, among other things. Training also acts as a lever for innovation by
developing employees’ skills (Antonioli and DellaTorre, 2016; Sheehan et al., 2014).
Beyond the HRM practices that drive innovation, Curado (2018) pointed to the trust
relationship between the company’s various actors, highlighting the exchanges and
interpersonal interactions on which a number of innovation-oriented HRM practices are based.
However, adopting a practice-centered approach is not sufficient to understand this
phenomenon in depth as these practices vary from one SME to the next. Thus, the
practice-based approach still offers a simplistic view and a descriptive analysis of the existing
links between HRM and innovation. Because they are based on interpersonal exchanges, some
HRM practices also seem to be part of a relational perspective that has yet to be studied. While
previous work has begun to establish a dialogue between HRM and innovation, many
questions remain (Shipton et al., 2017). Indeed, the literature review previously carried out
allowed us to observe that the mechanisms linking these two elements are still largely
unknown (Laursen and Foss, 2014), in particular when it comes to the relational dimension in
SMEs. In the context of SMEs, relationships are essential and contribute to the evolution of
HRM and innovation. In order to understand the articulation between HRM and innovation in
SMEs, we mobilize the gift/counter-gift concept to carry out a micro-analysis of the social
processes that are at play and the relational mechanisms that are being triggered.

The gift/counter-gift mechanism as a way to connect HRM and innovation in SME

Mauss (1925) has suggested that the gift/counter-gift mechanism is a sequential process in
three stages: giving, receiving and giving back. This cycle begins when one of the actors
PR makes a gift: for the donor, this gesture entails sacrificing part of the resources he or she
49,8 owns (Mauss, 1954). Giving a gift is an action all concerned agree on, but it is nevertheless
uncertain, since no return is guaranteed. When the recipient receives the gift, two options
are available: accept it or refuse it. If the individual accepts it, they will in turn make a gift
to preserve the relationship. This counter-gift, deferred in time, is not the subject of any
planning. Moreover, it complies with a standard of reciprocity and not with an equivalence
1522 principle: the exchange is intended to be fair. Alter (2009) stresses that reciprocity is not
only between two individuals but between the individual and the community; it therefore
benefits a third party, who may be related to a project, a group or a company, among
others. This is referred to as generalized reciprocity. A new dynamic of giving, based on
the same ternary cycle, is set in motion. Caillé and Grésy (2014, p. 157) also remind
us that “it is not the one we are going to give back to, but another will benefit for a reward
from.” This theory demonstrates the complexity of relationships, so specific to the SME
context. “Innovation means being able to cooperate, to mobilize one’s own resources, but
also those of colleagues” (Alter, 2011, p. 8). The SME manager is therefore led to create
social links and ultimately to engage in a logic of gift/counter-gift to develop the
company’s innovation project.
The donor feels pressured by a plurality of contingency factors. This idea is in line with
Mauss’s (1954) concept of “total social fact,” which calls for consideration of the context in
which the exchange is embedded. The various internal and external contingency factors
cannot be overlooked with regard to the specific features of the structure, the
interdependence of multiple spheres and the permeability of organizational boundaries.
Unlike the theory of social exchange (Blau, 1964) and contrary to the psychological contract
(Delobbe et al., 2016), the gift/counter-gift theory offers more opportunities to consider the
context in which exchanges take place.
This theoretical foundation is relevant when trying to understand the relationship
between HRM and innovation in SMEs. This type of structure is characterized by several
specific features (Volery and Mazzarol, 2015): an informal management mode, strong
proximity or the presence of strong relationships. We choose to approach innovation as a
process upon which levers and obstacles act. The literature review revealed that HRM is
one of these levers and obstacles. In SMEs, HRM is often intuitive and arbitrary (Lai et al.,
2016). More specifically, it is based on mutual adjustments and informal exchanges, so we
have chosen to focus on both formal and informal SME practices. In addition, Psychogios
et al. (2016) have recently shown informal HRM enables employees to be more involved in
the strategic projects carried out by the company. They also highlighted the key role
played by the social and relational dimension within it, which leads us to propose a
relational perspective based on the theory of gift/counter-gift (Mauss, 1925); indeed, it
provides insight into the value of social ties between individuals. To mobilize this theory,
we have adopted three concepts: total social fact (Mauss, 1954), the logic of gift and
generalized reciprocity. Finally, innovation results from gift/counter-gift exchanges
between actors (Alter, 2009). Appropriate HRM practices need to be put in place to
facilitate these gift/counter-gift exchanges.
Figure 1 models the conceptual framework used.
This theoretical foundation provides for a conceptualization path that enables
us to better understand the mechanisms underlying the relationship between
HRM and innovation. The literature review shows that the literature has essentially
been focused on practices and tools. Previous empirical developments have not fully
explained their effects on HRM (Laursen and Foss, 2014). While HRM practices provide
an interesting first entry point, we delve deeper into the reflection by mobilizing the
gift/counter-gift theory, in order to observe the relationship between HRM and innovation
from a new angle.
 HRM and
Human innovation
SME
Innovation Resource in SMEs
Management
Gift/counter-
gift
relationships
1523
Total social
Levers fact total Formal
The logic of
Obstacles gift Informal
Generalized
reciprocity
Figure 1.
Conceptual framework

