Effect Of Democratic Leadership Styles On Corporate Performance

Project and Seminar Material for Business Administration and Management BAM

Effect Of Democratic Leadership Styles On Corporate Performance


Abstract


This study was carried out to examine the effect of democratic leadership styles on corporate performance using Promasidor Nigeria Limited, Lagos State as a case study. The study was carried out to find out whether there is a significant relationship between democratic leadership style and corporate performance of business organizations, ascertain whether democratic leadership style is being adopted in the operations of Promasidor Nigeria Limited, ascertain if democratic leadership contributes positively to organizational growth and development, find out whether democratic leadership style have a positive impact on employees’ and corporate performance of Promasidor Nigeria Limited, determine how democratic leadership style contribute to the corporate performance of Promasidor Nigeria Limited. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of staff of Promasidor Nigeria Limited, Lagos State. In determining the sample size, the researcher conveniently selected 57 respondents and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables. While the hypotheses were tested using Pearson Correlation statistical tool, SPSS v23. The result of the findings reveals there is a significant relationship between democratic leadership style and corporate performance of business organizations. The study also revealed that how democratic leadership style contribute to the corporate performance of Promasidor Nigeria Limited includes: contributes to effective discussion making, improves policy formulation, promotes effective policy implementation, contributes to the achievement of organizational goals. Therefore, it is recommended that to the leaders should increase the level of democratic practice to spur employee performance in a greater rate. Also, the stakeholders of the private university should encourage the practice of democratic leadership style to further enhance employee performance. To mention but a few.


Table of Content


Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organization of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • APPENDIX
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background of the Study

The kind of leadership employed in an organization determines the extent to which it is effective or ineffective. According to Anees (2013), leadership is critical in every institution or organization because of its far-reaching implications for goal achievement and organizational progress. The effectiveness of social systems is seen to be primarily contingent on the quality of leadership. According to Azka, Tahir, Aslam, and Syed (2011), depending on the leadership style used in the firm, subordinates are either favorably or negatively influenced in terms of achieving corporate objectives. As a result, leadership style is a critical factor in an organization’s success or failure.
Over the years, organizations have strive to ascertain the best leadership style that best influence employees’ and cooperate performance. This search has resulted in endless efforts by researchers to ascertain how leaders operate and the resulting effect on corporate performance through employees. According to (Alghazo& Al-Anazi, 2016), Leadership plays a significant role in buildingafervent environment and encouraging culture in an organization. Ngethe et al. (2012) argued that leadership roles and their styles contributes immensely to employees effectiveness.

This perception is based on the fact that the pattern of leadership adopted can either motivate or demotivate the work force, which in return may increase or decrease workers productivity and tendency of retention in an organization. Thus, leadership is perceived to be personal trait which is reflected in an individual’s potentials and actions. But sometimes, leadership is also associated with the role of managers or experts. This assertion may create some confusion because not all managers are leaders and conversely, not all leaders are managers. However, what is essential in this sense is that good leadership is identified by the level of performance of the organization concerned and its employees(Bass, Avolio, Jung &Berson, (2003).On this premise, Bennis, (2008)reiterated that a leader is someone who identifies the way, works through the way, and leads others to follow way.

The leadership style adopted in managing any organization contributes to the achievement of organizational goals and objectives. Although much progress has been made in understanding leadership styles and their impact on employees’ performance, much has not been known about in the impact of democratic leadership style on the performance of workers especially in business organizations such as Promasidor Nigeria Limited. This is because the effect of leadership in organizational success cannot be over emphasized. A number of business organizations are yet to actualize goals as a result of challenges associated with leadership methods adopted.

Apart from the intricacies of democratic leadership style, how management adopts the style to improve employees’ performance in that organization is also a matter of inquiry. A good leadership style with the intention of an excellent employee performance will invariably turn the fortunes of an organization around. An ample understanding of democratic leadership style and the impact on employees’ job performance is crucial in human capital development in the Nigerian organizations and this is a key factor in the determination of organizational success. Though, certain factors (economic, political and technological) may demand change in leadership styles. In the light of the above, this study seek to examine the effect of democratic leadership styles on corporate performance.


1.2 Statement of the Problem

A leadership style that motivates employees is critical for achieving good corporate performance as noted by Northouse (2014). Sougui, Bon, & Hassan, (2016) established that the four path-goal theory leadership styles namely directive, supportive, participative and achievement had a significant impact on the performance of organizations. Otieno (2015) found out that the democratic leadership styles leads to employee engagement which in turn enhance the corporate performance of the organization.

The problem of poor corporate performance has been perceived during the last decades as an important element in leading. This problem was mainly identified in the area of employees commitment, policy formulation and implementation. However, there is growing evidence to demonstrate that democratic leadership styles engender positive employee work attitudes in the workplace (Kim, 2002; Wright and Kim, 2004). Democratic leadership involves efforts by a leader to encourage and facilitate participation by others in making important decisions (Yukl, 2010). In organizations, it is often necessary to involve others in the process of decision making in order to get decisions approved and implemented. Democratic leaders not only guide group members but also participate actively in the group and acknowledge inputs from group members when making decisions and solving problems. From the aforementioned, this study seek to examine the effect of democratic leadership styles on corporate performance.


