Researching on the influence of leadership style on employee performance in small and medium enterprises in Vietnam

Researching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in VietnamResearching on the influence of leadership style on employee performance in small and medium enterprises in Vietnam

-NGUYEN NGOC HUNG

RESEARCHING ON THE INFLUENCE OF LEADERSHIP STYLE ON EMPLOYEE PERFORMANCE IN SMALL AND MEDIUM

The work was completed at University of Commerce

Science instructor:

1 Assoc.Prof.Dr Nguyen Thi Bich Loan

2 Dr Nguyen Thi Thanh Nhan

Review 1:

Review 2:

Review 3:

The thesis will be defended before the School level Thesis Evaluation

Council at the University of Commerce

At ……hour ……day ……month ……year …………

1 Nguyen Ngoc Hung (2020), “Leadership style measurement scale in

Vietnamese enterprises”, Industry and Trade Magazine, no 9/2020, pp

178-183

2 Nguyen Ngoc Hung (2021), “The influence of transformational leadership

style on employee performance: A study in small and medium enterprises in Hanoi”, Industry and Trade Journal, no 20/2021, pp 158-162

3 Nguyen Thi Bich Loan, Nguyen Ngoc Hung (2022), “The impact of

leadership style on employee performance in small and medium enterprises in Vietnam”, Journal of Commercial Science, no 170/2022, pp 40-55.

1 The need for research

In Vietnam's economy, the small and medium enterprises sector currentlyplays an active role as one of the four decisive driving forces with fast growth, animportant factor in employment and income for workers play an important role inthe implementation of the country's social security policy Employee performance

is very important and is a decisive factor in the success of businesses, especiallysmall and medium enterprises with limited resources Boxall & Purcell (2003) haveshown that individual job performance will determine the overall performance ofthe whole enterprise

Leadership style plays an important role in the success of every business ingeneral and small and medium enterprises in particular The first studies of Lewin,Lippitt and White (1939), then there are many theories of leadership style such aseffective leadership style according to the study of Stogdil (1948), influenceleadership style according to the study of Stogdil (1948), influence leadership styleaccording to the study of Stogdil (1948), influence leadership style according toresearch by French & Raven (1959, Yukl (1992), Fieldler's contingent leadershipmodel (1964), situational leadership style (Hersey & Blanchard, 2008) Next, it can

be said that leadership style Comprehensive directing Bass & Avolio (2004) andBass & Riggio (2006)

The characteristics of Vietnamese small and medium enterprises are limitedresources and competitiveness, while leaders of small and medium enterprisesoften focus on business activities such as sales, market development, mobilizingcapital, but not focusing on employee development, not focusing on findingsolutions to improve employee performance through the impact of leadership style.Cummings and Schwab (1973) affirmed that if comparing all factors of theenterprise affecting employee performance, leadership style is the factor that must

be put on top In Vietnam, research on leadership style is still sketchy and there is

no research on the influence of leadership style on employee performance insmall and medium enterprises

From that theoretical and practical aspect, the PhD student chooses the

thesis topic “Researching on the influence of leadership style on employee

performance in small and medium enterprises in Vietnam.”

2 Research objectives and questions

2.1 Objectives of the research

The specific objectives of the thesis are as follows:

- Building a research model on leadership style and the influence ofleadership style on employee performance on the basis of theoretical overviewand related research Building the research scale and hypothesis.

- To test the influence of leadership style on employee performance insmall and medium enterprises in Vietnam

- Proposing solutions to improve leadership style to improve employeeperformance in small and medium enterprises in Vietnam

- How are leadership styles and employee performance measured?

- How does leadership style affect employee performance in small andmedium enterprises in Vietnam?

- What solutions are needed to improve the leadership style, contributing toimproving employee performance in small and medium enterprises in Vietnam?

