Digital HR Systems as Strategic Capabilities: Explaining Employee Engagement and HR Service Delivery in a Developing Economy

The increasing adoption of digital human resource (HR) systems has transformed the strategic role of HR functions, particularly in organisations operating in developing economies where institutional, technological and resource constraints continue to influence organisational performance (Dwivedi et al., 2022; World Economic Forum, 2025). Although previous studies have examined the operational benefits of digital HR technologies, limited empirical evidence explains how these systems function as strategic organisational capabilities that simultaneously enhance employee engagement and HR service delivery within resource-constrained environments (Bondarouk & Brewster, 2016; Minbaeva, 2021). Drawing on the Technology Acceptance Model (Davis, 1989), the Unified Theory of Acceptance and Use of Technology (Venkatesh et al., 2003), Social Exchange Theory (Cropanzano & Mitchell, 2005), and Socio-Technical Systems Theory (Trist & Bamforth, 1951), this study conceptualises digital HR systems as strategic capabilities that create organisational value through improved employee engagement and service effectiveness. Using a pragmatic mixed-methods research design, quantitative data were collected from employees of a major public utility organisation in Malawi and complemented by qualitative interviews with HR managers and organisational leaders. Multiple regression analysis demonstrated that system accessibility, perceived usefulness, system reliability and management support significantly influenced employee engagement and HR service delivery. Qualitative findings further revealed that leadership commitment, organisational readiness and continuous user support strengthened employees' acceptance and effective utilisation of digital HR systems. The study extends strategic capability theory (Barney, 1991; Teece et al., 1997) by demonstrating that digital HR technologies represent organisational capabilities rather than merely administrative tools, particularly within developing- country contexts characterised by infrastructure limitations and institutional complexity. The findings provide practical guidance for organisations seeking to leverage digital HR transformation to improve employee engagement, organisational responsiveness and HR service performance while contributing new evidence from an under-researched African context.