IMPACT OF LEADERSHIP STYLES ON SUCCESSION PLANNING IN SMALL AND

MEDIUM ENTERPRISES IN LAGOS STATE, NIGERIA

BY

JIMOH, Adams Lukman

B.Sc. (UNILAG), ACIPM, MNIM

Matric No. 14/68MJ010

BEING A DISSERTATION SUBMITTED AND PRESENTED TO THE DEPARTMENT

OF BUSINESS ADMINISTRATION, FACULTY OF MANAGEMENT SCIENCES,
UNIVERSITY OF ILORIN, NIGERIA IN PARTIAL FULFILMENT OF THE
REQUIREMENTS FOR THE AWARD OF MASTERS OF SCIENCE DEGREE (M.Sc.)
IN BUSINESS ADMINISTRATION

DR. S. B. ISIAKA

(SUPERVISOR)

SEPTEMBER, 2016.

1
 CERTIFICATION

This is to certify that this dissertation was carried out by JIMOH, Adams Lukman in the
Department of Business Administration, Faculty of Management Sciences, University of Ilorin,
Ilorin, Nigeria.

______________________ _________________

DR. S.B. ISIAKA DATE

(Supervisor)

_______________________ _________________

DR. U. GUNU DATE

(Head of Department)

________________________ __________________

PROF. J.O. OLUJIDE DATE

(Dean, Faculty of Management Sciences)

_______________________ __________________

EXTERNAL EXAMINER DATE

2
 DEDICATION

To the Mercy of Almighty Allah over all Mankind

3
 ACKNOWLEDGEMENT

My unqualified gratitude goes to Almighty Allah, The most Merciful of those who show Mercy
and the Provider, who lavishly gave me the endurance, resilience, foresight and thoughtfulness to
undertake this project and to complete it. Alhamdulillah!

My deepest gratitude also goes to my supervisor, Dr. S.B. Isiaka. I have been amazingly
fortunate to have a supervisor who gave me the freedom to explore on my own and at the same
time the guidance to recover when my steps faltered. He taught me how to question thoughts and
express ideas. His patience and support helped me overcome many crisis situations and finish
this dissertation. I hope that one day I would become as good an advisor to my students as he has
been to me.

I sincerely appreciate the Dean of Faculty of Management Sciences Prof. J.O. Jackson, Head of
Business Administration Department Dr. U. Gunu and Dr. I.B. Kadiri (PG Coordinator). For the
knowledge impacted whilst in school and for giving me the key and strength to face the world.

My appreciation also goes to Dr. F.C. Anyim (My Undergraduate Supervisor) of the Prestigious
University of Lagos. Department of Industrial Relations and Personnel Management. For his
insightful comments and constructive criticisms at different stages of my research though, was
thought-provoking, and he helped me focus my ideas. I am grateful to him for holding me to a
high research standard and enforcing strict validations for each research result, and thus teaching
me how to do research.

Dr. U. Gunu is one of the best lecturers I have come across in university of Ilorin. He set high
standard for his students and he encourages and guides us to meet those standards. He introduced
us to different leadership styles and all we need to know about leadership and his teachings
inspired me to work on this topic. I am indebted to him for his continuous encouragement and
guidance.

I am grateful to Dr. Y.I. Mustapha for his encouragement and practical advice. I am also thankful
to him for reading the manuscript; commenting on my views and helped me understand and
enrich my ideas.

I am also indebted to the outstanding academic and non-academic staffs of the Faculty of
Management Sciences. Particularly, Department of Business Administration, University of
Ilorin, for their contributions towards the success of my program. Especially, Dr. R.A.
Gbadeyan, Dr. M.A. Aremu, Dr. A.S. Kasum, Dr. I.I. Aun and Dr. J.A. Bamiduro, Dr. Oladipo

Mr. O.J. Omolekan, has been always there to listen and give advice. I am deeply grateful to him
for the long discussions that helped me sort out the technical details of my work. I am also
thankful to him for encouraging the use of proper citation, analysis of the work and consistent

4
notation in my writings and for carefully reading and commenting on countless revisions of this
manuscript.

I wish to acknowledge the contributions of Mr. S. Waranja and O. Gbenga Ph.D. students in the
Prestigious University of Lagos. Department of Industrial Relations and Personnel Management
assisted with the analysis of the data for this work. And also wish to acknowledge Mr. S.A.
Abdullah and A.O. Mustapha of the department of Industrial Relations and Personnel
Management, University of Ilorin for their encouragement and advice.

Also i wish to acknowledge the contributions of my family who gave me total support and
encouragement towards my pursuit to obtain a Master degree. My special thanks go to my
children. J. Muminah, J. Muslimah, J. Monsurah and J. Medinah for their patient and endurance.

Many friends have helped me stay sane through these difficult years. Their support and care
helped me overcome setbacks and stay focused on my graduate study. I greatly value their
friendship and I deeply appreciate their belief in me. Jazakumullahu Khairan.

JIMOH, Adams Lukman

14/68MJ010

July, 2016.

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 ABSTRACT

Nigerias economy is dominated by Small and Medium Enterprises (SMEs) in Agriculture,

Manufacturing, Commerce, Industry and Services. Despite the active involvements by SMEs in
Nigeria economy. High mortality rate among SMEs is a matter of major concern. The main
purpose of the study is to determine impact of leadership styles on succession planning in SMEs
in Lagos state, Nigeria. The study specifically determined impact of (i) directive, (ii)
transformational, (iii) participative and (iv) transactional leadership on succession planning in
SMEs.

This study adopted an explanatory research. The population of the study was 11,663 registered
SMEs in Lagos state. The study used simple random sampling technique to select the sample size
of 387out of the total population of 11,663 registered SMEs in Lagos state. Data obtained were
analyzed and presented using both descriptive and inferential statistics. Regression analysis was
used to test the hypotheses.

The study comes out with the following findings: (i) (R=0.812, R2=0.659, (0.000) <0.5). This
implies that 65.9% variation in the dependent variable (succession planning) is explained by the
independent variables used in the model. (ii) (R=0.806, R2=0.649, (0.000) <0.5) this Indicates
that the model as fitted explains 64.9% of the variability in succession planning (iii) (R=0.535,
R2=0.287, P (0.000) <0.5). This implies that 28.7% variation in the dependent variable
(succession planning) is explained by the independent variables used in the model. (iv)
(R=0.778, R2=0.605, P (0.000) <0.5). Indicates that the model as fitted explains 60.5% of the
variability in succession planning.

The study concludes that directive, transformational, participative and transactional leadership
are major and significant determinants of succession planning in SMEs. It is therefore important
for organization to build a culture of strong leadership whereby employees show effective
leadership at all levels and leaders should teach and mentor their followers and show faith in
their capabilities to succeed.

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 TABLE OF CONTENT

Title Page i

Certification Page ii

Declaration iii

Dedication iv

Acknowledgment v

Abstract vi

Table of Contents vii

List of Tables x

List of Figures xi

List of Appendices xi

CHAPTER ONE

INTRODUCATION 1

1.0 Introduction 1
1.1 Statement of the Problem 2

1.2 Research Questions 2

1.3 Objectives of the Study 3

1.4 Research Hypotheses 3

1.5 Significance of the Study 4

1.6 Scope of the Study 4

1.7 Organization of the Study 4

CHAPTER TWO

LITERATURE REVIEW 6

7
2.1 Introduction 6

2.2 Conceptual Framework 6

2.2.1 Concept of Leadership 6

2.2.2 Leadership Styles 7

2.2.3 Concept of Succession Planning 10

2.2.4 Concept of SMEs 14

2.2.5 Characteristics and Role of SMEs in Economy 17

2.2.6 Leadership Effectiveness 19

2.3 Directive Leadership and Succession Planning 22

2.4 Transformational Leadership and Succession Planning 24

2.5 Participative Leadership and Succession Planning 26

2.6 Transactional Leadership and Succession Planning 27

2.7 Theoretical Framework 28

2.7.1 Situational Theory 28

2.7.2 Trait Theory 29

2.7.3 Great Man Theory 29

2.7.4 Theory Adopted For the Study 30

2.8 Empirical Framework 30

2.8.1 Research Gap 30

2.9 Conceptual Mode for the Study 33

2.9.1 Review of Variables 33

CHAPTER THREE

RESEARCH METHODOLOGY 35

3.1 Introduction 34

3.2 Research Design 34

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3.3 Data Specification 34

3.4 Population of the Study 34

3.5 Sampling Frame and Sample Size 35

3.6 Data Collection Instrument 35

3.7 Method of Data Collection 36

3.8 Method of Data Analysis 36

3.9 Ethical Consideration 37

CHAPTER FOUR

RESULTS AND DISCUSSION OF FINDINGS 38

4.1 Introduction 38

4.1.1 Analysis of responses to questionnaire 39

4.1.1 Presentation of the Respondents Socio Demographic Data 39

4.2 Analysis of the Research Questions 39

4.3 Test of Hypotheses 46

CHAPTER FIVE

SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 53

5.1 Introduction 53

5.2 Summary of Findings 53

5.3 Conclusion 54

5.4 Recommendations 55

REFERENCES 57

APPENDIX I QUESTIONNAIRE 61

APPENDIX II SMALL AND MEDIUM ENTERPRISES BY STATE 70

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 LIST OF TABLES

TABLE PAGE

4.1.1 Presentation of the respondents socio demographic data 38

4.1.3 Distribution of the Respondents by Gender 39

4.1.4 Distribution of the Respondents by Age 40

4.1.5 Distribution of the Respondents by Educational Attainment 40

4.1.6 Distribution of the Respondents by Experience 41

4.2.1 Questions addressing directive leadership expressed in percentages 39

4.2.2 Questions addressing transformational leadership expressed in percentages 41

4.2.3 Questions addressing participative leadership expressed in percentages 42

4.2.4 Questions addressing transactional leadership expressed in percentages 43

4.2.5 Questions addressing succession planning expressed in percentages 44

4.3.1 Model Summary 46

4.3.2 Analysis of Varancea 47

4.3.3 Coeficientsa Estiamte 47

4.3.4 Model Summary 48

4.3.5 Analysisa of Variance 48

4.3.6 Coefficientsa Estimate 49

4.3.7 Model Summary 49

4.3.8 Analysisa of Variance 50

4.3.9 Coefficientsa Estimate 50

4.4.1 Model Summary 51

4.4.2 Analysisa of Variance 51

4.4.3 Coefficientsa of Estimate 52

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 LIST OF FIGURES

FIGURE PAGE

2.9 Conceptual model of Leadership styles on succession planning 33

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 CHAPTER ONE

INTRODUCTION

1.0 Background to the Study

Nigerias economy is dominated by Small and Medium Enterprises (SMEs) in

Agriculture, Manufacturing, Commerce Industry and Services etc. The historical background of
small and medium enterprises in Nigeria can be traced back to 1946 when the essential paper No.
24 of 1945 on A Ten year plan of development and welfare of Nigeria was presented (Ever
since, SMEs have gained prominence and mention as a seed bed of innovations, inventions and
employment generation or creation (Aremu and Adeyemi, 2010). SMEs in Nigeria are seen as
the backbone of all economies and are a key source of economic growth, dynamism and
flexibility.

A study done by the Federal Office of Statistics shows that 97% of all businesses in
Nigeria employs less than 100 employees, implying that 97% of all businesses in Nigeria are, to
use the umbrella term, "small businesses". The SME sector provides, on average, 50% of
Nigerias employment, and 50% of its industrial output. Indeed, there appears to be an agreement
that the development of SMEs in Nigeria is a step towards building a vibrant and diversified
economy (Mahmoud, 2005).

However, Researchers and consultants have long stressed succession planning's

importance in ensuring the continuity and prosperity of a SMEs businesses (Ward, 2003).
Nevertheless, SMEs, like other business concerns pose leadership and succession challenges that
normally require a unique approach to their solutions (Dunemann & Barrett, 2004). For SMEs to
survive, there is always a pertinent need for good leadership, good managerial skills, human
resource management and a succession strategy that envisions the exit of founders; or others,
who at one time or another, reached the helm of company leadership and authority - company
politics notwithstanding. According to Marshall (2001) the issues surrounding succession
planning are much more complex than simply passing the business along to the oldest son.

Many business owners today do not want to work until their deaths, nor is it a financial
necessity. It is also no longer a given, or even expected, that businesses will be passed to the

12
oldest son. In many ways, this makes the issue of succession planning more difficult for the
founder/owner because the decisions of when, how, and to whom the business will be transferred
must be planned in advance. Sorensons (2000) research shows leadership style that the business
founder employs plays a critical role in successful succession planning. It has been argued that
one of the primary functions of businesses is to maximize productivity. This responsibility for
productivity and smooth functioning rests primarily upon the leadership of the business. In the
case of family-owned businesses, however, the issue of leaders maximizing productivity is more
difficult than it may be for non-family-owned businesses. That is because the leaders of family-
owned businesses may also be the parents, siblings, or relatives of those they employ.

