Entrepreneurial Leadership, Performance and Sustainability of Construction Enterprises in Pakistan

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Bahauddin Zakariya University, Multan

Department of Commerce
Assignment
SUBMITTED TO: Dr. Masood Ul Hassan
SUBMITTED BY: Muhammad Ali Raza
ROLL NUMBER: 15
MS (Innovation and
CLASS:
Entrepreneurship)
SUBJECT: Sustainability Entrepreneurship
Date of Submission: 18-Aug-2020
Assignment Title:
(MID PAPER) Entrepreneurial Leadership, Performance and
Sustainability of Construction Enterprises in Pakistan
Muhammad Ali Raza (Roll Number: 15) MS (Innovation and Entrepreneurship)

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Entrepreneurial Leadership, Performance and

Sustainability of Construction Enterprises in Pakistan
Introduction:
Business intricacies, combined with accelerated economization, have
pushed businesses to be responsible citizens in achieving sustainability
agendas. Since a significant number of firms have amalgamated their
affirmative commitment to sustainable business practices into corporate
identities, these emerging firms within the Asia-Pacific region have
sufficient scope for improvement,(Amran, Lee, and Devi 2014) especially
in terms of small and medium-sized enterprises (SMEs), which appear to
be making an immense contribution to economies across nations(Nyaga
and Bett 2018). Small and micro-enterprises have played a profoundly
positive role in eradicating poverty and generating significant employment
opportunities, especially among emerging economies, both policymakers
and academics have highlighted (Journal 2017)(Rahman 2016).
Small and micro-enterprises, which serve as leaders of indigenous
entrepreneurship and national development, play an important role at all
levels of the global economy by inspiring the building of technical
capacities, spreading innovation and mobilizing resources(Makhanu and
Mukwa 2017). As for Pakistan, which represents an emerging economy,
micro-enterprises accounting for 75 percent of the total number of small
and medium-sized enterprises employ approximately 2 million people
nationally, thus signifying their important role in national growth.
Micro or small companies differ tremendously from larger
conglomerates, as MEs are characterized by one-person operations, poorly
run, likely to being impermanent, perhaps less competitive, often informal,
and undercapitalized (EIJDENBERG and MASUREL 2013) business
enterprises that have economic activities beyond formal institutional
constraints but within informal institutional boundaries. Furthermore, micro-
enterprises fulfill the demand of large social groups by employing low-paid
workers as wage workers, which appears to be widely common in low-

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income and underprivileged populations, thereby emerging as a powerful

tool for reducing poverty as well as economically empowering the poor (Al
Mamun et al. 2016).
Effective and sustainable entrepreneurship includes individuals with
specific abilities and personality characteristics, some of which have been
highlighted in the literature as having a major impact on the acquisition of
varied rates of organizational performance (Sharma 2016). Business
success is highly dependent on entrepreneurial characteristics and skills
from the role of micro and small businesses, such as leadership skills,
managerial and networking skills, technical skills, and entrepreneurial
education level. Leadership, as an entrepreneurship development, is
important because of its capacity to recognize one’s value in the
entrepreneurial process; hence, it is considered vital in a variety of
organizational-sustainability-related aspects, such as encouraging
innovation and adapting to changing environment.
Research Gap:
Through the Pakistani viewpoint, an unreliable human factor seems
to be a major obstacle that Construction enterprises Performance in
Pakistan. We have to resolve in order to maintain sustenance and
competitiveness on the market. Ironically, much of the current literature has
applied the resource-based perspective within a similar framework to the
present research, but restricted to firm success alone, which seems to
contradict the theory's ultimate aim in encouraging firms to achieve
sustainable competitive advantage (sustainability), referring to superior
economic, social, and environmental performance (Barney 1991). In the
effort to find the significant gap found in enterprise sustainability literature
with context to the theoretical and practical aspects of Asia, we have
examined the influence of a significant human factor, notably
entrepreneurial leadership (i.e. responsibility, accountability, analytical
thinking and emotional intelligence), on the performance and sustainability
of construction enterprises in Pakistan.

