Frontiers in Business, Economics and Management 
ISSN: 2766-824X | Vol. 19, No. 2, 2025 

 

235 

Heterogenous Impact of Leadership Styles on Employee 
Performance and the Mediating Role of Employee 
Engagement: An Empirical Study on Private SMEs in 
Malawi 

Glory Cynthia Mphaluwa, Hui Liu, Rutendo Samantha Marere 

Zhejiang Sci-Tech University, 5 Second Avenue, Xiasha Higher Education Zone, Hangzhou, 310018, China 

 

Abstract: In recent years, the crucial role of matching leadership styles with employee performance in the management of 
Small and Medium Enterprises (SMEs) has been increasingly acknowledged in different developing countries, Malawi included. 

Properly adopting, a given leadership style can keep employees performing at their best, which sends a productive signal for 

organizational growth and sustainability. Conversely, adopting an inappropriate leadership style can often lead to a low level of 

motivation within employees. Thus, in general terms, performance targets are not achieved time and again due to an inability to 

motivate individual or groups of employees within an enterprise. However, a lot of small and medium enterprises' proprietors 

and managers in Malawi struggle to adopt appropriate leadership styles as they have a poor understanding of how they relate 

with the management of small and medium enterprises. Furthermore, there is still a lack of research in the management literature 

regarding the best leadership style for Malawi's SME sector. It is, therefore, imperative to identify that leadership style which 

best fits the management of SMEs in Malawi to heighten Employee performance. Subject to the said pressing issues, the purpose 

of this study is to determine the direct and indirect impact of leadership styles on the levels of performance of employees i n 

SMEs while taking employee engagement as an interposing variable, more specifically focused on the level of democratic, 

autocratic, and charismatic leadership. The study will thus try to examine how each behavioral component of those three styles 

of leadership would function towards promoting SME performance within the Malawian economy. Thus, the study recommends 

that charismatic leadership style be prioritized in the SME sector to enhance Employee performance. It is also suggested that a 

comprehensive leaders' training program, organized by recognized institutions, be introduced to enhance the level of Democratic 

and Autocratic leadership skills among SME entrepreneurs in Malawi. This paper scrutinized leadership styles impact on 

performance levels of employees in SMEs with employee engagement as the mediating variable. Three hundred questionnaires 

were distributed, and data from 231 employees from various private small and medium enterprises in Malawi were collected. 

SPSS was used to process and measure the analysis and structural models. Using a cross-sectional survey design, data was 

collected from 231 employees from various private SMEs, with subsequent analysis using structural equation modeling to 

explore direct and indirect effects. The results indicate that charismatic leadership had the strongest positive impact on both 

employee engagement and performance, followed by democratic and autocratic leadership styles. Charismatic leadership was 

particularly effective in fostering an emotionally engaging work environment that promoted both higher performance and 

motivation. Democratic leadership also significantly enhanced engagement and performance by fostering inclusivity in decision-

making processes. Interestingly, autocratic leadership, although traditionally seen as limiting autonomy, positively impacted 

employee performance by providing structure and clarity. Employee engagement was found to mediate the relationship between 

all three leadership styles and employee performance, emphasizing its critical role in translating effective leadership into 

productive outcomes. The study concludes that adaptive leadership styles, tailored to specific organizational contexts, can 

significantly enhance employee engagement and performance, providing actionable insights for leaders in Malawi’s SME sector. 

One of the key variables in determining how engaged employees are with their leader, the company, and the company's success 

is their leadership style. So far, there have been studies on the relationship between leadership style, employee performance, and 

employee engagement at the district level. However, there has yet to be research on the relationship between leadership style, 

employee performance, and the engagement of employees in the private sector in Malawi, which is a gap that needs to be 

researched. Therefore, this study examines the relationship between three leadership styles, namely Autocratic leadership, 

charismatic leadership, and Democratic leadership, concerning engagement in work and performance of private sector employees 

Keywords: Democratic leadership; Charismatic leadership; Autocratic leadership; Employee performance; Employee 
engagement; SMEs. 

 

1. Introduction 

1.1. Background of Study  

Leadership revolves around forming connections and 

fostering relationships with team members. Each style has its 

distinct advantages and limitations, which are very likely to 

affect both performance and sustainability in the long run of 

SMEs (Cui, 2022). For example, some leadership styles 

promote creativity and enthusiasm in employees, while there 

are those ineffective in promoting innovation and affecting 

overall operational effectiveness (Iqbal, 2020). Hence, 

understanding the impact of these different leadership styles 

becomes pivotal in maximizing the performance of SMEs in 

terms of sustaining their role in driving any country's 

economic growth, like Malawi (Azim, 2017). These SMEs, 

from the traditional family-owned businesses to the more 

established manufacturing and service businesses, are vital 



 

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for catalyzing innovation, creating jobs, increasing 

competitiveness, facilitating inter-industrial links, and thus 

economic development (Begum, 2022). However, despite that 

huge contribution, SMEs in Malawi operate in a challenging 

environment with problems like limited access to financial 

resources, human capital problems, generalized regulatory 

frameworks, and competition from larger enterprises (Islam, 

2021). To ensure a continuous contribution by SMEs to 

Malawi's economy, the challenges posed must be addressed 

ahead in combination with emerging opportunities. Therefore, 

effective leadership, where quite centrally an appropriate 

leadership style is adopted, acts as the guiding hand in 

traversing this turbulent environment toward organizational 

sustainability. Thus, this study seeks to identify and assess the 

role of leadership styles in SME performance in Malawi, 

aiming to add knowledge to this dynamic context. The 

dynamic between leaders and their team members is critical 

to a company’s growth. Hence, this paper will explore the 

varied effects of Leadership Styles on Employee Performance 

and how employee engagement acts as a mediator in this 

relationship: A case study of Private SMEs in Malawi. This 

study was inspired by the increasing trend of employee 

resignations in Malawi, attributed to poor communication and 

lack of unity between managers, supervisors, and their teams. 

Small and medium-sized enterprises (SMEs) are pivotal in 

developing various economies, including Malawi. SMEs 

significantly contribute to the economy's income, production, 

and job creation, as evidenced by several studies. The Malawi 

Gemini MSE Survey revealed that SMEs employ 

approximately 1.7 million individuals (comprising owners 

and paid or unpaid workers), representing at least 38 percent 

of Malawi's total working-age population. Women account 

for at least 42% of this employment figure and contribute 

around 15.6% to the national Gross Domestic Product (GDP). 

This highlights the potential of SMEs to align with the 

Government of Malawi's strategic goal of transitioning from 

a predominantly import and consumption-based economy to 

one focused on manufacturing and exporting, given that the 

production and exportation of goods and services are key 

features of the SME-dominated private sector. Despite the 

ongoing expansion of the market, small- and medium-sized 

enterprises (SMEs) in Malawi are experiencing 

unprecedented levels of competition. This reality has 

underscored the importance for these firms to bolster their 

management and leadership capabilities to enhance their 

operational performance. Consequently, this paper aims to 

explore the relationship between leadership styles and 

employee productivity, while also investigating the growth 

pathways for SMEs in Malawi. (Udin U. D., 2022) described 

leadership as the dynamic between leaders and their followers, 

focusing on how leaders direct their teams toward fulfilling 

the company's objectives. (Xu G. Y., 2008) highlighted the 

crucial role of leadership in an organization, emphasizing its 

importance in the creation of vision, mission, determination, 

setting goals, and formulating strategies, policies, and 

procedures to achieve these goals effectively and efficiently, 

including the guidance and coordination of organizational 

efforts and activities. According to (Arifani, 2020) leadership 

is identified as a key determinant in influencing the quality of 

work and productivity of employees, significantly impacting 

an organization's capacity for change. (Harris, 2007) noted 

that exceptional leadership is essential for attaining top-

quality outcomes. Today, numerous organizations are 

grappling with issues stemming from unethical behaviors, 

such as high employee turnover and disappointing financial 

outcomes. These challenges may be attributed to a lack of 

strong leadership. (Vigoda-Gadot, 2012) has confirmed that 

achieving their defined goals is a primary objective for most 

companies. This underscores the importance of having 

effective leaders who can organize and inspire their 

workforce. (Sriram, 2012) encourages organizations of the 

21st century to capitalize on emerging opportunities and 

navigate the threats that continually present themselves. As 

such, there's a critical need for employees who are prepared 

to exceed their normal job responsibilities to foster a well-

suited organization. Small and medium-sized enterprises 

(SMEs) are recognized as essential to the strategic plans of 

governments worldwide, playing a significant role in 

achieving national objectives across both developed and 

emerging economies. (Muthuraman S. H., 2020) supports the 

strategies adopted by numerous developed nations that focus 

on nurturing, expanding, and supporting SMEs to reduce 

unemployment, enhance wealth distribution, and boost 

economic growth. (Al Farsi, 2021) and (Al-Hussaini, 2019) 

have noted that existing research highlights the crucial role of 

SMEs in generating revenue, creating jobs, reducing poverty, 

encouraging the development and use of entrepreneurial skills, 

and enabling the integration of various sectors across different 

geographical and economic contexts. The expansion of SMEs 

in several countries has been attributed to factors such as 

diversification, privatization, unemployment, and the 

involvement of expatriates in many small business ventures. 

Many organizations expect their employees to exert more 

effort to meet set goals. Issues within human resources often 

serve as obstacles that hinder a company from achieving these 

targets (Loestefani, 2022). Effectively managing human 

resources is a crucial aspect of management that can enhance 

both efficiency and effectiveness in the workplace. 

Consequently, a well-structured company is better positioned 

to compete in the market. It's essential for an organization to 

have competent human resources, as this ensures that other 

resources can be utilized to their fullest potential in reaching 

company goals. The performance and success of a company 

can be gauged by the results produced by its workforce. To 

improve employee performance (Muhaimin, 2023), it is 

important to recognize that an organization's success or 

failure largely depends on its human resources; thus, 

initiatives aimed at improving working conditions are vital 

(Wardhana, 2023). Insufficient oversight from management, 

leading to a lack of accountability among employees, must be 

addressed to prevent negative impacts on performance levels 

(Mendo, 2023). (Bakker A. B., 2023) suggests that leadership 

is an interaction among individuals and groups, where each 

person engages with others and occupies a distinct role. The 

way one selects this role can differ from one person to another. 

This selection pertains to the concept of influence, as leaders 

have the power to sway others while being influenced by 

themselves. Leadership is not merely a technique; it's also a 

characteristic of an individual. If a leader struggles to manage 

their own tasks and challenges, it’s unrealistic to expect them 

to successfully lead others. Leadership must begin with self-

management. Leadership style pertains to the various 

approaches leaders employ to guide and influence their team 

members. Both types of leaders emphasize task-oriented 

strategies while also prioritizing interpersonal relationships 

(Alrowwad, 2020). A leader's style reflects their behavioral 

patterns, which are shaped by their strengths and weaknesses. 

However, not every leader can adapt their style effectively to 



 

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suit different situations and contexts. Consequently, it is 

essential for a leader to identify the most suitable leadership 

style to nurture, guide, and harness the potential of their 

employees (Wijayanti, 2020). The performance of employees, 

both in terms of quality and quantity, is essential for the 

success of various activities. Leaders, as the key drivers, play 

a vital role in enhancing educational quality by overseeing 

school operations, administration, staff development, and 

maintaining infrastructure (Mendo A. Y., 2023). These leaders 

face the challenge of effectively meeting their responsibilities 

while shaping policies and proposing innovative strategies to 

improve education. Additionally, government initiatives, 

including legislative reforms in the education sector, 

influence the planning, execution, and assessment of 

educational institutions (Wardhana A. K., 2022). Deming's 

assertion that 80% of quality issues originate from 

management and leadership underscores the importance of 

examining how different leadership styles affect employee 

performance. The problems discussed earlier are also evident 

in several previous studies. For instance, (Firdaus, 2023) 

found that charismatic leadership positively impacts 

employee performance. In contrast, (Aldian, 2023) concluded 

that the charismatic leadership style does not affect employee 

performance. Additionally, research by (Zulaikha) indicated 

that democratic leadership styles positively influence 

employee performance, whereas (Biloa, 2023) argued that 

they do not. In Malawi, the applied leadership style is 

primarily democratic; however, charismatic elements are also 

present both within and outside the organization. This dual 

approach is necessary as the organizations seek to align with 

the environment and character of the leaders, who prioritize 

transparency and open communication in all matters. 

Furthermore, most SME’S maintain a level of sovereignty 

in their practices. Thus, the charisma of an authoritative leader 

with a high social status becomes crucial for facilitating 

effective internal and external communication (Rochim, 

2023). Overall, the SME’s adaptation to its community's 

needs underscores the importance of having a charismatic 

leader in ensuring smooth communication channels, both 

internally and externally (Ryandono, 2019). 

Organizational success, whether in manufacturing or 

service sectors, is often gauged by performance. (Wagimin, 

2019) corroborates findings from multiple studies that 

underline the importance of leadership styles in enhancing 

employee performance. It is suggested that effective leaders 

utilize their abilities and influence to positively impact their 

followers and the organization. This study seeks to examine 

the role of Employee Engagement as a mediating factor 

between leadership styles and Employee Performance, a topic 

that (Bakker A. B., 2011) has claimed lacks sufficient 

empirical research. Previous studies have shown that the 

effects of leadership styles, Employee Engagement (EE), and 

Employee Performance (EP) vary within the same industry. 

Much of the research on employee performance has focused 

on analyzing the individual aspects of the concept separately 

or consolidating them into a single measure. According to 

(Sendawula K. S., 2018) and (Jung, 2000), academic 

achievement is often seen as the sole measure of productivity 

and quality of work when assessing employee performance. 

Meanwhile, some research, such as that by (Kleysen R. S., 

2001), considers employee performance as unified 

construction. Malawi, located in Southern Africa, faces 

unique challenges in managing its human resources, largely 

due to a significant unemployment rate and widespread job 

insecurity among its workforces. Despite having a working 

population of approximately 10.22 million out of a total 

population of 20,931,751, Malawi suffers from one of the 

highest unemployment rates globally. Those who are 

employed often experience instability in their jobs, primarily 

due to the nation's struggling economy. This job insecurity 

leads to diminished trust and confidence among employees. 