Wren (2005) states that, the family business leadership should foster good
communication among members and with non-members employees and should also provide for
orderly succession. He further states that, these factors are the most important in counteracting
the strong emotions that can arise. At home, responsibilities and rights are different than at work
and this should be kept in mind at all times small and Medium Enterprises (SMEs) are engines of
economic development through contribution of jobs and poverty reduction.

This study therefore seek to establish various leadership styles employed in SMEs and
how its affect succession planning in SMEs in Lagos state, Nigeria.

1.1 Statement of the Problem

Despite the potential importance of SMEs in any economy, high mortality rate among
established SMEs is a matter of major concern in developing economies. International Finance
Corporation (IFC) reported in 2012 that only 2 out of every 10 newly established businesses
survive up to the first five years. The report was corroborated by Small and Medium Enterprise
Development Agency of Nigeria (SMEDAN) that only 15% of newly established businesses
survive the first five years. This is a pointer to the fact that there is a problem. The indispensable
role of succession planning in SMEs in Nigeria therefore makes it imperative to study the extent
to which leadership styles in succession planning can enhance small and medium enterprises
survival.

Although some research studies have been done on succession planning in SMEs,
research on impact of leadership styles on succession planning in SMEs is relatively recent,

13
especially in Nigeria. Thus, studies in such an area remain unexplored and need to be conducted.
This study therefore, examines the impact of leadership styles on succession planning in SMEs
in Lagos state, Nigeria.

1.2 Research Questions

This study provides answer to the following questions;

i Does directive leadership have any effect on succession planning in SMEs?

ii What impact does transformational leadership have on succession planning in SMEs?

iii Does transactional leadership have any effect on succession planning in SMEs?

iv How does participative leadership affect succession planning in SMEs?

1.3 Objectives of the Study

The main objective of the study is to examine impact of leadership styles on succession planning
in SMEs in Lagos State, Nigeria. The following specific objectives were proposed to help in
achieving the general objectives of the study.

i. to determine effect of directive leadership on succession planning in SMEs;

ii. to examine impact of transformational leadership on succession planning in SMEs;

iii. to determine effect of transactional leadership on succession planning in SMEs and

iv. to determine the impact of participative leadership on succession planning in SMEs.

1.4 Research Hypotheses

The following hypotheses were tested in the course of the study

HO1: directive leadership does not have any significant effect on succession planning in SMEs

HO2: transformational leadership does not have significant impact on succession planning in
SMEs

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HO3: transactional leadership does not have any significant effect on succession planning in
SMEs

HO4: participative leadership does not have significant impact on succession planning in SMEs

1.5 Significance of the Study

The governments and other relevant institutions will utilize the knowledge gained from
this study in assisting the entrepreneurs by designing relevant courses for training them. The
policies formulated would also aimed at helping SMEs businesses survive for a long time as they
serve as important economic base in employment creation. This study will also go a long way to
assist researchers in the future as a reference material in the field of human capital management
and its development. The general public will also find this study useful in understanding basic
concepts in leadership styles and their relative impact on succession planning. Also, the findings
of the study will contribute to existing empirical knowledge on the impact of leadership styles on
succession planning in SMEs which could be used as source material for further research studies.
Therefore, it is beneficial to interested researchers as well as students in related course of study.

1.6 Scope of the Study

The primary focus of this research as implied by the general objectives is impact of
leadership styles on succession planning in SMEs in Lagos state. The study was carried out in
Lagos state, Nigeria. Lagos State registered SMEs businesses were chosen because the state is
prided as having the largest SMEs businesses in Nigeria (SMEDAN, 2013). The coverage of the
information that was gathered was limited to register SMEs in Lagos state, Nigeria. The data for
the study covers the period of 2005 to 2015 (10 years). The results of the findings through
statistical analysis were limited to data gathered from the field of study.

1.7 Organization of the Study

The study was carried out and reported in five chapters. Chapter one is the general
introduction to the study and it provides the background to the study, statement of the problem,
research questions, objectives of the study, scope of the study, research hypotheses, significance
of the study, and study plan. Chapter two will focus on literature review and establish the
conceptual, theoretical and empirical frameworks for the study. Chapter three discussed

15
methodological process of carrying out the study. It includes items such as research design, Data
specification and population of the study, sampling (including sample size), method of data
collection and method of data analysis. Chapter four dwells on presentation and analysis of data
obtained from field surveys, test of hypotheses and discussion of results. Chapter five includes
summary, conclusions and recommendations.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter focused on the review of relevant literatures for the study and was divided
into conceptual, theoretical and empirical framework. The essence is to allow us to have a basis
for the measurement of key variables of the study and of course establish a logical underpinning
that will give a direction for the study.

2.2 Conceptual framework

2.2.1 Concept of leadership

A leader shows the way by his example. He is not a pusher; he pulls rather than pushes.
(Terry,1988). According to Kruse (2013) Leadership is a process of social influence, which
maximizes the efforts of others, towards the achievement of a goal. Leadership is a process by
which a person influences others to accomplish an objective and directs the organization in a
way that makes it more cohesive and coherent. A process whereby an individual influences a
group of individuals to achieve a common goal (Northouse, 2007).

Leadership is the ability to evaluate and or forecast a long term plan or policy and
influence the followers towards the achievement of the said strategy. (Adeoye, 2009). Also
Livingstone (1949) defines leadership as the ability to awaken in others the desire to follow a
common objective. ...leadership is like the Abominable Snowman, whose footprints are
everywhere but who is nowhere to be seen" ( Bennis & Nanus, 1997). According to Charles
(1992) "A leader shapes and shares a vision which gives point to the work of others.

A leader is best when people barely know that he exists, not so good when people obey
and acclaim him, worst when they despise him. Fail to honour people' they fail to honour you.'
But of a good leader, who talks little, when his work is done, his aim fulfilled, they will all say,
'We did these ourselves. Lao (6th Century BC). According to Rosalynn (1927) "A manager takes
people where they want to go. A great leader takes people where they don't necessarily want to
go, but ought to be."

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 "As we look ahead into the next century, leaders will be those who empower others."
(Bill Gates, 1999). The U.S. military has studied leadership in depth. One of their definitions is a
process by which a person influences others to accomplish a mission (U.S. Army, 1983).
According to Zeitchik (2012) Leadership is a process by which a person influences others to
accomplish an objective and directs the organization in a way that makes it more cohesive and
coherent.

2.2.2 Leadership Styles

The leadership and style may differ from one person, or situation, to the other. The word
leadership has been used in various aspects of human endeavor such as politics, businesses,
academics, social works, etc. Previous views about leadership show it as personal ability
(McGrath and MacMillan, 2000). Messick and Kramer (2004) argued that the degree to which
the individual exhibits leadership traits depends not only on his characteristics and personal
abilities, but also on the characteristics of the situation and environment in which he finds
himself. Since human beings could become members of an organization in other to achieve
certain personal objectives, the extent to which they are active members depends on how they are
convince/led that their membership will enable them to achieve their predetermined objectives.

Therefore, an individual will support an organization if he believes that through it his

personal objectives and goals could be met; if not, the persons interest will decline. Leadership
style in an organization is one of the factors that play significant role in enhancing or retarding
the interest and commitment of the individuals in the organization. Thus, Glantz (2002)
emphasizes the need for a manager to find his leadership style. In the literature, leadership has
been identified as an important subject in the field of organizational behavior. Leadership is one
with the most dynamic effects during individual and organizational interaction. In other words,
ability of management to execute collaborated effort depends on leadership capability. Lee and
Chuang (2009), explain that the excellent leader not only inspires subordinates potential to
enhance efficiency but also meets their requirements in the process of achieving organizational
goals.

Fry (2003) explains leadership as use of leading strategy to offer inspiring motive and to
enhance the staffs potential for growth and development. Several reasons indicate that there

18
should be a relationship between leadership style and organizational performance. The first is
that todays intensive and dynamic markets feature innovation-based competition,
price/performance rivalry, decreasing returns, and the creative destruction of existing
competencies (Santora et al., 1999). Studies have suggested that effective leadership behaviors
can facilitate the improvement of performance when organizations face these new challenges
(McGrath and MacMillan, 2000) Understanding the effects of leadership on performance is also
important because leadership is viewed by some researchers as one of the key driving forces for
improving a firms performance. For instance, transactional leadership helps organizations
achieve their current objectives more efficiently by linking job performance to valued rewards
and by ensuring that employees have the resources needed to get the job done (Zhu, Chew and
Spengler, 2005).

Visionary leaders create a strategic vision of some future state, communicate that vision
through framing and use of metaphor, model the vision by acting consistently, and build
commitment towards the vision (Avolio, 1999; McShane Glinow, 2000). Some scholars like
Zhu et al. (2005), suggest that visionary leadership will result in high levels of cohesion,
commitment, trust, motivation, and hence performance in the new organizational environments.
Mehra, Smith, Dixon and Robertson (2006) argue that when some organizations seek efficient
ways to enable them outperform others, a longstanding approach is to focus on the effects of
leadership. Team leaders are believed to play a pivotal role in shaping collective norms, helping
teams cope with their environments, and coordinating collective action.

This leader-centered perspective has provided valuable insights into the relationship
between leadership and team performance (Guzzo and Dickson, 1996). Some studies have
explored the strategic role of leadership to investigate how to employ leadership paradigms and
use leadership behaviour to improve organizational performance (Judge, et al, 2002; Judge and
Piccolo, 2004; Keller, 2006; McGrath and MacMillan, 2000; Meyer and Heppard, 2000; Purcell,
et al., 2004; Yukl, 2002). This is because intangible assets such as leadership styles, culture, skill
and competence, and motivation are seen increasingly as key sources of strength in those firms
that can combine people and processes and organizational performance (Purcell et al., 2004).

Previous studies led the expectation that leadership paradigms will have direct effects on
customer satisfaction, staff satisfaction, and financial performance. In general, however, the

19
effects of leadership on organizational performance have not been well studied, according to
House and Adytas review (1997), who criticized leadership studies for focusing excessively on
superior-subordinate relationships to the exclusion of several other functions that leaders
perform, and to the exclusion of organizational and environmental variables that are crucial to
mediate the leadership-performance relationship. Another problem with existing studies on
leadership is that the results depend on the level of analysis.

House and Aditya (1997), distinguished between micro level research that focuses on the
leader in relation to the subordinates and immediate superiors, and macro-level research that
focuses on the total organization and its environment. Other scholars have also suggested that
leaders and their leadership style influence both their subordinates and organizational outcomes
(Tarabishy, Solomon, Fernald, and Sashkin, 2005). For transformational leadership style, the
follower feels trust, admiration, loyalty and respect towards the leader, and is motivated to do
more than what was originally expected to do. The transformational leader motivates by making
follower more aware of the importance of task outcomes, inducing them to transcend their own
self-interest for the sake of the organization or team and activating their higher-order needs. He
encourages followers to think critically and seek new ways to approach their jobs, resulting in
intellectual stimulation. As a result, there is an increase in their level of performance,
satisfaction, and commitment to the goals of their organization (Podsakoff et al, 1996).

Transactional leadership involves an exchange process that results in follower

compliance with leader request but not likely to generate enthusiasm and commitment to task
objective. The leader focuses on having internal actors perform the tasks required for the
organization to reach its desired goals (Boehnke et al, 2003). The objective of the transactional
leader is to ensure that the path to goal attainment is clearly understood by the internal actors, to
remove potential barrier within the system, and to motivate the actors to achieve the
predetermined goals. Transactional leaders display both constructive and corrective behaviors.
Constructive behavior entails contingent reward, and corrective dimension imbibes management
by exception. Contingent reward involves the clarification of the work required to obtain rewards
and the use of incentives and contingent reward to exert influence. It considers follower
expectations and offers recognition when goals are achieved.

20
 The clarification of goals and objectives and providing of recognition once goals are
achieved should result in individuals and groups achieving expected levels of performance.
Active management by exception refers to the leader setting the standards for compliance as well
as for what constitutes ineffective performance, and may include punishing followers for
noncompliance with those standards. This style of leadership implies close monitoring for
deviances, mistakes, and errors and then taking corrective action as quickly as possible when
they occur (Solomon, 2005)

2.2.3 Concept of Succession Planning

Succession planning is the process of assessing and auditing the talent in the organization
in order to answer three fundamental questions: Are there enough potential successors available?
Are they good enough? And do they have the right skills and attributes for the future?
(Armstrong, 2006). Suh, Yun-Hee and Park (2008), succession planning prepares the company
and the employee for future needs. According to Charan, Drotter and Noel (2001), succession
planning is a process of identifying and developing internal people with the potential to fill key
business leadership positions in the company.

