Small and Medium Enterprises (SMEs) in Japan have been playing a major role in area of Japanese economy. Many SMEs are key suppliers to large businesses and represent the backbone of the world third largest economy. However their role in the economy has been hindered by their weak performance during last two decades. The firm entry rate has shown downward trend while exit rate has trended upward in recent years and considerably exceeded the entry rate. One of the reasons for high rate of business failure in SMEs, as some SME advocates argue that, is due to its less attention to the human side of their business. Therefore, the broad objective of this paper is to examine Human Resource Management (HRM) practices in SMEs in Japan. Specifically, this study aims to examine the relationship between HRM practices and operational performance in terms of employees’ Organizational Citizenship Behavior (OCB) of SMEs in Japan. Moreover, this study attempts to examine the relationship between HRM practices and OCB shedding some lights on the link between HRM practices and OCB. A structured questionnaire was developed and sent to 436 SMEs in Aichi Prefecture and 144 firms responded to the questionnaire resulting in 32 percent response rate. Based on the data analysis it was found that there is strong positive correlation between HRM outcomes and OCB of employees in manufacturing SMEs in Japan.
Keywords: Human Resource Management, Small and medium enterprises, HRM outcomes, organizational citizenship behavior.
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