UNIVERSITY OF GHANA ENTREPRENEURIAL LEADERSHIP AND …

UNIVERSITY OF GHANA

ENTREPRENEURIAL LEADERSHIP AND GROWTH OF SMALL

MEDIUM ENTERPRISES: LESSONS FROM

TRANSFORMATIONAL ENTREPRENEURS IN GHANA

BY

GLORIA ADU-DARKO

(10341955)

THIS THESIS IS SUBMITTED TO THE UNIVERSITY OF GHANA,

LEGON IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR

THE AWARD OF MPHIL MARKETING DEGREE.

JUNE, 2017

University of Ghana http://ugspace.ug.edu.gh

i

DECLARATION I hereby declare that this study is the result of my own research and has not been presented by

anyone for any academic award in this or any other university. All references used in the work

have been duly acknowledged.

Thus, I am responsible for any shortcomings.

………………………………………….. …………………………..

GLORIA ADU-DARKO DATE

(10341955)


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CERTIFICATION

I hereby certify that this thesis was supervised in accordance with guidelines laid down by the

University of Ghana.

…………………………………………. …………………………..

DR. SAMUEL C. K. BUAME DATE

(SUPERVISOR)

…………………………………………. …………………………..

DR. KWAME ADOM DATE

(CO-SUPERVISOR)


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DEDICATION

I dedicate this thesis to God and my mum, Agnes Adu-Darko, for her endless support, prayers,

love, and care.


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ACKNOWLEDGEMENT

My profound gratitude goes to my supervisors, Dr Samuel C. K. Buame and Dr Kwame Adom,

for their constructive guidance, advice and valuable comments throughout the research process.

I also thank my parents, Mr and Mrs Adu-Darko, my aunt, Madam Rebecca Adjei, my brothers,

Mr. Nana Essilfie Adu-Darko and Mr. Samuel Offei Adu-Darko, and Mr David Adipah Yobo,

for their support, encouragement, and understanding throughout this work.

I also extend my appreciation to Mr. Shelter Teyi, Miss Bernice Ananga, Miss Aseda Mensah,

as well as all members of the Marketing Department and MARCOMMS (UGBS) for their

invaluable assistance and advice at various stages of this work.

My sincere thanks go to Miss Adjoa Vyllas Ocran and Miss Kendicta A-Ensonga Ajene for

their assistance in transcribing the data.

To my classmates, ‘brand managers’ (Deborah Dede Narh and Aseda Mensah), and my loyal

customers; you guys are just awesome. Thanks so much for making MPhil worthwhile.

Last but not the least, my profound gratitude goes to all the respondents who took time off their

busy schedule to participate in discussions and interviews and provided me with the necessary

information for this study.


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TABLE OF CONTENTS

DECLARATION ........................................................................................................................ i

CERTIFICATION ..................................................................................................................... ii

DEDICATION ......................................................................................................................... iii

ACKNOWLEDGEMENT ........................................................................................................ iv

TABLE OF CONTENTS .......................................................................................................... v

LIST OF TABLES ................................................................................................................. viii

LIST OF FIGURES .................................................................................................................. ix

LIST OF ABBREVIATIONS ................................................................................................... x

ABSTRACT ............................................................................................................................. xi

CHAPTER ONE ........................................................................................................................ 1

INTRODUCTION ..................................................................................................................... 1

1.0 Introduction ...................................................................................................................... 1

1.1 Background of the Study ................................................................................................. 1

1.2 Research Gap and Problem Statement ............................................................................. 3

1.3 Research Purpose ............................................................................................................. 6

1.4 Research Objectives ......................................................................................................... 7

1.5 Significance of the Study ................................................................................................. 7

1.6 Scope of the Study ........................................................................................................... 8

1.7 Chapter Disposition ......................................................................................................... 8

CHAPTER TWO ..................................................................................................................... 10

LITERATURE REVIEW ........................................................................................................ 10

2.0 Introduction .................................................................................................................... 10

2.1 Evolution and definition of Entrepreneurship ............................................................... 10

2.2 Types of Entrepreneurship ............................................................................................. 13

2.3 Types of Entrepreneurs .................................................................................................. 15

2.4 Schools of Thoughts in Entrepreneurship ...................................................................... 17

2.4.1 The Classical School ............................................................................................... 17

2.4.2 The ‘Great Persons’ School .................................................................................... 18

2.4.3 The Intrapreneurship School ................................................................................... 18

2.4.4 The Psychological School ....................................................................................... 19

2.4.5 The Management School ......................................................................................... 19

2.4.6 The Leadership School ............................................................................................ 20

2.5 Leadership ...................................................................................................................... 20

2.6 Entrepreneurial Leadership ............................................................................................ 23

2.7 The five attributes of Entrepreneurial Leadership ......................................................... 25

2.7.1 Innovativeness ......................................................................................................... 26

2.7.2 Proactiveness ........................................................................................................... 30

2.7.3 Risk-taking .............................................................................................................. 32

2.7.4 Visionary ................................................................................................................. 35

2.7.5 Motivating ............................................................................................................... 35

2.8 Entrepreneurial Leadership and SME Growth ............................................................... 36

2.9 Theoretical Review- Human Capital of the Entrepreneur ............................................. 37


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CHAPTER THREE ................................................................................................................. 38

CONTEXT OF STUDY .......................................................................................................... 38

3.0 Introduction .................................................................................................................... 38

3.1 Country Profile .............................................................................................................. 38

3.2 The History and Development of SMEs in Ghana ........................................................ 39

3.3 Concept of SMEs ........................................................................................................... 41

3.4 Ghanaian Understanding of SMEs ................................................................................ 43

3.5 Structure/Nature/Characteristics of SMEs ..................................................................... 44

3.6 Importance of SMEs ...................................................................................................... 47

3.7 Factors influencing the growth of SMEs ....................................................................... 48

3.8 Supporting, Facilitating and Regulatory Agencies of SMEs in Ghana ......................... 52

3.9 Overview of selected firms ............................................................................................ 54

3.9.1 Kama Health Services Limited (now known as Mikkado Holdings) ..................... 54

3.9.2 Forever Clair Beauty Clinic .................................................................................... 56

3.9.3 DAASCO Group ..................................................................................................... 57

3.9.4 Jandel Limited ......................................................................................................... 58

CHAPTER FOUR ................................................................................................................... 60

METHODOLOGY .................................................................................................................. 60

4.0 Introduction .................................................................................................................... 60

4.1 The Research Onion ....................................................................................................... 60

4.2 Research Philosophy underpinning the study ................................................................ 62

4.3 Research Approach ........................................................................................................ 65

4.4 Research Design ............................................................................................................ 66

4.5 Research Strategy .......................................................................................................... 69

4.6 Choice of Research Method ........................................................................................... 73

4.7 Types of data .................................................................................................................. 75

4.8 Population and Sampling ............................................................................................... 76

4.9 Data Collection Instrument ............................................................................................ 80

4.10 Data Analysis ............................................................................................................... 82

4.11 Time Horizon of the study ........................................................................................... 83

4.12 Validity and Argument Reliability .............................................................................. 84

4.13 Ethical Considerations ................................................................................................. 84

CHAPTER FIVE ..................................................................................................................... 86

DATA ANALYSIS AND DISCUSSION OF FINDINGS ..................................................... 86

5.0 Introduction .................................................................................................................... 86

5.1 Presentation of findings ................................................................................................. 86

Table 5.1.1 Characteristics of the Respondents ............................................................... 86

5.1.2 Understanding entrepreneurial leadership ............................................................... 88

5.1.2.1 Description of an Entrepreneurial leader ............................................................. 89

5.1.2.2 Innovativeness ...................................................................................................... 91

5.1.2.3 Proactiveness ........................................................................................................ 92

5.1.2.4 Risk-taking ........................................................................................................... 93

5.1.2.5 Visionary .............................................................................................................. 94

5.1.2.6 Influencer/Motivator ............................................................................................ 94

5.1.2.7 Instances that make respondents believe that they are entrepreneurial leaders ... 95


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5.2 Human Capital of an entrepreneur and SME growth..................................................... 99

5.3 Challenges of Entrepreneurial Leadership ................................................................... 101

5.3.1 Managing Challenges of Entrepreneurial Leaders ................................................ 104

5.4 Effect(s) of Entrepreneurial leadership on SME growth ............................................. 106

5.4.1 Number of employees (loyal) ................................................................................ 106

5.4.2 Number of Subsidiaries and branches ................................................................... 108

5.4.3 Assets and finances ............................................................................................... 110

5.4.4 Market Share ......................................................................................................... 111

5.5 Other findings .............................................................................................................. 112

5.5.1 Supernatural Being supporting growth ................................................................. 112

5.5.2 Gender and SME growth ....................................................................................... 113

5.5.3 Government support .............................................................................................. 113

5.5.4 Reasons why Ghanaian SMEs hardly grow into large firms ................................ 115

5.6 A Summary of the Cross-Case Analysis in relation to the objectives of the study ..... 117

5.7 Discussion of Findings ................................................................................................. 118