3. Research methodology
Context of the study
Based on the meaning actors apply to their shared experience, the objective of this work is to
identify gift/counter-gift relationships to link innovation and HRM to SMEs. From this
perspective, we have opted to conduct qualitative research in accordance with the vast
majority of empirical work conducted on the basis of this theory (Berthoin Antal and
Richebé, 2009). The systemic approach states that, since it highlights exchanges between
actors, the gift/counter-gift theory needs to be studied through a qualitative approach.
Following Gehman et al. (2018), the case study approach is preferable for two reasons: it
offers the possibility of carrying out an in-depth analysis of a phenomenon and it makes it
possible to account for the interrelation between the phenomenon and its context. Yin (2012)
emphasizes that it is appropriate for answering research questions starting with “why” and
“how,” where the researcher is not able to control events.
We based our choice for the SME to be studied on several criteria:
• Size: to better understand HRM issues, we opted for a workforce of between 50 and
100 employees. From 50 employees on, an SME starts to structure its HRM, as it
realizes it is likely to generate organizational difficulties. However, once a company
has more than 100 employees, their intrinsic characteristics evolve and come closer to
those of medium-sized companies, which could distort the data.
• The nature and degree of innovation: the firm had to have engaged in at least one
incremental technological innovation in the last three years.
We began by identifying the SMEs that correspond to the selection criteria. The company
had to be an SME according to the definition of the European Commission (2003)[2] and
have a turnover of less than €50m, have less than 250 employees, and be independent.
Then, we used the Factiva database to find press articles about pre-selected SMEs. We
browsed the websites of these SMEs to determine how innovative they are. Different sources
of data helped us to identify the SME Geom. This SME is an “emblematic” case (Yin, 2012)
since exchanges are ubiquitous and HRM remains informal. Geom was founded in 1954,
initially as a family surveying firm. In 1961, the company became the first one in its sector to
integrate activities such as photogrammetry. Geom’s founder then handed the company
over to his son, Nathan, in 1987. The latter opted for the implementation of a strategy aimed
PR at diversifying services by proposing topographic survey applications, both for land and for
49,8 air, before extending them to the maritime domain. This strategy caused it to review its
articles of association and to incorporate as an SAS (French simplified stock company) in
2014. That same year, as he was approaching retirement, Nathan decided to transfer the
company to Julien, one of his employees, while remaining a shareholder and taking part in
all decisions. In total, 76 employees work in this SME. Its main activity now is geometry,
1524 topography and photogrammetry. It has a turnover of €6.5m and relies mainly on the
managing director and an HR manager to handle its human resources management.
As the relationship between gift and counter-gift between actors is particularly
difficult to understand at the organizational level, we focused on an innovation project
running from 2013 to 2016, in order to understand the logic of gift/counter-gift. The
temporal delimitation of the project is based on the reconstruction of the different project
stages, defined on the basis of interviewed actors’ perceptions and associating it with the
following phases[3]: initiation, planning, early stages of execution, execution, final stages
of execution and closure (Calabretta et al., 2017). Even though phases overlap and
are difficult to identify, based on actors’ perceptions, we retained the initial phase, the
execution phase and the closing phase.
The project involved the development of software designed to make the data processing
chain more reliable. It was focused on modeling soil uncertainty and enhancing data, with a
view to developing applications and facilitating tool navigation while assessing the risks
associated with rock falls and floods, using software containing a confidence indicator.
In other words, the development and deployment of this new software were similar to a
technological innovation. In this framework, Geom collaborated with several partners,
including the SME Math, which played a key role. Math was founded in 2003. It specializes
in data modeling through applied mathematics. It applies its skills to improve the products
of its customers, which include banks, analytical laboratories and car manufacturers. It has
a 32-strong workforce, mainly research engineers and doctors, who develop innovative,
tailor-made techniques positioned at the intersection of information technology and
mathematics. We deem it important to specify these two SMEs did not know each other
before the beginning of the innovation project. They were put in contact by a common
acquaintance, to meet Geom’s company manager’s need.
The study allowed us to identify the intra-organizational and inter-organizational
trajectories of gift/counter-gift exchanges. However, we focus this paper on intra-organizational
trajectories; verbatim reports from external partners are secondary data.

