The adoption of human capital services by small and medium enterprises: A diffusion of innovation perspective

While lack of scale economies have traditionally limited the use of human capital programs among small and medium enterprises (SMEs), outsourcing models have recently emerged to provide cost-effective access to these programs. Drawing on the diffusion of innovation literature, we apply the rational accounts model and institutional theory to examine why SMEs differ in their willingness to use newly available human capital programs. We specifically examine the impact of SME size on the adoption of human capital innovations. Using survey and archival data from over 400 SMEs, we found broad support for the integrated approach we propose.