Human Resource Management in the Digital Era and Competitive Advantage Factor Affecting on Business Performance in Vientiane Capital, Lao PDR

Human resource management is a key area in the digital age, firstly in business. It is central to a business strategy, facilitates the attainment of competitive advantage and improves business performance. This research sought to examine the role of certain factors that affect competitive advantage, test these factors through Confirmatory Factor Analysis, and construct a model depicting the interrelationships between business performance in Vientiane Capital, Lao PDR. This research used quantitative research methods only. Data were obtained from a sample size of 256 SMEs in Vientiane Capital and were analyzed using Structural Equation Modelling for hypothesis testing. The research findings from testing the hypotheses shows that the Human Resource Management factors in this era of digitalization greatly impacts on competitive, with the t-value = 9.86, influence coefficient β=0.87, and P-value < 0.001, likewise, the factors of competitive advantage have a positive impact on firm performance in the case of Vientiane Capital, the hypothesis is accepted at the t-value of 2.1, influence β=0.36 and P-value <0.05, In addition, human resources management factors in this digital era also significantly impact the business performance in Vientiane Capital, the evidence for this is that t-Value is 2.88 with an influence coefficient β=0.54 and P-value <0.05. Further, with respect to business performance the SEM model has the following values: (χ2/df)= 1.78; GFI=0.97; AGFI=0.93; CFI=0.99; RMSEA=0.05. Both factors account for business performance variance at R2=0.76. The findings of the research underline the importance of Human Resource Management in the development of firm’s competitive advantage and efficiency of business activity in rudimentary states regulating them within age. The evidence indicates that firms in Vientiane Capital should place more emphasis on their HRM practices in order to achieve greater competitive advantage and improved performance.