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There is a broad consensus amongst academics, policy makers and practitioners that a fundamental cause of difficulties experienced by the majority of economies in transition is a lack of entrepreneurialism. This is manifested in the low rate at which new, especially smaller-scale, private businesses are created. This is particularly evident in Bosnia and Herzegovina (BiH) where many barriers either created by or inherited from the old system remain in place. Such barriers inhibit entrepreneurial progress in the country despite a number of strengths and opportunities. The main prerequisite for such progress is the development of an institutional infrastructure capable of creating the optimum conditions for entrepreneurial development. International experience shows that a number of models perceived to be relevant in different international contexts have not been effective in BiH, due to the lack of a holistic, equitable and future-oriented approach to socioeconomic transformation. The aim of this paper is to address and assess the current problems and issues in BiH and to provide an integrative framework for entrepreneurship and SME development appropriate to the local and other contexts. [ABSTRACT FROM AUTHOR]