Review of Empirical Research on Leadership and Firm Performance
Abstract
Introduction
Methodology
Authors | Country/sector | Methods | Respondent | Leadership approaches | FP measures | Relationship between leadership and FP |
---|---|---|---|---|---|---|
Elenkov (2002) | Rusia/multi-sector | Quantitative/hierarchical regression | CEOs and Managers | TA, TF | Subjective NF: Business objectives achievement |
Positive, direct TF has more impact on FP than TA Moderator: Support for innovation |
Koene et al. (2002) | Netherlands/service | Quantitative/hierarchical regression | Employees | Charismatic leadership, Initiating structure | Objective FI: Net profit, Controllable costs, Total sales |
Positive, direct (Charismatic leadership) Moderator: Firm size |
García-Morales et al. (2008) | Europe and America/pharmacy | Quantitative/SEM | CEOs | TF | Subjective FI: ROA, ROE, ROS, Market share, Sales growth |
Positive, both direct and indirect Mediators: Organizational innovation, Organizational learning |
Lee and Liu (2008) | Not identified/not specified | Quantitative/SEM | Employees | TA, TF | Subjective NF: Innovation performance |
Positive, direct TF has more impact on FP than TA |
Carmeli et al. (2010) | Not identified/not specified | Quantitative/regression analysis | Managers | Innovation leadership | Subjective FI: ROA, Sales growth NF: Management-employees relations, Employee relations, Product quality, Product development |
Positive, both direct and indirect Mediator: Strategic fit |
Chan (2010) | Malaysia/banking | Qualitative/interviews | Managers and Employees | Leadership Expertise and Experience | Subjective FI: Repayment rates, Portfolio at risk, Costs, Drop-out rates NF: Membership growth, Operating self-sufficiency |
Positive, direct |
Jian-xun et al. (2010) | China/multi-sector | Quantitative/hierarchical regression | CEOs | TA | Subjective FI: Net profit margin, ROS, ROA NF: Market performance |
Positive, direct |
C. Huang et al. (2011) | Taiwan/multi-sector | Quantitative/CFA | CEOs | TF | Subjective FI: Cost savings, Employee productivity, ROI, ROS NF: Accuracy, Timeliness, Efficiency, Effectiveness |
Positive, direct |
Min et al. (2011) | China/not specified | Quantitative/SEM | Managers | TF, Paternalistic leadership | Subjective NF: Employee job satisfaction, Organizational commitment, Organizational communication |
Positive, direct (TF) Moderator: Trust to leadership |
Özsahin et al. (2011) | Turkey/manufacturing | Quantitative/regression analysis | Managers | Change-oriented leadership, Task-oriented leadership, Relation-oriented leadership | Subjective FI: Profitability, Sale income, Liquidity level NF: Employee job satisfaction, Reputation |
Positive, indirect (task-oriented, relation-oriented) Mediator: Learning orientation |
H. Wang et al. (2011) | China/not specified | Quantitative/SEM | CEOs | Task-focused, Relationship-focused | Subjective FI: Profitability, Sales growth, Asset growth, Market share NF: Competitive status |
Positive, direct (task-focused) Positive, indirect (relationship-focused) Mediator: Employee’s attitude |
Zehir et al. (2011) | Turkey/multi-sector | Quantitative/regression analysis | Employees | Supportive leadership, Participative leadership, TA | Subjective FI: Sales, Market share NF: Defect level of products, Customer satisfaction |
Positive, both direct and indirect Mediator: Organizational culture |
García-Morales et al. (2012) | Spain/automotive, chemical | Quantitative/SEM | CEOs | TF | Objective FI: ROA, ROE, ROS, Market share |
Positive, indirect Mediators: Organizational innovation, Organizational learning |
Peterson et al. (2012) | the USA/technology | Quantitative/SEM | CEOs | Servant leadership | Objective FI: ROA |
Positive, direct |
Samad (2012) | Malaysia/logistics | Quantitative/regression analysis | Managers | TF | Subjective NF: Employee satisfaction, Customer satisfaction |
Positive, direct |
Wilderom et al. (2012) | Nederland/banking | Quantitative/SEM | Employees | Charismatic leadership | Objective and Subjective FI: Profit, Return on capital, Operating costs, Depreciation NF: Efficiency, Customer satisfaction, Managerial behavior, Professional behavior, Service quality, Contact with clients, Market position, Reputation |
