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Article

The Role of Participatory Leadership and Employee Innovative Behavior on SMEs’ Endurance

by
Ghadah Alarifi
* and
Nawal Abdalla Adam
Department of Business Administration, Faculty of Business & Administration, Princess Nourah bint Abdulrahman University, Riyadh P.O. Box 84428, Saudi Arabia
*
Author to whom correspondence should be addressed.
Sustainability 2023, 15(3), 2740; https://doi.org/10.3390/su15032740
Submission received: 4 December 2022 / Revised: 17 January 2023 / Accepted: 1 February 2023 / Published: 2 February 2023
(This article belongs to the Special Issue Sustainable Development Goals: Effective Leadership and Resource-Constraint Innovation)
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Abstract

:
Small and medium-sized enterprises (SMEs) have struggled to survive during the COVID-19 crisis. The factors that contributed to their survival during the period deserve to be investigated. Drawing on social-exchange theory, this study aims to explore the mediating effect of participative leadership on the relationship between employee work innovative behavior (EWIB) and the survival of SMEs after the emergence of the COVID-19 pandemic. A questionnaire survey was used to collect data from 390 managers randomly selected from 114 medium-sized enterprises in Saudi Arabia. Structural equation modeling (SEM) was used to examine the hypothesized relationships between the research variables. The results of the study indicate a significant and positive association between EWIB and participatory leadership. There is a positive and important effect of both participatory leadership and EWIB on the endurance of SMEs. Participatory leadership had a partial mediating effect on the relationship between EWIB and the SMEs’ endurance during the COVID-19 pandemic period. The study sheds light on the importance of the innovative behavior of the workers and the participatory leadership for the survival and continuity of SMEs in times of crisis similar to COVID-19. The study’s findings provide suggestions for SMEs’ managers regarding adopting a participatory leadership style to develop employees’ innovative behavior and ensure the enterprise’s endurance.

1. Introduction

The COVID-19 pandemic is one of the largest known humanitarian crises, and it has disrupted operations in small and medium-sized enterprises (SMEs) worldwide. Because of COVID-19, SMEs have suffered from declining sales, paralysis in business operations [1]), and slowing growth [2]. They also experienced supply disruptions and an unstable workforce [3]. Because SMEs represent the largest economic sector of many countries, their survival is vital to support economies and create job opportunities. With the pandemic lasting for more than two years, it is important to research the key factors that have contributed to the survival of SMEs. As a response to the consequences of COVID-19, some researchers have pointed to the importance of effective leadership [4]. Leadership is a driving force that improves performance and is a tool for achieving organizational goals [5,6]. Ref. [7] found that the response of leadership in times of crisis could improve an organization’s financial position, enhance its ability to survive, and support its employees. Participatory leadership is one of the most important leadership styles that might be suggested to limit the consequences of the COVID-19 pandemic on SMEs.
Participatory leadership involves discussing the problems facing an organization with employees and allowing them to share in the decision-making to find solutions [8]. Employees are expected to support the enterprise and actively engage in work-related issues [9]. Researchers have demonstrated the significant role of leadership in motivating innovative employee behavior in SMEs [10,11]. Additionally, studies have confirmed the positive contribution of employee innovative behavior to SMEs’ continuation and sustainability during the COVID-19 pandemic [12,13,14]. However, there is a dearth of studies that link participatory leadership and employee innovative behavior to the ability of SMEs to sustain operations after the emergence of COVID-19.
The authors of this study aim to fill the literature gap by examining the integrative relationship between participatory leadership, employee work innovative behavior (EWIB), and SME endurance after COVID-19. In addition, the authors intend to shed light on the association between participatory leadership and the continuity of SMEs. The results of this empirical study provide insight into the mediating role of participatory leadership on the relationship between EWIB and SME endurance during the COVID-19 pandemic. Based on social-exchange theory [15], this study hypothesizes that when the leader involves employees in the decision-making process for the problems facing the organization, the employees respond by providing more creative and innovative ideas that lead to improved performance of the organization, maintaining its survival. The critical circumstances SMEs experienced during the COVID-19 pandemic require a re-examination of the relationship between participatory leadership and EWIB to ensure the continuity of these enterprises [1].
This study contributes to the literature on leadership and small and medium-sized enterprise (SME) survival by highlighting participatory leadership’s role in stimulating employees’ innovative behavior in times of crisis, similar to the coronavirus disease (COVID-19). The study’s results show the importance of using leadership styles that contribute to positive employee behavior to help SMEs face risks and crises with resilience. This research provides important insights for SMEs and those concerned with their development. The study contributes to developing the literature in several ways. First, previous studies have focused on the links between participatory leadership, EWIB, and SME endurance by addressing the bilateral relationships between these variables. The current study is characterized by the fact that it has dealt with the link between the three concepts together, i.e., EWIB, participatory leadership, and SME endurance. Second, previous studies have dealt with the bilateral relationships between EWIB, participatory leadership, and SME endurance under normal working conditions. This study illustrates the significance of the relationship between these variables under exceptional circumstances and a real crisis imposed by the COVID-19 pandemic, which exposed SMEs to serious challenges that threatened their survival and continuity. Third, unlike previous studies, this study developed a theoretical framework upon which future studies can rely to test the relationship between EWIB, participatory leadership, and SME endurance. Finally, the study examined the mediating role of participatory leadership in the relationship between EWIB and SME endurance based on social exchange theory [16], which previous studies did not do. This is to illustrate the importance of the social dimension and the mutual relations between leaders and their subordinates in case the enterprise is exposed to a crisis imposed by the external environment, such as COVID-19.
The remainder of the paper is outlined as follows. Section 2 highlights the literature review, previous studies, and the hypotheses on which the study was based. Section 3 presents the methodology followed to accomplish the study. In Section 4, the results of the study data analysis are presented. Section 5 discusses the study’s results and provides suggestions for strengthening the relationship between EWIB, participatory leadership, and SME endurance. The last section of the paper presents the study’s concluding remarks and recommends future research directions.

