One main challenge for human resource (HR) management in small and medium-size enterprises (SMEs) is to balance the formal policies and the informal culture of these smaller firms. While HR formality has remained a subject of much qualitative analysis, it has not received much quantitative analysis. Using a sample of 89 Vietnamese SMEs this study tested the level of formality as a dimension of HR management. The results supported our hypotheses that firm size is positively related to HR formality, and that HR formality is positively associated with owners’ perceptions of firm performance. This study provides important research implications as well as practical implications for managers and policy makers.
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