The Impact of Artificial Intelligence on Sustainable Human Resource Practices Within Saudi Medium-sized Enterprises: The Mediating Role of Digital Skill Development

Abstract

This study investigates the impact of Artificial Intelligence (AI) on Sustainable Human Resource Practices (SHRP) within Saudi medium-sized enterprises, emphasizing the mediating role of Digital Skill Development (DSD). Anchored in the context of Saudi Arabia’s Vision 2030 and the global push for digital transformation, the research adopts a quantitative methodology, utilizing a structured questionnaire distributed to 384 HR professionals and employees across various sectors. Data were analyzed using SPSS and SmartPLS to evaluate both direct and indirect relationships among AI, DSD, and SHRP. The findings reveal that AI has a significant positive influence on both DSD and SHRP. However, DSD does not exhibit a direct effect on SHRP but plays a partial mediating role, enhancing the impact of AI on sustainable HR outcomes. This suggests that while digital skills alone may not drive sustainable practices, they are essential for amplifying the benefits of AI integration in HR functions. The study contributes to theoretical frameworks such as the Resource-Based View and Dynamic Capabilities Theory by highlighting the interdependence of technology and workforce competencies in achieving strategic sustainability. Practically, the results underscore the need for Saudi SMEs to align AI adoption with workforce upskilling initiatives to ensure a holistic and effective HR transformation. The study offers policy and managerial recommendations to support this alignment and suggests avenues for future research in emerging markets. Overall, the research provides timely insights into how AI and digital competence can be leveraged to enhance sustainable HRM in technologically evolving organizational contexts