While industry leaders proactively address environmental issues as an integrated part of corporate strategy, small and medium enterprises (SMEs) often perceive it as a means of cost reduction. The aim of this paper is to track the development of motivators, environmental initiatives, and their perceived effects on competitive advantage among SMEs. For that purpose, we conducted a longitudinal analysis of 4 repeated surveys over a period of 14 years among Danish manufacturing SMEs. Results show that Danish SMEs have increasingly deployed environmental initiatives that are associated with both lower costs and a differentiation dimensions of competitive advantage. The study also shows that over managerial attitudes, strategic intent has been the main driver when adopting such initiatives. Furthermore, we found that despite some differences between small and medium‐sized firms in terms of the levels of environmental engagement, the competitive benefits are generally robust regarding firm size. Before concluding, implications for future research and corporate managers are pointed out. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment