INFLUENCE OF LEADERSHIP STYLES ON PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES AT NAIROBI CENTRAL BUSINESS DISTRICT IN KENYA

Mwenda Harriet Kinya

College of Human Resource and Development,

Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya

Corresponding Author email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Dr. Allan Kihara

College of Human Resource and Development,

Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya

Dr. Mary Mwanzia

College of Human Resource and Development,

Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya.

CITATION: Kinya, M., H., Kihara, A., Mwanzia, M. (2018). Influence Of Leadership Styles On Performance Of Small And Medium Enterprises At Nairobi Central Business District In Kenya. International Journal of Strategic Management. Vol. 7 (4) pp 37 – 59.

ABSTRACT

Small and Medium Enterprises (SMEs) have a critical contribution in the economy of Kenya. These enterprises employ hundreds of thousands of Kenyans, and make immense contribution to the country’s economic growth. Yet, aside from this important role they do play in the economy, up to 80 percent of these enterprises do not survive their fifth year of operations. One of the key reasons for this situation is that the strategic direction of such firms are limited by the inappropriate leadership styles of the entrepreneurs. It has to be noted that the leader plays a critical role in driving his or her team towards a specified goal. Hence, when the leadership style adopted is inadequate to keep the team motivated, then the organizations is unlikely to realize its goals. In any case, employees are the most important resources in an organization, and the role of the leader is to cause them to give their best. This study focused on four leadership styles; transactional, transformational, participative and laissez faire with a view to suggesting the best style of leadership for an SME. The research was conducted in Nairobi County specifically within the Central Business District (CBD). Chapter two looked at the available literature on the subject, in a bid to lay grounds for the study. In doing so, the sources consulted included books and referred journals articles, thus guaranteeing that the information used in this section was reliable and not just unverifiable opinions. Chapter three delved deeper on how the data to be used in the study was collected and analyzed. In essence, according to Nairobi County Business Licensing Department (2015), we had a total of 1,319 registered SMEs within Nairobi County, which were spread across nine sectors, namely investment, consultancy, contractors, office products, general merchants, electronics, tours and travels, supplies and food retailers. The study adopted a descriptive research design. A sample of 132 organisations was used to collect data. Data collected was analyzed using SPSS software. The study results showed that Transactional Leadership had a positive and significant influence on performance of small and medium enterprises at Nairobi central business district in Kenya. Regression results also showed that transformational leadership style and participative leadership style had a positive and significant effect on performance of small and medium enterprises at Nairobi central business district in Kenya. Finally results showed that laizez farez style of leadership had a negative but significant effect on performance of small and medium enterprises at Nairobi central business district in Kenya. The study concluded that leadership style had an influence on performance of small and medium enterprises at Nairobi central business district in Kenya. The study recommends for inclusion of strategic leadership styles on small and medium enterprises to boost performance.

Key words: Transformational Style of Leadership, Laissez Faire Leadership Style, Performance of SMEs’ in Nairobi Kenya, Participative Leadership Style, Performance

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