Taylor (2002) identifies three types of planning that aim at achieving practical goals and
objectives of organization. Micro-planning deals with forecasting supply and demand for specific
groups. Contingency planning covers the situation where possible scenarios are examined and
the implications assessed before major decisions are taken. Succession planning is a third type
that focuses on manpower planning activity such as recruitment and development of employees
in order to fill managerial and top positions. Collins (2009) defines succession planning as a
process that can provide seamless leadership transition across the organization. Strategic,
systematic and deliberate effort to develop competencies in potential leaders through proposed
learning experiences such as targeted rotations and educational training in order to fill high-level
positions without favoritism (Tropiano, 2004).

In the words of Charan (2001) succession planning is perpetuating the enterprise by

filling the pipeline with high performing people to assure that every leadership level has an
abundance of these performers to draw from, both now and in the future. From this perspective,
succession planning is seen as management pipeline that accelerates management performance

21
over a period of time. Charans definition looks into the future and this probably influences
Scharmer (2007) assertion that succession planning is co-creating, a transformational stage
during which management explores the future.

Succession planning is organized preparation of potential successor to assume new role

(Garman and Glawe, 2004). However, this definition is short and compact, but it is not futuristic
and lack strength when compared with Charans definition. The Journal for Quality and
Participation (2005) reported that 67% of companies do not have a succession plan and 45%
have no executive development plan in place and it was argued that the crisis could be alleviated
by implementing succession training programmed (Khumalo & Harris, 2008). According to
Sharma (2003), succession planning of small and medium enterprises can occur in the following
context. They identified the following as the ingredients for successful transition of succession
planning of small and medium enterprises.

I Role clarification of predecessor: The sound relationship between the incumbent and the
successor is central to the success of intergenerational transition. The perspectives on the role of
outgoing owner managers vary. Some authors assert that the definitive withdrawal from the firm
or very limited role during and after the successor's appointment (Churchill & Hatten, 1987;
Gersick et al. 1999; Handler, 1989; Holland & Boulton, 1984; Holland & Oliver, 1992;
Longenecker & Schoen, 2002) but others argue that the outgoing owner manager should be
given some new pertinent roles (Malinen, 2001; Cabera-Suarez, 200 Chung & Yuen, 2003;
Feltham et al., 2005; Cadieux,2007). As an advisor, the retired founder can transfer his or her
tacit knowledge and network of contacts to their successors (Malinen, 2001).

According to process of transition, the expected role from the predecessor might be a
supervisory role during joint-reign phase and consultant role during withdrawal phase (Handler,
1989). Even a founder predecessor with an entrepreneurial profile could become a new mentor if
he or she personally is involved in the process of training and integrating the successor (Cadieux,
2007). The relations with the form can be maintained by overseeing firm's strategic decisions
(Cabera-Suarez, 2005; Chung & Yuen, 2003; Feltham, 2005), making contacts with
organizations as honorary positions, joining the board of directors, and acting as a firm's
ombudsman (Cadieux,2007).

22
 Thus, it is important to help the predecessor become more self-aware to seek another role
out of the firm (Hall, 1986). This is particularly critical to family firms, in that the incumbent's
resistance to give up the status and power may be one of the severe barriers in accomplishing a
smooth transition between one generation and the next. Because the founder fears losing control
and is, concerned that retiring from the firm will mean a demotion in his or her role even within
the family (Lansberg, 1988).

ii Succession Autonomy: A successor must be regarded as one of the most important

stakeholders who influence the results of succession. The argument is that if a designated
successor is reluctant to take over the family business, the succession is less likely to be
successful (Venter et al., 2005). When a current owner-manager feels doubt about the ability and
credibility of a successor, not only is the predecessor not likely to hand over completely, but
wants to continue to take control of firms decision processes even after the succession.

Therefore, it may be worthwhile that a successor needs to be consulted with a former

owner manager before the initial succession decision. If a potential successor does not find the
discretions in management after the succession, the willingness of the potential successor to take
over the family business may be less. In case of that the succession process has no other choices
but to select a certain person as the successor, the succession processes may be worse-than-
expected or even fail. Handler (1989) was the first to undertake a systematic and comprehensive
study of the range of influences associated with next generation family members. Handler argues
that a successful succession depends on leaving the successor to make his or her own decisions.

Goldberg and Woolridge (1992) suggest that the successor must take control of
succession process. Shepherd and Zacharskis (2000) stress the successor's decision making
processes. Interestingly, a study of successfully completed intergenerational transfer in Canada
shows that successors are willingly asked to take over, contrary to other cases in general
(Cadieux, 2007). The quality of relationship between the outgoing leader and successor is of
great importance to the success of succession process (Brockhaus, 2004; Chrisman et al., 1998;
Dickson, 2000; Lansberg & Astrachan, 1994). The high quality relationship is characterized by a
high level of trust, mutual support, open and earnest communication, and acknowledgement of
each other's achievement (Harvey & Evans, 1993; Neubaur & Lank, 1998).

23
iii Succession Communication: Studies of failed succession show that dispute among family
members is frequently due to a lack of ground rules of selection. Minimal criteria relating to
selection of prospective successor must be set in advance and acknowledged to all the concerned.
The rules of the game and processes for the succession must be communicated early and clearly
(Ambrose, 1983; Ward, 1997). In this sense, it should be clearly communicated to all concerned
for the participants in the succession task force, selection criteria, procedures for continual
evaluation and selection, time frame, and timing of succession and population of candidates
(Breton-Miller et al., 2004).

As mobilizing the succession planning process means to deal with the ambivalence of
different stakeholders. (Lansberg, 1988), lack of both communication and trust may confound
the whole process of succession (Handler, 1994). Thus, it may be assumed that the high quality
of succession occurs when mutual respect, understanding, and communication between
generations exist in the process of succession planning so that the family unit can feel an
informed decision was made (Harvey & Evans, 1995).

vi Succession Justice: For the family business facing succession issues, justice relating to
transition process should be taken importantly into account to maintain the relationships among
stakeholders including family members other than the predecessor and the successor (Ayres,
1990). The succession justice derives from recognition of stakeholders in terms of ability and
fairness in selection process. The new successor in the family business is necessary to be
confirmed by a majority of stakeholders, including key employees, investors, bankers, suppliers,
and distributors (Harvey & Evans, 1995). If the successor sets in the new leadership position but
is reluctantly or even not recognized as an appropriate person by the stakeholders, the successor
are less likely to effectively take control of the business with little authority. Given this
importance and characteristics of the succession justice, thus, firms that prepare business
succession should pay a great deal of attention to it.

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2.2.4 Concept of Small and Medium Enterprises

The concept of Small and Medium Enterprises (SMEs) is relative and dynamic; hence
there is no universal definition for small and medium enterprises. Each country tends to adopt
definitions based on the needs of public policy, the level of economic development, the role
SMEs are expected to play in the economic development of that country and the programmed of
assistance designed to achieve the goal (Emmanuel, 2003). Small businesses do not conform to
any neat parameters because much of their activities depend on the industry in which they
operate also the personalities and aspirations of those in charge of these businesses. These factors
vary from manufacturers to retailers, professional managers, high growth, high start-ups that are
funded by venture capitalists to self-financed tradesmen and women for the purpose of making a
living (David and Nicholas, 2006).

The first attempt to overcome this definition problem was by the Bolton (1971) which
formulated an economic and a statistical definition of SMEs .Under the economic definition,
a firm is regarded as small if it has a relatively small share of the market place, managed by the
owner or part-owners in a personalized way, is independent in the sense of not forming part of a
large enterprise. Under the statistical definition, a firm is regarded as small if its markets share is
not enough to influence the price of goods as well as quantity sold in the market to a significant
effect.

The central bank of Nigeria (2001) in a stand-alone definition defines an SME according
to asset base and between #5 million and #500 million, and staff strength between 11 and 300
employees. In a related definition by Baumback (1983) attempts made to define small business
in terms of employment, asset value or sales volume have proved unsatisfactory because a firm
in one industry may loom large relative to its competitors, yet be small in employment, assets
and sales relatives to the firms in other industries or vice versa. Storey (1994) also identified
three key distinguishing features between large and small firms. The first is the greater external
uncertainty of the environment of operation and the greater internal consistency of its motivation
and actions. Second they have different role in innovation and thirdly they are greater likelihood
of evolution and change in the smaller firms.

25
 Loveman and Sengenberger (1990) recounted that, Small enterprises or small and
medium enterprises are elusive concepts. They do in fact hide a large heterogeneity in the types
of the firms. Definitions also change overtime, owing to changes in price levels, advances in
technology, etc. even in the same country; definition may vary within institutions, depending on
their policy focus (Emmanuel, 2003). For instance, prior to 1992 in Nigeria different institutions
like the Central Bank of Nigeria, Nigeria Bank of Commerce and Industry, Centre for Industrial
Research and Development and the National Economic Reconstruction Fund adopted different
definitions to achieve the objectives of the programmed they wanted to execute.

The criteria that have been used in the definition include annual turnover, gross output,
capital investment and employment. In 1992, the National Council on Industry streamlined the
various definitions in order to ensure uniformity and provide for its review every four years. The
definition adopted used a combination of capital investment and employment for the
categorization of the industries. The definitions were first revised in 1996 and then in 2003 as
follows:

Micro/cottage industry Enterprise with total cost (including working capital but excluding
cost of land) not more than N1.5milion, with a labour size of not more than ten workers

Small scale industry enterprise with total cost (including working capital but excluding cost of
land) above N1.5 million but not exceeding N50 million with a labour size of between eleven
and one hundred workers.

Medium scale industry enterprise with total cost (including working capital but excluding
cost of land) above N50 million but not exceeding N200 million, with a labour size of between
101 and 300 workers

Large scale industry enterprise with total cost (including working capital but excluding cost of
land) above N200 million and a labour size of over 300 workers (Ayoola, 1999).

The National Economic Reconstruction Fund (NERFUND) also defined SMEs as

enterprises with assets excluding land, plus cost of project not exceeding N40 million (CBN,
2013). In the Central Bank of Nigeria (CBN) Monetary and Credit Policy Guidelines (2006),
SMEs is defined as an enterprise with fixed assets excluding land but including working capital

26
not exceeding N40million. The Centre for Industrial Research and Development (CIRD) at
Obafemi Awolowo University Ile-Ife also defined SMEs as enterprise with total assets in capital
not exceeding N250, 000,000 and employing not more than 50 full-time workers (Obitayo,
1991).

Clarke (1972) indicated that the confederation of British industries defined SMEs as
industries with less than two hundred employees. Small and medium enterprises equity
investment scheme proffered the following definition of SMEs in 2001 a small and medium
industry is defined as any enterprises with a maximum asset base of N200 million, excluding
land and working capital and with the number of staff employed by the enterprise not less than
10 and not more than 300 (SMIEs guidelines 2006).

The revised current SMEs guidelines have however, modified this definition by removing
the upper restriction on the number of employees and expanding the capital base of SMEs to
N500 million. The Nigerian concepts of SMEs are somewhat divergent but the Central Bank of
Nigeria agrees with the Small and Medium Industries and Equity Investment Scheme (SMIEIS)
in their definition of a SME as any enterprise with a maximum asset base less than N200 million
(equivalent of about $1.43 million) excluding land and working capital, and with the number of
staff employed not less than 10 (otherwise will be a cottage or micro-enterprise) and not more
than 300 (CBN, 2001). Moreover, this definition for SMEs was based on the revised definition
by the National Council on Industry in 2001.

For the purpose of this study, the definition given by CBN will be adopted. Therefore, a
small and medium enterprise (SMEs) is an enterprise that has asset base (excluding land) of
between #5 million and #500 million and labour force of between 11 and 300.

2.2.5 Characteristics and roles of SMEs in economic development

A major characteristic of SMEs worldwide is that they are generally managed by their
owners either as sole proprietorship or partnership (Adamu, 2004). SMEs are characterized by
simple management structure resulting from the fusing of ownership and management in one or
very few individuals. Thus SMEs tend to strongly revolve around the owner-managers rather
than operate as separate entities. There is often greater subjectivity in decision making and the
prevalence of largely informal employer-employee relationship. SMEs have very limited access

27
to long-term capital and their access to short term financing is often limited and sometimes
obtained at a penal rate of interest based on the perception of the sector as risky by the formal
financial institutions (Emmanuel, 2003).

