Sustainable Entrepreneurship in the Western Balkan Countries: Key Constraints

Abstract

Public concern about environmental issues has led to growing interest in sustainability across various sectors, including entrepreneurship. However, beyond the concern for environmental protection and the presseration of natural resources for future generations, additional conditions are necessary to foster the development of sustainable entrepreneurship. While developed countries provide examples and evidence of the successful implementation of this concept, its application in developing countries presents challenges due to a range of limiting factors. In addition to essential financial support, the literature often highlights the lack and/or complexity of sustainability reporting, the absence of standards and clearly defined sustainability metrics, insufficient regulation, and the lack of support from higher education institutions as barriers to the transition toward sustainable entrepreneurship. This paper aims to examine the feasibility of applying the concept of sustainable entrepreneurship in Western Balkan countries, taking into account the aforementioned constraints. For the purpose of the empirical research, potential limitations were evaluated by managers and business owners in Albania, Bosnia and Herzegovina, North Macedonia, and Serbia. The results of the study answer the question of whether developing countries have the potential to foster sustainable entrepreneurship, given the analyzed constraints, or whether the implementation of this concept is reserved solely for large enterprises and economically advanced countries.

1. Introduction

Traditionally, entrepreneurship has been studied, analyzed, and applied as a mechanism for generating self-employment or as one of the drivers of job creation [1]. In other words, it has primarily been viewed as a means of stimulating economic development, while social and environmental issues were often overlooked. However, the increasing importance of environmental challenges and the emergence of the concept of sustainable development highlight that entrepreneurship should not be based solely on wealth creation but can also serve as a mechanism for guiding economic sectors toward sustainability [2]. This has motivated the emergence of a new concept—sustainable entrepreneurship.

Sustainability has become a critical concept in today’s business environment. International agreements, such as the UN Convention on Climate Change and the Kyoto Protocol, have committed countries to use natural resources more efficiently and promote environmentally responsible activities. Many countries also provide incentives for “sustainable entrepreneurs” who introduce innovations that integrate environmental principles into business practices [3]. Entrepreneurship plays a vital role in the transition toward sustainability, contributing to job creation, product innovation, and societal well-being [4].

It is evident that sustainable entrepreneurship has received much attention from different research domains in terms that companies need to be aware of their activity impact from an environmental and social point of view, not only using “economic glasses” [1]. Authors represent it as a form of business that, besides profit, also takes into account social and environmental impact. It starts from the idea that firms do not exist by themselves, but that their actions affect the wider community and environment [5]. The concept emphasizes that resources are finite and should be conserved and utilized wisely, prioritizing a long-term approach. This perspective underscores the importance of sustainable management to ensure the availability of resources for future generations. It advocates for careful and responsible use of resources, recognizing their limited nature and the need for thoughtful planning to maintain ecological balance and support continued development [6].

Sustainable entrepreneurship is seen as “a process in which entrepreneurs leverage opportunities in an innovative way for economic gain, social equity, environmental quality, and cultural preservation on an equitable basis” [7]. According to Schaltegger and Wagner (2011), this concept represents a strategic business model in which companies implement sustainable practices to boost efficiency and maintain competitiveness, all while addressing the environmental, economic, and social consequences of their actions [4,8]. Sustainable entrepreneurs move away from standard production techniques, conventional products, established market systems, and typical consumption habits, opting instead for environmentally friendly and socially responsible solutions that offer improved outcomes. Sustainable entrepreneurship extends beyond traditional business models by integrating environmental and social considerations into the pursuit of economic objectives. This approach emphasizes the creation of value that benefits not only the company but also society and the environment, since it aims at the holistic evaluation of business based on the factors people, profit, and planet [9]. It responds to the growing demand for corporate transparency and accountability, driven by stakeholders seeking businesses that contribute positively to global challenges [10] (p. 3).

The concept of sustainable entrepreneurship aims not only to contribute to the sustainable development of the organization itself but also to the broader sustainable development of markets and society, which requires significant sustainable innovations [8]. These innovations should resolve conflicts between ecosystems and economic systems. Therefore, achieving sustainable growth through sustainable entrepreneurship depends on innovation capacity [2,11,12]. A key constraint to the implementation of sustainable entrepreneurship in developing countries stems from a lack of financial support. However, while some authors link the realization of sustainable innovations to the availability of financial resources [11,13,14], others hold different views. Lee et al. (2018) found that the implementation of sustainable innovations by entrepreneurs also depends on research and development as well as human capital in energy and resource management [15]. From this perspective, achieving sustainable growth also relies on entrepreneurs’ innovation capabilities [2,16] contend that sustainable innovation and design do not solely depend on new technologies, but instead involve reimagining strategies for growth that reduce harmful environmental and social consequences. Thus, innovation can be considered a key factor for sustainability, which may refer to both product and process innovations. Since innovation is intrinsic to entrepreneurship [2], both forms are seen as mechanisms for achieving sustainable development goals [17]. However, this study does not include an analysis of entrepreneurs’ innovation capabilities in the comparison between conventional and sustainable entrepreneurship, as the primary focus is placed on examining institutional barriers.

Despite research showing that innovation is not always contingent upon access to financial resources, this limitation continues to appear in many studies. The findings suggest that the adoption of the sustainable entrepreneurship concept is restricted in developing countries and within SMEs. Moreover, the literature highlights that, alongside financial constraints, developing countries face additional challenges such as the lack of sustainability reporting, absence of standards and metrics, regulatory gaps, and insufficient support from higher education institutions. The extent to which these institutional barriers hinder the application of sustainability principles in developing countries remains an open question. To address this, a study was conducted among a group of enterprises from the Western Balkans.

2. Literature Review

Sustainable development is treated in contemporary literature through three interconnected dimensions: ecological, economic and social. Each of them has specific challenges, goals and indicators, but their integration is key to achieving long-term sustainability [18,19]. Traditional entrepreneurship emphasizes only economic development, whereas sustainable entrepreneurship aims for alignment among economic, social, and ecological goals. Faced with different environmental constraints, entrepreneurs demonstrate different levels of concern for sustainability because they have differing degrees of interaction with external actors in order to acquire tangible and intangible resources from the environment, so as to remain competitive [4]. In order to better understand perceived barriers and entrepreneurial exit intentions, besides the nature of entrepreneurship activity, one must consider the domains of sustainable entrepreneurship [20].

2.1. Sustainable Entrepreneurship: Economic, Environmental and Societal Domain

Economic sustainability emphasizes long-term growth while preserving environmental and social resources [21]. Although economic goals often dominate, true sustainability requires balancing profit with innovation, competitiveness, and corporate social responsibility [19]. The concept of green and circular economies highlights how sustainable technologies and resource efficiency can reduce costs and environmental impact [22]. However, economic growth remains controversial, as it supports societal development but can also harm ecosystems. In this context, Industry 5.0 introduces a shift toward human-centered, sustainable, and resilient production, emphasizing innovation that benefits both the economy and society [23,24].

Environmental sustainability focuses on minimizing a firm’s impact on natural resources to protect ecosystem health [25]. Waste management plays a central role in reducing environmental harm and greenhouse gas emissions [26]. Efficient waste systems help conserve resources, reduce pollution, and improve urban quality of life [27]. As a result, national and international strategies increasingly prioritize waste management due to its ecological, economic, and social relevance [25]. Entrepreneurs increasingly prioritize ecological concerns—such as environmental protection, sustainable technologies, and ethical decision-making—leading to a new view of business success that integrates social and environmental values alongside profitability [28]. Environmental sustainability includes pollution control, biodiversity protection, and the use of green technologies. Biodiversity, though often overlooked, is vital for ecosystem resilience and essential services like climate regulation and food production. Policies must balance short-term goals with long-term biodiversity protection [29]. Green technologies and sustainable industrial practices not only protect the environment but also enhance innovation, reduce costs, and improve company reputation [30]. Principles such as reduce, reuse, recycle, and recover are key to minimizing industrial eco-logical footprints [25]. Finally, education for sustainable development plays a crucial role in fostering responsible behavior and building resilient societies. It promotes skills like critical thinking and participatory decision-making, essential for driving environmental and economic sustainability [29]. The social dimension of sustainability covers working conditions, employee health, social inclusion, and community engagement. Safe workplaces boost productivity and reduce absenteeism and healthcare costs [31], which respondents also highly valued. Although social inclusion is central to the sustainable development goals, it is often poorly implemented, leading to lower awareness of its importance. Yet, inclusive policies improve productivity, innovation, and social cohesion [32]. Various standards classify social well-being into employee health, development, and satisfaction, as well as community and customer relations.

2.2. Sustainable Entrepreneurship Barriers

Perceived risks and obstacles are significant challenges to achieving sustainability. Entrepreneurs frequently encounter ethical dilemmas when trying to balance economic goals with social and environmental responsibilities [4]. Traditional, profit- or market-driven business models often ignore environmental and social issues, as addressing them can reduce profit margins. In contrast, sustainable entrepreneurs actively pursue opportunities in these overlooked areas, tackling challenges that are typically more complex than those faced in conventional entrepreneurship [4]. Despite its promising facets, sustainable entrepreneurship encompasses challenges and barriers compared to other profit-seeking opportunities, as it must create social and environmental values alongside the economic rents [20]. When launching a business, sustainable entrepreneurs often (1) feel more constrained by perceived obstacles, such as institutional conditions, and (2) demonstrate different attitudes and perceptions toward risk compared to conventional entrepreneurs. Recent literature highlights various challenges that social, environmental, and sustainable entrepreneurs commonly face [3] (p. 1138).

Several studies have highlighted the challenges social entrepreneurs face in securing financial capital. Business angels, venture capitalists, and other private investors are likely to hesitate in committing funds unless they can adequately offset their resource investments [3] (p. 1138). As sustainability evolves, many companies—especially small and medium-sized enterprises (SMEs)—face restricted access to advanced technologies and resources. Therefore, it is necessary to improve access to sustainable finance by providing microfinance loans or investments with a social impact, specifically targeted at sustainable entrepreneurs, as well as creating tax incentives and other financial instruments that encourage investment in sustainable SMEs [2,11]. Hoogendoorn et al. note that social entrepreneurs often lack access to experienced advisors who can share best practice models and adapt them to local contexts. This absence of a supportive infrastructure hampers their development and compels them to ‘reinvent the wheel’ [3] (p. 1138). Consequently, social entrepreneurship is frequently associated with uncertainty and apprehension, which can deter these entrepreneurs from making investments [4].

