Leadership styles and company performance: the experience of owner-managers of SMEs

Leadership styles of owner-managers were explored in the context of a developing

country in South Asia with a view to examining their impact on financial performance

of SMEs. It was justified that the study has both theoretical and contextual

significance. Data were collected from 204 companies in Sri Lanka by adopting mixed

methodologies that consisted of both qualitative and qualitative approaches.

Descriptive statistics and correlation coefficient were used in the analysis. The findings

revealed that the existence of three main leadership styles in the sample, namely;

entrepreneurial, managerial, and mix of both entrepreneurial and managerial

leaderships. The analysis indicated that 60 percent of firms had increased financial

performance, while 35 percent firms had decreased financial performance. The impact

analysis showed that entrepreneurial leadership style is more effective than managerial

leadership styles and the mixed style of leadership in terms of increasing financial

performance. Overall, the study contributes to the theory of leadership styles and

performance in the context of developing countries. It also has practical implications

for business leaders and owner managers of SMEs.