An empirical investigation of Human Resource Development (HRD) in Saudi Small and Medium-sized Enterprises (SMEs)

Submission note: A thesis submitted in total fulfilment of the requirements for the degree of Doctor of Philosophy to the Department of Management and Marketing, School of Business, College of Arts, Social Sciences and Commerce, La Trobe University, Victoria.

Many researchers and scholars have noted that the literature on human resource development (HRD) focuses predominantly on large organizations and multinational companies, at the expense of small and medium-sized enterprises (SMEs). In addition, much of the available research on HRD in SMEs has come from North America, Europe and Australia. Very little is known about the extent of HRD practices and activities in emerging and developing countries. Saudi Arabia is an emerging economy that has significant natural and human resources, including 25% of the world’s oil reserves and with over 41.6% of its population being aged less than 30 years. Saudi SMEs comprise over 99% of the private sector and will play an increasingly important role in the Saudi economy in the 21st century. This study looks specifically at the Saudi context and investigates the nature, extent and implementation of current HRD activities and practices in SMEs in Saudi Arabia. It also aims to identify factors that may hinder or drive HRD activities in SMEs in Saudi Arabia. A mixed methods approach has been adopted for this study. A survey and face-to-face, semi-structured interviews were used to gather data from owners, managers or persons responsible for HRD in SMEs. A purposive sampling technique was used in this research. In total, 17 interviewees and 258 SMEs participated in this study. The findings revealed that the majority of Saudi SMEs use and prefer informal HRD activities and practices over formal activities and practices. HRD activities tend to be conducted on an informal, reactive basis with a short-term horizon instead of being planned and more sophisticated. Medium enterprises are more likely to adopt a systematic approach toward HRD practices and less likely to be influenced by HRD barriers compared to small enterprises. SMEs were hindered from becoming involved in more formal HRD activities by many barriers. A lack of suitable training programs, the availability of cheap skilled and semi-skilled foreign workers, the cost involved in training and lack of management experience are among the major HRD barriers in the Saudi SME context. This study suggests some future directions that can improve HRD practices in SMEs in Saudi Arabia. The most important suggestions for the long-term improvement of HRD practices in Saudi SMEs are to reform current Saudi educational and vocational systems to meet the needs of SMEs and to modify policies regarding the importation and recruitment of foreign workers.