Impact of internal additional compensations policy on revenues in cross-sectoral SME environment

Abstract

© 2019 Inderscience Enterprises Ltd. A contemporary business practice attributed to the small and medium-sized enterprises (SMEs) reflects rather ad-hoc employees' compensations policies. In this study, we investigate whether cross-sectoral differences exist with respect to the additional compensations performance on the sample of IT (information technologies) and non-IT small firms coming from an emerging market in Europe. The central research includes systematic statistical analysis of the relations between additional compensations performance (both material and non-material) and revenues growth for more than 60 SMEs. We conclude that cross-sectoral differences of additional compensations' impact on revenues growth are evident. IT SMEs are more likely to experience year-to-year revenues growth when they perform additional compensations towards their employees and they execute nonmaterial additional compensations more frequently. However, variables observing employee category receiving an additional compensation and funding spent for additional compensations did not show considerable statistical significance with respect to impact on revenues growth for both observed sectors.