Effect of transformational, democratic and autocratic leadership styles on change management in Small and Medium Enterprises in Nairobi

Abstract

In the modern dynamic business environment, managing change has become quite imperative for the sustainability and competitiveness of the SMEs. SMEs in Kenya’s accommodation and food sector face a critical dilemma while they are essential drivers of economic growth, many struggle with managing organizational change effectively due to mismatched leadership styles. The prevalence of autocratic leadership limits adaptability and employee engagement raising concerns about which leadership styles are most effective for facilitating change in this context. This study, therefore, examined the effect of three styles of leadership: transformational, autocratic and democratic on change management of SMEs in Nairobi, Kenya. The purpose of the study was to address the issue of adapting SMEs to dynamically changing markets, focusing on the development of leadership competencies and their role in encouraging engagement among employees, minimizing change resistance and increasing organizational adaptability. The research relied on Full Range Leadership Theory and Kurt Lewin's Change Theory. The study used a positivist research philosophy with a descriptive cross-sectional research design. Primary data was collected via structured questionnaires targeting SME owner or managers with 197 participants selected using judgmental sampling technique while descriptive and inferential statistical data analyses was carried out to look for patterns in the data. Findings suggest that autocratic leadership is the most prevalent style of leadership in SMEs in Nairobi County with transformational leadership being the least popular of the three. According to the results of inferential statistics, transformational and democratic leadership have significant positive effect on change management, with the effect of transformational leadership being substantially stronger. On the other hand, autocratic leadership had significant negative effect on change management. Therefore, this study concludes that transformational and democratic leadership styles effect successful change whereas autocratic leadership is detrimental to successful leadership. This study provides incremental value by filling the empirical gap in the literature on culturally adaptive leadership strategies, and it provides actionable insights that might be useful for policymakers, leaders of SMEs and researchers. The findings contribute to a broader understanding of culturally adaptive leadership strategies, emphasizing its role in sustaining organizational growth and resilience in emerging markets.