How Does Green Innovation Capability Affect Circular Supply Chain Management Adoption: An Institutional Theory Perspective

Abstract Green innovation (GI) represents a critical yet underexplored driver of circular supply chain management (CSCM). While existing literature acknowledges the fragmented nature of GI–CSCM linkages, few studies investigate this relationship through an institutional theory lens or empirically validate the enabling mechanisms. Addressing this gap, we examine (1) whether GI capabilities facilitate CSCM adoption in manufacturing firms and (2) how institutional pressures moderate this relationship. Utilizing panel data from 247 Chinese A‐share listed manufacturers spanning 2008–2019, we find a significant positive association between GI capabilities and CSCM implementation. Institutional theory‐driven moderation tests reveal that competitive pressure, environmental information disclosure and environmental regulation compliance amplify this relationship. As the first empirical study to operationalize institutional pressures within the GI–CSCM nexus, this research advances the theoretical understanding of circular economy transition mechanisms while offering pragmatic insights for aligning innovation strategies with institutional legitimacy requirements.