Human-Centric Practices and Sustainable Innovation in Industry 5.0: The Mediating Role of Employee Dynamic Capabilities

Purpose: The paper studies the process by which human-centric organisational activities integrated with employee dynamic capabilities (EDC) drive sustainable innovation in an Industry 5.0 framework. Design/Methodology/Approach: A test experiment was conducted to determine the effect of human-oriented practises on sustainable innovation. A sample of 562 organisations in Hyderabad participated in the study by completing a structured questionnaire. Linear regression analysis and mediation modelling (Macro Process for IBM SPSS) were used to test hypotheses or determine the specific role of EDC. Findings: The findings confirm that anthropocentric organisational practises play a significant role in sustainable innovation, and EDC is a key mediator. What is discovered is that employees are not just inert resources but dynamic agents of change. They develop the flexibility, critical thinking, and creativity required to create sustainable transformations in the Industry 5.0 environment when underpinned by human-centric practices. Research Implications: Companies that want to be sustainable should move towards a more dynamic, human-focused approach to Human Resource Management (HRM). Investments in “human-centricity” must become a priority, as to attain sustainability through innovation, there must be a dedication to human capital that goes beyond technological infrastructure. Originality/Value: This study builds on the Resource-Based View (RBV) and Dynamic Capabilities Framework via illustrating that human-centricity is the key to improving EDC. It contributes to sustainable innovation literature, demonstrating that this innovation is neither strictly top-down nor technology-driven, but rather one whose basis lies in the facilitated capabilities of the workforce.