Transitioning from micro to small: Emergent organising in employment system formalisation

As micro-enterprises grow, employment systems become increasingly crucial due to challenges in surmounting limited resources, environmental instability, and the liabilities of smallness. This article explores how employment systems formalise during micro-enterprise growth, focusing on the interactional micro-processes among founders and other key actors. We utilise a lens of emergent organising to address the limitations of existing HRM and employment models for micro-enterprises, contexts marked by informality, fluid roles and limited HR expertise. Using an embedded exploratory multiple case study design, we show how founders and their micro-enterprise teams collectively enact formalising the employment system through two micro-processes: aligning mental models and routinising employment system practices, evidenced across three hospitality micro-enterprises in New Zealand. Our findings also show that these mechanisms pattern into employment system features that blend formal and informal practices, feedback loops, and a shared understanding of employment in micro-enterprises.