A conceptual study on investigating the effect of innovation, transformational leadership and work stressor on employee performance of SMEs in Pakistan

The understanding of elements contributing to employee performance of small and medium enterprises (SMEs) in Pakistan is still deficient. As the SMEs of Pakistan have had difficulty surviving in their early years, their initial failure rate is 90% -95%. Initially, this is a concept paper to provide useful insights into the relationship between organizational innovation, transformational leadership, and work stressor on employee performance of small and medium enterprises (SMEs) in Pakistan's manufacturing sector. The relationship between organizational innovation, transformational leadership, and work stressor and their effect on overall employee performance is established through a review of the literature. The mediating role of creativity was also an attempt to explore. In order to reach the optimum level of employee performance to increase the outcome of SMEs in Pakistan, it is mandatory to provide an open and supportive environment to employees so they can cultivate their creative ideas. This study mainly focused on the factors that directly influence employee creativity to ensure progress in employee performance. This study emerged from the fact that a very limited study is being carried out on this issue, and further research should be carried out in this field, especially in Pakistan. A model is proposed, and hypotheses will be developing and discussed based on theoretical considerations. The findings of this study can contribute to business practice by informing employee performance, improvement strategies. Business leaders could gain additional insights into strategies to engage and motivate employees to improve performance.