Digital HRM and Employee Innovation in Digital Workplace: Mediating Role of Psychological Safety

Abstract

Digital transformation has intensified the need for organisations to foster employee innovation while managing the behavioural implications of technology adoption. However, existing research has largely focused on the efficiency outcomes of Digital Human Resource Management, with limited attention to its psychological and behavioural effects. This study examines the effect of Digital Human Resource Management on employee innovation, with psychological safety as a mediating variable in the digital workplace. A quantitative explanatory design was employed using cross-sectional survey data collected from employees of PT XYZ who actively use digital HR systems. Data were analysed using Partial Least Squares Structural Equation Modelling to test direct and indirect relationships among variables. The results show that Digital Human Resource Management has a positive and significant effect on employee innovation and psychological safety. Psychological safety also has a significant positive effect on employee innovation. Furthermore, psychological safety partially mediates the relationship between Digital Human Resource Management and employee innovation, indicating both direct and indirect effects. The model demonstrates moderate explanatory power, suggesting that Digital HRM and psychological safety jointly influence innovation outcomes. These findings indicate that digital HR practices enhance innovation not only through technological support but also by creating a work environment that enables employees to express ideas and take risks. The study concludes that the effectiveness of Digital HRM depends on its alignment with employees’ psychological conditions. Organisations should integrate technological systems with supportive work environments to achieve sustainable innovation.