The holistic model of compliance costs of environmental regulation and companies’ productivityLah, Lenart Milan (Avtor) Kotnik, Žiga (Mentor) environmental regulationcompliance costsfirm productivityStandard Cost Model (SCM)Structural Equation Modeling (SEM)Porter HypothesisThis dissertation investigates the compliance costs of environmental regulation and their implications for companies in Slovenia and Croatia. The study builds on previous research by applying a comprehensive methodological framework to assess and interpret both the compliance costs of environmental regulations faced by firms and managerial perceptions of these costs. It further evaluates the potential effects of these costs on firm productivity, in line with the Porter Hypothesis, which examines the possible positive impacts of stricter environmental regulation on business performance. Compliance costs were estimated using the Standard Cost Model (SCM), which offers a robust basis for measuring the financial and administrative burden of environmental regulation. In addition, managers’ perceptions of these costs were assessed, and the factors influencing these perceptions were analyzed. This approach contributes to the literature on institutional theory, the resource-based view, and managerial cognition theory by highlighting the role of managerial attitudes toward environmental issues. Structural Equation Modelling (SEM) was employed to examine the determinants of compliance costs of environmental regulation and their impact on productivity in Slovenia and Croatia. Empirical results revealed that firm size increases compliance costs of environmental regulation in both countries, although larger firms in Slovenia perceive them as less burdensome. Regulatory complexity consistently drives both compliance costs and their perception, while environmental obligations and non-financial measures are significant only in Slovenia. In contrast, institutional quality raises perceived costs only in Croatia. While compliance costs of environmental regulation strongly shape its cost perceptions across both countries, the influence of regulatory complexity is more pronounced in Slovenia, whereas in Croatia, perceptions reflect a more balanced effect among compliance costs, regulatory complexity, and institutional quality. Furthermore, the inclusion of productivity enabled testing of the strong Porter Hypothesis, providing limited evidence that, despite being perceived as burdensome, compliance costs of environmental regulation as proxy of environmental stringency may enhance firm productivity in both countries. However, the explanatory power of the model remains robust, albeit with some minor limitations that should be acknowledged. vi This dissertation develops the holistic theoretical model that integrates key internal and external factors shaping compliance costs of environmental regulation and their perception, while also establishing a framework for assessing how these costs influence productivity. It contributes both theoretically and empirically by advancing methods for estimating compliance costs, incorporating managerial cognition into the analysis of environmental regulation, and examining the relationship between regulation and productivity. Although the study is limited by sample size, particularly in Croatia, it nevertheless provides a solid foundation for future research, especially in areas related to innovation effects, subjective managerial traits, and broader international comparisons.[L. L. Lah]20262026-09-03 11:10:04Doktorska disertacija186611sl