The relationship between human resource management practices, corporate entrepreneurship and business performance in medium and large businesses in Gauteng Province.

Abstract

Globalisation is creating profound and substantial changes for businesses and industries throughout the world. These changes have forced businesses to re-evaluate their organisational philosophy and strategic approaches to become more competitive. Businesses in general have to deal with internal and external challenges. To address these challenges, there is a significant amount of written consensus internationally, which denotes that established businesses should encourage entrepreneurial activity throughout their operations to compete successfully on a continuous basis. Therefore, businesses should identify and implement entrepreneurial actions such as developing new products and ideas or adapt their internal processes to new situations. Corporate level entrepreneurship plays an indispensable role in improving productivity and promoting economic growth. Entrepreneurial activities can result from individual creativity or pursuit of self-interest and some of these activities could eventually receive the business’s formal recognition and thus become an integral part of the business concept. Entrepreneurial activities are often initiated by individuals within an organisation. Therefore, one way in which organisations can remain competitive in today’s rapidly changing environment is to address the issue of achieving productivity through their employees. Human resources can either hinder or encourage corporate entrepreneurship. This study addresses the relationship between human resource management practices, corporate entrepreneurship and business performance in medium and large businesses. Four hypotheses were put forward for testing. A quantitative, formal and cross-sectional approach was used. Data were collected using a survey and self-administered questionnaires were emailed to 744 human resource managers in medium and large businesses in Gauteng. A response rate of 47.6 percent was achieved as 351 usable questionnaires were received. Items in the questionnaire were adapted from previous studies. Factor analysis was conducted to test the validity and reliability of the research instrument. Both descriptive and inferential statistics were applied to test the hypotheses. The empirical evidence indicated that corporate entrepreneurship is stimulated by better employee relations, selection practices, compensation, high levels of employee development and skills training. Selection and staffing are the most significant drivers of corporate entrepreneurship. The evidence further shows that human resource management practices influence business performance as well as that a positive relationship exists between innovation intensity and risk propensity, and business performance. The results also show that corporate entrepreneurship is a mediator between human resource management practices and business performance. As this was the first formal study conducted, which aimed to determine the influence of human resource management practices on corporate entrepreneurship and how it affects businesses performance, it can serve as a guideline for businesses in South Africa to assess their entrepreneurial intensity and corporate entrepreneurial climate.