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Research Question:
Entrepreneurial leadership plays a significant role in assessing the
viability of business projects. As for small businesses, entrepreneurial
leadership remains important as micro-entrepreneurs cannot develop their
company effectively without showing effective leadership attributes.
Perhaps this may be the reason why the micro-enterprise success theme
has emerged as popular among entrepreneurs and researchers,
particularly for those eager to find a definitive formula for successful micro-
enterprise.
There are two unanswered Questions which are:
(1) “What are the fundamental attributes of that influence firm
efficiency, especially in the Construction Enterprises context?”
(2) “How do those attributes apply to the Construction Enterprises
efficiency and sustainability aspects?”
With rising moral attitudes and ventures in entrepreneurship, it's wise
to look for features that shape successful entrepreneurs. For example, the
term as relatively new and an increasing field of interest requiring deeper
penetration of information within the framework of the characteristic of
entrepreneurial leadership. Meanwhile, it has been estimated that micro-
enterprises are struggling with several limitations in terms of personal
characteristics and skills among owners that impede their growth, survival
and sustainability. Extremely low principal skills typically one of the major
reasons for micro and small businesses to face barriers at accessing formal
markets.
Objective:
The objective is to identifying the most significant dimensions that reflect
entrepreneurial leadership, a list of essential attributes, including vision,
opportunity-focused, influencing, planning, motivating, creativity,
achievement-oriented, flexibility, persistence, patience, risk-taking, high
ambiguity tolerance, tenacity, power-oriented, self-confidence, proactive

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behaviour, Sustainability and internal locus of control.

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Literature Review:
Entrepreneurial Leadership:
Entrepreneurial leadership is parked at the intersection of leadership
and entrepreneurship (Renko et al. 2015) wherein leadership translates the
process of influencing (Yukl 2008) whereas entrepreneurship reflects both
the entrepreneur and the intersection of an entrepreneur with his or her
surrounding opportunities (Renko et al. 2015).
In reviewing the relevant literature with the objective of identifying the
most significant dimensions that reflect entrepreneurial leadership, a list of
essential attributes, including vision, opportunity-focused, influencing,
planning, motivating, creativity, achievement-oriented, flexibility,
persistence, patience, risk-taking, high ambiguity tolerance, tenacity, power
oriented, self-confidence, proactive behaviour, and internal locus of control
(Yukl 2008) has been unraveled where the concepts of entrepreneurship
and leadership converge and internal locus of control (Becherer,
Mendenhall, and Eickhoff 2008) , has been unraveled where the concepts
of entrepreneurship and leadership converge.
Responsibility and Micro-Enterprise Performance:
Responsibility is reflective of habits that reinforce the capacity of a
leader to organize and thereby expedite cooperative efforts generated by
alertness and intelligence towards the motives and needs of others and
followed by insight into situations (Becherer et al. 2008) .Meanwhile, the
performance of a micro-enterprise as a multidimensional construct that
blankets the operational and financial outcomes of a firm (Venkatraman
and Ramanujam 1986) depicts the personality of the owners (Burnard and
Bhamra 2011).
Moreover, the RBV upholds that specific traits of business managers
from the stance of valuable knowledge, skills, beliefs, and capabilities can
accelerate the performance of an organization (Barney 1991). Thus, the
concept of responsibility viewed as an individual-specific ability may serve
as a valuable and unique capability in channeling firms towards superior
performance.

