The Effect Of Leadership Styles And Entrepreneurial Orientation On The Business Performance Of Small And Medium Enterprises In Nigeria (PDF)

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– The Effect Of Leadership Styles And Entrepreneurial Orientation On The Business Performance Of Small And Medium Enterprises In Nigeria –

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Abstract

The purpose of this study is to investigate the effect of leadership style and entrepreneurial orientation on the business performance of small and medium enterprises in Nigeria. Leadership style and entrepreneurial orientation have been widely touted as a fundamental ingredient for enhancing firm growth.

Consequently, this aimed at examining the effect of leadership style and entrepreneurial orientation and its dimensional variables (innovativeness, risk-taking, and proactiveness) on SME growth (employment, sales, and asset growth).

Using information from 150 SMEs, the results obtained indicated that while leadership style and entrepreneurial orientation had a significant positive association with SME growth (employment and sales growth), most SMEs show a moderate level of entrepreneurial orientation.

Also, following the leadership style and entrepreneurial orientation dimensions, the findings established the emergence of proactive innovation (a combination of proactiveness and innovativeness) which showed a significant positive association on sales growth.

Risk-taking was the only factor that showed a significant influence on employment and asset growth. Based on the findings of this study it was recommended that organizations should adopt the democratic style of leadership and humane management practices in order to adequately commit the workforce to the work activities.

Introduction

1.1 Background of the Study

An effective leader influences followers in a desired manner to achieve desired goals. Different leadership styles may affect organizational effectiveness or performance (Nahavandi, 2002); Entrepreneurs have become the heroes of economic development and contemporary enterprises (Sathe, 2003).

Entrepreneurial orientation is a commonly used measure in the literature (Morris & Kuratko, 2002). This concept is the presence of organizational-level entrepreneurship (Wiklund & Shepherd, 2005).

Some researchers have tried to combine the two concepts into entrepreneurial leadership to explore both leadership and entrepreneurship behavior (Gupta, MacMillan & Suriec 2004; Tarabishy, Solomon, Fernald & Sashkin, 2005).

They have tried to combine entrepreneurship with leadership into a new form of leadership called entrepreneurial leadership. This new leadership model has been used to show both entrepreneurship and leadership behavior (Tarabishy et al, 2005).

In the dynamic, complex, and uncertain competitive environment, a type of entrepreneurial leader who is distinct from the behavioral form of leaders is needed (Cohen, 2004).

This study was designed to examine how leadership styles can affect the development and implementation of entrepreneurial orientation in Small and medium enterprises (SMEs) in Nigeria, SMEs exert a strong influence on the economies of Nigeria.

It also examines the effects of entrepreneurial orientation and leadership styles on business performance. The findings could contribute new knowledge in the fields of leadership and entrepreneurship, especially entrepreneurial leadership.

The development of entrepreneurship across cultures, economies and continents is an essential feature of economic change (Wright & Marlow, 2012). To date, entrepreneurship has become one of the major topics of discussion in the literature as it continues to grow both as a distinct academic discipline, and a recognized career (Alstete, 2008).

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