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ABSTRACT This paper explores the motivations for the adoption of the circular economy in the Chinese manufacturing business within a holistic framework of technological, financial, social and institutional aspects. Specifically, the paper examines the effect of the adoption of artificial intelligence, green finance and corporate social responsibility practices mediated by the implementation of the circular economy with green product innovation and green supply chain management as the mediating variables and regulatory pressure as a mediator. On a sample population of 479 managers from electronics, automotive and textile companies, partial least squares structural equation modelling (PLS‐SEM) was used to sample and analyse the sampled population. The results suggest that the application of artificial intelligence, green financial practices and CSR practices has direct strong implications for the outcomes of the circular economy and an indirect outcome regarding performance in measures of product innovation and supply chain practices. In addition, regulatory pressure affects the implementation of the circular economy directly and positively but also plays a role in enabling the organisational driving forces to produce sustainable results. The findings imply that the combination of technological potential, funding and social responsibility, along with strong regulatory enforcement, is crucial to the realisation of the circular transformation of resource‐intensive sectors. The study is a contribution to theory because it combines the perspectives of the technology–organisation–environment framework, the Resource‐Based View, stakeholder theory and institutional theory, while offering practical knowledge to managers and policy makers interested in speeding up sustainability transitions in emerging economies.
Zhao et al. (Sun,) studied this question.