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Responsibility is closely associated with leadership, and hence, has

been reckoned to be an essential characteristic of a leader (Stogdill 1948).
Within the context of entrepreneurship, the significance of responsibility as
part of a leader’s traits can be explained by the fact that entrepreneurs
work within a relatively unstructured environment where they need to be
wholly responsible for every aspect of the enterprise, such as sales,
recruitment, public relations, and negotiations (Kuratko 2007; Zhao and
Seibert 2006).
Micro-Enterprise Sustainability:
Enterprise sustainability denotes the stakeholder-focused
organizational business protocols that address the integrated economic,
environmental, and social aspects of performance over short- and long-
term periods within the limits imposed by nature and society (Searcy 2016).
Theory wise, the RBV can be deployed to illustrate the contingency of
responsibility, as individual-specific capabilities, so as to instigate superior
performance in organizations, thus directing towards sustainability from
unique and inimitable resources and capabilities (Searcy 2016; Wernerfelt
1984).
In addition, the introduction of accountability-related practises is
considered to boost organizations' ability to generate value for their
stakeholders, which represents the centrepiece of the sustainability model
(Omerzel and Antončič 2008).Moreover, responsible initiatives, such as
preventing harm towards the environment, do not only minimize operating
costs, but also enhance enterprise social reputation . In regard to this
(Amran et al. 2014) asserted that responsible behavior in an enterprise
functions as a sound platform to enhance sustainability. Therefore, socially
and environmentally responsible economic activities can be reckoned to be
sources of competitive advantage (i.e., superior economic, social, and
environmental firm performance). Based on the above discussion, the
following hypothesis is proposed.
Analytical Thinking:
Analytical and critical thinking have been regarded as introversion of
intellectual leadership thinking, whereby an alertness to the surrounding

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world and situations of comprehension are closely linked to leadership

capacity (Stogdill 1948).
Theoretically, the RBV posits that an entrepreneur’s analytical
thinking as a rare and valuable capability for a firm, inimitable in nature, can
generate superior enterprise performance (Barney 1991).Empirically, such
a capability does not only facilitate leadership experience but also supports
leadership training (Ricketts and Rudd 2005).
In addition, analytical thinking reflects one 's ability to see beyond
basic facts and to think complexly at a more systematic level, illustrating
the value of the term among entrepreneurial leaders who need to
constantly solve abstract problems with relatively complex solutions, along
with an ethical, reflective, or moral approach strengthened by critical
thinking (Flores et al. 2012).
(Elson et al. 2018) claimed that attention is given by employers and
leaders towards the need for critical thinking skills in the workforce arena
so as to generate business trends of evidence-based decision-making, thus
emphasizing the increasing importance of a critical thinking skill set as well
as its impact on professional performance. Within the context of
entrepreneurship, business leaders lacking leadership attributes, such as
higher cognitive processing, appear to be less effective, hence indicating
that a deficiency in critical thinking can negatively affect their ability to lead
an enterprise (Drath 1990).
Meanwhile, (Ibdah 2018) claimed that analytical thinking, as a means
of confronting problems and dealing with both internal and external
changes related to varied business activities, boosts the performance level
of firms. Additionally, (Kealey, Holland, and Watson 2005) empirically
proved that analytical thinking skills contribute significantly towards
performance among students.

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Theoretical Framework:
Research Methodology:
This study employed a cross-sectional research design and gathered
quantitative data from online google forms because of the limitation due to
Covid-19 held in an attempt to measure the impacts of responsibility,
accountability, analytical thinking, and emotional intelligence on the
performance and sustainability of micro-enterprises in Multan, Pakistan.
The study population is comprised of micro-entrepreneurs from low-income
households in Multan, Pakistan. I belong to construction industry so know
many low-income households in Multan, Pakistan