Building on foundations in environmental economics, researchers argue that environmental entrepreneurs often struggle to fully capture the value they create due to positive externalities, which result in significant value spillovers that benefit others without direct returns to the entrepreneur [3]. Environmental entrepreneurs must drive institutional changes by challenging existing laws, regulations, policies, and social norms. In many countries, for instance, non-renewable energy sources are subsidized and priced in ways that make renewable alternatives less competitive. Inadequate infrastructure and fluctuating prices further hinder the adoption of green energy. Likewise, existing public policies and long-standing practices tend to support traditional entrepreneurship, making it difficult for ecopreneurs to enter and compete in certain sectors [4].

Sustainable businesses often require significant initial investments in research and development, as well as in sustainable production methods and materials. Sustainable entrepreneurs may also face financial challenges due to the absence of standardized metrics for assessing the social value generated by their businesses [3]. Pinkse and Groot (2015) point out that sustainable start-ups often rely heavily on government support, such as subsidies and incentives, but face challenges due to complex application procedures and a lack of transparency in the process [33]. Based on the research results, Hoogendoorn et al. also concluded that sustainable entrepreneurs face institutional burdens and are likely to perceive more barriers than regular entrepreneurs [3]. Governments and policymakers should strengthen policies to reduce environmental pollution [11] and, more importantly, define green finance policies that will encourage future eco-entrepreneurs to establish ventures with an environmental focus, promote the use of eco-friendly products with a smaller negative impact on the environment, and achieve sustainable development [2]. Governments and institutions can create policies and regulations that support sustainable business models and provide training and support to entrepreneurs interested in sustainable entrepreneurship [2,34].

Educating the population about climate change and various existing ecological problems is necessary to raise awareness about sustainability, but also organizing forums to educate people on the use of environmental-friendly products like solar systems and various renewable energy sources, and investing efforts in strengthening trade policies among countries and other regions for the import/export of innovative technologies to balance economic development and sustainable environmental protection [11]. The role of higher education institutions can be particularly significant in promoting sustainable entrepreneurship. Academic institutions play a leading role in providing training in sustainable entrepreneurship [35,36,37]. Training in sustainable entrepreneurship, in addition to enhancing skills, helps in building new connections that can assist entrepreneurs in their careers [38]. Studies based on sustainable entrepreneurship training emphasize that such training helps improve the self-efficacy of emerging entrepreneurs and aids in launching businesses with a social purpose [38].

Jain and Tripathi (2022) also recognize the lack of reports on sustainable entrepreneurship, noting the reasons for this problem and emphasizing that it exists both in developing and developed countries [39]. The authors De Micco et al. [40] attempt to address this issue in their study by finding ways to resolve it. Moreover, the need for additional monitoring and reporting—due to the more diverse and complex stakeholder relationships [41,42]—can significantly increase the administrative burden for sustainable entrepreneurs. In essence, existing administrative processes and entrepreneurial support systems are not adapted to meet the specific needs of sustainable ventures [3].

The lack of a theoretical framework in the field of sustainable entrepreneurship, especially when it comes to measuring sustainable business practices, poses a significant challenge. Issues such as measurement standards, performance indicators, and measurement mechanisms remain unresolved [43,44]. Furthermore, authors find that the increasing number of standards only complicates conclusions [45].

In order to find a way to provide greater support for them, certain authors have tried to integrate the barriers that sustainable entrepreneurs face. Some of them found that sustainable entrepreneurs perceive more institutional barriers in terms of a lack of financial, administrative, and informational support at business start-up than regular entrepreneurs [3]. Another study identified similar groups of barriers, precisely unfavorable institutional environments, as significant barriers that can limit entrepreneurial performance. Perceived barriers reflect the extent to which entrepreneurs feel either supported or obstructed by institutional conditions when launching a business. These perceptions often include a lack of financial resources, complex administrative procedures, and insufficient information about the startup process [20].

From the viewpoint of sustainable entrepreneurship, corporate social responsibility (CSR) calls for a deliberate and forward-thinking approach to social obligations, instead of merely responding to issues as they arise. As a core element of contemporary sustainability, CSR helps tackle social, economic, and environmental challenges while enhancing both a company’s financial outcomes and the overall well-being of society [4]. However, CSR is typically associated with large enterprises, as small businesses and entrepreneurs do not implement CSR practices in terms of financial reporting, codes of conduct, procedures, strategies, and structures [46]. In this context, McWilliamson et al. [47] (p. 317) argue that the concept of CSR cannot be applied to small and medium-sized enterprises (SMEs) because they are “heterogeneous, with traits related to size, resources, management style, and personal relationships,” making it difficult to adopt practices from large firms [46]. Koe et al. (2014) found that, in Malaysia, it was mainly large enterprises that reported sustainability practices [7]. Vives (2006) discovered that medium and large firms are more likely to engage in socially responsible activities than smaller firms [48]. Murillo & Lozano [49] (p. 229) also argue that “the larger the firm, the more CSR is implemented”. Larger firms tend to proactively implement sustainable practices [28,50], while small businesses and entrepreneurs see sustainable practices as a novelty. Firm size is a key characteristic that can influence entrepreneurial orientation and, by extension, engagement in sustainable entrepreneurship. Larger companies often benefit from greater access to financial and human resources, allowing them to implement well-funded sustainability initiatives [51,52]. However, smaller firms can also play a significant role in sustainability through their flexibility and innovation, often responding more quickly to emerging market trends and adopting sustainable practices and technologies with greater agility [53].

