This paper develops a conceptual framework explaining how managerial characteristics influence financial performance in small and medium-sized enterprises (SMEs). Drawing on Upper Echelons Theory, Behavioral Finance, the Resource-Based View, Agency Theory, and financial decision theories, the study positions managerial characteristics as the primary antecedents of financial decisions and firm performance. Managerial cognition and behavioral perspectives are discussed only as background explanations for why managerial characteristics may shape financial policies differently across SMEs; they are not treated as separate constructs in the conceptual framework. The proposed framework focuses on three main relationships: the direct effect of managerial characteristics on financial performance, the mediating role of financial decisions, and the moderating role of digital transformation in strengthening the effect of financial decisions on performance. The proposed framework focuses on direct, mediating, and moderating relationships among managerial characteristics, financial decisions, financial performance, and digital transformation. Financial decisions are conceptualized through capital structure, investment, and working capital management, while financial performance is reflected in profitability, value creation, and strategic outcomes. By clarifying these relationships, the paper offers a focused conceptual integration that supports future empirical research on SME financial behavior and performance.
Ngoc et al. (Tue,) studied this question.