Nexus between Leadership Styles and Performance of Small and Medium Manufacturing Firms in Kenya

Abstract

This paper focuses on the nexus between leadership styles and performance of small and medium manufacturing firms (SME’s) in Kenya. The leadership styles examined include the transformational, transactional and passive/avoidant behaviour. This study is underpinned in the Dynamic Capabilities View of the firm and sought to examine whether leadership styles influences the performance of manufacturing SME’s. A triangulation of both quantitative and qualitative designs was used. Primary data was collected using a self-administered questionnaire from a sample of 115 firms obtained from a population of 165 manufacturing SMEs. Hypotheses were tested using bivariate correlations and regression analysis. The results indicated that leadership styles positively and significantly influences manufacturing SME’s performance (r =.259**, P = .005). Secondly, most of the CEO’s in these firms practices transactional leadership style (composite mean score, 3.54), followed by transformational leadership (composite mean score, 3.42) and lastly passive/avoidant leadership (composite mean score, 3.12).Thirdly, this study found that transformational leadership style is the best in these firms (r =.297**, P =.001; β1=.208, P=.013). The influence of transactional leadership style (r = .180, P =.054) and passive/avoidant leadership behaviour (r = .169, P = .071) was found to be insignificant.