The lack of fund often results in the non-adoption of modern technology and the resort to
labor-intensive production processes. This coupled with very poor inter and intra-sectorial
linkages do not allow the enterprises take advantage of the benefits associated with economies of
large scale production. SMEs are more widespread and resilient as a result of the greater use of
local raw materials. Emmanuel (2003) summarized the roles of SMEs in economic development
as follows:

i. Technological/industrial development: They have short-term gestation period and high

potentials for quick yield on investment. They therefore provide promising alternatives for
countries that desire the fast option for industrial development.

ii. Employment generation: It has been observed that more jobs per unit of investment capital
and per unit energy consumed are created worldwide by SMEs than large -scale enterprises.

iii. Technological acquisition: They provide opportunities for the development of local skills and
technological acquisition. In Nigeria "Aba made" syndrome is a clear manifestation of such
technological acquisition.

iv. Human capacity building: They provide a training avenue for the creation of local
entrepreneurs in several areas of economic activities. They are regarded as the 'university' where
a large class of Nigerian entrepreneurs usually receives training. It is therefore more important to
lay a good foundation of an industrial class by promoting small entrepreneurs than it is to build a
few large factories.

v. Promoting Growth: Most are involved in primary and secondary economic endeavors that rely
heavily on locally sourced materials, equipment and parts. As a result they achieve high local
value added by operators.

vi. Increased standard of living: Sound development of SMEs has positive implications for
improved standard of living of the citizenry and generates foreign exchange for further
development of the economy.

28
vii. Industrial dispersal or spread: They could easily be located in rural areas because they can
survive on rudimentary industrial infrastructure. Consequently, they serve as major facilitators
for industrial dispersal and rural development and thus help in mitigating the rural-urban drift.

viii. Serving of large -scale industries: Raw materials and goods are supplied to the large-scale
industries while they engage in distribution of finished product from such industries to
consumers.

ix. Export promotion: Some SMEs engaged in manufacturing serve as channels for import
substitution and export promotion.

x. Structural transformation of rural areas: When they are cited in rural areas, they help to
improve rural infrastructure and the living standard of the people. Social amenities such as: road,
electricity, pipe-borne water, telecommunication facilities, etc, are attracted to the area as a result
of the presence of SMEs in the community.

xi. Flexibility: They react swiftly to changes in the operating environment. They therefore
provide good testing ground for new products and nascent production technique.

xii. Low Take-off requirements: Take-off capital requirements are low. Small-scale
industrialization therefore widens the scope for participation in industrial activities by
individuals with limited capital. They are effective instruments of mass participation in industrial
development.

2.2.6 Leadership Effectiveness

Organization leadership is the process and practice by key executives of guiding and
shepherding people in an organization towards a vision over time and developing that
organizations future leadership and organization culture (Pearce & Robinson, 2007). Leadership
is the ability to anticipate, envision, maintain flexibility and empower others to create strategic
changes necessary. Multifunctional in nature, leadership involves the ability to influence others
and managing the entire organization (Volberda, Morgan, Reinmoeller, Hitt, Ireland, &
Hoskisson, 2011). Without leadership, our families, our companies, our organizations will fall
apart. Most leaders recognize that they have a role of maintaining stability (Draft, 2005). This is

29
why most family businesses survive the first generation because the owner as a leader offers
stability. In his absence, most firms lack stability.

Davis, Allen and Hayes (2010), discusses about family business stewardship. He state
that, the leadership of the family business can act independently of the family that owns
organizational wealth. A good steward in a family business is a decision maker who is a
caretaker of a familys assets, who desires to pass a healthier and stronger business to the next
generation. Current and future generation will benefit from a steward who is motivated to make
the business succeed rather than pursuing his own selfish interest.

Maxwell (2007) has given an illustration on how leadership capability affected the
succession on the worlds largest fast food retail. In 1937, two brothers Dick and Maurice started
a small drive-in restaurant in California, it was the first of this kind the world ever had. The
restaurant was so popular and grew very first. They moved from serving food on China ware and
focused on serving burgers on paper and plastic utensils. By 1950s their annual turnover hit $
350,000.00. They were the McDonalds brothers the owners of the then McDonalds Hamburgers,
a successful family owned business. As part of their expansion strategy, they chose franchising.
It was a good idea that but actually failed because the McDonalds brothers did not have the
leadership capabilities to march this big strategy.

In 1961, Ray Kroc bought the rights to franchise from the two brothers for $2.7 million.
He had a vision for its potential. Through vision, sacrifices and leadership today McDonalds
Corporation has over 31,000 restaurants in 119 countries. He had the leadership ability that the
McDonalds founding owners lacked.

The lack of effective leadership of the owners in the first generation and the leaders of the
second generation greatly affect the survival of family owned business. Leadership theories
suggest that a leader can be made or born. Leaders are made through formal education. Some
owners of small business do not have so much formal education. Effective leadership in
succession planning requires that the leader has the ability to envision and share is dream with
the family members; that the leader mentors his successors; that the leader is a strategic planner;
and finally that the leader is able to relinquish his powers (Davis et al, 2010).

Vision

30
 A vision is a picture of what the firm wants to be and, in broad terms, what it wants to
ultimately achieve. The leader of the firm is responsible for working with others to form the
firms vision (Volberda et al, 2011). According to Draft (2005), the vision is not only a dream;
buts an ambitious view of the future that everyone in the organization can believe, one that can
be realistically achieved. He continues to say that strategic leadership means the ability to
anticipate and envision the future, maintain flexibility and think strategically.

Lansberg (1999) says a vision is a dream by the owner of the business. He says that if
succession is a journey then its mandatory that the dream is shared. A collective vision of the
future inspires family members towards commitment and hard work. No family member will feel
like he is working hard towards the predecessors dream and wasting their own dreams. The
shared vision should be explicit that it grows within the members of the family. We need to
envision the future we want for ourselves and others, and feel passionate about the legacy we
want to leave, and then we are more likely to take the first step forward. If we dont have the
slightest clue about our hopes, dreams and aspiration, then the chance that well lead is nil
(Kouzes & Posner, 2007).

Effective leaders are forward looking, they are able to envision where the organization
will be even when they are gone. They look beyond the horizon and imagine what the
organization needs to be. This vision is not only the leaders vision but it needs to be shared.
They have to ensure what they see the others will also see. Shared visions are motivators and can
help overcome many challenges like the death of the owner (Kouzes & Posner, 2007). Without
leadership and vision from the members of two generations and the use of select family,
management and governance practices, the future of SMFEs is bleak. This blurred futures causes
confusion, slow decision making and even organization paralysis. Family business that lack
leadership and shared vision through its generations shut down very fast (Robert, 2010).

Mentoring

According to Utrilla and Torraleja (2014), one of the techniques that family business can
use for professional development is mentoring. Professional development can make the
difference between success and failure, because it contributes to making a company more
adaptable to changing and competitive environments. Mentoring is a tool that provides

31
employees with knowledge, skills, and the ability to improve their work, and hence contribute to
the objectives of the business.

The practice of mentoring provides the successor with knowledge, skills, and the ability
to improve their work, and hence contribute to the objectives of the business. The benefits
individuals obtain are shared with the business However, to create this competitive advantage,
family firms need to have a critical firm-specific and intangible resource, tacit knowledge which
family members obtain and develop through their education and experience both inside and
outside the firm. Tactic Knowledge unlike explicit knowledge is known to many or been
formally known (Nunez-Cacho & Grande, 2012)

Knowledge-based view points to the importance of transferring resources between

generations. Zahra, Neubaum, and Larraneta (2007), emphasizes on the process of transferring
knowledge as a resource to achieve the continuity of the family business and increase the
positive influence of the family in the firm. This theory suggests two paths for how information
is shared in family businesses: the first path refers to the formal knowledge that is contained in
the firm, whereas the second refers to the informal knowledge, which is tacit, constructed
collectively, and shared socially.

The transfer of tacit knowledge is more complex and is carried out by slow and costly
processes. The effect of the family business facilitates the transmission of such knowledge,
because living with the family and working in the business from an early age helps members
develop high levels of tacit and specific knowledge. Furthermore, family businesses
mustpreserve tacit knowledge because it is vital for the development of future leaders (Chirico &
Nordqvist, 2010).

Mentoring has various functions in businesses, some of these functions are: the
development of the proteges career include learning and preparation for promotion, training,
and counseling. Mentoring is used to hasten the transmission of tacit knowledge in the company
(Utrilla & Torraleja, 2014). According to Massis, Chua, and Chrisman (2008), training of a
potential successor is a vital factor for succession. . If attention is not given to mentoring, the
succession may not take place because the potential successor will be inadequately prepared to
assume the top management position. They further explain that early exposure to the business is

32
needed for the potential successor to establish relationships with key suppliers, customers, and
lenders; to build credibility within the company; and to understand the culture and intricacies of
the firm.

2.3 Directive Leadership and Succession Planning

The concept of the directive leader conceptualizes the role of leaders as acting as a role
model for followers, displaying a sense of power and confidence, and making bold,
unconventional decisions. Furthermore, directive leaders develop and communicate an
emotionally captivating vision, foster the acceptance of shared goals, and motivate followers for
the achievement of common aspirations by directing others hence the staff are able to follow the
lead. Through this directive leaders are able to lay a strong foundation for the future succession
of the company (Walter & Bruch, 2009).

Directive leadership comprises the transformational traits of idealized influence and

inspirational motivation. That is, directive leaders communicate an idealized vision and motivate
their followers by appealing to their values and beliefs thus their staff are likely to follow the
same trend and make good candidates for the future succession of the company (Yukl, 2013).
Their vision is usually different from the status quo and relies on the idea that the organization is
not realizing its full potential. Directive leaders tend to draw on relationship-oriented behaviors
(Yukl, 2013; Northouse, 2009). Credibility is paramount in convincing followers that the
advocated vision is the most beneficial for the organization as a whole (Yukl, 2013).

To be credible, the directive leader needs to be eloquent. That is, they must possess
rhetorical skills that allow them to translate abstract concepts into a concrete and memorable
vision that followers can identify with. Directive leaders are confident in their skills and
communicate determination and motivation, inspiring followers to cope with uncertainty. Their
high motivation is translated into a willingness to work hard (Shamir et al., 1998) and to take
risks (House & Aditya, 1997) to challenge the status quo and accomplish their vision. In this
sense, directive leaders are entrepreneurial, making sacrifices and taking risks to achieve what
they believe is the most beneficial outcome for the organization succession planning.

Directive leaders have been found to be more effective than transactional leaders, and
increase followers performance, satisfaction, and commitment (DeGroot, 2000) Conger et al.

33
(2000) found that the positive effect of directive leadership on trust and performance and hence
future succession planning is mediated by the degree of reverence followers have for their leader.
Given that directive leadership is more focused on idealized influence than transformational
leadership, it may be more effective in less formal settings associated with small to medium
companies, or start-ups that require an appealing vision in their initial phase of operation. It has
also been suggested as potentially important for businesses of any size facing a crisis and
requiring fresh motivation to improve employee performance.

According to Rapp, (2005) one way to ensure a successful succession planning transition
is to build a culture of strong leadership whereby employees show effective leadership at all
levels. Strengthening leadership capacity throughout the organization can enable a highly
successful transition by reducing dependency on a single individual, such as a certain senior
leader or key person. Another key issue related to succession is the transfer of knowledge.

Directive leadership transition often leads to the loss of critical tacit knowledge that has
built up throughout the years. Strategies such as intentional documentation, attention to effective
systems and processes, and deliberate knowledge sharing are just a beginning. Creating a so-
called knowledge-based culture can deliver dividends when an organization is faced with
succession of a leader (Wilbert, 2010).

2.4 Transformational Leadership and Succession Planning

Transformational leadership aims at inspiring and motivating followers to align their

goals and beliefs to those of the organization and perform more than what is expected from their
contracts thus creating a sense of viable succession planning. In contrast to transactional
leadership, some researchers have generally conceptualized transformational leadership as the
top end of a continuum or hierarchy of social exchange, in which the high quality exchange
mutually stimulates and elevates leaders and followers, transforming (Northouse, 2009).

Generally, transformational leadership has been viewed as a higher-order construct that

shares some aspects with transactional leadership. However, by communicating an appealing
vision and the need for positive change, it also persuades employees to go beyond their
individual interests and therefore make good future leaders for the company thus successful
succession planning (Yukl, 2013). As such, it is a leadership style that draws heavily on

34
relationship-oriented behaviors and has also been found to be highly effective in times of
turbulent changes (Yukl, 2013). According to a study done by Northouse, (2009)
transformational leaders are found to act as role models, promoting a shared vision that can be
achieved by paying attention to the followers needs and by intellectually stimulating each of
them enabling each of them want to work for the future benefit of the company hence creating a
sense of ownership that will eventually help the company in the process of succession planning.

Transformational leadership is based on four dimensions: idealized influence

inspirational motivation, individualized consideration, and intellectual stimulation. Idealized
influence represents the leaders charisma. According to Bryant, (2003) the leader provides a
clear mission and appeals emotionally to his followers by becoming a source of admiration and
identification. The other staff want to be like him, they strive to excel in more ways hence could
create viable potentials when it comes to the succession of the company. By clearly sharing a
mission and a vision and by promoting personal empowerment, transformational leadership
allows the implementation of structural interventions that result in increased autonomy, higher
self-efficacy, and enhanced employee influence on work outcomes and successful succession
planning (Sun et al., 2012). In turn, followers empowerment, appreciation, and involvement in
the decision-making process result in increased job satisfaction and higher performance (Dvir et
al., 2002; Judge & Piccolo, 2004; Park & Rainey, 2008; Wang et al., 2011).