Positive, direct |
Zehir et al. (2012) | Turkey/multi-sector | Quantitative/regression analysis | Employees | TA, TF, Laissez-faire leadership | Subjective FI: Operation NF: Quality, Employee |
Positive, both direct and indirect (TF and Laissez-faire) Mediator: Supervisory commitment |
Arslan and Staub (2013) | Turkey/manufacturing | Quantitative/regression analysis | Managers | Theory X and Theory Y | Subjective FI: Turnover, Cost NF: Innovation |
Positive, direct (Theory Y) |
Noruzy et al. (2013) | Iran/multi-sector | Quantitative/SEM | Managers | TF | Subjective FI: Profitability, Sales growth NF: Customer satisfaction, Overall performance |
Positive, indirect Mediators: Organizational learning, Organizational innovation, Knowledge management |
Overstreet et al. (2013) | North American/motor carrier | Quantitative/SEM | Managers | TF | Subjective FI: ROI, Profit, Profit growth, ROS, Operating ratio NF: Operation performance |
Positive, both direct and indirect Mediator: Innovativeness |
Birasnav (2014) | Bahrain/service | Quantitative/hierarchical regression | Managers | TA, TF | Subjective NF: Overall performance compared to competitors |
Positive, both direct and indirect TF has more impact on FP than TA Mediator: Knowledge application |
S. Huang et al. (2014) | China/new venture | Quantitative/Hierarchical regression | Managers | Entrepreneurial leadership | Subjective FI: ROA, ROS, ROE, Cash flow, Gross profit margin NF: Growth |
Positive, both direct and indirect Mediator: Innovation |
Yıldız et al. (2014) | Istanbul/service and industry | Quantitative/SEM | Managers and Employees | TA, TF | Subjective FI: Profitability, Sales, Market share NF: Customer satisfaction, Reputation |
Positive, direct TF has more impact on FP than TA |
Zumitzavan and Udchachone (2014) | Thailand/hospitality | Quantitative/hierarchical regression | Employees | TA, TF, Laissez-faire leadership | Subjective FI: Financial results |
Positive, both direct and indirect Mediator: Organizational innovation |
Alagaraja et al. (2015) | The USA/service | Quantitative/path analysis | Managers | Leadership and People Management | Subjective NF: Productivity, Employee morale, Customer satisfaction |
Positive, direct |
Harsanto and Roelfsema (2015) | Indonesia/multi-sector | Quantitative/SEM | CEOs | TA, TF, Laissez-faire leadership | Subjective FI: Sales growth |
Positive, direct (Laissez-faire) Laissez-faire has more impact on FP than TF Negative, direct (TA) |
Kim and Schachter (2015) | The USA/not specified | Mixed/interview /Hierarchical linear models | Employees | Participative leadership | Subjective FI: Productivity NF: Work quality, Customer service orientation, Managerial effectiveness |
Positive, both direct and indirect Mediator: Followership |
Mutahar et al. (2015) | Saudi Arabia/telecommunication | Quantitative/SEM | Employees | TF | Subjective FI: ROE, ROA, ROS, Market share, Sales growth NF: job satisfaction (salary, physical working conditions, cooperation & teamwork, experience) |
Positive, both direct and indirect Mediator: Organizational learning |
Salehzadeh et al. (2015) | Iran/hospitality | Quantitative/SEM | Managers | Spiritual leadership | Subjective FI: Cash flow, Sales growth, Operating income, Market share, ROE NF: Customer, Internal process, Learning and growth |
Positive, direct |
D. Wang et al. (2015) | China/not specified | Quantitative/SEM | CEOs | Ethical leadership | Subjective FI: Sales growth, Profit growth, ROA, ROI, Market share growth, ROS NF: Efficiency of operations, Social performance |
Positive, direct Moderator: Leader justice orientation |
J. Huang et al. (2016) | China/hospitality | Quantitative/regression analysis | CEOs and Managers | Servant leadership | Subjective FI: Profit, Sales, Growth of assets, Sales growth, Market share NF: Employee morale, Competitive positioning |
Positive, both direct and indirect Mediator: Service climate Moderator: Competitive intensity |
