Innovation As A Catalyst: Mediating The Impact Of Entrepreneurial Leadership On Performance In Nepali Small And Medium Enterprises

Abstract

This study examined how Entrepreneurial Leadership would affect the performance of a firm and the effect the presence of innovation within the firm could have on the relationship in case of Nepali SMEs. The survey used responses from 289 Owners and Managers of Small and Medium Enterprises (SME) in Nepal. The analysis used EFA (Exploratory Factor Analysis) to establish/affirm factor structure, model fit, validity and reliability testing was done using CFA (Confirmatory Factor Analysis) while SEM (Structural Equation Modeling) was used to test and validate relationships. The study found that higher levels of entrepreneurial leadership within a firm had a positive effect on its overall performance. The study also found that partial mediation occurred in the relationship between entrepreneurial leadership and firm performance through innovation. This showed that an organization’s ability to increase entrepreneurial leadership would have a substantial bearing on its ability to perform. The study also showed that development of entrepreneurial leadership and support for innovation needed to be carried out in parallel as the partially mediating effect suggested that entrepreneurial leadership leads to firms’ performance not only through innovation through other mechanisms as well. This underlined the need for owners and managers within SMEs to become more entrepreneurial while also continuing to develop their leadership abilities and promoting innovation within their organizations to help them perform better.