International Journal of Management Reviews, Vol.

18, 85–107 (2016)

DOI: 10.1111/ijmr.12062

Human Resource Development in SMEs: A

Systematic Review of the Literature
Ciara T. Nolan and Thomas N. Garavan1
Department of Management and Leadership, University of Ulster, Ulster Business School, Shore Road,
Newtownabbey, Co., Antrim, BT37OQB, Northern Ireland (E-mail: c.nolan@ulster.ac.uk)1 Research Professor of
Leadership, School of Management, Edinburgh Napier University, Craiglockhart Campus
Corresponding author email: t.garavan@napier.ac.uk

Human Resource Development (HRD) in small and medium-sized enterprises (SMEs)

is a significant area of scholarship. However, the cumulativeness of research on HRD
in SMEs remains relatively low when compared to HRD generally. This paper reports
a systematic literature review (SLR) to synthesise research in this area. A disciplined
screening process resulted in a final sample of 117 papers published in 31 journals from
1995 to 2014. The synthesis of these empirical and theoretical studies revealed that:
(a) the literature utilises a narrow range of theoretical and conceptual perspectives;
(b) HRD is being investigated across a variety of SME contexts, themes and units of
analysis; (c) researchers define HRD in multiple ways and use a diverse set of measures
of HRD activity; (d) there is significant potential for future research across the SME and
HRD disciplines, SME settings and beyond existing theoretical perspectives. We offer
suggestions for further advancing the development of this area of research in terms of
theory, content and methodology.

Introduction advocated the positive effects of investment in HRD

Human Resource Development (HRD) is increasingly
one of the most comprehensively researched areas in
the broader sphere of human resource management
(Garavan et al., 2012). Researchers, commentators
and policy makers have stressed the importance of
investment in HRD to enhance the quality of human
capital and create sustainable competitive advantage
(Aragón-Sánchez et al., 2003; Scheel et al., 2014).
HRD as a concept emerged over four decades ago
(Hamlin and Stewart, 2011), however, it remains un-
derstudied in the SME context, in spite of the fact
that it is prominently practiced in these organisations
(Pajo et al., 2010). Dominant theorising in HRD has
evolved from and is oriented towards the study of
atypical (large) enterprises (Iles and Yolles, 2004).
Almost 20 years after Joyce et al.’s (1995) longitu-
dinal quantitative study of 353 SMEs, the cumula-
tiveness of HRD in SMEs research remains modest,
at best. HRD in SMEs has received significant atten-
tion in the popular press (O’Connell, 2014; Pardley,
2012) and leading small business associations have

C 2015 British Academy of Management and John Wiley & Sons Ltd. Published by John Wiley & Sons Ltd, 9600 Garsington
Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
on employee capability and organisational perfor-
mance (Federation of Small Businesses, 2011; Man-
agement Development Council, 2010). Research on
HRD in SMEs has to date utilised a limited number of
theoretical perspectives and insufficiently accounted
for the heterogeneity of SMEs. There is also a lack
of research on HRD in different national and cultural
contexts and the literature provides limited coherence
in terms of the content areas investigated. In addition,
few research studies in the SME context have explic-
itly defined the HRD construct.
As a step to advance HRD in SME’s theory and
research, we sought to identify those empirical and
theoretical studies that have investigated HRD in
that context. This is the first systematic review of
HRD in SMEs. The review focuses primarily on the-
oretical developments and empirical studies, how-
ever, we also make a methodological contribution
by analysing the methods used to investigate HRD
in SMEs and bring some coherence to an area that is
poorly operationalised. The field is growing and is ex-
pected to continue as an area of theorising, empirical
86
investigation and methodological development.
Therefore, our review can help to address important
lacunae in theorising and bring together a field that is
somewhat fragmented and insufficiently defined as a
disciplinary area. We specifically assess and synthe-
sise the theoretical and conceptual foundations found
in the literature, identify the dominant methodologi-
cal approaches, summarise important content issues
and identify outcomes. We are not aware of a compre-
hensive summary of empirical and theoretical studies
exploring HRD in SME settings (e.g. a systematic lit-
erature review (SLR)) which therefore indicates a key
gap in the literature. Through exploring the empirical
and theoretical studies that have investigated HRD in
SMEs, we provide evidence that it is a tenable area of
investigation.
As an area of research, HRD in SMEs faces a num-
ber of challenges. First, researchers have sought a
variety of publication outlets for their work, resulting
in a body of literature that is published in HRD, HRM
and SME journals. This has produced a fragmented,
disjointed body of literature that is of mixed quality.
This pattern of journal quality is not, however, untyp-
ical for an emerging area of study (Kelly et al., 2009).
Our systematic literature review therefore calls atten-
tion to these weaknesses and emphasises the need to
strengthen the area of investigation. One of the ad-
vantages of an SLR is that it adopts a ‘replicable,
scientific and transparent process’ (Tranfield et al.,
2003, p.209) to make evaluations of the current state
of the field and synthesise the divergent studies that
characterise HRD in SMEs research.
Thus, the purpose of this paper is to systematically
examine and organise the current body of empirical
and theoretical literature that has explored HRD in
SMEs. In this SLR, we included both categories of
paper, consistent with previous systematic reviews
(Hakala, 2011). We included theoretical papers that
were highly cited and had a strong impact within the
field. Earlier reviews that have investigated HRD in
an SME context included management development
(Fuller-Love, 2006), the facilitators and barriers to
workplace learning (Doyle et al., 2008), employee in-
volvement in work-related learning (Kyndt and Baert,
2013) and knowledge resources in SMEs (Macpher-
son and Holt, 2007). These reviews provide insights
into how researchers have operationalised HRD in
the SME context; however, they focused on a narrow
stream or particular dimension of HRD.
The following research questions guided the SLR:
(1) What are the theoretical concepts and traditions
that underpin empirical and theoretical studies of

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
HRD in SMEs? (2) How is HRD in SMEs studied
from a methodological perspective and in what con-
text is it studied? (3) What content dimensions of
HRD are investigated in the SME context?
We begin this paper by summarising the method
used to select and review the literature and provide
details of our search strategy, analysis and assessment
of the quality of the studies reviewed. We then present
our findings of the SLR of the papers reviewed. Fol-
lowing this, we discuss future directions for theory de-
velopment, methodology and content areas. We con-
clude by considering the strengths and weaknesses
of our review and highlight the contributions of the
paper to further research on HRD in SMEs.
Methodology used for the systematic
review
We analysed 117 studies that were published or avail-
able in press from January 1995 to June 2014 in 31
journals (Table 1). This list is based on journals with
varying degrees of impact but which have a history of
publishing SME and/or HRD research. We followed
the SLR process advocated by Denyer and Tranfield
(2009) and Macpherson and Jones (2010) using five
databases including Business Source Premier, ABI-
INFORM, Swetwise, Emerald and ProQuest. Figure 1
provides a summary of the SLR process used to pre-
pare this paper.
Conceptual boundaries
We began the SLR process by defining the research
objectives and conceptual boundaries (Denyer and
Tranfield, 2009). We conceptualised HRD content
along the following dimensions (cf. Hamlin and
Stewart, 2011; Monks et al., 2012; Ridder et al.,
2012): a) conceptualisations or definitions of HRD;
(b) dimensions of HRD (HRD architecture or sys-
tems, HRD interventions, HRD climate) and (c) out-
comes of HRD. We focused on the micro-context of
HRD found in SMEs and sought to broaden concep-
tualisations away from a sole focus on HRD interven-
tions. We encountered difficulties in defining ‘HRD’
given the broad conceptualisation found in the liter-
ature (Boselie et al., 2005; Sheehan, 2013; Watson,
2011). We also encountered challenges in defining
the term ‘SME’. We focused on ‘independent enter-
prises with 500 (or 250) employees or fewer’ (Storey,
2004, p.113). However, the SME literature is short on
universal definition of the term ‘SME’ (OECD, 2012).
Human Resource Development in SMEs 87

