Abstract
This paper aims to draw on the resource-based view (RBV) to examine the effect of transformational leadership (TL) on innovation and marketing performance in SME service firms. The paper further investigates the extent to which transformational leadership influences the effect of innovation on marketing performance and how such an effect could be managed for SME development. Cross-sectional survey data were collected from 437 SME service firms of an emerging economy with a fast-growing service sector. The quantitative methodologies were used in which partial least squares structural equation modeling (PLS-SEM) with bootstrap procedures was adopted to test the hypotheses. The findings suggest that innovation has a positive effect on marketing performance; transformational leadership has a moderating effect on the relationship between innovation and marketing performance. The study’s results show that these effects are robust in the firm’s marketplace. The current study examined the TL effect based on each rating. Therefore, it would be useful to study the effects of TL and other variables that can be manipulated by team level dynamics (or groups) such as trust in the team, team creativity, and team innovative performance in the future. For SME to be highly competitive in emerging economies, this study deepens the effect of innovation on firm performance and as such managers/owners should consider the vital role of transformational leadereship as a predictor of the relationship between innovation types and marketing performance. This current study contributes to the literature by assessing a valid model that describes the relationships between transformational leadership on innovation and marketing performance concurrently. This is the first empirical study to focus on SME marketing performance concerning types of innovation and marketing performance in an emerging economy with a moderated effect of transformational leadership.
Highlights
In both developed and emerging economies of the world, policymakers at the local, regional, and government levels have been thinking about the critical role of Afriyie et al Journal of Global Entrepreneurship ResearchSmall medium enterprise (SME) in generating employment and wealth and developing innovation (Nyoni and Bonga, 2018)
The study intends to examine the role of transformational leadership on innovation and marketing performance of SME and to investigate how the dimensions of transformational leadership moderate the effect of innovation and marketing performance
The study contributes to the existing literature by revealing the strategic role of transformational leadership style on the relationship between innovation and marketing performance of SMEs in Ghana
Summary
In both developed and emerging economies of the world, policymakers at the local, regional, and government levels have been thinking about the critical role of Afriyie et al Journal of Global Entrepreneurship ResearchSMEs in generating employment and wealth and developing innovation (Nyoni and Bonga, 2018). The vital role of small and medium enterprises (SMEs) in developing countries, through which their growth objectives can be achieved, has long been recognized (Burns, 2016). Small enterprises have been a significant area of concern to many policymakers, in an attempt to stimulate the rate of growth in low-income countries (Daniel and Fisseha, 1992). Small-scale enterprises are potential sources of employment and income in many developing countries. According to Burns (2016), small-scale enterprises employ 22% of the adult population in developing countries. They further perform useful roles in ensuring income stability, growth, and employment (Abor and Biekpe, 2006). Smallscale, labor-intensive enterprises are more likely to succeed in smaller urban centers and rural areas, where they can contribute to the greater distribution of economic activity in an area and can help to reduce the flow of migration to big cities
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