Recent findings highlight more specific effects of transformational leadership on

succession planning. In general, transformational leadership facilitates communication, allowing
employees to speak out to their peers and to their leaders without fear of retaliation (Liu et al.,
2010). Braun et al. (2013) found that transformational leaders that promote an open climate for
discussion are more trusted both at the individual and the team level, resulting in higher level of
achievement in succession planning. Epitropaki and Martin (2013) found that transformational
leaders foster smoother and more relaxed communications and negotiations hence a more viable
succession planning initiative.

When the leader exhibits transformational traits, followers were found to be more prone
to use tactics that reciprocate this relations-oriented leadership style, such as ingratiation, rather
than abrasive forms of influence such as coalition or direct confrontation (Epitropaki & Martin,
2013). Transformational leadership also mitigates the detrimental effect that conflicts have on

35
morale and performance (Ayoko & Konrad, 2012), and are able to exploit the shared vision and
their relationship orientation to settle conflicts and re-group their followers toward the intended
goal. Transformational leaders, however, have to deliver on promises in this case, the vision or
narrative deployed to motivate others.

Grant (2012) highlights several failures in the implementation of transformational

leadership in banks and military settings as the result of a gap between the articulation of an
appealing vision and the incapacity to translate that vision into reality. Transformational
leadership leads to positive outcomes only when the inspiring vision is made tangible, for
example through job designs that enhance the salience of the visions impact (Grant, 2012).
Moreover, transformational leaders must avoid the risk of being seen as so convinced of their
vision and ideas that others fear to contradict them or share their own (Detert & Burris, 2007).

2.5 Participative leadership and succession planning

Participative leadership is a managerial style that invites input from employees on all
company decisions. The staff is given pertinent information regarding company issues, and a
majority vote determines the course of action the company will take. Participative leadership can
sometimes be a slower form of decision-making, but it has several advantages that may make it
the right managerial method for your business. Participative decision-making is the extent to
which employers allow or encourage employees to share or participate in organizational
decision-making (Probst, 2005).

According to Bass, (2008) participative leadership is one of many ways in which an

organization can make decisions regarding its future succession plans. The leader must think of
the best possible style that will allow the organization to achieve the best results. This enables
employees work to their level best hence ensuring that the future is well planned for.
Participatory decision-making by the top management team can ensure the completeness of
decision-making and may increase team member commitment to final decisions in future when
they are considered for various posts in the company.

In a participative decision-making process each team member has an opportunity to share

their perspectives, voice their ideas and tap their skills to improve team effectiveness and
efficiency. By sharing decision-making with other employees, participants may eventually

36
achieve organization objectives that influence them in future when the succession plan in place
incorporates them (Brenda, 2001). In this process, participative leadership can be used as a tool
that may enhance relationships in the organization, increase employee work incentives, and
increase the rate of information circulation across the organization thus ensuring a successful
future succession plan (Anderson & McDaniel, as cited in Brenda, 2001).

Through participative leadership staff will more readily accept policies and decisions that
were reached by general consensus. This cuts down on the resistance that new company policies
will experience and speeds up the process of implementing new ideas. Employees are given a
personal stake in the success of new company policies by being involved in the process of
creating and approving these policies, and that helps the company to adjust rapidly to policy
changes and in the succession plans of the company because they can influence decisions
(Benefiel, 2005).

According to a study done by Wolf, (2002) employees that were given a voice in the
operation of the company felt personally liable for the success of the company and for its future
leaders. The staff morale remains at a high level because there is an appreciation for the chance
to be part of the company decision-making process in the future succession of a company.
Employees will also take a more active role in improving the work conditions when they know
that they can directly affect the policies that govern the workplace.

A participative style of leadership offers employees more than just the opportunity to
improve their income through good performance and ability to succeed the company. It gives
staff members the chance to be active in determining the future success of the company.
Allowing employees to be active in the growth of the organization encourages those employees
to stay with the company to see their plans result in success. This will improve employee
retention and improve the future succession of the company (Yang, 2012).

2.6 Transactional Leadership and Succession Planning

Transactional leadership assumes that leaders and followers have different goals and the
convergence of these different goals occurs through the strategic use of monetary rewards.
Generally, researchers have conceptualized transactional leadership as the bottom end on a
continuum or hierarchy of social exchanges. Transactional leadership also draws heavily on task-

37
oriented behaviours (Yukl, 2013; Northhouse, 2009) Transactional leadership relies on the
fulfillment of contractual obligations by rewarding achievements and punishing deviations from
acceptable standards for example by rewarding an employee through promotions the employee
may feel considered in the future ownership of the company hence this sets out a viable plan for
the future succession of the company (Rainey, 2009).

As one may expect from a task-oriented leadership style, transactional leadership has a
positive influence on future succession plan of a company (Bass et al., 2003). In particular, the
increased quality of internal communication through goal setting, monitoring, and feedback
ensures that knowledge is exploited at the organizational level and converted into future assets
that generate revenues for a succession plan (Bryant, 2003). The technical nature of a
transactional approach allows both leaders and members to critically examine each facet of this
leadership style. The more the leader and the followers agree on the transactional aspects of the
job, the higher the positive influence on performance, organizational commitment, trust in the
leader, and corporate citizenship behaviours and future succession plan (Whittington et al.,
2009).

Moreover, the contingency reward aspect of transactional leadership contributes to the

creation of a climate of a viable succession plan, which in turn determines satisfaction and
organizational commitment. That is, followers who perceive that routines and tasks are managed
consistently and fairly are more committed and satisfied (Walumbwa et al., 2008). Although
transactional leadership emphasizes task performance over relationships, it is particularly
effective in increasing organizational identification when the followers are characterized by high
levels of interdependence with other organizational members (Epitropaki & Martin, 2005). It has
been noted, however, that followers subject to transactional leadership exhibit less sense of
obligation towards their leader and less desire to reciprocate, often using hard tactics such as
direct confrontation and upward appeals to access resources not implied in their contract
(Epitropaki & Martin, 2013).

38
2.7 Theoretical Framework

There are different theories on leadership, each identifying own paradigm and concept on
succession planning in SMEs businesses. Some of these theories include; situational leadership
theory, trait theory and team building theory

2.7.1 Situational Theory

The situational or contingency theory proposes that the effectiveness of a certain

leadership style is situational or contingent, meaning that it will be effective in some
circumstances but not in others. Those aspects of the situation that enhance the effects of the
leader or nullify them are called situational moderator variables (Yukl, 2002). Therefore, the
contingency theory assumes that there is no universally appropriate leadership style or one-best-
way. The first comprehensive contingency theory of leadership was proposed by Fiedler (Fiedler,
1964, 1967), who determined the situation using three aspects: the leader member relations, the
position power, and the task structure.

The efficiency of a leadership style depends on the situational favorability. The

situational favorability results from weighing and combining the three situational aspects.
According to Fiedlers theory, the correlation of the leadership style and the leaders efficiency
varies according to the situation. Fiedlers achievement was to introduce the first contingency
theory of leadership and thereby he encouraged greater interest in situational factors (Neuberger,
2002).

2.7.2 Team Building theory

This theory emphasizes quality circles, best practices, and continuous improvement.

It is a theory that mainly hinges on reliance on teamwork. It also emphasizes flattening of

management pyramid, and reducing the levels of hierarchy. Finally, it is all about consensus

management that is involving more people at all levels in decision-making.

39
2.7.3 Trait Theory

Trait theory emphasizes the personal qualities of leaders and focus attributes that
distinguish leaders from non-leaders. Three kinds of traits are physical factors height,
appearance, age, etc. aspects of personality self-esteem, dominance, emotional stability,
conservatism, etc., and aptitudes general intelligence, fluency of speech, creativity, etc.,
assuming that the differential traits could be identified by empirical research. Stogdills (1948)
review on the literature on leadership traits showed associations with factors that he classified
under the general headings of capacity intelligence, alertness, verbal facility, originality,
judgment, achievement scholarship, knowledge, athletic accomplishments, responsibility
dependability, initiative, persistence, aggressiveness, self-confidence, desire to excel,
participation activity, sociability, cooperation, adaptability, humor, and status socio-economic
position, popularity.

However, the basic premise of the trait approach is that a person must possess a particular set of
traits in order to be identified as a leader could not be supported. A person does not become a
leader by virtue of the possession of some combination of traits, but the pattern of personal
characteristics of the leader must bear some relevant relationship to the characteristics, activities,
and goals of followers (Judge, 2004).

2.7.4 Theories Adopted for this study

The situational theory and trait theory were adopted. The situational or contingency
theory proposes that the effectiveness of a certain leadership style is situational or contingent,
meaning that it will be effective in some circumstances but not in others. Those aspects of the
situation that enhance the effects of the leader or nullify them are called situational moderator
variables. The Trait theories emphasize the personal qualities of leaders and focus attributes that
distinguish leaders from non-leaders.

The leadership theory is seen in the business world with companies promoting from an
existing leadership structure to retain control of business strategies and organizational direction.
Successful businesses have the potential to survive their founders. Businesses structured as
corporations, nonprofits or cooperatives have trajectories that are related to, but separate from,

40
the people who found them. Business succession is the process of figuring out how a company
will continue to operate after its founders or leaders are no longer actively involved. Because
leadership styles and models differ widely, succession models also vary based on the way an
organization has been managed (Bjuggren & Sund, 2001).

2.8 Empirical Framework

This section review literature on succession planning in small and medium scale
enterprises. Some of these studies include the work of Abdulazeez, Hakeem & Bisayo (2014)
whose conducted research on leadership styles and organizational performance in Nigeria SMEs.
A survey of two hundred and sixty eight small and medium enterprises was undertaken. Data
generated were analyzed by means of descriptive and inferential statistics. The results found that
the Nigerian SMEs are more autocratic and less participative as the power distance between
business owner and employees is very wide. The study further revealed an insignificant
relationship between leadership style and organizational effectiveness. Hence, it is concluded
that leadership style among Nigerian SMEs is not a major factor in determining organizational
performance.

Ben (2013) carried out research on effect of leadership styles on organization

performance in SMEs. The study adopted the descriptive survey design using percentages and
chi-square (X2) on hypothesis and questions formulated. The findings of the study revealed that
good leadership style enhances employee morale and that there is what is known as participatory
leadership style of management where both employers and employees take decisions that have
positive impact on the growth of the organization and good welfare facilities for the employees.

Also Musa and Semasinghe (2014) examined leadership succession problem in small
family businesses in Nigeria. The study used both primary and secondary source of data. The
data was analyzed through statistical package for social science SPSS and found that most
founders of family-owned firms failed to embark on succession planning due to fear of losing
control of the business to subordinate or any member of the family. In addition to their findings,
they also discovered that the problem of inheritance among family members militate against the
continuity of family enterprises.

41
 Nicolas (2015) effect of leadership styles on succession planning in SMEs in Kenya. The
study used Cluster sampling technique to select the sample size of 335 SMEs .The primary data
on the other hand was obtained from questionnaires. Cronbachs alpha was used to determine
reliability, Descriptive statistics such as frequency distribution, percentages, means and standard
deviations was calculated and data presented in form of tables, graphs and charts was used.
Inferential statistics was used to draw implications from the data with regard to the regression
model. The study findings indicated that directive leadership transformational leadership and
transactional leadership has a positive and significant effect on succession planning. However,
participative leadership has no significant effect on succession planning.

Ajay and Erich (2012) conduct research on succession planning and its impact on the
performance of small medium enterprises within the manufacturing sector in Johannesburg. A
combination of both qualitative and quantitative methodology was applied to get response from
15 companies out of the total companies. The study found that there was a gap between
perceived and actual status of succession planning in the small and medium enterprises studies
and there is major room for improvement in this area.

Hussein (2013) examined the effect of succession planning on family-owned business in

Kenya. He used primary source of data collection to gather information and the data was
analyzed through multiple regression. The study therefore, identified strategic succession
planning as critical factor affecting family-owned business in Kenya. Rose and Friday (2015)
carried out research on an appraisal of succession planning on family-owned business in Lagos
state. They used questionnaire to elicit information from the respondents and statistical package
for social science to analyzed the collected data. The study revealed that lack of succession
planning is not the significant factor responsible for the problem of succession despite the fact
that most family enterprise lack succession plan.

Gumbo, John, Gakure & Ngugi (2012) conducted research on roll of succession planning
on the survival of small and medium enterprises after the death/retirement of the first
entrepreneur in Kenya. The study used primary data through questionnaires which were given to
the respondents at their places of businesses. Quantitative data collected was analyzed by SPSS
and the result was presented through tables, figures, chart and percentage etc. a multivariate
regression model was applied to determine the relative importance of each of the four variables

42
with respect to SMFE growth. The study revealed that capability, entrepreneur and education of
the successor had the greatest effect on the survival of SMFE.

