Business Strategy and Leadership Style: Impact on Organizational Performance in the Manufacturing Sector of Ghana

Abstract

This study sought to investigate the impact of leadership styles and business strategy on the organizational performance of small medium scale enterprises (SMEs) in the manufacturing sector of Ghana. This had become necessary due to the fact that available literature on the subject matter lacked precision in terms of the specific leadership style and strategy which could better be employed to improve performance in the chosen area of study. A field survey (by means of questionnaires) was conducted in Accra, involving 60 CEOs and senior managers drawn from 10 organizations, which were randomly sampled for the study. In addition, a time series data from 2008 to 2013 on sales, profits before tax and employment from the 10 organizations were collected to develop performance indices for the organizations. Regression and analysis of variance (ANOVA) were then run to examine the relationship between leadership, strategy and organizational performance. The study revealed that leadership and business strategy statistically and significantly impacted on organizational performance but strategy had greater influence. Again, transformational leadership style and cost leadership significantly influenced organizational behaviour (p = 0.000 < 0.01) but transactioanal leadership style, differentiation and focus strategies did not. The study recommends that SMEs should take advantage of transformational leadership style and cost leadership to enhance growth and induce greater organizational performance.