To address these issues, it's crucial for Malawian 

organizations to adopt diverse leadership styles that can 

motivate and engage employees effectively, thereby 

minimizing burnout. Currently, many companies, especially 

in the private sector and within government institutions, tend 

to stick to a single, traditional leadership style. This approach 

limits their ability to adapt and innovate. 

Research by (Rasool et al., 2015) indicates that while some 

private companies are open to experimenting with various 

leadership methods, a large majority still rely on a singular 

style. In contrast, government entities predominantly favor an 

autocratic leadership approach. This has led to challenges 

identified by (Muthuraman S. A., 2021), including ineffective 

leadership that fails to meaningfully involve employees in the 

operational and production processes. This study aims to 

investigate strategies for actively engaging employees to 

enhance their performance. While there are numerous 

leadership styles available, Autocratic and Charismatic 

Leadership are often seen as the most prevalent and 

influential within the context of Malawi's organizational 

culture.  In Malawi, a significant number of companies are 

criticized for their lack of accountability, substandard services, 

and an unwillingness to adapt their operational systems. It's 

widely recognized that organizational leaders hold absolute 

control over decision-making processes and wield unchecked 

power. As noted by (Khan, 2015), this centralization of 

authority often results in diminished employee motivation, as 

workers see little reason to exert extra effort in their roles. The 

challenge, therefore, lies in fostering employee engagement 

within an atmosphere marred by distrust and a lack of 

confidence. To combat this, leadership must focus on 

cultivating trust. 

The importance of employee engagement in enhancing 

both organizational and individual performance and 

productivity is well documented, with (Amah O. E., 2018) 

highlighting its benefits. Research by (May, 2004), 

(Rothmann, 2010 ), and (Ugwu, (2014) has pointed out 

factors such as leadership behavior, the organizational climate 

established by leaders, and intra-organizational relationships 

as key drivers of employee engagement (Kruse, 2012), 

emphasized that the style of leadership is crucial for fostering 

employee engagement, as it influences other factors either 

directly or indirectly. According to (Amah O. E., 2018), 

effective leadership is instrumental in creating an 

organizational environment that supports relationship 

building and optimal performance, underlining the pivotal 

role of employee engagement in securing a competitive edge 

for businesses. 

The quest for the most impactful leadership style has seen 

value-based leadership models, including autocratic 

leadership, rise to prominence, as suggested by (Dean, 2008). 

Research by (Breevaart, 2014), (Zhang X. &., 2010), 

(Hanninen, 2017), and (Robinson Jr, 2018) has explored 

various aspects of how leadership styles influence employee 

engagement and outcomes such as task performance and 

burnout, the interplay between organizational resources and 

job demands, and how employee 'voice' contributes to 



 

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engagement levels. Building on these studies, the current 

research examines the differential impacts of leadership styles 

on employee engagement within a model framework. This 

study's primary contribution lies in its comprehensive 

examination of the effects of leadership styles, extending 

from employee performance to engagement, and enhancing 

the discourse on leadership's role in small and medium-sized 

enterprises (SMEs). By proposing to explore the theoretical 

links between leadership style and employee performance, 

and employing empirical analysis to assess the impact of 

various leadership styles on SME employee engagement and 

performance, this study aims to address the gap in empirical 

research within this field 

1.2. Research Question Statement and 
Research Gaps 

1.2.1. Research Questions  
The research question of this study will be as follows: 

Heterogeneous Impact of Leadership Styles on Employee 

Performance and the mediating role of employee engagement: 

An empirical study on Private SMEs in Malawi. 

1.2.2. Research Gap 
It is widely acknowledged that the topics of leadership 

styles, employee performance, employee engagement, and 

the dynamics within Small and Medium-sized Enterprises 

(SMEs) have attracted significant attention in recent years. 

After conducting extensive research and reviewing numerous 

studies, it's clear that there are many research opportunities 

yet to be explored in this area. The relationship between 

leadership styles and employee performance, as well as 

between leadership styles and employee engagement, may 

differ across sectors. The findings of this research will 

demonstrate that the influence of leadership styles on 

employee engagement (EE) and employee performance (EP) 

within a particular sector is consistent. A conceptual model, 

endorsed by SME employees in Malawi, is suggested to 

examine how leaders' motivation and support can enhance 

Employee Performance. (Matzler, 2008) suggested that the 

leadership behavior of SMEs' top management significantly 

influences the firms' innovation and performance levels. 

Consequently, as SMEs navigate the global market, it is 

imperative for them to develop innovative visions to stay 

relevant and competitive. In this context, the leadership 

behavior of a business owner or manager plays a vital role in 

providing clear guidance and a unified vision that all 

employees should embrace (Yang, 2008). This study 

contributes to existing literature by shedding light on these 

aspects. 

Firstly, the study aims to clarify the influence various 

leadership approaches have on boosting employee 

involvement. While previous research has suggested a link, 

no study has yet conclusively demonstrated this connection 

by simultaneously evaluating the impact of multiple 

leadership styles (Breevaart, 2014). Additionally, this 

research intends to bridge the existing gap in the literature on 

leadership and engagement by identifying factors that can 

strengthen the link between leadership approaches and 

employee engagement. The objective of this paper is to 

examine how different styles of leadership affect employee 

performance, considering the mediating role played by the 

levels of employee engagement, and to compile and assess the 

insights from existing studies on the dynamics between 

various leadership styles and employee engagement. 

Although the study of leadership within organizations is 

branching into diverse areas, most of the literature has 

focused on two perspectives. It starts by exploring the origins 

of each leadership style and their importance in shaping 

employees’ attitudes towards their work, highlighting their 

recent influence. The discussion then delves into Autocratic, 

Democratic, and charismatic leadership styles, exploring their 

assessment, implications, and principal factors. In conclusion, 

the review emphasizes significant observations regarding the 

connection between various leadership styles, employee 

performance, and engagement. 

1.3. Research Objectives  

This study creates and evaluates a research model that 

looks at the connections between (Autocratic, Democratic, 

and Charismatic), employee engagement, and employee 

performance. Specifically, this study aims to: 

Identify the effect of leadership styles (Autocratic, 

Democratic, and Charismatic) on employee engagement. 

Determine the effect of leadership styles (Autocratic, 

Democratic, and Charismatic) on employee performance. 

Evaluate whether focusing solely on one or two leadership 

styles affects the performance of employees and to what 

degree. 

1.4. Significance of the Study 

An in-depth analysis of leadership research, presenting key 

theories of leadership According to their perspective, the 

study of Organizational leadership has taken different 

directions. However, the research focus has generally been on 

two main areas: the traits and behaviors of leaders, the 

circumstances that necessitate leadership, and the potential 

outcomes of various leadership styles. There is a range of 

opinions among researchers about how critical leadership is 

and its impact on the success or failure of any project, 

organization, or institution. Nonetheless, the consensus 

among many scholars is that the style of leadership and the 

leaders themselves are crucial for the growth and prosperity 

of any organization. Moreover, this research could be utilized 

by those with opposing views to enhance organizational 

productivity and efficiency, thereby achieving sustainability 

within the organization. 

2. Literature Review 

2.1. Background of Malawi 

Malawi, located in Southern Africa, has a population of 

approximately 21.48 million and most of the people are the 

youth in households which have 4.4 occupants on average 

(Housing, 2018). A report released by the Bank in 2024 stated 

that despite major economic reforms and live economic 

protection policies since a long time ago, Malawi has 

remained one of the world's poorest countries. This calls for 

strengthening the economy that relies mostly on agricultural 

production, which employs more than 80% of the population, 

and thus is highly vulnerable to external shocks, particularly 

climatic shocks. The Vision is driven by Malawi 2063, a 

vision heralded in January 2021, on the basis that Malawi 

aspires to be "a prosperous, self-sufficient, industrialized 

nation with upper-middle-income status." It provides the 

foundation for a decade-long Country Partnership of the 

World Bank. Framework (CPF) from FY21 to FY25. This 

data was supplied by the United Nations Committee for 

Development Policy, and Malawi is one of the Least 

Developed Countries (LDC). Examples of the variables that 



 

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were employed to rank the countries include gross national 

income (GNI) broken down to above $1,018, an index of 

human assets, and an index of economic and environmental 

vulnerability (UNCTAD, 2021). The definition of SME from 

the European Union is reoriented around the number of 

employees, being fewer than 250 employees. This features 

micro enterprises, small enterprises, and medium sized 

enterprises (Keskġn, 2010). Moreover, infrastructure in the 

country is still undeveloped, with little or no access to basic 

or reliable transportation, electricity, and communication 

systems. Such infrastructural deficits became glaringly 

prominent in the wake of COVID-19 as stakeholders began to 

consider ways of dealing with COVID-19. 

The bedrock of today's economic life is small and medium 

enterprises (SMEs). Most SMEs do poorly in their operations, 

sometimes within their first two years of operation, and 

operate with little or no support from top management. 

Reports indicate that people in Malawi can hardly survive on 

a daily income that falls below one dollar (DUAN, 2016). The 

low status of the world's poorest countries, where households 

are having a hard time addressing their basic needs. The 

recent report confirm that most Malawians lack access to 

necessities, such as clean water, adequate healthcare, and 

quality education (Nations, 2020). For most Malawians, these 

firms are synonymous with small-business development and 

job creation. Small and Medium Enterprises have generally 

been regarded as the engine for economic activity in many 

countries, and indeed the largest employer in their 

communities, in the case of the least developed and emerging 

countries, but often small and medium enterprises are limited 

in financing (Van, 2019). Further explanations on micro 

enterprises all encompass self-employed individuals who 

function independently without any employees (Keskġn, 

2010). It has been confirmed that older and unwilling access 

to finance, which has been pointed out by numerous studies, 

is one of the major challenges SMES must face. Apparently, 

it got worse during COVID19 when other newer SMEs 

rushed to find finances to grow their businesses (Majanga, 

2015). The main role of SMEs to the economy is to promote 

the need to accommodate the estimated 600 million jobs, the 

growth and sustainability of the SMEs should be prioritized 

(Bank, 2022). Several studies suggest that the size and 

importance of the SME sector varies from country to country. 

Although SMEs have been acknowledged in developed 

countries recently, developing countries have always seen this 

significance since the 1970s (Berry, 2007). This could mean 

that SMEs are significant in the economy due to their role, 

being much more apparent in developing nations where 

opportunities for personal development and empowerment 

may be limited. For these reasons, local communities depend 

mainly on SMEs for livelihood. They can provide avenues for 

job creation and entrepreneurship, allowing people in the 

community to better their economic status. The further 

development and survival of SMEs assume great importance 

in developing countries, and this serves to make a strong case 

for the role SMEs play in economic development. While 

changes brought about by the COVID-19 pandemic have 

raised arguments that this growth has faced unprecedented 

disruption, the pandemic has presented some challenges to 

SMEs for their sustained growth, thereby possibly impeding 

the positive effect they have on local economies. Such 

disruptions have indeed underscored the quintessential 

importance of understanding the unique challenges faced by 

SMEs in crises and creates a chance to find ways to assist in 

recovery and assure future development. (Bartik, 2020) 

The impact of COVID-19 on the growth of SMEs in 

developing countries emphasizes the importance of these 

enterprises in driving the economy. Given their substantial 

impact on the economy, it is important to understand how 

SMEs can be promoted (Garcia-Martinez, 2023). Numerous 

studies show that the importance of SMEs in the modern 

world is growing, highlighting the new ideology of 

neoliberalism and globalization. In essence, SMEs should be 

the main instruments for a sustainable business environment, 

especially in developing countries. (Bank, 2022). The World 

Bank highlights a trend in developing economies toward 

smaller enterprises rather than big industries, as these are very 

adaptable since they come with low capital, thus cheap 

production. There are several sectors of SME that have been 

recognized as potential economic bases to spur economic 

growth. Creating avenues for the management of SMES will 

be more pleasurable only if they are aimed at fostering 

economic empowerment among the disadvantaged. (Masalira 

S. &., 2013). This is enough reason for developing countries 

to pour considerable effort into poverty alleviation, hence 

introducing projects intended to indirectly foster SMEs. 

Malawi, for instance, has the National Economic 

Empowerment Fund (NEEF). This Fund aims to influence 

economic development through the provision of various loan 

products for MSMEs. Its goals include increasing 

employment by supporting enterprises that create jobs, as 

well as promoting entrepreneurship development among 

youth, women, and other groups that may contribute to socio-

economic growth. SMEs were feared to close because of the 

COVID-19 pandemic. Nevertheless, they were affected by 

some other events besides the pandemic. s (NEEF., 2024). As 

anticipated, the survival of SMEs depends on the number of 

years they have been in business (Bowler, 2007). But 

researchers, who have inquired why SMEs fail in Malawi 

found 11 out the economic, regulatory and social factors as 

the causes (Wanjohi, 2010). Similarly, it has been argued that 

accessing financial resources is crucial for SMEs survival 

(Marlow, 2005) COVID-19 indeed represents a new case in 

itself, inducing interventions from governments, with the 

majority of such interventions being costly for SMEs, since 

the success of most SMEs depends on how fast these goods 

and services turn around. Besides, some scholars suggest that 

the success of self-employed businesses is highly reliant on 

the regularity of purchases and supplies coupled with the 

expenditure behaviors of prospective consumers’ 

(Gourinchas, 2020) With closure of businesses being the 

major intervention measures during COVID-19, people had 

nowhere to run commerce activities. The restricted movement 

mostly left the buying power at a very low level among the 

buyers. The larger population that depends on daily earnings 

lost their ability to afford purchases of goods and services 

during this time. The commitment of the Malawi Government 

to promote small-scale enterprises began in the 1970s with the 

establishment of institutions to foster the growth, existence 

and survival of MSMEs in Malawi. During the same period, 

membership and advocacy organizations also grew.  (Lora, 

2015). 

With reference to financing, it was disclosed that most 

SMEs mainly rely on informal credit mechanisms, 

contributions from relatives and loan associations (Chilima, 

2022).The Government of Malawi acknowledges the 

significant role of SMEs in the economy. Recognizing their 

potential to mitigate poverty, the sector has increasingly been 



 

240 

the focus in development policies (Malaw, 2002). This 

concern is manifested in the Malawi Poverty Reduction 

Strategy Paper, where SMES are cited as the greatest 

contributor to proper growth 

The financing gap for small and medium-sized enterprises 

can be traced mainly to their lack of availability of sound 

regulations. Most small and medium-sized enterprises in 

hospitality and tourism would be near impossible to secure 

external funding as they don't own fixed and semi-touchable 

assets (like real estate and buildings) to provide as collateral. 

