The influence of artificial intelligence adoption on circular economy practices in manufacturing industries

Considering the increase in the stakeholders' supervision and the change of production processes, sustainable development plays a crucial role in the survival of businesses. In order to achieve sustainable development, the circular economy (CE) seeks to manage the flow of materials and energy to closed-loop systems. Circular economy has led to the formation of sustainable business models. Artificial intelligence (AI) capabilities change work activities, data flows, and organizational processes. The purpose of this study is to identify the impact of adoption of AI on circular economy practices in the organization. The research questions include: What are the factors affecting the adoption of AI in manufacturing companies? What effect does the adoption of AI have on the CE practices in the organization? In the first phase, research constructs are identified and a conceptual model is developed based on previous studies. In the second phase, the research model is evaluated among 97 manufacturing companies in the Middle East. Structural equation model and Smart PLS software have been used for data analysis. The findings show that the technology characteristics, organizational capabilities and external task environment have an effect on adoption of AI, and adoption of AI has a positive effect on circular economy practices. Based on the results, AI technology can be a solution to change the production process and reduce the destructive effects of industry on the environment. Managers of manufacturing companies can use the capabilities of machine learning, intelligence and neural networks to manage resources and optimize product production.