Mensah (2012) carried out research on succession planning in small and

mediumenterprises in Takorad Metropolis of Ghana. Purposive sampling was used in selecting
125 SMEs for the study. Data was gathered through the use of questionnaire and analyzed using
percentages and frequency tables. The major findings of the study were lack of trust was one of
the factors affecting succession planning in SMEs. This was because many SMEs do not have
clear objectives and policy of succession planning for the enterprises.

2.8.1 Research Gap

The review of the literature above has not adequately identified the direct impact of
leadership styles on succession planning. There are also inconclusive findings on how leadership
style affects succession planning. The studies above have been mostly conducted in other part of
Africa countries and only limited studies in Nigeria has identified various leadership styles in
SMEs and how they affect succession planning. Therefore, this study examines the impact of
leadership styles on succession planning in SMEs in Lagos state, Nigeria.

2.9 Conceptual Model for the study

Figure 1: Conceptual framework of Leadership styles on succession planning

Independent variables Dependent variable

Directional Leadership

Situational Leadership Theory Transformational Leadership

Succession Planning

Team Building Theory Transactional Leadership

Participative Leadership

43
 Source: Adapted from Nicolas (2015)

A conceptual framework is a visual or written product that explains, either graphically or

in narrative form, the main things to be studiedthe key factors, concepts, or variables and
the presumed relationships among them (Miles and Huberman, 1994). The conceptual
framework that was used in this research depicts the various variables under study. Theories of
situational theory and trait theory provide the basis of the study independent variable which are;
directive leadership, transformational leadership, transactional leadership and participative
leadership. The theories assume that four different types of leadership style affect succession
planning in SMEs. These variables lead to the conceptual framework of the study as illustrated in
figure 1 above.

2.9.1 Review of Variables

i. Directive leadership: refer leaders who allow the goals or the plan to be openly or
routinely questioned once they are in place, make sure that every task is by the book or has
worked before, everyone is supervised and is given a task, assign tasks designed to accomplish
specific goals, guide and structures employees activities, clarify expectations, goals, and work
methods, monitors and follow up on our assignments, define roles and communication patterns
plan, schedule, and assign responsibilities

ii. Transformational leadership: refer to leaders who show acceptance and positive regard
for others, polite and considerate, not arrogant and rude, treat each employee as an individual,
patient and helpful when giving instructions or explanations, provide sympathy and support
when the person is anxious or upset, express confidence in the person when there is a difficult
task and provide assistance with the work when it is needed

iii. Transactional leadership: refer to leader who shows faith in the capabilities of the
follower to succeed, teach and mentor employees, do onsite observation, make difficult decisions
that are aligned with hotel visions, mission and objective.

iv. Participative leadership: refer to leaders who allow employees to participate in planning
daily activities, set my own targets, in setting procedures, allowed to have direct influence on
their work, allowed to make use of personal judgment, allowed to decide on how to do my job,

44
influence on what goes on in their work group and influence on decisions that affect their job,
keep time and listen to my ideas and suggestions.

45
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter highlights the procedures used in conducting the study. Pertinent issues
discussed in this section include the research design, sample size, sample procedure, methods of
data collection instrument, procedure for data collection and data analysis.

3.2 Research Design

Research design is described as a blue print or outline for conducting a study in such a
way that maximum control will be exercised over factors that could interfere with the validity of
the research results (Polit & Hungler, 1999). This study adopted an explanatory research. The
basic idea behind explanatory research is to measure variables using data collected from a
representative sample and then to examine relationships among the variables. In most instances,
explanatory research attempt to capture attitude or patterns of past behavior (Hagan, 2000). This
design is best for investigating impact of leadership styles on succession planning among SMEs.

3.3 Data Specification

Both Primary and Secondary sources were used to source for data for the study. The
primary data was obtained through questionnaire which elicits information on the bio-data of the
respondents and data related to impact of leadership styles on succession planning among SMEs.
The bio-data of the respondents covered items such as gender, age group, marital status,
educational qualifications, and experience. The secondary data was sourced from Lagos State
SMEs businesses and Lagos State Bureau of Statistics.

3.4 Population of the Study

The population for this study comprises all registered Small and Medium Enterprises in
Lagos state, Nigeria. It must be noted that based on the latest finding by the Small and Medium
Enterprises Development Agency of Nigeria (SMEDAN) and National Bureau of Statistics SBN
Collaborative Survey (2014). The total number of SMEs in all the 36 state in Nigeria as at 2014
stood at 37,067,416 (Small 68168, and Medium 4,670). Lagos state has the highest number of

46
SMEs (11,663), while Kwara state has the least (226). Therefore, the population for the study is
11,663 registered SMEs in Lagos State.

Table 3.4.1 Population of the Study

LAGOS STATE SMALL MEDIUM TOTAL

11044 619 11663
Source: Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and
National Bureau of Statistics Collaborative Survey (2013).

3.5 Sampling frame and Sample Size

The random sampling technique was used to ensure that every member of the population
has an equal chance of being included in the sample. The sample size was determined using
Yamane formula which is stated as follow:

n = N/ (1+Ne2)

Where:

N = Population size

n = Sample size

e = Level of error = 0.05

I = a theoretical constant

11663/ [1+11663(0.05)2]

11663/30.1575= 386.736

= 387 sample size

3.6 Data Collection Instrument

The study used structured questionnaire as data collection instrument. Questionnaire was
used because it helps the researcher to collect large amount of data in large areas within a short
time thus saving time for the study (Asika, 1991). The questionnaire contained both open-ended

47
and closed ended questions which were based on the research questions and objectives of the
study. The questionnaire was directed to both the owners and the key staffs of the company. The
items of the questionnaire were adapted from the work of Nicolas (2015) on effect of leadership
styles on succession planning in SMEs in Kenya. The study established the face and content
validity of the items used.

3.7 Method of Data Collection

The collection of primary data required the use of questionnaire. The questionnaire was
structured into two main parts. The first part focused on the demographic data which include
items such as gender, age, marital status, education qualifications, and experience. The second
part focused on questions related to issues concerning impact of leadership styles on succession
planning among SMEs. These were formulated as to provide basic answers to the research
questions. 387 copies of questionnaires were self-administered to the randomly selected
respondents. Likert scale of five points was used to enable the respondents give their opinions to
items in the questionnaire based on the following grades: Strongly Agree (SA) = 1, Agree (A) =
2, Undecided (UN) = 3, Disagree (D) =4, and Strongly Disagree (SD) = 5

3.8 Method of Data Analysis

Data was analyzed both quantitatively and qualitatively. Data was analyzed through the
use of SPSS (Statistical Package for Social Science) software. Qualitative data was analyzed
using thematic analysis. Descriptive methods were employed in analyzing qualitative data where
frequencies and proportions were used in interpreting the respondents perception on issues that
was raised in the questionnaire so as to answer the research questions. Descriptive statistics such
as frequency distribution, percentages, means and standard deviations were calculated and data
presented in form of table and chart. Inferential statistics (single regression) was used to draw
implications from the data with regard to the regression model.

The regression model is given below as:

Yx = 0 + 1X1+ E

Where:

48
Y = Dependent variable

0 = Intercept of the model.

1 = Coefficient of the independent variable in the model.

X1= element of independent variable

E= Error term.

3.9 Ethical Considerations

The researcher respected the respondents privacy. The participants were not expected to
write their names on the questionnaire, but each questionnaire has a code number for reference.
The participants were assured that information given will be treated confidentially and for the
purpose intended only. They also had the freedom to withdraw from the study at any point in
time. The researcher informed the respondents that they have a right not to participate in the
study if they so wish. The researcher also informed the respondents that they have a right to
withdraw from the study at any time without giving a reason as to their withdrawal regarding the
right to privacy of the respondents. In all cases, names were kept confidential thus collective
names like respondents were used.

49
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

This chapter deals with the presentation and analysis of the data collected from the field
of study. The chapter was divided into four parts. The first part discussed the frequency
distribution and analysis of responses relating to the demographic characteristics of the
respondents, the second part focused on analysis of variables related to the impact of leadership
styles on succession planning in SMEs, the third part deals with test of hypotheses, while the last
segment discussed the results and application of the analyses. The data were presented using
frequency tables while the hypotheses were tested with regression.

4.1.1 Analysis of responses to questionnaire

Description Frequency Percentage

Administer 387 100.0
Returned 344 88.9
Not returned 43 11.1
Source: Field Survey, 2016

Out of the 387 copies of questionnaires administered to the respondents, 344 copies of
questionnaires were completed and returned which implies a response rate of 88.9%.

4.1.2 Presentation of the respondents socio demographic data

4.1.3 Distribution of the Respondents by Gender

Frequency Percentage Valid percentage Cumulative

percentage
Valid MALE 171 49.7 49.7 49.7
FEMALE 173 50.3 50.3 100.0
Total 344 100.0 100.0
Source: Field Survey, 2016

The findings show that a total of 49.7% males and 50.3% of females have participated in this
survey. This implies that the respondents would be in best position to provide suitable answers to
the contents of the questions and it also shows that there is no discrimination between genders.

50
4.1.4 Distribution of the Respondents by Age

Frequency Percentage Valid percentage Cumulative

percentage
Valid 20-30yrs 26 7.6 7.6 7.6
31-40yrs 89 25.9 25.9 33.5
41-50yrs 120 34.9 34.9 68.4
Above 51yrs 109 31.7 31.7 100.0
Source: Field Survey, 2016

The Majority of the respondents in this survey falls within the age bracket of 20 30 years have
a percentage of 7.6% and those with age bracket 31 40 years have percentage of 25.9%, 41-50
years of age have 34.9% and finally, those with 50 years and above have 31.7%. This implies
that the population organization easily understood the concept and implication of leadership
styles on succession planning.

4.1.5 Distribution of the Respondents by Educational Attainment

Frequency Percentage Valid percentage Cumulative

percentage
Valid SSCE 93 27.0 27.0 27.0
NCE/OND 57 16.6 16.6 43.6
HND/B.Sc. 98 28.5 28.5 72.1
Masters 84 24.4 24.4 96.5
Others 12 3.5 3.5 100.0
Source: Field survey, 2016

The table also indicates that 27.0 % of the respondents fall under the category of certificate
programs, 16.6% of the respondents falls under the category of diploma of studies, 28.5% in the
B.Sc. level of study, 24.4% in the masters level of study while 3.5% is accounted for other
qualification. This means that all the respondents were educated and could therefore read and
write without aid who could understand the contents of the questionnaire better.

4.1.6 Distribution of the Respondents by Experience

Frequency Percentage Valid percentage Cumulative

percentage
Below 3yrs 150 43.8 43.8 43.8
Between 4-7yrs 162 47.2 47.2 91
Between 8-10yrs 12 3.5 3.5 94.5
Above 10yrs 19 5.5 5.5 100.0
51
Source: Field survey, 2016

The majority of the respondents have been in the business 4 7 years taking a percentage of
47.2%, 43.8% are below 3 years, 3.5% falls in between 8-10 years while the remaining 5.5 % of
them have been in the business for more than 10 years. This implies that majority of the
respondents are well experienced.

4.2 Analysis of the research questions represented in percentages and mean score

The research questions are summarized using the percentages and mean score. As regards to the
tables below, the calibrations are as follows: Strongly Agree (SA) = 1, Agree (A) = 2, Undecided
(UN) = 3, Disagree (D) =4, and Strongly Disagree (SD) = 5. Any mean score below 3 implies a
Strongly Agree or Agree while any mean score above 3 implies Disagree or Strongly Disagree.

Table 4.2.1 Questions addressing directive leadership expressed in percentages

Variables SA A U D SD Mean Std Dev.

% % % % %
I rarely allow the goals or the 23.0 57.0 12.8 3.5 3.8 2.081395 0.912691
plan to be openly or routinely
questioned once they are in place
I make sure that every task you 29.1 44.2 14.2 10.8 1.7 2.119186 1.004528
work toward is by the book or has
worked before
I makes sure that everyone is 44.2 48.3 4.7 2.6 .3 1.665698 0.713377
supervised and is given a task
I assign tasks designed to 39.2 41.9 11.9 5.2 1.7 1.883721 0.931078
accomplish specific goals
I guided and structures 30.5 55.8 13.7 0.0 0.0 1.831395 0.643924
employees activities
I clarify expectations, goals, and 30.5 55.8 13.7 0.0 0.0 1.831395 0.643924
work methods
I monitors and follow up on our 31.1 48.8 18.0 2.0 0.0 1.909884 0.752462
assignments
I define roles and communication 34.0 44.8 16.3 4.7 .3 1.924419 0.843488
patterns
I plan, schedule, and assign 19.8 57.8 11.3 8.7 2.3 2.159884 0.919828
responsibilities
Source: Field survey, 2016.