5.7.1 Understanding Entrepreneurial leadership (Objective 1) ...................................... 118

5.7.2 The role of Human Capital in achieving SME growth (Objective 2) ................... 119

5.7.3 Challenges of entrepreneurial leaders (Objective 3) ............................................. 120

5.7.4 Entrepreneurial Leadership and SME growth (Objective 4) ................................. 122

5.7.5 Gender and SME growth ....................................................................................... 123

5.7.6 Government support .............................................................................................. 123

5.7.7 Factors affecting SME growth .............................................................................. 124

CHAPTER SIX ..................................................................................................................... 125

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ......................................... 125

6.0 Introduction .................................................................................................................. 125

6.1 Summary of the study .................................................................................................. 125

6.2 Summary of Major findings ......................................................................................... 126

6.2.1 Understanding entrepreneurial leadership (Objective 1) ...................................... 126

6.2.2 The role of Human Capital (Objective 2) ............................................................. 126

6.2.3 Challenges of entrepreneurial leadership (Objective 3) ........................................ 127

6.2.4 The effects of entrepreneurial leadership (Objective 4) ........................................ 127

6.2.5 Other notable finding ............................................................................................ 127

6.3 Conclusions .................................................................................................................. 128

6.4 Recommendations ........................................................................................................ 128

6.5 Limitations and Suggestions for future research ......................................................... 129

REFERENCES ...................................................................................................................... 131

APPENDICES ....................................................................................................................... 156

APPENDIX 1: INTERVIEW GUIDE ............................................................................... 156

APPENDIX 2: EXCERPT OF RESPONDENT 4 (CASE AJ’s) INTERVIEW ............... 157

EXHIBIT 1: PHOTO OF RESPONDENT 1’s AWARDS ................................................ 158

EXHIBIT 2: PHOTO OF RESPONDENT 2’s AWARDS ................................................ 159


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LIST OF TABLES

Table 2.1: Transformational and Transactional Leadership .................................................... 23

Table 2.2: Some other EL Definitions ..................................................................................... 24

Table 5.1.1: Characteristics of the Respondents ..................................................................... 87

Table 5.3.1: Early Stages Challenges and current challenges of MK ................................... 101

Table 5.3.2: Early Stages Challenges and current challenges of GC .................................... 101

Table 5.3.3: Early Stages Challenges and current challenges of DA .................................... 102

Table 5.3.4: Early Stages Challenges and current challenges of AJ ..................................... 102


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LIST OF FIGURES

Figure 4.1: Research Onion for the study ................................................................................ 61


x

LIST OF ABBREVIATIONS

AGI Association of Ghanaian Industries

EL Entrepreneurial Leadership

EU European Union

GDP Gross Domestic Product

GH¢ Ghana Cedi

GIPC Ghana Investment Promotion Centre

MOTI Ministry of Trade and Industry

NBSSI National Board for Small Scale Industries

OECD Organisation for Economic Co-operation and Development

SMEs Small and Medium Enterprises

UN United Nations


xi

ABSTRACT

The development of entrepreneurship and SMEs have greatly contributed to the economic

development in many countries all over the world. This is as a result of entrepreneurial

activities which provide employment, revenue for both government and citizenry, as well as

serve as an avenue for innovation. The SME sector is the most dominant form of business in

Ghana. In spite of the economic importance of entrepreneurship and SMEs in Ghana, their

growth is hindered by several factors. These growth-hindering factors will not be challenging

if entrepreneurs exhibit entrepreneurial leadership qualities, which include; innovativeness,

proactiveness, risk-taking, visionary, and the ability to motivate employees. In view of that,

this study seeks to investigate the relationship between entrepreneurial leadership and SME

growth in Ghana.

Data is collected from a sample of transformational entrepreneurs through face-face in-depth

interviews and analysed thematically. The findings of the study suggests that Ghanaian

transformational entrepreneurs are entrepreneurial leaders because they exhibit traits such as

innovativeness, proactiveness, risk-taking propensity, visionary and ability to motivate

employees; and this turn leads to tremendous growth in SMEs. Also, entrepreneurial leaders

invest in their human capital inputs which facilitate the firm growth in terms of the number of

employees, subsidiaries, and assets as well as profitability. The study recommends that

entrepreneurs of small businesses need to exhibit entrepreneurial leadership traits as well as

invest in their human capital as it will help fast-track the growth process of SMEs. Future

researchers can investigate quantitatively in order to provide a more accurate generalisation of

the findings.


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CHAPTER ONE

INTRODUCTION

1.0 Introduction

This chapter provides a synopsis of what this study entails. The study seeks to explore the link

between entrepreneurial leadership and SME growth; while looking at the role of human capital

in achieving growth. Thus, the chapter includes; background of the study, research problem

and gap in literature, purpose of the study, research objectives, research questions, significance

and scope of the study, proposed methodology, and chapter disposition.

1.1 Background of the Study

It is an undisputed fact that the development of entrepreneurship and SMEs activities have

significantly contributed to the economic development of both developed and developing

countries around the globe (Calza & Goedhuys, 2016; McCann & Ortega-Argilés, 2016;

Karadag, 2015; Feldman, 2014; Abor & Quartey, 2010). This can be attributed to the various

roles that entrepreneurs play within their firms; serving as opinion leaders in their industries

and the economy as a whole. They significantly reduce unemployment rates, create revenue

for both the government and the populace, as well as serve as an avenue for innovation, hence

being classified as catalyst for economic growth (Taiwo, Falohun & Agwu, 2016; Imeokparia

& Ediagbonya, 2014; Cuckovic & Bartlett, 2007; Abor & Biekpe, 2005; Mensah, 2004). In this

vein, entrepreneurs have been described as change agents (Buame, 2012), innovators

(Nambisan & Baron, 2013), paradigm pioneers, and visionaries (Waddock & Steckler, 2016).

Contextually, the most dominant form of business in Ghana is found in the SME sector

(representing 92% of businesses in the economy), contributing about 70% to Ghana’s GDP,

and 49% to employment (Abor & Quartey, 2010). In addition, Aryeetey (2001) proffers that


2

these firms provide export and tax revenues and approximately 85% of employment in the

manufacturing sector. Furthermore, Frimpong (2013) added that SMEs pay a regular

contribution to the socio economic development of Ghana by providing basic goods and

services, as well as creating jobs. Thus, SMEs have been labelled as the seedbed for indigenous

entrepreneurship (Aryeetey & Ahene, 2004); meaning, SMEs have provided a podium for

homegrown private enterprises to spring in areas and industries that was generally ignored. A

combination of these investments has given rise to indigenous entrepreneurship in Ghana.

Although the economic importance of SMEs cannot be overlooked, they are inhibited by

numerous challenges that impede their growth. Research in the Ghanaian context, has shown

that SMEs encounter numerous problems most notably, inadequate financing (Oppong,

Owiredu & Churchill, 2014; Abor & Biekpe, 2007; Tagoe, Nyarko, & Anuwa-Amarh, 2005),

inapt management skills, inadequate marketing skills, and unfavorable government policies

(Buame, 2012) among others. These challenges stifle the growth of SMEs in Ghana, thus, their

contribution to Ghana’s GDP continues to reduce (Frimpong, 2013; cited in Ab Rahman, &

Ramli, 2014). SMEs are also confronted with changes in the environment, as well as

competition from both domestic and global peninsula; hence, it is therefore required that the

revitalisation for growth is understood by the leadership of SMEs (Saeed & Ibrahim, 2016).

Some scholars are of the view that the aforementioned challenges will not be as problematic if

SME owners lead with entrepreneurial leadership style (Cogliser & Brigham, 2004; Bryant,

2004; Arham, Boucher & Muenjohn, 2013). For example, Kassim and Sulaiman (2011) posited

that, to guarantee the growth and survival of SMEs, it is important to understand the leadership

activities of entrepreneurs.

The term entrepreneurial leadership was coined in the year 2000 by McGrath and MacMillan

who recommended that a new type of leader is required in today’s dynamic markets where


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uncertainty and competitive pressure is on the rise. They labeled this leader the “entrepreneurial

leader”, this is because it takes the leader with the “entrepreneurial” attitude to take advantage

of the opportunities that arise in these fast changing markets or situations in order to gain

competitive advantage for their organisation faster than others. Entrepreneurial leadership as

explained by some scholars such as, Kuratko (2007), Ireland, Hitt, and Sirmon (2003) and

Vecchio (2003), “entails the ability to influence others to manage resources strategically in

order to emphasize both opportunity-seeking and advantage-seeking behaviors”.

Ireland and Webb (2007) noted that ventures that are spearheaded by entrepreneurial leaders

gain competitive advantage, because they are innovative and proactive, and so enjoy first

mover advantages. Also, entrepreneurial leaders are regularly inspired by their employees,

hence, it is easier to instill ethical behaviors in them (Kuratko, Goldsby & Hornsby, 2004). For

this reason, entrepreneurial leadership has become very crucial for businesses to stay above the

waters of intense competition and survive (Kuratko, 2007). Hayton (2003) however postulates

that the extent to which an entrepreneur effectively and efficiently demonstrates these

leadership behaviours depend on the amount of human capital that he/she possesses. Therefore

this study seeks to explore entrepreneurial leadership and its effect(s) on the growth of

Ghanaian SMEs, as well as the role human capital plays in achieving this growth.