2. Literature Review and Hypotheses

Participatory leadership is defined as collective decision-making, where the employees are well informed and allowed to express their opinions and suggestions [17]. This leadership style improves the quality of decisions, and employees tend to accept and implement changes with enthusiasm and sincere desire [18,19]. Participatory leadership enhances employee problem-solving skills, stimulates creative thinking, and develops and supports innovation among employees [19]. Employee participation in decision-making was important to SMEs as they made decisions in response to the challenges of COVID-19. Participatory leaders give attention to subordinates, increase their motivation [20], enhance their confidence [19], resolve their conflicts, support them, and encourage them to come up with creative ideas. As a result, employees feel valued and act with responsibility [8] and commitment [21]. Participatory leadership encourages employees to contribute their suggestions for work improvement, which improves their performance and the enterprise’s productivity [22]. In addition, a leader’s positive treatment of employees can develop their innovative behavior [23].
EWIB is defined in this study as employee activities related to developing and implementing new, beneficial ideas for an organization’s products, processes, and procedures [24]. EWIB represents the activities that an employee performs in addition to the basic job duties [25]. It is an innovative task performed voluntarily by an employee [26,27] to develop activities in the organization [28]. EWIB is a multidimensional concept that includes behaviors related to innovation in the enterprise. The innovative behavior of employees is carried out through four successive behavioral activities [29,30,31]. First, there is “opportunity exploration” in which the nature and dimensions of a problem related to a currency or product are identified, and then a possible solution is conceived. Second is “idea generation,” which includes the development of new and feasible solutions and contributes to solving the problem effectively. Third, “idea promotion” is behavioral activities aimed at obtaining support and endorsement for ideas proposed by management and co-workers. Fourth, “idea realization” includes activities to implement innovative ideas, such as developing models or the necessary steps to implement ideas in reality, whether it is on a specific operation in the department or at the level of the organization as a whole. In this study, we focus on the innovative behavior of employees in SMEs during the outbreak of COVID-19, such as recognizing problems, developing new ideas to solve them, obtaining support to adopt proposed ideas, and contributing to their implementation [32].
Endurance is vital to business survival. While survival is a gauge of the enterprise’s overall performance, endurance means the ability to adapt to changes and withstand difficulties and challenges. Therefore, concepts of survival and endurance are used interchangeably to refer to long-term stability and sustainability [33]. Previous studies listed many factors that help in an SME’s survival and continuity. Some studies addressed factors related to employee commitment and motivation [34,35]. Other researchers attributed the survival of SMEs to the availability of entrepreneurial characteristics such as competence [36,37] and risk-taking [38,39]. Environmental factors and rapid technological development are also among the factors linked to SME survival [40,41]. This study examines the ability of SMEs to survive after exposure to the repercussions of the COVID-19 crisis and the impact of participatory leadership and EWIB.
Previous studies have confirmed the positive association between EWIB and an enterprise’s financial performance and survival [42,43,44]. Ref. [45] argued that innovation keeps SMEs alive. Innovation also enables organizations to keep pace with developments in their industries [46], meet the expectations and desires of customers, and achieve a competitive advantage [47]. Researchers have also concluded that innovative behavior increases organizational efficiency and effectiveness [48] and employee satisfaction [49]. Ref. [45] stated that innovation is a prerequisite for an organization’s survival, expansion, and growth. Several researchers have confirmed the positive impact of EWIB on a business’s performance and survival [50,51]. Therefore, the authors of this study argue that employees’ innovative behavior contributed positively to SMEs’ ability to withstand the problems caused by the COVID-19 pandemic.
