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The Interrelationship between HR, Strategy and Profitability in Service SMEs: Empirical Evidence from the UK Tourism Hospitality and Leisure Sector

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  • Andreas Georgiadis
  • Christos N. Pitelis

Abstract

We investigate the strategies, HR attributes and their synergies that are associated with superior performance in service SMEs using data from the UK Tourism Hospitality and Leisure (THL) sector. A major advantage of our analysis is that our sample includes information also on very small firms which makes results representative of the industry but also sheds light on a very little investigated area related to the nature of HRM and its link with performance of micro businesses. Our results suggest that high-performing SMEs in the THL sector are managed by more experienced entrepreneurs. Moreover, they employ a combination of technological and know-how firm differentiation strategies together with a highly skilled workforce, and/or a combination of (product) differentiation strategies based on quality of service and personal attention to customers, and a generous compensation package and attention to employees development.

Suggested Citation

  • Andreas Georgiadis & Christos N. Pitelis, 2010. "The Interrelationship between HR, Strategy and Profitability in Service SMEs: Empirical Evidence from the UK Tourism Hospitality and Leisure Sector," CEP Discussion Papers dp0972, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0972
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    More about this item

    Keywords

    Value capture strategies; Human capital; Organisation Commitment to Employees; Profitability;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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