Table 1. List of Journals used in the SLR, Journal Ranking and Articles Per Journal

Journal Title Article Count % Journal

Ranking Grade
(ABS 2010)

Small Business Journals

Entrepreneurship Theory and Practice 1 1% Grade 4
International Small Business Journal 9 8% Grade 3
Journal of Small Business Management 3 3% Grade 3
International Journal of Entrepreneurial Behaviour and Research 1 1% Grade 2
International Journal of Entrepreneurship and Innovation 4 3% Grade 2
Journal of Small Business and Enterprise Development 13 11% Grade 2
International Entrepreneurship and Management Journal 1 1% Grade 1
Human Resource Development Journals
Human Resource Development International 7 6% Grade 2
Journal of Education and Work 1 1% Grade 2
Advances in Developing Human Resources 1 1% Grade 2
Human Resource Development Quarterly 2 2% Grade 2
European Journal of Training and Development (formally Journal of European 22 19% Grade 1
Industrial Training)
International Journal of Training and Development 4 3% Grade 1
Journal of Workplace Learning 4 3% Grade 1
Journal of Management Development 1 1% Grade 1
Career Development International 1 1% Grade 1
Journal of Vocational Education and Training 1 1% Grade 1
Learning Organization 1 1% Grade 1
Education and Training 17 15% Grade 1
Human Resource Management Journals
International Journal of Human Resource Management 5 4% Grade 3
Human Resource Management Journal 3 3% Grade 3
New Technology, Work and Employment 1 1% Grade 3
Personnel Review 3 3% Grade 2
Employee Relations 2 2% Grade 2
Asia Pacific Journal of Human Resources 1 1% Grade 2
International Journal of Manpower 1 1% Grade 2
General Management/ Strategic Management/Organisational Studies Journals
Work Employment and Society 2 2% Grade 4
Human Relations 1 1% Grade 4
International Journal of Management Reviews 1 1% Grade 3
Strategic Change 2 2% Grade 2
International Journal of Management 1 1% Grade 1
Total 117

To address the aforementioned challenges, we fol- Data Collection and Analysis

lowed the advice of Örtenblad (2010) and set out to
To build a comprehensive database (cf. Wang
‘understand what is done and/or written under the
and Chugh, 2013) of HRD in SMEs articles
heading or concepts’ and what authors ‘mean in gen-
(Appendix 1), we used specific inclusion criteria (see
eral terms’ (p.446). We used the terms ‘training’, ‘de-
Appendix 2 for a detailed rationale). First, we set
velopment’ and ‘learning’, therefore affording a de-
our search parameters to focus on peer-reviewed aca-
gree of flexibility and capturing relevant literatures,
demic journal articles listed in the ABS Academic
whether labelled HRD or not. Our approach is con-
Journal Quality Guide (Harvey et al., 2010). Sec-
sistent with recent literature on the implementation of
ond, our search concentrated on articles published in
management knowledge and practice (Ansari et al.,
the following subject categories of the business and
2010), where ideas are translated, adapted and inter-
management discipline: ‘Human Resource Manage-
preted to fit specific organisational contexts (Benders
ment and Employment Studies’, ‘Entrepreneurship
and Van Veen, 2001).
and Small Business Management’ and ‘Management


C 2015 British Academy of Management and John Wiley & Sons Ltd.
88
Figure 1. A summary of the SLR process
Development and Education’ as the primary source
of the literature search; and ‘Organization Studies’,
‘General Management’ and ‘Strategic Management’
as the secondary literature sources as these categories
include journals that publish both SME and HRD
research on occasion. Third, within the selected jour-
nals, we searched the Title and Abstract fields using

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
a number of carefully selected key Boolean search
terms. Articles for inclusion were first identified by
carrying out database searches using the search terms
of HRD* OR human resource development* AND
SME to ensure that we captured the relevant articles
we conducted searches using the following terms:
training* AND SME*, development* AND SME*
Human Resource Development in SMEs
and learning* and SME*. Due to considerable varia-
tion in the terminology used to map the SME terrain
it also was necessary to expand our search to incor-
porate variations on the search term ‘SME’.
Our search identified 2,348 articles, of which 331
were considered to be relevant following application
of the inclusion and exclusion criteria. In a number
of cases inadequate abstracts made it difficult to iden-
tify the aims, approach, findings and conclusions of
the studies (Thorpe et al., 2005). Therefore, we ex-
amined the introduction and/or conclusions of the
study. Following the advice of Thorpe et al. (2005),
we further refined our list down to 117 articles (Ap-
pendix 1) that form the basis of this review. Due to the
complex nature of the topic under investigation, both
authors independently coded the papers based on the
pre-defined themes. We discussed any differences in
coding and our approach mirrored that of Wang and
Chugh (2013).
Status of HRD in SMEs Research
Overall, this systematic review highlights that HRD
in SMEs is being researched and tested in a variety
of SME contexts, disciplines and content areas. Our
sample included 11 theoretical papers, 44 quantita-
tive studies, 35 mixed method studies and 27 quali-
tative papers, all theoretically conceptualising or em-
pirically assessing HRD in SMEs. Thus, this review
illustrates that HRD in SMEs is being explored theo-
retically, quantitatively and qualitatively and the topic
has international appeal with studies being conducted
in many countries.
Publication Distribution and Geographic Spread
Scholarly interest in HRD in SMEs research has var-
ied considerably since 1995 (Figure 2). The years
1998-2008 account for the majority of the research
output and most of this output reports empirical stud-
ies (n = 106). The key publication outlets are the
Journal of European Industrial Training (now the
European Journal of Training and Development) (22
articles), Education and Training (17 articles), Jour-
nal of Small Business and Enterprise Development
(13 articles), International Small Business Journal (9
articles) and Human Resource Development Interna-
tional (7 articles). The majority of articles were pub-
lished in journals dedicated to HRD (e.g. JEIT/EJTD,
E+T, HRDI, IJTandD, n = 51) or small businesses
(e.g. ISBJ, JSBandED and JSBM, n = 29). It is also

C 2015 British Academy of Management and John Wiley & Sons Ltd.
89
appropriate to comment on the quality of the jour-
nals. Approximately 22% of the articles utilised were
published in 3/4* journals; 33% were published in
2* journals and the remaining 45% were from 1*
publications. The trends on journal quality may be
due to relative nascence of the field. Only one of
the small business journals identified is ranked as
4*; however, 41% of the publications selected for the
SLR were published in highly ranked small business
publications.
The spread of authors revealed that they came
from 21 countries. Authors from the UK dominate
them, with substantial numbers from Australia, the
United States, New Zealand, South Africa and the
Netherlands. There is a reasonable diversity of coun-
tries, however, 91% of papers are written by an author
or author team based in one country compared to 6%
in two countries and 3% in three countries or more.
When we examined authorship in terms of home re-
gion, the UK and Ireland is dominant (60%), fol-
lowed by Australia and New Zealand (13%), mainland
Europe (11%) and the United States (7%). Authors
from Asia and African account for the remainder of
the articles. The finding that a small portion of HRD in
SMEs research involves a global team of researchers
and that 73% of output comes from two regions is sur-
prising given the pervasiveness of SMEs in the global
economy. This suggests significant opportunity for
global research collaboration.
Theoretical Perspectives
The articles reviewed utilised a narrow range of
theoretical perspectives. We refer to theory as the
building blocks answering the what, why, who, when
where and how questions (Sutton and Staw, 1995).
We made a judgement concerning the theoretical per-
spective by focusing on the stated purpose, the ar-
gumentation, stated contribution and/or implications
outlined in the paper. Three theoretical perspectives
are particularly dominant. First, concepts from strate-
gic management and organisation theory have been
used to study HRD in SMEs studies (n = 40). Ex-
amples of these studies include the use of institu-
tional theory and resource-based theory to explain the
use of training and development methods (Greenidge
et al., 2012); the relationship between formal manage-
ment development and business strategy (Gray and
Mabey, 2005); the environment of an SME and the
extent of formal and informal learning opportunities
and expenditure on training and development (Loan-
Clarke et al., 1999; Marlow, 1998). Although many
90
Figure 2. HRD in SMEs Publication Distribution
Note: Articles cover the period from January 1995 to June 2014 inclusive
studies did not explicitly highlight a theoretical an-
chor within the fields of strategic management/ or-
ganisation theory, the resource-based perspective un-
derpinned much of the discussion and analysis in the
articles reviewed.
Second, a significant number of studies (n = 26)
utilised learning and training design theory. We ac-
knowledge however, that this is a broad category
and includes informal learning theory (Admiraal and
Lockhorst, 2009; Coetzer, 2007; Saunders et al.,
2014); action learning theory (Clarke et al., 2006);
experiential learning (Birdthistle, 2006; Harris, 2009)
and workplace learning (Rowden, 2002). These stud-
ies have largely drawn on the works of Kolb (1984),
Marsick and Watkins (1990) and Revans (1971). Ex-
amples of studies that utilise training design theory in-
clude understanding training needs analysis processes
(Johnston and Loader, 2003; Kerr and McDougall,
1999), the evaluation of HRD activities (Sadler-Smith
et al., 1999; Solomon et al., 2013) and to explain
the way in which skills are understood (Forde and
MacKenzie, 2004).
Third, a significant proportion of articles have var-
ious combinations of human capital theory and the
resource-based view (n = 23). These include studies
on competency models (Beaver and Lashley, 1998),
the application of human capital theory to explain
participation in training and development (Keogh

