Transactional leadership and its effect on supply chain management in manufacturing SMEs

Abstract

The continued lacklustre performance of small and medium enterprises (SMEs) in South Africa has brought the quest for lasting solutions. One of the options available is to tap into the areas of leadership and supply chain management (SCM) as potential sources of SME growth. This study analysed the link between transactional leadership and SCM in manufacturing SMEs in South Africa. The research constructs included transactional leadership, supply chain execution (SCE), and performance. The research was conducted in Gauteng, North-West and the Free State provinces. Furthermore, the study focused on established manufacturing SMEs, registered with the Small Enterprise Development Agency (SEDA). A quantitative research approach using a correlational design was used. 411 SME owners, managers and professional employees participated in the study. Management by exception exerted a positive effect on SCE. In turn, SCE positively impacted customer service (CS) but did not affect supplier performance. The impact of transactional leadership on the execution of SCM in manufacturing SMEs is minimal and is demonstrated through management by exception. Effective implementation of SCM in these businesses is essential for optimising CS.