Data collection
Following Gehman et al.’s (2018) recommendation, we diversified our collection methods,
using semi-structured interviews, observations and documentary analysis. In the interviews,
we asked targeted questions, but nevertheless remained open and general enough to allow the
interviewee to express themselves and, hence, us to collect rich information.
In order to understand the evolution of HRM and innovation in the company, 17
retrospective interviews (Table I) were analyzed (Calabretta et al., 2017) over three time
periods. These interviews were retrospective because the project had officially finished
when we interviewed the actors. To offset the retrospective bias, we relied on the innovation
project phases developed by Calabretta et al. (2017). Our goal was to guide respondents in
reconstructing their lived experience (Miles et al., 2013). In total, 11 interviews with internal
operators were conducted in 2016. The early results led us to interview five outside
operators in 2017 (Table I). Interviews were conducted using three interview guides[4]:
(1) For executive supervisors: the company and its environment, the progress of the
innovation project and HRM.
2016 Interviews with senior Leader
HRM and
management Director General innovation
Head of Lidar in SMEs
Director of Topography
Interviews with Homo Photogrammetry Manager
donatorsa Business manager
Engineer Lidar
Human Resources Officer 1525
Head of Topography
CAD Manager
Photogrammeter Technician
Observations Non-participating observation Day, Intermediate feedback
b
Documents 2016 Activity Report, Sector Study and 2015 Social Audit social 2015
2017 Interviews with external Joint Association: General Delegate
partners Research Laboratory: Research Engineer
Technology Platform: Research Engineer
Innovation Partner (SME): Co-founder
Institutional Partner: R&D Project manager
Observations Collective feedback with all SMES studied
2018 Interview Leader
Notes: aHomo donators are people who are part of a gift/counter-gift relationship and are involved in the
innovation project being studied; bthirteen internal documents were consulted, but only three are mobilized in Table I.
this paper Data collection phase

(2) For homo donators: the company and its environment, the development of the
innovation project and HRM.
(3) For outside partners: the organization and its relationship with the Geom company,
the progress of the innovation project and Geom’s HRM.
All interviews were recorded and transcribed in full. Interviews lasted between 40 min and
2 h and 30 min. A summary sheet of the interview was sent and validated by each
respondent. We wanted to meet the director again in 2018, in order to verify a number of
issues by cross-checking his own perceptions.

