Employee Well-Being And Performance In Manufacturing Smes: A Systematic Literature Review

Abstract

Employee performance remains a critical concern for manufacturing SMEs, particularly in resource-constrained and highly competitive environments. This systematic literature review, grounded in the Conservation of Resources theory, synthesises findings from 47 peer-reviewed studies published between 2000 and 2025 to explore how leadership styles, psychological empowerment, and employee well-being function as interrelated organisational resources that drive employee performance. The review reveals that empowering leadership styles such as transformational, inclusive, and supportive leadership enhance psychological empowerment through increased autonomy, competence, and purpose, while also strengthening organisational trust and affective commitment. These constructs, in turn, positively influence task performance, motivation, job satisfaction, and innovative work behaviour. Motivation, in particular, emerges as a central psychological mechanism that enables employees to sustain effort, overcome challenges, and align personal goals with organisational objectives. Despite these well-established relationships, the literature remains fragmented, often focusing on isolated variables and lacking integrated frameworks that consider contextual moderators such as organisational culture, trust, and structural empowerment. Methodologically, the dominance of cross-sectional data, self-report measures, and limited regional scopes restricts causal inference and theoretical generalisability. The review highlights significant conceptual and empirical gaps and calls for more longitudinal, multi-level, and sector-diverse studies. In doing so, it offers a comprehensive foundation for understanding how human-centric leadership and empowerment strategies can sustainably enhance employee performance in manufacturing SMEs and provides direction for future research and managerial practice.