A.Shaji George, S.Sagayarajan, Yazeed AlMatroudi, A.S.Hovan George
The future of work is undergoing a significant transformation with the emergence of Decentralized Autonomous Organizations (DAOs), a novel approach to organizational management and decision-making that leverages blockchain technology. These innovative structures hold the potential to revolutionize the way organizations function, enabling more transparent, democratic, and flexible systems. This paper presents an extensive survey of the DAO landscape, delving into their theoretical underpinnings, existing implementations across various industries, and potential future developments. Our goal is to provide a comprehensive understanding of the opportunities and challenges that DAOs pose for the future of work and organizational management, as well as to explore their implications for society at large. Central to our investigation are the core concepts and technologies that underlie DAOs, such as blockchain, smart contracts, governance mechanisms, and tokenomics. We examine how these elements come together to create a new paradigm of organizational structure, one that departs from traditional hierarchical models in favor of a more decentralized approach. By exploring the various ways in which DAOs have been implemented across different sectors, we gain valuable insights into their practical applications and the diverse range of use cases they can accommodate. In addition to highlighting the benefits and opportunities that DAOs offer, such as democratized decision-making, enhanced transparency and accountability, and global collaboration, we also address the challenges and limitations they face. These include issues related to technical barriers, scalability, legal and regulatory uncertainty, governance and token distribution, and security and privacy concerns. By examining these challenges, we can better understand the obstacles that must be overcome in order to fully realize the potential of DAOs. Finally, we delve into possible future trajectories and research directions in the realm of DAOs, including cross-industry adoption, the development of hybrid models, interoperability with existing systems, and the evolution of legal and regulatory frameworks. We also consider the impact of ongoing advancements in blockchain and decentralized systems technology on the future development of DAOs. In conclusion, this paper aims to provide a comprehensive exploration of the world of Decentralized Autonomous Organizations, offering valuable insights into their potential to reshape the future of work and organizational management. Through a thorough examination of their theoretical foundations, practical applications, and the challenges they face, we shed light on the transformative potential of this emerging technology and how it may redefine traditional organizational structures in the coming years.
Tämä kandidaatintyö on kirjallisuuskatsaus, joka käsittelee hajautettua autonomista organisaatiota (Decentralized Autonomous Organization, DAO). Työn tavoitteena on selvittää, mikä on hajautettu autonominen organisaatio, miten se toimii ja millaisia hyötyjä sen avulla voidaan saavuttaa, erityisesti liiketoiminnassa. Työssä eritellään hajautettujen autonomisten organisaatioiden ominaisuuksia ja niiden pohjalta saavutettavia hyötyjä. Työ esittelee jo olemassa olevia hajautettuja autonomisia organisaatioita sekä pohtii konseptin mahdollisuuksia tulevaisuudessa. Tässä yhteydessä käsitellään myös hajautettujen autonomisten organisaatioiden haasteita ja rajoitteita. Lohkoketjujen ja DAO:n tekniseen toteutukseen liittyvät seikat on jätetty työssä tarkastelun ulkopuolelle. Digitalisaation myötä organisaatiot kohtaavat kasvavan paineen sopeutua nopeasti muuttuvaan ympäristöön. Ympäristön kilpailullisuuden lisääntyminen lisää entisestään painetta tehokkaiden toimintatapojen löytämiselle. Nykyisten organisaatioiden keskitetty hallintorakenne luo haasteita skaalautuvuudelle, tehokkuudelle ja automaattisten prosessien hyödyntämiselle. Keskeisimpänä haasteena perinteisissä organisaatioissa on kuitenkin riippuvuus luottamusta vaativasta keskitetystä hallinnosta. Lohkoketjuteknologia ja sen päälle rakennetut hajautetut autonomiset organisaatiot mahdollistavat mullistavia uusia tapoja organisoitumiselle. Lohkoketjuteknologia on teknologisen kehityksen merkittävimpiä uusia harppauksia. Se mahdollistaa aivan uuden tavan organisoitua: älysopimusten avulla rakennetut hajautetut autonomiset