Digital human resource management and digital competencies: keys to sustainable digital transformation in SMEs

Abstract This study examines the mediating role of Digital Competencies (DCs) in the relationship between Digital Human Resource Management (DHRM) and Digital Transformation (DT) in SMEs in Lima, Peru. Employing a non-experimental, cross-sectional design, data was collected through a structured survey of 272 SME entrepreneurs. Partial Least Squares Structural Equation Modeling (PLS-SEM) was selected due to its suitability for mediation analysis in studies with moderate sample sizes and non-normal data distributions. Results indicate that DHRM significantly enhances the development of DCs (β = 0.750), which in turn positively influences DT (β = 0.433). The analysis confirms a partial mediating effect of DCs between DHRM and DT (indirect effect β = 0.325; VAF = 52.7%), highlighting the importance of digital upskilling in amplifying human-centered transformation. While DT may support operational efficiency and resource optimization, sustainability was not directly measured and should be explored in future research. Practical recommendations include implementing adaptive digital training programs, integrating AI-enabled HR tools, and fostering inter-organizational collaboration to strengthen digital capabilities. Key limitations involve the cross-sectional nature of the study and reliance on self-reported data, which may affect causal inference and introduce perceptual biases. This research contributes by offering actionable strategies for SMEs aiming to enhance their digital competitiveness through workforce-centered innovation.