(Li W, 2021b). SME financing has been widely researched 

due to its economic significance (Huang SZ, 2021a).   

SMEs contribute up to 90% of all businesses across the 

globe (Peterhoff, 2019). In addition, SMEs contribute to 

about 60% of employment worldwide and employ nearly 80% 

of the workforce in the developed world. Another critical 

finding was that small and medium enterprises contributed 50% 

of the global Gross Value Added (GVA). The 2012 Fin Scope 

MSME survey reveals that 1,050,320 people employed in 

only about 41% of Malawi's MSMEs further demonstrates the 

pivotal role SMEs play in our domestic economy. The 

contribution of small and medium-scale enterprises to socio-

economic growth and development takes many forms, 

including increasing public revenue collections through 

taxation, provision of goods and services to the public, and, 

even more importantly, poverty alleviation through job 

creation and empowerment of citizens economically. Much as 

other studies done across time and space Numerous studies 

conducted over time and across various regions have 

demonstrated that inadequate transportation, poorly educated 

labor forces, and unreliable electricity supply significantly 

hinder the growth and sustainability of small and medium-

sized enterprises (SMEs) (Kazooba, 2006). However, among 

these challenges, access to finance consistently ranks as the 

most critical barrier according to current evidence.  

In Malawi, maintaining updated data on micro, small, and 

medium enterprises (MSMEs) proves difficult due to the 

characteristics of this sector. A large proportion of businesses 

operate informally without registration making it challenging 

to monitor new startups, closures, or shifts in business size 

categories such as from micro to small or from small to 

medium. At an institutional level, establishing a 

comprehensive tracking system in response to these 

difficulties has also presented significant obstacles. The 

intricacies associated with gathering reliable information 

continue to complicate efforts aimed at building a robust 

database for MSMEs within the country. It has been 

established that more than 90 percent of these SMES were not 

registered with the Registrar General (Mhone, 2019). He 

argues that these SMEs do not want to register because of the 

registration fees. As the result, the Government of Malawi is 

putting in place measures to encourage SMEs to comply with 

the being developed policies and trade legally. Emphasis 

should be given to waiving registration fees for SMEs during 

emergencies. In addition, through public awareness 

campaigns, individuals involved in small businesses must 

appreciate the importance of trading legally. 

Hitherto, the most comprehensive single major study 

undertaken in the sector and serves as a reference point in 

highlighting the important features and context of MSMEs in 

Malawi (Malawi F. M., 2012). The findings added important 

figures to the already significant role the SME sector played 

in driving the country's development agenda through the 

promotion of sustainable economic growth and development. 

They provide the need and justification to redirect the policy 

to focus on efforts to develop the sector and accordingly 

channel financing to boost the SME sector in Malawi. 

Furthermore, the various foreign exchange rate systems 

management discrepancies in Malawi have presented another 

challenge for small- and medium-sized enterprises. The effect 

of the exchange rate is transmitted mainly through the 

procurement and importation of raw materials and the 

limitations on the availability of trade credit for small 

businesses by commercial banks. From an institutional 

perspective, weaknesses in the legal framework in such 

aspects as the enforcements of guarantees make it very hard 

for financial institutions to recover bad loans. Hence, lenders 

are forced to impose stiff conditions for financing to small and 

medium-sized enterprises. Other than the general 

macroeconomic and policy issues highlighted above, some of 

the other challenges make access to credit a puzzle for 

MSMEs. Structure and nature of MSMEs themselves also 

carry their fair share of the burden. As reported by (Lemuel, 

2009), there are a myriad of internal structural and 

organizational problems within SMEs that are of huge 

concern to banks and financing institutions. According to his 

findings, most SMEs tend to be disorganized in such aspects 

as internal control functions, accounting and human resource 

management. A study on SME financing in sub-Saharan 

Africa, (Derreumaux, 2009) concludes that internal controls 

in the management of small-scale businesses play second 

fiddle. As such detection and correction of weaknesses 

becomes harder. Resultantly, banks lose trust in SMEs as they 

try to minimize risks and comply with central bank regulatory 

requirements regarding risk management. This state is a result 

of the universal reality that most MSMEs are owned by 

individuals or families who are themselves decision makers 

in all aspects of the business without having any professional 

checks, a scenario that increases chances of committing errors 

in the running of the business hence eroding confidence from 

the lenders. 

SME finance and economic growth in Malawi said from 

the years 1981 to 2014, it concluded that the expansion of 

access to finance in Malawi has not had a positive impact on 

the growth of SMEs (Zidana, 2015). Let alone Malawi, the 

impact of SMEs on the national GDP has been so tremendous. 

Quite a number of studies have been conducted on SMEs 

concerning their positive contributions towards the national 

economy; their growth patterns world over, as well as 

challenges hampering their growth and performance, 

including studies by (Zimmerer, 2002) and (Nieman, 2003). 

These made significant contributions regarding SMEs’ 

contributions and operations. In their assessment of the roles 

of SMEs in national economies, (Masalira, 2013) argue that 

the SME sector is and has been acknowledged worldwide as 

an economic powerbase to stimulate economic growth. They 

further claim that Small and medium sized businesses are not 

merely necessary, but vital in an emerging and growing 

economy. In their study, they find that SMEs account for 

about 91% of the formal business entities, contributing to 

about 51% of GDP, and providing almost 60% of employment 

in South Africa. Supporting these arguments is (Cant, 2012), 

who estimates that small business undertakings create about 

80% of all new job opportunities annually in South Africa and 

that the sector has been placed on the South African 

government’s priority list due to its contributions. (forum, 

2003) further indicates that SMEs account for about 88.7% of 

the work force in Indonesia, and that they are also significant 



 

241 

in enhancing the quality of human resources, nurturing a 

culture of entrepreneurship, fostering creativity and opening 

up new business opportunities SMEs contribute to economic 

development in various ways: by creating employment for 

rural and urban growing labor force, providing desirable 

sustainability and innovation in the economy as a whole (Fida, 

2008). The development of SMEs is seen as the way to 

accelerating the achievement of wider socio-economic goals, 

including poverty alleviation (Cook, 2000). According to the 

findings of (Longley, 2006), small businesses with fewer than 

500 employees drive the US economy by providing jobs for 

every half of the nation’s workforce. According to (Ackah, 

2011) the SME sector is considered very important in many 

economies because it provides jobs, pays taxes, is innovative 

and very instrumental in countries’ participation in the global 

market. They further explain that SMEs account for nearly 93% 

of the registered businesses in Ghana and therefore play an 

important role in economic development by providing 

employment opportunities, opening new business 

opportunities, enhancing entrepreneurship, and fostering 

creativity among many other things. 

SMEs across the world have been identified as vital in 

achieving industrial and economic development objectives 

and that SMEs are earmarked as the cornerstones of both 

developed and developing economies (Nkwe, 2012). 

Governments themselves view SMEs as major sources of 

employment, economic growth and wealth creation and in 

addition, development of this sector contributes to poverty 

alleviation and generation of potential entrepreneurs (Mutula, 

2006). Apart from these contributions more studies further 

stated that the sector offers linkage development to large 

industries and is essential for a competitive and efficient 

market (Nkwe, 2012). SMEs support the rural economy in 

providing income generating activities thus increasing the 

rate of growth of real per capita income, balance income 

distribution and improve economic stability. It is also argued 

that SMEs offer a large part of the solution to countries like 

Botswana where there are difficulties faced by marginalized 

groups such as disabled, youth and women (Acquah, 2007). 

In addition to their positive contributions to developing 

economies, (Monks, 2010), analyses the contributions of 

SMEs even to the already developed economies. In his paper, 

(Kongolo, 2010), finds that SMEs play a significant role in 

the national development as they contribute to the transition 

of agriculture-led economies to industrial ones furnishing 

plain opportunities for processing activities which can 

generate sustainable source of revenue and enhance the 

development process. The creation of SMEs by individuals is 

commonly termed entrepreneurship which is defined as the 

emergence and growth of new businesses (April, 2005) and 

whose main motivational factor is the maximization of profits 

(Nieman, 2003), which becomes a basic and traditional 

measure of business growth and success over time (Samuels, 

2003). Unlike other big entities, SMEs are mostly owned by 

individuals or a small group of individuals who are involved 

in the ownership and control of such small business entities 

and prefer it that way to being employed due to, according to 

(Zimmerer, 2002), the fact that entrepreneurship creates an 

opportunity for the trader to be independent and able to 

achieve what is important to him as a person; and that with 

entrepreneurship, the owner of the business is able to reach 

their full potential since most entrepreneurs use their 

businesses as instruments of self-expression and self-

actualization. Leadership is among the critical factors 

impacting whether a small or medium business becomes 

unstoppable success, and that is greatly shaped by the 

managerial skills and leadership style the owner/manager 

displays within the organization (Aghahowa, 2021). 

Despite extensive literature on leadership styles and 

employee performance, a research gap exists in understanding 

how leadership styles specifically impact employee 

performance and engagement in the Malawian SME sector. 

Previous studies have predominantly explored this 

relationship in large corporations and public-sector 

organizations, often focusing on broad, generalized effects. In 

the Malawian context, there is limited empirical evidence on 

the influence of different leadership approaches such as 

autocratic, democratic, and charismatic styles on performance 

outcomes within private SMEs. It makes sense that most SME 

owners/managers are unable to apply the appropriate styles of 

leadership that account for a situational context, as they do 

not see the connection between leadership styles and SME 

management. Ineffective leadership, in turn, will occur 

(Alifah, 2021) Additionally, employee engagement as a 

mediating variable in the relationship between leadership 

styles and performance remains underexplored. Engagement 

is essential for fostering a motivated workforce, yet its 

dynamics in SMEs, particularly in developing economies like 

Malawi, have not been comprehensively examined. This 

study seeks to address these gaps, offering insights into how 

distinct leadership styles impact both engagement and 

performance among SME employees. 

Despite national development policies highlighting the 

importance of bolstering the private sector as a key driver of 

development (Malawi, 2006), Malawi suffers from a frail 

private sector contributing only about 20% to the country's 

total annual investment. However, this chapter aims to lay the 

foundation for understanding the scope and significance of 

the study at hand. It provides background information 

relevant to the research topic. Following this, the chapter 

deals with the specific problem that makes the present study 

necessary.  

2.2. Problem Statement 

In the constantly fluctuating world of business, greater 

emphasis is being expended to reveal the complex connection 

between leadership dynamics and Employee performance. 

There seems to exist a wide gap in the understanding of the 

specifics of the connection, such as the connection between 

styles of leadership and business performance in SMEs. SME 

owners, managers, and policymakers often keep grasping the 

belief that what is needed is good management for business 

rather than leadership (Mgeni, 2016). This old-time 

assumption prevents realizing the contribution of leadership 

into SMEs. However, the past two decades have shown 

deficiencies in the performance of SMEs and raised questions 

about this belief. Evidence in favor of this is displayed by 

(Okeke, 2019), indicating that the reasons behind slow growth 

and poor performance of many SMEs are mainly due to 

inadequate leadership within these enterprises. 

Significant example would be creating a positive 

connection between leadership practices and SME 

performance in Nigeria (Obiwuru, 2011), In further support 

of this observation at the world level, another study affirms 

the universality of the positive impact of appropriate 

leadership styles (Hemmen, 2015). However, within that 

acknowledgment of said positive impact are important 

queries concerning SME owners and managers' awareness 



 

242 

regarding their selected leadership styles. Understanding the 

specific leadership styles, we have within the framework of 

boosting a firm's performance and understanding the positive 

and negative aspects of those specific leadership styles 

become key questions, as pointed out in various analysis 

(Hossin, 2023b). This leads into the real ins-and-outs of the 

leadership dynamic in SMEs, exposing conscious decisions 

and strategic considerations for success in the field. However, 

from the comparison made on reviewing the literature 

exhaustively, it is seen there exists scarce literature addressing 

the styles that impact SME performances significantly. 

Moreover, a considerable gap continues to exist even in those 

studies between a unilaterally agreed theory culminating in a 

specific style of leadership proving to yield higher business 

performance. SMEs in Malawi are now facing persistent 

challenges, particularly intense competition within their 

industries and on a global scale. To navigate these challenges 

and thrive in the global economy, SMEs must undergo 

significant transformations, like fostering innovation, 

embracing digitalization, and more importantly, practicing 

effective leadership styles 

2.3. Leadership Styles  

Leadership consistently ranks as a key topic of interest 

within organizational behavior studies. While the definition 

of leadership can vary, the common thread is the ability to 

guide others, setting apart individuals as leaders. Efforts to 

clearly define "leadership" have encountered challenges, 

making it a complex area for both scholars and practitioners. 

This complexity has sparked scholarly debates for over a 

century, resulting in a variety of definitions, as highlighted by 

(Devi, 2021). Leadership is deemed a crucial component in 

management, with research spanning from global politics to 

specific industry characteristics in an attempt to understand 

what makes a leader. (Anastasiou, 2021) noted in their 

research review that there are nearly as many definitions of 

leadership as researchers are attempting to define it. Some 

experts, (Megawaty M. H., 2022), describe leadership as the 

act of directing or coordinating tasks for group members. 

(Andrej, 2022) elaborate further, explaining leadership as the 

ability to leverage various resources to motivate, engage, and 

meet the expectations of followers. Leadership's impact on 

critical project outcomes and the behavior of others highlights 

its importance for every individual. This significance is 

underscored by (D. Muijs, 2011), who pointed out 

leadership's pivotal role in organizational success. The effects 

of effective leadership are often prominently displayed, 

influencing both national history and the dynamics within 

individual organizations. (James, 2011) posits that leadership 

encompasses creating an organization's future vision, crafting 

strategies to realize this vision, and effectively 

communicating it across the organization. (Bass., 1985) 

highlights that leadership and performance that surpass 

expectations mark a significant advancement in 

understanding the characteristics of exceptional leaders, their 

strategies for achieving results, and the reasons behind their 

often extraordinary leadership success. (Gandolfi, 2017) 

points out that there is a diversity of leadership styles within 

organizations, with some scholars like (Bhatti, 2012) 

suggesting that autocratic and democratic leadership styles 

are among the most prevalent. Autocratic leadership, as 

discussed by (Zheng, 2021), is characterized by leaders 

having absolute control over their followers, a style 

commonly adopted in various sectors, including the military. 