Many studies in relation to SMEs have concluded that there is a positive correlation between participatory leadership and EWIB [52,53,54]. Specifically, the studies found that psychological empowerment [55,56], sharing leadership [57], inclusive leadership behaviors [58], and empowering leadership [59] positively affect EWIB. According to [60], there is a significant association between organizational commitment, employee innovation, and team-level participative leadership. However, previous research found that the participatory leadership style positively impacts enterprise growth [61] and enterprise performance [62]. Ref. [63] argued that participatory leadership, psychological empowerment, and trust in supervisors increase enterprise performance regarding profits, which causes enterprise sustainability. Ref. [64] confirmed that prosocial leadership and collaborative capability have a direct and positive effect on SME resilience and flexibility. Additionally, [65,66] argued that participatory leadership positively affects employees’ internal corporate social responsibility perceptions and satisfaction, leading to SME endurance. This argument supports the hypothetical mediating role of participatory leadership in the relationship between EWIB and SME endurance.
The theory of exchange behavior employs conceptual paradigms that address the social relationships between individuals in organizations that are based on cost-benefit [16], which assumes that behavior results from an exchange between enterprises and individuals [16]. Social-exchange theory has been used extensively by researchers in various fields [67], such as sociology [68], anthropology [69], and psychology [70], social networking [71], tourism [72], and business administration [73]. Social-exchange theory has been widely applied to leadership [74,75]. Regarding leadership, social-exchange theory states that when leaders focus on subordinates’ benefits rather than placing additional burdens on them, they trade that benefit for high performance [76]. Drawing on the social-exchange theory, the authors argue that employees in SMEs engage in innovative work behavior when their employers are participative leaders. When employees are appreciative and have freedom of opinion and are motivated and supported by their leaders, they respond with more positive actions and creative solutions to the organization’s problems [77]. EWIB and leadership engagement are linked because empirical research has confirmed the positive association between them [11]. Ref. [53] found a positive association between participatory leadership and employee commitment. Innovative behavior also has a positive impact on an enterprise’s performance and life span [78,79,80]. Thus, it can be argued that participatory leadership shows the positive impact of EWIB on SME survival. The authors hypothesize that if managers in SMEs had adopted participatory leadership, employees would have enthusiastically provided innovative solutions and ideas that would have mitigated the negative effects of COVID-19, which would positively affect business performance and survival. Therefore, the hypotheses of this study can be stated as follows:
Hypothesis 1 (H1):
Participatory leadership had a positive and significant effect on EWIB during the COVID-19 pandemic.
Hypothesis 2 (H2):
EWIB had a positive and significant effect on SME endurance during the COVID-19 pandemic.
Hypothesis 3 (H3):
Participatory leadership had a positive and significant impact on SME endurance during the COVID-19 pandemic.
Hypothesis 4 (H4):
Participatory leadership mediated the positive and significant relationship between EWIB and SME endurance during the COVID-19 pandemic.
The research model for the study was based on social-exchange theory and previous studies. The research model in Figure 1 shows the relationship between EWIB, participatory leadership, and SME endurance. The model suggested that EWIB and participatory leadership were determinants of SME endurance during the COVID-19 pandemic. The model also hypothesized that participatory leadership mediated the link between EWIB and SME endurance.

