Keywords

1 Introduction

Recently, leadership styles, strategic planning, organisational culture and performance concepts have been a subject of growing interest for both academics and professionals [1]. Several studies attempted to investigate the associations between leadership, organisational culture types, strategic planning formulation and implementation and organisational performance in both developed and developing countries at different situations from different perspectives during the 20th century in the field of organisational studies and social science [4].

Consequently, many researchers as well as professionals considered those concepts together as the key success factor for many organisations in both developed and developing countries [6]. Moreover, leadership, organisational culture and strategic planning enable the improvement of SMEs performance and growth [4, 22].

Despite the growing number of studies between those constructs, there has been limited empirical work done on the relationship of these factors in one fully integrated model [9]. There is a lack of empirical work on the indirect relationship amongst these variables. For instance, there is limited work on the mediating or moderating impact of different factors on leadership-performance relationship within SME’s context [7, 11]. Moreover, there are very few studies that investigate potential mediators that have an impact on leadership-performance within developing countries and especially in the Middle East and North Africa (MENA) region. Therefore, this study aims to understand this relationship further within this context by taking into consideration the mediating influence of strategic planning and the moderating impact of organisational culture on Egyptian SME’s.

2 Performance, Leadership and Strategic Planning

2.1 SMEs Performance

There is a significant impact of small and medium enterprises (SMEs) economic growth rate for both developed and developing economies [6]. SMEs help to sustainably develop [5, 15] technologically advance innovative solutions to both private and public sectors [1]. They can also provide opportunities for investment and entrepreneurship [26]. Currently, there is a renewed interest to further understand leadership, organisational culture and strategic planning [3] given the need for sustainability and growth [11].

Leadership has a direct influence on group process and outcomes (Bass 1990) and affects growth and development [25, 27]. It has been extensively researched under many different approaches and methods [20]. According to Stogdill [21] organisational performance is defined as a “set of financial and non-financial indicators, which offer information on the degree of achievement of objectives and results”. Van den Berg and Wilderson [23] model firm performance on the basis of the Balance Scorecard, differentiated between financial and non-financial measurement of performance (Table 1).

Table 1. Financial and non-financial components of Balance Scorecard [23]
Full size table

2.2 Leadership Styles

Leadership styles have been a subject of growing interest for both academics and professionals in the fields of Management, organisational behaviour as well as organisational studies [11]. The leadership concept has been the focus of studies for the past twenty years and gradually became a topic of intense interest. This interest stems out from the fact that leaders provide guidelines and they have to motivate their followers to accomplish tasks [2]. According to Robbins and Judge’s study [17], leadership has been defined as a process of interaction between one or more members of a group working towards the same interest. In this context, a leader is considered as being the main driving force for any collaborative teamwork. Stogdill [21] justified the significant role of a leader in restructuring problems, establishes priorities and initiates developmental operations. Furthermore, a leader is seen as a person with popular traits of personality, character and charisma [10].

The Full-range leadership model was proposed by Tosi et al. [22]. It has been continuously tested by various researchers and remains the most widely accepted and researched. The Full range leadership theory was the catalyst that moved the leadership field forward from the trait approaches of the 1930s, the behavioural approaches of the 1950s and 1960s, and the contingency theories of the 1960s and 1970s. The Full-range leadership model is arguably the most validated leadership model in use today [18]. It consists of three distinct leadership styles; transformational, transactional and laissez-faire leadership. These three styles are represented by nine distinct factors of leadership using the survey instrument called Multifactor Leadership Questionnaire. Until now, the full range theory of leadership comprises of five transformational leadership factors, three transactional and one non-transactional laissez-faire. Albloshi and Nawar [2] concluded that despite some of the shortcomings in the theoretical background and measurement, the Multifactor Leadership Questionnaire form 5X, which is used in this study, is a valid and reliable instrument that can adequately measure the nine components including the Full-range theory of leadership.

2.3 Organisational Culture

Organisational culture has attracted significant research attention from the last decade of the 20th century [20]. Researchers have attempted to provide a universal acceptable definition of organisational culture. However, there is no single definition of organisational culture [20]. Robbins and Judge [17] provided a comprehension definition that could be applied to almost all types of organisations:

“For any given group or organisation that has a substantial history, organisational culture is

  1. (a)

    A pattern of basic assumptions,

  2. (b)

    Invented, discovered, or developed by a given group,

  3. (c)

    As it learns to cope with its problems of external adaptation and internal integration.

  4. (d)

    That has worked well enough to be considered valid and, therefore,

  5. (e)

    Is to be taught to new members as the

  6. (f)

    Correct way to perceive, think, and feel in relation to those problems” [17].