organisaatiot. Älysopimukset toimivat hajautettujen autonomisten organisaatioiden rakennuspalikkana. Ne ovat ennalta määriteltyjen ehtojen pohjalta automaattisesti itsensä toteuttavia ohjelmia, jotka toimivat lohkoketjuissa. DAO toimii hajautetun luonteensa ansiosta täysin riippumattomasti luottamuksellisesta kolmannesta osapuolesta. Ominaisuuksiensa vuoksi se tuo mullistavan uuden tavan organisoitua ja hallita tulevaisuuden liiketoimintaa. Hajautetun autonomisen organisaation merkittävimpiä ominaisuuksia ovat hajautuneisuus, itseohjautuvuus, avoimuus, anonyymius, muuttumattomuus ja tehokas yhteentoimivuus. Näiden pitkälti lohkoketjuteknologian pohjalta periytyvien DAO:n ominaisuuksien myötä syntyy merkittäviä hyötyjä liiketoiminnalle. Hajautetun rahoituksen palvelut ovat tällä hetkellä suurin DAO:n mahdollistama toimiala. Riippumattomuus pankeista tai suurista organisaatioista, palveluiden turvallisuus ja läpinäkyvyys sekä jäsenten mahdollisuus vaikuttaa organisaation hallintaan ovat suurimpia saavutettuja hyötyjä. Myös korkea likviditeetti, tehokkuus ja avoin mahdollisuus osallistua protokollien toimintaan ovat merkittäviä saavutettuja hyötyjä. Haasteita DAO:n toiminnalle tuo tiedon ja regulaation puute, sekä toteutuksen tekninen haastavuus.
The ongoing FTX scandal and the crash in the crypto market witnessed in 2022 has called into question the sustainability and viability of such systems in the DeFi sector. Decentralized autonomous organizations or DAOs which use the same underlying architecture of blockchain under a 'governance by code' mechanism are also being scrutinized. There is an increasing interest from policymakers now to bring DAOS into a legal and regulatory ambit. This article contends that, contrary to the notion that mainstreaming the technology will allow for its broad adoption, certain systemic features of DAOs will limit the ability of such systems to expand their market presence. Going forward, DAOs will be tasked with finding solutions to the challenges of governance, scalability, and financial regulation. Innovative approaches to these issues will be essential for allowing DAOs to reach their full potential and bring about the transformative economic, social, and political impact that they have promised.
This chapter examines the One World Natural Grocery and its unusual hybrid of representative and participatory democratic control, in which a network of autonomous work groups and elected committees share responsibility for managing day-to-day and long-term operations. Unlike either the older collectivist-democratic cooperatives or the managerial bakery, the grocery's hybrid democracy is not coupled with unequal economic rewards or political power. The chapter first explores the allocation of earnings within the grocery, and contextualizes them at its locale. Next, it describes the grocery's political organization, detailing the workings of a complex and decentralized form of organizational power where governance and management overlap in unusual ways. The chapter then addresses the grocery's successes and failures in distributing economic and political rewards and rights across differences of class, race/ethnicity, and gender. Finally, it summarizes the potential and limits of such a densely clustered democratic structure for an alternative market organization, and what lessons the grocery might offer to workers more generally.
Cristiano Bellavitis, Christian Fisch, Paul P. Momtaz
Blockchain technology and smart contracts are catalysts for decentralization and disintermediation. These new technologies reduce transaction costs, agency costs, and offer a basis for trustless social and economic interactions. They are fueling new business models for decentralized platforms and have revolutionized crowdfunding. A recent trend, Decentralized Autonomous Organizations (DAOs), stands to fundamentally transform organizing and governance. DAOs are blockchain-native, decentralized organizations that are collectively owned and managed by their members via smart contracts. In this note, we assess the promises and challenges of DAOs, with a focus on decentralized governance and disintermediation, and offer a first empirical glimpse at the rise and functioning of DAOs. Overall, DAOs may introduce a new era in organizational economics, transforming the global corporate landscape from hierarchical organizations to democratic and distributed organizations powered by organizational entrepreneurship and innovations.
