The Synergy Between Industry 5.0 and Circular Economy for Sustainable Performance in the Chinese Manufacturing Industry

Abstract

The industrial shift from Industry 4.0 to Industry 5.0 has transformed organizational thinking, moving the focus from purely technological implementation to a more human-centered approach. The current study has focused on the Industry 5.0 technological capabilities to bring into circular economy practices aligned with sustainable development goals, aiming to enhance sustainable performance. Moreover, the resource-based theory has grounded the development of the comprehensive framework on Industry 5.0 technological capabilities (artificial intelligence capabilities, big data analytical capabilities, Internet of Things capabilities, machine learning capabilities, and blockchain technology capabilities) and circular economy practices (eco-design, management system, and investment recovery) to achieve sustainable performance (environmental performance, social performance, and economic performance). Data have been collected from 179 respondents from the Chinese manufacturing industry. Additionally, data have been analyzed using the structural equation modeling technique. The results showed that Industry 5.0 technological capabilities directly affect sustainable performance. Moreover, circular economy practices played a dual, moderating, and mediating role between Industry 5.0 technological capabilities and sustainable performance. The current study has contributed to filling a gap in the literature on Industry 5.0 capabilities, especially in the circular economy and sustainable performance perspective. The practical contribution recommended is that if organizations focused on their Industry 5.0 technological capabilities, it would boost circular economy practices and sustainable performance to achieve sustainable development goals.