Moderating Role of Transformational Leadership on the Relationship between Entrepreneurial Orientation and SMEs Performance in Katsina State

This study examined the effect of entrepreneurial orientation on the performance of SMEs with the moderating role of transformational leadership (TL) behavior. On the grounds of Resource Based view and Dynamic Capability theory, cross-sectional research design was used to collect data from the respondents. The sample of the study consists of 194 manufacturing SMEs operating in Katsina state, Nigeria. A PLS-SEM approach was used with aid of SmartPLS 3.2.8 to analyse the data. The result showed that entrepreneurial orientation dimensions (innovativeness, pro-activeness and risk taking) were significantly and positively related to the performance of SMEs in Katsina state. The result also indicateed that transformational leadership strengthens the positive effect of proactiveness on SMEs performance; it was also revealed that TL weakens the relationship between risk taking and SMEs performance. Lastly, there was insignificant moderating effect of TL in the relationship between innovativeness and SMEs performance. This study recommends that owners/managers should continue to pursue creativity and innovativeness by being proactive and taking calculable risks in order to bring new offerings to the market thereby enjoying first mover advantage and subsequently increase their performance. The moderating effect of TL contributes to the resource-based view (RBV) and provides useful understandings to owner/managers of SMEs with regard to policy formulation and execution to improve the performance of business firms.