The competing values framework for organisational analysis was developed by Antonakis and House [3], Moorman [14], and Bass [7]. The focus has been on organisational effectiveness. It is based on two dimensions that emphasise the competing values of (a) focus (external versus internal) and (b) structure (control versus flexibility). These two dimensions are the basis of a matrix of four quadrants with each of which representing a different type of culture. These are (1) clan, (2) adhocracy, (3) hierarchy, and (4) market [7].

2.4 Strategic Planning

Strategic planning roots back to the mid of the 20th century between 1950s and 1960s. Initially, it was, strategic management that gained its reputation primarily within military contexts. Progressively, the term was widely introduced in business activities and governmental agencies. According to Robbins and Judge’s [17], strategic management is considered to be a management tool. It includes different components that enable organisations to establish their goals and objectives. Currently, strategic planning is considered as an effective tool to produce and evaluate organisational strategy [19]. Nawar and Dagam [15] defined strategic planning as an organisational process in which decisions are made by different departments concerning specific goals and activities. Robson [27] defined strategic planning as “the process of developing and maintaining consistency between the organization’s objectives and resources and its changing opportunities” [27].

3 Conceptual Model and Hypothesis Development

3.1 Leadership and SMEs Performance

Leaders are considered as the major catalyst factor for the success, improvement performance and growth of an organisation for both developed and developing countries. The significant impact of leadership styles on an organisation’s performance is well document in the literature. This relationship is well documented with a strong association between the two concepts [26]. Most research findings argue that the leadership style has a significant impact on the performance output. Leaders can significantly increase the motivation of employees in order to achieve the desirable and required objectives as well as boosting and sustaining firm performance [26]. The impact of leadership on SME’s is well documented in the literature review. Robbins and Judge [17] studied the effect of leadership styles on the business performance of SMEs within a Malaysian context. They concluded that there is a significant positive association between both transactional transformational leadership style and business performance within small to medium enterprise SME’s. Furthermore, they suggest that there is a negative association between passive avoidant leadership style and firm performance. In Fact, this paper aims to re-examine the relationship between leadership styles and SMEs performance with focusing on moderating and mediating impact of organisational culture and strategic planning. More specifically, the paper investigates the direct and indirect relationship between different research constructs.

3.2 Strategic Planning as Mediator on Leadership and Performance

Several studies have addressed the relationship between the leadership styles and strategic planning, the impact of leadership styles on organisational performance, and the influence of strategic planning on a firm’s performance. However, most of those studies are limited to assessing associations between those variables in large enterprises. They focus on investigating the direct relationship between leadership styles, strategic planning on SME’s performance considering each concept separately [16]. They have also been carried out in the developed western context. Limited research has focused on investigating the relationship between leadership styles and strategic planning in relation to SME’s performance within developing or emerging economies. Also, there is a limited research to the indirect relationship between these variables. A gap in the existing literature can be identified on whether organisational culture mediates the relationship between leadership styles and organisational effectiveness. The paper describes some results that aim to understand better this gap.

3.3 Organisational Culture as Moderator on Leadership and Performance

Few empirical studies investigated the moderation impact of organisational culture on the relationship between leadership and performance. Albloshi and Nawar [2] examined the moderating effect of organisational culture type on the relationship between leadership and knowledge management process in the context of small-to-medium sized enterprises operating in Austria. They found that the effectiveness of leadership behaviour depends upon the type of organisational culture. They also suggest that leaders should use this mechanism effectively in order to establish the forms of thinking and the levels of motivation and behaviours that are important for the organisation (Fig. 1).

Fig. 1.
figure 1

Conceptual framework of the mediation impact of strategic planning and the moderation effect of organisational culture on leadership performance within Egyptian SMEs.

Full size image

4 Hypotheses and Methodology

4.1 Proposed Hypothesis

Based on the existing literature review, this paper proposes the following research hypotheses:

H1: :

There is a significant relationship between leadership styles and SMEs performance.

H2: :

The relationship between leadership style and organisational performance is moderated by organisational culture.

H3: :

Strategic planning mediates the effect of leadership styles on organisational performance.

In order to achieve the main objectives of this study and to evaluate the research propositions, a positivistic research philosophy was followed by a deductive research design. A quantitative research method was applied in which the data collection was implemented using a self-administrated questionnaire. The questionnaires were distributed as “hard copies” to target participants. This approach was considered to be the most appropriate way to collect the data within the Egyptian context for several reasons. Firstly, official reports and data on the SME’s are limited due to poor reporting practices in the manufacturing sector in Egypt. Secondly, telephone interviews and postal surveys are not widely used in Egypt due to its high cost and low response rate. Lastly, as this is a national study, it is vital that a wide geographical spread of respondents is obtained. A convenient sample technique was used in order to collect data from 50 SMEs operating in Egypt. In fact, 50 out of 75 organisations agreed to participate in this study. The data collected was analysed using the Statistical Package for Social Sciences Version 22 (SPSS 22).

