THE IMPACT OF DIGITALIZATION ON HUMAN RESOURCE MANAGEMENT IN CHINESE SMALL ENTERPRISES

Abstract

The rapid advancement of digital technologies has significantly transformed the operational and managerial practices of modern enterprises. For Chinese small and medium-sized enterprises (SMEs), digital transformation presents both opportunities and challenges, particularly in the domain of human resource management (HRM). Despite the growing importance of digitalization, empirical research examining how the digital level of SMEs influences HRM practices remains limited. This study investigates the relationship between digital level and human resource management in Chinese SMEs by developing and testing a structural model. Digital level is conceptualized as the extent to which digital technologies are integrated into organizational systems, managerial decision-making processes, and communication platforms, while HRM is operationalized as a multidimensional construct including recruitment, training and development, performance management, compensation management, and employee communication. Using questionnaire survey data collected from managers and employees of SMEs across multiple industries in China, the study employs structural equation modeling (SEM) to analyze the proposed relationships. The empirical results indicate that a higher digital level significantly improves the effectiveness and standardization of HRM practices. Digital technologies enhance recruitment efficiency, support data-driven performance evaluation, facilitate employee training, and strengthen internal communication. The findings suggest that digitalization not only upgrades technological infrastructure but also promotes managerial innovation in SMEs. This research contributes to the literature on digital transformation and HRM by providing empirical evidence from the SME context and offers practical implications for managers seeking to improve organizational competitiveness through digital development.