The Human-Centric Paradox of AI in HRM: How Technostress and Digital Literacy Co-Determine Employee Productivity in Smart Work Environments

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The rapid integration of Artificial Intelligence (AI) into Human Resource Management (HRM) creates a human-centric paradox, promising enhanced operational efficiency and data-driven decision-making while simultaneously introducing novel stressors that may diminish employee performance and well-being. This study investigates the complex interplay between AI adoption, technostress, and digital literacy in shaping employee productivity within smart work environments. Utilizing an explanatory sequential mixed-methods design, quantitative data from a survey of 300 employees in technology-oriented firms was analysed using regression and mediation models in SPSS and SmartPLS. This was followed by qualitative thematic analysis of 20 in-depth interviews to contextualize the statistical findings. Results confirmed that AI integration significantly predicts higher productivity, but this relationship is negatively impacted by the multifaceted dimensions of technostress, such as techno-overload and techno-insecurity. Crucially, digital literacy was found to be a powerful mediator and buffer, mitigating these adverse effects and enabling employees to leverage AI as an augmenting tool rather than a perceived threat to their roles. Qualitative findings further revealed that technostress stems from constant algorithmic monitoring and the pace of technological change, while digital literacy acts as an empowering mechanism that fosters confidence and control. The study concludes that realizing AI's full productivity benefits requires a balanced, human-centric approach, contributing to technostress theory by empirically validating digital literacy's pivotal role. 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