Leadership styles and company performance: the experience of owner-managers of SMEs

Leadership styles of owner-managers were explored in the context of a developingcountry in South Asia with a view to examining their impact on financial performanceof SMEs. It was justified that the study has both theoretical and contextualsignificance. Data were collected from 204 companies in Sri Lanka by adopting mixedmethodologies that consisted of both qualitative and qualitative approaches.Descriptive statistics and correlation coefficient were used in the analysis. The findingsrevealed that the existence of three main leadership styles in the sample, namely;entrepreneurial, managerial, and mix of both entrepreneurial and managerialleaderships. The analysis indicated that 60 percent of firms had increased financialperformance, while 35 percent firms had decreased financial performance. The impactanalysis showed that entrepreneurial leadership style is more effective than managerialleadership styles and the mixed style of leadership in terms of increasing financialperformance. Overall, the study contributes to the theory of leadership styles andperformance in the context of developing countries. It also has practical implicationsfor business leaders and owner managers of SMEs.