The impact of mental health, emotional intelligence and corporate strategy on managerial performance of SMEs during and post-COVID-19 pandemic

Purpose The objective of this study is to examine the impact of mental health on managers’ performance of small and medium-sized enterprises (SMEs) in an emerging market called Iran both during and after the COVID-19 pandemic. Furthermore, this paper studies mediating role of corporate strategy on mental health and management performance. Third, the current study aims to investigate whether the emotional intelligence (EI) moderates this relationship. Design/methodology/approach The questionnaire tool is used to measure our variables including mental health, EI, corporate strategy and managerial performance. The authors collected the data from 384 managers in SMEs. To analyze the data, the study employs structural equation modeling with a partial least squares method while incorporating Random Forest, the Sobel Z-test and multi-gross analysis to evaluate the differences between pandemic and post-pandemic periods. Findings Consistent with the upper echelons theory, the results show that there is a positive and significant relationship between mental health and SME managerial performance, which is mediated by corporate strategy. In other words, improved mental well-being enables SME managers to thoroughly analyze various aspects and contingencies, including the organizational structure, the economic climate of the country and internal capabilities and challenges, so they can adopt a fitting strategy leading to the economic prosperity of the company. Notably, the postcrisis performance was most strongly predicted by corporate strategy which also dealt with the prolonged impact of the pandemic further intensified by ongoing sanctions. Moreover, the findings confirm the moderating impact of EI on the relationship between mental health and managers’ performance. This means that managers with high in EI generally have a positive perspective towards tackling challenges, interpreting them as chances rather than stressors, so that they are empowered to provide competent decision-making in challenging situations. As a brief note, this article demonstrates the significant psychological stress experienced by Iranian SME managers as a result of the persistent financial instability through sanctions, inflation and political unrest. Mental health and high EI for managerial performance will still be important after the end of the pandemic. Practical implications The study provides a powerful message for SME board members to do a greater job of addressing the mental health and EI of their managers when the market becomes tough so they can safeguard financial resources in order to keep a company’s value. The paper states that SMEs can learn some specific ways to nurture the mental health of their managers that would facilitate sound decision-making and leadership ability, enhance organizational productivity and increase organizational growth. Originality/value Whereas most previous studies focused on the employee’s mental health, to the best of the authors’ knowledge, this paper is one of the first to focus on the CEO mental health as a determinant of performance in an emerging market experiencing the greatest stressors, addressing the research gap at the level of managers. Finally, the study contributes a thorough comprehension of how the relationship is in general affected by the moderating effects of EI and the mediating effect of corporate strategy.