Para-González et al. (2018) | Spain/manufacturing | Quantitative/partial least squares | Managers | TF | Subjective FI: Profitability, Benefits NF: Productivity |
Positive, indirect Mediators: High-performance human resource practices, Organizational learning, Organizational innovation |
Sethibe (2018) | South Africa/not specified | Quantitative/SEM | CEOs | TA, TF, Laissez-faire leadership | Subjective NF: Customer satisfaction, Productivity, Product innovation |
Positive, direct (TA and TF) |
Berraies and Bchini (2019) | Tunisia/knowledge-intensive | Quantitative/SEM | Managers | TA, TF | Subjective FI: ROA, Net profit margin, Profitability, ROI, Sales growth, Market share growth |
Positive, both direct and indirect (TF) Mediator: Innovation |
Chen et al. (2019) | China/multi-sector | Quantitative/SEM | Managers | TF | Subjective FI: ROI, ROE, ROA, ROS, Profitability |
Positive, both direct and indirect Mediator: Innovation |
Jing et al. (2019) | Australia/pharmacy | Quantitative/SEM | Managers and Employees | Leadership paradigms | Subjective FI: Net profits, Sales turnover, Controllable business costs NF: Customer satisfaction, Employee satisfaction |
Positive, indirect Mediators: Vision communication/sharing, organizational climate, leader–follower trust |
Ur Rehman et al. (2019) | Malaysia/not specified | Quantitative/SEM | Managers | TA, TF | Subjective FI: Profit, Sales volume, ROI, Market share NF: New products, Market development, Product quality, Employee commitment, Employee productivity, Personal development, Employee job satisfaction |
Positive, both direct and indirect Mediators: Organizational learning, Innovative culture |
Abasilim et al. (2019) | Nigeria/service | Quantitative/regression analysis | Employees | TA, TF, Laissez-faire leadership | Subjective NF: Employees' commitment |
Positive, direct (TF) |
Hartnell et al. (2020) | The USA/banking | Quantitative/path analysis | Employees | Servant Leadership | Objective FI: Branch deposit volume |
Positive, both direct and indirect Mediators: Goal achievement climate, Organizational citizenship behavior |
Katsaros et al. (2020) | Greek/delivery | Quantitative/SEM | Employees | Autocratic, Democratic, Laisser-Faire leadership | Subjective FI: ROA, ROE, Net Profit Margin, Efficiency Ratio and Total Asset Turnover |
Positive, both direct and indirect Mediator: Readiness to change |
Kittikunchotiwut (2020) | Thailand/multi-sector | Quantitative/SEM | Managers | TF | Subjective FI: Revenue income, sales growth rates, asset after-tax returns, and overall profitability |
Positive, both direct and indirect Mediators: Learning orientation, Firm innovativeness |
Son et al. (2020) | China/multi-sector | Quantitative/SEM | Managers and Employees | TF | Subjective FI: ROI, ROA, ROS, Average profitability, Profit growth, Sales growth NF: Quality development, Customer satisfaction, Responsiveness, Productivity, Cost management |
Positive, both direct and indirect Mediator: Knowledge sharing |
Hanaysha (2020) | Malaysia/banking | Quantitative/SEM | Employees | Authentic leadership | Subjective FI: Sales growth, Market share, Profit growth, ROI |
Positive, direct |
Jensen et al. (2020) | The USA and the EU/multi-sector | Mixed/interviews, regression analysis | CEOs | Transformational leadership | Objective FI: Net profit margin. ROA |
Positive, direct |
Loh and Yusof (2020) | Malaysia/automotive vendors | Mixed/Interviews, PLS-SEM | Managers and Employees | Blue ocean leadership | Subjective FI: Effective cost management NF: Customer satisfaction, Internal Process, Learning and growth |
Positive, direct |
Mekhum (2020) | Thailand/pharmacy | Quantitative/PLS-SEM | Managers and Employees | TA, TF, Laissez-faire leadership | Subjective FI: Not specified NF: Not specified |
Positive, indirect Mediator: Personal Knowledge Management Moderator: Competitive tension |
Siagian et al. (2020) | Indonesia/manufacturing | Quantitative/PLS-SEM | Managers | Affective leadership | Subjective FI: Sales, Operating costs reduction NF: Customer satisfaction, Ability to meet customer needs. |
Positive, Direct |
