This paper explores the role of higher education institutions in enhancing the small and medium-sized enterprise (SME) ecosystem in Brunei Darussalam, particularly with regard to improving the spirit of entrepreneurship and the motivation to seek opportunities independently to propel the country’s transition economy forward. A qualitative methodology was adopted for data collection, using semi-structured interviews with Bruneian and German SME owner/managers and sales representatives. The economics perspective of the institutional framework was employed to identify the formal and informal constraints faced by SMEs in Brunei Darussalam. Recommendations are offered to inform the relevant stakeholders about the key issues faced by SMEs so that appropriate forms of guidance and benchmarking can be provided to facilitate the country’s economic development.