Strategic alignment of HRM practices in manufacturing SMEs: a Gestalts perspective

Purpose – This paper seeks to take a Gestalts perspective to analyze the alignment between the HRM practices and strategic capabilities of SMEs. Design/methodology/approach – Based on Miles and Snow's adaptive cycle, this study examines the coherence of HRM practices with the strategic capabilities of manufacturing SMEs ( n =176) in terms of products, markets, and networks. A principal component factor analysis was first made to reduce the HRM practices into a lesser number of factors. A clustering algorithm was then used to determine three groups of SMEs or Gestalts . Finally, an a posteriori examination of the performance of each group was made. Findings – SMEs align their HRM practices with their realized strategy within three configurations, namely local, international, and world‐class SMEs. Regardless of their strategic choices, these SMEs achieve comparable levels of performance. Research limitations/implications – The Gestalts perspective seems effective in its capacity to describe the role of the HRM function. While the firms surveyed are fairly representative of Canadian manufacturing SMEs, there might yet exist a bias in that these are firms that have chosen to undertake a benchmarking exercise. Originality/value – The study is one of the first to use Miles and Snow's adaptive cycle as a foundation to specify the type of activities that researchers should consider in assessing the SME's overall degree of strategic alignment. A practical implication for owner‐managers is that their strategic choices in terms of product innovation, market expansion or network extension must be inter‐linked with the development of their HRM practices.