Net Journal of Social Sciences

Vol. 1(2), pp. 54-60, December 2013

ISSN: 2315-9774
Full Length Research Paper

Effects of strategic leadership styles on organisational

development in small and medium enterprises (SMEs)
in Lagos, Nigeria
Olajide Patrick Oladele1, Niyi Israel Akeke1*, Obawale Simeon Adebisi1 and Stephen
Oluwafemi Adeusi2
1
Department of Business Administration, Faculty of Management Sciences, Ekiti State University, Ado Ekiti, Ekiti State,
Nigeria.
2
Department of Banking and Finance, Faculty of Management Sciences, Ekiti State University, Ado Ekiti, Ekiti State,
Nigeria.
Accepted 22 October, 2013

ABSTRACT

The study examined the effects of strategic leadership styles on organisational development in Small and
Medium Enterprises; with a view to highlight the link between strategic leadership and the development of
small and medium enterprises in Nigeria. The study was conducted in Lagos state. Data for the study were
generated through the use of structured questionnaire and administered on operators of SMEs in the study
area. A two-stage sampling technique was used for the study. At the first stage, a total number of 3,900
SMEs registered with National Association of Small and Medium Scale Enterprises (NASME); Small and
Medium Enterprises and Distributive Group of Lagos Chamber of Commerce and Industry (LCCI); and
Nigerian American Chamber of Commerce (NACC) in Lagos State were purposively selected. At the second
stage, a total of three hundred and ninety (390) SMEs were randomly sampled with a sample fraction of
10%. Data collected were analyzed using the mean, standard deviation and analysis of variance. The study
revealed that supportive, inspirational and commanding leadership styles are statistically significant
leadership styles influencing organisational development in SMEs, hence, concluded that supportive,
inspirational and commanding leadership styles of the strategic leadership styles were determinants of the
success of SMEs in Nigeria.

Keywords: Strategic leadership, organisation development, marketing concentration strategies, SMEs.

*Corresponding author. E-mail: [email protected].

INTRODUCTION

The small business sector is recognized as an integral low investment cost as well as the development of
component of economic development and a crucial entrepreneurial capability and indigenous technology.
element in the effort to lift countries out of poverty Ogujiuba et al. (2004) in their work, observe that apart
(Wolfenson, 2001). Small and Medium Scale Enterprise from increasing per capita income and output, SMEs
(SMEs) are engine of economic growth, job creation, create employment opportunities, enhance regional
poverty reduction and catalysts for socio-economic economic balance through industrial dispersal and
transformation in developing countries. They have not generally promote effective resource utilisation
only been the means through which accelerated considered important to engineering economic
economic growth and rapid industrialization have been development and growth.
achieved (Harris et al., 2006a, b) but also a veritable tool This explains the reason why policy makers at various
for the achievement of national economic objectives at levels of government in Nigeria have continued to focus
 Oladele et al. 55

