Transformational Leadership and Business Performance: An Insight From Technology-based SMEs in Malaysia

Abstract

Many researches have been conducted on leadership styles and business performance in Malaysia. However none of these researches specifically studied transformational leadership and business performance from the perspectives of technology-based SMEs. This paper serves two purposes. First, the authors aim to identify the critical dimensions of transformational leadership and business performance. Second, this paper intends to determine the relationship between transformational leadership and business performance. This study used a quantitative method approach using survey questionnaire. 86 respondents who are the owners or top managers of technology-based SMEs in Malaysia took part in the study. The analyses conducted involved factor, reliability and correlation analysis. The results of factor analysis proposed three dimensions representing transformational leadership, i.e. enthusiastic optimism, idealized influence and individual consideration which is contrary to the four dimensions theorized by Bass and Avolio (2004). In addition, business performance generated a one-factor-dimension. The correlation analysis indicates there is a significant and positive correlation between transformational leadership and business performance. The originality of this paper lies on being the first to examine the transformational leadership and business performance in technology-based SMEs in Malaysia.