Leadership Style, Market Orientation and Small Firms Growth Relationships in the Accra Metropolis: Exploring the Partial Least Squares Approach

Abstract

Small and Medium Sized Enterprises (SMEs) are businesses that help accelerate the rate of economic growth in low-income countries and also contribute to poverty alleviation if managed with the right leadership. However, in Ghana most SMEs fail in the first year of existence (Biekpe, 2004) due to numerous factors. This study therefore, examines the effect of owner/manager leadership styles and market orientation on the growth of SMEs in the Accra Metropolis. A total of 400 owner/managers were selected through the simple random sampling from a population of 3,474 manufacturing SMEs, using the Partial Least Square approach (PLS). Findings indicated that transformational leadership style of owner/managers had a positive and significant relationship with market orientation. Transactional leadership style on the other hand, showed a negative relationship to market orientation but a positive and significant relationship to SME growth. In conclusion, it was observed that no single individual can achieve organisational goals without the help of others and hence managers should gain understanding of how and why certain leaders are able to transform their organisations.The study recommends that, government should initiate programmes and policies that would enhance the skill and training of SME owner/managers in achieving SMEs growth.

Keywords: Leadership Styles, Market Orientation, SMEs, Partial Least Square, Entrepreneurship & Organisation