EFFECT OF LEADERSHIP STYLES ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES

EFFECT OF LEADERSHIP STYLES ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Leadership is one of the most essential factors that influence the organizational success. It helps to direct, guide and persuade the employees of any organization towards achieving its goals and objectives. Effective leadership is a pre-requisite for effective accomplishment of each business tasks (Talat, Sana, Samra & Abeera, 2015). Furthermore, effective leadership supports management development and training, and also provides the building block for organizational performance. Abdulazeez, Hakeem and Bisayo (2014) opine that leadership in business can affect both everyday activities and people; it can also determine participation, attention and acknowledgement of groups and individuals within an organization. Leadership style and its effects on the organizational performance have been a subject matter and core issue of many scholars such as (Puni, Ofei & Okone 2014). Leadership styles cover all aspects of dealing within and outside of an organization, handling or dealing with conflicts, helping and guiding the workforce to achieve or accomplish their tasks (Talat et al 2015).

Thus, Leadership style assists organizations to be more creative and profitable. Organizations exist in varying capacities in Nigeria and they are characterized as small, medium, or large scale businesses. World Bank report in (2008) estimates that, out of twelve (12) million businesses of all sizes operated in various parts of Nigeria, over 70% are small scale businesses. Though, large scale enterprises left alone cannot fast track the desired development and growth challenges that would venture Nigeria as one of the first 20 most viable economies in the world by the year 2020. Consequently, it becomes very 2 vital for the development of the small and medium scale enterprises (SMEs) in order to take care of some local/rural developmental needs. SMEs are absolutely vital to the survival and growth of every business in organizations. However, in small and medium scale enterprises (SMEs) the owner/manager has different leadership roles to play; he is the chief risk bearer, chief administrator and strategy implementer, crises solver, policy maker etc. towards organizational goals. However, the extent of success depends on the style of leadership adopted and the environmental situation created for employees to function well (Puni, Ofei & Okone 2014). Lewin, Lippit and White (1939) view that leadership style is one of the factors that determines owner/manager's choice of decisions making process in organizations. In reality, what is found in various organizations, including SMEs, is one (or a combination of two or more) of the leadership styles predefined by authors. Some owner/managers run their businesses using autocratic style where he/she takes all the decisions, issues instructions and expects others to carry them out without demand or deliberation. In some other organizations, a participative style exists (where the owner makes decision on the basis of agreement) works best. However, in some others, leadership roles may be highly visible and widespread, time committed, while at times, the leadership roles may be less demanding and require a brief ceremonial performance with the details delegated to subordinates (Akoma, Adeoye, Binuyo & Akinwole 2014, Lewin at al 1939). Therefore, the way in which SMEs owner/manager chooses to exercise leadership is likely to have a strong encouragement on the organizational performance, motivation and confidence of subordinates. As such, an understanding of leadership is imperative to even SMEs (Uchenwamgbe, 2013). 3 In recent years, leadership styles have drawn more attention due to its role in the failure or success of an organization. Puni, Ofei and Okone (2014) view leadership style as one of the most important human resources-related effect, and most deliberated topic in management and psychology.

1.2 Statement of the Problem

Organizational system in Nigeria is yet to be fully conversant with the development and relationship that leadership style has with their subordinates in the workplace especially Small and Medium Scale Enterprises (Ahmad, Carlene & Nuttawuth 2013). At the same time, business units in their varying capacities operate under the same environment in Nigeria and are faced with similar opportunities, problems and prospects depending on their respective industry. It therefore, becomes very pertinent to examine what constitutes the failure of SMEs in Nigeria. According to a report by Small and Medium Enterprise Development Agency of Nigeria SMEDAN (2008), only about five to ten percent of young companies survive and grow to maturity and most SMEs die within five years of existence. Various challenges which seem to confront SMEs around the globe include recession, poor management, and low trade barrier from currency barrier among others (SMEDAN 2012). Studies, examples are (Obiwuru et al, 2011; Ahmad et al, 2013; Uchewangbe 2013; & Akoma et al, 2014) Abdulazeez et al, 2014) also put forward many factors as the possible causes of early 5 failure of SMEs in Nigeria. These can be attributed to internal factors of an organization, such as; lack of access to finance, poor infrastructural facilities, lack of market research, lack of expertise and lack of management abilities among the key players in the organizations. All of these constitute factors that inhibit many SMEs from achieving their objectives (Obiwuru et al, 2011).

Format: MS Word

Chapters: 1 - 5, Preliminary Pages, Abstract, References
Delivery: Email

No. of Pages: 115

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