7. Effects of Leadership Style on Organizational...

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Australian Journal of Business and Management Research Vol.1 No.7 [100-111] | October-2011 100 EFFECTS OF LEADERSHIP STYLE ON ORGANIZATIONAL PERFORMANCE: A SURVEY OF SELECTED SMALL SCALE ENTERPRISES IN IKOSI-KETU COUNCIL DEVELOPMENT AREA OF LAGOS STATE, NIGERIA Obiwuru Timothy C. Department of Actuarial Science University of Lagos, Nigeria Okwu, Andy T. (Corresponding Author) Department of Economics, Banking and Finance Babcock University, Nigeria E-mail: [email protected] Akpa, Victoria O. Department of Business Administration and Marketing Babcock University, Nigeria Nwankwere, Idowu A. Department of Business Administration and Marketing Babcock University, Nigeria ABSTRACT This study has investigated the effects of leadership style on organizational performance in small scale enterprises. The major objective was to determine effect of leadership styles on performance in small scale enterprises. Transformational and transactional leadership styles were considered in this study. Transformational leadership behaviours and performance/outcome considered relevant in the study were charisma, inspirational motivation and intellectual stimulation/individual consideration; and effectiveness, extra effort and satisfaction, respectively. Transactional leadership bahaviours and performance/outcome variables were constructive/contingent reward and corrective/management by exception; and effort, productivity and loyalty/commitment, respectively. The study followed a survey design, and employed evaluative quantitative analysis method. Analysis was based on primary data generated through a structured Multifactor Leadership Questionnaire (MLQ) administered on respondents. Responses to research statements were scaled and converted to quantitative data via code manual developed for the study to enable segmentation of the data responses into dependent and independent variables based on leadership behaviours and associated performance variables. OLS multiple regression models were specified, estimated and evaluated. The result showed that while transactional leadership style had significant positive effect on performance, transformational leadership style had positive but insignificant effect on performance. The study concluded that transactional leadership style was more appropriate in inducing performance in small scale enterprises than transformational leadership style and, therefore, recommended transactional leadership style for the small enterprises with inbuilt strategies for transition to transformational leadership style as the enterprises developed, grew and matured. Keywords: Leadership style, Effects, Performance, Small Scale Enterprise 1. INTRODUCTION The concept and definition of leadership and style may differ from one person, or situation, to the other. The word leadership has been used in various aspects of human endeavour such as politics, businesses, academics, social works, etc. Previous views about leadership show it as personal ability. Messick and Kramer (2004)

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