Relationship between Leadership Styles in Strategy Implementation and Performance of Small and Medium Manufacturing Firms in Thika Sub-County, Kenya

Abstract

This paper examined the relationship between leadership styles practiced during strategy implementation and the performance of small and medium manufacturing firms (SME) in Thika Sub-County in Kenya. The three leadership styles investigated in this study included the transformational, transactional and passive/avoidant leadership behavior based on Avolio’s and Bass definitions. The study is underpinned in the Dynamic Capabilities View of the firm where a leadership style is recognized as one of the key dynamic capabilities required by the firm in maintaining superior performance and a competitive edge among the rival firms. A survey questionnaire was used to collect data from 115 firms from the two key industrial subsectors within Thika Sub- County. Guided by the philosophy of logical positivism and for triangulation purposes, this study adopted a mixed research design which incorporated the descriptive, quantitative, and qualitative designs. The bivariate linear correlations and linear regression analysis were used to indicate the relationship between the dependent and independent variables and to test the proposed hypotheses. The study found statistical evidence that a positive and significant relationship exists between leadership styles applied during strategy implementation process and performance of the SME manufacturing firm in Thika Sub-County, Kenya. Secondly, the study results indicated that most of the key leaders (owners and CEO’s) in these firms practiced transactional leadership style followed by transformational style and lastly the passive/avoidant behavior. Thirdly, the study findings revealed that among the three dominant leadership styles practiced in most organizations today, the transformational leadership style is positively and significantly related to SME’s performance. The transactional and passive/avoidant behavior has positive but insignificant relationships with performance of these firms. The findings in this study are in line with other scholars in literature who found out a positive and a significant relationship between organizational leadership and performance. The study concluded that manufacturing firms interested in enhancing their performance and staying ahead of competition should endeavor to practice superior leadership styles starting with transactional leadership and progressively changing to transformational leadership style in the entire process of strategy implementation in their firms.