Latin America is undergoing a profound reorganization. Though the worst years of the recession seem tobe behind us, the future remains fraught with uncertainty. Latin American nations will need to adapt tooperating in an increasingly deregulated and open economy governed by market sovereignty in thecoming years. Commitment to market forces, on the other hand, should not entail the State ceasing tointervene in the economy, but rather redefining the scope and intensity of its engagement. Futurepublic policies should shift away from managing a basic reality defined by governmental laws andcontrols and toward managing a more complex environment defined by numerous actors, private andpublic, operating under competitive norms and interacting with one another. Within this broadercontext, decentralization processes emerge as a primary forum for state transformation. This articlediscusses the primary qualities that must be retained by an economic adjustment plan aimed atachieving compatible fundamental macroeconomic balances and ensuring democracy's survival. Second,the study argues for seeing the present trend toward decentralization not only as a political byproductof democratic consolidation, but as a crucial component of a broader strategy of positive adjustment.
今から30年以上前、会社法の強行法規性をめぐり、「会社法における契約自由」の観点から大いに議論された。会社を「契約の束」とみる企業理論が有力になり、組織や団体のもつ固有性を自明のものとせず、構成員である個人レベルから分析することを通して組織的なものの意義を捉え直すことの必要性が唱えられた。当時、会社法学においては、「会社法における契約自由」の観点から、会社法の強行法規性をめぐって大いに議論された。その後、30年以上が経過した現在、ブロックチェーン技術という現代的な様相の下で、改めて「契約と組織の交錯」する現象としてDAO（Decentralized Autonomous Organizations）が注目に値する。DAOは技術的には分散型のオープンソース・ソフトウェアでブロックチェーン上でコードに基づいて運営されるバーチャルな組織である。DAOの中核にはスマートコントラクトがあり、プログラムコードの実行によって取引が行われ、ブロックチェーンに記録されるとともに、意思決定や財産管理など組織のルールが記述される。つまり、DAOにはスマートコントラクトという契約類似の機能とガバナンスの機能が備わっている。そして、SCが従来の契約（法）や組織（法）に取って代わる機能を果たすならば、DAOは「契約法の死」や「コーポレートガバナンスの死」をもたらすものとなりうる。 本研究の一つの課題は、スマートコントラクトの法的性質を明らかにすることにある。SCは履行の自動化を実現する手段にとどまらず、「ソフトウェアの相互作用」に「意思表示の合致」を認め、SCコードを契約条項と認めうることを明らかにした。もう一つの課題が、The DAOのハッキング事件を契機として顕在化したDAOのガバナンス問題（適切なガバナンスの欠如）である。プロジェクトの価値を最大化するため、多様な主体のインセンティブをうまく調整するための設計が求められる。現段階では完全なオンチェーンガバナンス・ルールに依拠するのではなく、オフチェーンで存在する主体にDAO概念を組み込むアプローチが妥当である。 More than 30 years ago, there was much debate over the mandatory nature of corporate law from the perspective of freedom of contract in corporate law. Firm theory that viewed the company as a "nexus of contracts" gained strength, and the need to rethink the significance of organizational structure by analyzing it from the view point of individual members, instead of taking the inherent nature of organizations as self-evident. At the time, there was much debate in corporate jurisprudence regarding the mandatory nature of corporate law from the perspective of freedom of contract in corporate law. More than 30 years later, under the modern aspect of blockchain technology, DAOs (Decentralized Autonomous Organizations) deserve attention again as a phenomenon of the intersection of contract and organization. At the core of a DAO is a smart contract(cited as SC), in which transactions are executed by executing the program code and recorded in the blockchain, and the rules of the organization, such as decision-making and asset management, are programmed. In other words, DAOs are equipped with both a contract-like function and a governance function. If the SC performs a function that replaces traditional contract (law) and organization (law), the DAO could lead to the "death of contract law" or the "death of corporate governance". One of the tasks of this study is to clarify the legal nature of smart contracts: SC is not only a means to automate performance, but also a means to recognize "software interaction" with "meetings of intent" and SC code can be recognized as a legal contractual terms. Another issue is the governance problem of DAOs (a lack of proper governance), which became apparent in the wake of The DAO hacking incident. In order to maximize the value of the project, designs to successfully coordinate the incentives of various actors are required. At present stage, rather than relying on complete on-chain governance rules, an approach that incorporates the DAO concept into entities that exist off-chain is appropriate.
