SME innovation and employee creativity: The role of entrepreneurial leadership

Entrepreneurial leadership and innovation are needed for small and medium enterprises (SMEs) to survive and grow. Entrepreneurial leaders must unlock and use their employees' creativity to innovate. Moreover, they should foster creativity, risk-taking, and teamwork to secure business growth and success. Therefore, this study analyzes the link between entrepreneurial leadership, creativity, and innovation among SMEs. The aim is to identify the traits that lead to entrepreneurial leadership which helps in fostering creativity and innovation among SMEs in Saudi Arabia. The study is based on primary data from employees, managers, and owners of SMEs in the capital region of the Kingdom of Saudi Arabia. Two hundred and eighty-one responses were collected. However, only two hundred and forty-eight responses were left for the final analysis. The results of the study indicate that entrepreneurial leadership positively influences organizational innovation and employee creativity among SMEs, where the coefficient was found to be significant. Next, no mediation relationships involving creativity were noted between entrepreneurial leadership and organizational innovation. However, entrepreneurial leadership has been identified as a critical driver of innovation and employee creativity in SMEs. Furthermore, the study suggests that SMEs need to foster a culture of innovation to unleash employee creativity. Finally, the study can have important implications for practitioners and academic scholars.