Leadership for SME's: A Literature Review (Fall 2023)

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Leadership for SME’s

Table of Contents
Literature Review:...........................................................................................................................3
Leadership and importance..........................................................................................................3
Competencies of a leader.............................................................................................................4
Ethical leadership and importance...............................................................................................5
Reference List:.................................................................................................................................7

Literature Review:
Leadership and importance
The concept of leadership has been devised as a vast idea in which all the activities within the
business organisation is carried out by a single person called the leader and everything is decided
by that person. However, according to Northouse (2018), it was said that leadership is a type of
business capacity in which the companies’ management is associated in setting and achieving the
challenging goals and in taking the decisive action whenever needed to outperform the
competition and inspire others to perform efficiently. Leadership cannot be tracked with
quantitative metrics but it can be easily compared to other people or entrepreneurs who are
carrying on the same actions, which include setting the approaches of the companies, tone the
management and maintain the culture within the organisation. Antonakis and Day (2017) argued
that the concept of leadership is somewhat associated with providing the direction for the
company and its workers. According to this person, the definition of leadership is the art of
motivating people to work together to achieve a common goal and direct the workers and the
employees with a specific strategy, which can help to meet the companies needs. DuBri (2015)
clarifies that leadership is the activity of the leaders within the organisation regarded collectively,
and it is the performance of the person in leading a group of people within the organisation,
establishing a clear vision and providing knowledge, information to co-ordinate, and balance the
conflicting issues to focus on the primary goal of the company.
It is evident that leadership is necessary in every organisation as it can help to maximize
efficiency and achieve the organisational goals. However, certain scholars like Rosenbach (2018)
justifies that leadership is not only associated with achieving efficiency and the organisational
goals, but also they are focused on motivating the employees of the companies by incentivizing
them in both non-economic and economic manner, so that they can increase their efficiency and
willingness to work for the company. The person also suggests that leaders are associated with
initiating action and communicating the plans and policies to the subordinates and makes the
roles and responsibilities clear to them. Shamir and Eilam-Shamir (2018) argue that a leader is
responsible for providing guidance to the subordinates so that they can perform efficiently and in
creating confidence within them eradicating the conflicts and resolving the complaints and

problems of the employees. Klenke (2016) states that a leader is always concerned with building
the morale, building the internal environment, and creating coordination between the people
inside the organisation. However, Western (2019) adds that the leader is also associated with
bringing up new ideas so that the company can excel and take the risks, which can be converted
into the actual operations of the company.
Competencies of a leader
Grint et al. (2016) in his journal suggest that the competencies of a leader can be divided into 5
different categories, which includes managing self, managing the products of the company,
managing people, managing the programs and leading the organisation. Every subdivision has a
set of competencies suitable for that kind of activity. Northouse (2017), in relation to the same
topic, suggests that the leader has to be honest, fair, and ethical and must have interpersonal
skills that allow the person to treat others with sensitivity, respect and courtesy. The leader must
always respond to the feelings of other people. It is evident that a leader must have complete
knowledge about the market and therefore, the person must assess the strength and weaknesses
to pursue self-development and develop reliance so that the person can deal effectively with
pressure, remaining optimistic and persistent under adverse situations.
As mentioned by Covin and Slevin (2017) in his journal, the leader must be able to carry on clear
and convincing oral presentations and must be clear, concise, and organised in written
communication. The person must always be flexible to adapt new information and face
unexpected obstacles, must have the ability to solve problems efficiently, weighing the relevance
and accuracy of information, and making recommendations after analysing the problems. It
follows that managing projects is also an important function of a leader, and Komives and
Wagner (2016) argues that team building is the primary responsibility of a leader where the
person must foster pride, spirit, commitment, and trust to accomplish group goals. The person
also states that the main motive of a leader must be on an efficient customer service and in
delivering high quality product and services, which would also include technical credibility,
applying principles, procedures, regulations, and policies to specialised expertise. On the
contrary, Robertson (2016) argues that the leader must have an accountability to determine the
objectives, delegate the work, and set the priorities accepting the responsibility for mistakes and
establishing control rules and systems. The person also suggests that a leader must be decisive

and make timely decisions, be well informative, and perceive unpleasant consequences with
ease.
Decisiveness, as clarified by Lussier and Achua (2015) is one of the responsibilities of a leader
and the person must be able to negotiate and influence other people and obtain information to
accomplish the goals. Heifetz and Linsky (2017) argue that a leader must be responsible for
human capital management and in leveraging diversity within the workplace, so that the
individual can satisfy the vision and mission of the organisation efficiently. Boin et al. (2016)
advocated that a leader must be also focused on conflict management and in resolving the
disagreements in a constructive manner. They should indulge themselves in public service
motivation and in developing others so that these people can contribute to the organisation as
well as provide feedback, which can be used as an opportunity to learn through informal and
formal methods.
As stated by Renz (2016), leaders should be responsible for technical and financial management
within the organisation, have good knowledge about technological systems, the financial
processes, and the administration, and use this knowledge to monitor expenditure and set the
priorities. The person must also introduce creativity and innovation and allow collaborating to
build alliances and cross boundaries, foster strategic relationships and achieve the common goal.
Mendenhall et al. (2017) believe that leaders must provide the employees with a clear vision and
help them to translate the vision into action. It is also believed that the leaders must be indulging
themselves in strategic thinking, capitalising on the opportunities and managing the actions,
building entrepreneurship, developing or improving the products or services and taking
calculated risks to accomplish organisational objectives.
Ethical leadership and importance
Ethical leadership can be defined as a leadership that is associated with ethical beliefs and values
and in creating dignity and right for others. This concept is associated with different factors like
fairness, charisma, consideration, honesty, and trust. Martin et al. (2017) states that ethical
leadership is the form of leadership in which the leaders are associated with conducting the
activities for common good and makes it acceptable and appropriate in different areas of the life
of people. Kavathatzopoulos (2019) argues that ethical leadership is a leadership theory that is