The number of entrepreneurs in developing countries is typically suboptimal, making the encouragement of entrepreneurship critical for economic development [34], especially when it comes to sustainable entrepreneurs, or one of the variants, societal or environmental. Although sustainable entrepreneurship can positively impact a sustainable economy, the extent of this impact will vary depending on the economic conditions of each country or region [50]. Providing incentives for business startups, especially in “green” sectors, would contribute to sustainable development [54]. Additionally, there is a lack of institutional support for sustainable entrepreneurship in many developing countries [20,46,55]. Despite the contextual limitations in developing countries, authors claim that it is possible to achieve sustainable development without a trade-off between poverty reduction and environmental sustainability [11,46]. Sustainable entrepreneurship can be applied equally in small and medium-sized enterprises [11,38,54], both at the start of a venture or later, after a certain period [38]. Therefore, the following question arises: what are the realistic chances for the development of sustainable entrepreneurship in developing countries? One key feature of sustainable entrepreneurs in developing countries is that most are driven by economic motives. Entrepreneurs in these countries are generally unaware of the importance of maintaining a good reputation, networking with stakeholders, building trust, and customer loyalty due to low levels of education and awareness, which undermines their social capital and explains their lack of responsible entrepreneurship [56]. However, perceived barriers can result in negative outcomes, including reduced effort or intentions to exit entrepreneurship [20]. The review of previously presented and elaborated barriers is presented in

Table 1. Review of barriers.

Barrier Category	Barrier Description	Authors
Financial Barriers	Limited access to capital and funds, high initial investments, obstacles to financing sustainable innovations	[2,11,13,14,33]
Political Barriers	Unfavorable institutional environments, lack of political support, inadequate public policies and subsidies for unsustainable sources	[3,20,34,46,55]
Informational and Educational Barriers	Lack of advisory support, training, education, and sustainability awareness; insufficient research programs and collaboration with the sustainable entrepreneurship sector	[3,35,36,37,38]
Technological Barriers	Limited access to advanced technologies and technical infrastructure, especially in developing countries	[2,4,11]
Perceived Risk and Uncertainty	Higher perception of risk, uncertainty, and mistrust in sustainable models compared to traditional entrepreneurs	[3,39]
Regulatory Barriers	Lack of or misalignment in regulations, laws, and standards supporting sustainable business practices	[2,4,11,34]
Lack of Standards and Metrics	Absence of common indicators and measures for assessing social and ecological value	[43,44,45]
Administrative Barriers	Complex and non-transparent procedures for applying for subsidies and institutional support	[33,41,42]
Firm Size and Access to CSR	Smaller firms rarely implement CSR due to limited resources and lack of strategic capacity	[7,46,47,49,50]
Barriers in Developing Countries
Insufficient Institutional Support	Low levels of education and awareness, lack of social capital, and limited institutional resources	[34,46,55,56]
Innovation Capacity Constraints	Lack of human capital, limited R&D resources, and low innovation capability	[2,12,15,16,17]
Lack of Reporting and Transparency	Low levels of sustainability reporting, especially in developing countries	[39,41,42]

Source: own.

.

Even though the attention of certain authors is focused on sustainable entrepreneurship in developing countries, the systematization of the barriers in these countries is missing. Based on the previous research and the identified literature gap, the following research hypotheses should be tested:

H1. 

The limitations to sustainable entrepreneurship are equally present across the countries of the Western Balkans.

H2. 

Larger enterprises in the countries of the Western Balkans have greater potential to implement sustainable practices.

H3. 

The observed barriers are interconnected, so addressing one may lead to a reduction in the impact of another.

3. Research Methodology—Sample Structure, Definition of Variables, and Hypotheses

To examine the barriers for practicing sustainable entrepreneurship, perceived in the region that covers Serbia, Albania, Bosnia & Herzegovina and North Macedonia, as developing countries, the research has been conducted. It included qualitative and quantitative analysis.

