TRANSFORMATIONAL LEADERSHIP AND PROFITABILITY OF SELECTED SMES IN LAGOS STATE, NIGERIA
Abstract
Small and Medium Enterprises (SMEs) are developing and pioneering businesses that have been recognized to be the economic drivers in both developed and developing nations. They are well known for their consistent contributions to a country Gross Domestic Product (GDP). Despite their economic importance, SMEs have been experiencing poor performance that hindered their growth and developments. Some of the challenges of the performance issues are improper understanding and practice of leadership. This has led to a drop in profitability which has resulted in poor performance. This study therefore investigated the effect of transformational leadership on profitability of selected Small and Medium Enterprise (SMEs) in Lagos State, Nigeria. The study adopted survey research design. The population of the study was 8,395 which is the total number of registered SMEs in Lagos State, Nigeria. A sample size of 477 supervisors and middle managers of SMEs were enumerated using Cochran;s (1977) formula. Adopted questionnaire was used and data was collected using a valid and reliable questionnaire with a Cronbach alpha value greater than 0.7. Data were analyzed using both descriptive and inferential tools. Linear Regression Analysis was used to determine the effect of the variables using Statistical Package for Social Science (SPSS) version 25. The finding revealed that transformational leadership had effect on profitability (β = 0.285, t = 2.987, R2 = 0.049, p<0.05). The study concluded that there was a statistically significant effect of transformational leadership on profitability of selected SMEs in Lagos State, Nigeria. Therefore, the study recommended transformational leadership style be used in Lagos State SMEs to attain profitability beyond expectations. This is because transactions are the foundation of transformations because when a leader honors his transactions with people, they come to trust the leader over time, and transformational leadership relies on higher levels of trust rather than compliance to achieve exemplary profitability and overall performance.
Keywords: Transformational Leadership, Profitability, Small and Medium Enterprises.
CITATION: Oyelade, K.A., & Akpa, V. O. (2022). Transformational leadership and profitability of selected SMEs in Lagos State, Nigeria. The Strategic Journal of Business & Change Management, 9 (2), 1029 – 1040.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i2.2317
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