Effective Leadership in SMEs: A Research Project on Key Factors

This research project investigates the factors influencing effective leadership in Small and Medium Scale Enterprises (SMEs). It examines the elements of leadership that affect SMEs, the issues faced by these enterprises in terms of leadership management, and the relationship between leadership variables and SME performance. The study aims to provide a basic understanding of these factors, determine the challenges in leadership management, and explore the connection between leadership factors and SMEs. The research employs a literature review to define leadership, its essential elements (communication, democracy, feedback, self-awareness, and team awareness), and how weak leadership skills can negatively impact SMEs. It also discusses the importance of leadership in guiding and motivating teams to achieve business goals. The study identifies organizational culture, technology, and employee roles as factors affecting leadership and highlights the problem of decreased performance and productivity in the absence of effective leadership.

RESEARCH PROJECT
(Factors that affect effective Leadership in
Small and Medium Scale Enterprises)

ABSTRACT
The study will outline the proper understanding of the various factors which are connected with
the with leadership with small and Medium Scale Enterprises. In addition to this, the study will
also highlight the issues faced by small and medium scale enterprise in terms of leadership
management. Furthermore, the research will also ascertain the connection between small and
medium-sized businesses and leadership factors.

Table of Contents
ABSTRACT.....................................................................................................................................2
CHAPTER 1: INTRODUCTION....................................................................................................4
Overview about the topic........................................................................................................4
Research aim, objectives and questions.................................................................................5
Research rationale..................................................................................................................5
Significance of the research....................................................................................................6
Research problem...................................................................................................................6
CHAPTER 2: LITERATURE REVIEW.........................................................................................7
What do you mean by elements of leaderships which affect the small and medium scale
enterprises?.............................................................................................................................7
Explain the issues faced by small and medium scale enterprise in terms of leadership
management?..........................................................................................................................8
What is a link between leadership variables and small and medium-sized businesses?......10
CHAPTER 3: RESEARCH METHODOLOGY...........................................................................12
CHAPTER 4: DISSCUSSION......................................................................................................15
CHAPTER 5: CONCLUSION AND RECOMMENDATION.....................................................19
REFERENCES..............................................................................................................................22

CHAPTER 1: INTRODUCTION
Overview about the topic
The chosen topic is leadership in the present study and it is defined as the most important
factor that help individuals to make productive decisions, set objectives and in providing
direction within a professional working environment. Leadership is needed in every business
in order to set and attain challenging goals, take decisive and fast decision when needed,
outperform the high competition and motivating others to perform at the best level. It is the
leader of the business that help in achieving the predetermined objectives of the business in
an effective manner. They guide and assist employees of the company in understanding their
roles and responsibilities so that employees work in an effective and efficient manner. A
leader is a person who motivates and inspires employees of the business by giving them
certain financial and non-financial incentives in order to gain high profitability and growth
(Diamantidis and Chatzoglou, 2018). Small and medium enterprises are defined as business
organisations that maintain assets, revenues or a different number of employees below a
certain threshold. Leaders are needed in small enterprises also because they help in
introducing various policies and plans and results in gaining high success and growth. With
the help of good and effective leadership they can create a vision and can help in motivating
people to make it a reality within the competitive business environment. It is the
responsibility of the leader to guide and inspire employees for working in a more efficient
and effective way in order to gain high profitability and productivity. It is mainly defined as
an essential function of management that helps the company in directing their resources for
accomplishing goals and increased efficiency. There are several factors that help the leader in
gaining popularity and support from the employees of the business. Organisational culture,
technology, employee role and many more are defined as some of the factors that affect
leadership in relation with the small and medium enterprises (Kim, Kim and Jeon, 2018).
Leadership has a direct impact on the performance and productivity of the company as this
helps in providing the right direction to the employees working towards achieving the pre-
defined aim and objectives. In the highly competitive environment, it is important for the
company to select and recruit leaders that have the ability to influence employees for
working effectively for increased growth. The study will outline the various elements which