Su et al. (2020) | China/agriculture | Quantitative/SEM | Managers and Employees | Environmental leadership | Subjective FI: Market share, ROI, Competitive advantage, New market NF: Environmental image, Environmental impact, Green innovation practice outcomes |
Positive, both direct and indirect Mediator: Green innovation practices |
Rehman and Iqbal (2020) | Pakistan/education | Quantitative/SEM | Employees | Knowledge-based leadership | Subjective NF: Satisfaction, Development, Responsiveness, Productivity, Ranking |
Positive, both direct and indirect Mediators: Knowledge management, Innovation |
Gürlek and Çemberci (2020) | Turkey/technology | Quantitative/PROCESS | Managers | Knowledge-based leadership | Subjective FI: Market share, Sales volume, Profitability. Prestige |
Positive, both direct and indirect Mediators: Knowledge management, Innovation |
Anh and Nhàn (2021) | Vietnam/multi-sector | Quantitative/SEM | Managers and Employees | TA, TF, Laissez-faire leadership | Subjective FI: Financial results NF: Customers, Internal processes, Training-Development |
Positive, direct (TA and TF) Negative (Laissez-faire leadership) |
Munawaroh et al. (2021) | Indonesia/manufacturing | Quantitative/PLS-SEM | Employees | Strategic Leadership | Subjective FI: Not specified NF: Not specified |
Positive, direct |
Li et al. (2022) | China/not specified | Quantitative/regression analysis | CEOs | Leadership characteristics | Objective FI: Revenue growth, ROA |
Positive, direct |
Y. Zhang and Wei (2021) | China/multi-sector | Quantitative/SEM | Managers | Change leadership | Subjective FI: Not specified |
Positive, direct |
Y. Zhang and Wei (2021) | China/manufacturing | Quantitative/PROCESS | Managers | Charismatic leadership | Subjective FI: Sales growth, Profit growth, Market share growth |
Positive, both direct and indirect Mediator: Environmental performance |
Nguyen et al. (2021) | Vietnam/multi-sector | Quantitative/PLS-SEM | Managers | Ethical leadership | Subjective FI: Market share, Sales growth, Sales revenue, Profitability NF: Customer satisfaction, Customer retention |
Positive, indirect Mediators: Corporate Social Responsibility, Firm Reputation |
Saeidi et al. (2021) | Malaysia/multi-sector | Quantitative/SEM | Managers | TA, TF, Laissez-faire leadership | Subjective FI: ROE, ROI, ROA, ROS, Market share growth, Sale growth, Net profit margin NF: Customer satisfaction, Internal business processes, Growth and learning |
Positive, both direct and indirect Mediator: Corporate Social Responsibility |
Yi et al. (2021) | China/not specified | Quantitative/SEM | Managers and Employees | Empowering leadership, Directive leadership | Subjective FI: Sales growth, Profitability, ROI, ROA. NF: Efficiency, Quality of innovations, Productivity |
Positive, direct |
Zhang, Bao, et al. (2021) | China/multi-sector | Quantitative/regression analysis | Managers and Employees | TF | Subjective FI: Sales growth, Revenue growth, Net profit margin NFI: Growth in the number of employees; Product/service variety/quality/innovation, Process innovation, New technology, Customer satisfaction. |
Positive, both direct and indirect Mediator: Entrepreneurial information bricolage |
Le and Le (2021) | Vietnam/multi-sector | Quantitative/SEM | Managers and Employees | TF | Subjective FI: Capability in using assets to generate revenues |
Positive, both direct and indirect Mediator: Change capability |
Findings
Descriptive Findings
The Effects of Different Leadership Approaches on FP
Transformational leadership
Transactional and transformational leadership
Transactional, transformational, and laissez-faire leadership
Other leadership approaches
Mediating Mechanism in the Relationship Between Leadership and FP
Organizational learning
Organizational innovation
Organizational culture
Other mediators
Moderating Mechanism in the Relationship Between Leadership and FP
Toward a Unifying Framework on the Relationship Between Leadership and FP
Discussion and Areas for Future Research
Research Design Advancement
Examination of Understudied Leadership Approaches
Inclusion of Emerging Intervening and Boundary Variables
Conclusion
Declaration of Conflicting Interests
Funding
ORCID iD
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