Table 4.2.1

52
 The above table shows the questions addressing directive leadership. It is evident from
the result that the mean score for all the variables are less than 3 which the stipulated
benchmark for accepting the statement or not. Analysis on the percentage also back up the mean
score as the majority of the respondents strongly agree or agree to each of the variables addressig
directive leadership. 23% strongly agrees and 57% agrees that they allow the goals or the plan to
be openly or routinely questioned once they are in place, 23% strongly agrees and 57% agree
that they allow the goals or the plan to be openly or routinely questioned once they are in place,
29.1% strongly agree and 44.2% agrees that they make sure that every task you work toward is
by the book or has worked before, 42.2% strongly agrees and 48.3% agrees that makes sure that
everyone is supervised and is given a task, 39.2% strongly agrees and 41.9% agrees that assign
tasks designed to accomplish specific goals, 30.5% strongly agrees and 55.8% agrees that they
guided and structures employees activities, 30.5% strongly agrees and 55.8% agree that they
clarify expectations, goals, and work methods, 31.1% strongly agrees and 48.8% agree that they
monitors and follow up on our assignments, 34% strongly agrees and 48.8% agree that they
define roles and communication patterns, 19.8% strongly agree and 57.8% agree plan, schedule,
and assign responsibilities.

Table 4.2.2 Questions addressing transformational leadership expressed in percentages

Variables SA A U D SD Mean Std Dev.

% % % % %
I show acceptance and positive 41.3 43.6 11.3 .3 3.5 1.811047 0.904666
regard for others
I am polite and considerate, not 44.5 35.8 15.4 4.4 0.0 1.796512 0.856727
arrogant and rude
I treat each employee as an 25.0 36.3 31.7 7.0 0.0 2.206395 0.897593
individual
I remember important details 27.9 38.1 20.9 13.1 0.0 2.19186 0.988767
about the person (like their
Name!)
I am patient and helpful when 32.0 44.2 16.6 6.7 .6 1.997093 0.89865
giving instructions or
Explanations
I provide sympathy and support 35.8 39.2 11.9 8.7 4.4 2.06686 1.103218
when the person is anxious or
Upset
I express confidence in the person 30.2 47.7 16.0 .3 5.8 2.037791 0.999284
when there is a difficult task

53
I provide assistance with the work 26.5 49.7 17.7 2.6 3.5 2.069767 0.926333
when it is needed
I am willing to help with personal 38.1 38.7 17.7 5.5 0.0 1.906977 0.879012
problems
Source: Field survey, 2016.

Table 4.2.2

The above table shows the questions addressing transformational leadership. It is evident
from the result that the mean score for all the variables are less than 3 which the stipulated
benchmark for accepting the statement or not. Analysis on the percentage also back up the mean
score as the majority of the respondents strongly agree or agree to each of the variables
addressing transformational leadership. 41.3% strongly agrees and 43.6% agrees that I show
acceptance and positive regard for others, 25.0 strongly agree, 36.3 agrees and 31.7% undecided
that I treat each employee as an individual, 27.9% strongly agree and 38.1% agrees that I
remember important details about the person (like their Name!), 32.0% strongly agrees and
44.2% I am patient and helpful when giving instructions or Explanations, 35.8% strongly agrees
and 39.2% agrees that I provide sympathy and support when the person is anxious or Upset,
30.2% strongly agrees and 47.7% agrees that I express confidence in the person when there is a
difficult task, 26.5% strongly agrees and 49.7% agree that I provide assistance with the work
when it is needed, 38.1% strongly agrees and 48.7% agree that I am willing to help with personal
problems.

Table 4.2.3 Questions addressing participative leadership expressed in percentages

Variables SA A U D SD Mean Std Dev.

% % % % %
I am allowed to participate in 36.0 47.1 14.0 2.9 0.0 1.837209 0.769089
planning daily activities
I am allowed to set my own 34.6 45.1 11.0 9.3 0.0 1.950581 0.910195
targets
In my business, employees 33.7 41.6 18.9 5.8 0.0 1.968023 0.871727
participate in Setting procedures
Employee in my business are 23.5 46.8 22.1 7.6 0.0 2.136628 0.861517
allowed to have direct influence
on their work
I am allowed to make use of 17.2 54.7 21.5 6.1 .6 2.18314 0.807151
personal judgment

54
I am allowed to decide on how to 24.4 45.9 20.1 5.5 4.1 2.188953 0.999589
do my job
In my business employees have 29.9 43.9 21.5 2.6 2.0 2.02907 0.896559
much to say or influence on what
goes on in their work group
In my business employees have 17.7 43.9 29.7 6.7 2.0 2.313953 0.910088
much to say or influence on
decisions that affect their job
My superiors keep time and listen 17.2 46.2 25.0 9.9 1.7 2.328488 0.931911
to my ideas and suggestions
Source: Field survey, 2016

The above table shows the questions addressing participative leadership. It is evident from the
result that the mean score for all the variables are less than 3 which the stipulated benchmark
for accepting the statement or not. Analysis on the percentage also back up the mean score as the
majority of the respondents strongly agree or agree to each of the variables addressing
participative leadership. 36.0% strongly agrees and 47.1% agrees that I am allowed to participate
in planning daily activities, 34.6% strongly agrees and 45.1% agree that I am allowed to set my
own targets , 33.7% strongly agree and 41.6% agrees that In my business, employees participate
in Setting procedures, 23.5% strongly agrees and 46.8% agrees that Employee in my business are
allowed to have direct influence on their work, 17.2% strongly agrees and 54.7% agrees that I
am allowed to make use of personal judgment, 24.4% strongly agrees and 45.9% agrees that I am
allowed to decide on how to do my job, 29.9% strongly agrees and 43.9% agree that In my
business employees have much to say or influence on what goes on in their work group, 17.7%
strongly agrees and 43.9% agree that influence on decisions that affect their job, 17.2% strongly
agrees and 46.2% agree that My superiors keep time and listen to my ideas and suggestions.

Table 4.2.4 Questions addressing transactional leadership expressed in percentages

Variables SA A U D SD Mean Std Dev.

% % % % %
I show faith in the capabilities of 25.9 38.4 27.9 7.6 .3 2.180233 0.914454
the follower to succeed
I always teach and mentor 30.5 50.0 12.5 4.7 2.3 1.982558 0.909771
followers
I love what he/she does and 31.1 42.4 14.2 8.7 3.5 2.110465 1.052281
ensure that our values are aligned
with the organization

55
I do on-site observation 24.4 50.3 14.5 10.8 0.0 2.116279 0.89922
I make difficult decisions that are 39.8 46.5 11.9 1.7 0.0 1.755814 0.727407
aligned with the business visions,
mission and objectives
Source: Field survey, 2016.

The above table shows the questions addressing transactional leadership. It is evident from the
result that the mean score for all the variables are less than 3 which the stipulated benchmark
for accepting the statement or not. Analysis on the percentage also back up the mean score as the
majority of the respondents strongly agree or agree to each of the variables addressing
transactional leadership. 25.9% strongly agrees and 38.4% agrees that I show faith in the
capabilities of the follower to succeed, 30.5% strongly agrees and 50.0% agree that I always
teach and mentor followers, 31.1% strongly agree and 42.4% agrees that I love what he/she does
and ensure that our values are aligned with the organization, 24.4% strongly agrees and 50.3% I
do on-site observation, 39.8% strongly agrees and 46.5% agrees that I make difficult decisions
that are aligned with the business visions, mission and objectives.

Table 4.2.5 Questions addressing succession planning expressed in percentages

Variables SA A U D SD Mean Std Dev.

% % % % %
There is no conflict between 47.4 34.6 14.5 3.2 .3 1.744186 0.842543
stakeholders on who should take
over the business
There is high commitment and 26.2 28.2 28.8 13.7 3.2 2.395349 1.109504
involvement of the
management/owners
The owners regularly review 33.4 44.2 13.1 7.3 2.0 2.002907 0.970403
talent of the successor
The business have never been left 23.5 49.7 17.2 6.4 3.2 2.159884 0.96318
without a leader
There has been understanding 26.5 43.9 16.6 10.5 2.6 2.188953 1.025503
among stakeholders on who
should take over the business
Whoever take over the business is 39.0 41.3 14.8 4.9 0.0 1.857558 0.846912
respected by all stakeholders
The business stills runs well with 31.4 41.9 18.3 6.7 1.7 2.055233 0.95976
the new successor
We love the new successor 27.9 49.7 14.8 6.7 .9 2.02907 0.880149
Source: Field survey, 2016.

56
The above table shows the questions addressing succession planning. It is evident from the result
that the mean score for all the variables are less than 3 which the stipulated benchmark for
accepting the statement or not. Analysis on the percentage also back up the mean score as the
majority of the respondents strongly agree or agree to each of the variables addressing succession
planning. 47.4% strongly agrees and 34.6% agrees There is no conflict between stakeholders on
who should take over the business, 26.2% strongly agrees, 28.2% agree and 28.8 undecided that
there is high commitment and involvement of the management/owners, 33.4% strongly agree and
44.2% agrees that the owners regularly review talent of the successor, 23.5% strongly agrees and
49.7% agrees that the business have never been left without a leader, 26.5% strongly agrees and
43.9% agrees that There has been understanding among stakeholders on who should take over
the business, 39.0% strongly agrees and 41.3% agrees that whoever take over the business is
respected by all stakeholders, 31.4% strongly agrees and 41.9% agree that the business stills runs
well with the new successor, and work methods, 27.9% strongly agrees and 49.7% agree that we
love the new successor.

4.3 Test of Hypothesis

Hypothesis One

H0: there is no significant effect of directive leadership on succession planning in SMEs

H1: there is a significant effect of directive leadership on succession planning in SMEs

Table 4.3.1: Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .812a .659 .658 .94865

Source: Authors computation, 2016

a. Predictors: (Constant), Directive Leadership

The correlation coefficient (R) equals 0.812, indicates a positive relationship between the
variables. The R-Squared statistic indicates that the model as fitted explains 65.9% of the
variability in succession planning. This established that effective use of directive leadership on
succession planning will have effect on the survival of SMEs.

Table 4.3.2: ANOVA

57
 Model Sum of Squares Df Mean Square F Sig.

Regression 593.774 1 593.774 659.790 .000b

1 Residual 307.781 342 .900

Total 901.555 343

Source: Authors computation, 2016

a. Dependent Variable: Succession Planning
b. Predictors: (Constant), Directive Leadership
The p-value of (0.000) which is less than the level of significant at the 0.05 indicate that the
result is statistically significant; therefore the null hypothesis is rejected. Therefore, it can be
concluded that there is a significant effect of directive leadership on succession planning in
SMEs.

Table 4.3.3: Regression Coefficient

Model Unstandardized Coefficients Standardized T Sig.

Coefficients

B Std. Error Beta

(Constant) -3.283 .272 -12.060 .000

1
Directive Leadership 1.741 .068 .812 25.686 .000

Source: Authors computation, 2016

a. Dependent Variable: Succession Planning
The regression coefficient of the above equation for the model implies that unit change in
directive leadership will exert a positive effect on succession planning.

Hypothesis Two

H0: there is no significant effect of transformational leadership on succession planning in SMEs

H1: there is a significant effect of transformational leadership on succession planning in SMEs

Table 4.3.4: Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .806a .649 .648 .96213

Source: Authors computation, 2016
a. Predictors: (Constant), Transformational Leadership

58
The correlation coefficient (R) equals 0.806, indicates a positive relationship between the
variables. The R-Squared statistic indicates that the model as fitted explains 64.9% of the
variability in succession planning. This established that effective use of Transformational
Leadership on succession planning will have effect on the survival of SMEs.

Table 4.3.5: ANOVA

Model Sum of Squares Df Mean Square F Sig.

Regression 584.970 1 584.970 631.929 .000b

1 Residual 316.586 342 .926

Total 901.555 343

Source: Authors computation, 2016

a. Dependent Variable: Succession Planning
b. Predictors: (Constant), Transformational Leadership
Also the p-value of (0.000) which is less than the level of significant at the 0.05 indicates that the
result is statistically significant; therefore the null hypothesis is rejected. Therefore, it can be
concluded that there is a significant effect of transformational leadership on succession planning
in SMEs.

Table 4.3.6: Regression Coefficient

Model Unstandardized Coefficients Standardized T Sig.

Coefficients

B Std. Error Beta

(Constant) .965 .116 8.287 .000

1
Transformational Leadership .819 .033 .806 25.138 .000

Source: Authors computation, 2016

a. Dependent Variable: Succession Planning
The regression coefficient of the above equation for the model implies that unit change in
transformational leadership will exert a positive effect on succession planning.

Hypothesis Three

H0: there is no significant effect of participative leadership on succession planning among SMEs

59
H1: there is a significant effect of participative leadership on succession planning among SMEs

Table 4.3.7 Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .535a .287 .285 1.26608

Source: Authors computation, 2016

a. Predictors: (Constant), Participative Leadership

The correlation coefficient (R) equals 0.535, indicates a positive relationship between the
variables. The R-Squared statistic indicates that the model as fitted explains 28.7% of the
variability in succession planning. This established that effective use of participative Leadership
on succession planning will have effect on the survival of SMEs.