Charitable giving in legacy systems is subject to several major downsides that can be addressed with decentralized autonomous organizations (DAOs). Centralized legacy charitable organizations often lack foundational transparency and are subject to significant power imbalances that favor the donor and lead to centralization of the charity. Existing legal incentives often lead to so-called Zombie Charities in many jurisdictions. The donative intent can therefore often not be optimally fulfilled. DAOs combine unique feedback loops and transparency features with community governance that address the existing shortcomings of charitable organizations in decentralized structures.
Local food enterprises have mainly emerged from social and environmental movements. These enterprises try to maintain and develop values contrary to standard business practices. They promote certain principles of transformation, such as less hierarchical structures, the minimization of capital requirements and decreased profit orientation. They focus on small-scale units requiring multi-skilled labor and greater customer participation which is related to new forms of social interaction, changing cost structures, stability impacts, growth limitation and new diffusion strategies. If traditional hierarchical structures are replaced by more democratic decision-making processes, then a greater effort will be required to clarify responsibilities and competencies, control processes, resolve conflicts and maintain the motivation of all those involved. Our research shows that, depending on the type, transformative enterprises have specific upper size limits, which, if exceeded, make social stabilization difficult. The diffusion process compatible with this follows the principle of a decentralized and autonomous multiplication of the organizational model rather than the concept of traditional entrepreneurial growth. In our contribution, we discuss the opportunities and challenges facing transformative enterprises in terms of cost effects and social diffusion based on supply chain analyses.
Social enterprises (SEs) have been active for some decades and have been regulated by law in several countries. Their operation showed ability to complement the provision of welfare services, especially social services, by the public sector and private enterprises, and to innovate in the introduction of new services, organizational and managerial models. In some cases, SEs succeeded in producing and innovating in an autonomous way, without depending on public financial support and procurement agreements. This paper starts from the state of the art in the study of SEs to propose different avenues through which they can be able to expand supply of welfare services and contribute to the decentralization of welfare systems. It traces these specific abilities to SEs’ peculiar institutional structure, especially their non-profit nature, the pursuit of public benefit and social missions, and multi-stakeholder governance. This last feature is considered the most remarkable emerging characteristic in the evolution of this organizational form. The paper then proceeds to focus on price discrimination as specific governance mechanism of the relations of production and exchange, involving different stakeholders and allowing SEs to widen their supply of services, achieve financial sustainability and contribute to the decentralization of the welfare system.
Game models and optimization models analysis showed that low educational level and decentralized management of farmers result in the low income and high cost of farmers' innovation.Besides,the difficulties in gaining access to technical innovation loans also restrict farmers' technological innovation.Technological innovation lift the threshold of farmers on capital input,yet farmers' difficulties in financing limit farmers to adopt new technologies,which in turn lead to greater volatility of the agricultural income,and further restrict the enthusiasm of farmers to adopt new technologies.Finally,the countermeasures for promoting agricultural technological innovation were discussed.