For qualitative analysis, the Delphi method was employed as a structured and systematic technique to elicit, refine, and consolidate the judgments of a panel of experts, with the aim of reaching a consensus on a complex issue [57]. This method is widely recognized for its applicability in areas where empirical evidence is limited and expert opinion is crucial [58]. It facilitates the development of alternative perspectives, exploration of underlying assumptions, and consensus-building among domain-specific experts [59]. To collect expert insights related to sustainability practices, a research protocol was designed and implemented as the primary instrument of data collection. The protocol included a detailed list of questions and thematic areas to be discussed, along with relevant logistical information. It was distributed to all participants in advance to ensure preparedness and consistency during the sessions. The Delphi study encompassed two iterative rounds and involved 20 experts from four widening countries: Serbia, Bosnia and Herzegovina, North Macedonia, and Albania. Experts were individuals who have recently decided to start a business—specifically, those actively taking steps to launch a business and those who have been owner-managers for less than three years [3]. In the first round, participants were presented with a set of structured questions addressing the three pillars of sustainability—economic, environmental, and social—as well as practices specific to the Serbian context, including the application of circular economy principles. The questionnaire comprised both closed-ended (yes/no) and open-ended questions, allowing respondents to elaborate and propose options or recommendations. Responses were aggregated and summarized to identify key themes and areas of convergence. This synthesis informed the design of the second-round instrument. The second-round questionnaire, derived from the summarized findings of the first round, was distributed to the same panel of experts. The primary objective of this round was to assess the level of agreement among participants and to identify priority sustainability dimensions that should be further analyzed to support sustainable development within the observed national and regional contexts. This iterative process enhanced the reliability and validity of the findings and enabled a consensus-driven identification of the most critical sustainability aspects.

The responses obtained in this phase were subjected to statistical analysis. A consensus threshold was defined a priori: if more than 70% of the respondents rated a given item as either “significant” or “very significant,” consensus was considered to have been reached. The results of this analysis are presented in the accompanying table. Items for which consensus was achieved were subsequently included in a broader quantitative questionnaire, designed to support the empirical research. This final phase targeted a sample of at least 100 organizational units across four countries (Serbia, Bosnia and Herzegovina, North Macedonia, and Albania), for piloting the questionnaire with the aim of identifying current barriers in the region with regard to sustainability practices and sustainability reporting. The questionnaire was sent.

The final quantitative questionnaire, developed based on the Delphi study findings, was distributed electronically to 240 organizational units across Serbia, Bosnia and Herzegovina, North Macedonia, and Albania. The target group included representatives from SMEs, public institutions, and civil society organizations involved in sustainability-related activities. Distribution was conducted via email, using institutional mailing lists and professional networks. To improve participation, follow-up reminders were sent two weeks after the initial invitation. Participation was voluntary and anonymous. To ensure a balanced representation of participants from all four countries, only the first 100 valid responses collected between 1 February and 1 March 2025 were included in the final dataset. During this period, care was taken to monitor the distribution of responses across countries, ensuring that each national sample was proportionally represented [60]. A total of 100 valid responses were collected, resulting in a response rate of approximately 41.7%. This rate is considered acceptable for studies involving organizational stakeholders and provides a sufficient basis for further quantitative analysis [61,62]. Although the sample size cannot be considered statistically representative, it is nevertheless informative and appropriate for a pilot study [63,64]. The results obtained serve as a valuable foundation for refining research instruments and ensuring the methodological quality of subsequent, more extensive research on this topic.

The

Table 2. Sample structure by country and company size.

Country	Frequency	Size	Frequency
Serbia	25	Large	25
Albania	25	Medium	32
Bosnia and Herzegovina	25	Small	43
North Macedonia	25	Total	100
Total	100

Source: own.

describes the sample composition. Of the total number of enterprises in the sample, the majority are small enterprises (43), followed by medium-sized (32), and large enterprises (25).

Based on the literature review, key elements necessary for the easier and faster implementation of sustainable practices were identified. These elements are simultaneously recognized as major limitations in developing countries and include: support from higher education institutions, financial support programs, the establishment of regulations and policies, the definition of standards and measures, and the availability of sustainability reports.

The respondents’ perceptions of the importance of these constraints (limitations) were expressed on an importance scale (1—Not important at all; 5—Very important) based on the Likert-type format, commonly used for measuring agreement, importance, satisfaction, frequency, or performance. These evaluations represent the dependent variables in the study. To address the research questions and test the hypotheses, the independent variables considered are the country of origin of the surveyed enterprises and their size. There is high reliability (values of Cronbach’s Alpha above 0.8 are generally considered good). The items are measuring the same underlying construct consistently.

4. Results and Discussion

Table 3. Descriptive statistics of tested variables.

Constraints	Mean	Std. Deviation
Lack of support from higher education institutions	4.10	0.847
Lack of financial support programs	4.18	0.857
Lack of regulations and policies	4.21	0.782
Lack of sustainability standards and measures	4.22	0.773
Unavailability of sustainability reports	4.08	0.849

Source: own.

presents the average importance ratings of the mentioned constraints, along with the dispersion of responses, regardless of the country of origin and company size. It can be observed that, within the analyzed sample, the most significant constraints are the Lack of regulations and policies (4.21) and the Lack of sustainability standards and measures (4.22). These constraints also show the lowest response dispersion (0.78 and 0.77, respectively).

When considering the country of origin, the results in

Table 4. Average ratings by country.