Table 4.3.8: ANOVA

Model Sum of Squares Df Mean Square F Sig.

Regression 220.287 1 220.287 137.425 .000b

1 Residual 548.213 342 1.603

Total 768.500 343

Source: Authors computation, 2016

a. Dependent Variable: Succession Planning.
b. Predictors: (Constant), Participative Leadership
Also the p-value of (0.000) which is less than the level of significant at the 0.05 indicate that the
result is statistically significant; therefore the null hypothesis is rejected. Therefore, it can be
concluded that there is a significant effect of participative leadership on succession planning in
SMEs.

Table 4.3.9: Regression Coefficient

Model Unstandardized Coefficients Standardized T Sig.

Coefficients

B Std. Error Beta

(Constant) .948 .249 3.816 .000

1
Participative Leadership .737 .063 .535 11.723 .000

60
Source: Authors computation, 2016
a. Dependent Variable: Succession Planning
The regression coefficient of the above equation for the model implies that unit change in
participative leadership will exert a positive effect on succession planning.

Hypothesis Four

H0: there is no significant effect of transactional leadership on succession planning among SMEs

H1: there is a significant effect of transactional leadership on succession planning among SMEs

Table 4.3.10: Model Summary

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .778a .605 .603 .94258

Source: Authors computation, 2016

a. Predictors: (Constant), Transactional Leadership

The correlation coefficient (R) equals 0.778, indicates a positive relationship between the
variables. The R-Squared statistic indicates that the model as fitted explains 60.5% of the
variability in succession planning. This established that effective use of Transactional Leadership
on succession planning will have effect on the survival of SMEs.

Table 4.3.11: ANOVA

Model Sum of Squares Df Mean Square F Sig.

Regression 464.646 1 464.646 522.978 .000b

1 Residual 303.854 342 .888

Total 768.500 343

Source: Authors computation, 2016

a. Dependent Variable: Succession Planning
b. Predictors: (Constant), Transactional Leadership
Also the p-value of (0.000) which is less than the level of significant at the 0.05 indicate that the
result is statistically significant; therefore the null hypothesis is rejected. Therefore, it can be
concluded that there is a significant effect of transactional leadership on succession planning in
SMEs.

61
Table 4.3.12: Regression Coefficient
Model Unstandardized Coefficients Standardized t Sig.
Coefficients

B Std. Error Beta

(Constant) 1.158 .124 9.325 .000

1
Transactional Leadership .770 .034 .778 22.869 .000

Source: Authors computation, 2016

a. Dependent Variable: Succession Planning
The regression coefficient of the above equation for the model implies that unit change in
transactional leadership will exert a positive effect on succession planning.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter provides the summary of the findings from chapter four, and it also gives the
conclusions and recommendations of the study based on the objectives of the study.

5.2 Summary of Findings

The general purpose of this study was to determine impact of leadership styles on
succession planning in small and medium enterprises (SMEs) in Lagos state, Nigeria.

62
 The first hypothesis seeks to determine whether directive leadership has any significant
effect on succession planning. The regression coefficient of the above equation for the model
implies that unit change in directive leadership will exert a positive effect on succession
planning. Also the p-value of (0.000) which is less than the level of significant at the 0.05
indicates that the result is statistically significant. This is also in line with findings by other
scholars in the field. According to Yukl, (2013), directive leaders communicate an idealized
vision and motivate their followers by appealing to their values and beliefs hence their staff is
likely to follow the same trend making good candidates for future succession. Due to the fact that
directive leaders foster the acceptance of shared goals, and motivate followers for the
achievement of organizational goals, they lay a strong foundation for the future succession of the
company (Walter & Bruch, 2009) Therefore, it can be concluded that there is a significant effect
of directive leadership on succession planning in SMEs.

The second hypothesis seeks to determine whether transformational leadership has any
significant effect on succession planning in SMEs. Findings revealed that regression coefficient
of the table 4.3.6 equation for the model implies that unit change in transformational leadership
will exert a positive effect on succession planning. Also the p-value of (0.000) which is more
than the level of significant at the 0.05 indicates that the result is statistically significant.
Therefore, it can be concluded that there is a significant effect of transformational leadership on
succession planning among SMEs.

The third hypothesis seeks to determine whether participative leadership has any
significant effect on succession planning in SMEs. Findings revealed that the regression
coefficient of the table 4.3.7 equation for the model implies that unit change in participative
leadership will exert a positive effect on succession planning. Also the p-value of (0.000) which
is less than the level of significant at the 0.05 indicates that the result is statistically significant.
Therefore, it was concluded that there is a significant effect of participative leadership on
succession planning among SMEs. This is contrary to the findings by Nicolas (2015) who says
that participative leadership does not affect succession in SMEs. Also Bass (2008) notes that
through participative leadership, organizations can make decisions regarding its future
succession plans. This is due to the fact that employees will work to their level best in an attempt
to ensure that the future is well planned for.

63
 Hypothesis four seeks to determine whether transactional leadership has any significant
effect on succession planning in SMEs. The research findings revealed that the regression
coefficient of the table 4.3.8 equation for the model implies that unit change in transactional
leadership will exert a positive effect on succession planning. Also the p-value of (0.000) which
is less than the level of significant at the 0.05 indicates that the result is statistically significant.
Therefore, it was concluded that there is a significant effect of transactional leadership on
succession planning in SMEs.

5.3 Conclusion

The study has established that directive leadership has a positive effect on succession
planning. With directive leadership, followers are able to cope with uncertainty since leaders that
exhibit directive leadership communicate determination, motivation as well as inspiration.
Consequently, such leaders can take risks to achieve what is the most beneficial outcome for the
organization succession planning.

Also, the study shows that transformational leadership has a significant effect in
succession planning. Transformational leaders are effective in communicating an appealing
vision and the need for positive change thereby enhancing successful succession planning.

The study has established that participative leadership has significant effect on succession
planning. Participative leadership gives employees an opportunity to be involved in the growth
of the organization and future succession, the study results exhibits significant effect of
participative leadership on succession planning. This could be as a result of higher form of
decision-making associated with participative leadership.

Finally, transactional leadership has a positive and significant effect on succession

planning. Since transactional leadership is based on the premise that achievement are rewarded
and deviations punished, employees work towards improving performance so that they may be
considered in the future ownership of the company. It can therefore be concluded that
transactional leadership is effective in increasing organizational identification and creating a
viable succession plan.

5.4 Recommendations

64
In light of the findings of the study, the followings recommendations were made

1. Organizations should build a culture of strong leadership whereby employees will show
effective leadership at all levels and also plan, schedule, assign responsibilities and structure
employees activities in order to model good candidates for future succession.

2. It is important for leaders to have a clear vision and appeal emotionally to their followers in
order for them to be a source of admiration and identification. This will have a pull effect on
the employees in that they will strive to excel so as to create viable potentials when it comes to
the succession of the company.

3. Organization at all-time should employ a leader who will teach and mentor their followers and
show faith in their capabilities to succeed. Also it is important for the organization to reward
exemplary performance among employees so as to encourage all employees at all levels to
portray the behavior and

4. They should also enhance relationships between the leaders and followers and or between
followers in the organization, increase employee work incentives, and increase the rate of
information circulation across the organization in order to ensure a successful future succession
plan.

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APPENDIX I

LETTER OF INTRODUCTION AND QUESTIONNAIRE

Dept. of Business Administration,

Faculty of Management Sciences,

University of Ilorin,
Ilorin. Nigeria.

Dear Sir/madam,

71
I am a M.Sc. student in the department of Business Administration, Faculty of Management
Sciences, University of Ilorin, Ilorin. I am presently carrying out a research titled Impact of
leadership styles on succession planning among SMEs in Lagos state, Nigeria. A questionnaire
has been developed essentially for this research purpose and nothing else, hence your
participation and invaluable contribution to the success of this will be greatly appreciated. In
addition, since it is purely for research and academic purposes, your responses will be treated
with strict CONFIDENTIALITY.

You can be assured that no one will ever know how you responded to the questions. Please, do
not write your name anywhere in this questionnaire.

Thank you in anticipation for your kind assistance and cooperation.

Yours faithfully,

JIMOH, Adams Lukman

14/68MJ010

DIRECTION: Please take a few minutes to write down your responses to each questions
appearing below: these questionnaire is intended to be anonymous, though you are free to sign
your name if you wish. You will receive a confidential report that summaries the key responses
of all respondent and recommends action steps. Answer the following questions by ticking or
filling the empty boxes.

SECTION A

1 What is your gender?

Male [ ] Female [ ]

2. What is your age category?

72
20-30 years [ ] 31-40 years [ ] 41--50 years [ ] 51 and above

3. What is your highest academic qualification?

[ ] SSCE [ ] ND/NCE [ ] HND/B.Sc. [ ] Master [ ]

Other please Specify

4. For how long have you been in the business?

[ ] Below 3years [ ] Between 4- 7years

[ ] Between 8-10 years [ ] above 10years

SECTION B: DIRECTIVE LEADERSHIP (TICK WHERE APPLICABLE)

5 Strongly Agree, 4 Agree, 3, Undecided, 2 Disagree, 1 Strongly Disagree

SA A U D SD

I rarely allow the goals or the plan to be openly or routinely

questioned once they are in place

I make sure that every task you work toward is by the book or

has worked before

1 makes sure that everyone is supervised and is given a task

1 assign tasks designed to accomplish specific goals

1 guided and structures employees activities

I clarify expectations, goals, and work methods

I monitors and follow up on our assignments

73
I define roles and communication patterns

I plan, schedule, and assign responsibilities

SECTION C: TRANSFORMATIONAL LEADERSHIP (TICK WHERE APPLICABLE)

SA A U D SD

I show acceptance and positive regard for others

I am polite and considerate, not arrogant and rude

I treat each employee as an individual

I remember important details about the person (like their

Name!).

I am patient and helpful when giving instructions or

explanations

I provide sympathy and support when the person is anxious or

Upset

I express confidence in the person when there is a difficult

task

I provide assistance with the work when it is needed

I am willing to help with personal problems

SECTION D: PARTICIPATIVE LEADERSHIP (TICK WHERE APPLICABLE)

74
 AS A U D SD

I am allowed to participate in planning daily activities

I am allowed to set my own targets

In my business, employees participate in Setting

procedures

Employee in my business are allowed to have direct

influence on their work

I am allowed to make use of personal judgment

I am allowed to decide on how to do my job

In my business employees have much to say or

influence on what goes on in their work group

In my business employees have much to say or

influence on

decisions that affect their job

My superiors keep time and listen to my ideas and

suggestions

SECTION E: TRANSACTIONAL LEADERSHIP (TICK WHERE APPLICABLE)

SA A U D SD

I show faith in the capabilities of the follower to succeed

I always teach and mentor followers

75
I love what he/she does and ensure that our values are
aligned

with the organization

I do on-site observation

I make difficult decisions that are aligned with the

business visions, mission and objectives

SECTION F: SUCCESSION PLANNING (TICK WHERE APPLICABLE)

SA A U D SD

There is no conflict between stakeholders on who should take

over the business

There is high commitment and involvement of the

management/owners

The owners regularly review talent of the successor

The business have never been left without a leader

There has been understanding among stakeholders on who

should take over the business

Whoever take over the business is respected by all

stakeholders

The business stills runs well with the new successor

We love the new successor

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 APPENDIX II

SMALL AND MEDIUM ENTERPRISES BY STATE

STATE SMALL MEDIUM TOTAL

ABIA 1769 40 1809
AKWA-IBOM 898 195 1093
ANAMBRA 1620 117
BAUCHI 2039 27
1737
BAYELSA 354 72
2066
BENUE 1146 22
426
CROSS RIVER 1126 168
DELTA 1444 -
EBONYI 1206 4 1168

EDO 1897 118 1294

EKITI 903 126 1444

ENUGU 812 99
GOMBE 1043 65 1210
IMO 1259 135 2015
JIGAWA 1022 75
1029
KADUNA 2712 170
KANO 7790 496
911
KEBBI 898 91
1108
KOGI 1380 17
KWARA 164 62 1394

LAGOS 11044 619

NASARAWA 1098 22 1097
NIGER 1258 100 2882
OGUN 1690 104 8286
ONDO 1850 194 989

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OSUN 2247 25 1397
OYO 7468 519 226
PLATEAU 2070 110 11663
RIVER 2981 41 1120
SOKOTO 631 210 1358
TARABA 891 669 1794
ZAMFARA 577 16 2044
FCT 2244 446 2272
7987
2180
3022
841
1560
593
2690
TOTAL 68168 4670 72838

Source: Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and
National Bureau of Statistics Collaborative Survey (2013)

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