3 Object and scope of the research

3.1.1 Research subjects

The thesis studies the influence of leadership style on employeeperformance in small and medium enterprises in Vietnam

3.2 Research scope

Spatial scope: The thesis studies Vietnamese small and medium

enterprises with operating time of 5 years or more In which the research andsampling are small and medium enterprises in Hanoi, Da Nang and Ho ChiMinh City representing the three regions of North, Central and South

Scope of time: The thesis synthesizes secondary data of Vietnamese

small and medium enterprises from 2017 to present Proposals to improveleadership style to improve employee performance are oriented towards 2030

Scope of content: The thesis studies the influence of leadership style on

employee performance in small and medium enterprises in Vietnam The thesisapproaches leadership style according to the comprehensive leadership styletheoretical framework of Bass & Avolio (2004), Bass & Riggio (2006) Thethesis approaches the employee performance according to the theoreticalframework of Koopmans (2011)

4 Research Methods

To achieve the research objectives, the author used a combination of tworesearch methods, which are qualitative research methods and quantitative researchmethods

5 Scientific and practical significance of the research topic

The thesis has contributions that are consistent with the goals set outinitially

5.1 Contribution to theory

- On the basis of an overview and selective inheritance of domestic andforeign studies, the thesis builds a research framework on leadership styles andemployee performance in the Vietnamese context The thesis clarifies anddevelops some concepts of leadership style and employee performance in smalland medium enterprises

- The thesis builds models and research hypotheses on the influence ofleadership style on employee performance in the context of small and mediumenterprises in Vietnam

- The thesis adjusts a number of scales of leadership style, and at thesame time adjusts and adds a new scale of employee performance suitable tothe context of Vietnamese small and medium enterprises

5.2 Contribution to practice

- Through data analysis, the thesis has tested the research model of theinfluence of leadership style on employee performance in small and mediumenterprises in Vietnam The test results show the influence of 7 factors ofleadership style on employee performance in small and medium enterprises inVietnam, of which 6 factors positively affect the employee performance is:Idealized Influence; Inspirational motivation; Intellectual stimulation;Individualized consideration, Contingent reward; Management by Exception-

active One factor that has a negative impact on employee performance is the

laissez-faire leadership style

- The thesis proposes solutions to improve leadership style in order toimprove employee performance in small and medium enterprises in Vietnam

6 Structure of the thesis.

In addition to the table of contents, the lists, the introduction, theconclusion, the research works related to the topic, the appendix, the thesisconsists of 5 chapters:

Chapter 1: Overview of research on leadership style, employee performance,the influence of leadership style on employee performance

Chapter 2: Theoretical foundations and research models

Chapter 3: Research Methods

Chapter 4: Research results on the influence of leadership style onemployee performance in small and medium enterprises in Vietnam

Chapter 5: Discuss research results and recommendations

CHAPTER 1 RESEARCH OVERVIEW ON LEADERSHIP STYLE, EMPLOYEE PERFORMANCE, THE INFLUENCE OF LEADERSHIP STYLE ON

EMPLOYEE PERFORMANCE 1.1 Research overview on leadership styles

From 1939 to now, there are many authors who have studied leadershipstyles with different approaches:

Leadership style according to the typical behavioral approach is studied

by Lewin, Lippitt and White (1939); Ohio University (1948); research by theUniversity of Michigan (1949) ; Robert Blake and Jane Mouton (1964)

Leadership style according to the trait approach: Characteristics of effective

leadership style according to research by Stogdil (1948); Characteristics of

successful leadership (Stogdil, 1974); Digman's five-element model (1990)

Leadership style according to influence approach , typically the study ofFrench & Raven (1959), Influence leadership style according to Yukl (1992)

Situational leadership style, typically the authors Tannenbaum & Schmidt(1958); Fieldler's Random Leadership Model (1964); Model Vroom and Yetton(1973); House's trail goal theory (1974, 1992, 1996); Alternative leadership stylesaccording to Kerr & Jermier (1978); Yukl's Multidirectional Connection Leader(2002); Cognitive theory according to the research of Fiedler (1986); Situationalleadership style theory (Hersey & Blanchard, 2008)