1.2 Research Gap and Problem Statement

The efficacy of programs meant to grow SMEs rest on in-depth comprehension of the

entrepreneur’s personal characteristics as well as his/her leadership qualities (Kuratko &

Hodgetts, 2001). Frese and de Kruif (2000) noted that indeed, the survival and growth of SMEs

largely depends on the entrepreneur since the major decisions of the firm are taken by the

entrepreneur. Thus, in his/her absence, the business remains at a standstill. Hall (1995) and

Shane (2007) observed that the major difference that exists among various SMEs can be


4

explained by the distinct entrepreneur and the leadership style exhibited (Ling, Simsek,

Lubatkin & Veiga, 2008). Though the leadership style of entrepreneurs is important to the

success of a small business (Valdiserri & Wilson, 2010), researchers noted that an

understanding of their leadership behaviours is still lacking (Hernez-Broome & Hughes, 2004;

Renko, El Tarabishy, Carsrud, & Brännback, 2015; Wright, Roper, Hart, & Carter, 2015).

Again, although the subject of leadership has been examined in the literature, Mohd Sam et al.

(2012) hold that in practice, knowledge about leadership and its impact on organisational

performance is still deficient. It is therefore important for entrepreneurs to cultivate their

leadership skills in order to see their firms through good and bad times (Mohd Sam et al., 2012).

Arham et al. (2013) also suggest that entrepreneurs are needed to develop solid leadership

behaviours in order to manage their firms irrespective of the season. They added that even in

times of crisis, apt leadership of the enterprise would help employees to remain focused and be

motivated. Hence, one of the driving forces for SMEs successes in the future relies heavily on

a development of good leadership (Abdul Razak, 2010). This is critical because Davies et al.

(2002) suggest that some of the primary factors that result in the failure of SMEs are inadequate

leadership and management skills. Moreover, Eggers and Leahy (1995) believed that skills

such as motivation of others, financial management, communication, vision, and self-

motivation, which fall under leadership, play crucial roles in determining how quickly a small

business would grow. Therefore, even though enterprises automatically call for

entrepreneurship, the leadership style that exists within the organization, is the vital ingredient

required for a successful enterprise (Arham et al., 2013).

Furthermore, other researches have highlighted that leadership style is critical to the success of

a small business (Valdiserri & Wilson, 2010), and that leaders of small businesses need to

develop a better understanding of leadership in order to realize their organisational goals and


5

objectives (Hernez-broome & Hughes, 2004). For instance, Valdiserri and Wilson (2010), who

studied 48 small businesses in and the US, discovered that the type of leadership behavior of

the leader, whether they were transactional or transformational, affected the profitability and

success of small businesses.

Methodologically, a number of studies have quantitatively looked at the reasons for failures as

well as the critical success factors among SMEs. The findings of these studies (Hung, Effendi,

Talib & Rani, 2010; Beaver, 2003; Ghosh, Liang, Meng, & Chan, 2001; Perry, 2001) have

been deliberated broadly. Over the years, various studies have identified the critical success

factors and the reasons for failures among SMEs and the findings of these studies have been

discussed broadly. Nonetheless, these factors for SMEs success/failures have been studied

quantitatively, thus, Arham, Boucher and Muenjohn (2013) calls for a qualitative perspective

on the characteristics of entrepreneurial leadership since it is still lacking.

This study also responds to Kassim and Sulaiman’s study in 2010 which recommend that an

understanding of leadership behaviours of entrepreneurs should be explored in other

geographical regions. Thus, a close scrutiny of studies on SME growth in Ghana suggest that

the growth of SMEs is significantly affected by some barriers due to certain external factors

and firm characteristics (Yeboah, 2015; Obeng, Robson, & Haugh, 2014; Mahmoud, 2010;

Kayanula & Quartey, 2000). Specifically, these studies have focused on examining the role of

government (Kim, 2011), financial institutions (Anane, Cobbinah, & Manu, 2013), policy

environment (Kayanula & Quartey, 2000), political and socio-cultural environment (Kheni,

Dainty & Gibb, 2007), technological infrastructure (Owusu-Frimpong & Mmieh, 2007) and

market orientation (Mahmoud, 2010); while very few studies have considered the internal

factor (i.e. leadership) and its impact on SME growth. Kheni et al. (2007) also postulate that

the performance of SMEs is still not commanding though some of the factors addressed in


6

previous studies have improved over the years. There is, therefore, the need to study the growth

of SMEs from a different perspective. Hence, this research seeks to fill the three gaps, namely;

issue, methodological and contextual gaps by exploring entrepreneurial leadership and whether

or not it influences the growth of SMEs in Ghana.

Some researchers have also identified a general problem stating that SMEs are stagnated in

their business operations and not growing as expected (Kwaning, Nyantakyi & Kyereh, 2015;

Yeboah, 2015; Manu, 1998). This could account for the reason why most SMEs do not progress

into large businesses as observed by Villars (2006). Interestingly, the government and non-

governmental institutions has deployed support programs to promote and sustain their

development. It has however been worrisome that in spite of all the support from government

and non-governmental institutions, Ghanaian SMEs are not growing as required and their

contribution to GDP is gradually dwindling (Frimpong, 2013).

It is therefore uncertain is whether or not SMEs are beneficiaries of governmental and non-

governmental support remains unclear. It is also uncertain what is actually causing SMEs

stagnation, and if leadership affects SMEs growth. These remain investable issues the

researcher deems fit. Therefore, the study seeks to explore entrepreneurial leadership and its

effect on SME growth. To this end, an empirical study exploring how Ghanaian SMEs

understand the concept of entrepreneurial leadership, the role of human capital in achieving

SME growth, the challenges faced by entrepreneurial leaders in achieving SME growth, and

the effect(s) of entrepreneurial leadership on SME growth constitute the focus of the study.

1.3 Research Purpose

The purpose of this research, therefore, is to understand (through the following research

objectives), the relationship between entrepreneurial leadership and SME growth, by drawing

lessons from transformational entrepreneurs in Ghana.


7

1.4 Research Objectives

This thesis seeks to achieve the following objectives:

I. To explore how Ghanaian entrepreneurs understand the concept of entrepreneurial

leadership.

II. To examine the role of human capital in achieving SME growth.

III. To identify the challenges faced by entrepreneurial leaders in achieving SME growth.

IV. To evaluate the effect(s) of entrepreneurial leadership on SME growth.

1.5 Significance of the Study

This research explores entrepreneurial leadership, the challenges associated with it, the role of

human capital and the effect(s) of entrepreneurial leadership on SME growth; hence its

importance from a developing country’s perspective. According to Boateng (2014), the

significance of any research can be viewed along research, practice and policy strands. Hence,

the significance of this study is divided in relation to the three strands stated above.

In relation to academia, this research seeks to contribute toward extant literature on

entrepreneurial leadership, and narrowly complements the discourse about the understanding

of entrepreneurial leadership and SME growth from a Ghanaian perspective. It also tries to fill

the ambiguities in the literature by providing a detailed understanding of entrepreneurial

leadership and SME growth in Ghana; and also serve as a basis for future research; since gaps

for future research will be identified.

Also, the findings of this study is an eye-opener for Ghanaian entrepreneurs as it enables them

appreciate the importance of entrepreneurial leadership and human capital in achieving SME

growth, and also serve as a blueprint for Ghanaian entrepreneurs and SMEs in general.


8

This study also enables policy makers develop strategies that will encourage Ghanaian

entrepreneurs to invest in human capital and also adopt entrepreneurial leadership behaviours

among Ghanaian SMEs.

1.6 Scope of the Study

The study revolves around the concept of entrepreneurial leadership in Ghana with emphasis

on transformational entrepreneurs in the Greater Accra Region. This is because some of these

enterprises operated by transformational entrepreneurs are found in the region, and the

researcher can easily access them. Although entrepreneurial leadership is not limited to

business owners, the study will concentrate on (business) owners of ‘transformed’ SMEs in

Ghana. This will enable the researcher understand the growth process of these enterprises and

ascertain whether entrepreneurial leadership has a part to play. The researcher aims to also

glean some lessons (if any) for Ghanaian SMEs to adopt in order to accelerate their growth

process.

1.7 Chapter Disposition

This study will be organized into six chapters. The first chapter provides a synopsis of the

research. It gives a brief study background, problem statement, goal of the study, research

objectives, and questions, significance and scope of the research, limitations of the study and

the chapter synopsis of the research.

Chapter two focuses on a review of relevant literature including areas such as; the overview of

entrepreneurship and leadership, entrepreneurial leadership and its attributes, and the human

capital (theory) of an entrepreneur.


9

Chapter three entails the context of study which covers the brief overview of Ghana, the history

of SMEs in Ghana, its definition, importance and challenges that affect SME growth in Ghana.

Also, an overview of the firms led by entrepreneurial leaders is provided in this chapter.

Chapter four provides the outline of the methodology used in this study. These include the

research approach, research design, research strategy, research method, data collection,

analysis tools and techniques.

Chapter five entails the data analysis, findings and discussion of the study.

Chapter six being the last chapter of the study, encapsulates a summary of research findings,

conclusions, as well as r3ecommend suggestions for future research. References, appendices

and exhibits follow this chapter.