Regina Birner, Kristin Davis, John Pender, Ephraim Nkonya · 11 authors
The article provides a conceptual framework and discusses research methods for analyzing pluralistic agricultural advisory services. The framework can also assist policy-makers in identifying reform options. It addresses the following question: Which forms of providing and financing agricultural advisory services work best in which situation? The framework ‘disentangles’ agricultural advisory services by distinguishing between (1) governance structures, (2) capacity, (3) management, and (4) advisory methods. The framework suggests an impact chain approach to analyze the performance and impact of agricultural advisory services and discusses theoretical and empirical research methods that can be used when applying the framework. The framework shows that reforms of agricultural advisory services can combine different reform elements—such as decentralization, contracting out, using new advisory methods, and changing the management style—in different ways so as to best fit local circumstances. Using a New Institutional Economics approach (transaction costs approach), the article shows that the following sets of contextual factors need to be considered in this regard: the policy environment; the capacity of potential service providers; the type of production systems and market access of farm households; and the characteristics of local communities. The framework can be used to develop assessment tools for agricultural advisory services, to inform processes of reforming of agricultural advisory services and to guide inter-disciplinary research. The framework is unique in combining the insights from different disciplines, which have, so far, been treated separately in the literature. The framework can help policy-makers and analysts to move from ‘ideological’ discussions on reform models to an evidence-based ‘best fit’ approach.
Local finance system is the core of local systems and the democratization of local systems is the condition and guarantee of the democratization of local finance system.Therefore,the paper introduces concretely democratic issues of local finance both under decentralization system and centralization system in foreign countries.It places emphasis on the problems of local finance under centralization system and puts forward concrete measures about the democratization reform of local finance in China.
This research is concerned with how bank lending relationship affects small and medium-sized enterprise financing. We particularly focus on the effect of this contractual feature on their specific asymmetric information problems. We contribute in several ways to the fields of corporate finance and financial intermediation. First, we find evidence that firms which work with more likely to provide lending relationship banks, decentralised ones, use less trade credit, social and fiscal debt and leasing. They appear to access more easily to bank credit. Second, we note that small and mediumsized enterprises choose their main bank for their ability to deal with the kind of information they can provide. Firms with hard information prefer to borrow to centralized banks and firms with soft information prefer to borrow to decentralized ones. Those which can't work with a bank of good type are more credit constrained. Third, we show that bank lending relationship improve collateral efficiency in credit contracts. It allows banks to offer separating equilibrium based on two dimension contracts: interest rate and collateral level. The information transfer during the relationship prevents agency costs associated with collateral. So good project holders can credibly signal themselves giving more collateral to obtain lower interest rate. By doing this, banks limit credit rationing in this context
When the Annals of Collective Economy became the Annals of Public and Cooperative Economics in 1974, it incorporated the term ‘social economy’ into its French title (Annales de l'économie publique, sociale et coopérative), even though the social economy had not yet gained recognition in any country, not even France. Although the public enterprise and public services sectors emerged as the principal sector conveying the general interest, the social economy did not yet constitute a recognized ‘third sector’, despite that fact that mutual societies, cooperatives and associations had existed for over a hundred years. Three decades later, the issue of general interest – and that of the State as its principal architect – would be raised in other ways. This long period was marked by crisis and change in various Nation-States, and in geopolitics throughout the world, with the emergence of regional blocs, including the European Union, and more recently with the economic rise of China and India. Thus, to a significant extent, States were re-engineered, both in terms of the division of skills through globalization and decentralization and in their core function, especially their methods for intervening and regulating the economy and society (Lévesque 2003). Many public enterprises had to open up to competition, as did several large cooperatives and mutual societies, while numerous cooperatives and associations emerged – principally in social services, local development, job creation and labour market integration, and fair trade. In addition, there was a growing trend toward privatization, demutualization and even decooperativization. While the State is still one of the principal participants in defining general interest, it is no longer the only one, since other ‘solidarity perimeters’ have now established themselves (Monnier and Thiry 1997). Thus, economic and political entities, have become more complex, more interdependent and more hesitant in confronting global challenges such as global warming, security and, more broadly, sustainable development. With the above factors in mind, we analysed the content of the Annals of Public and Cooperative Economics, for the period 1975–2007, in the light of activities that fall within the domain of general interest. To we a of in the that were in period of the we the public enterprises and public enterprises and and the though the of the social economy and the principal and significant in terms of though we were not to of In addition, the of the Annals is the of the content of the various in the not the of the the of interest of and the Annals is not the public the social economy and the their mutual as established through their to the general interest. and the of country, rise to that to that the of general interest. the a of is with a as and as the one is into with public enterprises and public services, while the with the is the of the social economy mutual societies, and associations and for the decades as a of the with the public sector and with the While the public sector the with of the the sector in the with of the we the the the of the by the and the in we be in a to the and the principal raised within the To we to their of in terms of general interest and to the of a in in (Monnier and Thiry 1997). 