International Journal of Science, Engineering and TechnologyAuthors: Buddhika YPAS
Abstract: This study investigates the impact of Human Resource (HR) digitalization on organizational performance within Small and Medium Enterprises (SMEs) in Sri Lanka’s Western Province. Despite the global digital transformation trend, empirical evidence within developing economy SMEs remains scarce. Utilizing a cross-sectional quantitative survey of 384 SME decision-makers, data were analysed using Structural Equation Modelling (SEM), regression, and moderation analysis. Findings reveal that HR digitalization significantly explains organizational performance (R² = 0.747). Specifically, digital performance management most substantially enhances employee satisfaction, while HR analytics most profoundly improves strategic decision-making capability. These effects are moderated by firm size, industry sector, and duration of digital adoption. As the first major empirical study in this context integrating the Technology-Organization-Environment (TOE) and Resource-Based View (RBV) frameworks, it addresses a critical gap in the literature (Zavyalova et al., 2022; Rajapakshe, 2018). The research provides actionable, evidence-based guidance for SME managers prioritizing digital investments, technology vendors developing localized solutions, and policymakers crafting supportive national digital strategies for economic resilience.
