Human resources are recognised as one of the main sources of economic growth. The management of these resources (HRM) is therefore an important issue. However, while roughly half of all employees are employed in small and medium-sized enterprises, scientific studies on HRM are to a large extent limited to large enterprises. This thesis is an attempt to increase our understanding of how small and medium-sized enterprises manage their employees. The thesis examines main determinants of HRM practices within small and medium-sized enterprises, and how certain differences in HRM practices may affect an enterprise's performance and size.