The Impact of Leadership Styles on the Entrepreneurial Orientation of Small and Medium Enterprises in South Africa
Keywords:
Entrepreneurial orientation, leadership style, SMEs, South Africa
Abstract
The critical role Small and Medium Enterprises play in the economic prosperity of nations cannot be understated. SMEs actively contribute towards economic growth and development through their active role as innovators and agents for change. The authors of this paper believe that leadership styles exercised by SME owners have a bearing on the innovative ability of SMEs. Hence, this paper aimed at investigating the impact of leadership styles on the entrepreneurial orientation of SMEs in Polokwane Municipality. A quantitative research method was used and 103 SMEs participated in the survey. The random sampling technique was used. Self-administered questionnaires were utilised to collect data in a survey. Data analysis included descriptive statistics, Pearson’s correlation and regression analysis. Reliability of the data collection instruments was measured using the Cronbach’s alpha. The results indicated that the SMEs display average levels of entrepreneurial orientation. In addition, the results showed that SMEs display average levels of leadership styles inclined towards transformational leadership style. Furthermore, the results showed a significant positive relationship between the independent variables: leadership styles with the dependent variable (EO) of SMEs. SMEs were recommended to provide flexible leadership styles that will make EO to flourish in their businesses. Furthermore, the policy makers and relevant authorities were recommended to devise and implement a consortium of strategies and policies that can increase the level of entrepreneurial orientation among SMEs in South Africa.
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References
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Bahula, M. A. (2013). The impact of entrepreneurial orientation on performance in the metals and engineering industry. Dissertation (MBA). University of Pretoria, South Africa.
Bass, B. M. (1985). Leadership and performance beyond expectation. New York: The Free Press.
Bowen, M., Morara, M. & Mureithi, S. (2009). Management of business challenges among small and micro enterprises in Nairobi-Kenya. KCA. Journal of Business Management, 2(1), 16-31.
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Brijlal, P., Naicker, V. & Peters, R. (2013). Education and SMME business growth: a gender perspective from South Africa. International Business & Economics Research Journal, 12(8), 855-866.
Burns, J. M. (1978). Leadership. New York. Harper & Row.
Covin, J. G. & Slevin, D. P. (1988). The influence of organisation structure on the utility of entrepreneurial top management style. Journal of Management Studies, 25(3), 217-234.
Covin, J. G. & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10, 75-87.
Covin, J. G. & Wales, W. J. (2011). The measurement of entrepreneurial orientation. Entrepreneurship Theory and Practice, 1(1), 1-26.
Fatoki, O. & Garwe, D. (2010). Obstacles to the growth of new SMEs in South Africa: A principal component analysis approach. African Journal of Business Management, 4(5), 729-738.
Fatoki, O. (2012). The impact of entrepreneurial orientation on access to debt finance and performance of small and medium enterprises in South Africa. Journal of Social Science, 32(2), 121-131.
Fatoki, O. (2014). The causes of the failure of new small and medium enterprises in South Africa. Mediterranean Journal of Social Sciences, 5(20), 922-927.
Filler, K. S. (2013). An Analysis of Leadership Styles and Entrepreneurial Orientation of Executives within the Licensed Assisted Living Facility Industry in Indiana. Indiana Wesleyan University.
FinMark Trust. (2015). Financial access and SME size in South Africa. Online at http://www.finmark.org.za/0e91471136eb493c9771c15a0d591dee/finaldownload/downloadida5f7b10bf38c64bc80af7dbaacf46010/0e91471136eb493c9771c15a0d591dee/wpcontent/uploads/2016/01/rep_financial-access-and-sme-size-insa_dec20151.pdf/Accessed on 17 March 2016.
Garwe, D. K. & Fatoki, O. (2012). The impact of gender on SME characteristics and access to debt finance in South Africa. Development Southern Africa, 29(3), 448-461.
Khandwalla, P. N. (1976/1977). Some top management styles, their context and performance. Organisation and Admin Sciences, 7, 21-51.
Kwasi, D. (2015). Resilient leadership: A transformational-transactional leadership mix, Journal of Global Responsibility, 6(1), 99-112.
