Effects of Sustainable HRM Practices on Productivity: Insights from Italian Small Enterprises

Sustainability and Human Resources Management (HRM) are increasingly important concerns for small and medium-sized enterprises (SMEs). Our study focuses on the intersection between sustainability, HRM, and Small enterprises analysing that through the lens of performance in terms of average added value per employee (AAV). This study aims to address two research questions: (1) How do HRM practices and sustainable practices impact performance in terms of AAV in Small Enterprises in Italy? (2) Do Italian Small Enterprises driven by activities aimed at promoting employee welfare and sustainability have a higher AAV? Datasets from the Italian Institute of Statistics (ISTAT) - including the Permanent Business Census and the periodic "Labor and Wages" dataset - have been utilized to provide insights into the relationship between sustainable HRM practices and productivity in Italian Small Enterprises. As expected, our findings revealed that certain HRM practices are associated with a higher AAV, such as incentives based on results, worker skill assessments, and activities promoting physical and psychological well-being. However, surprisingly, some sustainability practices, such as flexibility of working time, work performance flexibility, initiatives enhancing employee equal opportunities and parenting, reducing environmental impact, and mobility between functions and job rotation, were linked to a lower AAV. The results highlight the complexity of the relationship between sustainability, HRM practices, and performance in small enterprises. While certain HRM practices seem to contribute positively to AAV, some sustainability practices may not have the same impact, leading to only partial confirmation of hypotheses H1 and H2. We discuss these results and provide a possible interpretation from which we derive opportunities for future studies. The inherent limitations of the study, in particular those related to the databases utilized, are declared and debated.