Leadership, Strategic Quality Management, and SMEs Sustainability: The Mediating effect of Employee Empowerment and Engagement

Abstract

Small and Medium-Sized Enterprises (SMEs) are key drivers of economic growth, employment, and innovation globally. However, their sustainability is increasingly challenged by resource limitations, heightened competition, and rapidly evolving market dynamics. To remain competitive and achieve long-term sustainability, SMEs must adopt effective leadership and strategic quality management (SQM) practices that enhance organizational performance and adaptability. Despite the proven importance of leadership and SQM in improving operational efficiency and customer satisfaction, their impact on SMEs' sustainability often remains limited due to a lack of employee empowerment and engagement. This disconnect highlights a critical research gap in understanding how employee empowerment and engagement mediate the relationship between leadership, SQM, and SMEs' sustainability. Leadership plays a pivotal role in driving strategic initiatives and fostering a culture of continuous improvement. Explanatory research design is employed to understand the causal relationships between variables and how one variable influences. The explanatory approach is ideal for this study as it allows for the assessment of the direction and strength of relationships between leadership, SQM, and SME sustainability. In this study, a purposive sampling technique was appropriate because the researchers targeted specific SMEs whose leadership and SQM practices are aligned with the study's objectives. A sample size of 335 is appropriate for this study, as it strikes a balance between providing sufficient statistical power and being feasible in terms of data collection. The choice of this sample size ensures that the data are robust enough to perform advanced statistical analysis, such as structural equation modeling (SEM), which is suitable for testing complex causal relationships. A sample size of 335 also allows for meaningful subgroup analysis, enabling comparisons between different industries, company sizes, and geographical locations. The findings of the study reveal that effective leadership positively influences the sustainability of small and medium enterprises (SMEs). Strategic quality management positively influences the sustainability of small and medium enterprises. Leadership has a profound impact on employee empowerment and engagement. Strategic Quality Management (SQM) plays a critical role in shaping employee empowerment and engagement. Employee empowerment and engagement are key mediators in the relationship between leadership and the sustainability of small and medium enterprises (SMEs). Employee empowerment and engagement play crucial roles in mediating the relationship between strategic quality management (SQM) and the sustainability of small and medium enterprises (SMEs). This study enriches the theoretical understanding of SQM by positioning it as a key enabler of employee empowerment. SMEs should prioritize embedding SQM practices in their operations to enhance employee empowerment and engagement. SMEs should invest in developing transformational leadership skills at all organizational levels. Leaders who demonstrate high levels of transformational leadership (e.g., providing inspiration, motivation, and individualized attention) empower employees and foster engagement.