SME’s leadership in improving performance

Abstract

The discussions about leadership and performance never end. Successful leadership (LD) is a causal factor in good individual performance (IP). However, how it affects still requires a lot of proof. This research examined the influence of LD on IP both directly and mediated by individual internal variables. This research examined the mediating variables of the influence of LD on IP. The research was conducted on 416 employees of small and medium enterprises (SMEs) in Yogyakarta, Indonesia using a questionnaire whose validity and reliability were tested. Once the data meets the requirements of the multiple linear regression test, the multiple linear regression (MLR) method was carried out to test the direct influence of LD, motivation (MT) and job satisfaction (JS) on IP. Structural equation modeling (SEM) with a two-step approach was used to test the mediation model. Increased IP is not immediately caused by LD. However, leaders can increase MT and JS directly. MT consistently improves IP, but JS has no effect on IP. The results of this study strengthen the results of previous research that the influence of LD on IP is mediated by MT and JS. A discussion of the results of this research is presented after the presentation of the analysis of the research results.