There is a rising awareness of the importance of small and medium enterprises in enhancing national economies. Small firms have to rely more on their key people, but yet experience notable difficulties with HRM. The role of HRM is crucial for these businesses in developing and sustaining their performance. However, understanding is not aided by the reality that most HRM studies are conducted in large and multinational organisations. Moreover, HRM studies within SMEs context, though infrequent, are conducted in western developed countries. Addressing these deficiencies, this research explores HRM practices in the context of Saudi SMEs where there is a growing recognition of the importance of entrepreneurship in accelerating the pace of its major economic reforms. The study aims to find what and how HRM practices are adopted and also to identify the main factors affecting the adoption of these practices. It utilises a multiple case-study approach using semi-structured interviews as a tool for data collection This research contributes to the knowledge gap by mapping the extant literature through a systematic literature review of HRM in SMEs. It also increases our understanding of the process of managing people within small firms in a less known context (Saudi Arabia). Although many previous studies indicated the heterogeneity of HRM practices across SMEs, this study identifies heterogeneity of HRM practices even within SMEs. In addition, the unitary approach was challenged in this research by finding inconsistency in the HRM practices as reported by owner-managers and employees. This thesis also draws the attention to the significance of the psychological attributes of the owner-manager and their influence on shaping HRM in SMEs, including owner-manager passion. Theoretically, this study adds to institutional theory by combining its constructs with the strategic choice theory as a helpful framework to study HRM practices within SMEs in the Saudi context. Specifically, rather than merely offering a holistic approach, it explores and categorises the differing responses to the institutional context taken by the case study SMEs, thereby highlighting the role and significance of owner-manager agency