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Despite the theoretical foundation that links Transformational leadership (TFL) with innovation behavior, previous studies have overlooked on Transformational leadership and innovation behavior at the individual level relationship but paid less attention to how transformational leadership qualities of top leaders would advance innovative work behavior within the organizational setting. To date, the impact of Transformational leadership at a top executive level on employee’s innovative work behavior (IWB) within an organizational setting has not been dealt with in-depth. However, using transformational leadership theory, this study uncovers the pivotal role of innovation culture (IC) and managerial innovation (MI) in the relationship between CEO transformational leadership and employee’s innovation behavior in SMEs. A cross-sectional design with a total of 434 employees from 24 SMEs operating from Rwanda was analyzed using structural equation modeling to evaluate the relationship between the variables developed in the study. The findings of this study support our hypothesized model.