3. Materials and Methods

The study used a quantitative approach to clarify the relationship among variables.

3.1. Sample and Procedure

The sample consisted of SME managers in Saudi Arabia. Based on the definition of SMEs by the Small and Medium Enterprises Authority (2017), the study focused on businesses with 6 to 249 employees. A sample of 450 SME managers was randomly selected from 150 SMEs listed in the General Authority for Statistics database (provided that three managers were selected from each enterprise).
The data were collected in January 2022, using an online questionnaire survey. (Online questionnaires are flexible and help to obtain large responses in a short time) [81]. Furthermore, it was appropriate considering the social-distancing precautions imposed by the COVID-19 pandemic. Before sending the questionnaire to the respondents, it was translated into Arabic to facilitate their understanding of its phrases. Then, a questionnaire link was emailed to the sample members. Finally, 390 questionnaires were completed—a response rate of 87%. The respondents were 72% male and 28% female and the majority were 31 to 35 years of age (26.7%) with a bachelor’s degree (42.1%). There were 114 SMEs included in the study—60 small-sized enterprises and 54 medium-sized enterprises. Most of the enterprises included in the study were 1 to 3 years old (34%).

3.2. Measures

The questionnaire constructs were measured through multiple items extracted from literature in the fields of EWIB, participatory leadership, and SMEs. All construct values were measured using a five-point Likert scale that ranged from strongly disagree (1) to strongly agree (5).
EWIB was measured through eight items borrowed from [82]. All items were related to the creative behavior of employees during the COVID-19 outbreak that concerned the employee initiative to identify solutions to the problems their businesses faced, their contributions to new ideas for products and work methods, and their participation in the implementation of those ideas.
Participatory leadership was measured by six indicators developed by [82], which focused on the extent to which employees were involved in decision-making and planning in the business. The phrases related to employee involvement in preparing alternative plans, encouragement to express opinions and suggestions, and support of their innovative ideas and solutions.
For this study, “SME endurance” refers to the consistent existence or operation of the SME during the COVID-19 pandemic. The concept of “SME endurance” is used in the current study to indicate business survival. The COVID-19 period began at the end of 2019 and extended for more than 30 months, during which SMEs were subjected to complete and partial closure, and the conditions for social distancing required working with a smaller workforce. The researchers’ opinions differed regarding the measures of SME survival. Some researchers supported using financial measurements because they are objective and easy to calculate [83,84]. The financial measures are criticized for sometimes being unavailable [85], incomplete [86], and inaccurate [87]. Therefore, some researchers suggested that non-financial measures be supportive of financial ones, although they are subjective. Some other researchers suggested measuring SME survival with financial and non-financial subjective measures [88]. Based on [88], the use of financial and non-financial measures gives a more comprehensive view of the efficiency and effectiveness of resource utilization, competitiveness, and the ability of the enterprise to face the conditions imposed by the external environment, such as the COVID-19 pandemic. Therefore, SME endurance was measured in this study through two dimensions [89]: financial and strategic indicators. The financial indicator included six items related to deposit adequacy, debt-to-asset ratio, use of retained earnings to finance production operations, capital turnover, and technology use in business operations. The strategic indicator included strategic changes the business adopted after the COVID-19 pandemic began and comprised items about product types, market segments, and risk appetite. It was measured through six items.

4. Results

The data were analyzed with the SmartPLS program. Partial-least-squares structural-equation modeling (PLS-SEM) was used to examine the hypothesized relationship between variables [90]. PLS-SEM is proven to be effective at evaluating the theoretical plausibility of correlations between variables, assessing the mediating effect of variables, and assessing the strength of structural and complicated associations between model constructs [91]. SmartPLS was first employed to estimate the measurement model and then was utilized to examine potential relationships between the latent variables depicted in the structural model [92].

