THE MODERATING EFFECTS OF ORGANISATIONAL CULTURE ON THE RELATIONSHIP OF LEADERSHIP STYLES AND SMES GROWTH IN THE TOP 100 SMES IN KENYA

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1 THE MODERATING EFFECTS OF ORGANISATIONAL CULTURE ON THE RELATIONSHIP OF LEADERSHIP STYLES AND SMES GROWTH IN THE TOP 100 SMES IN KENYA By Judith Bijurenda Asiimwe EAMARC CONFERENCE 2016

2 ABSTRACT The study aimed to investigate the moderating effect of organizational culture on leadership styles and SMEs growth. Stratified random sampling was used, to obtain a sample of 227 from a target population of 553 managers from the top 100 SMEs of Kenya. Descriptive statistics were used to describe and summarize the data. Inferential statistics where used to make inferences and draw conclusions about the quantitative data. Findings indicated that Organization culture had a significant moderating effect on the relationship between leadership styles and SMEs growth. the study recommended that managers should be mindful of the organizational culture in order to manage a dynamic environment.

3 Introduction A pattern of shared basic assumptions or meanings that where learnt by a group as it tried to solve its problems of external adaptation and internal integration, that had previously worked well so as to be considered valid and therefore passed on to new employees as the right way to perceive, feel and think in relation to tackling organisational challenges (Shein,2004). several researchers and scholars have posited that Organizational culture and leadership styles have a link, and both play an important role in determining organizational effectiveness.

4 Introduction Some of the components that capture the essence of an organization's culture were investigated under this study: Innovation oriented, outcome oriented, aggressiveness, detail oriented, team oriented, stability, and people oriented.

5 Introduction This is based on the premise that organizations have personalities which are referred to as cultures. And these cultures govern how members behave within the organization. Strong versus week cultures : strong cultures have greater impact on employee behavior and are more directly related to reduced employee turnover. A strong culture creates cohesiveness, loyalty and organizational commitment while a weak culture has little impact on employee behavior.

6 Literature Review Nguyen and Mohamed (2011) carried out a study to investigate the relationship between leadership behavior and Knowledge management and the moderating effect of organizational culture on this relationship in Small medium sized enterprises operating in Australia and found compelling evidence in support of the moderating role of organizational culture on this relationship.

7 Literature Review A study by Yiing and Ahmad (2009) investigated the moderating effects of organizational culture on the relationship between leadership behavior and organizational commitment and organizational commitment and job satisfaction and performance in an educational setting in Malaysia, The researchers found that leadership behaviors were significantly related to organizational commitment and organizational culture played a significant role in moderating the relationships.

8 Literature Review Gelaidan (2012) investigated the moderating effects of organizational culture on the relationship between leadership style and employee commitment Found that Organizational culture played an important role and moderated the relationship between leadership style and employee commitment.

9 Literature Review However, Kotter and Heskett (1992) conducted a study in 207 firms over a five year period in which they used various measures of culture and long term performance data to link culture and performance. The study found weak correlations between culture and long term performance; however, this study did not link culture and performance to leadership styles or growth of these companies.

10 Conceptual Framework Democratic Leadership style Laissez-Faire Leadership style Transformational Leadership style SMEs Growth Transactional Leadership style Organization Culture

11 Methodology A causal research design was employed Target population of this study comprised of chief executive officer, human resources manager, information technology manager, finance manager and administration manager of the top 100 KPMG SMEs in Kenya of Proportionate stratified random sampling was used to obtain a sample of 227 out of a target population of 553

12 Findings Table 4.1 Organization Culture and SMEs Growth Mean Std. Deviation Our organization allows employees to be innovative Employees in our organization are willing to experiment new things Employees in our organization are results oriented Employees in our organization have high expectations for performance Employees in our organization are aggressive Employees in our organization are competitive Employees in our organization are precise Employees in our organization pay attention to detail Employees in our organization are team oriented Employees in our organization work in collaboration with others Our organization has security of employment Our organization s actions are predictable Employees in our organization have respect for individual right There is fairness in our organization

13 Findings Table 4.2 Correlation between Organization Culture and SMEs Growth Organization culture SMEs growth Organization culture SMEs growth Pearson Correlation 1 Sig. (2-tailed) Pearson Correlation.811* 1 Sig. (2-tailed).016 *. Correlation is significant at the 0.05 level (2-tailed).

14 Findings Table 4.19 Chi-Square Tests between Organization Culture and SMEs Growth Value df Asymp. Sig. (2- sided) Pearson Chi-Square a Likelihood Ratio Linear-by-Linear Association N of Valid Cases 188 a. 67 cells (83.8%) have expected count less than 5. The minimum expected count is.02.

15 conclusion The study established that organisational culture had a moderating effect on the relationship between leadership styles and SMEs growth in the top 100 SMEs in Kenya.

16 recommendation The study therefore, recommended that managers should be mindful of the organisational culture in order to manage a dynamic environment and also promote a positive organisational climate.

17 THANK YOU