Contrarily, (Chukwusa, 2019) describes democratic 

leadership as involving the active participation of 

subordinates in decision-making, with leaders encouraging 

their input in setting goals and solving problems. The success 

of an organization heavily relies on the quality of its 

leadership. Effective leaders are those who anticipate change, 

seize opportunities, and inspire their team to achieve high 

levels of performance and productivity. The significance of 

strategic leadership in today's management practices cannot 

be overstated, as leaders must have the ability to navigate 

organizational challenges, recognize unexpected factors, and 

make informed decisions to steer their organization towards 

success, as noted by (Syakur, 2022) and (Laliasa, 2018). The 

latter also supports the democratic leadership style for its 

inclusivity and empowerment of subordinates in problem-

solving processes. 

An emphasis on a democratic leadership setup, the leader's 

role is to outline the objectives, the means to achieve them, 

and leave the decision-making to the team members, who also 

enjoy autonomy to address challenges they encounter. This 

leadership model prioritizes a collaborative team effort 

(Saggaf, 2019). 

From a conceptual standpoint, differentiates performance 

into two categories: individual employee performance and 

overall organizational performance. The former refers to the 

contributions of an individual within an organization, while 

the latter encapsulates the collective achievements of the 

organization. The attainment of organizational objectives is 

intricately linked to the utilization of resources and the active 

participation of employees who are instrumental in realizing 

these goals (Niswaty, 2019). 

Furthermore, charismatic leadership can also be defined by 

distinguishing itself through a leader's unique appeal and 

inspirational capabilities (Wahid, 2018). Charismatic leaders 

are not only revered for their authoritative positions but also 

for their prestige, spiritual depth, and unwavering principles, 

as (Setiawan, 2014) elaborates. Such leaders wield a profound 

influence on their followers, instilling a strong belief in the 

leader's vision, a willingness to comply, and a deep emotional 

investment in the organization's mission, according to 

(Rafikah, 2018). (Juliarti, 2022) also notes that effective 

charismatic leadership significantly boosts employee 

organizational commitment, while a good work-life balance 

indirectly influences this commitment. 

2.3.1. Autocratic Leadership 
Autocratic leadership, often labeled as "oppression" 

leadership, centralizes power in the hands of the leader, 

making them believe their decisions and views are absolute, 

as highlighted by (Burke, 2016). (Obiwuru. T, 2011) 

characterizes autocratic leaders as those who demand 

obedience from their employees and control the decision-

making process entirely. Such managers do not seek input 

from their team or allow them to give feedback. Instead, they 

are expected to follow orders without question, relying on a 

system of rewards and punishments to motivate employees, 

as noted by (Cherry., 2018). This method leans more towards 

instilling fear and applying punishment rather than offering 

incentives. Recent criticism of autocratic leadership points to 

higher rates of employee turnover and absenteeism in 

organizations led by such leaders, according to studies cited 

by (Cherry., 2018). Autocratic leaders typically make choices 

based on their personal beliefs and are resistant to considering 

their followers’ perspectives (Cherry., 2018); (AL Khajeh, 

2018). Communication tends to be one-way, from leader to 



 

243 

employees, who are then expected to execute these directives 

without input. The process of making effective decisions 

usually requires contributions from multiple individuals; 

hence, the autocratic style might lead to subpar decision-

making, planning, and organization. However, theories on 

social hierarchy suggest that autocratic leadership could, in 

certain contexts, boost morale and performance by 

establishing a clear, hierarchical structure that provides 

predictability and security. This structure can promote team 

psychological safety if team members accept the established 

hierarchy. On the contrary, if team members dispute this 

hierarchy and engage in power struggles, the centralizing 

actions of autocratic leaders can lead to frustration and 

decreased psychological safety and performance. In certain 

scenarios, especially during crises or when quick decisions 

are necessary, autocratic leadership might prove beneficial if 

the leader is insightful, equitable, and understands their 

followers well, as (Armstrong, 2012) and (Bhargavi, 2016) 

suggest regarding leadership styles and organizational 

performance. (Chua, 2018) The fundamental belief behind the 

autocratic leadership style is that individuals are inherently 

irresponsible, lazy, and untrustworthy, which leads them to 

rely on leaders to handle leadership and management 

responsibilities. This reliance results in ineffective outcomes, 

so it is assumed that leaders should undertake these tasks 

independently, without any participation from their followers. 

An autocratic leader exerts complete authority over their 

followers and feels entitled to manage them as they see fit. 

One of the primary advantages of this style of leadership is 

the ability to make swift decisions, allowing for immediate 

action on tasks to carry out those decisions (Bojadziev, 2019) 

It also guarantees the dominance of the leader. Regarding the 

drawbacks, many employees feel displeased when treated this 

way. Nevertheless, the autocratic leadership approach is 

usually most effective in scenarios where the leader has 

specialized knowledge or during a crisis, when swift decision-

making is essential and delays need to be avoided (Olayisade, 

2021). 

2.3.2. Charismatic leadership 
A charismatic leader is recognized for their exceptional 

ability to influence and guide followers through their 

compelling qualities and behaviors (Mhatre, 2014). This type 

of leadership is often seen as a method of social influence 

where one or more individuals inspire and motivate their 

followers by outlining necessary actions and equipping them 

with the means and encouragement to fulfill objectives. The 

concept of charismatic leadership has been the subject of 

numerous theoretical and empirical studies over the last few 

decades (Jacobsen, 2001). Furthermore, the failure of 

employees to adapt to change and the persistence of the status 

quo can often be attributed to managers' inability to 

effectively implement change (Paais, 2020). Leaders must 

align the organization's relevance with the goals of change 

and pursue these goals through effective leadership that 

fosters change, grounded in the organization's values, which 

are reinforced through education and training (Pardo Del Val, 

2003). Historically, charisma was considered a "gift," and 

"hero" was a term used to describe a leadership role model. 

Scholars argue that the perceived superhuman or supernatural 

attributes of a leader are crucial for the foundation of 

charismatic authority. Charismatic authority is often 

contrasted with legal or traditional authority, emphasizing that 

it stems from personal attributes rather than formal positions; 

it is typically seen in less conventional, more informal 

organizations, especially during crisis situations, and is 

characterized by strong personal traits (Özdemir, 2020). A key 

feature of charismatic leadership is the leader's ability to 

captivate and persuade followers through their personal 

magnetism and compelling communication skills. 

Charismatic leaders have a knack for envisioning the future 

clearly, persuasive, and inspiring. They communicate a 

powerful and engaging vision that resonates with their 

followers, providing them with a sense of direction and 

motivation (Bhatia, 2018). Such leaders are often seen as bold 

figures who are willing to challenge the status quo and take 

risks to realize their vision, unafraid of making 

unconventional decisions (Bhatia, 2018). The vision they 

share is not only compelling but also delivered in a manner 

that galvanizes their followers. Their self-confidence and 

belief in their own capabilities help to instill confidence and 

trust among their followers. Charismatic leaders are 

characterized by their enthusiasm, vigor, and a clear sense of 

purpose, which attracts and captivates their followers. They 

can evoke strong emotions in their followers, driving them to 

exceed expectations in pursuit of shared goals. 

2.3.3. Democratic Leadership 
Democratic leadership plays a significant role in 

empowering employees. This leadership style involves 

guiding and impacting the work of team members. 

Democratic leadership is also characterized by a leader's 

approach that encourages employees to voluntarily 

participate in decision-making, planning, and providing 

constructive criticism and suggestions for accountability 

(Ghifara, 2022). Democratic leadership is rooted in a dynamic 

interaction between leaders and their subordinates, as leaders 

create opportunities for participation in the decision-making 

process (Syamsidar, 2021). Leaders avoid making unilateral 

decisions by actively involving subordinates and emphasizing 

collaborative deliberation. This participatory approach fosters 

well-managed educational institutions that thrive on 

innovation, as diverse ideas contribute to the progress of these 

organizations (Alam, 2023). It is viewed as a comprehensive 

approach to leading, influencing, and managing individuals to 

execute tasks based on predetermined plans (Nabella, 2022). 

Known also as participatory leadership, it emphasizes self-

determination and fair participation, distinguishing itself from 

authoritarian leadership through its focus on active 

engagement, accountability, and delegating responsibilities, 

as it emphasizes collaboration between leaders and their 

followers during the decision-making process. While the 

leader may implement the decision, this occurs after fostering 

consensus within the team or group (Olayisade, 2021). 

Democratic leaders, who should not be assessed merely based 

on their popularity, offer choices and encouragement to their 

team members, allowing them to have a say in decision-

making processes. A key duty of such leaders is to enable their 

team members by sharing responsibilities and promoting 

group dialogues (Xie, 2018). Every team member is 

responsible for their choices and actions, contributing to the 

collective autonomy of the group (Aqqad, 2019). The style of 

leadership being described involves actively engaging 

followers in the process of setting goals, addressing 

challenges, and fostering teamwork. This approach can be 

utilized across various organizations, whether in the business 

sector, non-profit organizations, or governmental bodies. It is 

particularly effective in environments where team members 

possess patience, expertise, experience, and a willingness to 

contribute their knowledge during the decision-making 



 

244 

process (Jdetawy, 2018). However, democratic leadership is 

not without its challenges. It might lead to inefficiencies if 

roles are not clearly defined or if there is a pressing time 

constraint. Additionally, team members might not possess the 

essential skills or knowledge for effective decision-making. 

Despite these obstacles, democratic leadership can be 

advantageous when team members are willing to pool their 

expertise and insights. Nonetheless, the decision-making 

process within this leadership model tends to be more time-

consuming (Al‐Yami, 2018). 

2.4. Factors that influence leadership Styles in 
SME 

Effective leadership in small and medium-sized enterprises 

(SMEs) necessitates careful consideration and a flexible 

approach, as these environments are sensitive and subject to 

rapid, unpredictable changes. To identify the most suitable 

and effective leadership style or combination of styles for 

SMEs operating in various situational contexts, it's essential 

to take multiple factors into account. These factors can be 

internal or external, tangible or influenced by the context. 

Consequently, researchers are continuously exploring the 

elements in each scenario that impact the leadership style 

adopted by leaders in SME management (Soomro, 2019). In 

their research, (Agarwal, 2021) identified eight key factors 

that can greatly impact the leadership styles chosen by owners 

or managers of small and medium-sized enterprises (SMEs). 

These factors include personality, belief systems, company 

culture, employee diversity, individual personality traits, 

levels of control, organizational structure, and experience. 

Another study also highlighted the factors that affect 

leadership in small and medium-sized enterprises (SMEs) and 

suggested that these factors are like those found in larger 

organizations, albeit on a smaller scale. The researchers 

identified various demographic variables, including gender, 

age, and race, that can significantly influence the leadership 

styles adopted by SME owners or managers. As a result, 

earlier related studies (Hejazi, 2012) support these findings. 

The existing literature (Soomro, 2019) emphasizes that 

various strategic, personal, motivational, and communicative 

factors can assist SME leaders in effectively managing their 

organizations. In their recent studies within the Vietnamese 

context, (Le T. D., 2022) noted that previous research 

identified four key attributes influencing the choice of 

leadership styles: Enterprise Characteristics (including 

Business Sectors, Development Phases & Sizes of Enterprises, 

Company Relationships & Connections, and Job Features), 

Leader Characteristics (such as Leader’s Personalities, 

Managerial Skills and Level, Emotional Intelligence, and Past 

Employment Experiences), Employee Characteristics 

(comprising Employee Personalities and Age, Competencies, 

Working Experience, and Attitudes), and Other 

Environmental Factors (which include Macro, Micro, and 

Internal Factors). The various factors outlined above play a 

crucial role in influencing the relevance of different 

leadership styles within the context of managing small and 

medium-sized enterprises (SMEs) (Le T. D., 2022) Therefore, 

it is essential to thoughtfully assess all aspects associated with 

leadership styles prior to selecting one to implement in SME 

management. 

2.5. Employee Performance  

Some scholars posits that employee performance 

encompasses the level of achievement employees reach in 

completing tasks (Chaurasia, 2013), while others  view it as 

the results attained within the work setting (AL Zaabi, 2016). 

Furthermore, (Donkor, 2020) highlights that employee 

performance is vital for organizational success, urging 

organizations to identify factors that enhance high-

performance levels. According to (Charbonnier-Voirin, 2012) 

and (Dirani, 2020), performance is often evaluated against 

broad indicators and specific criteria that mirror professional 

accomplishments or the fulfillment of set goals, with common 

metrics being productivity, behavior, and the quality of work 

and products. Research by (Kleysen R. S., 2001) and 

(Sendawula K. S., 2018) evaluates supervisor perspectives on 

performance through productivity, work quality, and 

innovative behavior at the individual level. The role of 

leadership style is paramount in enhancing employee 

performance and discipline, as described by (Day, 2013), who 

asserts that leadership involves a blend of philosophies, skills, 

characteristics, and attitudes aimed at influencing 

subordinates' performance. (Hanafi, 2018) categorizes 

leadership styles into three main types: task-oriented, 

relationship-focused, and outcome-focused, arguing that the 

most effective style is one that motivates and is adaptable to 

varying situations. (Hanafi, 2018) also agrees on the 

significant influence of leadership style on employee 

performance, emphasizing the leader's critical role in 

decision-making and accountability for outcomes. Hence, 

leadership style is crucial for achieving organizational 

objectives, which are unattainable without high employee 

performance. 