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
et al., 2005; Kock et al., 2008; Kotey and Folker,
2007; Skinner et al., 2003), the provision of formal
training programmes (Bryan, 2006), and the commit-
ment of resources to training and development (Reid
and Harris, 2002).
Methodology
We analysed the methodology characteristics of the
papers in two ways: i) the unit of analysis; and ii)
methods used.
Unit of Analysis
The primary unit of analysis of HRD in SMEs re-
search is the individual. This individual was exclu-
sively the employee in 27 articles, the SME manager
(non-owner) in two articles and the owner-manager
(entrepreneur) in 14 articles. The SME manager (non-
owner) and employee was the unit of analysis in 13
articles, the owner-manager (entrepreneur) and the
SME manager in 15 articles and the owner-manager
(entrepreneur) in three papers and employee was the
unit of analysis. The owner-manager (entrepreneur),
SME manager (non-owner) and employee was the
unit of analysis in 40 articles. A further two articles
focused on the SME manager (non-owner), employee
Human Resource Development in SMEs
and the firm and one article focused on the owner-
manager (entrepreneur) and the firm. HRD in SMEs
research is dominated by micro-unit analyses, which
focuses on the perspective of the owner-manager. This
pattern is not surprising given that the owner-manager
is a primary focus of SME research. Research indi-
cates that the design and implementation of train-
ing and development practices in SMEs is typically
the domain of founders or owner-managers (Higgins
et al., 2013; Walker et al., 2007). However, such over-
reliance on managerial perspectives has meant that the
recipients of HRD are overlooked. As is also evident
in the HRM literature (e.g. Storey et al., 2010), in the
main, studies do not address employees’ perceptions
and responses to HR practices.
Methods Used
Our systematic review identifies a number of impor-
tant methodological trends that inhibit the advance-
ment of HRD in SME research. All of the 45 quan-
titative studies used surveys as the data collection
method. However, these studies were almost exclu-
sively cross-sectional. We found few studies that were
longitudinal in nature, utilised structured case com-
parisons, studies that effectively combined survey and
archival data, and/or that used multi-level designs.
The quantitative studies also utilised many different
measures of HRD. There was an overreliance on the
use of descriptive statistics and limited use of com-
plex statistical methods. It is arguable that many of
these quantitative studies are deficient in that they
do not eliminate competing or alternative theoretical
explanations for the empirical findings.
The 27 qualitative studies used a variety of data
collection methods; however, they were also deficient
in that insufficient attention was given to describing
the organisational and institutional context, suggest-
ing a more static approach to the study of HRD in
SMEs. The very significant number of mixed method
studies is a particularly distinct feature of the litera-
ture. However, these studies frequently did not com-
bine qualitative and quantitative data in effective and
complementary ways.
Content
Our analysis of content of HRD in SMEs focused on
three aspects: (1) definitions of HRD; (2) character-
istics of HRD in SMEs and (3) outcomes of HRD in
SMEs.

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91
How is HRD Defined?
The first content dimension focuses on how HRD
is defined. The origins of the term HRD can be
traced to the work of Harbison and Myers (1964)
and Nadler (1970). A particular feature of the stud-
ies we reviewed was a lack of consensus in how
HRD is defined. Generally, authors described HRD
either explicitly or implicitly. Only three papers ex-
plicitly defined HRD (Beaver and Hutchings, 2005;
Hill and Stewart, 2000; Kerr and McDougall, 1999).
Generally, authors made explicit references to terms
such as: ‘training’, ‘development’, ‘learning’, ‘com-
petence development’, ‘informal training’, ‘formal
job-related training’ and ‘management training and
development’.
The term ‘training’ is frequently used but is rarely
defined. It is generally conceptualised (n = 10) as a
planned and systematic effort (Coetzer et al., 2012)
and as a formal activity such as a course (Bishop,
2008; Castany, 2010; MacMahon and Murphy, 1999;
Martin et al., 2006; Westhead, 1998). Kock and
Ellström (2011) use the term competence develop-
ment; however, this definition is quite congruent with
definitions of formal training in that it refers to inter-
nal and external training courses as well as informal
activities. Similar assertions can be made in relation to
Scott and Cockrill’s (1997) definition of multiskilling.
The term ‘informal training’ is more frequently used
in recent publications, which Jayawarna et al. (2007,
p.261) define as being ‘ad-hoc, fragmented and flex-
ible’. HRD is predominantly conceptualised as a
structured, individual-focused rather than a collective
concept.
In summary, our results confirm McGuire’s (2014)
assessment that conceptually HRD remains under-
defined with no consensus on its definition. Scholars
either seek to articulate specific conceptualisations of
HRD by using a variety of definitions sourced from
multiple authors or simply do not define HRD at all.
Characteristics of HRD
We identified three characteristics of HRD in the
studies we reviewed. First, studies have investigated
an organisational level HRD architecture or sys-
tem characteristics in SMEs (n = 14). Examples
include the strategic and/or learning orientations
of SMEs (Aragón-Sánchez, et al., 2003; Gold and
Thorpe, 2008), SME HRD policy and programmes
(Admiraal and Lockhorst, 2009; Beaver and Lashley,
1998), and the strength of the HRD system in terms of
92
linkages between policies and practices (Devins and
Johnson, 2003; Gray and Mabey, 2005; Hoque and
Bacon, 2008; McCole et al., 2001).
Second, studies have investigated HRD interven-
tions (n = 11) with specific emphasis on the HRD
practices that are implemented in SMEs. Examples of
practices investigated include the use of external man-
agement training courses and qualification-based pro-
grammes (Bryan, 2006; Marshall et al., 1995; Loan-
Clarke et al., 2000; Matlay, 2004); the amount of time
devoted to delivering formal training programmes
(de Kok, 2002); the types of training methods used
(Fernald et al., 1999; Raymond et al., 2012; Sam-
brook, 2003; Smith and Barrett, 2014) and the use
of apprenticeships leading to external qualifications
(Ford and MacKenzie, 2004).
Third, studies have investigated the HRD climate
in SMEs (n = 10). Examples include opportunities
for managers and employees to develop (Coetzer,
2006a, 2006b, 2007; Coetzer and Perry, 2008;
Zientara, 2009), the climate for on the job training
(Lorenzet et al., 2006), the content of social support
for employee involvement in training (Rauch et al.,
2005); and employee attitudes concerning participa-
tion in HRD (Wang et al., 2010).
A significant number of papers addressed all three
HRD characteristics (n = 22) (Birdthistle, 2006;
Harris, 2009; Hirschohn, 2008; Joyce et al., 1995;
Kitching, 2007; Matlay, 2001; Stokes, 2001) or com-
binations of dimensions. More than one third of
the articles focus on the HRD architecture or sys-
tem characteristics and HRD interventions (n = 36)
(Hoque and Bacon, 2006; Huang, 2001; Matlay,
1999a, 1999b, 2004; Matlay and Hyland, 1997; Ray-
mond et al., 2012; Sadler-Smith et al., 1998; Savery
and Luks, 2004; Webster et al., 2005a, 2005b), 13 arti-
cles focus on HRD architecture or system characteris-
tics and development climate (Castany, 2010; Deakins
et al., 2012; Hill and Stewart, 1999; Raffo et al., 2000;
Tikkanen, 2002), and a further 11 articles focus on
HRD interventions and development climate (Row-
den and Ahmad, 2000; Teck-Hong and Yong-Kean,
2012).
In addition to the threefold categorisation of HRD
characteristics in SMEs above, we observed that sig-
nificant discussion in the literature focuses on the key
barriers preventing SMEs from engaging in formal
HRD. Studies highlighted the inverse relationship be-
tween firm size and formal HRD provision (Hoque
and Bacon, 2008; Kotey and Folker, 2007), coupled
with a lack of willingness to invest time and money
in such activity (Castany, 2010; Thassanabanjong

