Driving Economic Growth: Examining the Role of Leadership within SME Innovation.

Abstract

Small and medium-sized enterprises (SMEs) make a significant contribution to the UK economy, accounting for 60% of all private sector jobs and 47% of revenue. Whilst previous research has highlighted the importance of innovation for economic growth, productivity and success within larger organisations, this has been largely under-explored within smaller organisations. This is arguably more important than ever before as there is a distinct need for SMEs in the UK to innovate to recover from the COVID-19 pandemic and the associated economic crisis. However, without a leadership presence, there is little or no focus for an organisation to innovate, nor is there an individual or group to lead the way forward, and to motivate fellow employees to innovate. This paper investigates the role of leadership as a means of cultivating innovation within SMEs in the UK. Certain behaviours and leadership attributes are found more likely to support and encourage innovation in a variety of different types of leaders, regardless of their actual leadership style. However, we suggest that authentic, entrepreneurial, transformational and ambidextrous leadership approaches, have the potential to be particularly valuable in cultivating innovation within SMEs, and that this could be particularly pertinent for business recovery post-pandemic.