Sustainable human resource development in urban micro, small and medium enterprises: Strategic mapping of workforce capabilities

Abstract

Orientation: Micro, small and medium enterprises (MSMEs) are crucial engines of economic growth, yet their competitiveness in emerging economies is constrained by persistent structural and human resource development (HRD) challenges.
Research purpose: This study examines the HRD landscape of urban MSMEs in Yogyakarta, Indonesia, to develop a sustainable workforce development framework.
Motivation for the study: The research is motivated by the need to address persistent HRD issues, specifically owner-centric management, substantial training gaps and informal HR practices that hinder MSMEs’ potential despite their significant economic role.
Research approach/design and method: A multimethod qualitative design was employed, involving 440 MSMEs. Data collection combined observations at 30 business sites, in-depth interviews with 30 owners, 12 focus group discussions and open-ended questionnaires. Data were analysed thematically.
Main findings: The analysis identified four critical HRD challenges: (1) owner-centric, familial structures impeding professionalisation; (2) substantial training gaps, with 66% of MSMEs never having formal training; (3) weak community affiliation, as over half are unaffiliated with business associations; and (4) a reliance on informal HR practices without standardisation.
Practical/managerial implications: The findings advocate for multilevel interventions: targeted training (micro level), cluster and mentorship development (meso level) and policy alignment with the Sustainable Development Goals and Indonesia’s Vision 2045 (macro level).
Contribution/value-add: Theoretically, the study integrates the Resource-Based View, Knowledge-Based View and the Ability, Motivation, Opportunity framework. It proposes the ‘Adaptive Tiered Grand Design’, a phased HRD roadmap that contributes to the global discourse on sustainable MSME development in emerging economies.