In today’s dynamic business landscape, small and medium enterprises (SMEs) must cultivate readiness for organisational change to remain resilient and competitive. This study investigates factors influencing employee readiness for change within SMEs in Klang Valley, Malaysia, focusing on self-efficacy, transformational leadership, and effective communication. Additionally, it examines the role of employee engagement as a mediator in the relationship between leadership and change readiness and organisational culture as a moderator for self-efficacy and communication. Using a quantitative approach, data were collected from 384 SME employees and analysed with Partial Least Squares Structural Equation Modeling (PLS-SEM). Results reveal that self-efficacy, leadership, and communication significantly impact readiness for change, with employee engagement and organisational culture enhancing these relationships. The study’s findings underscore the importance of fostering a supportive culture, transparent communication, and confidence-building practices to prepare employees for change. These insights offer practical strategies for SME leaders to boost adaptability, align employee attitudes with organisational goals, and promote resilience in a rapidly evolving business environment.
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