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Sample Size:
Due to Covid-19 we are not able to collect large number of data so
we able to collect 103 responses from micro-entrepreneurs residing in
Multan Pakistan.
Data Analysis Method:
Structural equation modelling via partial least squares (PLS-SEM)
refers to a causal modelling approach that maximizes the explained
variance of the dependent latent constructs (Hair, Ringle, and Sarstedt
2011). Moreover, due to the exploratory nature of this study and the non-
normality issue, this study employed a PLS-SEM estimation with the
primary objective of maximizing the explanation of variance among the
dependent constructs embedded in the structural equation model. The
results of this analysis are reported as recommended by (Hair, Ringle, and
Sarstedt 2013) for PLS modelling, which are inclusive of indicator reliability,
internal consistency reliability, convergent validity, discriminant validity,
Average Variance Extracted (AVE), effect size, path coefficient estimates,
and predictive relevance.
Hypothesis:
Hypothesis 1 (H1). Responsibility has a significantly positive impact on
firm performance among micro-enterprises.
Hypothesis 2 (H2). Responsibility has a significantly positive impact on
sustainability among micro-enterprises.
Hypothesis 3 (H3). Accountability has a significantly positive impact on
firm performance among micro-enterprises.
Hypothesis 4 (H4). Accountability has a significantly positive impact on
sustainability among micro-enterprises.
Hypothesis 5 (H5). Analytical thinking has a significantly positive impact
on firm performance among micro-enterprises.
Hypothesis 6 (H6). Analytical thinking has a significantly positive impact
on sustainability among micro-enterprises.

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Hypothesis 7 (H7). Emotional intelligence has a significantly positive

impact on firm performance among micro-enterprises.
Hypothesis 8 (H8). Emotional intelligence has a significantly positive
impact on sustainability among micro-enterprises.
Hypothesis 9 (H9). Enterprise performance has a significantly positive
impact on sustainability among micro-enterprises.
Hypothesis testing:
 Indicator Reliability
 Convergent Reliability
 Internal Consistency
 Discriminant Validity
Indicator Reliability:
Reflective indicator loadings >0.5 shows item is a good measurement
of the latent construct Achieved in Table I.
Cronbach’s Alpha’ evaluate the reliability of the items in terms of
unidimensionality of a set of scale items. It’s a measure of the extent to
which all the variables in your scale are positively related to each other.
α>0.7 Achieved in Table I.
Convergent Reliability:
Convergent Reliability: Assessed using Average Variance Extracted (AVG)
comparable to proportion of variance explained in factor analysis (Value
between 0 and 1). AVG>0.5 Achieved in Table I.
Internal Consistency: Internal Consistency assessed using Dhillon-
Goldstein Rho (or also known as the composite reliability (CR), ρ);
measures the reliability of the indicators where values are between 0 and 1.
CR>0.7 adequate Consistency Achieved in Table I. and also Figure 2.
We can remember this as:
 Cronbach’s Alpha > 0.7 (See Table I. and also Figure 2)
 Loadings > 0.5 (See Table I)
 AVG > 0.5 (See Table I)
 CR > 0.7 (See Table I)

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Partial least squares (PLS) structural equation modelling (SEM) was

used to analyses the data. For running PLS-SEM, we used the SmartPLS
software version 3.2.2. PLS-SEM is a powerful technique which has
become popular among the social scientists since the last one decade and
is widely used in prior studies. In terms of analysis, PLS-SEM is a two-step
process involving the assessment of the measurement and structural
model.
First, the measurement model should be assessed by examining the
internal consistency reliability (ICR), convergent validity (CV) and
discriminant validity (DV).ICR measures the degree to which the items
measure the latent construct .This assessment was done through
composite reliability (CR) scores. The results indicate that the CR scores of
all constructs exceeded the threshold criterion of 0.7, demonstrating high
internal consistency of the scales used in this study.
Next, factor loadings and average variance extracted (AVE) were
assessed to determine the CV of the constructs. The CV is the “extent to
which a measure correlates positively with alternative measures of the
same construct”. A factor loading should be 0.708 or higher, and 0.70 is
considered close enough to be acceptable.
Another criterion for checking the validity of the construct is DV. DV is
“the extent to which a construct is truly distinct from other constructs by
empirical standards” (Hair et al. 2011). In this study, DV is checked with the
help of (Fornell and Larcker 1981) criteria, which states that the square root
of AVE value should be higher than the squared correlation with other
constructs (Fornell and Larcker 1981).Results in Table II show that the DV
was achieved.
As presented in Table II, the correlations among the latent constructs
were compared with the square roots of the average variances
extracted .Table II further indicates that each of the square root of the
average variances extracted has exceeded the correlations among latent
constructs. Hence, this suggests that adequate DV has been achieved.

