Small and Medium Enterprises (SMEs) play a significant role in Malaysia’s economy and social wellbeing. Employees who are managed by effective leaders sustain the SMEs’ organisational performance and contribute to their success. Leadership effectiveness of managers means leadership that influences the work efforts, effectiveness and satisfaction of the employees.
The constructs such as SMEs, leadership, leadership effectiveness and organisational performance have captured the interest of scholars and practitioners alike. Literature concerning leadership, leadership effectiveness and organisational performance, alongside literature on Full Range of Leadership formulated by Avolio and Bass (1991), was reviewed. The literature highlighted the lack of localised leadership studies as they are either lean towards large organisations or have a Western bias. The studies of leadership and organisational performance in Malaysia are also few in number. Specifically, empirical studies with the constructs of Full Range of Leadership and Outcomes of Leadership in the context of SMEs in Malaysia are limited. The literature concerning SMEs operating in the wholesale subsector of the distributive trade sector in Malaysia was also reviewed to gain more insight into their unique characteristics, challenges and opportunities. The literature highlighted gaps in leadership knowledge and practical skills, and in SMEs’ organisational performance, and included calls for more academic and practical contributions. The calls for improving leadership framework, training and policies to heighten the SMEs performances have motivated this research.
This research focuses on the leadership styles and leadership outcomes of Malaysian managers working in SMEs. This research aims to determine the most dominant leadership styles of the managers and which leadership style is the most effective in influencing the outcomes of leadership. This research also aims to ascertain the difference of the outcomes of leadership between the owner-managers and non-owner-managers.
The three research questions for this research are: 1. What is the most dominant leadership style (Transformational, Transactional and Laissez-faire) manifested by Malaysian managers?
1. What is the most dominant leadership style (Transformational, Transactional and Laissez-faire) manifested by Malaysian managers?
2. Is there a relationship between Outcomes of Leadership with each of Full Range Leadership styles manifested by Malaysian managers? 3. What are the differences in Outcomes of Leadership between owner-managers and non-owner-managers?
3. What are the differences in Outcomes of Leadership between owner-managers and non-owner-managers?
The Full Range of Leadership model formed this research theoretical framework. The three leadership constructs of this model are Transformational, Transactional and Laissez-faire styles, whereas the constructs of the Outcomes of Leadership model are Extra Effort, Effectiveness and Satisfaction. The latest measurement instrument, MLQ (5X Short) was used to measure the Full Range of Leadership and Outcomes of Leadership constructs. The research is aligned to post-positivist paradigm for viewing the world objectively. The quantitative research approach was justified and used for this research. Self-administered online surveys were conducted in order to sample a cross-section of the SMEs’ employees working in the wholesale subsector of the distributive trade sector in Klang Valley, Malaysia. Descriptive and K-mean cluster analyses were used to determine the most dominant leadership style. The mean comparison using analyses of variance (ANOVA) was performed on the Outcomes of Leadership of the managers. Pearson Product-Moment Correlation Coefficient analysis (PPMCC) was performed to find out the relationship of Outcomes of Leadership and Full Range of Leadership.
The research results revealed that Transformational, Transactional and Laissez-faire Leadership styles were manifested in a continuum of different frequencies. The Transformational Leadership was found to be the most dominant style, followed by Transactional and with Laissez-faire in the last place. The managers’ ownership of the company was found to have no significant impact on the Outcomes of Leadership. The Outcomes of Leadership was found to have strong and positive relationship with Transformational Leadership style and a moderate and positive relationship with Transactional Leadership style. However, the Outcomes of Leadership was found to have a weak and negative relationship with Laissez-faire Leadership style.
The principal implication of this research, which benefits the SMEs, is that the Transformational was the most effective leadership style, followed by Transactional Leadership style. Laissez-faire was revealed to be the least effective style. Effective leadership improves the employees’ work effectiveness, satisfaction and willingness to exert additional efforts, which in turn improves the SMEs’ organisational performance.
The research contributes to the body of knowledge, theoretically and empirically. It extends the validity of Full Range of Leadership with localised settings. This research and findings may provide insights to scholars and practitioners for heightening the SMEs’ performance in the critical quest to propel the Malaysian economy through effective organisational performance and leadership.