Supply chain firm performance in circular economy and digital era to achieve sustainable development goals

Abstract Digitalization of the supply chain (SC) has received plenty of attention from practitioners and researchers in recent years to address the challenges of the business environment and assist firms in achieving a circular SC. Implementing circularity in business operations is a practice of achieving sustainability which is of utmost significance for achieving sustainable development goals established by the United Nations. This study empirically examines the relation among flexibility, AI–IoT adoption, and SC firm performance under the circular economy (CE) environment based on resource orchestration theory (ROT), an integrated version of the extended‐resource‐based view, and dynamic capability theory (DCT). Data were collected from Indian manufacturing firms through a questionnaire‐based survey and examined using “structural equation modeling (SEM).” The study results show that information flexibility and organizational flexibility have the highest impact on AI–IoT adoption. Organizational flexibility shows full mediation with AI–IoT, which would influence the SC firm performance directly. The analysis also indicates that CE will affect the relation between organizational flexibility and AI–IoT adoption. These findings pave the way for cross‐country analysis, formation of practical strategies, and policies related to AI–IoT and CE implementations.