Informal HRM Practices and Operational Performance of Subcontracting SMEs in Lubumbashi: A Quantitative Jurimetric Approach

Abstract

In the Haut-Katanga mining basin (DRC), subcontracting SMEs face a strict "CSR compliance wall" imposed by mining multinationals. Paradoxically, managers frequently resort to internal informality as a short-term financial flexibility strategy, effectively bypassing the mandatory provisions of the Congolese Labor Code. This study addresses a major scientific gap by exploring the interdisciplinary link between the enforcement of Congolese labor law and operational performance in management sciences. Rooted in a critical realist ontology and a positivist framework, the analysis uses a probabilistic sample of 250 SME professionals and managers in Lubumbashi, selected through a simple random sampling protocol based on Cochran’s (1977) formula. A multiple linear regression model was estimated using STATA. Descriptive statistics highlight a high rate of legal infractions: 66% of SMEs rely on verbal contracts (Art. 44) and 59.2% practice payroll opacity (Art. 100). The model tests and validates four specific hypotheses structuralized around the Legal Compliance Index (X1: Contract formalization, X2: Procedural justice, X3: Payroll traceability, X4: Medical care). These variables explain 69.92% of the variance in operational performance (R² = 0.6992), (p < 0.001). Payroll traceability (  = 0,412) and written contract formalization (  = 0,385) emerge as the most powerful drivers. Legal non-compliance severely damages long-term performance by breaching employees' psychological contracts resulting in an incurred turnover cost equal to 42% of the annual salary and acting as an exclusionary filter during CSR audits. This study recommends a systematic formalization of HRM practices to secure the commercial sustainability of local SMEs.

JEL Classification: M12, K31, O17, L25.

Paper Type : Quantitative Empirical Research (Jurimetric Approach)