Reciprocal leadership style: A study of Goleman's primitive leadership style(2001); Leadership by emotional intelligence according to research Goleman(1998), Stough (2002); Rost & Barker's relational leadership model (2000); Servantleadership style, research by Greenleaf (1977)

Holistic Leadership Style: Bass & Avolio (1997, 2004) and Bass & Riggio(2006) offer the full range of leadership model with three leadership styles asholistic process the dimensions (transformational leadership, transactionalleadership, faire leadership consisted of nine elements and were measured by theMultifactor Leadership Questionaire (MLQ) In particular, the nine elements of acomprehensive leadership style include: Idealized Influence Attribution,Idealized Influence Behavior, Inspirational Motivation and intelligentstimulation, and individualized consideration, Management by exception-active, Management by exception - passive, faire leadership

1.2 Research overview on employee performance

Armstrong and Baron (2005) prove that increased employee performancewill increase organizational performance There are many authors who havestudied employee performance (Employee performance or Job performace)according to different concepts and approaches According to Fly & Cox(1989), the employee's work result is the employee's job completion in terms ofcriteria such as actual time compared to the standard time, volume, and quality

of output out from the standard

The above traditional views on employee performance do not address thework behavior that leads to employee performance Some researchers laterintroduced the concept of job performance from a behavioral point of view andargued that if only evaluating employee performance based on results, it wouldnot reflect the true value that employees brought to the organization Inworking process Murphy (1989) argues that employee performance is the set

of employee behaviors aimed at achieving organizational goals According toBorman & Moowwidlo (1993), employee performance are measured by twofactors: (1) employee performance are assigned according to obligations, (2)employee performance are generated And employee performance are assignedaccording to obligations and job performance generated by context are twoindependent contributing behaviors to job performance These two factorsdescribe the specific behavior of an employee in producing employeeperformance

Inheriting the studies of Campbell, Borman & Motowidlo, the study ofKoopmans (2011) has added 2 additional variables measuring work performance.Koopmans has introduced a 4 variable model to measure employee performance,including: task performance, contextual performance and adaptive performance,counterproductive behavior However, then the research of Koopmans et al (2013 )proved that adaptive performance is a factor of the contextual performance factor

1.3 Research overview on the influence of leadership style on employee performance

Bass, Avolio (2003) researched the transformational and transactionalleadership styles of 72 light infantry leaders to assess the effectiveness,coherence, and performance of U.S military units engaged in combat simulationexercises Both the transformations and transactions of the army leadership andthe sergeants predicted the performance of the unit Raed Awamle (2004) foundthat transformational leadership, transactional leadership, and effectiveness areall related to job satisfaction and thereby improve job performance

Adler & Reid (2008) demonstrated a positive relationship betweentransformational leadership style, transactional leadership style and employeeperformance Azka Ghafoor, Tahir Masood Qureshi (2011) has studies therelationship between transformational leadership, employee engagement, andemployee performance, showing the relationship between transformationalleadership , employee engagement, and employee performance employee work Sundi (2013) evaluated the influence of Transformative and transactionalleadership styles on employee performance Research results show thattransformational and transactional leadership styles both positively affectemployee performance OSabiya Babatunde (2015) has shown the impact ofleadership style on employee performance in an organization

Nguyen Minh Ha, Pham The Khanh, Le Khoa Huan (2014) studied theinfluence of Japanese leadership style on employee performance at Japanesecompanies in Vietnam The results show that Performance (P) leadership style

affects 60.7% of employees performance, Maintenance (M) leadership styleaffects 18.6% of employees performance Performance & Maintenance affects61.7% of employee performance Cao Minh Tri, Cao Thi Ut (2017) studied theimpact of leadership style factors on the performance of civil servants inprofessional agencies in Soc Trang province The results of the regression analysisshow that there are 6 factors affecting the performance of civil servants indescending order of impact: (1) Management by exception-active, (2) IdealizedInfluence Attribution, (3)intellectual stimulation, (4) inspirational motivation (5)Individualized consideration, (6) Contingent Reward

