The Impact of Human Resource Management Practices on SMEs Performance: An Exploratory Study in Brunei Darussalam

Resource Based View

The main idea of RBV is many business organizations are competing with similar goods and services due to the similar source of resources (Peteraf & Bergen, 2003). Although it is essential to gain access to the source, it is equally important to manage and synchronize them effectively (Holcomb et al., 2009). The RBV is one of the strategic management theories which describe how business organizations achieve competitive advantage by configuring their resources to become (i) rare; (ii) difficult to imitate; and (iii) difficult to substitute (Costa et al., 2013; L’Ecuyer & Raymond, 2017). This reasoning explains how different business organizations in terms of size, are able to thrive by relying their internal factors (Kasturi et al., 2006).

This implies the importance of linking key resources with the business performance (Kunc & Morecroft, 2010). Based on the RBV, the business organizations can achieve sustainable competitive advantage by implementing the proper HRM practices (Batt & Hermans, 2012). This is due to the value of HRM practices are derived from the employees’ knowledge and capability (Newman & Sheikh, 2014). Therefore, this study will further analyze how the HRM practices are significant to the SMEs performance.