Did Jimmy Valentine change because of the setting or by himself?

O. Henry shows that the triggering factor in Jimmy Valentine's reformation was that he fell in love at first sight with a beautiful small-town girl named Annabel Adams. 

Jimmy Valentine looked into her eyes, forgot what he was, and became another man. 

He had to become "another man" in order to win the love of a girl like Annabel, for she would never have anything to do with a criminal. However, the author suggests that there were other factors involved in Jimmy's reformation and that Annabel was only the catalyst. For one thing, Jimmy was finding that it was easier for him to get caught and harder for him to get out of prison. As the story opens he is serving time in a state prison and working "assiduously" in the prison shoe shop. He has many connections on the outside, and he expected to be pardoned after serving only a few months of a four-year sentence for safe-cracking.

He had served nearly ten months of a four year sentence. He had expected to stay only about three months, at the longest. 

This is an ominous sign. Another ominous sign is that he is getting famous as the best safe-cracker in the business. Everybody in the underworld and everybody in law enforcement knows about Jimmy Valentine. Ben Price immediately recognizes his handiwork when he commits three burglaries right after being released.

Ben Price investigated the scenes of the robberies, and was heard to remark: “That's Dandy Jim Valentine's autograph. He's resumed business."

Jimmy can see that he is in danger of becoming what is called "an habitual offender," always a suspect, always on the lam. getting stiffer sentences, developing the look and attitude of a career criminal and convict. 

When Jimmy moves to Elmore, Arkansas to set up a business, he is not thinking of reforming. He just wants to find a new territory and shake his notoriety. He sets up a shoe business as a "front," but when he falls in love with Annabel he decides to become a real small-town businessman. The experience in prison has been an asset. He becomes successful in the shoe business and is soon engaged to Annabel. 

Jimmy's reformation is largely due to himself. He is a very intelligent young man and can see the handwriting on the wall. No doubt he would have decided to reform eventually. His love for Annabel sparked the decision to do so right then and there. He learns that a man who has the brains and talents to be a successful criminal can use the same brains and talents to go straight. Jimmy was a successful crook and became a successful businessman. He found that the straight life was much better than the crooked life. As he tells a friend in a letter:

Say, Billy, I've quit the old business—a year ago. I've got a nice store. I'm making an honest living, and I'm going to marry the finest girl on earth two weeks from now. It's the only life, Billy—the straight one. I wouldn't touch a dollar of another man's money now for a million.