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Outline st In the 21 century era, small and large, private and public businesses are all aiming towards

economic growth. However, this growth has slowed following emergence of unprincipled leaders whose main aim has been satisfaction of individual needs as opposed to their employees and customers. With such unethical practices, it is obvious that a strong impact has been witnessed in economic growth, which boils down to declining capital investments and unemployment for small businesses. Emergence of economic uncertainty can be traced back to WorldCom and e-business sector failure (Luthans, Luthans, Hodgetts, & Luthans 2001). Before the famous 9/11 attack, United States economy was already declining following increased unemployment and reduced consumer spending. This condition was further worsened by the 9/11 attack that resulted in increased uncertainty in economic change (Shaw & Shapiro 2002). These changes have challenged the need for leadership and management at all levels of business focusing on ensuring nothing but absolute success. For leadership and management to achieve these roles, there is need for redefinition from the commonly held perspective. Management and leadership are two terms that are commonly and differently used in small businesses and importantly in rejuvenating a dwindling economy. To some people, these terms are seen as synonyms and hence used frequently and interchangeably. From other perspectives, these words are perceived as two different business approaches. Those identifying these terms as extremes maintain the possibility of an individual being a bad manager and good leader simultaneously. Others have resided somewhere between the terms insisting that while management and leadership inherently presents two different business approaches, it is possible to navigate in both positions for a successful business. In modern business environment, businesses – whether small or large- will importantly require effective managers and effective leaders if any operation is going to be regarded as successful. While some perspectives argue that their contributions to organizational success vary, it is conclusively understood that management and leadership will apparently contribute positively towards any business success. For the purpose of this article, management and leadership are understood differently. Whether utilized simultaneously or differently, many businesses will give a precise testimony of significant impacts that leadership and management have on any successful business. Therefore, the main objective here is not to evaluate how the two terms vary, but rather how they contribute to success of small business. This essay will hence understand the fundamental characterizations of management and leadership, the components of effective leadership and management in small scale businesses and their underlying theoretical perspectives. Ideally with appropriate training, it is possible for managers and leaders to develop a successful small scale business.

Leadership versus management
In any small scale business, adopting an entrepreneurial spirit is perceived as critical for economic growth, enterprise growth, and overall nation wellbeing. Therefore in these entrepreneurs, the passion is motivated towards ensuring development of businesses that will outline success. As this business is continually natured, the aim is providing the best services and products at friendly prices that can easily be afforded by their customers. Therefore, without even contemplating on what constitutes leadership and management, business developers embark on a journey that is entirely perceived to be geared towards the overall goal. Ironically, these business leaders or managers hardly possess appropriate expertise, background, and desire of managing their businesses in a strategic manner. Leadership and management are important for success and hence if undermined, these businesses are likely to eventually fall or fail to achieve the overall objectives (Kouzes & Posner 2007). Kouzes and Posner (2007) understand leadership as a process that enables a group member to influence fellow members towards achieving a common goal. Further, the same authors explain that while indeed there exists various leadership styles, there are particular leadership components that will inherently exist in all these definitions. These varying definitions will undeniably agree that leadership is a

and staffing. Based on the fact that economic condition has been a major concern. this does not imply that both management and leadership roles cannot be held by one individual. profitability. Conversely. small businesses are individually owned and operated. they are observed to be operating under management. In Kotler’s leadership theory. 2007). resulted to the GDP growth by more than half. From a different perspective. this form of management is observed to be operating under leadership. Management definition incorporates supervisory. in United States. The last three decades have seen United States. Chemers (2002) adds that leadership and management are two different business approaches that should be handled by different individuals. going by the understanding of Gordon and Yukl (2004). among other global nations. this market has witnessed a rapidly changing demand for small business. an overlap exists in the two fields. it is apparent that when it comes to the economic growth. Growth in small businesses has been linked to economic improvement and most importantly creation of new employment. 