The Effect of Digital Leadership and Technology-Based Human Resource Management on Employee Performance in Digital SMEs
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Abstract
The rapid expansion of the digital economy has compelled Small and Medium Enterprises (SMEs) to adopt advanced leadership approaches and technology-driven human resource management practices. Digital leadership emphasizes the ability of leaders to leverage digital technologies to drive organizational change, innovation, and employee empowerment. This study aims to examine the effect of Digital Leadership and Technology-Based Human Resource Management (TBHRM) on employee performance in digital SMEs, with employee engagement as a mediating variable. A quantitative explanatory research design was employed, involving 150 employees from digital SMEs fostered by the Department of Cooperatives and SMEs in Denpasar City, Indonesia. Data were collected through a structured questionnaire and analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The results reveal that Digital Leadership and TBHRM have a positive and significant effect on employee performance. Furthermore, employee engagement partially mediates the relationship between both independent variables and employee performance. These findings highlight the strategic importance of digitally competent leadership and technology-enabled HR practices in enhancing employee outcomes and sustaining competitiveness in the digital business environment. This study contributes to the growing body of knowledge on digital leadership and digital HRM while offering practical insights for SME managers in the digital economy.
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