associated with ethical concepts, in managing and supporting at the same time, dealing with the
principles in a right behaviour and influencing other people to achieve the common goal of the
company, acting according to the principles and values mentioned in the ethics of the company.
In other words, it is the type of leadership in which unethical behaviour is avoided and there is a
balance between well being of the subordinate and the wider community while focusing on the
profitability of the organisation. Demirtas and Akdogan (2015) adds that an ethical leader can
always be an example to other people and always focuses on ethical standards to influence
society and maintain good decorum within the workplace. It is also mentioned that an ethical
leader is able to communicate properly and always thinks of the well-being of the people, zest
energy of the team and focuses on better health of the organisation.
Shin et al. (2015) opines that ethical leaders can always evoke confidence within the potential
investors and can help to achieve growth and success, catching the eye of the investors. This can
also build up customer loyalty and increase brand identity. Xu et al. (2016) clarify that an ethical
leader can always increase freedom and decrease micromanagement inspiring other people to
work by motivating the employees. These people can also decrease the level of moral
misconduct, which can hamper the brand name of the organisation and can deal with the
problems of the press and the public. Renz (2016) adds that and ethical leader can always
establish trust in vendors and partners and keep the morale high to boost the performances within
the organisation. Finally, it can be said that ethical leadership is important as the company can
comply with the legal practices and increase self-satisfaction among the people within the
organisation. Ethical leadership can focus on a healthy workplace environment in which it can
attract better employees and improve the aspects of the life of other people.

Reference List:
Antonakis, J. and Day, D.V. eds., 2017. The nature of leadership. Sage publications.
Boin, A., Stern, E. and Sundelius, B., 2016. The politics of crisis management: Public leadership
under pressure. Cambridge University Press.
Covin, J.G. and Slevin, D.P., 2017. The entrepreneurial imperatives of strategic
leadership. Strategic entrepreneurship: Creating a new mindset, pp.307-327.
Demirtas, O. and Akdogan, A.A., 2015. The effect of ethical leadership behavior on ethical
climate, turnover intention, and affective commitment. Journal of Business Ethics, 130(1),
pp.59-67.
DuBrin, A.J., 2015. Leadership: Research findings, practice, and skills. Nelson Education.
Grint, K., Jones, O.S. and Holt, C., 2016. What is Leadership. The Routledge Companion to
Leadership, p.3.
Heifetz, R. and Linsky, M., 2017. Leadership on the line, with a new preface: Staying alive
through the dangers of change. Harvard Business Press.
Kavathatzopoulos, I., 2019. Information and Communication Technology for ethical leadership
in business. Journal of Information and Management, 38(4), pp.6-11.
Klenke, K., 2016. Qualitative research in the study of leadership. Emerald Group Publishing
Limited.
Komives, S.R. and Wagner, W. eds., 2016. Leadership for a better world: Understanding the
social change model of leadership development. John Wiley & Sons.
Lussier, R.N. and Achua, C.F., 2015. Leadership: Theory, application, & skill development.
Nelson Education.
Martin, B., Breunig, M., Wagstaff, M. and Goldenberg, M., 2017. Outdoor leadership. Human
Kinetics.

Mendenhall, M.E., Osland, J., Bird, A., Oddou, G.R., Stevens, M.J., Maznevski, M. and Stahl,
G.K. eds., 2017. Global leadership: Research, practice, and development. Routledge.
Northouse, P.G., 2017. Introduction to leadership: Concepts and practice. Sage Publications.
Northouse, P.G., 2018. Leadership: Theory and practice. Sage publications.
Renz, D., 2016. The Future of Nonprofit Leadership and Management. The Jossey-Bass
Handbook of Nonprofit Leadership and Management, New Jersey: Jossey-Bass, pp.734-745.
Robertson, J., 2016. Coaching leadership: Building educational leadership capacity through
partnership. New Zealand Council for Educational Research. PO Box 3237, Wellington 6140
New Zealand.
Rosenbach, W.E., 2018. Contemporary issues in leadership. Routledge.
Shamir, B. and Eilam-Shamir, G., 2018. “What’s your story?” A life-stories approach to
authentic leadership development. In Leadership Now: Reflections on the Legacy of Boas
Shamir(pp. 51-76). Emerald Publishing Limited.
Shin, Y., Sung, S.Y., Choi, J.N. and Kim, M.S., 2015. Top management ethical leadership and
firm performance: Mediating role of ethical and procedural justice climate. Journal of Business
Ethics, 129(1), pp.43-57.
Western, S., 2019. Leadership: A critical text. SAGE Publications Limited.
Xu, A.J., Loi, R. and Ngo, H.Y., 2016. Ethical leadership behavior and employee justice
perceptions: The mediating role of trust in organization. Journal of Business Ethics, 134(3),
pp.493-504.