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
et al., 2009). The use of technologically-enabled HRD
interventions such as e-learning are also not
widespread in SMEs (Admiraal and Lockhorst, 2009;
Harris, 2009). In the main, evidence indicates a preva-
lence of and preference for informal and idiosyncratic
HRD approaches in SMEs (Coetzer et al., 2012;
Kitching, 2007). This has led many researchers to
conclude that SME HRD is inferior or rarely takes
place at all (e.g. Bryan, 2006; Massey, 2004; Mc-
Cole et al., 2001). Studies extol the virtues of formal
HRD (e.g. Bryan, 2006; Rauch et al., 2005) and crit-
icise the informal methods of SMEs. Informality is
therefore viewed as a manifestation of backwardness,
whereas formal approaches are regarded as sophis-
ticated. However, very little insight exists to explain
the omnipresence of informality with respect to HRD
in SMEs. This represents a critical gap in our un-
derstanding. We return to this issue later in the pa-
per in our discussion of future directions for theory
development.
Outcomes of HRD
Almost a quarter of the articles did not focus on
or investigate the outcomes of HRD (n = 29). Ex-
amining the impact of HRD on organisational and
individual outcomes in SMEs is fraught with chal-
lenges. This stems from inconsistencies in the mea-
surement of both HRD activity and performance.
There is an overriding emphasis on formal activ-
ity and little on informal approaches. The diver-
sity of performance aspirations amongst SMEs is
not adequately reflected in performance measures
adopted by researchers. Our review does highlight
that studies have found positive relationships between
both formal and informal HRD activity and perfor-
mance outcomes (Greenidge et al., 2012; Jones, 2004;
Panagiotakopoulos, 2011; Ram et al., 2000). Bene-
fits such as increased cost-effectiveness, quality, in-
novation and ability to adapt to change are cited
(Beaver and Hutchings, 2005; Lange et al., 2000;
Macpherson and Jayawarna, 2007), as are the ability
to meet regulatory requirements (Coetzer et al., 2012)
and greater flexibility (Collins and Smith, 2004;
Matlay, 1997).
Research of outcomes primarily uses perceptual
measures of impact. Apart from some exceptions
(e.g. Bryan, 2006; Huang, 2001; Newkirk-Moore and
Bracker, 1998; Savery and Luks, 2004), few studies
utilise objective firm and individual-level measures.
The positive impact of HRD on organisational out-
comes such as competitiveness, sales/employment
Human Resource Development in SMEs
growth and business development is linked to formal
and external HRD activity (Gray, 2004; Gray and
Mabey, 2005; Marshall et al., 1995; Wong et al.,
1997). Challenges in establishing statistically sig-
nificant relationships are also acknowledged (Smith
and Whittaker, 1998; Thassanabanjong et al., 2009),
with studies highlighting difficulties in establishing
causation (Aragón-Sánchez et al., 2003; de Kok,
2002; Devins and Johnson, 2002, 2003; Storey and
Westhead, 1997; Westhead and Storey, 1996).
In terms of individual-level outcomes, there is
widespread consensus that essential job-specific
skills are acquired through engagement in all forms of
HRD. However, the evidence suggests a strong belief
on the part of SME owner-managers and employ-
ees that informal, on-the-job, experiential workplace
methods are the most critical to job competence devel-
opment due to their context-specific nature (Jameson,
2000; Matlay, 2002; Paloniemi, 2006; Perry et al.,
2010; Pratten and Curtis, 2003; Walker and Webster,
2006). The important role played by socialisation with
colleagues in skill development is also highlighted
(Higgins et al., 2013; Saru, 2007; Seymour and
Sandiford, 2005). Conversely, lack of access to
workplace HRD can have a negative impact on
sustainable working amongst older employees (Zien-
tara, 2009). Some studies report a positive asso-
ciation between the use of formal, systematic and
structured HRD approach and improved worker mo-
tivation and staff satisfaction (e.g. Huang, 2001;
Pajo et al., 2010). However, other studies high-
light that employees respond more positively to in-
formal approaches (Harris, 2009; Kerr and Mc-
Dougall, 1999; Kock and Ellström, 2011; Matlay,
2002; Nolan, 2002). Investment in HRD practices
acts as a stimulus to and/or enhances further devel-
opment activities such as appraisal systems, mentor-
ing and personal development planning (Beaver and
Jennings, 2001; Devins and Johnson, 2002; Smith et
al., 2002). Investment in HRD practices also has a
positive impact on staff satisfaction, organisational
commitment, quality of working life and employee
self-confidence (Roffe, 2007; Rowden, 1995, 2002).
At the managerial level, research suggests that exter-
nal training and development programmes can build
valuable technical and entrepreneurial skills in areas
such as strategic management, financial management,
business development, marketing and HRM (Devins
and Gold, 2000; Marlow, 1998; Massey, 2004; Patton
and Marlow, 2002; Walker et al., 2007; Wightman
and McAleer, 1995). Rigg and Trehan (2002) high-
light the important role played by managerial engage-