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Table I. Measurement model quality criteria

(composite
(average variance
LV Factor loading Cronbach’s α reliability) rho_A
extracted) AVE
CR
Accountability 0.894 0.900 0.927 0.761
AC1 0.792
AC2 0.889
AC3 0.922
AC4 0.882
Analytical Thinking 0.905 0.941 0.931 0.676
AT1 0.642
AT2 0.957
AT3 0.911
AT4 0.913
AT5 0.901
AT6 0.927
AT7 0.265
Construction Enterprise
0.745 0.886 0.845 0.601
Performance
EP1 0.787
EP2 0.877
EP3 0.911
EP4 0.874
EP5 -0.147
Construction Enterprise
0.909 0.930 0.931 0.730
Sustainability
ES1 0.868
ES2 0.888
ES3 0.829
ES4 0.865
ES5 0.822
Emotional Intelligence 0.917 0.925 0.937 0.750
EI1 0.890
EI2 0.870
EI3 0.814
EI4 0.858
EI5 0.895
Responsibility 0.965 0.967 0.974 0.905
RS1 0.977
RS2 0.952
RS3 0.946
RS4 0.929

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Table II. Fornell and Larcker criteria for discriminant validity

Costructio
Analytic Costruction Emotiona
n
Accountabili al Enterprise l Responsibili
Enterprise
ty Thinkin Sustainabili Intelligen ty
Performan
g ty ce
ce
Accountability 0.873
Analytical
0.794 0.822
Thinking
Construction
Enterprise 0.995 0.790 0.775
Performance
Construction
Enterprise -0.053 0.000 -0.092 0.854
Sustainability
Emotional
0.921 0.942 0.917 -0.046 0.866
Intelligence
Responsibility 0.807 0.832 0.802 -0.018 0.838 0.951
Finding:
Sustainability, organisational expansion and survival aspects of
SMEs are highly dependent on the skill sets of their directors. As such,
many critical effects of entrepreneurial leadership (i.e., transparency,
accountability, analytical thinking, and emotional intelligence) on enterprise
efficiency and sustainability among micro-enterprises were empirically
investigated in this study. The results of the study showed that the element
of accountability practiced by heads of households with low incomes has a
substantial positive impact on their company performance.
The study also found a substantially positive impact on their micro-
enterprise success and sustainability of transparency among low-income
household heads. Therefore indicating that accountability is a crucial
determinant that promotes not only the performance but also the
sustainability of every firm.
As for critical thought, this study found a major positive impact on the
survival of micro-enterprises operated by low-income household leaders.
The findings indicate a dramatically positive impact on micro-
enterprise success in terms of emotional intelligence. Supporting emotional
intelligence among low-income entrepreneurs thus helps them to achieve

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superior success in micro-enterprises. Finally, this study showed a major

positive influence of micro-enterprise success on the sustainability of micro-
enterprises.
Contribution:
This research contributes by enhancing the body of knowledge by
integrating sustainability aspects from the point of view of Construction
enterprises from the resource-based view (RBV) theory lens and at the
same time enriching the existing literature, especially within the Pakistan
context.
This research is also important as small businesses have been
counted as a strong resource for eradicating poverty and motivating the
disadvantaged economically, apart from being extensively important for
low-income and underprivileged communities. The fact that these small
firms were defined to rely heavily on the resources of the features and skills
of the owners is the prime focus of this particular analysis.
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1

Bahauddin Zakariya University, Multan

SUBMITTED BY: Muhammad Ali Raza

SUBJECT: Sustainability Entrepreneurship

Date of Submission: 18-Aug-2020

Muhammad Ali Raza (Roll Number: 15) MS (Innovation and Entrepreneurship)