Country	Albania		Bosnia and Herzegovina		North Macedonia		Serbia		Total
	Mean	Std. Deviation	Mean	Std. Deviation	Mean	Std. Deviation	Mean	Std. Deviation	Mean	Std. Deviation
Lack of support from higher education institutions	4.08	0.702	4.04	0.978	4.16	0.800	4.12	0.927	4.10	0.847
Lack of financial support programs	4.12	0.781	4.24	0.779	4.20	0.913	4.16	0.987	4.18	0.857
Lack of regulations and policies	4.04	0.841	4.28	0.737	4.08	0.862	4.44	0.651	4.21	0.782
Lack of sustainability standards and measures	4.36	0.757	4.04	0.935	4.32	0.748	4.16	0.624	4.22	0.773
Unavailability of sustainability reports	4.16	0.850	4.08	0.909	4.08	0.812	4.00	0.866	4.08	0.849

Source: own.

show that in Albania and North Macedonia, the most significant constraint is the lack of sustainability standards and measures (Albania 4.36 and North Macedonia 4.32), while the lack of regulations and policies is rated as the least significant constraint (Albania 4.04 and North Macedonia 4.08). However, this latter constraint represents the most significant limitation in Bosnia and Herzegovina and Serbia (4.28 and 4.44, respectively).

Testing the significance of differences in responses, i.e., examining the influence of the country of origin on the assessment of the importance of the mentioned constraints, involved the use of analysis of variance (ANOVA). However, after examining the assumptions required for applying this parametric test, it was concluded that ANOVA could not be applied to the available data. Therefore, its non-parametric alternative, the Kruskal–Wallis test, was used instead. This test evaluates whether independent groups share similar average ranks. Rather than relying on the original data values, each observation is replaced by its rank, and these ranks are then analyzed to assess if the groups come from identical distributions. In essence, the test checks if the medians of the groups are equal.

The significance level obtained from the applied test, as shown in

Table 5. Kruskal–Wallis test’s results.

	Lack of Support from Higher Education Institutions	Lack of Financial Support Programs	Lack of Regulations and Policies	Lack of Sustainability Standards and Measures	Unavailability of Sustainability Reports
Chi-Square	0.281	0.412	3.736	2.694	0.451
Df	3	3	3	3	3
Asymp. Sig.	0.963	0.938	0.291	0.441	0.929
Effect size (η2)	≈0	0.008	≈0	≈0	≈0

Source: own.

, indicates that there is no statistically significant difference in the perceived importance of constraints among the analyzed countries. This finding supports the first research hypothesis, which states that the limitations of sustainable entrepreneurship are equally present across the Western Balkan countries. Effect sizes (η²) for the Kruskal–Wallis statistics ranged from 0 to 0.008, indicating negligible to very small effects.

When considering the size of the company, the results in

Table 6. Average ratings by company size.

Size	Large		Medium		Small		Total
	Mean	Std. Deviation	Mean	Std. Deviation	Mean	Std. Deviation	Mean	Std. Deviation
Lack of support from higher education institutions	4.36	0.860	3.94	0.914	4.07	0.768	4.10	0.847
Lack of financial support programs	4.28	0.891	4.22	0.906	4.09	0.811	4.18	0.857
Lack of regulations and policies	4.28	0.678	4.09	0.856	4.26	0.790	4.21	0.782
Lack of sustainability standards and measures	4.48	0.586	4.16	0.847	4.12	0.793	4.22	0.773
Unavailability of sustainability reports	4.24	0.926	4.00	0.916	4.05	0.754	4.08	0.849

Source: own.

show that the Lack of sustainability standards and measures was identified as the most significant constraint for large enterprises (4.48). For medium-sized enterprises, the Lack of financial support programs was rated as the most critical constraint (4.22), while for small enterprises, the Lack of regulations and policies was considered the most significant (4.26).

The significance of differences in the perceived importance of constraints based on company size was tested using the Kruskal–Wallis test. The results of this test are presented in the following table.

Based on the test results shown in

Table 7. Kruskal–Wallis test’s results (company size).

	Lack of Support from Higher Education Institutions	Lack of Financial Support Programs	Lack of Regulations and Policies	Lack of Sustainability Standards and Measures	Unavailability of Sustainability Reports
Chi-Square	4.877	1.476	0.767	3.455	2.044
df	2	2	2	2	2
Asymp. Sig.	0.087	0.478	0.681	0.178	0.360
Effect size (η2)	0.030	≈0	≈0	0.015	≈0

Source: own.

, company size does not have a statistically significant effect on the assessment of the importance of the identified constraints, as the observed significance levels for each constraint exceed the predefined threshold of 0.05. Kruskal–Wallis tests indicated small effect sizes for some variables (η² = 0.030, η² = 0.015), while others showed negligible differences between groups (η² ≈ 0). There is limited practical significance across most comparisons.

A more detailed analysis of the significance of differences, as shown in

Table 8. Kruskal–Wallis test’s results (company size and country).

Country	Statistics	Lack of Support from Higher Education Institutions	Lack of Financial Support Programs	Lack of Regulations and Policies	Lack of Sustainability Standards and Measures	Unavailability of Sustainability Reports
Albania	Chi-Square	2.733	2.035	1.689	0.295	0.048
	Df	2	2	2	2	2
	Asymp. Sig.	0.255	0.362	0.430	0.863	0.976
North Macedonia	Chi-Square	2.237	2.732	.022	1.111	1.647
	Df	2	2	2	2	2
	Asymp. Sig.	0.327	0.255	0.989	0.574	0.439
Serbia	Chi-Square	0.677	1.967	1.305	2.343	1.199
	Df	2	2	2	2	2
	Asymp. Sig.	0.713	0.374	0.521	0.310	0.549
Bosnia and Herzegovina	Chi-Square	5.408	1.716	1.158	6.054	1.862
	Df	2	2	2	2	2
	Asymp. Sig.	0.067	0.424	0.561	0.048	0.394

Source: own.

