Job embeddedness, voluntary employee turnover and organisational tacit knowledge in small and medium enterprises

Abstract

The aim of this study is to examine the relationship between voluntary employee turnover and organisational tacit knowledge in small and medium size consulting firms. In order to achieve this, this study adopts a positivist paradigm using a quantitative methodology. Data were collected through cross-sectional surveys of 150 small and medium size education and training consulting firms in the GTA (Greater Toronto Area) of Ontario, Canada. Of this sample, 93 usable responses were received, which represented a 62% response rate. Two key sets of relationships were tested. First, organisational tacit knowledge, as the dependent variable, was regressed against voluntary employee turnover rates in 2015 and 2016 (model 1); secondly, job embeddedness, as an independent variable, was used as a predictor of voluntary employee turnover rates in 2015 and 2016 (Model 2). Furthermore, the level of investment in human capital was introduced into both relationships as a moderating variable. A preliminary pilot study was carried out, which found each of the four categories of variables in this study to be of significant importance to the surveyed organisations. Thereafter, data were collected in a main study on a cross-sectional basis and were analysed with the aid of descriptive statistics, correlation and linear regression. When the effects of “type of organisation”, “size of organisation”, “location of organisation” and “the number of years since organisation was formed” were controlled for in models 1 and 2, results showed that voluntary employee turnover rate is negatively related to organisational tacit knowledge; and, fit to community, one of the six dimensions of job embeddedness is negatively related to voluntary employee turnover rate, supporting hypotheses H1 and H2, respectively. A third result also showed that levels of investment in human capital can increase the scale of the negative relationship between organisational tacit knowledge and voluntary employee turnover rate - a result which supports hypothesis H3a. However, levels of investment in human capital were not found to be capable of increasing the scale of the negative relationship between any of the six dimensions of job embeddedness and voluntary employee turnover rate, which meant that hypothesis H3b is not supported. Given these mixed results, this study proposes the need for future studies to be conducted with a focus on developing voluntary employee turnover and tacit knowledge theories that are built upon data obtained from small and medium size organisations. This study also suggests a need to examine the role of functional and dysfunctional turnover in the relationship between organisational tacit knowledge and voluntary employee turnover. Key limitations in this study include the relatively small sample size of respondents to the administered questionnaire; the difficulty encountered in accessing literature and theories relating to the dynamics of voluntary employee turnover and tacit knowledge within small and medium size organisations; and the current gaps in the job embeddedness theory for predicting turnover rates within small and medium size enterprises.