Entrepreneurial leadership and MSME performance in resource-constrained uncertain contexts: insights from Ethiopia

Abstract

This study examines the influence of entrepreneurial leadership (EL) attributes on the effectiveness of Micro, Small, and Medium Enterprises (MSMEs) in Ethiopia, a context characterised by institutional voids and resource constraints. Drawing on survey data from 356 MSME leaders, hierarchical regression analysis was employed to test the impact of five EL dimensions—creativity, opportunity-seeking, vision, decision-making, and risk-taking. The findings reveal that creativity and opportunity-seeking positively and significantly improve firm effectiveness, underscoring their importance in enabling adaptability and resilience in resource-constrained settings. In contrast, vision and decision-making exhibit no significant influence, reflecting the challenges of long-term strategic orientation under volatile institutional and political conditions. Counterintuitively, risk-taking demonstrates a negative and significant effect, highlighting how high uncertainty and weak institutional support exacerbate entrepreneurial vulnerability. Environmental dynamism emerges as a positive moderator, enabling leaders to navigate complexities through informal networks and adaptive strategies. These results suggest that the effectiveness of EL is heavily contingent upon contextual conditions rather than leadership attributes alone. The study contributes to entrepreneurship and leadership scholarship by advancing context-sensitive understandings of EL and offers policy insights for fostering MSME growth in fragile institutional environments.

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