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Leadership styles and strategy process research: A study of Dutch small and medium-sized enterprises

Nijkamp, Y. (2016) Leadership styles and strategy process research: A study of Dutch small and medium-sized enterprises.

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Abstract:Background: Researchers have confirmed that the behavior of leaders influences group and organizational behaviour, but less is known about leaders’ influence on the effectiveness of strategy generation and strategy execution processes. However, leadership is an important ingredient for the success of organizations. American researchers found that only 8% of the leaders are both good at strategy generation and strategy execution. This suggests that it is worthwhile to take a closer look at this subject. Purpose: This study reviews the role of leadership in affecting the effectiveness of strategy generation and execution. The primary objective of this research is to investigate the perceived role of leadership regarding the strategy generation and execution processes at Dutch small and medium sized enterprises (SMEs). Secondary objectives are to gain an understanding of the nature and challenges of both leadership and strategy processes. A clear understanding of the relationship between different styles of leadership and the strategy performance of an organization is missing in existent literature. The focus is on the strategy generation and execution phase of the strategy process. The main research question is: ‘What effect does the style of leadership have on the effectiveness of strategy generation and execution process at Dutch SMEs?’ Methodology: A quantitative research method is chosen to collect the data. An online research questionnaire was used to collect the data from a sample of SME business leaders. In total 166 business leaders completed the questionnaire whereof 93 are currently working at a Dutch SME. In order to define the style of leadership the Path-Goal questionnaire of Indvik (1985;1988) with 20-items used. This questionnaire is related to the Path-goal theory which defines four main leadership styles: directive, supportive, participative and achievementoriented. The effectiveness of both strategy generation and strategy execution is examined through the characteristics of both processes therefore a 5 point Likert-Scale is used. Both parts of the questionnaire (leadership and strategy generation and execution) are a self-report of each business leader. After assessing the data for reliability and validity, correlation and multiple regression analysis were performed to test the relationships. A multiple regression analysis is performed to investigate whether each style of leadership has a significant impact on the effectiveness of both strategy generation and execution. Conclusions: The results show that only 5,4% of the business leaders at Dutch SMEs are both very effective at strategy generation and strategy execution. However, 46,2% identified themselves as ‘effective’ regarding both strategy generation and strategy execution. Looking at each leadership style individually, there are 24 directive, 28 supportive, 35 participative and 6 achievement oriented leaders within the sample. Results of the multiple regression showed that the style of leadership will not significant influence both the effectiveness of strategy generation and execution. The directive leadership style shows a negative coefficient and the other three leadership styles indicate a positive coefficient. The achievement-oriented leadership style has on both aspects the highest positive coefficients related to the effectiveness of strategy generation and execution. However, none of the effects are significant.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:https://purl.utwente.nl/essays/71513
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