Lai, A. (2011). Transformational-transactional leadership theory. Online at http://digitalcommons.olin.edu/ahs_capstone_2011/17/Accessed on 15 October 2015.
Lekhanya, L. M. (2013). The use of social media and social networks as the promotional tool for rural small, medium and micro enterprises in KwaZulu-Natal. International Journal of Scientific and Research Publications, 3(7), 1-7.
Lumpkin, G. T. & Dess, G. G. (1996). Clarifying the Entrepreneurial Orientation Construct and linking it to Performance. Academy of Management Review, 21(1), 135-172.
Mahmood, R. & Hanafi, M. (2013). Entrepreneurial Orientation and Business Performance of Women-Owned Small and Medium Enterprises in Malaysia: Competitive Advantage as a Mediator. International Journal of Business and Social Science, 4(1), 82-90.
Manaf, A. H. A. & Latif, L. A. (2014). Transformational Leadership and Job Performance of SMEs Technical Personnel: The Adaptability Cultural Approach as Mediator. Mediterranean Journal of Social Sciences, 5(20), 648-655.
Martin, J. (2015). Transformational and transactional leadership: an exploration of gender, experience, and institution type. Libraries and the Academy, 15(2), 331-351.
Matchaba-Hove, T., Farrington, S. & Sharp, G. (2015). The entrepreneurial orientation- performance relationship: A South African small business perspective. South African Journal of Entrepreneurship and Small Business Management, 7, 36-68.
Miller, D. & Friesen, P. H. (1982). Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strategic Management Journal, 3(1), 1-25.
Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770-791.
Miller, D. (2011). A reflection on EO research and some suggestions for the future. Entrepreneurship. Theory and Practice, 35(6), 873-894.
Mintzberg, H. (1973). Strategy-making in three modes. California Management Review, 16(2), 44-53.
Mohutsiwa, M. (2012). Strategic entrepreneurship and performance of small and medium enterprises in South Africa. Dissertation. University of the Witwatersrand, Johannesburg.
Muchiri, M. & McMurray, A. (2015). Entrepreneurial orientation within small firms: a critical review of why leadership and contextual factors matter. Small Enterprise Research, 22(1), 17-31.
Muneer, S., Iqbal, S. M. J., Rehman, S. U. & Long, C. S. (2014). An Incorporated Structure of Perceived Organizational Support, Knowledge-Sharing Behavior, Organizational Trust and Organizational Commitment: A Strategic Knowledge Management Approach. Pakistan Journal of Commerce and Social Sciences, 8(1), 42- 57
Murimbika, M. (2012). Influence of strategic management practices on the entrepreneurial orientation of South African firms in the financial and business services sector. Dissertation, University of the Witwatersrand, Johannesburg.
Musa, D., Ghani, A. H. & Ahmad, S. (2011). The role of market orientation as a moderating variable in the relationship between entrepreneurial orientation and firm performance. IPBJ, 3(2), 15-31.
Mwangi, M. M. A. & Ngugi, K. (2014). Influence of entrepreneurial orientation on growth of micro and small enterprises in Kerugoya, Kenya. European Journal of Business Management, 1(11), 417-438.
Nahavandi, A. (2006). The art and science of leadership (4th Ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Oncer, A. Z. (2013). Investigation of the effects of transactional and transformational leadership on Entrepreneurial Orientation. International Journal of Business and Social Research, 3(4), 153-166.
Palalic, R. & Busatlic, S. (2015). Exploratory research on relationship between entrepreneurial orientation dimensions and business performance and growth of fast and slow growing small and medium enterprises in Bosnia and Herzegovina. International Journal of Business and Management, 10(2), 15-30.
Panagopoulos, N. G. & Avlonitis, G. J. (2010). Performance implications of sales strategy: the moderating effects of leadership and environment. International Journal of Research in Marketing, 27(1), 46-57.
Shahraki, M. R. & Bahraini, Z. (2013). An examination of the relationship between transformational leadership with entrepreneurial orientation in organization (Case Study: Mobin Petrochemical Company- South Pars). International Journal of Advanced Studies in Humanities and Social Science, 1(4), 274-289.
Soininen, J. (2013). Entrepreneurial Orientation in Small and Medium-Sized EnterprisesduringEconomicCrisis.Onlineatwww.doria.fi/bitstream/handle/10024/92169/isbn9789522654472.pdf/Accessed on 6 October 2015.