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93
ment in formal learning as a catalyst for other forms
of internal HRD within SMEs.
Summary of the Challenges for HRD in SMEs
Research
In addition to the key themes and patterns of HRD
in SMEs research that we have discussed thus far, we
now draw attention to the main challenges in HRD in
SMEs research that have emerged from our system-
atic analysis of the literature.
First, this SLR demonstrates that HRD in SMEs is
conceptualised and investigated in a variety of SME
contexts, countries, practices and outcomes. Even
though Nadler (1970) first popularised the term HRD,
it took until 1995 for HRD to be explored in an em-
pirical manner in the SME context. This SLR did not
place any limitation on the publication year; how-
ever, no empirical studies or theoretical contributions
were found across all of the databases searched be-
fore 1995. As illustrated in the section ‘Publication
Distribution and Geographic Spread’, the academic
conversation on HRD in SMEs is primarily confined
to HRD and SME literatures. Few studies are pub-
lished in either general HRM or management fields.
The isolated nature of the field suggests that it is a
niche area not well communicated to academics out-
side of the disciplines of HRD and SMEs.
Second, to date, the majority of research on HRD in
SMEs attempts to either understand the characteris-
tics of HRD in different SME contexts or investigates
the organisational and individual outcomes of HRD in
SMEs (as discussed in the sections ‘Characteristics of
HRD’ and ‘Outcomes of HRD’). Very few empirical
studies or theoretical contributions have fundamen-
tally engaged with the theoretical construct of HRD,
which perhaps reinforces the diversity of conceptu-
alisations and their operationalisation in the existing
studies. There is also considerable diversity with re-
spect to research designs and the methodological ap-
proaches adopted. The diverse approaches undoubt-
edly reflect different philosophical positions, which
in turn underpin a further key challenge: how HRD
is defined. This issue continues to represent a criti-
cal obstacle in the field more generally (Hamlin and
Stewart, 2011) and our SLR reveals that there is lim-
ited reflection on this issue with respect to HRD in
SMEs.
Third, our SLR revealed that there is inadequate
understanding and accommodation of the unique id-
iosyncrasies of SMEs, their analytical distinctiveness
to larger businesses, the constraints they face and the
94
motivations that drive their decision to engage in all
forms of HRD. This is aptly captured by Kuchinke
(2003, p.295) who maintains that the reasons for vari-
ation in HRD practices between large and small firms
are ‘theoretically underdeveloped and empirically un-
der researched’. The majority of empirical work on
HRD in SMEs does not appear to pay systematic at-
tention to other organisational dimensions apart from
firm size as a means of explaining patterns and char-
acteristics of HRD in this setting. In particular, re-
searchers have not afforded adequate attention to the
influence of key stakeholders in the SME setting, in-
cluding the critical role played by the owner-manager
and the agency exercised by individual employees.
This suggests a strong need for more nuanced and
context-sensitive accounts of HRD. The section ‘The-
oretical Perspectives’ highlighted the dominant the-
oretical perspectives utilised, however, many studies
make weak use of robust theoretical approaches or
do not specify their stance at all. This represents a
critical gap that future work must address. Our asser-
tion in this regard stems directly from the recognition
that the differences between large and small firms are
more than that of scale and that resultant theorising
must be built on actual small firm experience (Taylor,
2006). Significantly, in the context of HRD Westhead
and Storey (1996, p.18) state that ‘theories relating to
SMEs must consider the motivations, constraints and
uncertainties facing small firms and recognise that
these differ from those facing larger organisations’.
Our discussion in the following sections focuses on
how these critical research gaps can be addressed.
Discussion of Future Directions
Following the structure utilised to report the find-
ings of our systematic review, we now discuss ex-
isting knowledge gaps and suggest potential direc-
tions for further research with respect to: (1) theory,
(2) methodology and (3) content. Table 2 presents our
framework for future research directions.
Theory – Future Directions
The first question of this review sought to discover
the theoretical concepts and traditions that underpin
empirical and conceptual studies on HRD in SMEs.
Our findings indicate that a majority of studies have
not made strong use of theory as a platform to en-
hance the credibility of the field. Where theoretical
perspectives are utilised, there is an over-reliance on

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
a small number of theories and limited evidence of
innovation in extending existing theories or adopt-
ing new ones. Based on our review, we suggest three
theoretical perspectives that have particular utility in
the HRD in SMEs context: complex resource-based
theory, upper echelons theory and strategic choice
theory. These three theoretical perspectives have a
particularly good fit to the SME context because they
first of all capture the informality of HRD in SMEs,
they give emphasis to the central role of the owner-
manager, which we found dominates the literature,
and they offer effective explanations as to why SMEs
adopt particular approaches to HRD, thereby account-
ing for heterogeneity in the SME setting. We acknowl-
edge that other theories such as learning theories and
training design theories are cornerstone HRD theories
however they are frequently used in existing research.
Therefore, we focus here on theory suggestions that
will address significant gaps and advance the field of
investigation in a fundamental way.
Our systematic review revealed the popularity of
the resource-based view (RBV) to inform empiri-
cal investigations of HRD in SMEs. The complex
resource-based view was first introduced in 2004
(Colbert, 2004), however, there is little evidence of
its explicit use in the SME context. In our view, it
represents a significant extension of the RBV that fits
well with the SME context. The complex RBV is valu-
able in helping researchers to understand how HRD
practices emerge over time in an informal way rather
than being planned or strategically implemented by
an owner-manager. Our systematic review highlights
that informality is central to the emergence and op-
eration of HRD in SMEs. The complex RBV raises
the possibility that SMEs may operate on the basis
that informal HRD best serves their needs because
it strengthens their strategic position (Edwards et al.,
2010; Marlow et al., 2010). Colbert (2004) suggests
that complex RBV challenges researchers to think
differently about concepts such as ‘fit’ and ‘flexibil-
ity’. Consistent with this challenge it is perhaps more
appropriate to view the emergence of HRD and its fit
with SME strategy because of ‘ongoing, decentralised
dialogical processes’ (p.355).
The complex RBV suggests that informality is not
merely an evitable characteristic of HRD in SMEs,
but it may represent an important resource. Colbert
(2007) argued that the value of resources is grounded
with their synchronicity to a firm’s operating con-
text. In the SME context, informal practices enable
flexibility and responsiveness to the demands of
the business environment, thus affording competitive
Human Resource Development in SMEs 95

Table 2. Future Research Directions: HRD in SMEs, Theory, Methodology and Content
Specific Suggestions for Field

Theory:
r Make greater use of theoretical perspectives that fit the SME context, e.g. complex resource-based theory, upper echelons theory and strategic choice
theory.
r Use complex resource based theory to better understand how informal HRD fits the strategic context of SMEs.
r Use upper echelons theory to more fully understand how personalised interpretations of owner-managers influence their HRD in SMEs.
r Investigate the role of owner-manager experiences, values and personalities on attitudes to HRD and HRD orientation.
r Understand the role of managerial discretion and owner-manager job demands on attitudes and values towards HRD.
r Utilise strategic choice theory to investigate investment in HRD decisions.
r Understand the internal and external triggers of investment in HRD in SMEs.
r Understand the process that leads owner-managers to view investment in HRD as a contributor to SMEs value-added activities rather than on compliance
or regulatory issues.
Methodology:
r Pay more attention to sample selection and make greater use of employee as well as owner-manager samples.
r Broaden the SME types and contexts in which HRD is studied.
r Make greater use of ethnographic methodological approaches such as close-observational or participative research.
r Encourage longitudinal studies and generate samples that enable the investigation of external and internal context.
r Utilise three new methodological concepts: localised interpretation, contextual rationality and polyphony, to inform research designs.
Content:
r RBV / CRBV questions:
◦ Understand the alignment and fit of formal and informal HRD practices with SME strategy.

◦ Understand the configurations of HRD practices appropriate to different SME contexts.

◦ Understand the individual and firm level outcomes of both formal and informal HRD practices.

◦ Understand the role of development climate as a mediator between HRD practices and outcomes.

r Strategic Choice Issues:

◦ Understand the factors that influence the choices that SME managers make about investment in formal HRD practices.

◦ Understand the factors that drive reactive and proactive approaches to HRD issues.

◦ Understand how external factors facilitate or constrain the choices that SME owner-managers make about investment in HRD.

◦ Understand the scope for the exercise of individual agency and personal choice amongst owner-managers and employees with respect to HRD practices.
r Owner Manager Characteristics:
◦ Understand owner-manager development orientation and its relationship to HRD practices.

◦ Understand the influence of owner-manager values, experiences and personalities on their attitudes towards HRD.