2.6. Employee Engagement 

Work engagement is significantly influenced by factors 

related to the workplace, including job stability, leadership 

quality, and the performance of employees, as noted by (Al 

Haziazi, 2021). The concept of employee engagement, 

introduced over the last twenty years, highlights its novelty in 

the professional sphere (Polmear, 2022). (Almawali, 2021) 

emphasizes the profound effect of leadership behaviors on 

fostering a high level of employee engagement. Organizations 

are encouraged to adopt leadership approaches that empower 

employees, especially as business environments become 

more dynamic. The evolving nature of business practices has 

also reshaped the expectations from leaders. Effective 

leadership is now seen as guiding and motivating team 

members towards optimal resource utilization and achieving 

company objectives, as stated by (Tahir, 2021). This 

leadership fosters a positive organizational culture and 

commitment to the company’s core values. HR experts view 

the challenge of engagement as being significantly 

determined by an employee's work experience and treatment 

within the organization. Distinct from job performance, 

engagement focuses on an employee’s personal investment in 

their work (Dan Crim, 2006). An emotionally committed 

employee demonstrates passion and concern for the 

organization's success. The collective view among scholars 

defines employee engagement as a mix of cognitive, 

emotional, and behavioral dedication towards achieving 

desired company outcomes (Prayogi, 2021). Research points 

to employee engagement being characterized by attributes 

such as having a sense of organizational purpose, showing 

involvement, commitment, enthusiasm, and exerting focused 

effort and energy, encompassing both attitudinal and 

behavioral elements (Schneider, 2008). While employee 

engagement is often equated with work engagement in studies, 



 

245 

due to overlapping psychological needs and satisfactions, it is 

distinct from related concepts like organizational 

commitment, citizenship behavior, and job involvement (Saks, 

2006). The factors influencing employee engagement are 

categorized into three groups: organizational factors (like 

management styles and job rewards), job-related factors (such 

as the work setting and task features), and individual 

characteristics (including physical energy and self-awareness) 

2.6.1. Employee Engagement as a Multifaceted Construct 
The research conducted by (May, 2004) highlighted that 

employee engagement encompasses cognitive aspects as well 

as the adaptable employment of emotions and actions. 

(Wellins, 2005) described engagement as a blend of 

dedication, allegiance, productivity, and a sense of ownership. 

(Cha, 2007) described employee engagement as the emotional 

and active participation of an employee in their work, 

characterized by complete engagement that includes 

emotional, physiological, and cognitive aspects. This 

engagement comprises three key elements: engagement in 

work, recognition from the organization, and a feeling of 

value towards one’s work. (Schneider, 2008) proposed 

treating employee engagement as a comprehensive term that 

encapsulates various forms of engagement, such as trait 

engagement, psychological state engagement, and behavioral 

engagement, each requiring different frameworks like a 

proactive personality (for trait engagement), involvement (for 

psychological state engagement), and organizational 

citizenship behavior (for behavioral engagement). (Bakker A. 

A., 2011) defined engagement as a positively charged 

emotional state marked by vigor and dedication. (Soane, 2012) 

introduced a model of employee engagement based on three 

pillars: focus on one’s work role, activation, and a positive 

emotional state. Furthermore, (Xu L. G., 2013) categorized 

employee engagement into four aspects: organizational 

identity, attitude towards work, mental condition, and the 

potential for effectiveness. (Xiao, 2014) conceptualized 

employee engagement through five dimensions: proactivity, 

loyalty, efficiency, identity, and dedication. Lastly, (Liu, 

(2016), identified five dimensions of employee engagement 

among knowledge workers: organizational identity, 

commitment, immersion, energy, and a state of satisfying 

harmony. 

2.6.2. Employee Engagement as a Dedicated Willingness 
Employee engagement refers to the level of commitment 

and enthusiasm employees have towards their company, 

illustrating their willingness to remain with the organization 

and exert significant effort for its success. This concept 

manifests in three key behaviors: 1) Positive Speech: 

Employees speak highly of their company, colleagues, and 

their experience, 2) Desire to Stay: Employees express a 

strong intent to remain part of the company for the long haul, 

viewing their position not as a temporary stepping stone but 

as a lasting career choice, and 3) Exertion of Effort: 

Employees show a readiness to go above and beyond in their 

work to contribute to the company's achievements. Some 

organizations interpret employee engagement as the extent of 

an employee's readiness and capability to contribute to the 

company's prosperity, distinguishing between intellectual and 

emotional engagement. Intellectual engagement relates to an 

employee's understanding of their role within the company 

and their department, where the job's financial, professional, 

or personal development rewards foster a sense of intellectual 

commitment. Emotional engagement, on the other hand, is 

influenced by job satisfaction and the fulfillment employees 

feel from their role within the organization. According to 

(Zhang Y. F.-K., 2010) emotional engagement is crucial. (Xie 

W. H., 2006) highlighted that employee engagement 

encompasses the worker's passion for their job, including 

their diligence, devotion to the company, loyalty to their 

superiors, and self-assurance. 

2.6.3. Employee Engagement as a Positive State of Mind 
(Schaufeli W. S.-R., 2002) described work engagement as 

a fulfilling, positive mental state related to work, marked by 

energy, commitment, and deep focus. Unlike fleeting 

emotions, it's a stable and broad affective-cognitive condition 

not tied to specific individuals, events, or actions. (Harter, 

2002) saw employee engagement as the degree to which an 

individual is engaged, satisfied, and enthusiastic about their 

job. (Zeng, 2005) defined it as a durable, positive emotional 

and motivational condition that energizes employees, inspires 

a readiness to invest in their work at any moment, and is 

marked by feelings of joy, pride, and motivation throughout 

the work process. 

2.6.4. Employee Engagement as the Opposite of Burnout 
Engagement encompasses energy, involvement, and 

productivity, which oppose the three elements of burnout: 

tiredness, skepticism, and diminished work effectiveness, as 

identified by (Maslach, 2001). Both engagement and burnout 

represent opposite spectrums, according to (Schaufeli W. B., 

2004), who articulated that the characteristics of vigor and 

dedication directly counteract exhaustion and skepticism. In 

(González-Romá, 2006) distinguished two opposing sets of 

dimensions (emotional exhaustion versus vigor, and cynicism 

versus dedication) as separate, underlying dimensions of 

energy and identity. (Demerouti, 2010), suggested that while 

cynicism and dedication represent opposite ends of the 

identity spectrum, the notion that emotional exhaustion and 

vigor sit at opposite ends of the energy spectrum was not 

upheld. Leadership style is among the key factors anticipated 

to foster employee engagement. 

3. Theory and Hypothesis 

3.1. Hypothesis 

3.1.1. Leadership Styles and Employee Performance 
The effectiveness of employees plays a crucial role in 

enabling an organization to achieve its strategic goals. 

Leaders not only act as essential guides for their team 

members but also bear responsibility for the organization's 

success (Scott, 2018). Some researchers argue that autocratic 

leaders lack trust in their employees, believing that only 

incentives can motivate them. This leads to a lack of loyalty 

from the staff, who eagerly await the downfall and 

replacement of such leaders (Veliu, 2017). Employees tend to 

respond negatively to the threatening behavior of hostile 

managers, negatively affecting optimal performance 

(Mohamme, 2014). On the other hand, leaders who focus on 

positive and trustful relationships with their employees can 

enhance worker engagement (Riva, 2021). Various studies 

have identified employee engagement as an increased 

emotional attachment an employee has towards their 

organization, motivating them to put in more effort at work. 

This engagement, when combined with certain leadership 

styles, is crucial. (Megawaty M. H., 2022) highlighted that 

leadership elements influencing employee engagement 

include pride in the organization, a sense of team unity, 

intellectual encouragement, career growth opportunities, trust 

and integrity, and a direct link between the organization's 



 

246 

performance and that of the employee. Consequently, this 

level of engagement impacts on service-oriented firms, 

suggesting that employees are more dedicated to serving their 

leaders when they see them as transformative (Maral, 2022). 

Democratic leadership, which promotes the free expression 

and open discussion of ideas, is described as a collective 

leadership approach (Demirtas, 2020). However, some 

studies have pointed out that while democratic leadership 

might be attractive due to the diversity of ideas from the staff, 

it can lead to delays in results due to prolonged decision-

making processes (Jony, 2019). According to (Al-Malki, 

2018), the pinnacle of organizational excellence is linked to 

employee performance, achievable only when leaders 

facilitate a stress-reduced environment, define clear 

responsibilities, and foster a spirit of teamwork among their 

employees. 

The Influence of Democratic Leadership Style on 

Employee Performance  

Democratic leadership style generally assumes that the 

opinion of a person is better than his or her own, and 

participation gives rise to responsibility for its 

implementation (Andarista, 2021). Another assumption is that 

participation creates room for the development of a member. 

The view is in harmony with another one that has been 

conducted by (Chua J. B., 2020).  

H1a: Democratic leadership has a positive impact on 

Employee performance. 

The Influence of Autocratic Leadership Style on Employee 

Performance 

Authoritarian leadership promotes efficiency and a work 

ethic in subordinates. First, an authoritarian leader can 

perform effectively by providing specific and clear objectives 

that his or her subordinates should work on. Having complete 

control of the decision-making in the organization, the 

authoritarian leader gives a single purpose or mission for the 

followers to concentrate on their line of work, eliminating all 

confusion (Schaubroeck, 2017). Goal-setting theory suggests 

that specific goals, as opposed to those based on general ideas 

or conventions, almost always lead to the respondent 

performing at a higher level (Locke, 2006).It was also argued 

that if an employee has a specific goal to aim for, he can 

measure his success clearly, fairly, and objectively with 

respect to achieving it. Even authoritarian leaders keep strict 

oversight (Locke, 2006). 

H2a: Autocratic leadership has a negative impact on 

Employee performance 

The Influence of Charismatic Leadership Style on 

Employee Performance 

Charismatic leaders have a deeply rooted, extraordinary 

influence on their followers. Followers view the beliefs of the 

leader as utterly sincere, embrace the leader with no 

skepticism, and surrender voluntarily to the key character; 

they are attracted to their leader, invested emotionally in the 

vision and mission of their group or organization, tend to 

promote its successes, and set lofty performance goals 

(Firdaus D. R., 2023). A charismatic leadership style could 

basically form a foundation on which people being led are 

influenced to work vigorously and with great confidence 

along with zeal and effectiveness to achieve common 

organizational objectives, a charismatic leader could be 

adored by many of his followers without the latter realizing it; 

there is no way that it can be described in concrete terms 

(Akbar M. R., 2024). 

H3a: Charismatic leadership has a positive impact on 

Employee performance. 

3.2. Leadership Styles and Employee 
Engagement 

Previous studies have explored the role of various elements 

in boosting employee engagement. (Firman, 2021) 

highlighted that organizational effectiveness is significantly 

influenced by how leaders manage their teams. By aligning 

tasks with employees' interests and goals, new opportunities 

and approaches for enhancing company performance and 

productivity are unveiled (Firman, 2021). The cornerstone of 

organizational success is employee engagement, as it leads to 

heightened productivity and profitability. Leadership styles 

are crucial in predicting the level of employee engagement. 

The care shown towards employees' growth and well-being is 

also a reliable indicator of job performance, satisfaction, and 

organizational loyalty, as noted by (Alimo-Metcalfe B, 2008), 

(Griffin, 2015), and (Saks A. M., 2014a). These studies argue 

that for organizations to thrive, having engaged employees is 

essential; companies with disengaged staff face a greater risk 

of failure. (Rayton, 2014) posits that the quality of the leader-

employee relationship is fundamental in fostering employee 

engagement. Business leaders are thus faced with the task of 

identifying the most effective strategies to motivate and 

engage their teams (Eneh, 2016); (Galuska, 2014); 

(Maghraoui, 2016). Several factors contribute to an 

organization's success, with leadership being a pivotal 

element (Mehmood, 2016). (Megawaty M. H., 2022) 

identifies several leadership qualities—such as trust, integrity, 

the link between organizational and employee performance, 

intellectual stimulation, career growth opportunities, the 

leader-employee bond, pride in the organization, and team 

unity—as key to influencing employee engagement. 

The leadership approach adopted can significantly impact 

employee engagement levels. Employees' actions and 

behaviors are influenced by the leader's style. (Anitha, 2014) 

discovered a strong link between effective leadership and 

high employee engagement. (Khuong, 2014) found that 

employee engagement levels increase with the presence of 

sociable, ethical, and visionary leadership. (Anitha, 2014) 

also noted that the work environment, shaped by leadership, 

directly affects employee engagement. Leaders play a critical 

role in steering the direction of an organization and can drive 

change by employing the right engagement strategies (Ahmed, 

2015). Successful organizations are often those with effective 

leadership, necessitating leaders who inspire and motivate 

their workforce (Mehmood, 2016). 

(Eldor, 2016) points out that excellent leadership is rooted 

in proven leadership practices, which, when applied, can 

enhance both employee and organizational performance. 

(Anitha, 2014) outlined seven key areas leaders should focus 

on to boost employee engagement and productivity: the work 

environment, leadership, employee well-being, team 

dynamics, professional development, compensation, and 

organizational policies. Leaders that create a conducive work 

environment and support personal goal achievement can 

significantly increase employee engagement (Bhuvanaiah, 

2015). (Zhang T. A., 2014) and (Bolarinwa, 2015), 

emphasized the importance of meaningfulness, safety, and 

resource availability as psychological conditions leaders must 

foster to engage their employees effectively.  

H1b: Employee engagement mediates the relationship 

between Democratic leadership and Employee performance 

positively. 



 

247 

H2b: Employee engagement mediates the relationship 

between Autocratic leadership and Employee performance 

positively. 

H3b: Employee engagement mediates the relationship 

between charismatic leadership and Employee performance 

positively. 

H4: Employee engagement has a positive and significant 

relationship with Employee performance. 

3.3. Leadership Styles, Employee Engagement, 
And Employee Performance 

This research emphasizes the role of Employee 

Engagement as a mediator in the link between various 

leadership styles and Employee Performance (EP), grounded 

in a theoretical framework. Enhanced performance is 

achievable only when expectations are reasonable and the 

interaction between managers and employees is equitable. 

The effectiveness of leadership in improving employee 

performance hinges on its ability to motivate higher 

Employee Engagement levels. An improvement in the 

exchange relationship between a leader and their subordinate 

boosts engagement, which in turn, enhances performance 

(Chaurasia S., 2013). Previous research has identified a 

positive correlation between Employee Engagement (EE) and 

EP (Schaufeli W. E., 2015) It's recognized by leaders that 

focusing on Employee Engagement leads to a more effective 

and productive workforce (Rich B. L., 2010). Without the 

engagement of employees, leadership improvement 

initiatives are doomed to fail. Work engagement is described 

by (Schaufeli W. S.-R., 2002) as a positive, motivational state 

related to work that includes vigor, dedication, and absorption. 

Although Autocratic leadership can be strategically chosen by 

a leader and may be perceived positively by team members, a 

nuanced approach to Autocratic leadership is necessary to 

circumvent the negative perceptions and outcomes 

traditionally associated with it. Building on the discussions 

above, a proposed relationship between leadership styles and 

EP, mediated through EE, is established. Hence, the above 

hypotheses.  

