Human‐Centric Digital Transformation in Industry 5.0: A Phenomenological Study of Family‐Owned <scp>SME</scp> in Sri Lanka

ABSTRACT This phenomenological study explores human‐centric digital transformation within Industry 5.0, specifically focusing on family‐owned SMEs in Sri Lanka. Despite their crucial economic role, these businesses encounter distinct challenges, such as succession transformation and the preservation of traditional values amid technological advancements. This study addresses the significant gap in literature regarding Industry 5.0 digital transformation in family‐owned SMEs, particularly in developing economies like Sri Lanka. By exploring the lived experiences of a third‐generation family‐owned business, the study provides novel insights into balancing technological progress with the preservation of traditional values, contributing to a deeper understanding of digital transformation in culturally embedded SMEs. Using Interpretative Phenomenological Analysis (IPA), the research explores the lived experiences of ‘Aaseer Mixture’, a third‐generation family‐owned food and snacks manufacturing SME located in Northern Sri Lanka. Key themes identified through detailed interviews with family members include ownership insights on digital integration, empowering family‐centric digital evolution and digital integration for business strategies. The study reveals how family dynamics and intergenerational differences impact decision‐making processes related to digital transformation. Emphasizing the need for inclusive strategies that consider the intersecting circles of ownership, family, and business, the study develops a new human‐centric digital transformation model tailored for family‐owned SMEs. This model balances technological progress with the preservation of core family values and traditions, offering valuable insights for navigating digital integration. By highlighting the necessity of embracing digital technologies to maintain relevance and attractiveness to future generations, the study contributes to the literature on digital transformation in family‐owned SMEs, especially within developing economies.