The Digital Transformation of Human Resources – A Conceptual Framework for Small and Medium-Sized Enterprises (SMEs)

Human resource management (HRM) digitisation is now one of the most significant trends in contemporary organisational studies. It is changing the manner in which organisations recruit, nurture, and retain their employees. This is an opportunity as well as a challenge to small and medium-sized enterprises or SMEs, which are the majority of businesses in most parts of the world, and which contribute to economic growth. Electronic applications such as human resource information systems (HRIS), learning management systems (LMS), and even artificial intelligence (AI)-based recruitment software have become unavoidable in larger enterprises, but due to resource shortages, lack of infrastructure, and cultural opposition, are discouraged in smaller enterprises, namely SMEs. As it is reflected in the literature, the COVID-19 pandemic was a catalyst that both accelerated the pace of digital HR adoption in all environments and exposed the differences in preparedness, particularly in developing economies such as Sri Lanka. This paper summarises the process of adoption, resistance and change of HR practices by SMEs in the digital era using the Technology Acceptance Model (TAM), the Technology-Organisation-Environment (TOE) framework and the Unified Theory of Acceptance and Use of Technology (UTAUT2). The article develops a conceptual framework through a narrative review of extant literature and evidences the interaction of technology, organisation and the environment to shape HR digitalisation in SMEs. The findings show that, when ethical issues and contextual considerations are appropriately taken into account, digital HR transformation not only improves efficiency and decision-making but also resilience and competitiveness. The article makes a contribution to the body of scholarship by linking theories of digitalisation with the SME-focused HRM body of literature and offers practical insights into how SME managers and policymakers have tried to grapple with the difficulties of digital HR transformation.