Vu Thi Anh Tuyet (2019) found that transformational leadership style withintellectual stimulation and personal attention has a positive effect on theprofessional results of the organization, but has the opposite effect direction tofinancial results The analysis results also show that unexpected reward andmanagement by exception have a positive impact on the professional results of theorganization In addition, the laissez-faire leadership style has a positive impact onorganizational performance and financial performance

1.4 Conclusion about the research gap

Firstly, in previous studies, there are few studies on the effects ofleadership style on employee performance in the direction of affecting threefactors of employee performance including: task performance, contextualperformance and adaptive performance

Secondly, most of the studies on leadership styles in Vietnam approach therelationship between leadership style and leadership effectiveness, employeeengagement, and employee loyalty There are relatively few studies on the influence

of leadership style on employee performance

Thirdly, in Vietnam, there has not been any research to study the influence

of leadership style on employee’s performance with the target audience ofVietnamese small and medium enterprises This is a gap for the author toconduct research to clarify the influence of leadership style on employeeperformance, thereby proposing solutions for leaders of small and mediumenterprises in Vietnam can improve employee performance through theinfluence of leadership style

CHAPTER 2 THEORETICAL BASIS AND RESEARCH MODEL

2.1 Theoretical foundations of leadership style

2.1.1 Leadership concept and leadership style

2.1.1.1 Leadership concept

Most studies confirm that leadership is the influence of the top or middle level

to subordinates (individuals or a group or organization) to achieve goals Robbins(2003) also pointed out that “leadership is the ability to influence a group of peopletowards the achievement of a common goal” This view is consistent with that ofNorthouse (2001) who introduced the concept of leadership as a process by which anindividual influences a group of others to achieve a common goal Bass (1985)added that leadership is the transformation of subordinates into creating realisticvisions of goals and guiding and helping them achieve those goals

From the above synthesis, leadership according to the PhD student

approach is the process of influencing individuals or groups so that they voluntarily and actively perform work, thereby achieving the goals of the organization or enterprise

2.1.1.2 Leadership style concept

According to Stogdill (1948), leadership style “is a type of manner andability to accomplish organizational goals and continue to influence allorganizational activities” Leadership style refers to the relationship in which oneperson uses his authority and methods to get many people to work together andwork together for a common job (Fiedler, 1969) Pardey (2007) concludes that

“leadership style is the way in which a leader leads people to perform according

to his or her ability and appropriate to the circumstances of the organization”

From the perspective of leadership style, the approach of the thesis is:

Leadership style in business is the way leaders interact and influence employees

in order to motivate employees to voluntarily make efforts performance in order

to achieve the goals of the business.

2.1.2 Comprehensive leadership style in the business

Bass & Avolio (2004) and Bass & Riggio (2006) provide a theoreticalframework for full range leadership, including transformational leadership,

transactional leadership and transactional leadership, laissez-faire leadership

style This is also the theoretical framework of leadership style that the thesisapproaches According to this approach, the holistic leadership style will have thefollowing components:

* Transformational leadership style

According to Bass & Avolio (2004), transformational leadership style ismeasured by 5 factors These factors are also repeated in the study of Bass andRiggio 2006 The five factors include: Idealized Influence Attribution; IdealizedInfluence behavior; Inspirational motivation; Intellectual stimulation;Individualized consideration

* Transactional leadership style: According to Bass and Avolio (2004),

the transactional leadership style will have two groups of behaviors equivalent totwo factors as follows: Contingent Reward; second, Management by Exception –Active

* Laissez-faire leadership leadership style: This leadership style

includes: Management by exception - Passive and Laissez-faire leadership

style

2.2 Theoretical basis of employee performance in small and medium enterprises

2.2.1 Some basic concepts

2.2.1.1 Small and medium enterprises

The concept of the thesis according to the law on small and medium

enterprises , according to which small and medium enterprises include micro

enterprises, small enterprises and medium enterprises, with an average number of employees participating in social insurance per year not exceeding

200 people and meet one of two criteria: Total capital is not more than 100 billion VND or total revenue of the preceding year is not more than 300 billion VND.