, revealed that in Bosnia and Herzegovina, the importance of constraints does, in fact, depend on the size of the enterprise. Specifically, in this country, the Lack of sustainability standards and measures was identified as the most significant constraint for large enterprises (average score of 5.00), while at the same time, it was rated as the least significant by small enterprises (average score of 3.69). The importance of specific constraints in Bosnia and Herzegovina, observed by enterprise size, is presented in the following table.

As shown in

Table 9. Evaluation of Constraints’ Importance in Bosnia and Herzegovina.

Size	Parameters	Lack of Support from Higher Education Institutions	Lack of Financial Support Programs	Lack of Regulations and Policies	Lack of Sustainability Standards and Measures	Unavailability of Sustainability Reports
Large	Mean	5.00	4.67	4.67	5.00	4.67
	Std. deviation	0.000	0.577	0.577	0.000	0.577
Medium	Mean	4.00	4.33	4.33	4.22	4.11
	Std. deviation	1.225	0.866	0.707	0.972	1.054
Small	Mean	3.85	4.08	4.15	3.69	3.92
	Std. deviation	0.801	0.760	0.801	0.855	0.862
All	Mean	4.04	4.24	4.28	4.04	4.08
	Std. deviation	0.978	0.779	0.737	0.935	0.909

Source: own.

,an examination of the perceived importance of constraints in Bosnia and Herzegovina reveals that differences in evaluations also exist across other constraints when considering enterprise size. However, these differences are less pronounced for the remaining constraints. Nevertheless, these findings contradict the second research hypothesis. Specifically, given the limited resources of small and medium-sized enterprises, it was assumed that they would face greater challenges with the identified constraints. However, the results indicate that large enterprises in Bosnia and Herzegovina actually assign greater importance to these constraints.

Spearman’s rank correlation was used to examine the relationships among the importance of perceived obstacles. The results of Spearman’s rank correlation analysis provide strong evidence in support of Hypothesis H3 (

Table 10. Spearman’s rank correlation coefficients.

	Lack of Support from Higher Education Institutions	Lack of Financial Support Programs	Lack of Regulations and Policies	Lack of Sustainability Standards and Measures	Unavailability of Sustainability Reports
Lack of support from higher education institutions	1.000 (<0.001) *	0.633 ** (<0.001)	0.389 ** (<0.001)	0.427 * (<0.001) *	0.389 ** (<0.001)
Lack of financial support programs	0.633 ** (<0.001)	1.000	0.397 * (<0.001) *	0.357 ** (<0.001)	0.410 ** (<0.001)
Lack of regulations and policies	0.389 ** (<0.001)	0.397 ** * (<0.001)*	1.000	0.577 ** (<0.001)	0.481 * * (<0.0001)
Lack of sustainability standards and measures	0.427 ** (<0.0001)	0.357 ** * (<0.0001)*	0.577 ** (<0.0001)	1.000	0.574 * * (<0.001)
Unavailability of sustainability reports	0.389 ** (<0.001)	0.410 ** (<0.001)	0.481 ** (<0.001)	0.574 ** (<0.001)	1.000

**. Correlation is significant at the 0.01 level (2-tailed). * The p-value is in parentheses.

). All five identified barriers—ranging from institutional and financial constraints to regulatory and informational gaps—are significantly and positively correlated (p < 0.001), indicating a high degree of interdependence among them.

There was a strong positive correlation between respondents’ perceptions about the importance of lack of support from higher education institutions and lack of financial support programs, ρ = 0.633, p < 0.001\rho = 0.633, p < 0.001, ρ = 0.633, p < 0.001, and a moderate correlation between lack of sustainability standards and unavailability of sustainability reports, ρ = 0.574, p < 0.001\rho = 0.574, p < 0.001\ρ = 0.574, p < 0.001. This implies that efforts to strengthen academic–entrepreneurial collaboration could simultaneously enhance financial literacy, access to funding, and awareness of sustainability tools. Moderate correlations were also found between regulatory and informational barriers, such as between the lack of sustainability standards and the unavailability of sustainability reports (ρ = 0.574, p < 0.001). This reflects how the absence of standardized guidelines may contribute to limited transparency and poor reporting practices within enterprises. According to respondents, importance of all obstacles is significantly correlated, indicating an interconnection between institutional, financial, and regulatory obstacles. These findings underscore that perceived obstacles do not operate in isolation but are part of a broader systemic context. Consequently, isolated policy interventions may have limited effect unless they are part of a coordinated, cross-sectoral strategy. For example, improving sustainability reporting practices could be more effective when paired with the development of formal standards and enhanced institutional guidance.