1.3 Objective of the Study

The general aim of this study is to critically examine the effect of democratic leadership styles on corporate performance. Specifically, the study is set to:

  1. Find out whether there is a significant relationship between democratic leadership style and corporate performance of business organizations
  2. Ascertain whether democratic leadership style is being adopted in the operations of Promasidor Nigeria Limited.
  3. Ascertain if democratic leadership contributes positively to organizational growth and development.
  4. Find out whether democratic leadership style have a positive impact on employees’ and corporate performance of Promasidor Nigeria Limited.
  5. Determine how democratic leadership style contribute to the corporate performance of Promasidor Nigeria Limited.

1.4 Research Question

The study will be guided by the following the questions;

  1. Is there a significant relationship between democratic leadership style and corporate performance of business organizations?
  2. Is democratic leadership style being adopted in the operations of Promasidor Nigeria Limited?
  3. Does democratic leadership contribute positively to organizational growth and development?
  4. Does democratic leadership style have a positive impact on employees’ and corporate performance of Promasidor Nigeria Limited?
  5. How does democratic leadership style contribute to the corporate performance of Promasidor Nigeria Limited.
    Contributes to effective discussion making
    • Improves policy formulation
    • Promotes effective policy implementation
    • Contributes to the achievement of organizational goals

1.5 Research Hypothesis

Ho: There is no significant relationship between democratic leadership style and corporate performance of business organizations.

Ha: There is a significant relationship between democratic leadership style and corporate performance of business organizations.


1.6 Significance of the Study

This research on the effect of democratic leadership styles on corporate performance will be extremely beneficial to management, employees, and all other actors in organizations as a whole. This study will enable managers to know the types of leadership style to adopt in their effort to achieve organizational set goals as well us how the style will better decision making, and growth in the organization.

Also, this study is important/essential because it will enable the organizations to know the style of leadership preferred by their employee. It will help the leaders to have a better understanding of their employees and know the best leadership style to adopt in order to effectively influence or motivate their subordinates.

Additionally, subsequent researchers will use it as a literature review. This means that, other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regards to the effect of democratic leadership styles on corporate performance.


1.7 Scope of the Study

The study focuses on the effect of democratic leadership styles on corporate performance. The study borders on finding out whether there is a significant relationship between democratic leadership style and corporate performance of business organizations, ascertaining whether democratic leadership style is being adopted in the operations of Promasidor Nigeria Limited, ascertaining if democratic leadership contributes positively to organizational growth and development, finding out whether democratic leadership style have a positive impact on employees’ and corporate performance of Promasidor Nigeria Limited, and determining how democratic leadership style contribute to the corporate performance of Promasidor Nigeria Limited. The respondents for this study will be obtained from the staff of Promasidor Nigeria Limited, Lagos State.


1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.


1.9 Definition of the Study

Leader:

A person who influence and direct the affairs of others.

Leadership Style:

A leadership style refers to a leader’s characteristic behaviors when directing, motivating, guiding, and managing groups of people

Employee:

An employee is simply refers to someone employed by an employer in an organization to work under another person known as the manager or the supervisor officer.


1.10 Organization of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.


Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the effect of democratic leadership styles on corporate performance using Promasidor Nigeria Limited, Lagos State as a case study. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was on the effect of democratic leadership styles on corporate performance using Promasidor Nigeria Limited, Lagos State as a case study. The study is was specifically carried out to find out whether there is a significant relationship between democratic leadership style and corporate performance of business organizations, ascertain whether democratic leadership style is being adopted in the operations of Promasidor Nigeria Limited, ascertain if democratic leadership contributes positively to organizational growth and development, find out whether democratic leadership style have a positive impact on employees’ and corporate performance of Promasidor Nigeria Limited, determine how democratic leadership style contribute to the corporate performance of Promasidor Nigeria Limited.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent were staff of Promasidor Nigeria Limited, Lagos State.


5.3 Conclusions

Based on the findings of this study, the researcher concluded that;

  1. There is a significant relationship between democratic leadership style and corporate performance of business organizations.
  2. Democratic leadership style is being adopted in the operations of Promasidor Nigeria Limited.
  3. Democratic leadership contributes positively to organizational growth and development.
  4. Democratic leadership style have a positive impact on employees’ and corporate performance of Promasidor Nigeria Limited.
  5. How democratic leadership style contribute to the corporate performance of Promasidor Nigeria Limited includes: contributes to effective discussion making, improves policy formulation, promotes effective policy implementation, contributes to the achievement of organizational goals.

5.4 Recommendations

Based on the findings of the study, the following recommendations are proffered.

  1. The leaders should increase the level of democratic practice to spur employee performance in a greater rate. Also, the stakeholders of the private university should encourage the practice of democratic leadership style to further enhance employee performance.
  2. Leaders in organization settings and other areas should apply this leadership style frequently. They should purpose to get employee input when making decisions that affect the employees and the organization in general.

