Given the importance of family businesses with regard to the economic growth of South Africa, and the fact that their high failure rates have a negative influence on the country’s economy, this study focused on ineffective leadership among family businesses and the influence thereof on business performance. People’s perceptions of leadership are changing, and an ethical, people-centred, character-orientated approach to leadership may be what businesses require. In addition, innovation and employee well-being are being given high priority, and leadership that is ethical and caring is of great importance. The primary objective of this study was twofold, firstly to establish the levels of Ethical, Authentic, Participative and Servant leadership displayed by family business owners and employees in the Eastern Cape, and secondly to establish the influence on the Perceived business performance of the family business of displaying these styles. Poor leadership was identified as a major challenge that family businesses are faced with, and a challenge that contributes to their high failure rate. The literature dealt with the nature and importance of leadership, and both traditional and contemporary leadership styles were elaborated on. The traditional leadership styles identified were autocratic, laissez-faire, transactional, transformational and participative leadership, while the contemporary styles identified and discussed were ethical, authentic and servant leadership. From the literature it was evident that a more ethical, people-centred, character-orientated approach to leadership may be what businesses require to be successful today. The literature highlighted Ethical, Authentic, Participative, and Servant leadership as the more character-orientated leadership styles that positively influence the performance of any business, including family businesses. These leadership styles formed the main focus of this study. In this study a quantitative research design was adopted and a descriptive study of a cross-sectional nature was undertaken. A convenience sampling technique was used owing to the inaccessibility of a family business database. The sample size in this study consisted of 250 small family businesses. A survey was undertaken and a structured, self-administered questionnaire was used to gather the necessary data. The measuring instrument was developed by sourcing items from several existing studies. Family business owners and employees working in the family business were approached by fieldworkers and asked to participate in the study. In total, 266 questionnaires were usable, 133 from family business owners and 133 from family business employees. An effective response rate of 53.20 percent was achieved. The validity and reliability of the measuring instrument were confirmed by means of an exploratory factor analysis (EFA) and by the calculation of Cronbach’s alpha coefficients. Descriptive statistics were calculated in order to summarise the sample data, while t-tests were used to determine whether the differences in mean scores returned by the family business owner and employee sample groups for the leadership styles under investigation, were significantly different from each other. Pearson’s product moment correlations were used to assess the associations between the variables under investigation. A multiple regression analysis (MRA) was used to assess the relationships between the independent variables and the dependent variable Perceived business performance. Lastly, the relationships between selected demographic variables and leadership styles displayed by family business owners were tested by means of an Analysis of Variance (ANOVA). Five factors were extracted from the EFA, four of which were considered for further analysis. The four usable factors extracted could be identified as the theoretical dimensions of Ethical leadership, Participative leadership, Perceived business performance and Servant leadership. The items measuring Ethical and Authentic leadership did not load as expected, as several items measuring the two factors loaded onto one factor. The Cronbach’s alpha coefficients returned for the four usable factors extracted from the EFA were greater than 0.7, and thus the scales measuring the independent and dependent variables provided satisfactory evidence of validity and reliability. The findings of this study show that for both the family business owner and employee sample group, Ethical leadership returned the highest mean score, followed by Servant and Participative leadership. The great majority of the family business owners therefore agreed that they adopted these leadership styles. In addition the majority of family business employees agreed that the family business owner, for whom they worked, adopted these leadership styles. T-tests were conducted to assess whether the differences in mean scores returned by the two sample groups were statistically significant. Significant differences were found between the means scores returned by both sample groups with regard to the level of Ethical and Servant leadership displayed by the family business owner. No significant difference was found between the mean scores returned by both sample groups for Participative leadership. This finding was not surprising, given that socially desirable bias occurs when individuals describe or rate themselves in a manner that is untruthful or in a way that they feel may be viewed favourably by others. From the MRA, no relationships were reported between the independent variables (Ethical, Participative and Servant leadership) and the dependent variable Perceived business performance. The results of ANOVA revealed that there was no relationship between the Gender, Age, Ethnicity, Tenure, Generation, Number of employees and the Nature of the family business and the Ethical, Participative, and Servant leadership styles. However, the results show that family business owners with a tertiary qualification are more likely to adopt a Participative leadership style. Despite no significant relationship found in this study, it is well supported in the literature that the leadership styles investigated have a positive influence on business performance. Family business owners should take cognisance of this, and measures should be taken to ensure that the leadership style implemented in their businesses is ethical, participative and servant-orientated. This study has attempted to enlarge the body of knowledge available on leadership, especially concerning the servant, ethical, people-centred and character-orientated leadership styles. The results of the study differ somewhat from existing literature, and therefore add to the body of knowledge on leadership. Furthermore, this study has addressed a gap in the current literature regarding the influence of leadership on business performance among family businesses in a developing economy such as South Africa.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nmmu/vital:9306 |
| Date | January 2015 |
| Creators | De Witt, Andrea |
| Publisher | Nelson Mandela Metropolitan University, Faculty of Business and Economic Sciences |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Masters, MCom |
| Format | xvi, 222 leaves, pdf |
| Rights | Nelson Mandela Metropolitan University |
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