Impact of Leadership Style on Business: A Literature Review

This literature review discusses the impact of leadership style on businesses. It covers themes such as how businesses use leadership style, impact of different leadership styles on productivity and morale of employees, how choosing inappropriate leadership style impacts decision-making of the business, and roles performed by a leader for the success of an organisation. The review also identifies research gaps and provides recommendations for businesses to adopt appropriate leadership styles.

LITERATURE REVIEW

Contents
INTRODUCTION...........................................................................................................................3
MAIN ISSUES................................................................................................................................3
MAIN BODY...................................................................................................................................3
Theme 1: How businesses use leadership style......................................................................3
Theme 2: Impact of different leadership styles on productivity and morale of employees...4
Theme 3: How choosing inappropriate leadership style impacts decision-making of the
business...................................................................................................................................5
Theme 4: Roles performed by a leader for the success of an organisation............................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
With the motive of building a new business, it is quite important to identify, choose and
maintain appropriate leadership. There are different kinds of leadership styles which include
coaching leadership, affiliative leadership, laissez-faire, autocratic, democratic etc. But generally
the challenge faced by an organisation is finding appropriate leadership style (Kazim, 2019). The
different styles of leadership styles play important role in the success of a business and in some
cases it becomes the reason of low employee motivation, inappropriate decision-making, high-
employee turnover and lower productivity. It is stated that organisations are needed to select the
appropriate leadership style for avoiding any negative effects. The existing literature review
focuses on carrying out in-depth information about the conceptual framework of leadership and
different leadership styles in an organisation (Bednářová, Hiršová and Komárková, 2019). This
section also includes gap in the literature based upon theme so that proper findings could be
carried out. The sources used for gathering relevant information are: books, articles, journals,
newspapers, publications etc.
MAIN ISSUES
Some of the themes that best describe the selected topic are:
 How businesses use leadership style
 Impact of different leadership styles on productivity and morale of employees
 How choosing inappropriate leadership style impacts decision-making of the business
 Roles performed by a leader for the success of an organisation
MAIN BODY
Theme 1: How businesses use leadership style
According to Idiegbeyan-Ose (2018), leadership style refers to the characteristics or
behaviour of a leader. The behaviour of a leader revolves around the procedure of direction,
guidance, management and motivation of employees. In the procedure of developing an
organisation, it is quite significant to choose apt leadership style so that pre-defined objectives of
a business could be attained.
According to Rao and Zaidi (2020), the main leadership styles include democratic,
laissez-faire and autocratic. On the other hand, as per the view of the most common kinds of
leadership styles are affiliative, authoritative and coaching. Though, the most important area of

the business is the way to determine and consider the relevant leadership style that could match
the requirements of an organisation.
While selecting the appropriate leadership style, there is a requirement to focus on both
team and leader before finalising the relevant style. Organisations select leadership style as per
the goals of an organisation and the development of an organisation. On the other hand, as per
the view of Fahlevi and et. al., (2019), there are five significant aspects which hold great
importance for an organisation while selecting apt leadership style which are nature of
relationships, personality of the leader, maturity of the team, timings and nature of tasks.
Identified research gap
The current studies have determined that the factors that make an organisation to adopt the
relevant style of leadership. These studies have highlighted that there are different kinds of
leadership style. These studies lack in recognising and using multiple leadership style that could
assist in meeting objectives of an individual. Hence, the current investigation is quite important
for suggesting businesses to successfully use multiple leadership styles in the presence of
competition.
Theme 2: Impact of different leadership styles on productivity and morale of employees
According to Maaitah (2018), leadership styles are adopted in an organisation with the
motive of improving the business performance. The impact of leadership style in an organisation
is defined as aspects that are generally created due to selecting inappropriate or appropriate
leadership style. It is determined that leadership style directly impacts the productivity of an
organisation because morale and motivation level of employees are affected. On the other hand,
as per the opinion of Makhathini and Van Dyk (2018), the style of leadership style impacts level
of the productivity but it does not affect motivation and morale of employees because it is
generally controlled and directed by the culture of an organisation.
In the opinion of Akanji and et. al., (2019), it can be said that when retail companies
adopt leadership style of autocratic, leaders are responsible setting goals for team without any
input of team members. This causes certain challenges in the organisation as absenteeism rates
increase and low morale among employees. In simpler words, level of productivity gets reduced
due to increased wastes, decreased customer satisfaction and large number of errors. However,
the organisational culture is dependent upon the professional ethics among employees.

It is responsibility of an organisation to maintain morale level of employees so that they
can perform their work and assist company to meet their pre-determined needs and requirements.
Therefore, leadership style affects the morale of employees as well as productivity of the
organisation. It directly depends upon the selecting apt leadership style which clearly showcases
that autocratic leadership increases absenteeism level however, democratic style leads in
generating outcomes in the favour of a business.
Determined research gap
The conducted studies have showcased that leadership styles impact morale and
productivity level of employees. Hence, these studies were limited to represent meaningful link
among employee morale, organisational culture and leadership style. The current study shows
that leadership style impacts culture of the organisation as well as morale of employees.
Theme 3: How choosing inappropriate leadership style impacts decision-making of the business
According to Abasilim, Gberevbie and Osibanjo (2018), choosing the relevant style of
leadership is one of the major responsibilities of an organisation so that they can manage teams.
There are many times when an organisation faces failure due to selecting inappropriate
leadership style. Selecting inappropriate leadership style could affect the procedure of decision-
making. A fashion retail organisation has a mission to expand business operations in the
emerging market. In this type of circumstance, an organisation requires to adopt Laissez-faire
leadership style for making employees accountable for their assigned work.
According to Budiasih and et. al., (2020), employees are able to take decisions on their
own regarding work without taking permission from the managers. This assists in improving the
productivity of the employees. On the other hand, if company selects authoritative leadership
style then employees do not follow the operational leaders. Then employees do not give
importance to actions of managers because they do not include employees while mapping out the
activities. This increases the lack of productivity and directly impacts the expansion strategy of
the business. On the other hand, as per the view of Al‐Yami, Galdas and Watson (2018),
inappropriate selection of leadership style becomes responsible for making wrong decisions in an
organisation.
When retail firm selects authoritative leadership style then an environment is created
where proper distance is maintained between employees and managers. This distance creates
working environment in which decisions are taken without making mutual decisions. Hence, this

