Entrepreneurial Orientation, Affective Commitment, and Transformational Leadership’s Impacts on SMEs’ Innovation Performance

This study aimed to examine the impacts of employees’ entrepreneurial orientation on innovation performance mediated by affective commitment and moderated by transformational leadership in small-medium labour-intensive enterprises. It was inspired by an earlier study on the direct effects of entrepreneurial orientation, innovation performance, and organisational commitment, moderated by transformational leadership. However, that earlier research did not explicitly examine the emotional attachment and sense of belonging that were elements of organisational commitment, particularly for small and medium labour-intensive businesses. To fill this gap, the current study added affective commitment, wherein a sense of emotional attachment and belonging was important in labour-intensive enterprises. This study used quantitative survey methods followed by observation, and PLS-SEM 3 was used to analyse the data. The data were collected from 190 respondents working in the swiftlet nest industry in North Jakarta, Indonesia. Findings revealed that transformational leadership has had trouble fostering entrepreneurial orientation and affective commitment in labour-intensive businesses. As a result, these enterprises face challenges in innovating and sustaining long-term competitive advantages.