2.2.1.2 Employee concept in small and medium enterprises

The approach of the thesis, employees in small and medium enterpriseswho work for the employer under agreement, are paid salary and are under themanagement, administration and supervision of the employer in the small andmedium enterprises

2.2.1.3 The concept of employee performance in small and medium enterprises

There are many authors who have studied employee performance withdifferent approaches The traditional view holds that employee performance isthe completion of work measured against established goals and standards such

as output volume, cost, time, and quality products (Fry & Cox, 1989).Traditional views on employee performance have not yet addressed the workbehavior that leads to employee performance The following researchers putforward the view of work performance from a behavioral point of view and arguethat only evaluating job performance based on output results will not reflect thetrue value that employees have brought back to the organization during work(Combell, 1993); (Murphy, 1989)

The thesis approaches the concept of employee performance from a behavioral point of view Thus, employee performance are understood as the results that employees perform through behavior and are associated with the goals of the enterprise

2.2.2 Factors affecting employee performance in small and medium enterprises

Researches on factors affecting work performance are quite diverse withmany different points of view Overall, employee performance is influenced by

factors such as leadership style, support from superiors, corporate culture, training,working environment, and work motivation

2.2.3 Factors constituting employee performance in small and medium enterprises

According to Borman & Moowwidlo (1993), job performance ismeasured by two factors: Task performance, contextual performance.Koopmans (2011) added 2 variables to measure job performance andintroduced a 4 variable model to measure employee's job performance,including: task performance, contextual performance and adaptiveperformance; Counterproductive behavior at works

The thesis analyzes and measures positive job performance results ofemployees, on the basis of approaching Koopmans (2011)'s theoreticalframework of job performance and adjusting it to suit the needs of employees.small and medium enterprises in Vietnam, the results of work performanceinclude three elements: task performance, contextual performance and adaptiveperformance

2.3 Research models and hypotheses

2.3.1 Research models

From the research overview, the researcher built the research model asfollows:

Figure 2.1 Research models

Source: Author's suggestion

2.3.2 Research hypotheses

From the research model, the research hypotheses are established as follows:H1: “Idealized Influence attribution” positively affects the performance

of employees

H2: “Idealized Influence behavior” has a positive effect on employeeperformance.

H3: “Inspirational motivation” has a positive effect on employeeperformance

H4: The factor “Intellectual stimulation” has a positive effect on theperformance of employees

H5: “Individualized consideration” has a positive effect on employeeperformance

H6: “Contingent Reward” has a positive effect on employee performanceH7: “Management by exception - Active” has a positive effect onemployee performance

H8: “Management by exception - Passive” has a negative effect onemployee performance

H9: “Laissez-faire leadership style” has a negative effect on employeeperformance

CHAPTER 3 RESEARCH METHODS 3.1 research process

The research process of the thesis is as follows:

Figure 3.1 Thesis research process 3.2 Research design

3.2.1 Scales and questionnaires

3.2.1.1 Scale of leadership style and employee performance

The scale for leadership style is inherited and adjusted based on the MLQ 5X multifactorial scale (Multifactor Leadership Questionaire version 5X) of Bassand Avolio (2004) The original MLQ - 5X scale originally consisted of 36questions, 9 elements with 4 observed variables for each factor

-Koopmans (2011), employee performance are built as follows with 14questions with 3 factors: task performance, contextual performance andadaptive performance

3.2.1.2 Investigation question

The survey questionnaire was designed based on the results of the review ofthe studies and the results of expert interviews to make adjustments to clarify themeaning of the question and be suitable for the Vietnamese context Throughinterviews and discussions with 15 experts including expert scientists and leaders

of small and medium enterprises in Vietnam, the author completed thequestionnaire to officially survey 800 people, collecting 675 votes , including 623valid votes The official questionnaire is presented in appendix 1, including thefollowing parts: