As manufacturing small and medium-sized enterprise (SME) embrace digital transformation (DT), the role of digital human resource management practices (DHRMP) in enhancing innovation performance (IP) has gained critical importance. This study investigates how DHRMP contributes to innovation through the mediating roles of big data analytics capabilities (BDAC) and digital employee behavior (DEB). It further examines how top management support (TMS) moderates these relationships to optimize innovation outcomes.
Adopting a deductive approach, this study utilizes a quantitative research design. Data were collected via a structured survey from 389 employees working in manufacturing Small and medium-sized enterprises (SMEs) across Pakistan using stratified purposive sampling. The proposed model was analyzed using partial least squares structural equation modeling with SmartPLS 4.0.0.
The findings reveal that DHRMP has an indirect but substantial effect on IP, primarily mediated through BDAC and DEB. While the direct influence of DHRMP on IP is limited, the presence of robust analytical capabilities and digitally adaptive employee behavior significantly enhances innovation. Moreover, TMS strengthens the BDAC–IP link, highlighting the strategic role of leadership in converting digital capabilities into innovation gains.
This study contributes a novel integrated framework linking digital HR strategies, employee behavior and big data capabilities to IP. By applying the resource-based view and social identity theory, it provides new insights into how SMEs can strategically leverage digital HRM and leadership to build innovation-centric, digitally resilient manufacturing systems.
