Do leadership styles matter in microfinance performance? Empirical evidence from Ghana

Abstract

The study draws on the relevance of the full range leadership proposition by showing the relative ability of leadership styles to influence organisational performance in microfinance sector of Ghana. Ghanaian microfinance sector has been concerned with building vibrant institutions within the financial sector. In this direction, managers of these institutions need to bring their leadership styles to bear on the strategic and operational decisions. The objective of the present study is to examine the effect of leadership styles on organizational performance of microfinance institutions in the Greater Accra region of Ghana. The study employed cross sectional survey design using correlation and regression analysis. A simple random sampling technique was used to select 121 institutions in 2014. Multifactor Leadership Questionnaire was used to measure the variables of leadership styles while the business dimension of Malcolm Baldrige National Quality Questionnaire was used to measure organizational performance. The present study found that microfinance managers exhibit transformational, transactional and laissez-faire leadership styles. However, the dominant identified leadership style is transactional. Analyses of data revealed that transformational leadership style has signif icant positive ef fect on organizational performance of the institutions. The age of the firmis an important factor in performance while tertiary education of leaders do not matter in the context of young microfinance sub-sector in the Greater Accra region of Ghana. It is recommended that transformational leadership style should be encouraged for the management of microfinance institutions.

Keywords: Leadership Styles, Microfinance, Organizational Performance