will be creating a major impact on the small and medium scale enterprises. As it can be seen
that there are various issues which are faced by the enterprise in relation to leadership
management. Such issues will also be highlighted in the study in a detailed manner.
Research aim, objectives and questions
Research aim
To examine the factors which affect the leadership in relation to Small and Medium Scale
Enterprises
Research objectives
 To develop basic understanding about the factors linked with leadership with small and
Medium Scale Enterprises.
 To determine the issues faced by small and medium scale enterprise in terms of
leadership management
 To determine the relationship between leadership factors and the small and Medium
Scale Enterprises.
Research questions
 What is the basic understanding about the factors linked with leadership with small and
Medium Scale Enterprises?
 What are the issues faced by small and medium scale enterprise in terms of leadership
management?
 What is the relationship between leadership factors and the small and Medium Scale
Enterprises?
Research rationale
In relation to the present study, the main goal to conduct this research is to understand
about different types of elements which has the power to influence good leadership within
the small and medium enterprises. As the term leadership is considered as an essential
concept within an organisation because it helps in guiding and inspiring employees to work
in a right manner for achieving success and growth in the competitive market (Ma and
Jiang, 2018). The main idea of conducting this whole research is to determine the effect of
factor related to leadership on the small and medium enterprises in order to improve
overall performance of employees. Likewise, this particular research helps in fulfilling two

type of objectives that is personal and professional. In terms of personal objective, the
researcher will gain detailed knowledge and skill about different leadership styles and
different factor that affects it. Whereas, in terms of professional objective, the researcher
will get details regarding how to perform leadership role in future company and also helps
in conducting the research in future on the similar topic more appropriately.
Significance of the research
The following research topic is quite significant and important in gaining detailed
knowledge about the leadership factor in relation with the small and medium enterprises.
Leadership plays a very important role within an organisation because it helps in providing
direction to the employees towards achieving high success and profitability in the business
market (Zhou and Wu, 2018). It is important for the company to chose right person for giving
leadership responsibility within the organisation because they help in assisting employees with
any problem. This helps the researcher in getting all the relevant and detailed information about
the selected topic in a more reliable and effective manner. The researcher chooses different types
of research methodologies methods to conduct the present research in an efficient and smooth
manner. This knowledge and skill help in collecting data and information about the topic and
also helps in determining the strengths and weaknesses of the researcher for carrying out the
future research in an appropriate manner. In order to sustain in the highly competitive business
environment, it is important for the company to choose good leader that motivates and inspires
employees in the right direction. The following research also helps students in increasing their
knowledge about the concept of leadership within an organisation and its importance in the small
and medium enterprises. It also helps the researcher in conducting the research on the same topic
efficiently and effectively for getting more authentic and accurate information.
Research problem
The main problem identified in carrying out the present research is the challenges faced
by the company in the absence of leadership. Without leadership no employee can work in the
right and deliberate manner and this effects the overall performance and productivity of the
business. This also affects the performance of employees as they do not clearly understand their
role and responsibility in the right manner and this results in decreased profitability.

CHAPTER 2: LITERATURE REVIEW
What do you mean by elements of leaderships which affect the small and medium scale
enterprises?
As per the view of Nor-Aishah, Ahmad, and Thurasamy (2020) Leadership is the term of
motivation that allows to leaders to motivate the group of people for achieving the common goal
of the business. Leadership is an art to guide or influence the people for the effective working
that is the benefit for the business operation. it is a process that helps to motivate and guide the
followers and inspiring them for giving their best performance for the business's growth. A good
leadership handles the overall situation or activity of the group that helps in coordination and
communication. Leadership determines as the success or failure of the business because it is
responsible for manage the overall activity and operations. There are five essential elements of
Leadership such as communication, democracy, seeking out feedback, knowing ourself and
know about the team. In context to small and medium scale enterprises, the weak and insufficient
leadership skills are affecting the small and medium scale enterprises because there is no
communication and coordination in team members (Khan, and et.al., 2021). Small and medium
scale enterprises is affected by the poor skills of leadership which is the loss for the overall
business and its operations. SMEs needs to guide their team about overall crisis which helps to
develop their leadership skills. Leadership plays an important role in SMEs because it is help to
manage the overall process of team work. Elements of leadership affecting the small and
medium scale enterprise as maintain the leadership quality of the leader that helps to increase the
SMEs productivity and performance.
According to the point of view of Arici and Uysal (2022) leadership is defined as the
skills that manage and control the overall activity and process of the team. It is referring to the
skills of guidance, motivation, training, controlling, communicating the overall team
individually. These skills helps to leads the team members and motivates them to achieve the
goal together. A good leader is responsible for all the success and failure of the organisation
because they are handle the overall process of business. A leader is a person or individual that
are responsible for the manage the leadership quality within the business. There are some
elements of leadership that is helps to improving the business operation such as communication,
democracy, seeking the feedbacks, knowing ourself, and knowing others. In context to small and