13. management and leadership are perceived to share numerous similarities. In small businesses. According to Kurakto (2007). controlling. witness a dominant development of small businesses (Kuratko. this has not always been the case because as earlier highlighted. and occurs in a group context. For instance. Rost (Chemers. The small business increase has come as a boost to economic growth and as a means of employment creation. These small businesses have. As the leaders are involved in features such as organizing. leadership is an old concept that has been employed in business for many centuries. it incorporates influence. when management activities are aimed at assisting employees to achieve organizational goals. Kotler’s perspective is undeniably shared by many scholars when it comes to understanding leadership and management. serving as a main source of job creation through incorporation of more than 50& of the workforce. by Gordon & Yukl (2004). In order for these achievements to be enhanced.3 million United States organizations were registered as small scale businesses by the year 2004. For instance. Literature review In the United States. Hence. according to theorists Nanus & Bennis as qtd. According to Pellerin’s (2007) perception. However. Therefore from studies. hence hardly dominate in their field of operation. these aspects will undeniably play a contributing role in the utilized theory and definition of leadership. management is perceived to be an approach through which activities are accomplished in such a way that routines can be mastered. 2002) on the other side understands leadership as a relationship with multidisciplinary influence while management is perceived to be authoritarian leadership that is lined towards one direction. Leading hence implies influencing others and development of a vision through which change may be enhanced. regardless of how leadership is operationalized. administrative. 2006).process. a larger section of economy is mainly centered on small businesses. Kurakto (2007) has noted the importance of effective leadership. and executive direction of an organization or group. and well framed organization goals. management and leadership fields can also be observed to be different. small businesses are hardly detachable. From the United States Census (2005) statistics. Moreover. planning. small business growth has been attributed to increased competition. For instance. leaders have used various approaches that have been employed to enhance organizational positioning in such a way that these business objectives and goals can be achieved (Howard. both leadership and management are ways of impacting influence and collaborating with people for achievement of the overall goal. This is a simple indication that these two aspects will undeniably involve interchanging and similar roles and hence can hardly be fully isolated. Kouzes and Posner (2007) argue that management is understood from varying definitions. involves attainment of a well labeled goal. However. . poor leadership is inherent in many small businesses. Management on the other hand is a concept that has been developed over the last 100 years as a result of industrial transformation. but management is perceived to follow a definition quite different from leadership. Therefore.

Robbins and Coutler (2003) has highlighted three exceptional leadership characteristics which are. 90% of small business fail. (2007). if these leaders have to be successful. Transformational leadership According to Pryor et al.Beaver (2003) and Perry (2001) affirms that one of the reasons for failure in much small business is simply because of poor leadership. The same authors also add that these charismatic leaders should be able to demonstrate optimism. and dominance in their beliefs. Gordon and Yulk (2004) have mainly targeted their reteach in understanding important leadership skills that affect small scale environment. there is a high likelihood of charismatic leaders focusing to develop a clear and distinct group. (3) Personal risk taking. this study does not incorporate another burning issue: management incompetence. Charismatic leadership Charisma in leadership is highlighted and defined in numerous ways. for any economy to be successful. Emphasizing on the importance of this leadership. a way is created through which contribution is enhanced by ensuring that extraordinary things are implemented (Pellerin 2007). leadership has been understood differently although there is a common agreement in these varying perspectives. determination and confidence. it was clearly observed that the main reason behind failure of small business was management neglect. (4) Sensitivity to the business environment in which the business is operating. These authors strongly agree that failure in these businesses is mainly caused by poor skills in management and leadership. These authors arguably add that these leaders are also required to engender trust as well as the ability to take personal risks to prove that their approach is indeed justified. the rate of failure hits more than 62% in many small businesses. According to Kouzes and Posner (2007). if these small businesses have to be successful. Based on this understanding. charismatic leadership is perceived as a behavioral inclination of leaders that result in development of exceptionally strong relationship between leaders and their followers. In addition. Therefore. As Pellerin (2007) observes. As a result. For these businesses. They are: (1) Articulation and vision. These skills are well incorporated in different theoretical perspectives. these leaders have been able to inspire their employees towards a direction in which organizational objectives and goals may be achieved (Schermerhorn 2005). In addition. it is important to incorporate leadership styles. expression of high confidence. Beaver (2003) analyzed 200 small scale businesses that had recorded bankruptcy. and lack of knowledge on leadership. However. transformational leaders are able to impact movement and change in their organization. From the study. Scheers and Radipere (2007) add that within the first ten years of business