Abstract

In today’s business world, Small and Medium Enterprises (SMEs) are the source of development in the national economy. The globalization and the tough competition in the domestic and international markets motivate SMEs to adopt transformational leadership in their mission because of the significant traits of those leaders such as idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. In recent decades, the United Arab Emirates (UAE) focused on SMEs to achieve economic growth. Transformational leaders have the ability to foster the performance of SMEs. But adopting transformational leadership is not an easy task and require in-depth analysis to recognize the necessary factors that easy the adoption of transformational leadership by SMEs. Hence, the aim of this study is to examine the impact of transformational leadership on business performance of SMEs. Quantitative methods have been used to measure and evaluate this relationship. 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. The empirical results revealed that transformational leadership has a significant effect on SME performance. Thereby, SMEs should emphasize on the reality that transformational leaders are the pillar of success in a country rely on innovation and technology to develop all sectors and faces of life. Moreover, SMEs should focus on those leaders who have the personal characteristics matching with transformational leadership to foster the organizational performance in the domestic market.