medium enterprises, the weak leadership quality can cause of the failure of the business that
affecting the overall productivity and performance. Small and medium enterprise affecting by the
communication of people which is creating so many issues within the business. A poor and
inefficient leadership is the reason of the failure of the business and its operation (Patiar, and
Wang, 2020). it is hitting the small business and its areas directly, because a weak leadership is
not able to maintain the overall function of business which affecting the performance and
productivity. A lack of leadership skills is creating many challenges in the business which can be
caused by the gap of soft skills in the individuals.
In the opinion to Khuwaja and et.al (2020) leadership is the function which is own by the
leaders for motivating and managing the group or people for achieving the common goals of the
business. Elements of leadership helps to develop the communication, helps to collect the
information about others, knowing yourself, seeking the feedbacks, and democracy. Leadership
is the quality that is helps to guide, motivate, control, manage and trained the team members for
achieve the same gaols. It also helps the employees in working together and coordination of the
team members. it is the quality that mange the overall team and motivates them for effective
working. In relation to small and medium scale enterprises, leadership is developing the overall
team performance that is helps in effecting working but, a weak leadership management in the
business can affect the overall performance and growth of the business (Canterino, and et.al.,
2020). The small and medium scale enterprise has low and weak leaders which is affecting its
productivity and performance of the business. Small and medium enterprise can be affecting by
the low combination of team members because if there is no good leadership then there is no
motivation and better performance of team members. Small and medium scale enterprises is
important for the economy but mostly SMEs not perceive the leaderships quality within the
business which may affects the factors and function of the business.
Explain the issues faced by small and medium scale enterprise in terms of leadership
management?
In the opinion to Weiss (2021) there are many challenges that is faced by the small and
medium-sized business in the term of leadership. They faced that there is no effectiveness within
the business. Employees performance getting low due to poor leadership. They faced that
employee are not communicate with each other which is having an issue for the coordinate
working. They faced there is a lot of barriers within the business because employees are not able

to work with effectiveness. For a leader it is necessary to having the high-skilled for the good
leadership but in the term of SMEs they faced that there is inefficient and weak performance
because the leaders are not able to control and manage the group of people (Dawar, and Singh,
2022). small medium-sized business faced that leadership management is not possible due to
employees communication because employees are not able to communicate with each other that
is creating the impact on the coordinate working. Small and medium-sized business are affecting
by the poor and weak leadership skills that is reducing the performance of the business.
According to the view of Müller, Buliga, and Voigt (2021) there are many issues which is
faced by the small and medium-sized enterprises in the term of leadership management.
Leadership skills are required high skills to lead within the team. For a good leader, it is required
many skills such as communication skills, management skills, human resources skills, listening
skills, creativity, innovative and many more. In context to small and medium-sized business,
they facing issues in the term of leadership skills where they faced that there is no leadership
qualities in the manger who can manage the overall team and its operation. They faced that there
is no effective working of employees which reduce the productivity and profitability of the
business. They faced that leader has limited skills which impacting on the business performance
because employees are not coordinate with each other for achieving the common goal for the
business. They faced that there is low productivity and performance of the employees which
harm the business operation of the small and medium-sized business (Iglesias, and et.al., 2020).
they faced that there is no effective leader for decision making in the business which is creating
the issue in gaining the success in future.
As per the point of view of Trevino and Nelson (2021) there are some challenges and
issues that is faced by the small and medium-sized business. They faced that the team members
are not coordinating with each other why which it is reducing the business performance. There is
lack of effectiveness in the business which effects on the business operations. They faced those
employees are not listening to their leaders which is creating the barriers in the working. A small
or medium business can be run by the good leader but it is necessary to listen the leader but they
are facing issues in managing the employees. They faced that there is no communication
between leaders and team members which affects the performance and growth of the company.
They faced that employee are losing their motivation to work with effectiveness which is also
creating an issue for the business growth (Miles, and Morrison, 2020). they faced that there is no