3.4. Research Model  

The figure below shows the research framework 

comprising of the independent, dependent and mediating 

variables. The independent variables are Democratic, 

Charismatic and Autocratic leadership styles whereas the 

dependent variable is employee performance and employee 

engagement as the mediating variable. 

 
Figure 1. Conceptual Framework 

4. Research Methodology 

4.1. Sample Selection and Data Collection 

This study employs a quantitative, cross-sectional design 

to explore the impact of different leadership styles on 

employee performance and to assess the mediating role of 

employee engagement within this relationship. Data was 

collected using a structured questionnaire administered to 

employees from several small and medium-sized enterprises 

(SMEs) in Malawi’s private sector. Participants were selected 

using purposive sampling based on specific inclusion criteria. 

We included employees from private SMEs in Malawi who 

had at least one year of experience in their current roles and 

were familiar with the leadership practices in their 

organization. We excluded individuals who had less than one 

year of experience or worked in non-SME organizations, as 

they were less likely to provide relevant insights into the 

leadership styles and employee engagement within SMEs. In 

addition, internet is overpriced beyond the reach of most 

Malawians. The section of the Malawian public that has 

access to the Internet often experience poor and sluggish 

internet connections (Akademie, 2019). Therefore, the 

questionnaire was distributed both in electronic and physical 

format since not all respondents had access to internet. 

Combining data from both formats contributed to validating 

findings and providing a more robust basis for conclusions.  

A purposive sampling approach was used to select 300 

participants from various SMEs, with a response rate of 77% 

yielding 231 usable responses. The data collection instrument 

incorporated the Multi-Factor Leadership Questionnaire 

(MLQ) for leadership style assessment employee engagement 

and performance that have been validated in prior research. A 

five-point Likert scale was employed across all measures, 

ranging from "strongly disagree" to "strongly agree," 

allowing for a detailed analysis of participants' perceptions. 

The instrument used was in the form of a questionnaire that 

was distributed directly to the respondents, then the data was 

summarized by Microsoft Excel before being entered into the 

program SPSS. SPSS was used to process and measure the 

analysis and structural models. 

In the context of the questionnaire, questions about 

enterprise scale are investigated. The selected scales are 

reliable scales modified by existing researchers many times. 

The data used in this paper was collected, starting from 8 

October 2023 to 31 October 2023. To increase the recovery 

rate of the research questionnaires some monetary incentives 

were provided to the respondents.  

4.2. Measurement Tools 

To assess the relationship between leadership style, 

employee performance and employee engagement, the 



 

248 

“Multi-Factor Leadership Questionnaire” (MLQ) by (Bass, 

1995) was developed and used for this study. The study 

questionnaire adopted a five-point Likert scale in calibrating 

the responses of the respondents. According to (Bloomberg, 

2011), the Likert scale is the most often used variation of a 

summated scale, which consists of statements that represent a 

favorable attitude toward an object of interest (Alshurideh, 

2010). The study used the Likert scale because previous 

empirical research on leadership style used the Likert scale to 

collect data on respondents’ perspectives, choices, and 

opinions (Brooke, 2007). The tool includes 20 items. 

However, this questionnaire has been refined to adapt to the 

leadership context as well as to the characteristics of the 

private sector in Malawi. The Questionnaire was built on a 

five-point Likert scale from 1 to 5, where 1=strongly disagree, 

2=disagree, 3=neutral, 4=agree, and 5=Strongly agree. The 

Multi-Factor Leadership Questionnaire, Employee 

Engagement and Employee Performance Questionnaire was 

divided into three parts, the first part focuses on answering 

demographic issues, the second part focuses on analyzing 

different leadership styles of leaders in private sector firms, 

and the third part focuses on analyzing and evaluating the 

level of employee engagement and employee performance. 

4.2.1. Leadership Style Scale 
The study uses the charismatic leadership scale developed 

by (Zehir, 2014) to measure leadership from five aspects. This 

scale has been widely used in previous studies and has good 

reliability and validity. The scale is divided into four 

dimensions: high performance, sense of mission, and 

organizational goals. The Likert 5-point method was used. A 

summary of the items is provided on the table.  

 

Table 1. Democratic leadership scale 

No Item 

1 
My leader/supervisor has a sense of mission which 

he transmits to other 

2 
My leader/ supervisor communicates expectations 

of high performance 

3 
My leader/supervisor provides inspiring strategic 

and organizational goals 

4 
My leader/supervisor shows sensitivity to the 

needs and feelings of other organization members 

 

Democratic leadership: the sub-scale of democratic 

leadership developed by (Ahmed Zakaria Abdullahi, 2020) in 

the context of Chinese culture is adopted. This scale has been 

widely used in previous studies and has good reliability and 

validity. The scale is divided into four dimensions: decision-

making processes, supportive communication, guidance, 

responsibility, and “passion. The Likert 5- point method was 

used. A summary of the items is provided in the table. 

 

Table 2. Autocratic leadership scale 

No Item 

1 
My leader/supervisor involves us in decision-

making processes 

2 
My leader/supervisor provides us with frequent 

and supportive communication 

3 
My leader/supervisor provides guidance without 

pressurizing us 

4 
My leader/supervisor helps us accept 

responsibility for completing our tasks 

 
Authoritarian leadership: the sub-scale of authoritarian 

leadership developed by (Ahmed Zakaria Abdullahi, 2020) in 

the context of Chinese culture is adopted. This scale has been 

widely used in previous studies and has good reliability and 

validity. The scale is divided into four dimensions: 

authoritarian behavior, power, authority, and control, rewards 

or punishments, and direction, day-to-day activities and he 

asked me to obey his leadership”. The Likert 5- point method 

was used. A summary of the items is provided on the table. 

 

Table 3. Charismatic leadership scale 

No Item 

1 
My leader/supervisor retains all power, authority, 

and control in all decision-making 

2 
My leader/ supervisor rewards or punishes us to 

motivate us to achieve organizational objectives 

3 
My leader/ supervisor provides us with the needed 

direction 

4 
My leader/ supervisor adopts one-way 

communication and does not consult us 

 

4.2.2. Employee Performance 
The employee performance scale prepared by (Al Montaser 

Mohammad1, 2022), is adopted, with a total of four items, 

such as “performance improvement, participation, problem 

solving and implementation” and so on. The Likert 5- point 

method was used. A summary of the items is provided on the 

table.  

 

Table 4. Employee Performance scale 

No Item 

1 
The company is keen on my participation in 

making decisions that improve performance 

2 
The management structures in this company 

encourage the performance of workers. 

3 I generate ideas or solutions to address problems. 

4 
I push ideas forward so that they have a chance to 

become implemented 

 

4.2.3. Employee Engagement 
(Al Montaser Mohammad1, 2022), Is a four-dimensional 

model applicable to different cultural backgrounds? It 

includes four dimensions: vigor, dedication, resilience, and 

immersion. The Likert 5- point method was used. A summary 

of the items is provided on the table.  

 

Table 5. Employee Engagement scale 

No Item 

1 At my job, I feel strong and vigorous 

2 I can continue working for very long periods at a time 

3 In my job, I am mentally very resilient 

4 I am immersed in my work 

5. Results and Empirical Analysis 

This paper selects existing mature scales which were used 

to formulate a questionnaire. SPSS26.0 was used to analyze 

the data collected. Through the descriptive statistical analysis, 

reliability and validity test, confirmatory factor analysis, 

correlation analysis, and the hypotheses proposed above are 

verified. The data analysis results are discussed after 

analyzing the data. 



 

249 

5.1. Descriptive Analysis 

Table 6 contains the descriptive analysis of the 4 control 

variables and the basic situation of the sample population was 

analyzed as follows. In terms of gender distribution, men and 

women account for 59.3% and 40.4%, respectively, which is 

relatively balanced. The age distribution covers a wide range 

of respondents, 18 employees fall between the ages of 18-

20yrs (7.8%), 69 employees fall between the ages of 25-30yrs 

(29.9%), 111 employees fall between the ages of 30-39yrs 

(48.1%) and 33 employees fall between the ages of 40 and 

above with mean age of 27. The employee’s occupation status 

was categorized into four parts namely full-time 25.5%, part-

time 55.0%, retired 19.5%, - and prefer not to say, respectively. 

The number of employees of the enterprise is mainly 50–100, 

accounting for 50% in total, and the education level of 

employees comprised of highest diploma 10.8%, bachelor’s 

degree 7.1 % and master’s degree 22.0 %. In terms of 

enterprise-type distribution, the top three are the social 

service industry, the insurance industry, and the 

manufacturing industry, which account for 56.0% in total. 

Overall, the samples are widely distributed and representative. 

 

Table 6. Descriptive Analysis 

Name Option Frequency Percentage Accumulated Percentage 

Age 18-24 18 8 8 
 25-30 69 30 38 
 30-39 111 48 86 
 Above 40 33 14 100 

Gender Male 137 59 59 
 Female 94 41 100 

Education Level Highest Diploma 25 11 11 
 Bachelor's Degree 155 7 78 
 Master's Degree 51 22 100 

Employment Status Full-time 59 26 26 
 Part-time 177 55 81 
 Prefer not to say 45 19 100 

5.2. Reliability and Validity Analysis 

Table 7. Reliability and Validity Analysis 

  Items Factor loading AVE CR Cronbach alpha KMO 

Democratic D1 0.87         

  D2 0.86         

  D3 0.88 0.74 0.92 0.92 8.56 

  D4 0.82         

Autocratic A1 0.80         

  A2 0.86         

  A3 0.81 0.67 0.89 0.89 8.38 

  A4 0.79         

Charismatic C1 0.79         

  C2 0.79         

  C3 0.80 0.62 0.87 0.87 8.20 

  C4 0.78         

Employee Employment EE1 0.88         

  EE2 0.80         

  EE3 0.75 0.67 0.89 0.89 0.83 

  EE4 0.84         

Employee Performance EP1 0.81         

  EP2 0.73         

  EP3 0.80 0.65 0.88 0.88 0.82 

  EP4 0.87         

    >0.5 >0.5 >0.7 >0.7 >0.7 

Table 7 displays the reliability analysis which consists of 

the factor loadings, AVE, CR, KMO AND Cronbach alpha. 

Cronbach’s alpha reliability test was chosen as the top way to 

assess the fitness and consistency of the collected data 

(Trochim, 2010). It is stated that the alpha value increases as 

the test variable correlations improve, with a reliable alpha 

value above 0.70 (Kline, 2000). which depicts that the items 

are reliable since their respective alpha values are greater than 

0.7. Therefore, the reliability of each variable is good and 

meets the research requirement. The KMO value for all thirty-

one items in our constructs is 0.87, p < .05 which indicates 

that these results are valid since the KMO is greater than 0.7. 

The composite reliability (CR) and the average variance 

extracted (AVE) were calculated for the theoretical interest in 



 

250 

scale development. All research variables fall in the 

acceptable CR range from .87 to .92, and the AVE range 

from .65 to .75 represented in the CR and AVE table. The 

analysis above shows that our research is reliable and valid 

therefore, we perform further analysis like confirmatory 

factor analysis (CFA). 

 

Table 8. Confirmatory Factor Analysis 

Number Index x2 df P x2/df GFI RMSEA RMR CFI NFI NNFI 

1 5-factor model 199.73 160 0.02 1.25 0.93 0.03 0.05 0.99 0.93 0.98 

2 4-factor model 716.06 164 0 4.37 0.761 0.12 0.14 0.8 0.78 0.77 

3 3-factor model  1031.68 167 0 6.18 0.66 0.15 0.17 0.69 0.66 0.65 

4 2-factor model 1398.7 169 0 8.28 0.53 0.18 0.19 0.56 0.53 0.51 

5 1-factor model 1891.17 170 0 11.12 0.37 0.21 0.24 0.39 0.37 0.32 

Table 8 displays the Confirmatory factor analysis was 

carried out in this research using SPSS data analysis and the 

five-factor model was adopted. Model 1 (5-factor model) 

includes all study variables rated by employees (Democratic, 

Autocratic, Charismatic, Employee Engagement, and 

Employee performance) being presented as five independent 

factors. Model 2 (4-factor model) combines employee 

engagement and employee performance as one factor and 

treats the other three variables as three independent factors. 

Model 3 (3-factor model) combines Democratic leadership, 

employee engagement, and employee performance as one 

factor and considers the other two variables as two 

independent factors. Model 4 (2-factor model) combines 

Autocratic, Democratic, employee engagement, and 

employee performance with charismatic leadership as the 

constant factor. Model 5 (1-factor model) combines all five 

variables as one factor. The results show that model 1 (5-

factor model) which is our hypothesized model was superior 

to all other models (model 2 -model 5). Model 1 results 

indicate (X2 = 199.7; df = 160; p < .001; comparative fit index 

(CFI) = .99; goodness-of-fit index (GFI) = .93; Normed Fit 

Index (NFI) = .93 root-mean-square error of approximation 

(RMSEA) = .03; and standardized root-mean-square residual 

(SRMR) = .05.), Model 2  (X2 = 716.1; df = 164; p < .001; 

comparative fit index (CFI) = .80; goodness-of-fit index (GFI) 

= .76; Normed Fit Index (NFI) = .76 root-mean-square error 

of approximation (RMSEA) = .12; and standardized root-

mean-square residual (SRMR) = .14.). Model 3 (X2 = 1031.7; 

df = 167; p < .001; comparative fit index (CFI) = .69; 

goodness-of-fit index (GFI) = .66; Normed Fit Index (NFI) 

= .66 root-mean-square error of approximation (RMSEA) 

= .15; and standardized root-mean-square residual (SRMR) 

= .17.). Model 2 (X2 = 1398.7; df = 169; p < .001; 

comparative fit index (CFI) = .56; goodness-of-fit index (GFI) 

= .55; Normed Fit Index (NFI) = .56 root-mean-square error 

of approximation (RMSEA) = .18; and standardized root-

mean-square residual (SRMR) = .19.) and lastly model 1 (X2 

= 1891.2; df = 1170; p < .001; comparative fit index (CFI) 

= .39; goodness-of-fit index (GFI) = .67; Normed Fit Index 

(NFI) = .39 root-mean-square error of approximation 

(RMSEA) = .21; and standardized root-mean-square residual 

(SRMR) = .24.). The above CFA results indicate that our 

model fit is accepted and best suited for this study since all 

alternative models (model 2, 3, 4 & 5) were inferior to (model 

1) therefore, we move further to correlation analysis. 

