How Entrepreneurial Leadership Enhances the Financial Performance of Small and Medium Enterprises: The Importance of Intellectual Capital and Innovation Capabilities

Authors

  • Kulteera Thongyai Prince of Songkla University
  • Wisanupong Potipiroon Prince of Songkla University

DOI:

https://doi.org/10.14456/abacj.2022.10
CITATION
DOI: 10.14456/abacj.2022.10
Published: 2022-04-30

Abstract

Entrepreneurial leadership plays an important role in enhancing firms’ financial performance. However, relatively few studies have examined the underlying explanation for this virtuous effect. This research aims to study the influence of business owners’ entrepreneurial leadership on the financial performance of small and medium sized enterprises’ (SMEs) and to examine the mediating roles of intellectual capital and innovation capabilities in the relationship between entrepreneurial leadership and financial performance. Survey data were collected by mail from 105 business owners or top executives and 1,001 employees in 105 SMEs in the manufacturing sector in the southern region of Thailand. In particular, entrepreneurial leadership was evaluated by the employees, while intellectual capital, innovation capabilities, and financial performance were evaluated by the business owners or top executives. Structural equation modeling (SEM) was used for analysis of the proposed moderated mediation model. The results confirmed that entrepreneurial leadership has an indirect influence on the financial performance of SMEs via the sequential mediating roles of intellectual capital and innovation capabilities. Moreover, the influence of innovation capabilities on financial performance was found to be stronger among SMEs that employed a higher level of differentiation strategies. The results from this research indicate that owners of SME businesses can play an important role in fostering their firms’ intellectual capital, which, in turn, influences the firms’ innovation capabilities and financial performance.

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2022-04-30

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