Leadership styles, management systems and growth: empiricial evidence from UK owner-managed SMEs

Abstract

Apart from starting, growing and/or sustaining a business, owner-managers in small firms have the responsibility to balance business goals and managerial priorities, with ownership control tendencies and family values (as in the case of the prolific family enterprise) in a fashion that can comfort all business stakeholders. Understanding the inter-relationship among owner-manager's leadership style, intra-organisational management systems, and business growth can enable us to develop insights into how small business leaders masterfully construct a management approach that is conducive to sustainable performance. This empirical paper draws evidence from a large-scale postal survey (5710 respondents) of small and medium sized enterprises (SMEs) in the UK and explores the association of small business managerial style and performance. Logistic regression analysis reveals that the managerial style of entrepreneurs is influenced by a series of demographic and situational factors. Moreover, owner-managed businesses characterised by delegation of authority appear to achieve higher growth in sales and operationalise in a more professional way. The paper concludes with a discussion of the implications. The role of managerial style in interpreting business's growth performance will complement the leadership literature.