Abstract

Human resource management is traditionally described as “the systematic process of acquiring, developing, rewarding and maintaining an organization’s people resources to maximize performance” (Butler and Schuller, 2005). As newly founded organizations grow and mature, their human resource requirements and needs change rapidly. Human capital is acknowledge to be an important source of sustained competitive advantage (Hayton, 2003, Barney, 1991), yet it is an especially difficult challenge for new firms to competently acquire and develop this valuable resource (Welbourne and Katz, 2002).

New ventures are often resource-constrained and so face a unique struggle between the demands of timeliness, quality and cost for their human resource practices. Firms that take the time to recruit and develop a high-performing workforce may miss windows of opportunity or prematurely run out of cash. Similarly, firms that rapidly add employees to meet growing demand may suffer from poor hiring decisions that have long-term financial consequences. A critical question then is how do successful new firms with little operating experience or financial resources find the appropriate balance that enables them to meet the demands of their particular business environment?

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