Economic sustainability factors influencing the implementation of sustainable HRM in manufacturing SMEs

In today’s business environment, sustainable development takes precedence, emphasizing the pivotal role of human resource management (HRM), including sustainable HRM, in the practical application of sustainability. Yet, existing research predominantly explores the environmental and social dimensions, leaving a notable gap in understanding the factors influencing economic sustainability within HRM. This gap is critical for organizational sustainability. This paper addresses this gap by spotlighting the significance of economic sustainability practices underpinning HRM in manufacturing SMEs. Nine economic sustainability factors are identified through literature and expert validation. Using total interpretive structural modeling, the study unveils their intricate interconnections, constructing a hierarchy. A matriced impact croises multiplication applique(MICMAC) analysis reveals “macroeconomic policies” as the most influential factor shaping sustainable HRM, impacting all others, while “employment guarantee/income stability” and “profitability” rely significantly on other factors. Practical implications involve integrating “macroeconomic policies” into HRM, optimizing “human resource efficiency” and “cost reduction strategy,” and facility enhancement. SMEs can strengthen economic sustainability commitment, employ re-engineering and restructuring strategies, and emphasize “increase in sales/productivity.” This research offers SMEs a framework to enhance HRM practices, align with economic sustainability, and contribute to broader sustainability goals.