Data analysis
With a comprehensive aim in mind, we carried out a thematic coding of our empirical
material, following Gioia et al.’s (2013) methodology. It permits us both to operationalize a
complex phenomenon by documenting its richness and to study the organization’s
dynamics (Gehman et al., 2018). Proponents of this method argue it is essential to focus on
concepts that convey meaning in order to bring out new constructs (Gioia et al., 2013). The
Gioia method seemed relevant to us, because it makes it possible to carry out a process-type
and dynamic analysis while taking contextual peculiarities into account; in this sense, it is
consistent with the main concepts mobilized from the gift/counter-gift theory (gift logic, total
social fact and generalized reciprocity). In keeping with this approach, first-order coding
emerged inductively from the field. The rise in abstraction specific to Gioia et al.’s (2013)
approach has been the subject of several back and forth feedbacks between theory and the
field, in an abductive logic.
Figure 1 shows how we went from 22 first-order codes to nine second-order themes, and
finally to three aggregate dimensions.
We define each of our three aggregate dimensions as follows: the release of
gifts refers to the different levers that encourage their circulation among SME
actors; the mobilization of gifts refers to the involvement of actors in the innovation
PR project by the manager. This second step aims to combine previously released gifts in
49,8 order to achieve the defined objective. After capitalizing on the experience gained during
or after the project’s closure, management staff revisits gifts to maintain this very specific
type of exchange.
We also define our three main second-order themes. This SME’s organizational context
illustrates to Mauss’s concept of total social reality. In other words, it has to do with the
1526 multitude of spheres (economic, social, etc.) in which gifts are exchanged. Intense social
ties correspond to the privileged relationships established between the leader and a
number of collaborators participating in innovation projects, and state to the exchange in
the gift/counter-gift theory. The gift/counter-gift relationships refer to the various
exchanges, i.e. the logic of gifts SME actors take part in. They can follow a vertical
trajectory and thus involve the manager and employees or they can follow a horizontal
dynamic, leading to exchanges between employees. By HRM practices we mean those
practices acting as innovation drivers that are mobilized and evolve throughout the
innovation process.
In accordance with this method, our first-order concepts emerged inductively from the
field. Then, due to the limited number of first-order concepts imposed by the method, we
performed more deductive coding to expand the predefined categories. As an illustration,
returning to the literature allowed us to bring out second-order concepts relating to the
favorable organizational context. Conversely, in other cases, the comparison of our empirical
data with existing work revealed aspects that have not yet been studied in the literature and,
as such, constitute real theoretical contributions. This is for example the “Combined vertical
and horizontal gift/counter-gift relationships.”
Our grid therefore combines dimensions from our theoretical framework as well as new
dimensions. Once it was built around three dimensions FMR: freeing up gifts, mobilizing
gifts and rethinking gifts (Figure 2). We proceeded to our systematic coding, in Microsoft
Word format, of all the data collected (leading to a 16,120-word file, structured according
to our grid).

4. Findings
To present our findings, we incorporate what Gioia et al. (2013) call “power quotes” verbatim
in the body of the text. In order to trace the process of the innovation project of Geom, we
have restored the history by identifying three phases (Figure 3).

Freeing up gifts in the initial phase

Geom’s leader, a highly inquisitive engineer and topographer with a PhD, pioneered an
enabling organizational environment that fosters innovation. When he does not have the
necessary skills to implement his innovation project, he makes the most of his connections
with the outside environment by building trusting relationships with innovation partners,
such as the Math leader. We call this “releasing the leader’s gift,” since the leader decides to
seize an opportunity in his environment to carry out his project by submitting an idea
to Math’s leader. Geom’s leader chose to associate with the project researchers from a
university laboratory. Collaborating with outside partners allowed Geom’s leader to
translate his idea into a project that was consistent with the company’s strategy during the
initial phase.
Such collaboration ultimately enabled Geom to introduce a new device into the
company’s processing chain and to improve the quality of the services provided in parallel:
I didn’t know Geom before the project was set up […] I don’t think I was on the team initially […]
Actually, it’s a network, it’s a person who knows Geom and who knew Math who proposed
that we set up a project together linked to Nathan’s need which got all this started! As
 - Challenges regarding the leader’s role HRM and
- Connection to the external environment Conducive Context innovation
- Consistency of the project with the strategy
in SMEs
- Trust relationship Freeing
Identified vertical gift/counter-gift
- Inventory of employees’ gifts up gifts
relationships
- Previous innovation commitment
- Strategic employment management 1527
- Valuation development Executed HRM practices
- Modes of information exchange

- Limited resources Changing Context

- Mutual enrichment with the partner(s)

- Perception of past innovation projects Combined vertical and horizontal Mobilising

- Adherence to the project gift/counter-gift gifts

- Soliciting sharing ideas

- Use of teamwork Deployed HRM practices
- Valuation development

- External environment pressures

Tension Context

- Lack of recognition Deteriorated vertical and

- Lack of incentive Rethinking
horizontal gift/counter-gift
- Loss of meaning gifts
relationships
- Exhaustion of employees
- Strengthening of support
Transformed HRM practices
Figure 2.
Structuring the case
study data
Source: Adapted from Gioia et al. (2013)

Initiation Execution Closure

(February 2013 to (February 2014 to (August 2015 to
January 2014) July 2015) February 2016)