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CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter examines relevant literature in the area of entrepreneurial leadership. It further

provides an understanding of the concept and its related issues, as well as explore its

relationship with SME growth.

2.1 Evolution and definition of Entrepreneurship

Entrepreneurship is the new trend that constantly transforms the environment within which

businesses operates. According to Veeraraghavan (2009), the word “entrepreneurship”

originates from the French verb, “entreprendre”, and the German word “unternehmen”, both

meaning to “undertake”. Buame (2012) explains that in prehistoric times, an entrepreneur

referred to an intermediary who established trade routes between a manufacturer and the final

consumer. An example of an entrepreneur in that era was individuals like Marco Polo. By the

Middle Ages, however, the term entrepreneur evolved to describe a person or actor who was

in charge of large production projects. Ironically, this understanding of an entrepreneur did not

include the need to take risks. Instead, the entrepreneur had to manage the project with the

available resources that the government provided. In that time, entrepreneurs were responsible

for large production projects including the construction of cathedrals, castles, public buildings,

among others (Buame, 2012). In the 17th century, however, risk was linked to entrepreneurship,

because Richard Cantillon (a renowned economist) observed that sole proprietors “buy at a

certain price and sell at an uncertain price, thus operating at a risk.” He, therefore, concluded

that entrepreneurs are risk-takers because the uncertain price at which the sole proprietors may

sell the goods may result in either a profit or loss.


11

The global industrialisation in the 18th century necessitated a clarification on the distinction

between an entrepreneur and a venture capitalist. The entrepreneur is the person in need of

capital, and the venture capitalist is the capital provider. Thomas Edison and Eli Whitney are

examples of entrepreneurs at the time. According to Buame (2012; p.18), “a venture capitalist

is a professional money manager who makes risks investments from a pool of equity capital to

obtain a high rate of return on the investments.” Other scholars are also of the view that there

is a distinction between small business owners and entrepreneurs. They argued that the

distinguishing feature is; entrepreneurs were risk-takers, innovative and change-oriented as

well as preserved higher achievement motivation. On the other hand, small business owners

were indifferent about innovation; however, their primary concern was accruing income for

their basic requirements (Garland, Hoy, Boulton & Garand, 1984; Steward, Watson, Carland

& Carland, 1998). This assertion is confirmed by Quaye and Acheampong (2013), who assert

that those who set up SMEs in Ghana are not innovative, hence they should be referred to as

‘owner-managers’ and not ‘entrepreneurs’.

In the 19th and 20th centuries, it was established that the entrepreneur is an innovator.

Entrepreneurship by then was identified as the process where an individual or a group of

individuals referred to as “entrepreneurs” carried out new combinations referred to as

“enterprise” (Schumpeter, 1942). Schumpeter (1942) posited that an entrepreneur is anyone

who introduces something new to the economy. Such new things may be in the form of

products, markets, different methods of production, diverse sources of supply/raw material,

different ways of management, or innovative ideas (Buame, 2012; Schumpeter, 1942).

Similarly, Drucker (1970) also acknowledged ‘entrepreneurship’ as a change orienting activity

which indicates that entrepreneurship is an iterative process made up of undertakings, right

from the inception of a new business, organization, or activity. An entrepreneur is, therefore,

anyone who actually looks for change, reacts to it, and takes advantage of change as an


12

opportunity. For this reason, proactiveness is one attribute of an entrepreneur. Thus, for an

activity to be classified as entrepreneurial, it must be characterised by proactiveness (i.e.

undertaking profitable new business ventures), risk taking, as well as innovation (National

Knowledge Commission, 2008).

Similarly, Bygrave and Hofer (1991) defined entrepreneurship as a process that encompasses

all the activities, functions, and actions related to the perception of pursuing opportunities and

creating novel organizations (Bygrave & Hofer, 1991). In its simplest form, entrepreneurship

is explained by Johnson (2001, p. 138) to “involve capturing ideas, converting them into

products and, or services and then building a venture to take the product to market”.

It is evident from the above paragraphs that there has been much evolution in the meaning of

the term ‘entrepreneurship’, and even currently, there remains little agreement on the definition

of entrepreneurship. Buame (2012) posits that there are disparities in the definition of

entrepreneurship largely because entrepreneurship is widespread and covers a number of

disciplines. To the sociologist, entrepreneurship is the process of generating income from

property and other personal assets; while to the psychologist, entrepreneurship is the situation

where an individual asserts his/her independence and has control over his/her life (i.e. own

locus of control). In management, entrepreneurship is seen as an organising process where

existing resources are re-organised to achieve a predetermined goal, among others. Other

scholars have also proposed that entrepreneurship can be defined depending on the context in

which it is practised (Hansemark, 1998; Siegel & Renko, 2012).

Thus, for this research, the study adopts Buame’s (2012) definition of entrepreneurship because

it encapsulates all the core elements that describe entrepreneurship irrespective of the form it

takes. He defined entrepreneurship as “an innovative process where a prospective individual


13

(or a group of individuals) identifies and seizes opportunity (be it an idea, or business);

organises existing resources to convert those opportunities into workable/marketable products

or services; thus by adding value through time, efforts, money, or skills for the benefit of

society; assumes the risks of the competitive marketplace to implement these ideas; and realises

the rewards from these efforts” (Buame, 2012; p. 31).

2.2 Types of Entrepreneurship

There are several types of entrepreneurship, which various scholars’ group under different

headings. For instance, Veeraraghavan (2009) labelled them as “Opportunity-based

entrepreneurship’ and “Necessity-based entrepreneurship”. The situation whereby an

entrepreneur perceives a viable business prospect and decides to practice it as an established

profession is referred to as opportunity based entrepreneurship. On the other hand, the necessity

based entrepreneurship describes a situation in which an entrepreneur is forced to engage in

entrepreneurship because there is lack of viable choices to make a living of them

(Veeraraghavan, 2009). In this instance, the entrepreneur chooses entrepreneurship as a career

against his/her will because there is no other choice left. In spite of the above classification of

entrepreneurship, Veeraraghavan (2009) realized that a new type of entrepreneurship is

springing up. He noted that this type of entrepreneurship is pursued by people who want to be

independent as a result of dissatisfaction from working for others (probably due to lower

income earning or negative work experiences). Such individuals become entrepreneurs because

they are more likely to bear the uncertainty that typifies new ventures.

Again, Aulet and Murray (2013) also classified entrepreneurship into innovation-driven

entrepreneurship and small business entrepreneurship. Innovation-driven entrepreneurship is

the term that explains the process of creating and delivering state-of-the-art innovations to

customers. The innovations mean ideas (either in the technical, market, or business model


14

domain) that are entirely new to the world and have a clear competitive advantage as well as

high growth potential. The enterprises that take advantage of international opportunities are

known as “innovation-driven enterprises” (IDEs) (Aulet & Murray, 2013). They further explain

that being innovation driven is very important since it highlights the need to create competitive

advantage, which the entrepreneur can achieve by doing “new combinations” (Schumpeter,

1934). That is, an entrepreneur has to do something unique by adding value to the already

existing resources (Aulet & Murray, 2013). The term “innovation-driven” is preferred over

“technology-driven” entrepreneurship because innovation is not limited to technology, though

enabled by it. Innovation comes in diverse forms encompassing technology, business models,

processes, and mPidegree (from Ghana), among others (Aulet & Murray, 2013). Some of the

most exciting innovations in this era include Google, Netflix, iTunes, Zipcar, among others.

These innovations are primarily, business model innovations.

The second type of entrepreneurship is the small business entrepreneurship. Aulet and Murray

(2013) explain that this type of entrepreneurship creates “small and medium enterprises”

(SMEs). These enterprises normally run long-established business ideas, face limited

competitive advantage, and usually serve the domestic markets. Thus, the prosperity of the

entrepreneur (operating an SME) depends on his/her business acumen, his/her ability to execute

a project, and the current local demand, however, (s)he is not confronted by the multifaceted

set of risks (i.e. technical, market, and business) that face the innovation driven entrepreneur.

As mentioned earlier, SMEs are the lifeblood of many economies (Aulet & Murray, 2012). In

the United States, for instance, self-employment and SME creation are the necessary ways of

moving people out of unemployment in hard times. SMEs also form majority of employment

in Spain. SMEs are particularly suitable for individuals with relatively low levels of education

and skills, although these enterprises also can generate (few) jobs for skilled professionals. In


15

a period where employees are laid off, SMEs offer these workers the opportunity to work and

exploit their skills independently.

Aulet and Murray (2013) postulate that in Europe, SMEs provide employment for the founder,

spouse and an average of four employees (who are normally family members). Comparing

SMEs to either large established firms or Innovation-Driven Enterprises, SMEs provide below-

the-average wages and poor benefits. Although “small businesses” are not essentially work

manufacturers (Aulet & Murray, 2012), Stangler and Litan (2009) reports that according to the

Kauffman Foundation, the American economy (between 1980 and 2005) realized that majority

of the 40 million net new jobs were created by companies not older than five years old (new

companies).

2.3 Types of Entrepreneurs

Schoar (2010) identified two different groups of entrepreneurs; i.e. subsistence entrepreneurs

and transformational entrepreneurs.