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Frequently Asked Questions


How leadership style affects organizational performance?

There is a considerable impact of the leadership styles on organizational performance. The leadership style influences the culture of the organization which, in turn, influences the organizational performance. Klienet al (2013) proved this fact by using four factor theory of leadership along with

How does Democratic leadership affect job satisfaction?

Sources: 0, 1 In addition to fostering a sense of autonomy, control, and participation in democratic leadership styles, the techniques used in democratic leadership can also play an important role in job satisfaction.

What are the advantages and disadvantages of Democratic leadership?

While the democratic process tends to focus on group equality and the free flow of ideas, the group’s leadership is there to provide guidance and control. The advantages and disadvantages of democratic leadership are similar to those of other leadership styles.

What is Democratic leadership style?

Democratic leadership, also known as shared leadership or participatory leadership, encourages all members of a team to take responsibility for decision-making. There are a number of leadership styles that can be used, such as democratic team building, collaborative leadership, and participatory leadership. Sources: 7

What is the relationship between leadership style and organizational performance?

Relationship between Leadership Styles and Organizational Performance There is a considerable impact of the leadership styles on organizational performance. The leadership style influences the culture of the organization which, in turn, influences the organizational performance. Klienet al (2013) proved this fact by using

What is the relationship between organizational culture and performance?

The fourth group of researches demonstrated that an entrusted relationship subsists between organizational culture and performance together with leadership styles. Leadership styles and organizational culture varied across healthcare organizations and can be linked with indicators of performance and organizational merits.

What is the importance of leadership style?

Leadership style as an aspect of management is very vital for the success of any organization. The quality of leadership can affect the behavior of the subordinates toward the achievement of the organization’s objectives.

Why is it difficult for leaders to increase organizational performance?

However, leaders find it difficult to postulate their kind of styles to the workers and the organization in order to increase their organizational performance. Also, the rate of illiteracy also hinder the organizational performance.

Does Democratic leadership style influence teachers’ job satisfaction and ownership feeling?

Bhatti et al. (2012) study found that the democratic leadership style had positively influence teachers’ job satisfaction and ownership feeling in both private and public schools in Pakistan, where the teachers’ were free to express their fears, propose and exchange their ideas and views.

Does leadership affect job satisfaction?

This is because leaders have an effect not only on identified objectives (Burns, 2007 ). (Henson, 1984; McElhaney, 2003; Schulman, 1989) were investigated. In this context, this study examined the effect of leadership on job satisfaction.

What are the benefits of Democratic leadership style?

Democratic leaders often inspire better cooperation among employees. The democratic leadership style invites workers to discuss the factors that will influence a particular decision. Because of this, workers have a better understanding of the reasoning behind the decisions that are made.

How does Democratic leadership affect creativity in the workplace?

Because one way to encourage creativity in the workplace is to make it easier for workers to share their ideas, employee creativity is greatly enhanced under a supportive democratic leadership. Democratic leaders often work with their employees to set workable goals rather than dictating what might be unobtainable goals.

What are the advantages of Democratic leadership style?

This leadership style encourages trust and respect throughout the team. It takes an open and honest mind to be a using democratic leader. This leadership style allows a team to develop more strength. In addition, this style results in increased productivity. Robust connectivity between team members.

How does Democratic leadership style affect teamwork?

Democratic leadership styles can create feelings of uncertainty within a team because of the need to make fast decisions sometimes. If leaders make these needed decisions without consulting their team, then the team members may wonder when, or if, they’ll be consulted for future needs.

What are the disadvantages of leadership style?

If this process is inefficient, then it can hinder productivity and reduce the pace of the workflow. This disadvantage can often leave employees feeling more frustrated about their team compared to having a leader make decisions immediately. 2. This leadership style in ineffective during crisis situations.

What is democratic leadership?

Democratic Leadership involves not only the leaders but also their employees in every decision-making process. Even though the leaders give the final word-team members participate equally during brainstorming and find a solution to a problem. Thus, it is also called participative or shared leadership.

What are the characteristics of Democratic leadership?

In democrat leadership, participation of group members is highly encouraged but the final say in the decision-making process remains with the leader. The participative style of leadership makes group members feel engaged in the process and stay more motivated and creative.

Is a Democratic leadership style right for your workplace?

Not every workplace, or team, is well-suited to a democratic leadership style. Since the opinions and thoughts of everyone are valued equally, it works best if you have a team of people who are skilled in critical thinking and well-educated. Otherwise, team members may not feel confident enough to offer their opinions.

Who are some examples of Democratic leadership styles?

From politicians like John F. Kennedy to civil rights leaders like Mahatma Gandhi, people from all walks of life have implemented the democratic leadership style characteristics into how they effectively guide others. To find distinct examples of what this type of leadership looks like in action, check out the list below.

What is the democratic/participative leadership style?

The democratic/participative leadership style places significant responsibility on leaders and their staff. This is true for all organizations — from private enterprises and government agencies to educational institutions and nonprofit entities. Read on to discover more about democratic/participative leadership: 

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