Context Conducive Evolution Tension

Gift/counter-gift Identified vertical Combined vertical Deteriorated vertical and
relationships gift/counter-gift and horizontal horizontal gift/counter-
relationships gift/counter-gift gift relationships
relationships
Executed HRM Deployed HRM Transformed
HRM practices practices HRM practices
Figure 3.
Innovation project:
three phases

our leader said, it could open new doors for us, such as a breaking into a new market […].
(Innovation Partner)
The leader also relied on the privileged relationships established with his collaborators:
he expected them to commit totally to the innovation project. The main actors
PR involved in innovation had a long history with the company and most of them had only
49,8 known this company:
We have all been here for a long time, between 10 and 30 years, at least. (Photogrammeter
Technician)

The trust relationship he had built allowed the manager to better identify the stock of gifts
1528 made by employees. Their expertise on past innovation projects, for example their previous
adherence to innovation, was an asset for the director. At the same time, some of the HRM
practices that were used acted as levers of innovation through the relationships established
between actors. Some of which are perceived as forms of gifts given by and for employees,
such as time spent in training.
During the initial phase of the innovation project, strategic employment management
was implemented: in view of his needs, the manager recruited an employee on a
fixed-term contract (CDD in French) because of his specific skills, high qualification level and
agile profile:
Alexis was meant to be there for some time and he worked in the Lidar department; he is an
engineer. He tried to develop techniques and tools. (Human Resources Manager)

The development of value enhancement is a lever for innovation: the manager used his
privileged relationships with some of his employees to detect the skills needed to carry
out his project:
The drone we had built needed to be maintained, so we needed the relevant skills […] We identified
in the group someone who, at home, was into model aircraft, as a hobby! […] He was interested, we
offered him the opportunity, he agreed. (Director of Topography)

Finally, the information exchange methods already in place played a decisive role in the
development of social links and, ultimately, in innovation. The general manager did
not deploy any communication tools, because the director preferred taking advantage of
informal occasions such as lunch times:
I think communication happens between people more often when they eat lunch together or
during the coffee break, that’s where they talk about work, see a little bit of what the others are
doing and that’s how relationships work! These are times when we can also talk about
innovation. (Leader)

The leader was the actor that initiated the release of gifts by seizing an opportunity in his
environment, based on inter-organizational relations and dealings with the organization’s
employees. He therefore created a context conducive to the gift/counter-gift exchange during
the initial phase of the project, by exploiting a number of HRM practices, which proved to be
innovation levers.

Mobilizing gifts in the execution phase

During the project implementation phase, limited resources were a barrier to innovation.
Indeed, the absence of an R&D department led Geom’s manager to rely on employees
managing production in parallel:
It’s still time consuming for our people! We don’t have any staff dedicated to R&D, innovation, who
are only paid for that! They are already overworked as it is […]. (Leader)

A favorable organizational context tends to be transformed by generating links among

employees. Geom members have kept positive memories of their involvement in past
innovation projects, as these previous projects have allowed the company to strengthen its
relationships with various members of its ecosystem. They have also acquired new HRM and
knowledge and skills in this context: innovation
The construction of the drone was a pretty neat project! Personally, I discovered a lot of in SMEs
assembly-related things at the technical level! It also enabled me to get to know some people better.
(Director of Topography)
Employees’ perception of past innovation projects also affected their commitment to the new
one; it shaped their gifts and while they thought about the likely benefits for the company,
1529
their gifts were mainly based on personal motivations.
During this phase and as part of the request for idea sharing, exchanges took place
informally, because no space was dedicated to idea sharing, with the exception of meetings
with external partners. Some employees’ gifts were more spontaneous, following the
presentation of the common objective by the manager:
Nathan is a person we can trust, we can express ourselves freely and give him our opinion, no
worries! I think it is important because the project would not have progressed well otherwise […].
(Business Manager)
I mostly worked with Alexis, who was recruited for this, but he’s not here today. I relied on Raphael
and Gabriel for the acquisition too. It’s a team effort, it’s important to say it: I could never have done
it by myself!. (Leader, Senior Management)
In addition, members of the management team chose to empower employees. The CEO and
the manager wanted all employees to have enough freedom to experiment by testing new
ideas or tinkering with new tools. The trust and autonomy granted them encouraged
employees to take initiatives:
I find we have a lot of freedom and even more so in innovation projects! We were entrusted with the
work follow-up. We were very autonomous in the project with Math, even more than usual.
(Photogrammetry Manager)
When mobilizing gifts during the innovation project execution phase, exchanges of gifts
between employees and with management took place, such as the time given by employees
to work on the innovation project or the ideas exchanged between employees, which
constitute gifts.

