The Nexus Between Leadership Style and Performance of Small and Medium Scale Enterprises in Nigeria

Abstract

The right leadership style can facilitateemployees motivation, inspiration, and persuade them to accomplish their individual and organizational goals with the support of management. Many SMEs in Nigeria do not include their staff in the decision-making process due to a lack of strong leadership abilities, which hinders their capacity to flourish. This study investigated how the leadership styles of SME in Asaba, Delta State impacts the organizational efficiency of those businesses. The study gathered information from SME managers and owners using a cross-sectional survey research methodology. The study found a weak but positive nexus between authoritarian leadership style and performance of SME. The study also discovered that the performance of SMEs in Delta State is significantly impacted by democratic leadership style. As a result, it may be concluded that a democratic leadership style impacted positively on SME performance in Delta State at the rate of 17%. Finally, the study concludes that laissez-faire leadership has the highest positive impact on the performance of SMEs in Delta State. This indicated that laissez-faire leadership had the most significant impact amongst the three leadership styles or philosophies examined. It showed that Delta State's small and medium-sized firms would perform 48% percent better for every 1 percent increase in Laissez-Faire leadership. Therefore, this study recommends that in SME management, a laissez-faire leadership style should be applied in appropriate situations to foster creativity.