<![CDATA[Aim: This study aims to examine the impacts of AI-HRM on Employee Well-Being (EWB) and Sustainable Performance (SP) in companies operating in the context of developing countries such as Pakistan. Also, the study will evaluate the role of perceived Organizational Support (POS) as moderator to enhancing the positive effects of sustainable HRM practices.Methodology: To avoid the Common Method Bias (CMB) in this study, the authors used the three-wave longitudinal research design. Data were collected in different time periods using a time interval of one month between the waves (T1: January 2026; T2: February 2026; T3: March 2026). The final sample was of 400 SME owners, founders and senior managers from the startups that obtained the necessary information through Partial Least Squares Structural Equation Modeling (PLS-SEM) using SmartPLS 3.0 softwareFindings: Research outcomes reveal that the implementation of AI-based HRM results in a significant negative direct influence on the employees’ well-being ( = -0.156, p = 0.012) as well as on sustainable performance ( = 0.207, p = 0.017). Meanwhile, the sustainable HRM practices yield a significant positive direct influence on both employee well-being ( = 0.435, p = 0.000) and sustainable performance ( = 0.300, p = 0.000). The POS moderation analysis provide evidence that the negative effects of AI HRM to be mitigated while boosting the positive effect of sustainable HRM practices. The model also explains 71% of the variance in employee well-being and 46% of the variance in sustainable performance.Implications/Novel Contribution: The study shows that business executives from the developing nations should be careful not to use AI tools independently. In order to combat potential employee burnout and declining performance, it is necessary that managers increase their company’s POS level through transparent communication, providing digital training for employees, and incorporating sustainable HR practices, such as providing protective mechanisms from excessive workloads, maintaining employees’ health, and ethical governance. Based on Social Exchange Theory (SET) and the Sustainable HRM Framework, this paper provides unique theoretical and practical contributions related to the heterogeneous impact of digitalized HR. By demonstrating POS as both an impediment to stress caused by AI and a facilitator of sustainability, this research fills a significant gap in the literature on digital HR development in developing countries.]]>
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