Statistics South Africa. (2016). South Africa unemployment rate 2000-2016 Data Chart.Online at http://www.tradingeconomics.com/south-africa/unemployment-rate/Accessed on 04 April 2016.
Tarsik, N. F., Kassim, N. A. & Nasharudin, N. (2014). Transformational, Transactional or Laissez-Faire: What Styles do University Librarians Practice? Journal of Organizational Management Studies, 2, 1-10.
Van der Merwe, S. P. & de Swardt, G. (2008). Small business owner-managers’ perceptions of entrepreneurship in the Emfuleni district. SAJEMS, 11(4), 449-464.
Van Geenhuizen, M., Middel, R. & Lassen, A. H. (2008). Corporate entrepreneurship in SMEs during the search for discontinuous innovations. Online at http://vbn.aau.dk/files/ Accessed on 26 June 2015.
Wealthwise. (2014). More Women Entrepreneurs Puts Gender Parity Within Reach. Online at http://www.wealthwisemag.com/more-women-entrepreneurs-puts-gender-parity-within-reach/Accessed on 05 May 2016.
Yang, C. (2015). The relationships among leadership styles, entrepreneurial orientation, and business performance. Managing Global Transitions, 6(3), 257-275.
Yong, A. G. & Pearce, S. (2013). A beginner’s guide to factor analysis: Focusing on exploratory factor analysis. Tutorials in Quantitative Methods for Psychology, 9(2), 79-94.
Zulkifli, R. M. & Rosli, M. M. (2013). Entrepreneurial orientation and business success of Malay entrepreneurs: religiosity as moderator. International Journal of Humanities and Social Science, 3(10), 264-275.
Adeniran, T. & Johnston, A. (2011). Investigating the level of internet capabilities of South African small and medium enterprises in changing environments. Online at http://www.zaw3.co.za/index.php/ZA-www/2011/paper/view/450. Accessed on 26 June 2015.
Agbenyegah, A.T. (2013). Challenges facing rural entrepreneurship in selected areas in South Africa. Thesis. North-West University.
Arham, A. F. (2014). The relationship between leadership behaviour, entrepreneurial orientation and organisational performance in Malaysian small and medium enterprises. Thesis, Royal Melbourne Institute of Technology University.
Arham, A. F., Boucher, C. & Muenjohn, N. (2013). Leadership and entrepreneurial success: a study of SMEs in Malaysia. World Journal of Social Sciences, 3(5), 117-130.
Avolio, B. J. & Bass, B. M. (1991). Multifactor leadership questionnaire: (3rded). Manual and sampler set. Redwood City, CA: Mind Garden. Avolio, B. J. & Bass, B. M. (2004). Multifactor leadership questionnaire: (3rded). Manual and sampler set. Redwood City, CA: Mind Garden
Awang, A., Ahmad, Z. A., Asghar, A. R. S. & Subari, K. A. (2010). Entrepreneurial orientation among Bumiputera small and medium agro-based enterprises (BSMAEs) in West Malaysia: Policy implication in Malaysia. International Journal of Business and Management, 5(5), 13-143.
Bahula, M. A. (2013). The impact of entrepreneurial orientation on performance in the metals and engineering industry. Dissertation (MBA). University of Pretoria, South Africa.
Bass, B. M. (1985). Leadership and performance beyond expectation. New York: The Free Press.
Bowen, M., Morara, M. & Mureithi, S. (2009). Management of business challenges among small and micro enterprises in Nairobi-Kenya. KCA. Journal of Business Management, 2(1), 16-31.
Brettel, M., Chomik, C. & Flatten, T. C. (2014). How organisational culture influences innovativeness, proactiveness and risk-taking: fostering entrepreneurial orientation in SMEs. Online at http://onlinelibrary.wiley.com/doi/10.1111/jsbm.12108/pdf/ Accessed on 26 June 2015.
Brijlal, P., Naicker, V. & Peters, R. (2013). Education and SMME business growth: a gender perspective from South Africa. International Business & Economics Research Journal, 12(8), 855-866.
Burns, J. M. (1978). Leadership. New York. Harper & Row.
