Abstract
This research intends to provide the theoretical evidence on the relationship between leadership style and organizational performance of small medium enterprises (SMEs) in East Malaysia.  The growth organizational performances among SMEs in East Malaysia have been at stagnant stage, as they are not able to respond to unforeseen issues due to weak leadership. The SMEs in East Malaysia are losing their competitive advantages as compared to West Malaysia. There is lack of motivation among the followers working in SMEs in East Malaysia as employees do not put extra effort in their tasks. There is absence of creativity in workplace as employees have not been giving any productive output from a long time. Previous research have documented that there are relationships between leadership style and organizational performance in SMEs in East Malaysia. The current study steps forward to contribute to gaps in body of knowledge by looking at the effects that occur due to different leadership style and its influence on the organizational performance in SMEs in East Malaysia. The nature of this study add to the existing literature by integrating the theory and evidence that could enhance organizational performance.
Highlights
Organizational performance is the performance of any organization can be judged by examining their final outcomes after the implementation of certain plan or procedure
The second common trend among past literature reviews is decision making is shared by subordinates with the presence of an explanatory metanarrative under democratic leadership (Nagendra and Farooqui, 2016; Hudon and Rouillard, 2015)
The irregularity among past literature reviews is increased in employee turnover rate if the transactional leadership in small medium enterprises (SMEs) in East Malaysia are not able to motivate employees to remain enthusiastic in their job position, the employees would want to join other organizations that practice charismatic leadership, transactional leadership would not increase organizational performance (Nagendra and Farooqui, 2016; Obiwuru, et al, 2014)
Summary
Organizational performance is the performance of any organization can be judged by examining their final outcomes after the implementation of certain plan or procedure. Based on leadership performance, reviews indicate serious issues in leadership in Sarawak Energy Berhad with a rating score of 3.2, such issues include career progression is based on race and seniority, supervisors and managers do not bother to get people who registered to handover their knowledge and tasks, office politics which affects increment and performance appraisal, slow promotions and lack of career growth (Sarawak Energy Berhad, 2019) Another problem in SMEs in East Malaysia like SEGi University has scored a rating of 2.4 out of 5.0 and 26% approve of CEO, from the reviews, as there is a very slow career and salary growth, increasing workload, fussy bosses who cheat to get work done, the management do not know what they are promising and non-flexible management, most of the staffs are unhappy and less satisfied (SEGi University, 2019).
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