CEO Transformational Leadership Style and Performance of SMEs: A Literature Review, Kenya

Abstract

Chief Executive Officer (CEO) transformational leadership style (TLS) has been promoted by many scholars as to the ultimate style that positively influences organizational performance in organizations. Despite increased publicity on its impact on organizational performance, its measurement has not been standardized making it difficult to corroborate the real impact of CEO TLS on the performance of organizations. The key parameters that define Small and Medium–Sized Enterprises (SME) performance include profitability, annual turnover, employee satisfaction, and owner satisfaction. Many studies focus on large corporates leaving out the SME sector which is a major driver of economic growth in many nations. The performance management theory, the Leader-Member Exchange Theory (LMX) and the transformational leadership theory (TLT) have been explored. The study adopted a literature review to establish the gaps. Studies confirm the presence of a considerable association between CEO TLS and the performance of SMEs. Upcoming inquiries need to explore harmonized designs that would help researchers conduct studies on SMEs using similar parameters to enhance comparison of the impact of CEO TLS on organizational performance. Studies should focus on each of the components of TLS to establish the most influential component and promote it for effective SME management for enhanced performance.