Effect of Transformational and Transactional Leadership on Innovation Performance among Small and Medium Enterprise in Uasin Gishu County, Kenya

Abstract

The main purpose of the study was to determine effect of Transformational and Transactional leadership on SME innovation performance. The study was informed upper echelons theoretical perspective. Explanatory research design was employed while questionnaire was used to collect data from a sample size of 290 SMEs which was randomly selected. Findings from multiple regression model indicated that both hypothesis were rejected at 0.05 level of significance. This infers that transformational leadership and transactional leadership had significant and positive effect on SME innovation. In addition, results showed that all the two predictors (transformational and transactional leadership) explained 57.2 percent variation of SME innovation. Thus, transformational leadership and transactional leadership make it possible for SMEs to highly innovation achieve competitive advantage. It is therefore important for SMEs managers to focus on understanding a transformational leadership and transactional leadership.