Transition Strategies Under Cost Pressures and Regulatory Uncertainty: Evidence from Sustainable SMEs in the Northeast of England

As small and medium enterprise organisations (SMEs) grapple with competing demands, decision-making is affected when faced with cost and regulatory uncertainties in response to sustainability obligations. Organisations adapt differently, focusing their resources to the most efficient use to optimise resources and enhance productivity. Qualitative interviews were carried out with 22 SME leaders spanning multiple sectors, including manufacturing, retail, services, construction, logistics, and hospitality, enabling examination of cross-sector variation while maintaining a shared regional context. The interviews lasted 45–65 min and captured managerial cognition, tacit knowledge, and informal strategic processes. The analysis reveals that SMEs do not respond uniformly to sustainability pressures. Instead, their responses are shaped by the interaction between cost pressures and regulatory uncertainty, producing distinct but overlapping strategic patterns. Three dominant mechanisms emerged across cases: cost filtering, temporal disruption under regulatory uncertainty, and strategic response variation. These mechanisms collectively explain how SMEs balance economic viability with environmental performance under constraint. The paper contributes to debates on sustainability transitions, resilience, and SME sustainability transitioning and growth strategies by identifying pathways that balance economic viability with environmental performance.