An Empirical Study on the Relationship between Employment Flexibility and Business Strategy towards Small and Mid-sized Enterprises

This study zeroed in on the labor force’s numerical adjustment and on human resource functionality, suggesting the factors that contribute to the attainment of employment flexibility, such as business strategies (cost reduction and innovation), company size, and labor union, and determining how employment flexibility and performance are related to each other at the firm level. For the survey results, it was found that overall, the SMEs that adopted an innovation strategy as well as relatively larger enterprises work proactively to realize HR functionality, such as by hiring based on meritocracy, investing in employee training, managing based on objectives, and pegging the annual pay of employees based on their performance, practices that boost performance. On the other hand, it was found that the SMEs that adopted a cost reduction strategy tended to hire non-regular workers to achieve labor cost savings but did not go to the extent of pursuing numerical adjustment in terms of HR management, such as declaring redundancies, laying off workers, and restructuring the workforce. It was shown in this study, however, that the companies without labor unions could numerically re-arrange or adjust their workforce by laying off workers.