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emergence and of not only to of economic – the – to the of European the in the we and of and of enterprise is as the to the to it by its be of the enterprise in large to a of public enterprises more numerous and be as in numerous to in This in the of the enterprise to its with a of and to the to the the et the and the and in that the the of and there public enterprise to its services for the of even a long public enterprises in their and in their of economic and in their of their enterprises with economic and trend since the a for such as public and public and even sector by the European Union, through and Public enterprises in and in the of and in over in sectors the regional with even in In their as enterprises and for social we their of since the for public enterprises a term not would be more to that there was of that had existed the the term more for were and to were were to a that to the core of to was to the of of In was and the of were by privatization, of the more for Thiry as 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enterprise a State services with to the general for public services and to that were it to to the general interest. have to in of public be that there public enterprises and economic activities to public enterprises with public no public public services were by enterprises even the of the and in the more of public defining and and their the European the of of general of and public is that of and a by the and in is as a of services of a to and have services not as as general interest public not the such as the services is and the for in the and other the of the sector general interest public and have several economic that market into the that other security of in terms of and and and throughout the for of the large the to even the the of the and of the be social the of the of in have public and a of for the public in the in of the is the one for the a public a to in the sector not public that in of the is that of public services and methods within the of public and of a to to a public enterprise a be is through the to the through a in the principal is not the the of the In is as to the to public services of up to market constitute one for the of the of be in by the of and by and by the State that in and the of a for While we that the Annals have analysed the of and and political have for the numerous This for not only their for the of European the of and in In the period were in the with the public This with the by the Thus, is in numerous While the analysed it was to the public sector of to and to be more in integration, it to is the especially in public its the fact that by and it to various of public is is with and in of the as for within a the the and various and to and the and that to the of with the of the to that the be more in the sector in the public the is to public and Public that in public sector including to their and of of especially is to that the State the general interest. of for its the of that in the for – that the to and the to In that is in public is to a of the of public have no that public be In several to Public there no sector and public sector market to public sector To the public for and several especially as the of and large of have the of public and fall within the of and the of that and methods to numerous and and of a to of to and that with the and that sector to social economy for of the and of the in the to in the the of that with recognition of the social economy and the rise of This in the sector did not the of since the in the to in the a in cooperatives in the social economy as a a of sector did not in the while the the did not we to with a significant the by social economy numerous the ‘social economy’ more as we the of with cooperatives and mutual in the of public the sector a Annals for associations the especially in society had a the associations a social in the decades became economic in for more of the labour Thus, in and the more to in in the any other economic and In the associations and the that a sector that to as that of With the in associations that in became ‘social and the cooperatives over the decades a a period for the of cooperatives and a period of for cooperatives In the the of and with a significant of cooperatives became even trend the of trend was that of and were to the of market While such as and such as the sector and mutual societies, and especially in the and and the of were in sectors that within the of the such as social services, social and local and In addition, to a of social not associations Thus, that the of by the is by its economic its in the not its be by the social and recognition of the social in the of the a of the trend in mutual and to with the that a that of social to a and term of the is not since to no one that cooperatives mutual have in and even that be for trend did not in European country, did it the In there is no of mutual and associations that social and services, the ‘social economy’ and ‘third still the sector be the of social economy the social economy there of defining the its and of mutual societies, the the by including and to various This including the of services to the by its and the of and over to since Thus, its of the is not its of there and the have no have a the associations that in economic activities that have recognized the social have that to political and there is no of the social the of the the Economy a for of in the and since it not not in the to the as by et the to the creation of for to the of to and in to extent, and to the of interest is of of be as of to themselves and with services that not by and in the principal and their services toward have no the is through through to associations the of by other Thus, only associations toward the of a be as the general interest especially in have raised of the of the sector and 1997). 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As the characteristics of rural finance is presented with small exchange quantity,high frequency,decentralizing,covering large areas and lacking of avouch condition,the rural cooperative finance credit risk strategic tends to take it as its important feature to develop revenue correlation loan and make use of correct forecast to anticipate revenue and use separate elements and big number principle to carry through credit venture management.
