Influence of AI on CE: underlying roles of network centrality and green product (process) innovations in manufacturing industry

Purpose Literature reviews unanimously report an affirmative influence of artificial intelligence (AI) capabilities on circular economy practices (CE), whereas empirical investigations, although scarce, do not align with these assertions and exhibit conflicting findings. This study aims to understand the mechanism behind the AI and CE relationship through mediation of green product (process) innovation and moderation of network centrality. Design/methodology/approach This study integrates dynamic capability theory (DCT) with network theory to examine the moderated-mediation effect of AI on CE. The online survey raised 224 valid responses, which were examined through partial least squares structural equation modeling. Findings Green product (process) innovation completely mediates between AI and CE. Network centrality positively moderates the mediation effects, such that mediation lowers as the firm becomes more central. Originality/value This study views AI as a lower-order dynamic capability and integrates DCT with network theory to illustrate how higher-order capabilities, i.e. green innovation and CE, can be availed. Besides, we provide empirical support to prevailing literature reviews by presenting a novel explanation to the AI and CE relationship.