productivity and profitability because of law performance of employees. These challenges make
the issue for the business which reduces overall growth and performance. It also reduces the
employee’s motivation why which there is no effective working in the business.
What is a link between leadership variables and small and medium-sized businesses?
According to the point of view of Qadir and Yeşiltaş (2020) the link between leadership
variables and small and medium-sized business referring to the function because leadership play
a vital role in the development of small and medium-sized business. Leadership variables is the
term that is referring to the three effective variables such as time, money and resources. These
variables manage the effective working. Variables of leadership determine as the function to
manage the overall time, cost, money and other resources that helps in effective and efficient
working of the organisation and the small and medium-sized business referring to the backbone
of the country because it is interlinked with society and economy. Small and medium-sized
business helps to increase the growth of the economy. The linked between variables of
leadership and SMEs is, leadership variables helps the SMEs in saving the time, money and
resources which is the big advantage for the small and medium-sized business (Xie, 2020).
Leadership variable helps the small and medium-sized business to consume their time and cost
and increase the profit for the business. Leadership play a important role in managing the overall
operation of the business. Small and medium-sized business's achievements can be achieved by
the good leader.
As per the view of Sawaean and Ali (2020) the link between leadership variables and
small and medium-sized business is defined as the term where the leadership variable provides
some essential variable to the SMEs to developing and manage the overall system. The
leadership variables help to manage and consume the time, resources and money that is
increasing the profitability and productivity of the business. Leadership variables is playing the
vital role because it helps the small and medium-sized business in development. With the help of
leadership variables SMEs increase their production by decreasing the waste cost because
leadership is also helps in decision making. A good leader of the business helps to consume the
time, money and resources and increasing the profit of the business (Dias, and et.al., 2022).
Small and medium-sized business take helps from the leaders for achieving the gaols for the
business. Reason behind the success of small and medium-sized business is an effective leader
that motivates and develop the group of people for achieving the goals for the business with

success. Small and medium-sized business goals can be achievable by the leadership variables.
The relation between leadership variables and small and medium-sized business playing a
important role because it is helpful for the SMEs. Leadership variables helps in effective
working and increase the performance and productivity of the business which is the advantages
for the SMEs.
In the opinion to Xuan, Thu, and Anh (2020) the link between the leadership and small
and medium-sized business is the function where the leadership helps the small business to
manage their overall production and productivity through the better and effective working.
Leadership is useful for the small and medium business because it is help to motivate the
employees within the business for achieving the goals with success. Leadership helps in
coordination which is the benefit for the small and medium-sized business in coordination of
employees. There are many links of leadership and small and medium-sized business which
creating the many advantages for the business. It is helps to increase the productivity and
performance of the business which improves the future growth of the business. The overall
productivity and process of business is handlde by the leaders where the the leadership quality
helps in decision making for the business (Fasth, and et.al., 2022). SMEs is effective if the
leadership variable are available in the business because it provides three essential variables such
as time, money and resources which is help in consume the overall time and cost of the business.
The variable's resources help to provide many terms such as finance, money, operations and
many more that is the benefit for the business. Leadership variables helps the SMEs to achieve
the gaols with success.