Subsistence Entrepreneurs

Subsistence entrepreneurs are people who turn out to be entrepreneurs as a way of providing

subsistence income i.e. income that can sustain them for a period of time. Gamberoni, Heath

and Nix (2013) also define subsistence entrepreneurs as those who turn to self-employment

solely to provide income that will sustain themselves and their families. In most developing

countries (such as India, China, as well as many African countries, of which Ghana is no

exception) almost all the entrepreneurs are subsistence entrepreneurs. They are characterized

by running small operations that neither evolve into large companies nor provide job

opportunities for extra people in the economy (Schoar, 2010). At best, subsistence

entrepreneurs simply provide alternative work opportunities for themselves and possibly, their


16

family members (Schoar, 2010; Decker, Haltiwanger, Jarmin & Miranda, 2014). This claim is

confirmed when Hurst and Pugsley (2011) found that in the US economy, a lot of young and

small business owners’ motivation for starting business was for non-monetary reasons such as

time flexibility or personal goals, and therefore have no aspirations for high growth. Gamberoni

et al., (2013) adds that these entrepreneurs choose to be independent owing to lack of wage

jobs or lack of skills necessary for wage jobs.

Transformational Entrepreneurs

Transformational entrepreneurs, on the other hand, are those entrepreneurs, whose ambition is

to create large, vibrant businesses that develop faster and further than the scope of a person’s

subsistence needs, thus providing jobs and income for others (Schoar, 2010). These

entrepreneurs establish businesses with the goal and ability to grow and create jobs for others

(Gamberoni et al., 2013). Though transformational entrepreneurs start small businesses like

their counterparts, have the intention of innovating and growing, in order to create work for

other people and introducing additional value into the economic system. Because they are

scarce and uncommon, investors and policy makers in an economy often have a hard time

identifying transformational entrepreneurs (Decker et al, 2014). They explain that

transformational entrepreneurs build large companies so that it will develop rapidly if put in a

benign environment. Thus, in the competitive marketplace, only a fraction of these

transformational entrepreneurs succeed and grow to their full potential (Schoar, 2010).

In addition, transformational entrepreneurs also create jobs for others through their expansion

processes and are therefore regarded by Decker et al. (2014) as the “true engines” of economic

growth in any nation. Hence, when discussing the importance of entrepreneurs in employment

creation and productivity growth, the emphasis lies on transformational entrepreneurs and not

merely subsistence entrepreneurs (Schoar, 2010).


17

Ghana suffers a lot from increasing unemployment rate, and since transformational

entrepreneurs are the “true engines” of economic growth (Decker et al., 2014), it is expedient

to understand Ghanaian transformational entrepreneurs as this research seeks to draw lessons

from them to help the majority of subsistence entrepreneurs in Ghana grow beyond what they

intended.

2.4 Schools of Thoughts in Entrepreneurship

Though there is a growing and intense interest in entrepreneurship, there are a number of

inconsistencies in defining entrepreneurs and entrepreneurship due to the differences in

people’s ideologies and schools of thought. Entrepreneurship has been classified into six

possible schools of thought by Cunningham and Lischeron (1991), who posit that the concept

may be classified as follows: classical school, great persons’ school, intrapreneurship school,

psychological school, management school, and leadership school of thought. These schools of

thought cement the argument that there is a lack of consensus on who actually an entrepreneur

is, and what s/he does.

2.4.1 The Classical School

The classical school of thought is believed to be the oldest school of thought in

entrepreneurship since it emerged in the 16th century. This school of thought believes that

people who take military risks or expeditions are entrepreneurs. The classical school of thought

further expands that these entrepreneurs are creative dreamers; i.e. people who can visualize

where they will be in some years to come (Buame, 2012). In other words, they are passionate

people who have dreams for change in the communities.


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2.4.2 The ‘Great Persons’ School

This school of thought seeks to answer the question “Are entrepreneurs (like leaders) born or

are they made?” As explained by Buame (2012), the debate in this school poses whether or not

an individual comes into the world carrying with the inborn natural ability to perform

entrepreneurially, or learn? According to the great persons’ school, an entrepreneur is a person

who has an intuitive ability (Zaman, 2013). This school believes that entrepreneurs have certain

traits or characteristics that naturally distinguish them from other people (Buame, 2012;

Garfield, 1986; Hughes, 1986; Silver, 1985). This is because their ideas, concepts and drives

are interesting, intriguing and thought-provoking.

2.4.3 The Intrapreneurship School

According to Zaman (2013), this school states that entrepreneurial abilities and skills can be

developed and harnessed in an organization. The intrapreneurship school is concerned about

operating within an existing organization and presenting fresh and innovative ideas, and

creating new units to develop new markets, products, and services. In other words, the

intrapreneurship school proposes that one does not need to start a new business to be an

entrepreneur; however, the qualities of an entrepreneur can be deployed in an existing firm to

bring about change in that organization. One aspect of intrapreneurial activity, therefore, is

being attentive to opportunities. Buame (2012) also noted that the intrapreneurship school

originated to address the dearth of innovativeness and competitiveness within firms. Thus,

innovativeness can be achieved when employees are encouraged to work as entrepreneurs in

semi-autonomous units. In addition, Buame (2012) noted that intrapreneurs need not own an

enterprise but rather possess discretionary freedom to function as entrepreneurs as well as

execute their ideas although not owners in themselves.


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2.4.4 The Psychological School

Sprouting from the psychology discipline (i.e. the study of human behaviour), the

psychological school of thought believes that certain factors drive people to undertake

entrepreneurial actions. These factors include individual needs, people’s drive for power and/or

recognition (Buame, 2012). Cunningham and Lischeron (1991) also claim that the

psychological school sees an entrepreneur as an individual who has some internal coerces that

guide him. The entrepreneur must therefore possess some distinctive values, attributes,

attitudes, and needs that will push him/her to act in a way that lives up to these values and

satisfies his/her needs. These values include honesty, uprightness, and being ethical and

dependable, among others.

2.4.5 The Management School

Cunningham and Lischeron (1991) propose that this school of thought view entrepreneurs as

organizers with an economic motive; they own and do organization, management and

assumption of all risks associated with their ventures. Again, the management school theorizes

that an entrepreneur is one “who organizes and manages a business undertaking, assuming the

risk for the sake of profit” (Websters, 1966). This school of thought is of the view that anyone

who manages or organizes a commercial enterprise and bears the risk can be defined as an

entrepreneur. John Stuart Mill also noted that the entrepreneur does not only take risks, but also

performs other functions such as supervision, control, and providing direction. Buame (2012)

also included other functions such as the development of business plans, analysis of

opportunities, attaining resources and working towards the organizational objectives and goals.

He further posits that in the management school, entrepreneurship is part of a system of cultured

activities that highlight the fundamental operations of a firm.


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2.4.6 The Leadership School

This school believes that entrepreneurs are leaders who rely on others to achieve organizational

goals and objectives. It also suggests that entrepreneurs are leaders who are able to identify and

recognize the needs of their subordinates and alter their style of leadership depending on the

requests of the people and the status quo (Zaman, 2013). Hence, an accomplished entrepreneur

should be an effective leader, a caring manager and/or mentor playing a significant role in

motivating, and leading people. It goes beyond personal traits and styles in relating with others;

in that, the entrepreneur’s role can be a central reference for change and indoctrinating values

and skills (i.e. preserving organizational intimacy, empowering people and developing a human

resource system). The leadership school, therefore, opines that entrepreneurs are natural

leaders, but it is essential to recognize that not all leaders are essentially entrepreneurs.

2.5 Leadership

The criticality of leadership in every economic, political, or organizational construct cannot be

overstated (Barrow, 1977; Fiedler, 1996). Research especially in the behavioral sciences on the

subject is therefore significantly comprehensive (Parris & Peachey, 2013), and its crucial role

in the success or failure of any organization is not to be taken for granted. Thus, it is very

important to understand the critical factor (i.e. leaders) that influences the success of an

organization. According to Northouse (2007), leadership can be defined as a process of

influencing people and guiding them to achieve organisational goals. Some scholars further

postulate that leadership is more of a skill that can be used to motivate followers in the

organization to work committedly towards identified goals (Barrow 1977; Parris & Peachey,

2013; Plsek & Wilson 2001; Cyert 2006).

As suggested by Jaiswal and Dhar (2015), a leader’s primary concern is to encourage creativity

among his workers in order to achieve innovative results. Additionally, he or she seeks to create


21

enthusiasm, especially by inspiring workers with a vision and thus providing all that they need

to achieve the most they possibly can (Chan, 2010). Again, scholars concur that a good leader

enhances the performance of the firm (Ogbanna & Harris, 2000; Tarabishy et al., 2005; Yang,

2009), and increases employees’ satisfaction and motivation (Papalexandris & Galanaki,

2009). Additionally, Banutu-Gomez and Banutu-Gomez (2007), and Kotter (2001) posit that

truly great leaders work around a vision in order to guide their organizations into new

directions, by creating a vision, articulating it to the followers, building a shared vision, and

finally, crafting a path to achieve the vision. According to Schneider (1987), the people within

an organisation are vital to building a successful organization. These include both the followers

as well as the leaders. Bass and Bass (2008) developed theories of leadership to help explain,

organize and simplify the complexity of the nature of leadership and its outcomes.

