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-factordimension. 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.

Leadership Behaviour, Entrepreneurial Orientation and Organisational Performance in Malaysian Small and Medium Enterprises

“…Even though researchers and practitioners have a great discussion and interest in the topics of leadership and EO (Arshad et al, 2016;As-Sadeq & Khoury, 2006;Ling et al, 2008;Lo et al, 2010, James et al, 2016Moreno & Casillas, 2008;Rauch et al, 2009;Wiklund, 1999), the arguments have to be liable in considering closely whether there is a relationship between leadership and EO on the one hand and organisational performance on the other hand. A very few studies have been focused and conducted to investigate the relationship between the three variables simultaneously (Arham, 2014;Yang, 2008;Todorovic & Schlosser, 2007).…”

“…To enhance the development of SMEs, full efforts are continuously being made seriously by governments (Al-Dhaafri, Al-Swidi & Yusoff, 2016;Dzomonda et al, 2017;Hayat et al, 2011) This objective of this research is to examine the impact of SMEs performance in Malaysia from the context of leadership behavior and the entrepreneurial orientation (EO). Leadership and EO are already known as crucial components for organization achievement (Arshad et al, 2016;Gul et al, 2012;Hannay, 2009;Wang, 2008;Yang, 2008). Strategic direction to the workers will motivate them to achieve organizational performances (Luu, 2017).…”

Leadership Styles, Firm Characteristics and Business Financial Performance of Small and Medium Enterprises (SMEs) in Tanzania

“…The findings are also supported by Dzomonda et al (2017) who argue that transformational leadership style has significant positive influence on business performance. Arshad et al (2016) similarly argue the same on the influence of transformational leadership style on business financial performance. In this case, the results are also supported by the transformational leadership theory which argues that the transformational leadership style has an influence on individual, group and organizational performance.…”

“…This is supported by Waldman, Ramirez, House, & Puranam (2001) who argue that transformational behavior enhances subordinates' effectiveness in a variety of organization setting. Likewise, Arshad, Rasli, Arshad and Zain (2016) argue that the transformational leadership style significantly and positively influence business performance of techno-based SMEs in Malaysia. Rose and Mamabolo (2019), on the same line, contend that transformational leadership style has significant influence on SMEs performance in the emerging markets.…”

Untitled

“…Transformational leadership focused on providing continuous support to perform more than what was being expected and thus creating a possible path for succession planning [26]. A transformational leader put effort on making changes within the organization to produce something that could be organization's competitive advantage [27]. The leader with transformational leadership characteristic could be divided into four dimensions such as idealized influence, intellectual stimulation, inspirational motivation and individualized consideration [28].…”