Abstract

Today, small and medium enterprises (SMEs) become a vital asset for almost all countries in the world and represent a dynamic sector of the global economy. In addition, effective leadership is essential to improve the organizational performance in situations where organizations face many challenges in the market. In the United Arab Emirates (UAE), SMEs are encouraged by the government to rely on innovation and creativity for achieving the economic growth. However, despite the excess of innovation and creativity reviews in SME context worldwide, there is lack of evidences in the case of UAE. Hence, the aim of this study is to examine the significance of relationships between transformational leadership, organization innovation, employee creativity, and SME business performance. Quantitative methods have been deployed to examine these relationships. The respondents are the executive managers of SMEs working in various sector like information and communication, manufacturing, education, financial and insurance, professional scientific and technical. The sample of 441 SMEs was specified for the data analysis based on SEM methods. The results revealed that all these relationships are significant. This study makes several theoretical contributions to the topic of transformational leadership and organizational performance. Whereas the creativity of employees seems to be a key source of innovation particularly in SME, but the financial resources is not enough to achieve economic growth in the market and sustainable profitability. Accordingly, SMEs should focus on leaders who have certain traits, such as idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration to raise profitability and business growth in UAE market.

Keywords: Transformational Leadership, Organizational Performance, Organization Innovation, Employee Creativity, Small and Medium Enterprises (SMEs)