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.