Developing a Grounded Theory of Human Resource Management in Informal Sector Enterprises: Evidence from Market Traders and Artisans in Southwest Nigeria

This study develops a grounded theory of human resource management in informal sector enterprises, drawing on original fieldwork with market traders, artisans, and small craft producers in Ibadan, Abeokuta, and Osogbo in South West Nigeria. The informal economy employs the majority of Nigeria's working population, yet the HRM literature remains almost exclusively focused on formal, structured organisations, leaving a critical empirical and theoretical void. The study employs a constructivist grounded theory methodology, with 45 in-depth interviews and 12 focus group discussions conducted across three informal business clusters. Theoretical sampling is used iteratively until theoretical saturation is achieved. Data are analysed using open, axial, and selective coding procedures, with constant comparative analysis guiding theory construction throughout. The emergent grounded theory reveals that informal sector HRM is neither absent nor ad hoc, but organised around a set of culturally embedded practices including apprenticeship-based knowledge transfer, kinship-mediated trust as a substitute for formal contracts, reciprocal obligation systems replacing formal reward frameworks, and social capital networks functioning as informal recruitment markets. The theory characterises informal HRM as a self-organising relational system grounded in indigenous Yoruba socioeconomic norms of solidarity and reciprocity. This original theoretical contribution challenges deficit-based framings of informal employment and proposes a Relational HRM Continuum applicable across formal-informal boundaries. Practical recommendations include policy frameworks that build on informal HRM strengths rather than imposing formal system replications. Keywords: Informal Sector, Grounded Theory, HRM, Southwest Nigeria, Apprenticeship.