operation. Therefore. Through leadership. Kouzes and Posner (2007) have highlighted five important attributes that must be found in any leader to be categorized as charismatic. and (5) Execution of progressive behavior. More than two decades ago. (2) Sensitivity to the needs of employees. they should importantly portray internal control locus. the central role of small businesses can hardly be undermined. strong convictions. This author observes that by the end of the third year. Leadership has always been perceived to be a process through which one person is able to support and aid others to accomplish common tasks. leadership and management skills should be understood as main steps towards increased returns. It is however perceived to be an exemplary character that is natured in an individual person. small business have to be competitive and productive (Beaver 2003). Such leaders are able to seek ways of altering the prevailing structure while ensuring that people are continuously convinced to support new responsibilities and vision. For any economic growth. the rate of failure in small businesses is high. For the excellent . From various authors. For these charismatic leaders. Charismatic leadership has a high likelihood of being found in emerging and struggling small businesses than in stable and successful organizations. and collective ability of accomplishing mission and realizing the vision. Schermerhorn (2005) has summarized charismatic leaders as leaders or managers who are capable of sparking a sense of belonging towards the business.

This ideal incorporates the SWOT analysis together with the vision. tools. and (4) Competitors at their levels apply similar business approaches. strategies. (2007) have revealed inner transformational leadership characteristics in small business. Various theorists strongly insist that strategic management is an important aspect for a small business targeting enhancement of quality initiatives. Pryor et al. These theorists mainly insist on the need for integrating quality initiatives into the organizations strategic management (Pryor et al. These characteristics are positively influential to the leader’s behavior. critical success factors. They are: (1) Small businesses are in most cases owned at the family level. This leadership is hence able to provide energy producing characteristics through which new changes are likely to be generated in a business. and feedback. these leaders are capable of motivating followers to transcend their individual interests for other combined purposes while at the same time ensuring that these followers are assisted to increasingly satisfy their individual needs. this model hardly incorporates the 5P’s model that was established by Pryor (1998). measurement. small businesses have been seen to have a low likelihood of utilizing strategic management models in comparison to large organizations based on a number of reasons. 5P’s model While strategic management theory is perceived to be a model that should be incorporated by business leaders for long term success and survival. Moreover. and Pryor (1998) with a perception that small scale business leaders or managers incorporate strategic management elements in their business.attention to strategic management systems and management models. However. Strategic management approach This approach was initially developed by Toombs. This inner connection is combined with the resulting behaviors do develop external behaviors through which a business is transformed. entrepreneurs involved in development of small business are hardly interested in development of procedures and processes. Furthermore. Large scale businesses compete with large business opponents that are competitively and strategically driven. (2) The leaders in small businesses are in most cases focused on daily operations thereby paying minimal-if any. a group vision is produced by a sense of personal involvement. Robbins and Coulter (2003) supports the perception above. For instance. Chemers (2002) explain that total quality management must be linked to the strategy of a business because most strategies incorporate goals. objectives. These characteristics are highlighted to be inclusive of honesty. On the other side. values. these organizations have large amounts of finances that can resourcefully be allocated to training. Numerous authors have mostly insisted that as a result of incorporating various business theories. without incorporation of any managerial models and implementation of systems through which improvement can be enhanced. (3) Small businesses are mainly less endowed in financial resources that can comfortably be utilized in improving business performance through training. 2007). and personal values. integrity. competitive advantage. goals. mission. a major ingredient is connection of transformational leadership with life experiences.transformational leaders. White. Chemers also adds that TQM must be guided by a senior team in management and project selection must be based on their importance when it comes to achieving success in a business. surveys. it becomes possible for small businesses to be improved. power and authority is utilized as motivational and inspirational tools to the people they follow and trust. they argue that customer impact must be integrated with strategic management as a way of achieving the desired results. standards. The strategic management model and strategic direction establishment is perceived to be incorporated in one of the five rudiments that should importantly be adopted to enhance a . For effective performance. large organizations obviously incorporate people with a clear understanding of management models by the time they have completed their studies in colleges. and training. models. Management models Conventionally. As a way of creating additional emphasis on this point. Additionally.