◦ Understand the role of owner-manager discretion and job demands on owner-manager characteristics in the context of HRD.

advantage (Ram and Edwards, 2010). Colbert (2007)
envisages such a scenario when he argues that flexibil-
ity in terms of HR practices emphasises a ‘continual,
deliberate reinterpretation of HR policies and prac-
tices in the context of the organisation’ (p.355). There
is evidence that strategy formulation processes in
SMEs are flexible and informal in order to cope with
a changing business environment (Behrends, 2007;
Harney and Dundon, 2007). The complex RBV postu-
lates that an SME will constantly revise and rearrange
its strategy as it gains experience. In this context,
Chadwick et al. (2013) found that the strategy pro-
cess in SMEs is a dynamic one that focuses on match-
ing human resource practices with short rather than
long-term priorities. Ram (2000) also concluded that
the implementation of a structured approach to train-
ing and development in the dynamic and sometimes
frenzied setting of the SME can hinder responses to
day-to-day matters that are often seen as more urgent.
Our systematic review highlighted the important
role of owner-managers and their centrality in re-
search on HRD in SMEs. Kerr and McDougall (1999)
and Patton and Marlow (2002), for example, iden-
tified the owner-manager’s ‘strategy of control’ as
central to HRD practices in SMEs and this includes
a desire to impose a ‘stamp’ or style on how things
are done. Given the central role of owner-manager
as a unit of analysis, as highlighted in our SLR, we
suggest that upper echelons theory (UET) (Hambrick
and Mason, 1984; Hambrick, 2007) is a useful the-
oretical perspective to understand cognitive charac-
teristics and their influence on HRD practices. UET
postulates that owner-managers will make decisions
about HRD practices based on their personalised


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96
interpretations of the strategic situations that face
them. How owner-managers construe a particular sit-
uation is a function of their experiences, values and
personalities (Hambrick and Mason, 1984). More-
over, Maes et al. (2005) maintain that the predictive
power of this theory in the SME context is significant
due to the fact that SMEs are often built around the
owner-manager and reflect their key characteristics.
We know from studies on other managerial prac-
tices in SMEs that the personal characteristics and
values of owner-managers are important in explain-
ing adoption of these practices (De Winne and
Sels, 2010; Hsu et al., 2013; Orens and Reheul,
2013). Specifically, owner-managers act because of
their understandings of issues and their personalised
understandings influence the decisions they make
about the management of an SME. Our system-
atic review reveals that owner-managers have par-
ticular understandings when it comes to HRD prac-
tices. They frequently learn in an experiential fash-
ion and, as a result, prefer informal HRD practices.
Bishop (2008), Deakins et al. (2012) and Smith and
Whittaker (1998), for example, found that they place
less value on formal practices. They may also lack an
awareness of the value that formal HRD practices can
offer to an SME (Walker et al., 2007).
Hambrick (2007) highlights two further significant
issues in the context of UET that are particularly
salient in the SME context. He suggests that man-
agerial discretion and job demands may moderate
the influence of owner-manager personal character-
istics and values. Hambrick (2007) suggested that
the greater the managerial discretion of the owner-
manager, the greater the influence of owner-manager
characteristics. Similarly, the influence of owner-
manager job demands is important. Owner-managers
who have significant job demands are more likely ‘to
take mental shortcuts and fall back on what they have
tried and seen work in the past’ (Hambrick, 2007,
p.336). It is therefore more likely in this situation that
the choices that they make about HRD practices will
reflect their values, backgrounds and personal dispo-
sitions. The research indicates that owner-managers
have very significant job demands because they have
few subordinates, multiple task challenges and they
make a very significant investment in the success of
the business. This has implications for the managerial
attention they can devote to HRD issues (Chadwick
et al., 2013).
Overall, we suggest that the SME context is a par-
ticularly useful one in which to study the impact
of owner-manager attributes on organisational out-

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
comes. Smaller businesses are less constrained by
organisational inertia, they typically have centralised
decision-making processes, owner-managers control
the composition of the top team and there are signif-
icant resource constraints. UET therefore can open
up significant avenues for research on the central
role of the owner-manager as a decision maker in
SMEs.
Third, we propose that valuable research insights
may be gained about the adoption of HRD practices
in SMEs with strategic choice theory (SCT) (Child,
1972; 1997). One of the major assumptions of SCT,
and which make it a particular strong fit to the SME
context, concerns the existence of a dominant coali-
tion that directs both the choices and actions of the
business. Central to this dominant coalition in the
SME is the owner-manager who is assumed to have
control over decision-making. SCT also acknowl-
edges the interdependence of environmental factors
and the critical role of key decision makers. Kochan
et al. (1984) argued that a pre-condition for strategic
choices is that the decision-maker can actually in-
fluence the strategic direction of an organisation and
that environmental factors do not overpower the deci-
sion maker’s ability to decide. Research suggests that
choice in the SME context can be reactive or proactive
(Worthington and Patton, 2005). Patterns of choice
will be influenced by the nature of the SME and the
market conditions in which it operates. In relation to
HRD, Patton and Marlow (2002) argue that due to the
vulnerability and external uncertainty facing SMEs, a
short-term, reactive, informal approach to HRD may
represent an appropriate response and thus may be
interpreted as strategic in this particular context. It
is thus a potential misconception to label SMEs as
deficient and lacking in strategic intent with respect
to HRD purely because of a relatively low level of
engagement in formal interventions. The choice of
individual SMEs to adopt informal approaches to
HRD has been described as an informed decision
by Storey (2004) and the outcome of a legitimate
reasoning process by Kotey and Folker (2007). Fur-
ther empirical work has shown that informality fits
well with the constraints under which small organi-
sations operate, and may in fact be more appropriate
and effective in enhancing business performance in
this particular context (Coetzer, 2006a). Consistent
with the arguments of Edwards et al. (2010), the ex-
tent of strategic choice may explain the considerable
differences and idiosyncrasies that exists within and
between SMEs and why they respond differently to
the same external conditions. We also suggest that the
Human Resource Development in SMEs
constraints on strategic choice in the context of HRD
practices can be either direct or subtle. It is likely
that SMEs will find themselves embedded in various
strategic relationships and, as a result, the SME can-
not be studied in isolation when investigating HRD
practices.
Overall, our systematic review highlights the need
to both broaden and deepen the theoretical base of re-
search on HRD in SMEs. We have confined our sug-
gestions here to three theoretical perspectives; how-
ever, ultimately the specific theories that researchers
utilise to study HRD in SMEs should be carefully cho-
sen to provide support for specific research questions.
Theories, if chosen carefully, will provide lenses
through which HRD in SMEs researchers can pro-
pose new and innovative questions.
Methodology: future directions
The second question that our review sought to
discover concerned the methods that are used to
investigate HRD in SMEs. The SLR highlighted
multiple quantitative, qualitative and mixed-method
approaches with little agreement on how to define
and measure HRD practices, how those methods
should be used, and in which SME contexts they
are more appropriate. We suggest that in order for
HRD in SME, research to make an impact and be
published in higher quality journals, a number of
methodological issues need to be considered. We also
propose that it is necessary to adopt innovative ap-
proaches that have unique application to the SME
context.
Selection of Samples
Our SLR highlighted a number of critical issues re-
lated to the selection of samples. First, the existing
body of HRD in SMEs research is very limited in
terms of the countries covered and the types of firms
that are included. There is an almost total absence of
studies from developing countries and in particular,
Asia and Africa. There is a strong bias towards studies
in one particular country due to issues related to data
availability and access. We also acknowledge bias in
our sample given the total reliance on articles derived
from English medium journals. The lack of access
to non-English medium journals may explain the un-
derrepresentation of developing countries. SMEs are
a global phenomenon; however, comparative stud-
ies are largely absent from the literature. The major-

