The study investigated the relationship between entrepreneurial leadership and innovative behavior within the packaged water industry in Rivers State, with a focus on the moderating role of strategic thinking and risk-taking. The study utilized a census of 298 representatives (owners, managers and supervisors) of 85 functioning packaged water companies based on a cross sectional research design and positivist paradigm. The questionnaire was a structured, closed-ended questionnaire based on other existing scales on entrepreneurial leadership and innovative behavior, and with a 5-point Likert scale to collect data. The reliability of the instrument was verified in a pilot test as the Alpha coefficients of Cronbach were found to be between 0.770 and 0.850. The Pearson Product Moment Correlation Coefficient was used in the analysis of data. The results show that there is a strong positive correlation between strategic thinking, risk-taking behavior, and such innovative behaviors as the generation of ideas, championing, and implementation. Strategic thinking showed a positive relationship with innovative behavior with a moderate positive correlation whereas risk-taking behavior had a positive correlation as well. This implies that innovations in any small business are highly dependent on entrepreneurial leadership, especially in terms of visionary planning and readiness to take risks. Finally, with entrepreneurial leadership, the culture of innovation is highly stimulated. It is suggested that the small business in the packaged water sector ought to work towards instilling strategic thinking, and risk taking in a calculated manner in their organizations. This is possible through the introduction of strategy workshops, cross-functional teams in the area of an environmental scanning and the innovation challenge programs, which promotes experimentation and failure tolerance in order to increase the overall organizational resilience and competitiveness.