Rethinking gifts at the end of the project

The SME is now taking a new turn: after having long opted for a strategy of differentiation
by quality and diversification by services, Geom’s players have recently come to realize
market transformations require a strategy of differentiation by costs. In addition, while the
SME’s clients have had to bear a decrease in their budget allocation, they have also
developed more in-depth knowledge of the business. In order to meet their requirements, the
SME must therefore equip itself with new, more powerful and better-suited IT tools:
Our customers are more being supported regarding the service granted them; then, they generally
have very specific and sophisticated requests […] Today, we have to evolve technologically […]
I hope this project will help us […]. (CAD Manager)
Employees mentioned a lack of recognition from senior management at the end of the
innovation project. More precisely, they were disappointed by the absence of spontaneous
rewards such as promotions or bonuses:
In this company, salary increases are not offered, we need to ask for them! If we don’t insist again
and again, we’re not even sure that it’ll work […] That’s how it works! Honestly, we’re getting fed
up with it all […] It’s also less rewarding to see that they don’t think of us spontaneously […]
Especially after big projects like this […]. (Business Manager)
PR For his part, the CEO thinks recognition does not necessarily have to be expressed by
49,8 way of financial rewards, but rather in the way management mode is established, the
quality of the relationship established with employees and the working environment
offered them:
We still have a benevolent, paternalistic management, at least! We are rather considerate with
collaborators, there is not too much pressure, we have fun and we enjoy nice moments
1530 together; I daresay this compensates for the fact that bonuses are not systematically offered to
people who participate in innovation, for example […] Recognition is not necessarily monetary.
(Director General)

Beyond the low gratitude level, some actors were also disappointed about the lack of
incentives for innovation throughout the project. Indeed, the personal interests of some
employees’ who had been working at Geom for several years, increasingly take precedence
over the company’s interest:
Then again, I’m an employee, too, and I’d love to be boosted from time to time! Getting more
flexibility in terms of compensation and gratification still makes it possible to break the monotony
and be motivated to commit. The more incentives I get, the more committed I become, like everyone
else! These are things that, after 10 years on the job – I’m telling you honestly – do motivate me.
(Photogrammetry Manager)

The deterioration of the gift/counter-gift relationship is also related to some employees in

the SME feeling things have become meaningless. The strategic vision is not sufficiently
understood by all Geom stakeholders. Due to a lack of support and exchange,
the innovation project has generated frustrations that have begun to weaken the
strong social bonds that were built. Some senior managers acknowledge the presence of
communication gaps:
We need to impose exchange occasions to give meaning to what we are doing. In terms of
remuneration and gratification, it still makes it possible to break the monotony, but we have a little
trouble doing so […] We see that some feel at a loss, somewhat, they didn’t even know
we are conducting an innovation project […] Innovation is a bit of a mess in some places […]
(Director of Topography)

At the end of this project, the SME’s employees were also running out of steam. This
essentially resulted from the build-up of all the innovation projects the company had carried
out, which employees had over-invested themselves in. While employees have so far not
made their gifts grudgingly, it should be noted that some of them are gradually beginning to
adjust their efforts:
I gather that, among employees, there are quite a few young people, overall. There are quite a few
thirty-somethings in LIDAR, in pictures, who have that kind of spirit; they act in a cowboy manner
sometimes or they don’t begrudge the hours they put in! They are driven by innovation and
challenge, I mean. But maybe I’ll dry up too, after a while, so we’ve got to be careful! I’m in a pivotal
period: the little craziness of early beginnings, OK, that’s it, I get it! I’m beginning to spread my
wings, I’m no longer so keen about that […] And, I’m not the only one, mind you […].
(Photogrammetry manager)

The innovation that has been developed has led to the implementation of new
training courses designed to facilitate employees’ appropriation of the software. Learning is
again done through informal exchanges. Internal collaborators, since they have mastered
the developed software, share their knowledge and the information necessary to use the tool:
When there is innovation, training necessarily follows! That’s what will happen with the indicator
developed with Math! It will be done internally, with those who already have the hang of it.
(Director General)
During the project closing phase, the employees who committed a lot refused to carry on HRM and
because they were very disappointed by the absence of counter-gifts as recognition of their innovation
work. In this tense context, the manager must rethink gifts by proposing new HRM in SMEs
practices and innovation levers that are likely to look like counter-gifts in employees’ eyes.

