The relationship of social entrepreneurial behavior, entrepreneurial leadership and organizational performance of small and medium enterprises in Malaysia

Small and medium enterprises (SME) play a huge role towards the economic performance of countries all over the world. In Malaysia, the SMEs play a major role as well in steering the development of the country. However, the organizational performance of Malaysian SME is still considered weak and has not been realized to its full potential. To improve the organizational performance, SMEs have to adopt and adapt best industry business practices that could assist them in becoming more competitive. Previous studies have examine the predictors of organizational performance, however little has been done in examining the relationship of social entrepreneurial behaviour and entrepreneurial leadership towards organizational performance as a cohesive framework. Therefore, this study examines the mediating effect of entrepreneurial leadership between social entrepreneurial behaviour and organizational performance of SMEs in Malaysia. Respondents were chosen by systematic random sampling and 401 respondents participated in this study. This study uses structural equation modelling for analysis and the findings show that entrepreneurial leadership mediates the relationship between social entrepreneurial behaviour and organizational performance. Based on the result, the best path to achieve organizational performance is by following the mediating path. Both entrepreneurial leadership and social entrepreneurial behaviour are considered new and in their infancy stage. As a result, this study fills the literature gap in the particular fields. In addition, this study provides empirical evidence on the relationship between the constructs, it is able to contribute practically towards the leaders of the organizations as they will understand better the role of social entrepreneurial behaviour and entrepreneurial leadership towards its organizational performance. Future research could venture into studying the effect of social entrepreneurship activities towards SME's performance. There is a huge literature gap in assessing the effect of social entrepreneurship activities within organization as there is a dearth of reliable and valid instrument.