attention at boosting the performance of small firms the potential value to the economy of Nigeria.
particularly those engaged in using local raw materials as The potentials and opportunities for SMEs to rebound
input for industrial production. Many of these attentions and play a crucial role in the economic growth and
have come in the form of institutional framework and development plans of Nigeria are enormous (Onugu,
financial support. Despite, SMEs have not performed well 2005). Improved understanding of strategic leadership
because of what Onugu (2005) identified as managerial and its effect on the development of SMEs will help them
and marketing problems among others. Thus, SMEs to meet these performance expectations-contributions to
must prepare and adapt to the fast changing business growth, vision 20:2020, and the millennium development
environment. Suffice to say that efforts of SMEs goals. Hence, this study seeks to analyse the effect of
operators must be geared toward organisation strategic leadership styles on organisational development
development (OD) activities. The choice of OD is in Small and Medium Enterprises (SMEs).
necessary because it focuses on managing emerging
change.
In implementing organisation development intervention, LITERATURE REVIEW
the SMEs can take these three marketing concentration
strategies for growth: the small business operators can The importance of competent leadership for planning and
develop new markets for its products, which involves implementing a significant organisation change effort
expanding from a local or a regional market to a national cannot be overemphasised. As individual predestination
or international market (Levratto, 2002); they can come in is determined by his DNA, so, the predestination of every
form of product innovation that deals with creating new organisation small business inclusive is contingent on its
products for present and prospective customers (Roper genetic code for growth and survival (Glaser, 2006).
and Love, 2002); and lastly, can deal with the Taking a look at the global business environment
development of the firm’s networks or relational capital today, one would find that competition is complex,
which implies collaboration and partnerships with challenging, and filled with competitive threats and
customers, suppliers, distributors, competitors and other opportunities for firms. It is only organisations with
organisations such as consulting firms and research effective leadership practices, as Ireland and Hitt (2002)
centres (Gulati, 1998). The use of collaborations is maintained, that can help to enhance performance since
essential to SMEs since they cannot possess all the they would be able to bring about change in the turbulent
necessary resources but can share with others human, business environment (Burke, 2002). Moreover,
financial, and relational capital to effectively engage in organisations are a reflection of their top-level leaders
market growth strategies. (Hambrick and Mason, 1984). Since the way top-level
According to Kotey and Meredith (1997), fundamental (executives) have an impact on organizational
choices available to SMEs in terms of organisational performance through their leadership (Phipps and
development are made by their CEO/owner-manager or Burbach, 2010) have been stressed in the field of
founder. There is no gainsaying therefore to reason that strategic leadership, this work adopts the strategic
entrepreneurs’ knowledge and skills, as well as their leadership paradigm in order not to focus on the
strategic orientation with respect to new markets, new characteristics of the relationship between leaders and
products, and new technologies will influence the their immediate followers but, rather, on how the CEOs of
organisation. In turn, this level should have an impact on the firm influences the strategic process of organizational
the firm’s performance in terms of growth, productivity, development.
profitability as well as overall contribution to the nation’s Hitt et al. (2005) define strategic leadership as the
economy. This view consent to Abbas and Asghar (2010) ability to anticipate, envision, maintain flexibility and
assertion that, launching radical changes and maintaining empower others to create strategic change as necessary.
it requires different leadership styles orientation with risk Ireland and Hitt (1999) believe that strategic leadership
taking attitude. Thus, Bennis (1995) in Abbas and Asghar may prove to be one of the most critical issues facing
(2010) identified four leadership styles: commanding, organizations. They further contend that without strategic
logical, inspirational, and supportive that has strong leadership, the probability that an organization can
relation with the development of change. achieve superior or even satisfactory performance when
Undertaking this research has been justified on the confronting the challenges of the global economy will be
basis of the identification of the gap in literature of greatly reduced. Strategic leadership entails the creation
organisational development intervention in SMEs. While of an environment that will support the achievement of
the importance of SMEs to nations’ economic growth is organizational goals and the role of monitoring the
recognised, researchers have not only provided a clear external environment to take advantage of opportunities
link between strategic leadership and organisational and to defend against threats (Gortner et al., 1987). It
performance as development measures of SMEs but also involves making decisions regarding the organization’s
the expected role of strategic leadership styles in products, services and markets, the selection of
changing the future economic importance of SMEs and executives, the allocation of resources to primary
 Net J Soc Sci 56

