Effect of Strategic Leadership on Performance of SMEs During Covid-19 Pandemic in Nairobi County, Kenya

Abstract

The global economy and enterprises have faced significant impacts due to the COVID-19 pandemic, necessitating leadership styles capable of navigating change and uncertainty effectively. Strategic leadership has emerged as a promising approach for establishing agile strategies amidst rapid transformations in business environments. This study aimed to assess the impact of strategic leadership on the performance of Small and Medium-sized Enterprises (SMEs) during the pandemic in Nairobi County, Kenya. Employing a descriptive and correlational research design, the study targeted 584 respondents from various SME industries in Kenya, with 237 respondents obtained using a stratified random sampling technique. Descriptive and inferential statistics, including correlation and regression analyses, were conducted using SPSS version 23. The findings revealed that SMEs in Nairobi County recognized the importance of strategic leadership for their prosperity, with a significant positive correlation between strategic leadership and performance (r (183) = 0.430, p < 0.05). Strategic leadership accounted for 18.5% of performance variance, indicating a substantial impact (F (1,181) = 41.174, p < 0.05). Moreover, the intercept between strategic leadership and performance showed a notable improvement (β = 0.230, p < 0.01), suggesting a 23% performance enhancement with effective strategic leadership implementation. In conclusion, the majority of SMEs in Nairobi County demonstrated strong strategic leadership, fostering absorptive and adaptive capacities crucial for navigating turbulent business environments. The study underscores the importance of institutionalizing strategic leadership within SMEs to enhance their ability to formulate and execute strategies effectively amidst rapid changes.