Valdiserri and Wilson (2010) discovered two kinds of leadership behaviours that contribute to

the profitability and success of small businesses (i.e. transactional and transformational).

Transactional leadership refers to the type of leadership where the leader performs his/her

duties within the boundaries of the organization and obeys the rules and regulations to the letter.

Also, transactional leaders place prominence on work standards and task-oriented aims (Burns,

1978). On the other hand, Eyal and Kark (2004) explain transformational leadership as a type

of leadership where the leader influences his followers by inspiring, empowering and coaching

them to improve their devotion, loyalty, excitement and enthusiasm. Gupta, MacMillan, and

Surie (2004) posit that transformational leadership has some similarities with entrepreneurial

leadership, since both emphasize the ability of a leader to have positive impact on motivation

and performance of subordinates.

A transactional leadership style tends to view an economic means of exchange as the

relationship between the leader and his followers (Tarabishy et al., 2005). Thus, that style of


22

leadership is based on the leader setting forth his expectations of his followers, and adjusting

reward or punishment dependent on how well employees measure up against the leaders’

expectations (Ensley, Pearce & Hmieleski, 2006). Such leaders adhere to existing rules and

regulations, and lay undue emphasis on work standards and task-oriented aims (Burns, 1978),

and seek to provide extrinsic motivation for the employees (Ensley et al., 2006).Transactional

leaders emphasize power authority and control, as they reach their goals rewarding or

punishing subordinates in the style of a transaction (Jogulu, 2010; Gupta et al., 2004). It also

resembles a transaction in that there is an underlying principle of exchange in which the leader

is the main player (Gupta et al., 2004), rather than an inspirational format for leadership.

On the other hand, however, transformational leadership seeks to motivate the followers so that

they work for inspirational goals and the organizational vision (Wofford & Goodwin, 1994),

attaining self-actualization by reinforcing their beliefs about themselves (Wang et al., 2012).

In other words, the leader is able to motivate subordinates to perform excellently by focusing

on their deeply-held personal values and intrinsic rather than extrinsic motivations (Gupta et

al., 2004). This perspective is an evolution from the transactional leadership approach, as

discussed above.

Researchers hold that, unlike the transactional approach, transformational leadership is

founded on four interrelated aspects: Idealized influence, Inspirational motivation, Intellectual

stimulation, and Individualized consideration (Avolio & Bass, 2004; Bass, 1985; Seltzer &

Bass, 1990; Chung-Wen, 2008). These encompass how the leader is able to provide a vision

and values for his subordinates, inspiring them to think creatively, and providing personal

attention to them in order to let them achieve the high levels of expectations from them (Bass,

1985; Seltzer & Bass, 1990; Matzler, Schwarz, Deutinger & Harms, 2008). Table 2.1

summarizes the distinction between transformational leadership and transactional leadership.


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Table 2.1: Transformational and Transactional Leadership

Characteristics Transformational Leadership Transactional Leadership

leaders gain compliance

by

inspiring, empowering and

coaching

exchange of rewards

appeals stimulate intrinsic motivation extrinsic motivation

appeals focus on organizational and “common

good” interests

self-interest

type of planned change major organizational changes routine changes

Table adopted from Hitt et al. (2005): 394.

Extant literature suggests that transformational leadership has some similarities with

entrepreneurial leadership, since both emphasize the ability of a leader to have positive impact

on motivation and performance of subordinates (Gupta et al. 2004). They, however, noted that

the entrepreneurial leaders’ ability to evoke followers’ performance is based on the

organization’s need to adapt the changing environment (ibid). Also, the main challenge for the

entrepreneurial leader is to create the willingness in followers and organizations to carry out

creative entrepreneurial actions rather than copy current conservative activities (Gupta et al.,

2004; Mokhber, Tan, Vakilbashi, Zamil, & Basiruddin, 2016).

2.6 Entrepreneurial Leadership

Entrepreneurial leadership is a term that was coined in 2000 by McGrath & MacMillan who

suggested that a unique type of leader is necessary for organizational success in increasingly

dynamic markets with so much uncertainty and pressure from the competition. The leader

required had to be an "entrepreneurial leader", who would be able to take advantage of fast-

changing markets and situations so as to gain a competitive edge in the market. Such leadership

entails the ability to influence others to strategically manage resources in order to seek both

opportunities and advantages for the firm (Ireland, Hitt, & Sirmon, 2003; Kuratko, 2007;

Vecchio, 2003). This definition draws insights both from entrepreneurship (Stevenson &

Jarrillo-Mossi, 1986) and leadership (Yukl, 2002). Wang, Tee & Ahmed (2012), explain further

that the definition projects entrepreneurship as a process which involves the desire and ability


24

to recognize and pursue an opportunity, while highlighting leadership as “the process of

influencing others to understand and agree about what needs to be done and how it can be done

effectively, and the process of facilitating individual and collective efforts to accomplish a

shared objective” (Yukl 2002, p. 3). Alternative definitions of entrepreneurial leadership have

been compiled in Table 2.2 below:

Table 2.2: Some other EL Definitions

Author(s) Year Entrepreneurial leadership definition

Gupta, MacMillan & Surie 2004 Leadership that creates visionary scenarios that

are used to assemble and mobilize a “supporting

cast” of participants who become committed by

the vision to the discovery and exploitation of

strategic value creation.

Thornberry 2006 Leadership requires passion, vision, focus, and

the ability to inspire others. Entrepreneurial

leadership requires all these, plus a mindset and

skill set that helps entrepreneurial leaders

identify, develop, and capture new business

opportunities.

Surie & Ashley

2008

Leadership capable of sustaining innovation

and adaptation in high velocity and uncertain

environments.

Goossen & Stevens 2013 It can be defined as that type of leadership

which provides for the scenarios where

committed followers are gathered to be led by

the vision of the leader towards finding new

opportunities and utilising them for sustainable

success and value for the organization.

Dover, Hariharan, &

Cummings

2014 A process that creates value for organizational

stakeholders by bringing together a unique

innovation package of resources to respond to a

recognized opportunity.

Yu & Kwan 2015 It can be defined as that style of leadership

which leads an entrepreneur to take risks, be

proactive and be innovative. It also involves

organizing and conducting the plans.

Renko, Tarabishy, Carsrud &

Brännback

2015 Entrepreneurial leadership entails influencing

and directing the performance of group

members toward the achievement of

organizational goals that involve recognizing

and exploiting entrepreneurial opportunities.

Source: Author’s own

Gupta et al. (2004) noted that the above definitions imply that entrepreneurial leaders are

confronted with two challenges: the leadership challenge and the entrepreneurial challenge.


25

The leadership challenge concerns the issue of having to persuade both the employees and a

firm’s other stakeholders that it is possible to assemble sufficient resources to accomplish the

necessary objectives while transforming people who are used to transactional relationships.

Meanwhile, the entrepreneurial challenge consists of envisioning and creating a range of

potential opportunities that may be exploited to revolutionize the followers and the firm, even

in light of resource constraints (Gupta et al., 2004).

In simple terms, Wang, Tee and Ahmed (2012) posit that entrepreneurial leadership requires

that the leader possess an ability to identify opportunities for change and be entrepreneurial, as

well as the ability most related to leadership, to motivate other people and mobilize the

necessary resources to make real change happen. Therefore, an entrepreneurial leader can be

described as a leader who is able to explore his/her environment, identify which potentials can

be capitalized upon, and is then able to persuade others to enthusiastically participate in the

process of creating new value (Wang et al., 2012).

Ventures that are spearheaded by entrepreneurial leaders are innovative and proactive, so they

enjoy first mover advantages which put them ahead in the competitive marketplace (Ireland &

Webb, 2007). Also, entrepreneurial leaders are regularly inspire their employees, hence, it is

easier to instill ethical behaviors in them (Kuratko, Goldsby & Hornsby, 2004).

2.7 The five attributes of Entrepreneurial Leadership

As discussed earlier, entrepreneurial leadership is the convergence of entrepreneurship and

leadership literature. Thus, the dimensions of entrepreneurial leadership include some

entrepreneurship and leadership dimensions. They are innovativeness, proactiveness, risk-

taking, visionary and motivation (Chen, 2007). Below are the detailed discussions of these

dimensions or characteristics.


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2.7.1 Innovativeness

The importance of innovation in the entrepreneurial process was emphasized by Schumpeter

(1942; 1934), who outlined an economic process of “creative destruction.” He elaborated that

creative destruction is the situation where wealth is created by revolutionizing existing market

structures by introducing radically new goods or services which are able to shift resources away

from existing firms and thus, allow new firms to grow. Schumpeter (1934) held that such

entrepreneurship, or “the competitive entry of innovative new combinations", is what has

propelled the dynamic evolution of the economy. Through such discussions, innovativeness

has come to be known as an integral aspect of entrepreneurship. Entrepreneurs are therefore

seen as innovators who drive the transformation of the economy (Schumpeter, 1934).

