Competition in technology and innovation, motivation crowding, and environmental policy

This paper investigates the theoretical and empirical relevance of motivation crowding theory for owner–managers' motivation towards sustainable development. Motivation crowding theory has argued that external pressures enforce (crowd in) moral motivation if these pressures are perceived as supportive. On the basis of this theory, we conjecture that a competitive environment that is characterized by a high intensity of competition on innovation will crowd in moral motivation towards sustainable development if owner–managers believe that environmental policy practices increase the innovative capability of their company. Test results on survey data filled out by 650 owner–managers support this hypothesis. These results imply that policy makers, who aim at stimulating innovation as well as sustainable development, should inform managers about the innovation‐enhancing effects of environmental policy practices.