Top Management Team Shared Leadership, Market-Oriented Culture, Innovation Capability, and Firm Performance

Abstract

What drives performance of small- and medium-sized enterprises remains largely unanswered and this article is an attempt in that direction to fill in the gap and help evolve the body of knowledge. The article is designed to produce theoretical insights on how top management team (TMT) sharing leadership, market culture, and firm innovation capability, relates to firm performance. Drawing on the resource-based and the dynamic capabilities-based view, we propose that firm innovation capability mediates between the linkages of shared leadership and market-oriented culture with firm performance. In this article, we performe structural equation modeling on survey data collected from 336 small- and medium-sized enterprises in the United Arab Emirates to examine the proposed hypothesized model of the study. The results reveal that both shared leadership and market-oriented culture have positive effects on firm innovation capability. This article suggests that market-oriented culture mediates the relationships of TMT-shared leadership and firm innovation capability. Similarly, firm innovation capability mediates the influence of market-oriented culture and firm performance, and the influence of TMT-shared leadership and firm performance. This article contributes to advance theory and practices. This article also makes sound theoretical and practical contributions to the usage of the resource-based and the dynamic capabilities view in the domain of the small- and medium-sized enterprises.