organizational components, and the formulation of instance, Saiwongpanya (2007) examined the
organizational goals and strategies (House and Aditya, relationship between strategic leadership and
1997). organisational success focusing on the Private Industrial
Goleman et al. (2002) argue that to be a strategic Sector in Lampang, Thailand. Both the qualitative and
leader in a successful organization, there is need to quantitative method of data collection was used.
ensure that all participants are aligned with a common Descriptive statistics as frequency, percentage, mode,
vision, with shared objectives and goals to which people and cross tabulation, inferential statistics with Chi-square
can be dedicated. Alignment means everyone’s work test statistics, and ANOVA test statistics were used for
forms part of the pursuit of a larger purpose embodied in analysing the data. An important result to emerge from
the products or services provided by the organization. this research is that the greater the complexity and
This alignment means that everyone has been convinced competition the greater the need for strategic leadership
that they make a difference to the success of the style. Conversely, the simpler the industry and lower the
organization (Mungonge, 2007). competition, the lesser the need for strategic leadership.
Hitt et al. (2005) believe that expressions of vision and Moreover, strategic leadership is the significance for
mission are essential characteristics of strategic every category of private industry in Lampang, which
leadership. What it means is that strategic leadership enhances management effectiveness and organisational
discards discredited systems and desires instead success. They require all elements of strategic leadership
maximize employee support and cooperation in pro- framework: visionary leadership; charismatic leadership;
active ways, so that together they can assist an and transformational leadership for managing the
organization to achieve its perceived vision. This, organisation. Though the study maintained that the
however, requires a methodology that is pragmatic, greater the complexity the greater the need for strategic
efficient and suitable throughout the organization. leadership style, it did not unearth which strategic
In other words, no matter how inspiring a vision leadership style(s) would be more appropriate for dealing
strategic leadership may have of their organization, such with changing business competitive landscape.
visions can only be translated into reality by the action of Wanasika (2008) integrates essential strategic leader
the people. It is for this reason that strategic leadership characteristics necessary to effectively manage
needs to be aware of the impact that its creative power globalization and steer the organization towards better
has on current and future corporate success. strategic focus with respect to environmental turbulence.
It has been suggested that organization leaders have Essential strategic leader characteristics are future
roles to play in order to implement a clear vision that orientation, propensity to take action, propensity to take
capitalise on change: open communication, create an risks, and absorptive capacity. Though the study
atmosphere that values uniqueness and diversity, maintained that combinatory effects of strategic leader
marshal the wonders of individual imagination, ask others characteristics are essential for effective strategic focus,
within the teams and across divisions for guidance in it did not make known the interactive effects of these
making headway toward common goal, nurture variables and how they are interrelated.
innovation that leads to inspired breakthrough, and
encourage all to speak up (Glaser, 2006).
It is through leadership that organizational members METHODOLOGY
are able to achieve senior management’s ideal vision of The study was carried out in Lagos State, Nigeria. Data for this
the future organization. The extent of the gap between study were generated through the use of structured questionnaire.
the current organization and the ideal organization can The copies of the questionnaire were administered on operators of
have an impact on the success of the change initiatives. SMEs engaged in production activities in the study area. A two-
If the gap is sufficiently large, change efforts are likely to stage sampling technique was used for the study. At the first stage,
a total number of 3,900 SMEs registered with National Association
be frustrating and potentially devastating, because of Small and Medium Scale Enterprises (NASME); Small and
members will perceive the change either too threatening Medium Enterprises and Distributive Group of Lagos Chamber of
or impossible to achieve (Hitt et al., 1996). Commerce and Industry (LCCI); and Nigeria and American
Organisational development and change require Chamber of Commerce (NACC) in Lagos State were purposively
leadership that will articulate an organisational vision for selected.
sustaining the change. Therefore, the articulation of an At the second stage, a total of three hundred and ninety (390)
SMEs were randomly sampled out of 3,900 SMEs with a sample
organizational vision is vital. According to Collins and fraction of 10%. The data collected were analysed using descriptive
Porras (1996), organizations that enjoy enduring success analysis to characterize the respondents and the sampled firms
have core values (essential and enduring tenets of while analysis of variance was used to measure the effect of
organisation) and a core purpose (organisation reasons strategic leadership styles on organisational development in Small
for being) that remain fixed while their business strategies and Medium Enterprises (SMEs). Strategic leadership style was
measured on four leadership styles: logical, inspirational,
and practices endlessly adapt to a changing world.
commanding, and supportive styles. Organizational development
Among the research works on strategic leadership and was measured on three variables; markets, products and network.
organisational performance are stated as follows: For Market dimension was determined by increasing sales of existing
 Oladele et al. 57

Table 1. Organizational development in SMEs (n = 280).

Variable Mean Standard deviation Minimum Maximum

Strategic Orientation
Development of new markets and products 5.27 0.25 1 5
Introduction of new technologies 3.49 1.01 2 3
Development of networks
Distribution partnerships 2.25 0.85 1 4
Design and R&D partnerships 1.64 0.56 1 3
Marketing partnerships 3.56 0.76 1 5
Development of Markets
Sales exported / sales 4.64 1.12 2 4
Frequency of prospecting for new markets 2.32 0.22 2 4
Development of products
Product R&D budget / sales 4.53 0.87 1 4
No. of R&D employees / no. of employees 3.65 0.65 1 5
Sales of new and modified products / sales 2.34 1.32 2 3

products to existing markets (market penetration) and finding new stood at an average of 3.65, standard deviation of 0.65, a
markets for existing products (market development). minimum of 1 and maximum of 5 while the sales of new
Products dimension was determined by creation of new products
for existing markets (product development), and creating new
and modified products/sales had a mean value 2.34, S.D
products while for new markets (diversification). The level of of 1.32 minimum of 2 and maximum of 3. It is inferred
network development was measured by the number of distribution, from the above that the practices related to the
marketing, design and R&D partnerships established by a firm with development of networks are being employed to a
customers, suppliers and other third-parties such as research relatively low extent. The developments of markets are
centres. The motivation for the measurement of these variables is being pursued to a high extent except the frequency of
based on similar studies such as St-Pierre (2003), Raymond and
St-Pierre (2003) and St-Pierre and Mathieu (2003). prospecting for new market. Product developments are
also being pursued to a reasonable level except that
product research and development budget and average
RESULTS AND DISCUSSION number of research and development employees are low.

