The Relationship Between Leadership and Business Performance

Literature Review 1
THE RELATIONSHIP BETWEEN LEADERSHIP AND BUSINESS PERFORMANCE
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Literature Review 2
Literature Review on Leadership and Performance
Leadership is an essential component of organizational behavior. It is also one of the
most changing effect during interactions in the organization and at the individual level.
Therefore, the ability of management to embrace collaboration in the execution of tasks is highly
dependent on leader’s capabilities. A good leader is the one who motivates the abilities of the
followers and provides them with resources needed to achieve the organizational goals. Stogdill
(1957) records that leadership is a personal trait to govern followers to achieve a common goal.
According to Fry (2003), leadership incorporates the application of top strategies to
lender motivation and to improve the staff’s ability for development and growth. Multiple
justifications record that leadership style links to organizational performs. One of them is that
today’s rigorous and changing market features innovation-driven competition, pricing rivalry,
reduced returns, and outsmarting of the existing knowledge (Santora et al. 1999; Venkataraman
1997). Various researches argue that despite the presence of the above defies, reliable leadership
can enhance the performance of an organization (McGrath and MacMillan 2000; Teece, Pisano
and Shuen 1997).
Organization’s ability to realize its objectives such as increased profits, wide market
share, quality products, financial stability, and survival by adopting appropriate strategies defines
its performance (Koontz and Donnell 1993). Also, organization performance can be viewed in
the aspect of how an organization is performing in relation to profitability, market position, and
quality of the products when compared to competitors. Therefore, it portrays how productive
enterprise members are in relation to growth and development of the organization.