increases the efficiency and productivity of the organisation. Therefore, authoritative leadership
style assists an organisation to increase productivity.
Identified gap
The conducted studies have shown that leadership style impacts the procedure of decision-
making. These studies have not identified the role of management team to choose and implement
relevant leadership style. The existing investigation is significant because it figures out the
responsibilities of management’s team to take care of whole leadership tasks and activities.
Theme 4: Roles performed by a leader for the success of an organisation
According to Akparep, Jengre and Mogre (2019), selecting leadership style is an important
task in which leaders play essential role in the process of failure or success of an organisation. As
per the view of Brohi and et. al., (2018), it is determined that leaders are responsible to motivate
and encourage employees for the success of an organisation. For attaining goals and objectives
of an organisation, leaders work hard to engage individuals with their assigned roles and
responsibilities. This engagement makes that employees are encouraged and motivated at work
for the success of a business.
With the purpose of keeping members of the team motivated, a leader takes help of
intrinsic and extrinsic motivational ideas. Leaders focuses on recognising performance of the
members for their high performance. On the other hand, in terms of extrinsic motivation leaders
provide monetary support to employees so that they can perform best at work.
According to Ibrahim and Daniel (2019), it is identified that meeting the objective of
profitability and productivity, a leader sets up map for making employees to follow the particular
direction. The leader takes care about the expectations of the employees for achieving great
success.
Identified research gap
The already conducted studies have determined that leaders motivate members of the team
for the success of a business. The studies have shown that leaders provide particular direction to
team members so that companies could gain success. Hence, the present study shows that leader
values members of the team for great contribution because this is one of the strategies for
ensuring success of the business.

CONCLUSION
From the above gathered findings and discussion, it is concluded that leadership style affects
the business. But the impact of leadership depends on several areas and three of them are
indicative towards maintenance, implementation and selection. Companies are needed to
consider leadership styles based upon the objectives of an organisation and different situational
factors. Inappropriate selection of leadership style impacts productivity, decision-making and
morale of employees. The significant role of leaders in an organisation is motivating members of
the team so that they can be satisfied and do their work with great efficiency and effectiveness.
Therefore, management team of an organisation holds essential place in selecting and using
relevant leadership style. Thus, every company invests its time to adopt apt leadership style.

REFERENCES
Books and Journals
Abasilim, U.D., Gberevbie, D.E. and Osibanjo, A., 2018, October. Canonical analysis of
perceived leadership styles and employees’ commitment in Nigeria. In ECMLG 2018
14th European Conference on Management, Leadership and Governance (p. 317).
Academic Conferences and publishing limited.
Akanji and et. al., 2019. The influence of organisational culture on leadership style in higher
education institutions. Personnel Review.
Akparep, J.Y., Jengre, E. and Mogre, A.A., 2019. The influence of leadership style on
organizational performance at TumaKavi Development Association, Tamale, Northern
Region of Ghana.
Al‐Yami, M., Galdas, P. and Watson, R., 2018. Leadership style and organisational commitment
among nursing staff in Saudi Arabia. Journal of Nursing Management, 26(5), pp.531-
539.
Bednářová, M., Hiršová, M. and Komárková, L., 2019. Leadership style and its influence on
employee identification with the organisation: A study from a Czech hospital.
Brohi and et. al., 2018. Does servant leadership style induce positive organisational behaviors? A
conceptual study of servant leadership, psychological capital, and intention to quit
relationship. Journal of International Business and Management, 1(1), pp.1-11.
Budiasih and et. al., 2020. The mediating impact of perceived organisational politics on the
relationship between leadership styles and job satisfaction. International Journal of
Innovation, Creativity and Change, 10(11), pp.478-495.
Fahlevi and et. al., 2019. Leadership styles of food truck businesses. Journal of Research in
Business, Economics and Management, 13(2), pp.2437-2442.
Ibrahim, A.U. and Daniel, C.O., 2019. Impact of leadership on organisational
performance. International Journal of Business, Management and Social Research, 6(2),
pp.367-374.
Idiegbeyan-Ose, J., 2018. An Investigation on the Nexus Between Leadership Style and Job
Satisfaction of Library Staff in Private University Libraries South-West, Nigeria. Library
Philosophy and Practice.
Kazim, F.A., 2019. Digital Transformation and Leadership Style: A Multiple Case Study. ISM
Journal of International business, 3(1).
Maaitah, A.M., 2018. The role of leadership style on turnover intention. International Review of
Management and Marketing, 8(5), p.24.
Makhathini, T.N. and Van Dyk, G.A., 2018. Organisational climate, job satisfaction, and
leadership style influences on organisational commitment among South African
soldiers. Journal of Psychology in Africa, 28(1), pp.21-25.
Rao, H.M. and Zaidi, U., 2020. How different perceived leadership styles have an influence on
organisational commitment on tourism smes. African Journal of Hospitality, Tourism and
Leisure, 9(1), pp.1-17.