Table 1 shows the descriptive statistics of variables of

Leadership styles in SMEs
organizational development via development of networks,
development of markets, and development of products. Four different type of leadership style were identified.
The strategic orientation of sampled SMEs as measured These are commanding leadership style, logical
by development of new markets and products has a leadership style, inspirational leadership style and
mean value of 5.27; standard deviation of 0.25, supportive leadership style. Each of these styles has
introduction of new technologies has a mean value of certain differentiating characteristics that were identified
3.49 and standard deviation of 1.01. Specifically on and analysed in Tables 2, 3, 4 and 5
development of networks, distribution partnership had a Table 6 shows the influence of strategic leadership
mean value of 2.25, standard deviation of 0.85, a styles on organizational development in SMEs. The result
minimum value of 1 and maximum of 4. Design and shows that supportive leadership style (F = 210.96, p <
research development partnership had a mean value of 0.05), inspirational leadership style (F = 42.81, p < 0.05),
1.64, S.D of 0.56, minimum of 1 and maximum of 3, and commanding leadership style (F = 5.55, p < 0.05)
development of marketing partnership had a mean value were statistically significant leadership styles influencing
of 3.56, S.D of 0.76, minimum of 1 and maximum of 5. organizational development in SMEs.
Considering the development of market, sales had a
mean value of 4.64, S.D. of 11.12, minimum of 2 and
maximum of 4. Frequency of prospecting for new markets Conclusion
had an average value of 2, standard deviation of 0.22, a
minimum level of 2 and maximum of 4. On the Based on the above result, the study concluded that
development of products, product R&D budget/sales had supportive, inspirational and commanding leadership
a mean value of 4.53, S.D of 0.87, minimum of 1 and styles of the strategic leadership styles which have been
maximum of 4. The average number of R&D employees found statistically significant in influencing organisational
 Net J Soc Sci 58

Table 2. Mean of commanding leadership style. Table 3. Mean of logical leadership style.

Commanding leadership style Mean Logical leadership style Mean

Establishing objectives 3.75 Specifying new directions 3.55
Strong work ethic 3.69 Adapts easily to development 3.49
show loyalty 3.57 Be reliable 3.36
Provide incentives 3.24 Rely on logical arguments 3.33
Show initiative 3.33 Preserve in their work 3.29
Maintain control 3.38 Achieve objectives 3.32
Be self confident 3.55 Be logical 3.28
Insist on meeting goals 3.07 Offer challenging assignments 3.26
Personal status 3.64 Job fulfilment 3.17
Concrete actions 3.43 The right timing 3.24
Hard driving 3.26 Competent 3.32
Accomplishment 3.21 Responsibility 3.46
Following orders 3.39 Being a good problem solver 3.18
Have well defined plans 3.27 Thorough 3.62
Take charge 3.56 Consistent plans 3.35
Are efficient and achieve result 3.76 Insist on quality output 3.45
Work hard 3.42 Explore my options 3.65
Source: Data analysis, 2013. Are flexible 3.22
Plan ahead 3.20
Be accurate 2.97
Table 4. Mean of inspirational leadership style.

Inspirational leadership style Mean Table 5. Mean of supportive leadership style.

Making goals exciting 3.11
Supportive leadership style Mean
Values people with new ideas 3.10
Listening to people 3.55
Recognize my contribution 3.57
Provides support 3.49
Create a feeling trust 4.61
Be team players 3.36
Feel a sense of job ownership 3.78
Enable performance 3.33
Facilitate restructuring 4.24
Participate with others 3.29
Have daring ideas 3.26
Assure responsibility 3.43
Rely on the team approach 3.24
Work well with colleagues 3.27
Dignity and respect 3.11
Assure fair rewards 3.24
Understanding people’s need 3.43
Acceptance 3.37
Creative 3.25
A feeling of security 3.21
Radical development 3.58
Effective communication 1.32
Having broad vision 3.63
Personal growth 3.27
Open minded 3.47
Being a team player 2.42
Creating opportunities 3.47
Sensitive 3.97
Encourage collaboration 3.26
A feeling of trust 1.98
Network with my colleagues 4.11
Build shared values 4.01
Are imaginative 2.43
Consult with others 2.06
Expect cooperation 3.28
Are dependable 3.62
Learn from others 3.43
Appreciate others 3.33
development were determinants of the success of SMEs
Source: Data analysis, 2013.
in Nigeria.

Limitation and future research rate of the respondents. More importantly, due to the fact
that the method of survey was self administered and the
This study is limited by sample size and low response researchers were grouped into areas to cover the various
 Oladele et al. 59

Table 6. Effects of strategic leadership styles on organizational development in SMEs.

S/N Propositions Df Mean square F Sig

1 247.648
i Supportive leadership style 329 1.174 210.957 0.000*
330

1 61.948
ii Inspirational leadership style 326 1.447 42.805 0.000*
327

1 0.127
iii Logical leadership style 326 1.463 0.087 0.769
327

1 0.712
iv Commanding leadership style 324 1.293 5.551 0.003*
325
Source: Data analysis, 2013.

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