Transformational Leadership and Employee Performance in Singaporean SMEs

Abstract

In Singapore, like many countries, economic vitality hinges on the profitability of small and medium enterprises (SMEs). The key to their success lies in the link between leadership style and employee performance. Despite extensive research on the impact of leadership on employee performance, there is a gap in understanding how transformational leadership specifically influences employee performance within Singaporean SMEs. This study addresses that gap, aiming to provide empirical insights crucial for the local context. A correlational research design is employed to investigate relationships among the variables. A questionnaire, administered via Qualtrics XM to 200 participants, collected data on demographics and four tenets of transformational leadership using a five-point rating scale. Structured Equation Modelling techniques were employed using Smart-PLS version 4 for the analysis of the collected data. The conceptual model demonstrated strong construct validity and reliability. The findings reveal two significant relationships: intellectual stimulation (H4) and individualized consideration (H5) within transformational leadership positively affect employee performance in Singaporean SMEs. This suggests that leaders’ encouragement to be innovative and cater to the followers’ needs are more likely to foster higher performance in the organization.