AN ASSESSMENT OF THE IMPACT OF DEMOCRATIC LEADERSHIP STYLE ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN LIMBE, CAMEROON

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Leadership style is crucial in influencing company culture and performance in today's ever-changing business environment. Small and Medium Enterprises (SMEs) play a substantial role in global economies, making valuable contributions to job generation, innovation, and economic expansion. In addition, leadership styles in these enterprises exhibit variation, with the democratic leadership style developing as a major and notable method. The democratic leadership style is distinguished by its emphasis on participatory decision-making, transparency, and collaboration, in contrast to authoritarian or laissez-faire methods (Steve, 2021). Within a democratic leadership framework, leaders actively engage employees in the decision-making process, solicit their feedback, and cultivate an atmosphere of trust and empowerment. Adopting such a strategy is thought to improve employee involvement, innovation, and dedication. According to  Kahn (2019), democratic style does have an effect on level of employees engagement. He further asserts that a democratic leader lets people try things out. Democratic leadership is based on the idea that team members should be able to share their thoughts and ideas while still letting the leader make the final choice. People in the group are more invested in the process, and they are recognized for being creative. There are many good things about democratic government. Subordinates are encouraged to talk about their experiences, which can help them come up with better solutions to problems and come up with new ideas (Sadia & Aman, 2018). Staff will care more about the present end result because they will be more involved and committed to projects. However, there is a growing satisfaction gap in many workplaces, which means that there is a bigger difference between what employers want and what workers are willing to do. A drop in employees commitment can be caused by a number of things, but the most common is that management has failed in some way. For a leader to be good at managing loyal employees, he or she have to make leadership skills part of the culture of the company (Fauzia & Sedyowidodo, 2023). This way, everyone from the boss at the top to the newest worker will be handled in the same fair and consistent way (Allen & Meyer, 2020).  Additionally, studies in the management books show that commitment from top management may have an even bigger effect on how an employee stays committed. There are different kinds of commitment at work, and some people think it can affect how well a group works (Meyer & Herscovitch, 2021). When leaders establish means for obtaining help from subordinates in the making of plans and decisions, they are making them to know that their contributions are sought and appreciated and this creates great benefits and harmony in the organization.Therefore, a survey will be conducted in order to assess the impact of democratic leadership style on the performance of small and medium enterprises in Limbe, Cameroon.

1.2 Statement of the Problem

An essential requirement for achieving effectiveness in SMEs is the adoption of a leadership style of management. The leadership styles dictate the extent to which subordinates are involved in decision-making and the administrative functioning of a company. However, enterprises characterized by low efficiency often have leaders that exhibit a high degree of bossiness. The process of decision-making is solely focused on them. Engaging in decision making fosters an individual's cognitive and affective engagement in a collective context, motivating them to actively contribute to group objectives and assume shared accountability for them (Chruden and Sherman, 2022). Furthermore, the primary issue with the majority of small and medium business enterprises (SMEs) is the lack of democratic leadership exhibited by their leaders towards their subordinates. Typically, leaders in the majority of small and medium firms exhibit an authoritarian leadership style. They control the direction and have centralized control over the organization's administration. The imperative for subordinates to engage in decision making is not a fleeting trend. It is deeply ingrained in the culture of those who enjoy freedom worldwide, and undoubtedly, it is the fundamental motivation in men.  Additionally, another issue impacting leadership style in small and medium-sized enterprises is the proficiency of the individuals designated as leaders (Sastrawidjaja, 2021). Typically, a portion of their appointments lack validity. Nevertheless, the fate of such an organization lies in the hands of competent leaders who, despite their abilities, lack the capacity to employ the appropriate leadership style in order to guide the members towards achieving the established goals or objectives. Thus, it is in the light of these that the study seeks to assess the impact of democratic leadership style on the performance of small and medium enterprises in Limbe, Cameroon.

1.3  Objectives of the Study

The main purpose of this study is to assess the impact of democratic leadership style on the performance of small and medium enterprises in Limbe, Cameroon. Specifically, the study will;

Determine the prevalence of democratic leadership style among small and medium enterprises in Limbe, Cameroon.

Assess whether there is a relationship between democratic leadership style and the performance of SMEs in Limbe, Cameroon. 

Examine the challenges faced by SMEs in Limbe, Cameroon, when adopting democratic leadership styles. 

Provide recommendations for optimizing the impact of democratic leadership on the performance of SMEs in Limbe, Cameroon.

1.4 Research Questions

The following questions have been prepared for the study:

What is the prevalence of the democratic leadership style among small and medium enterprises in Limbe, Cameroon?

Is there a relationship between the democratic leadership style and the performance of SMEs in Limbe, Cameroon?

What are the challenges faceded by SMEs in Limbe, Cameroon, while implementing democratic leadership styles?

What are the ways to enhance the influence of democratic leadership on the performance of SMEs in Limbe, Cameroon?

1.5  Research Hypotheses

H0:  There is no significant impact of democratic leadership style on the performance of small and medium enterprises in Limbe, Cameroon.

Ha: There is a significant the impact of democratic leadership style on the performance of small and medium enterprises in Limbe, Cameroon.

1.6  Significance of the Study

The results of this study will reveal the significance of leadership styles on the performance of employees in the organization, which is a combination of the individual employees' productivity. Additionally, it will be beneficial for the selected small and medium-sized enterprises (SMEs) and other organizations in the country to address the difficulties they face, particularly in terms of leadership styles and overall management of employees. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the impact of democratic leadership style on the performance of small and medium enterprises in Limbe, Cameroon.

1.7 Scope of the study

The scope of this study is boarded on  the impact of democratic leadership style on the performance of small and medium enterprises in Limbe, Cameroon. Empirically, the study will determine the prevalence of democratic leadership style among small and medium enterprises in Limbe, Cameroon, examine the challenges faced by SMEs in Limbe, Cameroon, when adopting democratic leadership styles, assess the correlation between democratic leadership style and the performance of SMEs in Limbe, Cameroon and provide recommendations for optimizing the impact of democratic leadership on the performance of SMEs in Limbe, Cameroon.

Geographically, the study will be delimited to SMEs in Limbe, Cameroon.

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Leadership styles: the various approaches, behaviors, and attitudes that leaders adopt in guiding and influencing their team members or followers

Democratic leadership: also known as participative leadership, is a style where leaders involve team members or followers in the decision-making process.

Employees commitment: define as the level of dedication, loyalty, and engagement that employees have towards their organization, its goals, values, and objectives.