4.2 Research Instruments

The Multifactor Leadership Questionnaire (MLQ form 5X) developed by Bass et al. [6] was used to measure the full range leadership styles (independent variables) from Iranian private organisations. The full range leadership styles developed by Bass and Avolio were derived from Burns study [5] on the transformational and transactional leadership. The transformational leadership style was measured based on 5 different dimensions. These were (a) idealised attributes, (b) idealised behaviours, (c) inspirational motivation, (d) intellectual stimulation, and (e) individual consideration. Consequently, transactional leadership style was measured using two dimensions: (a) contingent reward and (b) management by expectation active. In addition, passive/avoidant leadership style was measured using two dimensions: (a) management by expectation passive and (b) Laissez-Faire. A 5-point Likert scale ranging from not at all to frequently, if not always (5) was used to assess leadership styles in this specific study.

On the other hand, the moderator variable organisational culture in this study was measured using the Competing Values Framework (CVF). It is widely accepted as the most appropriate measurement instrument for this measurement [21]. The CVF was developed by Bass and Nawar and Dagam [7, 15] and consists of four main types. These are (a) clan culture, (b) adhocracy culture, (c) market culture, and (d) hierarchy culture. Again, the 5-point Likert scale was used to assess this parameter.

The third section of the questionnaire measures the strategic planning (as a mediator variable) using a multidimensional approach adapted for this study. The characteristic of the strategic planning measurement scale was taken from a valid test in the literature introduced by Yukl and Van Fleet [26]. The SME’s performance (as a dependent variable) was measured using the concept of a Balanced Score Card developed by Robbins and Judge [17, 24]. The final section of the questionnaire gathered demographic data of the sample.

4.3 Procedure

Four different stages of data analysis were followed with the aid of SPSS (version 22 [5, 15]). The first stage checked the reliability analysis of all variables under investigation through the Cronbach Alpha method. The second stage analysed the demographic part of the questionnaire of the sample using descriptive statistics. The third stage evaluated the direct relationship between the independent variables (leadership styles), dependent variable (SMEs performance), the mediator variable (strategic planning) and moderator variable (organisational culture) using correlation coefficients and regression analysis. This determined the degree of associations between pairs of variables. Finally, the last stage evaluated the indirect relationship between research variables and gathered an overall viewpoint of the role organisational culture as moderator and strategic planning as mediator of the relationship between leadership styles and organisational performance within Egyptian SMEs. A multiple regression analysis was used in order to test the proposed hypothesis.

5 Results and Discussions

Figure 2 shows the demographic analysis of the sample. 80 % of the respondents were aged between 25 and 34 with a gender distribution of 40 % males and 60 % females. 50 % of the sample was educated at a postgraduate level. Approximately 50 % of the sample had prior working experience ranging between 6 and 10 years and 45 % of the sample was operating in the construction sector.

Fig. 2.
figure 2

Demographic profile of the Egyptian sample

Full size image

Table 2 shows the results from Cronbach alpha that measured the internal consistency of the variables corroborated other findings in the literature relating to the acceptable level of reliability analysis [8, 12].

Table 2. Indicates that all variables investigated were reliable
Full size table

Table 3 is divided into two parts, the first part shows the direct relationship between the variables, and the second part shows the indirect. For the direct relationship between the variables, there are five positive and one negative relationships:

Table 3. Testing research hypotheses using correlations and regression.
Full size table
  1. (a)

    A positive between leadership styles and organisational performance.

  2. (b)

    A negative between strategic planning and organisational performance.

  3. (c)

    A positive between organisational culture and performance.

  4. (d)

    A positive between leadership styles and organisational culture.

  5. (e)

    A positive between leadership and strategic planning.

  6. (f)

    A positive between strategic planning and organisational culture.

These findings are in support of this study’s hypotheses. As for the indirect relationship, three outcome relationship results were found. There is a positive indirect relationship between transactional leadership and organisational performance. Therefore, organisational culture moderates the relationship between leadership and organisational performance. There is also a positive indirect relationship between leadership and organisational performance. This relationship is mediating by the existence of strategic planning.

6 Conclusion and Future Work

The results suggest that organisational culture is considered as a moderator on the relationship between different leadership style and organisational performance. Strategic planning is considered as mediator on the relationship between leadership-performance relationships within Egyptian’s SMEs. These findings are significant as they provide an overall viewpoint of the existence of direct and indirect relationships between the parameters of leadership and organisational performance in emerging economies. This study is a part of wider study that aims not only to identify these relationships in emerging economies but also to compare those results with developed economies. The identification of similarities and difference between the two contexts is important to help us understand the way in which framework conceptual models can be adapted for particular geographical locations and contexts.