The 1990s has been labeled as the decade of the small in Canada (Candalino and Knowlton 1994). While large Canadian firms are trying to be more competitive through downsizing, re-engineering, and decentralization, small firms are forging ahead (Candalino and Knowlton 1994; Morgan 1994). This is particularly true for small Canadian firms that are developing innovations with a clear competitive advantage and are leaders in sunshine industries such as high technology (Candalino and Knowlton 1994). Many of the firms are also picking up products and services dropped by large firms in their downsizing efforts. As a result, small Canadian firms are making major inroads in global markets (Morgan 1994). Small firms play a significant role in the Canadian economy. They contribute nearly 40 percent of Canada's Gross Domestic Product (GDP) and employ about half the labor force (Labbe 1994). Also, small businesses create nearly 60 percent of the new jobs in Canada. Hence their success is critical for the Canadian economy (Morgan 1994). Recognizing the importance of small firms in the stability of the economy, the Canadian government has set up programs like the Program for Export Market Development and Promotional Projects Programs to encourage their start-up and growth. Canadian provinces have also enacted legislation to encourage small business. For example, in Ontario, the Small Business Development Corporation Act provides tax breaks for individuals investing in small firms. However, regardless of this support, the success of small firms in the global market depends on their ability to manage human assets (Deshpande and Golhar 1995). Today's global market expects reasonably priced, high quality products delivered on time. Hence, small firms need a highly motivated, skilled, and satisfied workforce that can produce quality goods at low cost (Holt 1993). It is therefore important that small firms implement an appropriate human resource management strategy to develop such a work force. It is not surprising that, next to general management, small firms rank personnel management as their most important management activity (Hess 1987). Unfortunately, recruiting, motivating, and retaining employees are some of the biggest problems faced by small firms (Hornsby and Kuratko 1990; Mathis and Jackson 1991). However, in practice, other functional areas such as finance, production, and marketing usually get more attention than does personnel management (McEvoy 1984). For example, one study suggested that training in personnel management is not as critical as training in finance or marketing in small firms (Curran 1988). Even textbooks on small business management pay scant attention to personnel management issues (Deshpande and Golhar 1995; Hess 1987). Other research, however, suggests that inadequate and inefficient management of human resources has often resulted in low productivity, high dissatisfaction, and turnover among the employees (Mathis and Jackson 1991). Previous research has found lack of progressive HRM practices to be the leading cause of failures of small firms (McEvoy 1984). Thus there is little consensus among researchers regarding the role of HRM in the success of small firms. The empirical research in this study tries to resolve this issue by presenting a comparative study of small and large Canadian firms. Literature Review The purpose of a good HRM program is to recruit, select, motivate, and retain employees with such required characteristics as concern for the firm's success, ability to work in groups, and quantitative skills (Deshpande and Golhar 1994). Most of the published research in the U.S. and Canada investigating HRM issues in small businesses is conceptual and has concentrated on various HRM topics like selection, training and development, compensation, and industrial relations. For example, Gatewood and Field (1987) propose a model selection program for small business, while Curran (1988) suggests several training strategies for a small business. …