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In the field of management strategy, Yoon Hyun-joong, (2015) argued that leadership has been considered as a remarkably significant role to better the competitivity of small and medium-sized enterprises (SMEs). Kang Chan-hui(2019) claimed that the role of leaders in organizations can be regarded as the most crucial core strategy for accomplishing organizations’ performance. Leadership has an impact on organizational performance (Goo Jung-dae, 2019). As a result of the characteristics of SMEs, there is a lack of essence competencies, including technology, manpower, and support, the decisions leaders make by and large are extremely important (Park Tae-kyung, 2014; Miller, 1983). From the view of companies’ innovation, the role of leaders is much more prominent. Innovation is central to SMEs’ developing strategies that firms produce current market share, access new markets, and make benefit in the competitive market. These innovations mainly depend on the decisions of the leaders.
From the perspective of value innovation, Bartlett and Ghoshal (1990) pointed out that companies’ ability to innovate is rapidly becoming an important source of their competitive advantage. Management strategies for creating new values are crucial for companies. This is on account of the rapid-changing economic environment and uncertainty. Under the fast-changing environment, Huang et al. (2019) said that firms have to adopt innovation strategy to better innovation or increase value to enhance competitive edge. Owing to modern technology and knowledge, to imitate competitive edge and break market barriers is easy between regions and countries, and quickly acquire information about products and their prices.
In former studies, researches on enterprise-oriented companies have been ceaselessly growing and conducted to examine the significance of leadership (Kyrgidou and Spyropoulou, 2013; Sciascia et al., 2006). Nevertheless, some studies have shown that companies that take a solid enterprise-oriented perform better than those do not, others discovered fewer links between enterprise-oriented corporates and performance or even cannot discover a significant relationship (Rauch et al., 2009). Furthermore, a large number of studies are mostly zeroed in on the connection between leadership and performance, and so researches on manufacturing SMEs in developing markets are less common. Particularly, comparatively few studies have thoroughly been divided from the point of leadership and innovation. As a result, besides innumerable studies, we can state that the review about this correction is still open. In particular, studies about manufacturing SMEs in developing economies are far more inadequate. Corporates have played down the opportunity of establishing new industries and renovating the values of existed industries. Under such conditions, it would be more profitable to define the value of innovation clearly and display the analytical frame and tools required to establish and manage it. Putting it in another word, papers about how to make valuable innovation remain inadequate. Hari M., Fredi A. and Eneng T. (2020) argue that research workers might not have examined value innovation in much great detail. A large percentage of businesses fell apart due to the lack of innovation or the lack of technology adoption helping entire corporates’ performance.
Hence, this study aims to discover the impacts of leadership mediated by value innovation on the business financial performance of manufacturing SMEs in China. We set leadership as the motivating factors which influence value innovation, and study them from the view of business model innovation and product innovation. Then figure out how these factors influence value innovation and make an attempt to give academic and practical implications for what kind of role value innovation plays. This paper finds out causal impacts of leadership, and approval of value innovation on the performance of SMEs is convincing and appeared as an essential criterion revelation for the durability, sustainable development, and triumph of SMEs. This paper also gives a glimpse into academic and practical meanings which may better manufacture SMEs in emerging markets to improve their performance.
The remainder of the paper is organized as follows. To begin with, this paper will figure out the connection between leadership, value innovation, and firms' performance and hypothesizes their relation. Additionally, it objectively examines whether the hypotheses work in the Chinese business environment of rapidly changing. Lastly, this study will sum up its discoveries and give concluding remarks.