C 2015 British Academy of Management and John Wiley & Sons Ltd.
97
ity of HRD in SMEs studies use a combination of
quantitative and/or qualitative approaches; however,
insufficient attention is paid to the selection of sam-
ples that enable the development of theory about the
characteristics of HRD in SMEs in different national
contexts.
Second, we found evidence of significant sampling
and method bias in existing studies. For example,
researchers tend to select owner-managers and fre-
quently ignore other employee categories. It is im-
portant in order to understand the complexities of
HRD systems or architecture in SMEs to capture the
perspectives of multiple decision makers in shaping
how HRD is enabled in SMEs. Employees are not
‘passive recipients of management control’ (Ram and
Edwards, 2003, p.722) and thus are important actors
in the HRD system. There is a clear need to inte-
grate both managerial and employee perspectives as a
means of capturing the potential plurality of interests
in the SME setting. We therefore advocate the under-
taking of multi-level assessments of HRD by com-
paring both owner-manager and employee responses
(cf. Verreynne et al., 2013). It is also important in the
context of strategic choice theory to collect data from
clients, customers, suppliers and strategic partners. It
will be necessary to gather quantitative and qualitative
data over time in order to capture the characteristics
that shape the exercise of strategic choice in the case
of HRD. Longitudinal research may be more effective
in capturing the dynamism of these relationships and
how they influence choices about HRD. This suggests
that from a methodological perspective it is important
to define the boundaries of HRD research in the SME
context. From a strategic choice perspective, research
should not stop at the SME but should also engage
with key influencers and relationships in the exter-
nal environment. Colbert (2007) has suggested that
to best utilise the CRBV, researchers should make
greater use of qualitative research approaches to col-
lect data from multiple actors.
Third, through their empirical design, many stud-
ies on HRD have focused on exploring the degree
of proliferation of intensive formal practices, nor-
mally associated with activities undertaken by well-
staffed, sophisticated HR departments in larger firms.
Quantitative studies (e.g. Bryan, 2006; Pajo et al.,
2010) have used measures that may not capture or
take adequate account of the informal, flexible na-
ture of HRD that actually occurs in SMEs. Patton
and Marlow (2002, p.261) argue that such forms of
knowledge and skill generation should not be ignored
because they lie ‘outside the measurable template of
98
formality’, while Rigg and Trehan (2004) maintain
that a focus on formal HRD activity alone does not
capture the complexity of HRD in small firms and
presents a highly distorted picture of their activities.
Much SME HRD therefore often goes unnoticed with
the ensuing outcome being an under-estimation of
activity (Smith et al., 2002). This suggests that the
terminology used in quantitative studies may not sit
comfortably in SMEs and the language is likely to
be alien to owner-managers, who may be less able to
answer questions on topics that are alien to their daily
work.
Fourth, in order to more fully understand issues of
SME context, researchers need to be more system-
atic in terms of the types of SMEs that are included
in samples and they need to categorise SMEs more
accurately in order to understand how and whether
the SME context actually matters. Our review illus-
trates that there is great diversity in SME settings
and organisational characteristics. SME settings that
have received less attention from researchers include
non-profit organisations, community-level SMEs and
professional service firms. Our review points to con-
texts that therefore remain unexplored in relation to
HRD in SMEs and are thus ripe for investigation.
We therefore urge researchers to exercise greater care
in selecting firms and to define the study population
with greater care. Researchers need to be more pre-
cise as to why particular industries or firm types are
chosen as our SLR revealed little justification of the
research site. More situated studies of HRD prac-
tice are required to capture the subtleties and textures
of SME HRD in a range of contexts. Methodolog-
ically, this may involve greater use of ethnographic
studies incorporating observational and participative
research.
More Innovative and Research Context-Specific
Approaches
We argue that there is significant scope to utilise
methodological approaches that have uniqueness and
are significant to the SME research context. We now
propose three particular concepts that have value in
this context, namely localised interpretation, con-
textual rationality and polyphony. We select these
methodological concepts because of their fit to the
way HRD is practiced in SMEs. In particular, they
will help researchers to capture the informal and so-
cially constructed nature of HRD practices, the com-
plexity of such practices and their variation across
a population of SMEs. These concepts are informed

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
by a social constructionist perspective (Berger and
Luckmann, 1966) that seeks to explain how social
experience is created and given meaning by actors
in the organisational setting, thereby recognising the
centrality of context. First, we argue that the notion
of localised interpretation has value in opening up a
theoretical and analytical space to explore HRD in
SMEs as a socially constructed category. Localised
interpretation provides researchers with the space to
understand the emergence of HRD in SMEs and pro-
vides them with the opportunity to engage with stake-
holders who can identify their own (emic) version
of the HRD concept and illuminate actual practice.
Such an approach would resonate with important de-
velopments with the HRM in SMEs literature, no-
tably by Gilman and Edwards (2008, p.531), who
have argued that ‘small firms need to be studied in
relation to how they behave, rather than contrasting
practice with an idealised image of what they should
do’.
The second concept that has something to add from
a methodological perspective is the concept of contex-
tual rationality. Contextual rationality refers to actions
which are reasonable within a given context (Lukes,
1970). Townley (2008) has argued that contextual
rationality emphasises that rational action does not
need to have full awareness of the reasons why ac-
tions occur and it does not have to fully understand
the efficacy of actions for it to constitute a rational
thing to do. These features may be explained by the
‘context’ in which the action takes place. This sug-
gests that contrary to what we found in our SLR, the
SME context should be investigated more than simply
as a backdrop that shapes HRD practices. We argue
that contextual rationality is a key, but misunderstood
part of the HRD process in SMEs. The SME context
gives action and understanding its viability (Townley,
2008), and it therefore can legitimise particular HRD
practices in the SME context.
Third, the concept of polyphony (Bakhtin, 1984)
provides a valuable research tool to understand HRD
in SMEs. This concept suggests that HRD in SMEs
must be understood as a polyphonic phenomenon if
different discourses are to emerge and be accom-
modated. Researchers have highlighted that while
polyphony is always present, it tends to be silenced
by a dominant discourse (Kornberger et al., 2006). In
the case of HRD, the dominant discourse has tended
to assume that generic models have universal rele-
vance and has thus failed to adequately capture the
context-dependent nature of HRD in SMEs and the
variation of arrangements, strategies and processes in
Human Resource Development in SMEs
organisations (Kuchinke, 2003). Our earlier discus-
sion has also highlighted the managerialist perspec-
tives that dominate accounts of HRD in SMEs and
how the dominant discourse has served to sustain and
support predominantly formal patterns of activity to
the exclusion of informal approaches that frequently
prevail in the SME setting. Therefore, researchers
should endeavour to open up a discursive space for
the multiple and diverse perceptions of HRD found
in a heterogeneous population of SMEs and the ac-
tors therein. It has value in encouraging multivocality
(Law, 1994) and highlights the futility of looking for a
universal notion of what HRD is. In the turbulent con-
temporary business environment, Sambrook (2009)
argues that the issues of what HRD does and what it
can become are of greater importance. Against this
backdrop, we argue that the concept of HRD should
have a degree of semantic elasticity (Van Maa-
nen, 2011) when undertaking research in the SME
context.
Content: future directions
The third question of this SLR focused on the content
dimensions investigated in the literature and the iden-
tification of content research gaps. In this section,
we explore three key goals informed by the three
theoretical perspectives discussed earlier: the RBV
and CRBV, UET and SCT. These theoretical perspec-
tives suggest several intriguing directions for further
research that emerged from our SLR.
Alignment, Fit and Outcomes of HRD in SMEs
Numerous questions arise from the use of both the
RBV and CRBV that have to date not been explored
in the context of HRD in SMEs. In the context of
alignment and fit, there are major gaps concerning
how effectively HRD practices align with SME strat-
egy. What particular HRD practices are more or less
effective and in what situations? Are there different
configurations of HRD practices that are appropriate
to address different SME strategies? A particularly
important but yet, unanswered question, concerns the
conditions that initially facilitate the emergence of
informal HRD practices and their relationship to for-
mal practices. We lack fundamental insights on the fit
of different degrees of formality-informality. Specifi-
cally, what are the conditions that explain the adoption
of formal practices? How do formal practices evolve
over time and how are these practices related to the

