<![CDATA[This research analyzes the influence of entrepreneurial leadership and entrepreneurial orientation on business performance, with innovation capability serving as a mediating variable. The study focuses on bakery micro, small, and medium enterprises (MSMEs) in Medan, which face challenges related to limited innovation resources and leadership practices. Using a quantitative research method, data were collected from 100 bakery entrepreneurs through structured questionnaires and interviews. The variables Entrepreneurial Leadership, Entrepreneurial Orientation, Innovation Capability, and Business Performance were analyzed using Structural Equation Modeling–Partial Least Squares (SEM–PLS) to test both direct and indirect relationships. The findings demonstrate that entrepreneurial leadership and entrepreneurial orientation have significant positive effects on business performance, both directly and indirectly through innovation capability. Entrepreneurs who display visionary, proactive, and risk-taking behaviors tend to enhance their firm’s innovation capacity, which in turn improves productivity, customer satisfaction, and financial outcomes. The study confirms that innovation capability acts as a strategic bridge, translating entrepreneurial traits into sustainable performance. Bakeries that adopt participative leadership, continuous product innovation, and modern marketing (e.g., influencer collaborations, natural ingredients, proofing technologies) achieve higher competitiveness and long-term success.]]>
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