Entrepreneurial Leadership, Strategic Auditing, and Financial Agility as Catalysts of Sustainable Growth in SMEs: The Mediating Role of Innovation Capability

Abstract

This study investigates how entrepreneurial leadership, strategic auditing, and financial agility contribute to the sustainable growth of small and medium-sized enterprises (SMEs). It further examines the mediating role of innovation capability, developing a multidisciplinary model that integrates leadership, auditing, finance, and entrepreneurship perspectives. A quantitative, cross-sectional survey design was employed. Primary data were collected from 350 managers and employees in textile and glass manufacturing SMEs in Lahore, Pakistan, using a structured questionnaire adapted from validated scales. The research framework was tested through structural equation modeling (SEM) to assess both direct and indirect relationships among variables. The results demonstrate that entrepreneurial leadership fosters vision and proactivity, strategic auditing enhances governance and accountability, and financial agility strengthens firms’ ability to adapt resources. Together, these factors significantly improve sustainable growth. Moreover, innovation capability partially mediates these relationships, suggesting that leadership, auditing, and financial responsiveness generate stronger sustainability outcomes when paired with a culture of innovation. By combining entrepreneurial leadership, auditing, finance, and innovation, this study introduces a fit multidisciplinary model that extends sustainability research in SMEs and provides actionable insights for firms in emerging economies