5.3. Correlation Analysis 

 

Table 9. Correlation Analysis 

Variables Mean SD 1 2 3 4 5 6 7 8 9 

1. Age 2.69 0.81 1         

2. Gender 1.41 0.49 0.69 1        

3. Educational level 2.11 0.56 0.01 0.02 1       

4.Employment Status 1.94 0.67 -0.43 -0.06 0.06 1     . 

5. Democratic 3.32 1.08 -87 -0.07 0.08 0.10 1     

6. Autocratic 3.72 1.01 0.07 0.07 0.00 -0.08 -0.07 1    

7. Charismatic 2.86 0.71 .16* -0.04 0.02 0.03 0.06 -.20** 1   

8. Employee Engagement 2.98 0.8 .26** -0.04 -.0.55 .25** .23** .21** .32** 1  

9. Employee Performance 3.26 0.78 .22** 0.10 0.05 0.10 .32** .19** .37** .58** 1 

**P<0.01 *P<0.05  N=231         

Table 9 shows the analysis of correlation encompassed 

seven variables, including demographic aspects like age, 

gender, educational attainment, and employment condition, 

along with theoretical models of leadership styles, employee 

engagement, and employee performance. The findings reveal 

the interconnections between our control variables and the 

primary variables under study. The data from the correlation 

analysis presented significant relationships: age was found to 

correlate notably with charismatic leadership (b = .16, p < .05), 

Employee Engagement (b = .26, p < .05), and Employee 

Performance (b = .22, p < .05). However, age showed no 

significant correlation with democratic leadership (b = .09, p 

= .19), autocratic leadership (b = .07, p = .31), or other 

demographic variables in this investigation. The outcomes 

suggest that a leader's charisma, as well as employee 

engagement and performance levels, are influenced by age. In 

contrast, a leader's tendency towards democratic or autocratic 

styles appears to be age independent. Regarding gender, the 

analysis found it to have no significant correlation with 

leadership styles (democratic (b = .07, p = .3), autocratic (b 

= .07, p = .3), charismatic (b = .04, p = .6)), or with employee 

engagement (b = .04, p = .6) and performance (b = .1, p = .1), 



 

251 

indicating that these factors are not influenced by gender. 

Similarly, educational level was found to have no significant 

correlation with any of the constructions studied, suggesting 

that leadership style, employee engagement, and performance 

are not dependent on one's level of education. Employment 

status, however, showed a significant positive correlation 

with employee engagement (b = .3, p < .05) but not with 

leadership styles or employee performance, indicating a 

relationship between employment status and job engagement 

alone. On the other hand, a democratic leadership style was 

significantly correlated with higher levels of employee 

engagement (b = .23, p < .05) and performance (b = .32, p 

< .05), but not with other leadership styles, suggesting that 

democratic leadership positively impacts employee 

engagement and performance. Autocratic leadership was 

significantly correlated with charismatic leadership (b = .20, 

p < .05), employee engagement (b = .21, p < .05), and 

employee performance (b = .29, p < .05), highlighting a 

relationship between autocratic leadership and both charisma, 

engagement, and performance. Furthermore, charismatic 

leadership was significantly associated with both employee 

engagement and performance (b = .23, p < .05), and a mutual 

significant positive correlation was observed between 

employee engagement and performance. Overall, the analysis 

revealed that leadership styles significantly influence 

employee engagement and performance, with certain styles 

showing inter-correlations (autocratic and charismatic), while 

democratic leadership did not significantly correlate with the 

other styles examine. 

5.4. Hypothesis Test 

 

Table 10. Hypothesis Analysis 

Term c  a a (p) b b (p) 
a*b Mediating 

Effect Value 
a*b (Boot SE) 

  B S. D t B S. D t P 

Constant 1.94 0.32 6.16 2.23 0.28 7.89 0.000*** 

Age 0.27 0.06 4.47 0.18 0.06 3.32 0.001*** 

Gender -0.06 0.10 -0.63 -0.04 0.09 -0.49 0.63 

Education -0.11 0L.888 -1.20 -0.14 0.08 -1.73 0.085* 

Employment status 0.32 0.L074 4.29 0.31 0.07 4.67 0.000*** 

D         0.04 3.54 0.000*** 

A         0.05 5.36 0.000*** 

C         0.64 5.86 0.000*** 

R² 0.14             

Adjusted R² 0.13             

F 
F (4,213)=9,506, 

P=000*** 
    

F (7,230)=16.108 

P=000*** 
      

SPSS model 26 was used to test the direct relationship 

between democratic, autocratic, and charismatic leadership 

styles, employee engagement, and performance. Our 

hypotheses were largely supported which can be seen in the 

related table. which provides more information including t-

statistics, standardized path coefficient (b), and significant 

levels. Standardized path coefficients (b), t-statistics, and 

associated significance levels for all relationships in the study 

model are presented in related tables. The study used a two-

tailed t-test with a significance level of 5%, the path 

coefficient will be significant if the t-value is larger than 1.96. 

The result shows democratic leadership has a positive and 

direct impact on employee performance (b = .22, t = 5.38, p 

< .05). In line with hypothesis 1a, democratic leadership has 

a positive direct effect on employee performance, which 

means under a democratic leader, employees will perform 

well in the organization, hence fostering an inclusive 

environment and actively engaging employees in decision-

making. Democratic leaders contribute to improved 

performance as employees feel more valued and empowered, 

this is in line with research conducted by (Chua J. B., 2020). 

Contrary to expectations, Autocratic leadership was found to 

have a positive direct effect on employee performance (b 

= .21, t = 4.94 p < .05) rejecting hypothesis 2a which states 

Autocratic leadership has a negative impact on Employee 

performance. Employees' performance tends to increase 

under autocratic leadership. This suggests that in certain 

contexts, such as SMEs, a structured and authoritative 

approach can enhance performance by providing employees 

with clear expectations and stability, this confirms the study 

by (Huang, 2015). We also found charismatic leadership to 

have a positive direct effect on employee performance (b 

= .43, t = 6.89, p < .05) providing support for hypothesis 3a. 

This suggests that leaders who employ a charismatic style, 

characterized by inspiring and motivating employees through 

a shared vision, enhance performance outcomes more 

effectively than other styles, this confirms the research by 

(Akbar, 2024). However, we found the three leadership styles 

(democratic, autocratic, and charismatic) positively affecting 

employees’ performance in the organization, but charismatic 

leadership was found to have a relatively greater positive 

direct effect on employee performance than democratic and 

autocratic. In Addition, democratic leadership has a relatively 

high effect on employee performance compared to autocratic 

leadership. The above results provide support for hypotheses 

1a, 2a, and 3a. To test hypothesis 4, this study used a two-

tailed t-test with a significance level of 5%, the path 

coefficient will be significant if the t-value is larger than 1.96. 

Results indicate that there is a positive direct relationship 

between employee engagement and employee performance (b 

= .56, t = 10.1, p < .05) supporting our hypotheses (H4). We 

found employee engagement to have a strongly direct positive 

effect on employee performance, suggesting that despite the 

leadership style, engaging employees is the best way to foster 

their organization's performance. Although we didn’t 

hypothesize the direct relationship between the three 

leadership styles and employee engagement. We found that 

democratic leadership has a positive direct relationship with 



 

252 

employee engagement (b = .15, t = 3.54, p < .05) suggesting 

that democratic leaders will positively engage employees. 

Consequently, we found autocratic leadership to have a 

positive direct effect on employee engagement (b = .24, t = 

5.36, p < .05) and lastly, we found charismatic leadership to 

be positively associated with employee engagement (b = .37, 

t = 5.86, p < .05). The results provide evidence support for all 

our research hypotheses. 

5.5. Mediating Effect Analysis 

Mesomeric effect (Bootstrap 5000) 

 

Table 11. Mediation Analysis 

  Employee Engagement Employee Performance   

variables b p t b p t 

Age 0.27 0.00   0.18 0.00   

Gender -0.06 0.53   -0.04 0.63   

Education level -0.11 0.23   -0.14 0.09   

Employment Status 0.32 0.00   0.31 0.00   

D 0.14   -3.11 0.13   -3.60 

A 0.17   -3.66 0.04   -0.94 

C 0.31   -4.65 0.21   -3.64 

R2 0.14     0.34     

 

Table 12. Bootstrap test 

  c  a a (p) b b (p) 

a*b 

Mediating 

Effect 

Value 

a*b 

(Boot 

SE) 

a*b 

(z) 
a*b (P)     

Term c a a (p) b b {p} 

a*b 

Mediating 

Efect 

Value 

a*b 

(Boot 

SE) 

a*b 

(z) 
a*b (P) 

a*b (95% 

Boot CI) 

c'Direct 

Effect 

D_=>EE=>EP 0.22 0.15 0.000*** 0.41 0.000*** 0.06 0.02 3.26 0.001*** 0.026-0.098 0.16 

A_=>EE=>EP 0.21 0.24 0,000*** 0.41 0.000*** 0.10 0.02 5.05 0.000*** 0.065-0.14 0.12 

C_=>EE=>EP 0.43 0.37 0.000*** 0.41 0.000*** 0.15 0.03 4.61 0.000*** 0.093-0,224 0.27 

Bootstrapping analysis was conducted to test the mediating 

effects which were shown to be significant (Hayes, 2013). 

This Bootstrapping analysis was conducted to test the 

mediating effects which are shown above to test the mediating 

relationship (hypothesis 1b, 2b, and 3b), we use Bootstrap 

5000 analysis, where b = mediating effect value, boot C is 

mediating effects while 95% = coefficient, p < .05. The results 

from the mediating analysis show that employee engagement 

positively mediates the indirect relationship between 

democratic leadership and employee performance (b = .06, 

BootCI 95% = .03 to .1, p < .05), this provides support for 

hypothesis 1b. In line with hypothesis 2b, employee 

engagement also positively mediates the indirect relationship 

between autocratic leadership and employee performance (b 

= .1, BootCI 95% = .07 to .14, p < .05). This means that 

autocratic and democratic leadership is related to employee 

performance through employee engagement. Employee 

engagement mediates the relationship between charismatic 

leadership and employee performance (b = .15, BootCI 95% 

= .10 to .22, p < .05) which provides support for hypothesis 

3b. All hypotheses were strongly supported however, 

employee engagement has a stronger mediate effect between 

charismatic leadership and employee performance than for 

the other two leadership styles, suggesting charismatic 

leadership to be the most suitable style to improve employee 

performance in an organization. 

6. Conclusion 

6.1. Conclusion  

The purpose of the study was to explore the impact 

mechanism of leadership style on employee performance. 

Three typical leadership styles, Democratic leadership, 

Autocratic leadership, and charismatic leadership were 

selected to explore the impact of the three leadership styles on 

employee performance and introduce employee engagement 

as the mediating variable. Through empirical research, this 

paper analyzed the collected data, based on the results of the 

research hypotheses above. This paper has reached the 

following findings: (1) Autocratic, Charismatic, and 

Democratic leadership styles have a positive impact on 

employee performance and employee engagement. Employee 

engagement has a strong and direct positive effect on 

employee performance. (3) Employee engagement positively 

mediates the indirect relationship between democratic 

leadership and employee performance. From the above 

findings, it can be seen that Charismatic leadership has a 

positive impact on employee performance because 

Charismatic leadership can create an appropriate environment 

for engaged employees, actively encourage employees to 

tackle problems from a new point of view, cultivate their 

transformative ability, acquire new knowledge, stimulate 

them to rethink and review their previous understanding of 

transformative ability, encourage them to evaluate existing 

problems incorporate strategies and objectives, and achieve 

the purpose of effective change by actively discovering and 

solving problems. The future is clearly and convincingly 

envisioned by charismatic leaders. They articulate a strong 

and rousing vision that reverberates with their supporters and 

gives an internal compass and motivation (Bhatia, 2018).  

The results also show that the Autocratic leadership style 

has a positive impact on employee performance because, 



 

253 

under the Autocratic leadership style, leaders and 

subordinates are often based on consultancy. The employees 

are motivated to work with fear and punishment instead of 

rewards and incentives. Through benefit negotiation and 

reciprocal transactions to jointly achieve the goal, it will 

stimulate the incentive of employees to actively complete the 

task, to promote employee performance in enterprises. Under 

the guidance of realizing employee performance, theories on 

social hierarchy suggest that autocratic leadership may also 

positively affect morale and performance through the creation 

of a psychologically appealing, hierarchically ordered 

environment of predictability and security. Therefore, under 

the guidance of tasks, although employees are not willing to 

develop, they can also achieve the purpose of innovation and 

actively affect management innovation. that autocratic 

leadership can foster team psychological safety when team 

members accept the hierarchy within the team. In contrast, 

competition for power frustrates members, impairing 

psychological safety and performance. In some circumstances, 

if the leader is smart, fair, and has a good grasp of the 

followers, autocratic leadership may be effective (Armstrong, 

2012). 

We can also see that Democratic leadership has a positive 

impact on employee performance. Democratic leaders will 

positively engage employees compared with other enterprises, 

those enterprises that practice democracy actively carry out 

adaptive learning and can successfully carry out 

transformative activities. These leaders provide options and 

support to their subordinates or followers so that they can take 

part in decision-making. Therefore, as opposed to 

authoritarian leadership, this style of leadership is 

characterized by active participation, Therefore, democratic 

leadership is directly related to employee performance. 

From the mediating effect analysis, the impact of 

leadership style on employee performance is largely 

influenced by the mediating variable of employee 

engagement, which shows that leadership style affects both 

engagement and performance levels. At the specific level, 

employee engagement positively mediates the indirect 

relationship between democratic leadership and employee 

performance in addition autocratic and democratic leadership 

also relate to employee performance through employee 

engagement which strongly portrays employee engagement 

as the medium to boost performance  

Employee performance was found to have a strongly direct 

positive effect on employee engagement, suggesting that 

despite the leadership style, engaging employees is the best 

way to foster their organization's performance. Employee 

Performance based on leadership will be ineffective unless 

the leadership offers the incentive for higher levels of 

Employee Engagement. When the quality of the exchange 

relationship between the leader and subordinate increases, the 

level of engagement also increases, leading to an increase in 

performance (Chaurasia S., 2013). 