5. Theoretical contributions
This study provides clear implications for research and practice by developing a framework 1531
in which the gift/counter-gift trajectories make it possible to understand the link between
innovation and HRM in the SME context.
Contrary to prior research on this theme (Laursen and Foss, 2014; Curado, 2018), this
study shows the importance of the relational dimension in linking HRM and SME
innovation, which we conceptualize through the exchange of gift/counter-gift.
The originality of our study is the proposal of the FMR model based on three stages:
freeing up gifts, mobilizing gifts and rethinking gifts. These different phases present both
the evolution of the HRM (executed, deployed and transformed) and the context that
gradually becomes a source of tension. In fact, during the various stages, the gift/counter-
gift trajectories encourage innovation or slow it down and reveal the evolving role of HRM.
We respond to a gap identified by Seeck and Diehl (2017).
As Volery and Mazzarol (2015) have pointed out, vertical trajectories are ubiquitous
because of the centralization of the leader’s power and the low number of hierarchical levels.
Power games between employees and managers generate a break in the chain of gifts and
create an imbalance. Employees feel obliged to accept gifts and therefore to commit. They
feel frustrated when the expected counter-gifts do not meet their expectations (Alter, 2009).
These frustrations will then create tension. This research thus opens up new ways of
understanding innovation in SMEs by illustrating the appearance of relational obstacles.
More specifically, this study highlights the key role of employees. Like Shahzad et al. (2019),
our research shows that innovation must be based on a mechanism that gives employees the
opportunity to put their ideas forward and contribute their knowledge. The organization
should not ignore employees and their frustrations.
In addition, HRM can be a way of giving employees: some HRM practices can be
perceived as forms of gifts by employees in the image of training (Adla and
Gallego-Roquelaure, 2019). They act strongly on the behavior adopted by the
collaborators and thus make it possible to release gifts. Other relationships follow a
horizontal trajectory and are carried out between colleagues (Caillé and Grésy, 2014).
Our results emphasize that all these dynamics are built and organized around the intense
social bond that unites the SME manager with some of his or her employees. It is based on
creating and developing a relationship of trust, the personal characteristics of employees
and their previous commitment to innovation. This result echoes Alter’s work, which states
that gifts can take a variety of forms, including trust.
Our research highlights the deterioration of strong social connections related to changes
in organizational context and pressures from the external environment. The limited
resources available to SMEs on a human and financial level (De Massis et al., 2018)
contribute to this deterioration and often do not meet the expectations of employees. In
addition, our results reveal that the dynamics of reciprocity are negative, as evidenced by
the lack of recognition for their contributions to innovation experienced by employees. This
lack of recognition shows the manager refuses to go into debt and denies the many efforts
made by employees in this specific context (Caillé and Grésy, 2014; Alter, 2009).
Since managers do not respect the principle of reciprocity by paying their debts (Alter,
2009), employees want them to make upstream gifts in order to reduce the risks associated
with giving them up. Their disappointment is all the more important given the intensity of the
social bond and the relationship of trust with the leader. In the last phases of the project, if
PR management chose to break the chain of gifts, which is normally endless, these disruptions
49,8 had little impact on the innovation studied. Nevertheless, this decision is likely to have an
impact on the recent innovation initiatives to which the company is committed. Our results
emphasize that the logic of gifts is based on a form of learning by actors, particularly tired.
They now prefer to protect themselves by disengaging more or less gradually.