Lumpkin and Dess (1996), supported by Covin and Miles (1999), posit that innovativeness is

a reflection of a firm's engagement in, and support of, new ideas, experimentation, and

creativity much earlier than the competition, which would lead to novel products, services or

production processes. Other scholars have explained that innovativeness is the propensity to

creatively initiate and support new ideas and processes to engender new products, services,

technological processes, or new markets (Kropp & Zolin, 2005; Li et al., 2008; Mengue & Auh

2006; Miller & Friesen, 1982). Hage (1980) noted that although innovations might differ in

how radical they are, some researchers are of the view that the fundamental assumption of

innovation is a departure from extant technologies or practices in order to progress beyond

what is currently known as ‘state of the art’ (Kimberly, 1981; Baker & Sinkula, 2009). Thus,

innovativeness is synonymous to the creation of something new.

Moreover, Garcia and Calantone (2002) differentiate ‘innovation’ from ‘innovativeness.’ Since

innovation is explained as a repetitive process that is commenced by the sensitivity of a new


27

market and/or service opportunity for a technology-based invention, which subsequently

results in tasks striving for the commercial success of the invention (OECD, 1991), Garcia and

Calantone (2002) identify two important distinctions from innovativeness: i) the ‘innovation’

process encompasses the technological development of an invention, combined with the market

introduction of that invention to end-users through adoption and diffusion, as well as ii) the

innovation process is iterative in nature and thus, automatically includes the first introduction

of a new innovation and the reintroduction of an improved innovation. ‘Innovativeness’ on the

other hand, rather measures how new an innovation is (Garcia & Calantone, 2002). Thus,

highly innovative products have a higher degree of newness, and vice versa. The assessment

of newness is dependent on the researcher and what (s)he deems as new. For instance, some

consider what is new to the world (Song & Montoya-Weiss, 1998) as new; while others think

what is new to the adopting unit (Ettlie & Rubenstein, 1987) is new. Again, some researchers

believe that if something is new to the industry (O’Connor, 1998), or new to the market

(Kleinschmidt & Cooper, 1991; Meyers & Tucker, 1989), or new to the consumer (Atuahene-

Gima, 1995), is rather ‘new’.

Innovation has been classified in several ways (Downs & Mohr, 1976) however; the utmost

distinction has been between product-market innovation and technological innovation. Till

date, a number of studies have focused on technological innovativeness, which fundamentally

involves product and process development, with a strong focus on technical expertise and

industry knowledge (Cooper, 1973; Maidique & Patch, 1982). On the other hand, product-

innovativeness lays emphasis on the design of the product, and its subsequent market research,

advertising and promotion (Miller & Friesen, 1982; Scherer, 1980) in order to influence its

performance on the market. Lumpkin and Dess (1996), however, posit that it is difficult to

differentiate between these general classifications of innovativeness, as innovativeness

normally represents a combination of both types of innovation. Either way, innovativeness has


28

been pinpointed as a crucial component of entrepreneurial leadership. Chen (2007) explains

innovativeness as the entrepreneurs’ ability to enhance creative thinking in the team,

welcoming new ideas. Therefore, innovativeness involves the entrepreneurial leader

motivating his/her team to commit to creatively achieving entrepreneurial goals.

A number of studies have established the relationship between certain leadership styles and

organizational innovation. Transformational and entrepreneurial leadership have been found

to positively influence the performance of R&D project teams (Keller, 1992), team innovation

(Greenberger & Sexton, 1988), and organizational innovation (Jung, Chow & Wu, 2003).

Thus, members of top management actually influence the development and implementation of

new products when they provide the type of leadership which inspires and encourages

innovation. Leaders can either prevent the introduction of new ideas, stifling creative potential

(Andrews & Farris, 1967), or they can stimulate the desired innovation (Oldham & Cummings,

1996; Jung et al., 2003).

Creativity has many faces, and it may be found in a wide variety of contexts. The concept is

believed to be the confluence of knowledge, creative thinking, and motivation. More than just

the idea, therefore, innovation is putting a creative idea to work. Innovation may thus be

considered to be harnessing creative energy into a valuable outcome. An idea does not become

an innovation until is put into motion. An innovative entrepreneur, therefore, does not only

have the idea but puts it through the mill in action in the business, in order to demonstrate

his/her entrepreneurism. These innovations are differentiated from inventions in that they are

successfully applied rather than just made manifest (McKeown, 2008). The innovations must

also present new ways of doing things, representing incremental, radical, and revolutionary

changes in thinking, products, processes, or organizations, thus differing from existing ones.


29

Finally, unless these innovations align with organizational vision and goals, their impact will

remain minimal.

As pointed out by Taylor and Schroeder (2003), innovation should cut costs and maximize

productivity. While “mass innovation” has become the order of the day, presenting

unprecedented potentials for organizations to grow, larger firms still struggle with

implementing innovations. Nooteboom (1994) observes that small firms are more likely to

adopt innovations compared to their larger counterparts because they are more flexible and less

bureaucratic. This is beneficial because scholars have highlighted that the adoption of

innovative activities enable SMEs perform better than their counterparts, who do not adopt

innovation (Freel 2000; Vermeulen, De Jong, & O'shaughnessy, 2005; Westerberg & Wincent

2008; Qian & Li 2003; Verhees & Meulenberg 2004). Younger and smaller organizations are

therefore leveraging on innovative breakthroughs to find novel and unique solutions, leading

to better economic performance, higher growth, more jobs created, and higher wages for

employees (Sirelli, 2000).

Indeed, the current economic crises may actually yield benefits in that it may inspire innovation

within organizations (Day, 2007; Schoemaker, 2008). This would only hold if, in addition to

technology and manpower, a competent and entrepreneurial leader would foster innovation.

Such a leader would directly address the company’s growth gap, exploring several possibilities

and daring to enter unexplored areas which would ultimately reap huge payoffs. Such a leader

should be willing to face the risks involved and suffer some failures in the process, in order to

benefit from the ultimate success.


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2.7.2 Proactiveness

Proactiveness means "taking initiative by anticipating and pursuing new opportunities related

to future demand and by participating in emerging markets" (Lumpkin & Dess 1996, p. 146).

Schillo (2011) too explained proactiveness as a unique entrepreneurial activity to that enables

entrepreneurs to act before forthcoming projections are made in terms of products, consumer

demand, markets and/or technologies. Other scholars are also of the view that proactiveness

includes the entrepreneur’s ability to predict trends while searching for opportunities in order

to create changes in the environment. By so doing, new products and services are introduced

in the environment (Boohene et al, 2012; Alembummah, 2015).

Likewise, Rauch et al. (2009, p.763) are of the view that proactiveness refers to "an opportunity

seeking, forward-looking perspective characterized by the introduction of new products and

services ahead of the competitions and acting in anticipation of future demand". Chen (2007)

explain proactiveness as the entrepreneurs’ ability to encourage entrepreneurial initiatives that

nurture and support innovation. The leader, therefore, has the option to whether or not tackle

the ambiguity and accept responsibility for the repercussions. Mokhber, et al., (2016) also

believe that practiveness constitutes inspiring entrepreneurial initiatives among team members,

as well as nurturing innovativeness and creativity among them. Thus, proactiveness represents

the ability of the entrepreneurial leader to promote entrepreneurial initiatives that will improve

the firm’s competitive advantages.

Again, other scholars indicate that a company’s alertness and reaction to signs and trends in

the marketplace is shown by their proactiveness (Hughes & Morgan, 2007), hence, it is

imperative for any business to become a pioneer, if only they intend to capitalize on market

opportunities (Bleeker, 2011). As a forerunner, a proactive business enjoys certain first mover

advantages such as high returns, and a lead in establishing a unique brand identification (ibid).

In the same vein, Lumpkin and Dess (1996, p.147) proffer that leadership is related to


31

proactiveness, in that, a proactive firm “has the will and foresight to seize new opportunities,

even if it is not always the first to do so”. As a result, proactive firms set the trend for other

firms to follow. Instead of following, proactive firms lead and direct the industry within which

they operate. Thus, new developments and adjustments within the environment or market do

not overpower them.

In contrast, a study by Coulthard (2007) revealed that proactiveness is more useful during the

early stages of a firm, because as the firm grows, its proactiviteness begins to fall; and not

necessarily always being the pacesetter in the market per se (ibid). So, once a firm is

established, the role of proactiveness becomes less important (Hughes and Morgan, 2007;

Coulthard, 2007). In 2005, Dess and Lumpkin also linked proactiveness to structural capital.

They claim that structural capital makes the firm’s proactiveness valuable because it improves

its operations and receptiveness of market signals. As a result, these organizations remain

market leaders without relinquishing to market follower status. Bleeker (2011) proffers that

structural capital such as structures and processes, assist businesses in creating assets and

reserves more rapidly and at a lesser cost compared to that of competitors. Lumpkin and Dess

(1996) also proffer that proactiveness is an essential attribute in entrepreneurship because of

its forward-looking action approach. Proactiveness, therefore, shows itself through the

entrepreneur’s actions as (s)he formulates and executes certain ‘stated beliefs’ (Boohene et al,

2012).

Furthermore, Hughes and Morgan (2007) have opined that proactiveness is very important in

guaranteeing a firm’s superior performance. This assertion is confirmed by other researchers

who claim that proactiveness and firm performance are highly correlated (e.g., Day & Wensley,

1988; Wright, Kroll, Pray, & Lado, 1995). This is as a result of the proactive firm’s customer


32

oriented philosophy, and its ability to predict and pursue customer needs (Hanson & Morgan,

2007).

