Leadership paradigms and performance in small service firms

Abstract

Abstract The effects of employee-perceived leadership paradigms on multiple measures of firm performance collected from managers and customers in small businesses were examined. Four leadership paradigms operating in Australian retail pharmacies were assessed against six performance measures – financial outcomes, staff and customer satisfaction, productivity, retaining staff, and manager retention. Structural equation modeling, regression, and analysis of variance were employed to test the hypotheses. Predictions that firms characterized by visionary and organic/distributed leadership would outperform those using classical and transactional leadership were supported on all measures. Furthermore, the emerging organic leadership paradigm outperformed the others on every measure.