4.1. Measurement Model

To assess the measurement model, reflective-measure factor loadings, latent-variable composite reliability (CR), average variance extracted (AVE), and discriminate validity (via Fornell–Larcker and HTMT criteria) were calculated. The results in Table 1 show all indicators’ factor loadings were >0.70 [93], with the exception of one item (LEAD1) that had a loading of 0.621. Five items with loadings <0.50 were deleted. The results in Table 1 also indicate that the constructs’ composite reliability was confirmed with CR values >0.70 [93]. All constructs had AVE values that were >0.50 [93] (Table 1), indicating that reflective indicators were highly converged in measuring the constructs.
Discriminant validity results in Table 2 indicate that all constructs were strongly linked to their measurement indicators. The values of the AVE squares exceeded the values of the squares correlated with other variables [94]. Table 3 shows that HTMT ratios for all constructs were <0.90, which indicates that the discriminant validity between reflective measures was well established.

4.2. Structural Model

After the reliability and validity of measurement constructs were confirmed, the structural model was assessed to examine the hypothetical relationships between the model’s exogenous and endogenous variables. First, the predictors’ collinearity was examined to ensure their measurement indicators were different. The results in Table 4 demonstrate that VIF values for all constructs were <5 with tolerance >0.20 [95], which indicates the nonexistence of collinearity issues.
To assess the structural model, the variables’ coefficient of determination (R2) and predictive relevance (Q2) were assessed. R2 was calculated to determine the variance proportion in the endogenous variables (SME endurance and EWIB) that is explained by each exogenous variable (participatory leadership and EWIB). The results, in Table 4, reveal that R2 for the endogenous constructs was 0.193 for SMEs endurance and 0.224 for EWIB. R2 values were deemed adequate based on the [96] criterion of being >0.1. The blindfolding procedure was applied to assess the predictive power of the exogenous variables (Q2). Table 4 also shows that values of the predictive relevance (Q2) were >0.0 [97]. These results indicate that the model has predictive accuracy—EWIB and participatory leadership can predict the change in SME endurance, while PL can predict the change in EWIB.

4.3. Hypothesis Testing

The links between the model constructs were examined by running SEM-PLS bootstrapping. The analysis results in Table 5 depict the model path coefficients, significance levels, and t-value using bootstrapping of 5000 subsamples. The results indicate that the first three hypotheses were supported. Regarding H1, EWIB is positively associated with participatory leadership (β = 0.473; t = 9.670; p = 0.00). For H2, the results reveal that EWIB had a significant positive impact on SME endurance (β = 0.192; t = 2.743; p = 0.006). The bootstrapping results also confirm the positive and significant impact of participatory leadership on SME endurance (H3: β = 0.315; t = 5.330; p = 0.00).
The bootstrapping analysis was conducted to assess the mediation impact of participatory leadership on the relationship between EWIB and SME endurance. The analysis results in Table 6 show a significant total effect of EWIB on SME endurance (β = 0.341; t = 5.862; p < 0.00). The results also reveal the significant direct effect of EWIB on SME endurance with the existence of the mediating variable, participatory leadership (β = 0.192; t = 3.022; p < 0.00). In addition, there was a significant indirect effect of EWIB on SME endurance mediated by participatory leadership (β = 0.149; t = 4.467; p < 0.00). These results indicate the relationship between EWIB and SME endurance was partially mediated through participatory leadership. The indirect effect is significant because the confidence interval in the range did not include a zero value (range: 0.093–0.222).

