Digital Human Resource Management And Organizational Performance: The Mediating Role Of Employee Engagement And The Moderating Role Of Digital Competence In Pakistan

Abstract

Purpose: The research will investigate how the digital human resource management (Digital HRM) practices affect the performance of organizations in the service industry in Pakistan. In particular, it examines how the employee engagement mediates this relationship and how digital competence moderates this relationship.

Design/Methodology/Approach: Cross-sectional survey design was used and the approach applied was quantitative. The sample population was comprised of 450 employees who were employed in digitally transformed organizations of the banking, telecommunications, and information technology sectors in Pakistan. The hypothesized relationships were tested using Structural Equation Modelling (SEM) with AMOS version 26. Confirmatory Factor Analysis (CFA) was applied to test the measurement model and bootstrapping methods were used to test the mediation and moderation effects.

Findings: The findings have shown that Digital HRM practices have a significant positive impact on the engagement of the employees (b = 0.42, p < .001) and the organizational performance (b = 0.37, p < .001). The engagement of the employees showed a positive association with the performance of the organization (b = 0.45, p < .001). Notably, the Digital HRM and organizational performance were strongly connected through employee engagement. Moreover, the relationship between Digital HRM and employee engagement was also moderated significantly by the digital competence (interaction effect b = 0.18, p < .05), meaning that the beneficial impact of Digital HRM on engagement is reinforced, in case the employee has a high level of digital competence.

Practical Implications: This research has practical implications on HR managers, organizational leaders and policymakers in emerging economies. To maximize the effects of engagement and performance, organizations should invest in the development of digital competencies among employees and introduce Digital HRM systems to improve the results. The priorities should be training programs aimed to improve digital skills to ensure the maximum use of digital HR tools.

Theoretical Contributions: The paper contributes to the Digital HRM literature by bringing an integrated model to the test in an under-researched environment of an emerging economy. It adds to the Resource-Based View theory by showing that Digital HRM practices can be used as strategic resources that foster the performance of an organization by engaging the employees. The definition of digital competence as a boundary condition contributes to the knowledge of influencing Digital HRM to the greatest effect.

Originality/Value: This is one of the first papers to study the mediating effect of employee engagement and moderating effect of digital competence in the Digital HRM-performance relationship in the context of the service sector in Pakistan, and therefore it has a distinct contribution to the literature based on the emerging economy approach.