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Leadership of innovative Small and Medium Enterprises: Some evidence of practice in Wales. / Gary Walpole

The Fifth International Annual Conference on Leadership.

Swansea University Author: Walpole, Gary

Abstract

ABSTRACT – Leadership of innovative SMEs: Some evidence of practice in WalesThe increasingly demanding and competitive business environment SMEs operate within means they have to innovate to survive. The study set out to better understand the leadership and innovation practices of SMEs in South Wale...

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Published in: The Fifth International Annual Conference on Leadership.
Published: Cranfield The Fifth International Annual Conference on Leadership. 2006
URI: https://cronfa.swan.ac.uk/Record/cronfa40150
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Abstract: ABSTRACT – Leadership of innovative SMEs: Some evidence of practice in WalesThe increasingly demanding and competitive business environment SMEs operate within means they have to innovate to survive. The study set out to better understand the leadership and innovation practices of SMEs in South Wales and to ascertain whether a link exists between the practice of transformational leadership and organisational and product innovation. The study sent a two-page questionnaire to SMEs in South Wales and received 151 complete and useable questionnaires, representing a response rate of 13%. The questionnaire aimed to ascertain whether the respondents were practicing transformational leadership and the obtain data on product / market innovation and organisational innovation. The data obtained allowed the study to deliver some interesting findings. The businesses who responded are not strangers to innovation, over half advised they had developed new products or services in the last year, whilst almost 70% of respondents advised they had improved processes or working practices in the last year. It was also interesting to find that more than 53% of respondents advised at least 10% of their company’s growth was due to product or process innovation.The study also produced some interesting findings in terms of formalised innovation procedures within SMEs. The most revealing of the responses obtained was that pertaining to the inferred formality and frequency of product or process reviews. Almost 60% of the respondents adopt an ad hoc approach and therefore less than 40% have a formal policy for undertaking product or process reviews. It was also found that approximately 38% of respondents had formalised procedures for continuous improvement. There were some interesting findings in terms of the leadership styles being practised in SMEs, 60% of respondents developed their company vision together with employees and only 10% advised they never did this. The survey also revealed that 79% encourage employees to make suggestions about improving products and processes. Individualised consideration is an important element of transformational leadership and the study found that 51% regularly use mechanisms like coaching and mentoring. The study gathered data relating to the practice of intellectual stimulation within SMEs, another tenet of transformational leadership. It was found that 51% encourage continuous professional development or other learning.The data collected has revealed that transformational leadership is being practiced to varying degrees in SMEs in Wales. The four main tenets of transformational leadership help foster innovation in businesses in different ways. The innovation and leadership responses were given values and respondents were allocated scores and ranked. The study found a positive relationship between the two variables. The squared correlation (r2) enables the study to suggest that a change in the leadership score of an SME is likely to explain a 14% variance in the innovation score.
Keywords: SMEs, Leadership Practices, Innovation, Leadership
College: Research Engagement and Innovation Services