Intellectual capital, environment-related absorptive capacity and environmental performance: Firm-level evidence from China's E&E sector

Abstract

Much of the existing literature on environmental performance has focused on human capital and intangible assets such as environmental policies and strategies, the role of intellectual capital has largely been overlooked. This study aims to investigate the impact of intellectual capital on environmental performance at the firm level, specifically in the electrical and electronics (E&E) sector in China. By considering human, relational, and structural capital as integral elements of intellectual capital, we assess their direct influence on environmental performance and explore how these components interact with other factors in driving environmental outcomes. We also examine the role of environmental related absorptive capacity in this relationship. The data is collected from 113 firms in the E&E sector, and PLS-SEM is applied to analyse the relationship between intellectual capital and environmental performance. Our findings reveal a significant and positive impact of intellectual capital on environmental performance, highlighting its critical role in promoting sustainable business practices. Managers and policymakers are urged to integrate sustainability-focused training, strengthen inter-organizational networks, and embed environmental management systems to achieve dual goals of improved environmental and economic performance.