5. Conclusions

The growing interest in sustainable entrepreneurship has led to an increase in the number of scientific research papers on the topic, as well as a shift in business practices among a significant number of market actors. However, since market actors are considered one of the causes of environmental degradation, they are also expected to play a more active role in addressing environmental challenges [50]. The availability of both material and immaterial resources will certainly influence the rate at which the concept of sustainability is adopted by all stakeholders, particularly entrepreneurs and small and medium-sized enterprises (SMEs). Sustainable entrepreneurship represents a paradigm shift, responding to pressing global challenges such as climate change, resource depletion, social inequality, and institutional inefficiencies. Despite its potential, the development of sustainable entrepreneurship—particularly in developing countries—faces numerous structural and institutional barriers. These include limited access to finance and technology, underdeveloped regulatory frameworks, lack of standardized sustainability metrics, insufficient educational and advisory support, and low awareness of sustainability issues among entrepreneurs. Moreover, existing entrepreneurial ecosystems often fail to recognize or support the specific needs of sustainable ventures. At the same time, sustainable entrepreneurship offers a promising pathway to achieving the Sustainable Development Goals (SDGs), especially through the promotion of green technologies, circular economy models, and inclusive business practices. Larger firms are often more capable of implementing such practices due to their access to greater resources, but smaller enterprises can also contribute significantly by leveraging their agility, innovation capacity, and responsiveness to market trends. Given these findings, it becomes clear that fostering sustainable entrepreneurship requires a holistic policy approach—one that combines institutional support, targeted financial instruments, sustainability education, and incentive schemes tailored to the needs of SMEs.

Nevertheless, given the importance of this field in preserving resources for future generations and its potential as a source of competitive advantage, it is unlikely that this process will come to a halt. Accordingly, it is necessary to identify key barriers and take appropriate steps to eliminate or at least mitigate their effects. Ultimately, strengthening sustainable entrepreneurship ecosystems can serve as a catalyst for inclusive and resilient economic development, without compromising environmental integrity or social cohesion.

The findings presented in the paper reveal a high level of consensus among research participants regarding the barriers or constraints involved in implementing sustainability practices within the business sector in developing countries. It was obvious that the Western Balkan countries face most of the identified constraints typically associated with adopting the sustainability concept, and that these constraints significantly affect the direction of implementation in the region under study.

This study provides empirical insights into the perceived institutional, financial, and informational constraints that hinder the development of sustainable entrepreneurship in the Western Balkans. Across the sample of 100 enterprises from four countries, the most significant barriers identified were the lack of sustainability standards and measures (M = 4.22) and the lack of regulations and policies (M = 4.21), both of which also exhibited the lowest dispersion in responses, indicating high consensus among respondents. These findings reflect a systemic deficit in the institutional infrastructure required to support sustainable business practices. They correspond to the results of research presented by Hoogendoorn et al. [3]. Despite minor variations in country-level averages, non-parametric statistical analysis (Kruskal–Wallis test) found no statistically significant differences in the perceived importance of these constraints across countries. Effect sizes (η²) ranged from 0 to 0.008, indicating negligible practical differences. These results support the hypothesis that such barriers are uniformly present throughout the region, irrespective of national context. Similarly, company size did not significantly influence the assessment of barrier importance at the regional level. However, disaggregated analysis revealed that in Bosnia and Herzegovina, large enterprises rated several constraints—including sustainability standards and higher education support—as more important than small firms. This finding contradicts the assumption that smaller firms, due to more limited resources, would perceive greater institutional challenges, as presented by Durrani, Raziq, Mahmood, and Khan [65]. While the Kruskal–Wallis test again showed no statistical significance at the regional level, the effect size for some variables (e.g., η² = 0.030) suggests small but noteworthy practical differences in certain national contexts. Importantly, the barriers are not perceived in isolation. Spearman’s rank correlation coefficients revealed statistically significant positive correlations between all observed constraints (p < 0.001), indicating that these barriers are interrelated. This suggests that addressing one constraint—such as improving access to standardized sustainability measures—may alleviate the impact of others.

The findings of this study highlight several important practical implications for policymakers, support institutions, and business stakeholders in the Western Balkans. The strong consensus around the lack of sustainability standards and regulatory frameworks indicates a critical need for institutional reform to foster sustainable entrepreneurship. Governments should prioritize the development of clear, accessible sustainability metrics and integrate them into national policy agendas. Furthermore, the observed interconnections among institutional, financial, and informational barriers suggest that interventions should not be isolated but rather part of a coordinated and systemic approach. Policymakers should consider integrated reform packages—rather than single-issue policies—to effectively foster sustainable entrepreneurship. By targeting key leverage points, it may be possible to create a triple effect that reduces the overall burden of constraints faced by entrepreneurs in the region. Tailored support measures, particularly for SMEs, should reflect the differing needs and capacities of enterprises across the region.

A key limitation of this study lies in its reliance solely on the perceptions, attitudes, and beliefs of business owners and managers, which introduces a significant degree of subjectivity. Although the internal consistency of the measurement instrument was high (Cronbach’s α = 0.831), methodological limitations must be acknowledged. Additionally, testing the proposed hypotheses on a larger sample would enhance the precision and validity of the results [28]. Moreover, important control variables such as firm age, industry sector, and internationalization were not included, potentially leading to omitted variable bias. These limitations underscore the need for future research employing larger, stratified samples and more comprehensive measurement tools.

Future research could include a longitudinal and multi-method approach, with larger, stratified samples and robust control for contextual variables to deepen understanding of these dynamics.