Covin, J. G. & Slevin, D. P. (1988). The influence of organisation structure on the utility of entrepreneurial top management style. Journal of Management Studies, 25(3), 217-234.
Covin, J. G. & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10, 75-87.
Covin, J. G. & Wales, W. J. (2011). The measurement of entrepreneurial orientation. Entrepreneurship Theory and Practice, 1(1), 1-26.
Fatoki, O. & Garwe, D. (2010). Obstacles to the growth of new SMEs in South Africa: A principal component analysis approach. African Journal of Business Management, 4(5), 729-738.
Fatoki, O. (2012). The impact of entrepreneurial orientation on access to debt finance and performance of small and medium enterprises in South Africa. Journal of Social Science, 32(2), 121-131.
Fatoki, O. (2014). The causes of the failure of new small and medium enterprises in South Africa. Mediterranean Journal of Social Sciences, 5(20), 922-927.
Filler, K. S. (2013). An Analysis of Leadership Styles and Entrepreneurial Orientation of Executives within the Licensed Assisted Living Facility Industry in Indiana. Indiana Wesleyan University.
FinMark Trust. (2015). Financial access and SME size in South Africa. Online at http://www.finmark.org.za/0e91471136eb493c9771c15a0d591dee/finaldownload/downloadida5f7b10bf38c64bc80af7dbaacf46010/0e91471136eb493c9771c15a0d591dee/wpcontent/uploads/2016/01/rep_financial-access-and-sme-size-insa_dec20151.pdf/Accessed on 17 March 2016.
Garwe, D. K. & Fatoki, O. (2012). The impact of gender on SME characteristics and access to debt finance in South Africa. Development Southern Africa, 29(3), 448-461.
Khandwalla, P. N. (1976/1977). Some top management styles, their context and performance. Organisation and Admin Sciences, 7, 21-51.
Kwasi, D. (2015). Resilient leadership: A transformational-transactional leadership mix, Journal of Global Responsibility, 6(1), 99-112.
Lai, A. (2011). Transformational-transactional leadership theory. Online at http://digitalcommons.olin.edu/ahs_capstone_2011/17/Accessed on 15 October 2015.
Lekhanya, L. M. (2013). The use of social media and social networks as the promotional tool for rural small, medium and micro enterprises in KwaZulu-Natal. International Journal of Scientific and Research Publications, 3(7), 1-7.
Lumpkin, G. T. & Dess, G. G. (1996). Clarifying the Entrepreneurial Orientation Construct and linking it to Performance. Academy of Management Review, 21(1), 135-172.
Mahmood, R. & Hanafi, M. (2013). Entrepreneurial Orientation and Business Performance of Women-Owned Small and Medium Enterprises in Malaysia: Competitive Advantage as a Mediator. International Journal of Business and Social Science, 4(1), 82-90.
Manaf, A. H. A. & Latif, L. A. (2014). Transformational Leadership and Job Performance of SMEs Technical Personnel: The Adaptability Cultural Approach as Mediator. Mediterranean Journal of Social Sciences, 5(20), 648-655.
Martin, J. (2015). Transformational and transactional leadership: an exploration of gender, experience, and institution type. Libraries and the Academy, 15(2), 331-351.
Matchaba-Hove, T., Farrington, S. & Sharp, G. (2015). The entrepreneurial orientation- performance relationship: A South African small business perspective. South African Journal of Entrepreneurship and Small Business Management, 7, 36-68.
Miller, D. & Friesen, P. H. (1982). Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strategic Management Journal, 3(1), 1-25.
Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770-791.
Miller, D. (2011). A reflection on EO research and some suggestions for the future. Entrepreneurship. Theory and Practice, 35(6), 873-894.
Mintzberg, H. (1973). Strategy-making in three modes. California Management Review, 16(2), 44-53.
Mohutsiwa, M. (2012). Strategic entrepreneurship and performance of small and medium enterprises in South Africa. Dissertation. University of the Witwatersrand, Johannesburg.
Muchiri, M. & McMurray, A. (2015). Entrepreneurial orientation within small firms: a critical review of why leadership and contextual factors matter. Small Enterprise Research, 22(1), 17-31.
