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Abstract This article aims to present an approach to enhance the firm performance of SMEs by understanding the dynamics between the elements of the transformational leadership style of the CEO and the agility of the supply network. The business environment among SMEs is marked by fierce rivalry, quick change, and tremendous instability. While an agile supply chain is seen as a winning option for manufacturing SMEs, a transformational leadership style of the CEO can be a source of competitive advantage to improve their performance. Thus, an attempt has been made to integrate transformational leadership and supply chain agility elements and delineate their structural relationship using the total interpretive structural modeling method. Results indicate that transformational leaders drive agile initiatives in the supply chain by setting and communicating a vision, encouraging supply chain members to think of innovative solutions for problems, and mentoring them individually to achieve high-performance standards. These practices will make the team members put in extra effort to accomplish the task, thereby establishing a committed and flexible workforce. Conclusions are drawn, and implications are discussed for enhancing firm performance.
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