How and Why Do Economic Operators Comply With EU Law? Analysis of Firm‐Level Responses to the EU Timber Regulation in Germany

The European Union (EU) Timber Regulation (EUTR) formally requires EU operators to conduct due diligence along their supply chains to prevent illegally sourced timber products from entering the European market. Little is known about the regulatory behaviour and motivations of operators to comply with this regulation. We explore the regulatory behaviour of companies by applying a synthesis of behavioural theories of regulatory compliance and transnational market regulation. Informed by qualitative and quantitative mixed methods, this study finds that EUTR compliance is influenced by operators' regulative, economic, normative and cultural‐cognitive motivations. The empirical analyses reveal that larger, publicly exposed companies are driven to comply through social pressure and the deterrence effect of sanctions and control. Operators' perceptions of the costs and benefits do not explain compliance behaviour in a significant, quantitative way. The Internal values to abide by the law are found to be a stronger motivator than economic cost–benefit calculations.