Towards Sustainable Manufacturing in Developing Economies: A Systems-Based Model Linking Industry 5.0, SCE, and Green HRM

Abstract

Manufacturing firms face intensifying pressure to achieve sustainability while remaining competitive under environmental stress, rapid technological change, and institutional uncertainty—challenges that are particularly acute in developing economies. Although Industry 5.0 has emerged as a human-centric and sustainability-oriented industrial paradigm, limited research explains how it can be systematically operationalized to enhance sustainable business performance. This study addresses this gap by developing an integrative conceptual framework linking Industry 5.0, Smart Circular Economy (SCE), and Green Human Resource Management (GHRM) within manufacturing contexts. Drawing on resource-based, dynamic capability, and institutional perspectives, the framework conceptualizes Industry 5.0 as a strategic digital orientation that enables circular resource orchestration and sustainability-aligned human capital systems. SCE and GHRM are positioned as complementary operational mechanisms that translate Industry 5.0 principles into organizational capabilities. Innovation capability is introduced as a mediating dynamic capability explaining how technological and human resource investments generate environmental, social, and economic performance outcomes. Digital maturity and policy support are incorporated as contextual moderators shaping transformation pathways in developing economies. The proposed model advances sustainability-oriented industrial transformation theory by integrating previously fragmented research streams into a coherent socio-technical capability architecture. It also offers actionable insights for managers and policymakers seeking to align digital industrial development with long-term sustainability objectives under conditions of institutional heterogeneity.