5. Discussion

The authors aimed to address the significance of participatory leadership on the relationship between EWIB and SME endurance since the occurrence of COVID-19 in 2019. Previous studies have covered the links between EWIB, business performance, and endurance [50,51]. These studies confirmed the positive impact of EWIB on business continuity. Many studies have also confirmed the association between participatory leadership and EWIB [10,11]. The authors of this study seek to fill the gap in the literature by focusing on the mediating effect of participatory leadership on the relationship between EWIB and SME survival during the COVID-19 pandemic.
The results of this study confirm the significant association between EWIB and participatory leadership for SMEs. These findings support social-exchange theory, which explains that a participatory leader’s behavior toward their employees results in employees responding with innovative work behavior. These results are consistent with a study by [53], who examined the relationship between participatory leadership and EWIB in the service sector and the mediation impact of commitment on this relationship. This study revealed the direct and positive relationship between participatory leadership and EWIB in different types of SMEs. The challenges SMEs faced during the COVID-19 pandemic prompted SMEs’ managers to inform employees about the repercussions of the crisis on the enterprise, involve them in the decision-making process, and encourage them to provide innovative solutions to the enterprise’s problems.
This study finds a positive and significant correlation between EWIB and SME endurance. These findings support the conclusions of [50], who demonstrated the positive impact of innovative employee behavior on employees and short-term business performance (measured by sales). The current study suggests a positive relationship between EWIB and an SME’s long-term performance or ability to survive and face challenges imposed by a crisis. For SMEs to survive after the COVID-19 pandemic, they need innovative and effective solutions and ideas from their employees. Furthermore, SME employees were aware of COVID-19′s repercussions on all businesses and people in general. Therefore, it is expected that they would contribute creative ideas to save their enterprise.
The results of the study reveal that there is a positive and significant effect of participatory leadership on SME endurance. These results confirm the conclusion of a study by [62], who demonstrated the positive impact of top management on information technology SME performance. This study showed a positive correlation between participatory leadership at all administrative levels and the performance of the small enterprise. Participatory leaders in different kinds of SMEs support and motivate employees, which improves employee and enterprise performance. Moreover, leadership influences the plans and strategies of the SME.
The results of this study confirm a significant mediating effect of participatory leadership on the relationship between EWIB and SME endurance. These results are consistent with the work of [50]. When a leader involves employees in their organization’s affairs and decisions, it stimulates innovative behavior and increases productivity, which leads to the organization’s sustainability and survival. This relationship is especially important because SMEs have struggled to survive during the COVID-19 pandemic.
This study highlights the role of participatory leadership in communicating the positive impact of EWIB on SME endurance. The findings represent an addition to previous studies on SME development and sustainability. The study also addresses the links between EWIB, participatory leadership, and SME endurance during the COVID-19 pandemic. It enriches the literature about SME sustainability in periods of crisis and provides empirical evidence for the significance of EWIB in enhancing the viability of SMEs by improving their financial performance with the support of participatory leadership.
The COVID-19 pandemic created risks that threatened the lives of SMEs. Therefore, SME managers should encourage and support the innovative behavior of their employees to ensure their business’ survival and continuity during the exceptional circumstances imposed by the pandemic. The results of the study indicate the necessity of adopting participatory leadership because of its positive impact on EWIB, enterprise performance, and survival potential.

6. Conclusions

The authors of this study aimed to address the mediating role of participatory leadership on the relationship between the innovative behavior of employees and SME endurance during the COVID-19 pandemic using the PLS-SEM algorithm. The authors hypothesize that participatory leadership stimulates EWIB results in performance improvement and is accompanied by strategic modification, which will result in SME endurance.
The findings of the study suggest a positive association between EWIB and participatory leadership. The results demonstrate that in SMEs characterized by participatory leaders, employee behavior is expected to become more innovative. Furthermore, the results confirm the significant positive impact of EWIB on SME endurance. SMEs with innovative employee behavior have a higher probability of survival and continuity than other SMEs. Finally, the results confirm the mediating effect of participatory leadership on the relationship between EWIB and SME endurance. SMEs dominated by participatory leadership have greater potential to survive and withstand crises, such as the COVID-19 pandemic.
This study has many limitations. The study examines the mediating effect of participatory leadership on the relationship between EWIB and SME endurance in various economic sectors during COVID-19. Future studies could focus on specific industries within the SME sector. SMEs operating in different industries have been affected by the COVID-19 pandemic to varying degrees. Among the sectors that could be addressed, for example, are the tourism industry and the food and beverage industry.

Author Contributions

Conceptualization and methodology, G.A.; data analysis, N.A.A.; writing—original draft preparation, N.A.A.; writing—review and editing, G.A. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

The study was conducted in accordance with the Declaration of Helsinki, and approved by the Institutional Review Board (or Ethics Committee) of Institutional Review Board (IRB) (protocol code 22-1054 and date of 13 November 2022).

