THE EFFECT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON SUPPLY CHAIN MANAGEMENT SUCCESS: EMPIRICAL FINDINGS FROM THE SMES

IN KARACHI
ABSTRACT: Organizations are always engaged in enhancing their business processes. To gain competitive edge in the industry is one of the challenges facing many business organizations today. This thesis is broadly concerned with the human resource management practices that influence and shape the supply chain management success in the small and medium enterprises (SMEs) operating in Karachi, Pakistan. Specifically, the research identified the core elements of human resource management (HRM) practices, which strongly influence on the supply chain management (SCM) success. The study comprises quantitative survey of 195 SMEs from Karachi, covering eight services and manufacturing sectors which include: 1) Financial Institution, 2) Engineering/Construction, 3) Fuel/Energy, 4) Chemical/Pharmaceutical/Medical, 5) Education/IT/Science, 6) Textile/Leather/Sports, 7) Food/Restaurants, and 8) Transportation/Communication. Primary data was collected by means of survey, which was self administered. Questionnaire comprises three major sections. Section one is used to collect the perceived level of HRM practices, whereas section two is to measure the SCM success while section three is used for collecting demographic information. To test the hypotheses of the study, correlation, and multiple regression analysis were performed. The finding reveals greater insights into the HRM practices relationship and provides empirical validation of the relationship with SCM success. Descriptive analysis demonstrates that SMEs in Karachi generally practiced the HRM practices at moderate level. The mean value of HRM practices is 3.553 and SD value is 1.126. More particularly selection is moderately practiced in the organization (mean = 3.49, SD = .55) along with training (mean = 3.35, SD = .51), compensation (mean = 3.68, SD = .57), and evaluation (mean = 3.69, SD = .70). With respect to supply chain management, the SMEs responded in this study are generally inclined towards the supply chain management practice (mean = 3.66, SD = .95). Furthermore, the research examines the relationship between HRM practices and SCM success in SMEs. These HRM practices are Selection, Training, Compensation and Evaluation. The outcome of the HRM practices relationship with SCM success was examined by using correlation analysis and multiple regression analysis. The correlation analysis suggests significant and positive relationship among three of the four HRM practices variables and the SCM success. The correlation results suggest that SCM success is positively and significantly associated with Training (r = .510, p = .000), Compensation (r = .654, p = .000) and Evaluation (r = .556, p = .000) in SMEs. However, this study finds no relationship between Selection practice (r = .033, p =.730) and SCM success. Multiple regression analysis result indicates that among the four factors of HRM practices, training and compensation (with significant score of .000 and .025 respectively) are the two main predictor variables to SCM success in the private sector SMEs and significantly and positively effects SCM success. Results from correlation and multiple regression analysis further suggests that training and compensation are two key variables which would lead to successful implementation of supply chain management in the SMEs of Karachi, Pakistan.

The study produce a model suitable for use by human resource practitioners and supply chain managers as a guide in determining what initiatives an organization should adapt for a successful human resource and supply chain management integration in SMEs. This research has also made a contribution by revealing the relationship between HRM and SCM practices in small and medium enterprises operating in Karachi and providing relevant empirical evidence to support the theoretical model of this study and as a result crafting a pattern for SMEs operating in Karachi.