How can generative artificial intelligence empower circular supply chain practices? Evidence from Chinese companies

In the context of supply chain digitalization and the circular economy, generative artificial intelligence (GenAI) may help firms overcome persistent challenges in knowledge integration and rapid innovation iteration within circular supply chains. Drawing on the dynamic capability view (DCV) and the knowledge-based view (KBV), this study develops a theoretical model to examine the impact of GenAI on circular supply chain practices. The study focuses on the mediating roles of generative capability and iterative innovation, as well as the moderating role of circular innovation orientation. This addresses the core question of how digital technology drives value regeneration in the circular economy. Using partial least squares structural equation modeling (PLS-SEM) and survey data from 371 Chinese firms, we find that GenAI has a positive effect on circular supply chain practices, both directly and indirectly. Generative capability and iterative innovation each mediate the GenAI–circular supply chain practices relationship, and they jointly form a serial mediation pathway. Moreover, circular innovation orientation strengthens the positive effect of generative capability on iterative innovation. By conceptualizing generative capability as a higher-order dynamic capability rooted in knowledge acquisition, inheritance, and updating, this study clarifies how GenAI converts cross-generational knowledge reconfiguration into actionable circular practices. The findings extend DCV and KBV explanations of technology-enabled circular transformation, offering guidance for managers seeking to deploy GenAI for value regeneration.