Abstract
This paper develops a theory-building conceptual framework to explain the heterogeneous outcomes of AI-enabled Industry 5.0 initiatives in operations and supply chain contexts. Integrating the Technology–Organisation–Environment (TOE) framework with socio-technical systems theory, we argue that technological, organisational, and environmental conditions shape not only whether artificial intelligence (AI) is adopted, but more importantly the quality of socio-technical design through which AI is implemented. We theorise that socio-technical design quality—captured through participatory design, governance quality, human–AI complementarity, and workforce capability development—mediates the relationship between structural conditions and key operational outcomes. Specifically, the framework explains variation in sustainability, operational resilience, and inclusion and quality of work outcomes across organisations. By shifting attention from technology adoption to implementation quality, the paper extends TOE as a theory of outcome differentiation and positions Industry 5.0 as a socio-technical operations design challenge. The framework provides a foundation for future empirical research and offers insights for managers and policymakers seeking responsible, human-centred approaches to AI deployment in operations systems.