The Effect of Transformational Leadership, Long-term Orientation and Support Culture on Firm Performance: The Case of SMEs in Shaanxi, China
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This study examines the influence of transformational leadership, long-term orientation, and support culture on the effective performance of small and medium-sized enterprises (SMEs) in Shaanxi Province, China. Grounded in the Theory of Planned Behavior (TPB) and Social Cognitive Theory (SCT), the research employs a mixed-methods approach. The quantitative phase involved a survey of 513 SME entrepreneurs, analyzed using Structural Equation Modeling (SEM) with AMOS to test direct and mediating effects. The qualitative phase consisted of in-depth interviews with 10 experts, providing contextual insights into the mechanisms of leadership effectiveness.
The quantitative results indicate that transformational leadership ( = 0.254, p < 0.001), long-term orientation (
= 0.263, p < 0.001), and support culture (
= 0.328, p < 0.001) significantly enhance effective communication and rational decision-making. Both communication (
= 0.183, p < 0.001) and decision-making (
= 0.145, p < 0.001) positively predict effective performance. Mediation analysis using bootstrapping confirms that communication and decision-making act as partial mediators between leadership characteristics and firm performance. Model fit indices (CFI = 0.962, RMSEA = 0.049, TLI = 0.928) demonstrate an acceptable structural model.
The qualitative findings further reinforce these results, highlighting that leaders who encourage open communication, critical decision-making, and supportive organizational cultures foster higher employee engagement and adaptability. However, interviewees also noted challenges such as resistance to change and the need for leadership adaptability in turbulent environments.
This study contributes to leadership and management research by integrating cultural and behavioral perspectives into a comprehensive model of SME performance. It provides practical implications for policymakers, educators, and SME leaders, emphasizing the importance of leadership training, organizational support systems, and sustainable orientation strategies in strengthening performance outcomes.
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