Human-Centered External HRM and MSMEs' Trust in Government: The Roles of Psychological Contract Fulfillment and Institutional Respect

Abstract

Objective: This study examines how Human-Centered External Human Resource Management (HC-EHRM) operationalized through Government Care and Procedural Fairness, influences SMEs' Trust in Government through Psychological Contract Fulfillment and Institutional Respect, and tests Dependence on Government Support as a boundary condition on this relational pathway. Design/Methods/Approach: This study used a quantitative, explanatory, cross-sectional survey design. Data were collected from 398 valid responses from MSME owners, via an electronically distributed questionnaire, and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4, following the standard two-stage measurement and structural model assessment procedure. Findings: The findings reveal that perceptions of government care and procedural fairness are important foundations of public trust. Both factors strengthened citizens’ perceptions that the government had fulfilled its psychological obligations and treated them with institutional respect, which subsequently enhanced trust in government. These two relational mechanisms also served as key pathways through which government care and procedural fairness translated into greater public trust. However, dependence on government support shaped these relationships differently. Greater dependence reduced the contribution of perceived government care to psychological contract fulfillment, while increasing the importance of procedural fairness. Overall, the findings highlight that trust in government is shaped not only by perceptions of supportive governmental actions, but also by whether citizens perceive government processes as fair, obligations as fulfilled, and their standing as respected. Originality/Value: This study advances HC-EHRM as a relational governance and public management framework for government-MSME relationships rather than as an extension of internal human resource management, identifies Psychological Contract Fulfillment and Institutional Respect as two mediating mechanisms linking relational government care to institutional trust, and extends Resource Dependence Theory by showing that MSMEs' dependence on government support conditions this pathway asymmetrically. Practical/Policy implication: Local governments seeking to build durable MSME trust should prioritize transparent, consistent, and accountable administrative procedures alongside responsive, care-oriented engagement, and should calibrate this mix according to how dependent a given MSME segment is on government support.