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Transformational leadership, corporate governance practices and small and medium-sized enterprises (SMEs) performance: a developing nation perspective

Author

Listed:
  • Mahadih Kyambade

    (Makerere University Business School)

  • Afulah Namatovu

    (Makerere University Business School)

  • Monica Tushabe

    (Makerere University Business School)

Abstract

This study investigates the interplay between transformational leadership, corporate governance practices, and SME performance, drawing upon insights from Stakeholder Theory. According to Stakeholder Theory, companies should take into account the interests of all parties involved in the decision-making process. The study explores how transformational leadership behaviours such as vision-setting, empowerment, and employee engagement, interact with corporate governance practices to influence SME performance. Data were collected through self-administered questionnaires distributed to SME employees and owners in Uganda. Data were analyzed using AMOS structural equation modeling software to examine the mediating role of corporate governance practices in the relationship between transformational leadership and SME performance. The findings indicate that transformational leadership has a significant positive effect on SME performance. Furthermore, corporate governance practices partially mediate this relationship, highlighting the importance of governance mechanisms such as board composition, transparency, and accountability, in fostering ethical leadership and enhancing stakeholder engagement. These insights contribute to a deeper understanding of the mechanisms driving SME performance and inform strategies for improving leadership effectiveness and corporate governance practices, particularly within SMEs in developing countries. The study emphasizes the need for integrated leadership and governance approaches to achieve sustainable SME growth.

Suggested Citation

  • Mahadih Kyambade & Afulah Namatovu & Monica Tushabe, 2025. "Transformational leadership, corporate governance practices and small and medium-sized enterprises (SMEs) performance: a developing nation perspective," SN Business & Economics, Springer, vol. 5(9), pages 1-26, September.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:9:d:10.1007_s43546-025-00899-4
    DOI: 10.1007/s43546-025-00899-4
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    References listed on IDEAS

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