How digital transformation drives employee innovation in SMEs: a moderated mediation perspective

Abstract

Purpose Grounded in the Job Demands-Resources model, this study examines how digital transformation (DT) influences employee innovation behavior (EIB) through challenge appraisal (CA), hindrance appraisal (HA), and strategic human resource management (SHRM). It further investigates whether learning goal orientation (LGO) and paradoxical leadership (PL) shape these relationships as individual and leadership boundary conditions. Design/methodology/approach Data were collected from 730 employees in Vietnamese small and medium-sized enterprises (SMEs); 697 valid responses were retained and analyzed using partial least squares structural equation modelling and the PROCESS macro for Statistical Package for the Social Sciences (SPSS). Findings The results reveal that DT exerts both enabling and constraining effects on EIB. Specifically, DT enhances EIB indirectly through CA and SHRM, while also reducing EIB through HA. Furthermore, the indirect effects of DT vary across individual and contextual conditions. LGO significantly moderates both appraisal-based pathways, whereas PL exhibits a comparatively weaker yet significant moderating influence on innovation outcomes. Originality/value This study extends the Job Demands-Resources framework by integrating cognitive, individual, organizational, and leadership mechanisms into a multilevel explanation of digital transformation and employee innovation. It reconciles inconsistent findings on the DT-innovation relationship through parallel motivational and strain processes, demonstrates the context-dependent role of learning goal orientation, and clarifies how SHRM and paradoxical leadership function as organizational and leadership resources in digital transformation.