The Impact of Leadership Styles on the Entrepreneurial Orientation of Small and Medium Enterprises in South Africa

Obey Dzomonda,Olabanji Oni,Olawale Fatoki

doi:10.22610/jebs.v9i2(j).1654

Obey Dzomonda, Olabanji Oni + Show 1 more

Open Access

https://doi.org/10.22610/jebs.v9i2(j).1654

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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, Pearsonâ€™s correlation and regression analysis. Reliability of the data collection instruments was measured using the Cronbachâ€™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.

Highlights

There is growing importance for SMEs in various countries worldwide but most in developing countries (Lekhanya, 2013).Unemployment in South Africa is estimated to be 27.1% (Statistics South Africa, 2016)
The argument of this study was that entrepreneurial orientation is a possible antidote to a plethora of challenges causing SMEs in South Africa to fail
It was deduced that leadership style significantly predicts entrepreneurial orientation (EO) of SMEs

Summary

Introduction

There is growing importance for SMEs in various countries worldwide but most in developing countries (Lekhanya, 2013).Unemployment in South Africa is estimated to be 27.1% (Statistics South Africa, 2016). As remarked by Abor and Quartey (2010), SMEs form a large percentage of formal business entities in South Africa, contributing above 50% towards total economic activity in the country This contribution is sufficient to alert policy makers of how significant this sector is to the economy of South Africa. According to Adeniran and Johnston (2011), the statistics of small businesses dying every year is recurrent and is recorded to be at least 70% and 80% at most, which is extremely high Given such alarming statistics, debate has risen among scholars and policy makers whether this sector carries the so much anticipated solutions to a plethora of challenges facing South Africa. The random failure of SMEs is due to the weaknesses in their strategic framework and their inability to adopt EO (Awang, Ahmad, Asghar & Subari, 2010)

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