Muneer, S., Iqbal, S. M. J., Rehman, S. U. & Long, C. S. (2014). An Incorporated Structure of Perceived Organizational Support, Knowledge-Sharing Behavior, Organizational Trust and Organizational Commitment: A Strategic Knowledge Management Approach. Pakistan Journal of Commerce and Social Sciences, 8(1), 42- 57
Murimbika, M. (2012). Influence of strategic management practices on the entrepreneurial orientation of South African firms in the financial and business services sector. Dissertation, University of the Witwatersrand, Johannesburg.
Musa, D., Ghani, A. H. & Ahmad, S. (2011). The role of market orientation as a moderating variable in the relationship between entrepreneurial orientation and firm performance. IPBJ, 3(2), 15-31.
Mwangi, M. M. A. & Ngugi, K. (2014). Influence of entrepreneurial orientation on growth of micro and small enterprises in Kerugoya, Kenya. European Journal of Business Management, 1(11), 417-438.
Nahavandi, A. (2006). The art and science of leadership (4th Ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Oncer, A. Z. (2013). Investigation of the effects of transactional and transformational leadership on Entrepreneurial Orientation. International Journal of Business and Social Research, 3(4), 153-166.
Palalic, R. & Busatlic, S. (2015). Exploratory research on relationship between entrepreneurial orientation dimensions and business performance and growth of fast and slow growing small and medium enterprises in Bosnia and Herzegovina. International Journal of Business and Management, 10(2), 15-30.
Panagopoulos, N. G. & Avlonitis, G. J. (2010). Performance implications of sales strategy: the moderating effects of leadership and environment. International Journal of Research in Marketing, 27(1), 46-57.
Shahraki, M. R. & Bahraini, Z. (2013). An examination of the relationship between transformational leadership with entrepreneurial orientation in organization (Case Study: Mobin Petrochemical Company- South Pars). International Journal of Advanced Studies in Humanities and Social Science, 1(4), 274-289.
Soininen, J. (2013). Entrepreneurial Orientation in Small and Medium-Sized EnterprisesduringEconomicCrisis.Onlineatwww.doria.fi/bitstream/handle/10024/92169/isbn9789522654472.pdf/Accessed on 6 October 2015.
Statistics South Africa. (2016). South Africa unemployment rate 2000-2016 Data Chart.Online at http://www.tradingeconomics.com/south-africa/unemployment-rate/Accessed on 04 April 2016.
Tarsik, N. F., Kassim, N. A. & Nasharudin, N. (2014). Transformational, Transactional or Laissez-Faire: What Styles do University Librarians Practice? Journal of Organizational Management Studies, 2, 1-10.
Van der Merwe, S. P. & de Swardt, G. (2008). Small business owner-managers’ perceptions of entrepreneurship in the Emfuleni district. SAJEMS, 11(4), 449-464.
Van Geenhuizen, M., Middel, R. & Lassen, A. H. (2008). Corporate entrepreneurship in SMEs during the search for discontinuous innovations. Online at http://vbn.aau.dk/files/ Accessed on 26 June 2015.
Wealthwise. (2014). More Women Entrepreneurs Puts Gender Parity Within Reach. Online at http://www.wealthwisemag.com/more-women-entrepreneurs-puts-gender-parity-within-reach/Accessed on 05 May 2016.
Yang, C. (2015). The relationships among leadership styles, entrepreneurial orientation, and business performance. Managing Global Transitions, 6(3), 257-275.
Yong, A. G. & Pearce, S. (2013). A beginner’s guide to factor analysis: Focusing on exploratory factor analysis. Tutorials in Quantitative Methods for Psychology, 9(2), 79-94.
Zulkifli, R. M. & Rosli, M. M. (2013). Entrepreneurial orientation and business success of Malay entrepreneurs: religiosity as moderator. International Journal of Humanities and Social Science, 3(10), 264-275.
Published
2017-05-18
How to Cite
Dzomonda, O., Fatoki, O., & Oni, O. (2017). The Impact of Leadership Styles on the Entrepreneurial Orientation of Small and Medium Enterprises in South Africa. Journal of Economics and Behavioral Studies, 9(2(J), 104-113. https://doi.org/10.22610/jebs.v9i2(J).1654
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Section
Research Paper
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