Abstract

This book chapter examines the impact of legal regulations on sustainability as perceived by SME leaders. The impact of laws and regulations is explored within the framework of the entrepreneurial ecosystem at three levels: emotional or affective; cognitive motivational; and conative or behavioural. Through the inclusion of this practical small business perspective, we aim to enrich the discourse on the importance and challenges of regulation in the context of sustainability. This study is part of a larger research on the role of Hungarian SMEs in achieving the Sustainable Development Goals. In our mixed-method research we first used focus group interviews to identify the terms and phrases used by SMEs in relation to sustainability. Based on the qualitative results, a questionnaire was designed and administered to a representative sample of Hungarian SMEs. The results show that the legal system, i.e., policy, has a major—and at times controversial—impact on the sustainability of entrepreneurial activity. The policy implication is that sustainability issues should be addressed more comprehensively and in a more holistic, integral way across all domains of the entrepreneurial ecosystem. At the same time, individual characteristics of the entrepreneur, such as gender, position, and decision-making power, as well as characteristics of the enterprise, such as size or ownership structure, influence the assessment of the legislation and the perception and resolution of related challenges which should be taken into consideration.