ABSTRACT In the digital economy era, the intelligent transformation of small‐ and medium‐sized enterprises (SMEs) is inevitable. Drawing on innovation diffusion theory (IDT) and self‐determination theory (SDT), this paper proposes a dual‐level framework—organizational reform and individual‐level mechanisms—to explain how digital technology application drives human resource management (HRM) innovation in SMEs. Using 3‐year data from the 2020–2022 China Human Resource Practitioner Survey (CHRPS) across multiple industries ( N = 14,016), the results show that: (1) digital technology application significantly enhances HRM innovation in SMEs, and this effect is stronger than in large‐sized enterprises (LSEs); (2) individual‐level mechanisms (interdepartmental rotation, career commitment, and job satisfaction) serve as key micro‐foundations; and (3) the innovation effect varies by organizational context, with state‐owned and manufacturing SMEs benefiting more. This study repositions digital technology from an operational tool to a dual‐level enabler within the IDT‐SDT framework, revealing both organizational and individual pathways for HRM innovation. It also offers practical guidance for SMEs, including tailored strategies, intelligent structures, supportive environments, and innovation‐oriented incentives, to fully harness digital technologies during transformation.
Mao et al. (2026) studied this question.