EXAMINING THE IMPACT OF ENTREPRENEURIAL LEADERSHIP, EMPLOYEE AMBIDEXTERITY, AND ERROR MANAGEMENT CULTURE ON INNOVATION IN PAKISTAN’S SME’S

Abstract

Small and medium-sized enterprises (SMEs) are pivotal to sustainable economic growth, contributing significantly to Pakistan’s GDP and employment. This study explores the impact of entrepreneurial leadership on the innovation capabilities of SMEs in the manufacturing sector, addressing five key research questions: the influence of entrepreneurial leadership on innovation, employee ambidexterity, error management culture, and how these elements interplay to enhance SME innovation. Employing a deductive methodology within a post-positivist framework, the study collected quantitative cross-sectional data from 380 registered SMEs in major industrial cities of Pakistan. A structured questionnaire, derived from established scales, assessed factors such as innovation levels, entrepreneurial leadership, employee ambidexterity, and error management culture. With a response rate of 45%, the data were analyzed using SPSS software, employing descriptive and inferential statistics. The findings reveal that entrepreneurial leadership significantly enhances innovation in SMEs both directly and indirectly by promoting employee ambidexterity and fostering a culture of error management. Specifically, entrepreneurial leadership positively influences employee ambidexterity and error management culture, which in turn boost innovation. This study is original in its comprehensive examination of the interrelationships between entrepreneurial leadership, employee ambidexterity, and error management culture within the context of Pakistani SMEs. The study supports the hypotheses that entrepreneurial leadership, employee ambidexterity, and error management culture are crucial drivers of innovation in SMEs.