Digital Human Resource Management and Its Impact on Employee Performance in Digital Business SMEs

Abstract

The rapid growth of digital business has transformed how organizations manage their human resources. Digital Human Resource Management (DHRM) integrates digital technologies into HR practices to enhance efficiency, transparency, and strategic decision-making. This study aims to analyze the impact of Digital Human Resource Management on employee performance in Small and Medium Enterprises (SMEs) operating in the digital business sector. Using a quantitative approach, data were collected through a structured questionnaire distributed to 150 employees of digital-based SMEs. Data analysis was conducted using Structural Equation Modeling (SEM) to examine the relationships between DHRM practices, employee engagement, and employee performance. The results indicate that DHRM has a significant positive effect on employee performance, both directly and indirectly through employee engagement as a mediating variable. The findings suggest that effective implementation of digital HR practices—such as e-recruitment, digital training, and HR analytics—can enhance employee motivation, productivity, and overall performance. This study contributes to the literature on human resource management in the digital business context and provides practical insights for SME managers in designing digital HR strategies to improve organizational performance.