Can better working conditions improve the performance of SMEs? An international literature review

This study reviews the literature on the link between working conditions, safety and health and skills development, on the one hand, and increased productivity on the other, with a specific focus on small and medium-sized enterprises (SMEs). The writers find research evidence of an association between good workplace practices and various types of positive enterprise-level outcomes. These positive outcomes include reduced employee turnover, improved profitability and higher levels of customer satisfaction.
The literature surveyed consists in the main of studies of high-income economies and rather than unpacking the influence of different practices these studies serves to affirm that practices have best results when they are employed together. So, for example, a coherent ‘bundle of practices’ , combining good occupational safety and health and training with improved working hours and wages will generally improve productivity, innovation and employee retention. The review also finds evidence of a cause and effect, suggesting that better management practices lead to improved business outcomes rather than vice versa.
Despite all of the above, the review highlights that more research is needed. In particular, the researchers note the lack of literature analysing the complexity of the relationship between working conditions, safety and health, skills development, and firm outcomes. They also note the need for research in this area in developing and emerging economies.

Ebook ISBN: 9789221275510