1532 6. Managerial implications

The results suggest that employees must be placed at the heart of innovation in SMEs, right
from the beginning of the project. Our recommendations are organized around six
operational levers. The first recommendation is to make sense of the innovation project. It is
appropriate for the leader to share his or her strategic vision from the beginning of the
project. The goal is to win the support of as many people as possible. The second
recommendation is to co-build a culture conducive to trade. It must be based on
organizational factors such as the company’s history or values. This culture needs to be
co-constructed by all the actors. The third lever aims to encourage employee engagement.
Employees’ commitment to innovation is facilitated when it is part of a bottom-up approach:
when innovation starts with employees. The fourth recommendation is to detect and enlist
key players. The identification of employees should be done during recruitment. By way of
illustration, managers can ask: “Can you tell me about a major obstacle encountered by one
of your former colleagues in the course of his or her work? How did you help him or her to
overcome this?” We also recommend that they invite pre-selected candidates to share a
moment of conviviality within the organization. The goal is to identify their ability to
integrate and adhere to the corporate culture. Internally, it is a question of identifying
employees with a profile oriented toward collaboration. These actors do not hesitate to share
an idea or help a colleague in difficulty.
The fifth recommendation is to become aware of frustrations among employees. To
identify these, leaders must be attentive to the various signs betraying possible
frustrations, such as a refusal to provide services on time. It should also be ensured that
the counter-gift offered meets the expectations of the employees. Regular feedback would
be desirable in order to erase any form of frustration. The sixth is to create a virtuous
collaboration. Taking time to capitalize on the experience of innovation is essential.
Qualitative assessments can be conducted in the form of formal exchanges in team
meetings. More specifically, it is necessary to bring together the members who
participated in the innovation project after the closing phase so that everyone can express
themselves. We encourage SME managers to plan more convivial moments in order to
nurture the social bonds uniting the players (Alter, 2009).
In order to implement these six levers, we recommend that the manager involve
employees in the construction of HRM practices. Indeed, if the leader is essentially the
HRM Director in fact, we advise him to share HRM. Finally, it is necessary to move
from a self-centered HRM to a shared HRM in order to involve the largest number of
employees. This co-construction will make employees join the HRM policy and make it a
lever for innovation.

7. Limitations and future directions

Finally to give our comments, we were forced to adopt a linear perspective in order to obtain
an intelligible model. In this perspective, we relied on the different phases of the innovation
projects studied, thus giving the impression that the innovation process was intended to be
sequential and linear. This may seem contradictory with the gift/counter-gift theory, when
exchanges between actors are intertwined. Our research perspectives lead us to follow an
SME player throughout an innovation project and to take a closer look at its exchanges in
order to understand the points of tension and frustrations. This future research would thus
make it possible to be part of a more dynamic approach and to understand the mechanisms HRM and
that are triggered and the processes that play out. innovation
Lastly, since this research is essentially based on retrospection, cognitive biases related in SMEs
to interpretation by actors are liable to have filtered in, despite the various precautions we
took when studying this innovation project. This is why we plan to conduct a longitudinal
study by monitoring an innovation project in real time, from start to finish, so as to validate
or develop our model. Our research does not aim to generalize results; the point is to 1533
understand a study phenomenon examined through an original approach in order to enrich
existing work. It is therefore currently of exploratory value. In a future project, two other
SMEs will be studied in parallel, in order to adjust the modeling already developed. Finally,
to answer the call of Shipton et al. (2017), we could conduct a multi-level analysis to deepen
the understanding of the links between HRM and innovation.

8. Conclusion
In order to link HRM and innovation, we proposed a dynamic and contextualized model
consisting of three steps: freeing up gifts, mobilizing them and rethinking them. We have
shown that intense social ties, uniting the manager with some of his or her employees, are at
the heart of the link between HRM and innovation in SMEs. In addition, we have proposed
combinations of HRM practices to encourage employee engagement at each stage of the
process. The proposed FMR model is promising for both SME managers and stakeholders
and allows them to anticipate potential dysfunctions by taking account of the relational
dimension. Placing gift/counter-gift in the relationship between HRM and innovation
highlights the prominent place of employees in SMEs.

Notes
1. CIS (2014), www.insee.fr/fr/statistiques/2676243?sommaire=2676252#consulter-sommaire
2. Recommandation de la Commission du 6 mai 2003 concernant la définition des micro, petites et
moyennes entreprises (2003/361/CE).
3. The initial phase consists of identifying the initial idea and assessing project feasibility.
It corresponds to the first stages of execution, referring to a preliminary reflection aimed at finding
solutions to solve the problem and to the execution phase as such, including the execution of tasks
to develop and adapt the object at hand. In our case, closure is similar to the last stages of
execution, covering the final design and the final tests we had carried out, and closure as such,
corresponding to its official end.
4. In order to operationalize the theory of gift/counter-gift, we used the following terms: relationship,
exchange, expectations, and counterpart.

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Corresponding author
Ludivine Adla can be contacted at: ludivine.adla@univ-grenoble-alpes.fr

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