Strategic human resource management in the digital economy era: an empirical study of challenges and opportunities among MSMEs and startups in Indonesia

This study investigates the impact of digital Human Resource Management (HRM) strategies on workforce productivity and organizational performance within Micro, Small, and Medium Enterprises (MSMEs) and startups in Indonesia. Anchored in the Resource-Based View (RBV) and Dynamic Capabilities Theory, the research conceptualizes digital HRM as a strategic asset that enhances organizational performance by enabling firms to develop, deploy, and reconfigure human capital capabilities in response to digital transformation. The conceptual model includes five constructs: Digital Technology Adoption in HRM, Digital Training and Development, Work Flexibility and Hybrid Management, Innovation in Recruitment and Retention, and Utilization of HR Analytics and Artificial Intelligence (AI). Data were collected through structured questionnaires distributed to MSME and startup leaders and analyzed using Structural Equation Modeling (SEM) with Smart PLS. The results indicate that Digital Technology Adoption, Digital Training and Development, and Work Flexibility do not significantly influence workforce productivity or organizational performance (p > 0.05). However, Innovation in Recruitment and Retention and the Utilization of HR Analytics and AI have a significant and positive impact on both workforce productivity and performance outcomes (p = 0.000). These findings highlight that while not all digital HR strategies yield immediate benefits, the ability to build dynamic capabilities through innovative talent practices and data-driven HR systems is essential to achieving competitive advantage and organizational success in the digital economy.