The Influence of the SMES Top-Level Managers’ Leadership Styles and Their Entrepreneurial Orientation on the Business Performance

Abstract

The Small and Medium Enterprises (SMEs) are important for the development of any country. The importance of SMEs in overall growth and stability of economic upbringing is immensely amplified for a developing country like Pakistan where, SMEs are the major portion of overall businesses. The growth of SMEs in Pakistan is quite impressive. Although SMEs exist throughout the country but they are more concentrated in central Punjab like the cities of Faisalabad, Gujranwala, Gujrat and Sialkot. Rapid globalization expands international business and international market is frequently converting into boundary less environment. These conditions also affect Pakistani SMEs. The SMEs are traditionally considered as home based industry but their survival is no more possible with local business. The SMEs in Pakistan are mainly export oriented or providing the input for large export related industries. The rapidly changing global environment increased the complexities of business which demands effective leaders. These leaders must not only be able to understand the rapidly changing business scenario but also be able to adopt the appropriate leadership styles which can enhance or improve organizational performance.

This is an attempt to investigate the influence of the top-level managers’ leadership styles and their entrepreneurial orientation of SMEs on the business performance. This study confirms that there is positive relationship between entrepreneurial orientation and SME’s performance. The risk taking adds value to the firm’s performance but the contribution of innovation and proactiveness are more than the risk taking.

Data was collected from various parts of Punjab (Pakistan) through the questionnaire method. Data collected from a sample of 100 SME’s by random sampling. SPSS used for analyzing the data collected. The findings will definitely contribute new knowledge in the fields of leadership and entrepreneurship, especially entrepreneurial leadership.

Keywords: SME, leadership, entrepreneurship, Pakistan