This study has examined and analyzed the heterogeneous 

impact of Leadership Styles on Employee Performance and 

the mediating role of employee engagement in SMEs in 

Malawi. This research hypothesized Democratic and 

Charismatic leadership styles have a positive influence on 

employee performance, while Autocratic influences it 

negatively. However, the research results have shown that 

Autocratic leadership to have a positive impact and confirmed 

the proposed hypotheses for Democratic and charismatic to 

be acceptable, which means that the three studied leadership 

styles all have a positive impact on employee performance. 

Regarding research, question 3 to determine if considering 

only one or two leadership approaches has an impact on 

employee performance and to what extent. Different styles are 

needed for different situations and each leader needs to know 

when to exhibit a particular approach. Leaders must adjust 

their leadership style to the situation as well as to the people 

being led. The present study was an attempt to explore 

suitable leadership styles concerning the performance of 

employees. The results also revealed that each leadership 

style is a combination of different types of behavior and 

characteristics of leaders. If there is the need to decide quickly 

and act a leader should rely on the autocratic style. If the 

group is undisciplined and poorly organized, the autocratic 

style is more efficient. The democratic leadership style 

matches with a well-organized and stable group. In the longer 

term, the democratic style of leadership, which includes 

giving employees a certain freedom and involving them in 

decision-making, is more productive. The charismatic 

leadership style matches with attempts to induce followers to 

reorder their needs by transcending self-interests and striving 

for a higher order. 

Numerous studies have indicated that leadership is 

essential in influencing and fostering organizational success 

(Alifah A. &., 2021). Furthermore, the adoption of suitable 

leadership styles is paramount in all facets of small and 

medium-sized enterprise (SME) management, as it 

significantly enhances the firm’s performance, growth, and 

sustainability (Le T. D., 2022). In conclusion, this study 

undertakes a detailed exploration accompanied by useful 

recommendations on the Democratic, Autocratic, and 

charismatic leadership styles as applied in SMEs in Malawi. 

Mentioned here are the specific ways through which these 

leadership styles contribute to improved SME productivity in 

the nation. Using these findings, SME leaders and 

policymakers can come up with the correct interventions to 

be embarked upon so as to ensure that the coming into being 

of a more robust SME sector would ultimately work toward 

the attainment of national objectives in the economic domain. 

This research fills a very important knowledge gap and 

creates a foundation on which subsequent leadership and 

management studies in relation to SMEs may be built on. 

6.2. Theoretical Implications 

It is rather important to note that, in an SME, theory 

suggests that the performance of the employees determines 

the success and failure of the business significantly by the 

leadership styles of leaders adopted (Uzohue, 2016). From a 

theoretical standpoint, this research adds to the body of 

knowledge on EP and the function of EE in mediating and 

understanding the complexity of leaders’ perspectives of 

SMEs in Malawi. Employee engagement has been identified 

as a mediator in this theory (Udin, 2022). However, the use of 

suitable leadership styles enhances the productivity, 

performance, services, satisfaction, organizational 

commitment, and organizational structure of SMEs (Franco, 

2015). Practicing effective leadership styles in the 

management of SMEs reaps immediate and real benefits to a 

leader. It provides a holistic approach to the smooth running 

of SMEs; it provides a framework through which they 

identify essentials in SME management and improve them 

consistently; it creates a benchmarking platform to compare 

its performance with all the relevant parties, both inside and 

outside of an SME; it lays down structures, processes, and 



 

254 

relationships that empower employees to participate fully in 

the day-to-day activities of an SME. Besides, this study will 

add to existing management literature and to further 

knowledge of leadership practice and the choice of a 

leadership style in SME management. Finally, this study 

suggests that Malawian SME organizations that can 

effectively use these perspectives to improve EP will realize 

the rewards of better-performing employees. In the long term, 

this would impact the organization’s overall performance 

confirms with the idea that the effectiveness of leadership, 

along with the overall success or failure of a small or medium-

sized enterprise (SME), is heavily influenced by the 

management skills and leadership approach used by the 

owners or managers within the organization (Aghahowa, 

2021). Past studies have demonstrated that adopting a suitable 

leadership style is vital for enhancing the performance of 

small and medium-sized enterprises (SMEs) (Alifah A. &., 

2021). Furthermore, leaders need to be mindful of the various 

leadership styles, because with effective leadership, 

employees are motivated to put in extra effort, enhancing the 

organization's growth and sustainability. On the other hand, 

poor leadership can lead to a lack of initiative and motivation, 

resulting in consistently low output from employees 

(Aghahowa, 2021). There are various types of leadership 

styles in an organizational setting, each with its own 

advantages and disadvantages. The leadership approaches 

used by SME managers have been examined, analyzed, 

adapted, and reinterpreted by numerous scholars, researchers, 

and practitioners throughout the years (Jdetawy, 2018), 

(Alifah A. &., 2021) Every style possesses different 

dimensions, characteristics, methods, and procedures for 

improving the performance of SMEs. 

6.3. Practical Implications 

SME management teams may be able to assess the 

strengths and weaknesses of their organizations and develop 

appropriate leadership styles by diagnosing the status of 

leadership styles, EE, and EP in Malawi and exploring the 

relationships between these constructs. Senior and business 

managers should adopt suitable leadership styles for 

enhancing EP. By combining leadership styles and addressing 

the importance of EE, this study aims to find ways to improve 

EP. The wavering and challenging external factors have led 

many SMEs to focus on improving resource management 

(Menhat, 2019). The outcomes of this study provide advice 

for executives in the SME to coordinate their organizational 

efforts to increase EP through EE and leadership styles. EE 

should be recognized as a technique for boosting EP and 

retaining personnel in small and medium enterprises. As 

mentioned earlier, small and medium enterprises play a 

crucial role in driving financial activity in various countries, 

including those that are least developed and developing.  

(Huang SZ, 2021b) and (Van, 2019) small and medium-sized 

companies (SMEs) offer the primary chance for employment 

to generate revenue for local communities. Limited 

competition from large corporations and a shortage of skilled 

workers presents significant challenges for small and medium 

enterprises. (Huang SZ, 2021b) The absence of government 

regulatory measures has been linked to various issues. In 

recent years, the number of businesses has increased, yet not 

all have advanced, while a few have managed to succeed. 

Small and Medium Enterprises (SMEs) in Malawi encounter 

several difficulties, with the most significant being limited 

access to financing, insufficient production space, and a lack 

of markets for their goods. Various financial institutions are 

supporting SMEs by offering loans to help grow their 

businesses. While some have gained financial support, for 

others, the assistance has led to more challenges than they 

faced prior to receiving it. The study by (Zidana, 2015) A 

study on SME financing and economic growth in Malawi, 

covering the period from 1981 to 2014, found that simply 

increasing access to finance has not had a beneficial effect on 

the growth of SMEs in the country. 

6.4. Limitations and Future Research 

Recognizing the limits of a study does not signal insincerity; 

it merely puts in evidence the determination of the researcher 

to present, reveal, and accept in pursuit of knowledge the lack 

of a choice for a scapegoat (Arham, 2014) and (Hossain, 

2019). It adds more weight and credibility to any research 

reporting by providing the reader with further understanding 

of the study boundaries of potential advancement and the total 

strength of the research endeavor. Thus, this study recognizes 

certain limitations in compiling, analyzing, presenting, and 

discussing information collected. These limitations are 

described in this section. The study’s ultimate limitation is 

that it relied on a limited number of enterprises to test its 

hypotheses. The findings of this study can be cautiously 

generalized to other enterprises in different contexts. A case 

study approach could be appropriate in the future to 

understand better the process and mechanism by which 

increased EP is obtained and explain these outcomes. 

Researchers would be able to understand the complicated 

interactions between the variables. Future research might look 

at the research model in several situations in SMEs, such as 

private hospitals, network service providers, and education, 

and test its validity and application in various countries. 

Moreover, the research could also explore various leadership 

styles, focusing on the characteristics of Autocratic, 

Charismatic, and Democratic styles and advocating EP. In 

addition, a combined methodology that merges quantitative 

and qualitative approaches should be used to gain a more 

comprehensive knowledge of employee performance among 

various supervisors. Despite the study's reported sample size 

of 300 respondents, only 231 respondents were gathered 

because of time restrictions and slow or unreliable internet. 

The effectiveness and efficiency of the data collection 

procedure was yet another drawback. Twenty questionnaires 

were distributed during the pre-testing phase, but the problem 

that arose was that some of the values such as unanswered 

questions were missing from some of the surveys gathered. 

Furthermore, due to the respondents' attitudes which included 

answering mindlessly or merely to get the answer over with 

some replies did not even accurately reflect their positions. 

Lastly, there is the issue of uninterested respondents who were 

reluctant to complete the questionnaire. The surveys were 

created using Microsoft Forms and made available to them 

via social media platforms including WeChat and WhatsApp. 

As most of the targeted respondents are active social media 

users, these platforms are essential for connecting with them. 

Consequently, since respondents must complete all questions 

before they can click "Submit on the form, using the 

Microsoft Form to administer questionnaires does not result 

in missing values. 

Acknowledgment 

First and foremost, I would like to thank God guiding me 

throughout this journey. Many thanks and gratitude to my 



 

255 

supervisor, Associate Professor Liu Hui, who has always been 

very available, has provided excellent advice, and has been 

there throughout my thesis journey Without her help, there 

would be no paper today. Throughout my writing process, 

whenever I have questions, she would always put aside her 

busy schedule and take the trouble to guide me; After I 

finished my first draft, I took time out of my busy schedule to 

carefully correct and check my paper and put forward many 

pertinent guidance. My most sincere respect and thanks to my 

supervisor. 

At the same time, I would also like to express my gratitude 

to my family, friends, classmates, and faculty members who 

have assisted me with the thesis and have been supportive 

throughout and for also laying a solid foundation of 

professional knowledge for me. My sincere gratitude to 

everyone who has helped me with this paper in some way, 

directly or indirectly. This thesis would not have been feasible 

if it hadn't been for you who provided input and helped me 

fill out the questionnaire. Finally, I am very grateful to my 

parents for their unwavering support and constant 

encouragement. The kindness of my parent’s upbringing is 

unrequited. They are the strongest backing on my way to 

school. 

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Appendix 

Appendix A Survey Questionnaire 

Survey Questionnaire on Heterogeneous Impact of 

Leadership Styles on Employee Performance and the 

mediating role of employee engagement: An empirical study 

on Private SMEs in Malawi. 

Dear Respondent,  

I am inviting you to participate in this research by 

completing the following survey questionnaire. The 

following questionnaire will require approximately 5-10 

minutes to complete. The questionnaire should be completed 

by anyone above the age of 18 who is an employee. Thank 

you for taking the time to assist me with this research. Under 

no circumstances are you obliged to answer any of the 

questions; however, doing so will greatly assist me in 

completing my research and enhancing my understanding of 

this research focus. The data collected will remain 

confidential and used solely for academic purposes. Kindly 

indicate the extent to which you agree or disagree with the 

following statement by ticking [√] the option that best applies 

to you.  

Section one Demographic 

1. What best describes your gender?  
[] Male    [] Female 

 

2. What age group do you belong to?  
[] 18-24   [] 25-30   [] 30-39  [ ] Above 40   

 

3. Kindly state your employment status. 
[] Full-time   [] Part-time   [] Prefer not to say. 

 

4. What is your highest level of education? 
[] Highest diploma   [] Bachelor’s degree [] Master’s 

Degree  

Section two Leadership styles 

Kindly indicate the extent to which you agree or disagree 

with the following statement by ticking [√] the option that 

best applies to you.  



 

261 

1=Strongly Disagree 2=Disagree 3=Partially Agree 

4=Strongly Agree 5=Agree 

Democratic leadership 

1 My leader/supervisor has a sense of mission 

which he transmits to other 

[] 1   [ ] 2   [ ]3  [ ] 4  []5 

 

2 My leader/ supervisor communicates 

expectations of high performance 

[] 1   [] 2   []3   [] 4   []5 

 

3 My leader/supervisor provides inspiring strategic 

and organizational goals 

[] 1   [] 2   []3   [] 4   []5 

. 

4 My leader/supervisor shows sensitivity to the 

needs and feelings of other organization members 

[] 1   [] 2   []3   [] 4   []5 

 

 

Autocratic leadership 

1 My leader/supervisor involves us in decision-

making processes 

[] 1   [] 2   []3   [] 4   []5 

 

2 My leader/supervisor provides us with frequent 

and supportive communication 

[] 1   [] 2   []3   [] 4   []5 

 

3 My leader/supervisor provides guidance without 

pressurizing us. 

[] 1   [] 2   []3   [] 4   []5 

 

4 My leader/supervisor helps us accept 

responsibility for completing our tasks 

[] 1   [] 2   []3   [] 4   []5 

 

 

Charismatic leadership 

1 My leader/supervisor retains all power, authority, 

and control in all decision-making 

[] 1   [] 2   []3   [] 4   []5 

 

2 My leader/ supervisor rewards or punishes us to 

motivate us to achieve organizational objectives 

[] 1   [] 2   []3   [] 4   []5 

 

3 My leader/ supervisor provides us with the 

direction needed 

[] 1   [] 2   []3   [] 4   []5 

 

4 My leader/ supervisor adopts one-way 

communication and does not consult us 

[] 1   [] 2   []3   [] 4   []5 

 

Employee Performance  

1 The company is keen on my participation in 

making decisions that improve performance 

[] 1   [] 2   []3   [] 4   []5 

2 The management structures in this company 

encourage the performance of workers. 

[] 1   [] 2   []3   [] 4   []5 

 

3 I generate ideas or solutions to address problems. 

[] 1   [] 2   []3   [] 4   []5 

 

4 I push ideas forward so that they have a chance 

to become implemented 

[] 1   [] 2   []3   [] 4   []5 

 

 

Employee Engagement 

1 At my job, I feel strong and vigorous 

[] 1   [] 2   []3   [] 4   []5 

 

2 I can continue working for very long periods at a 

time 

[] 1   [] 2   []3   [] 4   []5 

 

3 In my job, I am mentally very resilient 

[] 1   [] 2   []3   [] 4   []5 

 

4 I am immersed in my work 

[] 1   [] 2   []3   [] 4   []5