Human Capital and SME Performance: Mediating Effect of Entrepreneurial Leadership

Abstract

Research Question: The paper investigates the relationships between human capital and SME performance, introducing into the analysis the mediating effect of entrepreneurial leadership in the specific context of a transitional economy. Motivation: The research of the mediating effect of entrepreneurial leadership contributes to a better understanding of the relationships between human capital and SME performance. As there is a small number of studies that have examined the role of entrepreneurial leadership in SMEs, the need for investigation is obvious. In addition, empirical evidence of the impact of human capital on SME performance is limited. Idea: Since leadership is considered to be a key determent of organisation growth, it is relevant to identify the relevance of entrepreneur’s leadership style and characteristics, as well as its role in the relationship between human capital components and success of SMEs in Serbia. Data: The study included 110 employees in Serbian small and medium-sized enterprises with up to 50 employees. A questionnaire was used to measure the employees’ attitude towards human capital, entrepreneurial leadership, and organizational performance, as well as socio-demographic variables. Tools: The data were prepared and analysed using statistical software IBM SPSS 24.0. Statistical data processing methods used in this paper are descriptive statistics, reliability analysis and regression analysis. Findings: The results of the analysis indicate that human capital has an indirect impact on organisational performance through the mediating effect of entrepreneurial leadership. Contribution: The results can be used in making future decisions, measures and standards related to human resource management in the context of transitional economies, as well as to help entrepreneurs to lead their employees effectively and ‚‚‚‚survive in today’s turbulent business environment.