The relationship between financial literacy, entrepreneurial leadership and entrepreneurial performance of small, medium and micro-enterprises

Abstract

The major aim of this study was to analyse the relationship between financial literacy, entrepreneurial leadership and entrepreneurial performance of small, medium and micro-enterprises. A simple random sampling approach was employed in conducting survey primary data collection using a self-administered structured questionnaire developed based on a 5-point Likert scale. Sample data collected from two-hundred and five respondents was first tested for construct validity and scale reliability using Keiser-Meyer-Olkin measure of sampling adequacy and Cronbach’s alpha criteria, respectively. Results indicate that the questionnaire’s items passed construct validity and scale reliability requirements. Exploratory factor analysis and confirmatory factor analysis were conducted to evaluate total variances explained, factor structures and associations between observed variables and latent factors using the Statistical Package for Social Sciences 24 software. Results show that no observed variables exhibited complex structures, and significant amounts of variances in observed variables were explained by the analogous constructs. Results obtained from the structural equation model estimated using Stata 14 software show presence of significant positive relationship between financial literacy, entrepreneurial leadership and entrepreneurial performance. Results from the estimated generalised structural equation model indicate that entrepreneurial leadership moderates the relationship between financial literacy and entrepreneurial performance of small, medium and micro-enterprises.