IMPACT OF LEADERSHIP STYLE ON PERFORMANCE: A COMPARISON BETWEEN SMES AND LARGE MANUFACTURING FIRMS IN ENUGU STATE

Abstract

This study examined the impact of leadership style on organisational performance by comparing small and medium-sized enterprises (SMEs) and large manufacturing firms in Enugu State, Nigeria. The study was motivated by the observed differences in management structures and performance outcomes between SMEs and large firms, as well as the need to determine how varying leadership styles influence organisational effectiveness in both contexts. The study adopted a descriptive cross-sectional survey research design. A total population of 1,240 employees drawn from selected SMEs and large manufacturing firms was used, from which a sample size of 302 respondents was determined using Taro Yamane’s formula. Data were collected using a structured questionnaire and analysed using descriptive statistics (mean and standard deviation) and inferential statistics (t-test and regression analysis). Findings revealed that transformational leadership is the most dominant and effective leadership style in enhancing organisational performance, while autocratic leadership negatively affects performance outcomes. The results further showed that large manufacturing firms demonstrated higher levels of performance and more transformational leadership practices compared to SMEs, which were more associated with autocratic leadership styles. The study also established that leadership style significantly influences organisational performance, accounting for a substantial proportion of variation in productivity, employee efficiency, innovation, and profitability. A statistically significant difference was found between SMEs and large manufacturing firms regarding the impact of leadership style on performance. The study concludes that leadership style is a critical determinant of organisational performance and that differences in organisational structure influence leadership effectiveness. It recommends the adoption of transformational leadership practices, leadership training, and reduced autocratic control, especially among SMEs, to improve organizational outcomes.