Citation:

Patience Tanyaradzwa Jeranyama, Cheng Limei. "CEO Financial Literacy on Firm Performance among SMEs; The Mediating Role of Firm Technological Innovations and Risk Tolerance and Moderating Role of Firm Size" International Research Journal of Economics and Management Studies, Vol. 3, No. 2, pp. 17-30, 2024.

Abstract:

This manuscript presents an in-depth exploration of the impact of Chief Executive Officer (CEO) financial literacy on the performance of Small and Medium-sized Enterprises (SMEs), with a particular focus on the context of Zimbabwe. This study is pivotal in addressing a significant gap in the existing literature by examining the mediating roles of firm technological innovations and risk tolerance alongside the moderating role of firm size. The research is grounded in Resource-Based Theory (RBT), which emphasizes the strategic importance of internal resources such as CEO financial literacy in shaping firm competitiveness and success. A comprehensive methodology is employed, utilizing Structural Equation Modeling (SEM) to analyze data from a cross-sectional questionnaire distributed to CEOs of SMEs in Zimbabwe. The study's findings reveal a robust and statistically significant positive relationship between CEO financial literacy — encompassing financial behavior, knowledge, and skills — and firm performance. This relationship is further mediated by technological innovation and risk tolerance. Notably, firm size is found to significantly moderate these relationships, highlighting its crucial role in the dynamics of SME performance. This research contributes to the scholarly discourse by offering new insights into the direct and indirect impacts of financial literacy on firm performance. It emphasizes the need for strategic investments in comprehensive financial education and leadership development, particularly in the dynamic and challenging economic environment of Zimbabwe. The study's findings have broad implications for practitioners and policymakers, suggesting a holistic approach to leadership development that includes fostering risk tolerance and the capacity to embrace technological advancements.

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Keywords:

CEO Financial Literacy, Firm Size, Risk Tolerance, SME Performance, Technological Innovation.