Culture over regulation: institutional dimensions driving sustainable entrepreneurship

Abstract Understanding how sustainable entrepreneurs can effectively drive change is inherently tied to the institutional environment, as incentives, regulations, and social norms can either be supportive or hindering. Moreover, individual-level factors, such as beliefs, values, and perceptions, shape behaviours, especially in the sustainability domain. Using original empirical data and drawing on a mixed-methods approach that includes 205 survey responses, 7 in-depth interviews, and secondary data from Catalonia in Spain, a region known for strong sustainable initiatives and entrepreneurial vibrancy, this study analyses founders’ perceptions of institutional dimensions (normative, cultural-cognitive, and regulative) and their role in shaping sustainable entrepreneurship. Results show that both perceptions on the normative dimension, reflected in a strong sustainability culture, and on the cultural-cognitive dimension, understood as the abilities and knowledge to address sustainability issues, positively influence sustainable entrepreneurship. Results show that both perceptions of the normative dimension, reflected in a strong sustainability culture, and of the cultural-cognitive dimension, understood as the abilities and knowledge to address sustainability issues, positively influence sustainable entrepreneurship. In contrast, perceptions of the regulative dimension, measured through government support, show an unexpected negative effect, with increased government support associated with lower levels of sustainable entrepreneurship. The results underscore the need to move the sustainability debate beyond technological and regulative fixes, instead highlighting the underlying sociocultural imaginaries that drive meaningful, sustainable change. These findings could be instrumental for policymakers in re-politicising economic activity, embedding sustainability knowledge into business education, and realigning regulatory frameworks to better support sustainable entrepreneurship.