The Relationship between Democratic Leadership Style and SMEs Growth in the Top 100 SMEs in Kenya

Abstract

The study sought to investigate the relationship between democratic leadership style and small medium enterprise growth in the top 100 KPMG SMEs in Kenya. A causal research design was employed to investigate the relationship between the independent variable with key constructs being orientation towards teamwork, innovative and creative, delegation of responsibilities and transparency and the dependent variable constructs being workforce growth, sales growth and return on assets. From a target population of 553 owners and Managers of the top 100 KPMG SMEs of 2013 using Stratified random sampling technique a sample of 227 was obtained. The study relied on primary data that was collected using closed-ended questionnaires. Data was analysed using Pearson's correlation, multiple regression and chi-square techniques. The study findings established that democratic leadership style and SME growth had a strong positive association (r =0.713, p = 0.021 (p< 0.05); the null hypothesis was rejected and alternative hypothesis accepted since the p value was less than alpha =62.146; df. = 52; p= 0.000(p<0.0.) The study concluded that democratic leadership style affected the overall performance of an organization as the employees found satisfaction in their work which positively affected their creativity and innovativeness which in turn affected the overall success and growth of the organization.  It was recommended that leaders of SMEs should include employees in the decision-making process in order to facilitate growth of the enterprise.