Human‐Centric Generative AI in Circular Supply Chains: Theoretical Insights From Ethics, Dynamic Capabilities, and Resource Conservation

ABSTRACT In response to growing calls for ethical, sustainable, and digitally enabled supply chains, this study investigates how the responsible deployment of generative AI (GenAI) enhances circular supply chain performance (CSP). Anchored in ethical theory, the dynamic capability view (DCV), and conservation of resources (COR) theory, we develop a multitheoretic framework examining how firms' digital humanism orientation and procurement innovation mindset shape responsible GenAI use. We further theorize how this responsible GenAI use activates AI‐augmented supplier development for circularity (AISD) as a dynamic capability, which mediates the relationship between responsible GenAI use and CSP. Contextual stressors, specifically, polycrisis experience and precarious behavior among supply chain professionals, are introduced as moderators that may undermine these relationships. The model is tested using time‐lagged survey data from firms in India and South Africa, analyzed via covariance‐based structural equation modeling. Findings support all proposed relationships across both country contexts. The study contributes by (1) extending ethical theory into GenAI‐enabled circular supply chains, (2) conceptualizing responsible GenAI use and AISD as firm‐level second‐order and first‐order dynamic capabilities that enhance sustainability outcomes, and (3) revealing how crisis‐driven human behavior conditions the efficacy of responsible GenAI in complex supply chain environments. Our results offer actionable insights for building ethically grounded, technologically enabled, and contextually responsive circular supply chains, especially relevant for emerging economies navigating digital transformation under resource constraints.