In this model. technical skills. these elements have additional importance besides their individual importance. it is hard to measure such traits such as integrity. In theory X. However. From this theory. their alignment is perceived to be equally important. After numerous years characterized with continuous research. coercing. the ability of exercising high level of ingenuity. The 5P’s model is perceived to have some elements that are similar to those found in strategic management model that has earlier been examined. employees (people). intelligence. it is possible for leadership approaches to be isolated. and installed into the positions of leadership. the managers believe that mental or physical effort expenditure is as natural as rest and play. task motivation.” The remaining elements are performance. it is apparently hard to identify consistent traits. The inconclusiveness is based on the perception that it is hard to measure traits amongst other things. the managers believe that employees are likely to exercise self-control and self-direction as a way of achieving the objectives that define their commitment. Undeniably. Mouton and Brake model therefore suggest that team management. Moreover. Business leadership approaches Trait approach to leadership Trait approach is developed from “great man” model as an approach through which key characteristics can be identified for successful leaders. Some of the commonly observed traits in an effective leader are inclusive of friendliness. supportiveness to group tasks. developed through collaboration of Jane Mouton and Robert Blake. In theory Y. and principles. Behavioral leadership The trait studies results were not conclusive. In order to qualify an individual as effective leader. . and general charisma. the focus has mainly been drawn to managers. This approach is centered on the perception that through this approach. it is observed that an average individual is more likely to develop an inherent work dislike and will make all efforts possible to avoid working. it is observed that this individual characteristic is highly likely to provoke the need for controlling. and honesty. and creativity in organization problem solution is widely (as opposed to being narrowly) disseminated in the people and human being potentials. these studies results have been inconclusive. is the most effective leadership approach. loyalty. Although some traits have been found in various studies. recruited. individuals possessing such traits can be selected. For pneumonic purposes. little guidance is given in understanding the constituents of effective leadershipin varying situations. Moreover. In the managerial grid. This theory has resulted in development of numerous traits. Theory X is also based on the perception that an average individual highly prefers being directed as a way of avoiding responsibility. In McGregor’s theory Y and theory X managers. emotional control. the focus is based on human relationships alongside performance and output. it is possible to conclude that theory X leader is more drawn towards an autocratic approach while theory Y leader is more drawn towards a participative style. For instance. there is a high likelihood of some traits to be more frequently observed than others. a major concern to production and employee. various traits should be processed. processes. imagination. However. and task (production) orientation together with a combination of concerns between these two limits. Nevertheless. Situational or contingency leadership approach to business Even as behavioral model is likely to assist management in a business when it comes to development of a specific leadership behavior. most modern researchers conclusively agree that indeed there exists no one appropriate leadership style for every manager under all settings. In addition. diligence. this is not sufficient reason to disqualify such a person as a leader. in case these traits are not present in an individual. Therefore. It is possible for some leaders to possess certain traits. Therefore. This inconclusiveness is what has challenged development ofbehavioral success. social skills. or even threatening individuals if they are to be encouraged to make efforts required for organizational goal achievement. this business approach has mainly been referred to as “Purpose. people.

