Strategic Human Capital Transformation for Global SMEs: Leveraging Artificial Intelligence and Digital Capabilities to Achieve Sustainable Competitive Advantage

Abstract

The rapid advancement of digital technologies and Artificial Intelligence (AI) has fundamentally transformed the competitive landscape for Small and Medium-Sized Enterprises (SMEs), requiring organizations to reposition human capital as a strategic asset rather than merely an operational resource. This study aims to develop a comprehensive understanding of how strategic human capital transformation, supported by digital capabilities and AI-driven human resource management, enhances organizational competitiveness and long-term sustainability in global SMEs. The study employs a qualitative literature review approach by synthesizing contemporary theories and empirical findings from internationally recognized books, peer-reviewed journals, and reports published by global institutions. The analysis integrates the perspectives of Strategic Human Capital Theory, Strategic Human Resource Management, Human Capital Analytics, Digital Leadership, Organizational Agility, Knowledge Management, and Innovation Capability. The findings indicate that sustainable competitive advantage is increasingly determined by organizations' ability to integrate digital technologies with strategic human capital practices, including AI-assisted talent acquisition, competency development, workforce analytics, continuous learning, and knowledge-sharing systems. Furthermore, organizational agility, ethical leadership, and digital competencies emerge as critical mediating capabilities that enable SMEs to respond effectively to dynamic global market conditions. The study proposes a Strategic Human Capital Transformation Framework that emphasizes the synergy among artificial intelligence, digital capabilities, organizational learning, and strategic leadership to strengthen innovation performance and organizational resilience. This framework provides both theoretical enrichment for strategic human capital literature and practical guidance for policymakers, business leaders, and SME practitioners seeking to accelerate digital transformation while supporting sustainable economic development and the realization of Indonesia Emas 2045.