HUMAN CAPITAL DEVELOPMENT AND DIGITAL CAPABILITY BUILDING IN SMES: A SYSTEMATIC LITERATURE REVIEW OF LEARNING MECHANISMS

Abstract

Small and medium-sized enterprises (SMEs) increasingly operate in environments in which digital technologies reshape customer interfaces, operations, innovation, and business models. Yet digital capability is not created by technology acquisition alone. It depends on the ability of owners, managers, and employees to acquire, interpret, share, apply, and renew knowledge. This systematic literature review synthesizes research on the learning mechanisms through which human capital development contributes to digital capability building in SMEs. The review integrates human capital theory, organizational learning, absorptive capacity, knowledge-based views, and dynamic capabilities. The evidence indicates six mutually reinforcing mechanisms: formal training and structured development; experiential and learning by doing processes; social and peer learning; external knowledge acquisition and network learning; knowledge sharing and organizational memory; and reflective, exploratory learning that supports sensing, seizing, and reconfiguring. A central finding is that human capital produces digital capability when individual knowledge is converted into organizational routines rather than remaining as isolated skills. SMEs face distinctive constraints, including limited training budgets, managerial bandwidth, employee multitasking, and dependence on external providers, which make informal and networked learning especially important. The review proposes a process model in which human capital provides the knowledge base, learning mechanisms transform individual and external knowledge into shared organizational knowledge, absorptive capacity enables assimilation and application, and dynamic capabilities convert accumulated knowledge into digital infrastructure, digital processes, analytics, innovation, and business model renewal. The article closes with implications for SME managers, policymakers, training providers, and future research, with particular attention to longitudinal and emerging-market contexts.