Abstract:
Small and Medium Enterprise (SME) sector is playing a significant role in Japanese
economy. However, over the last two decades, SMEs have no longer been a thriving
source of growth. The firm entry rate has downward trend while exit rate has trended
upward in recent years and considerably exceeded the entry rate. One of the reasons
for the high rate of business failures in SMEs, is due to its less attention to the human
side of their businesses when compared with their counter parts of large enterprises.
High voluntary turnover is considered to be the one of critical problem for SME
owner/managers among many other human resource issues. Therefore, the objective
of this paper is to examine the relationship between Human Resource Management
(HRM) practices and voluntary turnover in SMEs in Japan. Specifically, this study
attempts to examine the relationship between HRM practices and voluntary turnover
shedding some lights on the mediating effect of the link in between HRM practices
and turnover rate. 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 negative
but weak relationship, partially mediated by HR outcomes, between HRM practices
and voluntary turnover rate in manufacturing SMEs in Japan.
