This doctoral dissertation examines the impacts of two categories of factors on the environmental compliance behavior of small firms (SFs). The first category concerns internal motivations that drive SFs' decisions to comply or not comply with a formal environmental regulation. The other comprises external factors that affect formation of SFs' perspectives on rule compliance. The regulatory programs in Massachusetts and southern California targeting the dry cleaning industry are excellent cases through which to evaluate the central issues of SFs' compliance. The two programs are comparable in that they are equally strict; formal sanctions are equally severe; and regulated groups are similar in cultural background and other sectoral aspects (i.e., firm size, operating costs, and profit margins). A notable difference is that there was a sudden rise in compliance rates in Massachusetts as compared to southern California. The comparative case study draws on ethnographic analysis and structural equation modeling (SEM), based on in-depth interview data and surveys. The study will contribute to knowledge of how formal regulatory enforcement can alter SFs' willingness, opportunity, and capacity to comply, as well as broader insights about regulatory compliance in general.