However. In the places where “management” term is utilized to imply micro business. operational. As a result of situations. For these leaders to be viewed as effective. the solution is dependent on the factors affecting the situation.” In the standard business model. one British Standards Institute website has observed that it is possible for real business standards to be achieved by small scale businesses. the achievement of organizational success will not depend on adoption of similar leadership styles in all organizations. For this to be enhanced. If this approach is well utilized. there are nine main sections: (1) Customer care. (3) Employees and staff. in a high routine environment characterized with repetitive tasks. business performance is perceived to be a multifaceted construct incorporating customer.development of contingency models was aimed at indicating that the utilized style is dependent upon such aspects as the people. (5) suppliers. these leaders will be provided with understanding of leadership activities that are necessary for specific position if achievement of organizational objectives and goals is . For this leadership situation. and micro businesses (CQI 2007). and financial oriented performance domains. and (3) enhancement of an effective competition with bigger businesses (British Standards Institute 2007). (2) Business reviews. it hence has a high likelihood of resulting in: (1) elimination of inefficiencies witnessed when it comes to allocation of already limited resources. (8) Records. (2) improvement of marketing speed and risk reduction. For instance. these leaders will have an influential role on how the organizational goals are to be achieved by the employees in the organization. The indicators that have mainly been employed in performance measurement are: profitability. Standards of a small business The small business standards have been developed by Chartered Quality Institute (CQI) (2007) in collaboration with the management consultants. and business among other surrounding variables. Small business success is defined as performance level equal to or exceeding the firms owner expectations. it is likely to be a good starting point as the business moves towards management and improvement of its organization (CQI. it incorporates numerous small business management key ingredients. This performance measurement approach is incorporated as a result of limitation connected with small businesses financial data measurement. and return on investments. it is likely to imply the “proprietor. Therefore for small businesses. a comparatively directive management approach it likely to yield best results. The satisfaction of the owners through performance of business is perceived to be one significant success indicators. With small business research. they have to be viewed as essential for the business success. it is understood that there hardly exists one specific approach through which managers can be able to lead. and (9) Documentation. Nonetheless. The non-financial measures are inherent in Howard study. the situation. it is apparent that indeed success or failure in results production will mainly depend on leaders’ character. 2007). (6) processes and work environment. In contingency approach. varying leadership requirements are likely to be created for a leader. In relation to the small businesses standards application. (7) Correction and prevention of services complications. However. While the standard is mainly perceived to be simplistic in comparison to the 5P’s model and Strategic management model. a more participative approach will be required in a dynamic environment. From the general leadership perspective. Building a successful business According to Howard (2006). (4) management responsibility. annual earnings. This is a business model that is perceived to be important for managers targeting continuous growth in their business. small business leaders will require advanced understanding of the leadership styles to portray progress and development in achievement of organizational objectives and goals. Designing of the small business standards is aimed to be utilized in various investments that include small and medium size businesses.

this will be enhanced through leadership style. These leadership and management hence need to be employee motivation towards adaptation of organizational vision and mission. for instance in the current economic conditions that desperately require an influential intervention. the strategic management should be integrated with effective leadership styles. The failure of these businesses is indeed due to failure to adopt the necessary and fundamental requisites of a successful organization. For organizational effectiveness. leadership should play an integral role. In fact. Consequently. Therefore. This essay is very relevant. The way through which this will be enhanced is through incorporation of leadership and management theories analyzed in this essay. there will be a high likelihood of employee dissatisfaction that will undeniably divert from achievement of organizational objectives and goals. robust leadership will eventually affect the success and profitability of small be enhanced. Although these models cannot be simultaneously used in business. effective leadership and management skills. Conclusion Indeed the theoretical underpinnings evaluated in this article clearly demonstrate need for robust leadership existence in any small business. If employee empowerment will not be fulfilled in these organizations. if a healthy working environment has to be maintained in these businesses. Various models have been highlighted in this article and they are all important in enhancing business success. Leadership hence should be trailed towards ensuring employee satisfaction and effectiveness as a way through organizational success and profitability will be enhanced. leadership will obviously have an important role. If these small organizations have to improve their operations. any business striving towards a… . These businesses will hence have to establish working environment for their business. various leadership and management models should importantly be utilized.