Integrating digital technologies into human resource management (HRM) is increasingly recognized as a strategic initiative that drives firm performance. However, our understanding of how and when HRM digitalization affects firm performance remains limited. Based on the framework of fit in strategic HRM, we theorize that HRM digitalization induces two parallel fit-based mechanisms-HR flexibility (i.e., manifesting vertical fit) and HR strength (i.e., manifesting horizontal fit)-that subsequently influence firm performance. Further, we examine workforce digital literacy as an important context for such effects. Using multi-wave and multi-source field survey data from 161 firms’ CEOs and HR directors, we found support for most of our hypotheses. Our research offers novel insights into the complex implications of digital HRM on firm performance.
