Unveiling environmental excellence: the confluence of green Industrial Internet of Things, circular economy practices and dynamic capabilities in manufacturing firms

Purpose To meet environmental performance (EP) goals, this study aims to identify the complex interaction between green Industrial Internet of Things (GIIoT), circular economic practices (CEPs) and dynamic capabilities (DC). This study analyzes how technological, operational and cultural compatibilities enhance GIIoT adoption. Design/methodology/approach Data were collected from diverse Chinese manufacturing firms ( n = 339) through a quantitative survey. The research model was proposed, and hypotheses were tested using structural equation modeling. Moreover, the robustness of the structural model is further tested using Fuzzy Set Qualitative Comparative Analysis and importance performance map analysis. Findings The empirical results indicate that higher organizational compatibilities boost GIIoT adoption and EP. DC was assessed as a higher-order construct to examine its mediation of GIIoT adoption and EP. DC positively mediates GIIoT adoption-EP. Similarly, CEP’s positive impact on EP, partially mediating the relationship between GIIoT adoption and EP, has also been proved. Originality/value This research bridges current understanding and contributes useful insights for fostering environmental sustainability inside manufacturing firms and advances the theoretical understanding of technology adoption, sustainable development and dynamic capacity theory. It illuminates the way forward to harmonize and successfully integrate technology, CEP and EP. This research advances the area and gives decision-makers practical advice for creating sustainable and technologically sophisticated organizations.