C 2015 British Academy of Management and John Wiley & Sons Ltd.
99
unique and idiosyncratic nature of the operating en-
vironment of an SME? Colbert (2007) suggested that
the CRBV is particularly useful in explaining these
‘how’ questions.
A particularly important RBV / CRBV question
concerns the characteristics of the HRD architec-
ture in SMEs and a deeper understanding of how it
contributes to firm performance (Arthur and Boyles,
2007). We have gaps in our understanding of the firm-
level outcomes of both formal and informal HRD
practices. How do outcomes differ between general,
entrepreneurial and traditional lifestyle SMEs? What
team and organisation-level practices contribute to the
achievement of SME strategy and in what conditions?
It is important to be conceptually clear as to the defi-
nition of team and organisation-level HRD practices.
Does it suggest an HRD architecture implemented at
the team or organisational level or is it practices de-
signed to facilitate team and organisational function-
ing? In addition, it is important to understand how
the quality and intensity of HRD practices impacts
SME organisation and individual-level outcomes. We
have scope to investigate how mediators such as man-
agerial style, SME climate and developmental cli-
mate affects the relationships between formal / in-
formal HRD practices and organisational / individual
outcomes.
Strategic Choice Issues
First, consistent with the strategic choice theoreti-
cal perspective, there are significant knowledge gaps
concerning whether SMEs engage in purposeful
investment in strategically anchored HRD practices.
Research questions relevant to this issue include the
following: Do SME owner-managers view investment
in HRD as a business opportunity to be exploited and
commit resources to HRD practices? To what extent
will SMEs go beyond legislative compliance or cus-
tomer/supplier demands? Do owner-managers have
a strategic orientation that focuses on enhancing the
competitiveness of an SME? How does strategic ori-
entation influence the sophistication of HRD prac-
tices adopted in SMEs? What factors drive reactive
approaches to HRD issues? Second, there are ma-
jor gaps in our understanding of how SME strategic
choice in the context of HRD is influenced by external
bodies such as trade unions, employer associations,
training agencies, customers and suppliers. Questions
that arise in respect of this issue include the following:
Do they mandate particular HRD practices? How do
these factors influence the emergence of HRD? What
100
role do employees have in strategic choice? What
influence do employee demands for HRD have on
decisions made by SMEs? Third, there are interest-
ing questions about short and long-term perspectives
on HRD. For example, does a compliance or reac-
tive approach represent a less risky alternative where
there is an immediate concern with short-term sur-
vival? Is it the price to be paid for business continuity
rather than a basis to develop long-term competitive
advantage?
Fourth, the strategic choice perspective highlights
the role of individual agency. Questions that arise
include the following: In the SME context is there
greater scope for individual agency and personal
choice when it comes to HRD practices? Bishop
(2008) and Coetzer et al. (2012), for example, found
that the subjective orientations of employees exert an
important influence on the shape of an SME’s HRD
activity. A range of different interests and expecta-
tions amongst two key stakeholder groups may me-
diate HRD in SMEs in particular; owner-managers
undoubtedly exert considerable power, however, their
influence will be tempered by employee attitudes,
motivation and orientations, both positive and neg-
ative. Importantly, owner-manager power is not ab-
solute and employee input will affect the deploy-
ment of HRD and shape its operation. The nature
and form of HRD in SMEs is therefore the out-
come of ongoing, dynamic and complex interactions
within the idiosyncratic SME context (cf. Ram and
Edwards, 2003). These issues require further research
attention.
Owner-Manager Characteristics
We need to understand the influence of the owner-
manager in the context of HRD practices. First, con-
sistent with UET, there are major gaps in knowl-
edge concerning the influence of personal charac-
teristics of the owner-manager, e.g. demographics,
personality characteristics and values, in explaining
HRD practices in SMEs. Questions that arise here
include the following: To what extent are HRD prac-
tices in SMEs a reflection of the owner-manager?
How do social, psychological and cognitive charac-
teristics of owner-managers explain HRD practices?
What are the attitudes of owner-managers towards
HRD? Have they positive or negative attitudes? Do
they view HRD as a cost rather than a business
opportunity?
Second, we have gaps in knowledge about the
HRD orientation of the owner-manager. HRD ori-

C 2015 British Academy of Management and John Wiley & Sons Ltd.
C. T. Nolan and T. N. Garavan
entation refers to the extent to which an SME val-
ues investment in training, development and learning
activities (Monks et al., 2012; Sterling and Boxall,
2012). HRD orientation is central to the decision
to invest in HRD and build a HRD system or ar-
chitecture. Questions that require more attention on
this issue include for example: What SME competi-
tive conditions promote an HRD orientation? How
does HRD orientations influence HRD processes,
policies and practices? Third, research is needed to
understand the factors that explain the HRD orien-
tation of owner-managers and how orientation in-
fluences resources made available for HRD and to
understand the role of HRD orientation in explain-
ing the relationship between HRD and performance.
Relevant research questions include the following:
Does HRD orientation influence the sophistication
of HRD practices adopted in SMEs? How does
HRD orientation manifest in different SME contexts?
Fourth, UET raises other interesting questions in the
context of the owner-manager. For example, what
impact does the tenure of the owner-manager have on
attitudes and values towards HRD? Are long tenured
owner-managers less enthusiastic about HRD? What
impact does education level have? Are higher lev-
els of education associated with a greater capacity to
process information about HRD issues? How does ed-
ucation shape the cognitive base of owner-managers
concerning HRD? Finally, there is major scope to in-
vestigate the two moderators proposed by Hambrick
(2007) specifically: How does workload affect man-
agerial attention by the owner-manager to the HRD
architecture? What role does owner-manager discre-
tion play in enhancing or reducing the influence of
personal characteristics?
Conclusion
This SLR is the first synthesis of empirical studies
exploring HRD in SMEs utilising a rigorous method-
ology. Overall, the review of 117 papers suggests
some progress towards understanding HRD in SMEs.
HRD in SMEs is a worthwhile area of research; how-
ever, there is a need to enhance the quality of schol-
arships and achieve a more effective integration of
both the HRD and SME literatures. The review il-
lustrates the diversity of SME contexts and research
foci which have been investigated, and it shows that
HRD in SMEs has viability as an area of research.
Scholars exploring HRD in SMEs are using a nar-
row base of theories and there is significant scope to
Human Resource Development in SMEs
build upon existing theories and to develop theory
that is uniquely applicable to the SME context, e.g.
CRBV, UET and SCT. Our SLR emphasises the im-
portance of advancing the methodology to conduct
HRD in SMEs. There are significant deficiencies in
methodologies adopted and researchers must utilise
innovative, situated approaches that fit with the SME
context.
We concluded the SLR in a disciplined way and
it has a number of strengths and limitations. We in-
cluded both conceptual and empirical articles, thus
allowing us to capture the full spectrum of intellec-
tual endeavour on the topic. We adopted a rigorous
approach to the analysis of the papers. The papers
were assessed independently by both authors, thus
ensuring that the evaluations of papers were more ac-
curate. In terms of limitations, many of the studies
included in the review defined and measured HRD
activities in different ways. We have tried to resolve
these ambiguities, but acknowledge that we may have
lost some nuance in comparing studies for the review.
Our review does not escape the limitation of publi-
cation bias. We focused on published studies and ig-
nored unpublished work, findings presented in book
chapters and at conferences. Our review also suffers
from some general limitations of SLRs, where the ap-
plication of rigid criteria can lead to the exclusion of
relevant studies and it may limit creativity and innova-
tion (Easterby-Smith et al., 2012; Wang and Chugh,
2013).
We are confident that our SLR can make a mean-
ingful contribution to theory and research. First, as
a viable area of research, we have mapped out the-
matically the current body of research literature that
conceptually and empirically explores HRD in SMEs.
Secondly, we have been selective in the theoreti-
cal perspectives that we consider can advance the
field. These theoretical perspectives (RBV/CRBV,
UBT, SCT) provide an effective fit with the SME
context and they help capture the full spectrum of
HRD practices found in SMEs. Finally, these per-
spectives present particular challenges in the selec-
tion of methodological approaches. Methodological
approaches need to capture the complexity of HRD in
SMEs, account for the dynamic nature of SME busi-
ness relationships and environment, combine qualita-
tive and quantitative data sources, incorporate man-
agerial and employee perspectives, and study the
evolution of HRD practices over time. These con-
siderations, if implemented effectively, will lead to
research that has greater rigour and generalisability.

C 2015 British Academy of Management and John Wiley & Sons Ltd.
101
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Supporting Information
Additional Supporting Information may be found in
the online version of this article at the publisher’s
website:
Appendices 1 and 2