Informed Consent Statement

Not applicable.

Data Availability Statement

On behalf of all the authors, the corresponding author states that our data are available upon reasonable request.

Acknowledgments

The authors acknowledge the support of Princess Nourah bint Abdulrahman University Researchers Supporting Project number (PNURSP2023R 277), Princess Nourah bint Abdulrahman University, Riyadh, Saudi Arabia.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 15 02740 g001 550
Figure 1. The Research Theoretical Framework.
Figure 1. The Research Theoretical Framework.
Sustainability 15 02740 g001
Table
Table 1. Constructs’ Factor Loadings, Cronbach’s Alpha, CR, AVE.
Table 1. Constructs’ Factor Loadings, Cronbach’s Alpha, CR, AVE.
ConstructItemLoadingsCronbach’s AlphaCRAVE
EWIBEMA10.7580.8790.9090.67
EMA20.811
EMA30.886
EMA40.864
EMA50.852
Participatory Leadership (PL)LEAD10.6210.8470.8840.522
LEAD20.784
LEAD30.772
LEAD40.758
LEAD50.771
LEAD60.799
LEAD70.736
Financial
Indicator (FI)		EndFin20.7250.7140.8240.542
EndFin30.781
EndFin40.828
EndFin50.736
Strategic
Indicator (SI)		EndStr50.8460.6860.8630.760
EndStr60.896
Table
Table 2. Discriminant Validity (Fornell–Larcker Criterion).
Table 2. Discriminant Validity (Fornell–Larcker Criterion).
EWIBFIPLEWIB
EWIB0.818
FI0.1750.736
PL0.4810.1890.722
SI0.2590.3800.4650.872
Table
Table 3. Discriminant Validity: Heterotrait–Monotrait Ratio (HTMT).
Table 3. Discriminant Validity: Heterotrait–Monotrait Ratio (HTMT).
EWIBFIPLSI
EWIB
FI0.359
PL0.5190.403
SI0.3640.4670.477
Table
Table 4. Variance Explained (R2) and Predictive Relevance (Q2).
Table 4. Variance Explained (R2) and Predictive Relevance (Q2).
VariableR2R2 AdjustedQ2Collinearity
ToleranceVIF
PL 0.8671.288
EWIB0.2240.2210.1090.6311.4
SMEs Endurance 0.1930.1880.181
Table
Table 5. Hypothesis Testing Results.
Table 5. Hypothesis Testing Results.
Hypothesis: PathStd. BetaStd. ErrorT Statistics (|O/STDEV|)2.50% (LL)97.50%
(UL)		Decision
H1: Participatory Leadership −> EWIB0.4730.4779.670 **0.360.558Supported
H2: EWIB −> SME Endurance 0.1920.1902.743 **0.0520.318Supported
H3: Participatory Leadership −> SME Endurance 0.3150.3205.330 **0.1780.424Supported
** p value < 0.01.
Table
Table 6. Mediation Analysis Results.
Table 6. Mediation Analysis Results.
PathStd. BetaStd. ErrorT Statistics (|O/STDEV|)p-Value2.50% (LL)97.50%
(UL)		Decision
Total Effect: EWIB −> SME Endurance0.3410.0585.8620.00
Direct Effect: EWIB −> SME Endurance0.1920.0633.0220.003
H4: Indirect Effect
EWIB −> Participatory Leadership −> SME Endurance 		0.1490.0334.4670.000.0930.222Supported
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Alarifi, G.; Adam, N.A. The Role of Participatory Leadership and Employee Innovative Behavior on SMEs’ Endurance. Sustainability 2023, 15, 2740. https://doi.org/10.3390/su15032740

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Alarifi G, Adam NA. The Role of Participatory Leadership and Employee Innovative Behavior on SMEs’ Endurance. Sustainability. 2023; 15(3):2740. https://doi.org/10.3390/su15032740

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Alarifi, Ghadah, and Nawal Abdalla Adam. 2023. "The Role of Participatory Leadership and Employee Innovative Behavior on SMEs’ Endurance" Sustainability 15, no. 3: 2740. https://doi.org/10.3390/su15032740

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