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The Link Between Leadership, Strategy, and Performance in Manufacturing SMEs

By Nicholas O'Regan, Abby Ghobadian and Martin Sims


Sustainable competitive performance, in today's turbulent environment, is widely thought to depend on the quality of leadership and strategy. In this paper, we empirically examine the relationship between strategy, leadership and performance within a single study. Evidence is presented from 194 firms, outlining the association between strategy characteristics and the dimensions of leadership in a ranked order according to their degree of importance. The analysis indicates that a balanced transformational and transactional leadership style is likely to lead to better performance. The study also found that firms strongly emphasizing any of the leadership styles performed better than firms with uncertain or weak leadership styles. The findings provide practical guidelines to enable senior managers to consider leadership style in the formulation and deployment of their strategic plan. Finally, the analysis indicates the need to consider and align leadership and strategy in order to achieve sustainable competitive performance

Publisher: The Small Business Institute®
Year: 2004
OAI identifier:

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