A Framework to Identify Influences of Environmental Legislation on Corporate Green Intellectual Capital, Innovation, and Environmental Performance: A New Way to Test Porter Hypothesis

The aim of this paper is to examine the Porter hypothesis which defines that environmental regulations, under certain circumstances, could have positive effects on corporate environmental and economic performance. The majority of previous studies are based on questionnaire-based surveys, on normative models and on relative information at country level. To overcome some of the weaknesses of previous works, a benchmarking-scoring framework is suggested to draw useful and valuable information from corporate sustainability reports so as to examine the relationships between four dimensions of corporate performance, namely compliance with environmental legislation, green intellectual capital (GIC), environmental innovations, and corporate environmental performance. The proposed framework was applied in a sample of firms which operate in the metal products industry. The findings show that GIC could be a significant mediating factor between environmental legislation and environmental performance of firms. Additionally, it seems that GIC influences innovations and environmental performance.