Entrepreneurial Leadership and Organisational Performance of SMEs in Kuwait: The Intermediate Mechanisms of Innovation Management and Learning Orientation

Abstract

Aim/Purpose: This study aimed to investigate the impact of innovation management and learning orientation as the mechanisms playing the role of an intermediate relationship between entrepreneurial leadership and organisational performance of small and medium enterprises (SMEs) in Kuwait. Background: SMEs are currently among the principal economic instruments in most industrialised and developing countries. The contribution of SMEs can be viewed from various perspectives primarily related to the crucial role they play in developing entrepreneurial activities, employment generation, and improving innovativeness. Developing countries, including Kuwait and other countries, in the Gulf Cooperation Council (GCC), have recognised the key role played by SMEs as a strong pillar of growth. Consequently, many governments have formulated policies and programmes to facilitate the growth and success of SMEs. Unfortunately, the organisational performance of SMEs in developing countries, particularly in Kuwait, remains below expectations. The lagged growth could be due to a lack of good managerial practices and increasing competition that negatively impact their performance. Numerous researchers discovered the positive effect of entrepreneurial leadership on SMEs’ performance. However, a lack of clarity remains regarding the direct impact of entrepreneurial leadership on SMEs’ performance, especially in developing countries. Therefore, the nexus between entrepreneurial leadership and organisational performance is still indecisive and requires further studies. Methodology: This study adopted a quantitative approach based on a cross-sectional survey and descriptive design to gather data within a specific period. The data were collected by distributing a survey questionnaire to Kuwaiti SMEs’ owners and Chief Executive Officers (CEOs) via online and on-hand instruments. A total of 384 useable questionnaires were obtained. Moreover, the partial least square-structural equation modelling (PLS-SEM) analysis was performed to test the hypotheses. Contribution: The current study contributed to the existing literature by developing a moderated mediation model integrating entrepreneurial leadership, innovation management, and learning orientation. The study also investigated their effect on the organisational performance of SMEs. The study findings also bridged the existing significant literature gap regarding the role of these variables on SMEs’ performance in developing countries, particularly in Kuwait, due to the dearth of studies linking these variables in this context. Furthermore, this study empirically confirmed the significant effect of innovation management and learning orientation as intermediate variables in strengthening the relationship between entrepreneurial leadership and organisational performance in the settings of Kuwait SMEs, which has not been verified previously. Findings: The study findings showed the beneficial and significant impact of entrepreneurial leadership and innovation management on SME’s organisational performance. The relationship between entrepreneurial leadership and SMEs’ organisational performance is fundamentally mediated by innovation management and moderated by learning orientation. Recommendations for Practitioners: The present study provides valuable insights and information regarding the factors considered by the government, policymakers, SMEs’ stakeholders, and other authorities in the effort to increase the organisational performance level and facilitate the growth of SMEs in Kuwait. SMEs’ owners or CEOs should improve their awareness and knowledge of the importance of entrepreneurial leadership, innovation management, and learning orientation. These variables will have beneficial effects on the performance and assets to achieve success and sustainability if adopted and managed systematically. This study also recommends that SMEs’ entrepreneurs and top management should facilitate supportive culture by creating and maintaining an organisational climate and structure that encourages learning behaviour and innovation mindset among individuals. The initiative will motivate them towards acquiring, sharing, and utilising knowledge and increasing their ability to manage innovation systemically in all production processes to adapt to new technologies, practices, methods, and different circumstances. Recommendation for Researchers: The study findings highlighted the mediating effect of innovation management on the relationship between entrepreneurial leadership (the independent variable) and SMEs’ organisational performance (the dependent variable) and the moderating effect of learning orientation in the same nexus. These relationships were not extensively addressed in SMEs of developing countries and require further validation. Impact on Society: This study aims to influence the management strategies and practices adopted by entrepreneurs and policymakers who work in SMEs in developing countries. The effect will be reflected in the development of their firms and the national economy in general. Future Research: Future research should investigate the conceptual research framework against the backdrop of other developing economies and in other business settings to generalise the results. Future investigation should seek to establish the effect of entrepreneurial leadership style on other mechanisms, such as knowledge management processes, which could function with entrepreneurial leadership to improve SMEs’ performance efficiently. In addition, future studies may include middle and lower-level managers and employees, leading to more positive outcomes.