Abstract
This study examines the challenges faced by small and medium-sized enterprises (SMEs) in recruiting university graduates, focusing on the European Union (EU) context, where SMEs constitute 99% of businesses. Drawing on Resource Dependency Theory, we analyse an EU database of 17,000 companies to examine the complexities of SME-Higher Education Institution (HEI) relationships in the graduate labour market. Our findings reveal significant difficulties in hiring graduates from HEIs, consistent with previous literature. These challenges are attributed to the historical lack of collaboration between universities and SMEs due to communication barriers, disinterest from HEIs, and the unique characteristics of SMEs. Additionally, we investigate the presence of affinity groups among SMEs regarding the recruitment of HEI graduates, identifying three distinct groups with common patterns. These groups differ in their openness to potential collaborations, which impacts their ease of hiring graduates. Our results indicate that SMEs often struggle to offer attractive employment packages compared to larger companies, leading to a talent shortage that impairs their competitiveness. This study highlights the need for targeted managerial strategies and supportive policy measures to enhance the recruitment process, thereby improving productivity and market position for SMEs and contributing to overall economic development.