2.7.3 Risk-taking

Since the inception of entrepreneurship in the 1700’s, risk-taking has been one of the most

notable features of an entrepreneur. Richard Cantillon, who was among the first people to

officially use the term ‘entrepreneurship’, highlighted the risk aspect of entrepreneurship in his

understanding of the term. He explained entrepreneurship as the tendency to undertake any

venture/adventure whose conclusion is uncertain (Cantillon, 1734). Thus, seamen, as well as

soldiers, were referred to as entrepreneurs, because these expeditions were considered risky

undertakings that were full of uncertainty (Buame, 2012). Cantillon (1734) classified the

producers in the market economy into two: hired people and entrepreneurs. Hired people

referred to those people who receive fixed wages, and entrepreneurs referred to those people

who worked for themselves. He further argued that this feature of uncertainty served to

distinguish entrepreneurs from hired workers (Cantillon, 1734; Lumpkin & Dess, 1996). Thus,

risk-taking is frequently used to describe entrepreneurs (Lumpkin & Dess, 1996; Meyer,

Walker & Litwin, 1961).

Following this assertion, risk taking may be defined as the degree to which managers willingly

commit huge resources, uncertain of the outcome (Miller & Friesen, 1982) define. There are

different ways of explaining risk depending on the context within which it is defined (Lumpkin

& Dess, 1996). In the context of strategy, Baird and Thomas (1985; p. 231- 232) classified risk

into three types: (a) venturing into the unknown, (b) committing a relatively large portion of

assets, and (c) borrowing heavily. Gasse (1982) explain that these convey uncertainty and may

apply generally to other types of risk discussed in the entrepreneurship literature, such as

personal risk, social risk, or psychological risk. In the area of financial analysis too, Lumpkin


33

and Dess (1996) postulate that risk refers to the trade-off between risk and return; or the

probability of a loss. Liles (1974) also postulate that not only do entrepreneurial pursuits lead

to financial risks, but they also lead to additional personal risks such as missed career

opportunities or strained family relations.

The literature exposes a positive relationship between risk preferences and firm performance

(Atkinson, 1957). Performance levels may, therefore, be higher when there is a greater

uncertainty about the outcome, and entrepreneurs are often willing to take the risk of

uncertainty and shoulder the responsibility for failure (Covin & Slevin, 1991; Chen, 2007).

Risk taking may, however, be a firm-level orientation (Baird & Thomas, 1985), or an individual

level trait (Sitkin & Pablo, 1992; Brockhaus, 1980). Organizations that are more likely to take

risks tend to focus more on seeking worthwhile opportunities (Wiklund & Shepherd, 2003),

although this may depend on their level of development (Lumpkin & Dess, 2001). Again,

recent discourse evinces that researchers understand risk-taking at the firm-level to be the

firm’s courage to undertake activities like entering new markets, committing significant firm

resources to uncertain ventures and/or borrowing heavily (Coulthard, 2007; Keh et al., 2007;

Wiklund & Shepherd, 2005; Baker & Sinkula, 2009).

According to Fernald Jr, Solomon & Tarabishy (2005), balancing risk is essential to leadership.

They further explain that because it is impossible to predict the future with certainty, leaders

must consider all the numerous factors involved in a particular situation for decision-making.

Two kinds of risk have been identified: chance-related and skill-related risk. Macko and Tyszka

(2009) note that the extent to which the leader has control over the outcome differentiates

between the two kinds of risk, and affects entrepreneurs’ propensity to take risk. For instance,

in tossing a coin, one cannot control the outcome since it depends on pure luck. However, in a

competition or quiz, the outcome depends on both luck and on the skill or knowledge of the


34

decision-maker. Extant literature, therefore, suggests that entrepreneurial leaders are more

likely to take risk when the outcome of the action depends on their own skills rather than on

pure chance (Heath & Tversky, 1991; Camerer & Lovallo, 1999; Vlek & Stallen, 1981;

Weinstein, 1984). Thus, though risk-taking is considered an attribute of entrepreneurship,

Kuratko and Hodgetts (2001) opine that successful entrepreneurs are not gamblers who accept

unnecessary risks; rather, they take carefully calculated ones (Begley & Boyd 1987b).

Zahra (2005) also suggest that entrepreneurs face various kinds of risks as they lead their family

organisations. The most common among these risks is the business risk which result from the

inconsistency in a firm’s performance. He further posits that business risk could arise as a result

of unpredictability in the industry as a whole. These uncontrollable factors such as changes in

the technological waves, changes in economic indices, and social change significantly alter the

stream of a company’s earnings (Zahra, 2005). In spite of the changes within the industry,

another side of the business risk is linked to the firm itself, mirroring the unique qualities of

the firm and its senior decision-makers. Also family firms are characterized by some factors,

including; assets, cultures, and managerial processes, that induce uncertainty about the

consistency of their earning streams. Habbershon, Williams and MacMillan (2003) also posit

that another source of uncertainty arise from certain intangible qualities that create the

“familiness” quality of these firms.

The nature of entrepreneurial activities of family owned business operations can be a source of

risk. This is because entrepreneurship focuses on identifying and taking advantage of

opportunities in the market by managing existing and new resources in ways that create a

competitive advantage. These opportunities can be quite risky as the required time investment,

as well as the payoff from them, remain unknown variables. Entrepreneurs need to try several

new combinations of resources that will help the firm innovate in terms of novel offerings to


35

the market. This period of trial-and-error could waste time, and be expensive and risky as one

cannot be sure whether the desired outcome will be realized. Even if entrepreneurs succeed in

finding the winning combination, it is difficult to protect their competitive advantage because

imitation is normal (Zahra, 2005).

2.7.4 Visionary

Another important feature of an entrepreneurial leader is the ability to have a vision. Sashkin

& Rosenbach (1998) describe vision as the ability to mentally and behaviorally construct the

future. A good leader often plans in advance, thinking hard about causal reactions and how to

achieve the desired outcomes in light of potential setbacks and opportunities. Entrepreneurial

leaders are required to be visionary, and this often involves a deep meditation on how the vision

would align with the entrepreneurial goals of the organization, so that by the time it is

communicated to the employees, it is a clear vision, and can inspire the firm to be more

proactive, innovative, and risk-taking.

2.7.5 Motivating

Entrepreneurial leaders are also good at motivating and encouraging their followers. As in most

small businesses, decision-making is often the duty of one key person, it is important that the

other members of the firm feel as inspired to achieve organizational goals as the one who

develops firm strategy.

The literature suggests that both the knowledge and experience of the leader and his team

influences organizational growth. Where there is insufficient motivation, however,

organizational knowledge may not yield its greatest return (Locke, 2000). Similarly, growth in

the organization requires intentional behaviour (Dutton, 1993), but where there is no

motivation to spur the desired behaviours, organizational growth slackens.


36

2.8 Entrepreneurial Leadership and SME Growth

As mentioned earlier, the survival and growth of SMEs largely depends on the entrepreneur

since the major decisions of the firm are taken by the entrepreneur (Frese & de Kruif, 2000).

Thus, entrepreneurs who are growth-oriented are more likely to lead in a manner that innovates

(Oke, Burke & Myers, 2007). This is because, the entrepreneurial leader identifies

problems/gaps in the growth process, explores new ways of doing things, and then boldly go

into unexplored areas (thus, taking risks). Also, growth-oriented entrepreneurs are likely to

export (Love & Roper, 2015) their products and services so as to increase their market share.

They also invest in training employees (BIS, Scottish Enterprise, Invest NI & Welsh

Government, 2012) such that the staff are always fortified with quality, up-to-date skills and

knowledge. Again, Roper and Hart (2013) noted that entrepreneurial leaders welcome support

and advice from the external stakeholders. Growth-oriented entrepreneurs also utilise their

external finance in a way that maximum outcomes are achieved (Brown & Lee, 2014),

compared to their counterparts who have little/no plans of growing.

Again, some studies posit that entrepreneurial leadership significantly impacts the growth of

SMEs (Hayton, 2015; Wright et al., 2015). This is because the leader’s past experience and

knowledge positively influence the number of market opportunities that the entrepreneur

identifies. In order to take advantage of the opportunities identified within the market, the

entrepreneur actively adopts formal human resource practices (Rouditser & McKeown, 2015)

such as setting challenging and inspiring goals for him/herself and the employees (Wright et

al., 2015). They further explain that given adequate commitment, feedback and knowledge,

employees are motivated by challenging goals to perform better, compared to the less

challenging goals. Thus, through entrepreneurial leadership, firms grow as the entrepreneur is

able to spot opportunities, innovate, become more proactive, take risk, as well as motivate

his/her employees.


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2.9 Theoretical Review- Human Capital of the Entrepreneur

Becker (1964) propounded the human capital theory which suggests that the more human

capital a person possesses, the higher the person’s performance when completing tasks. Human

capital refers to the amount of knowledge and skill that a person possess. According to

Ventakaraman (1997), the human capital of entrepreneurs consists of all the unique insights,

skills, intellectual characteristics, and capacities; although the human capital of an individual

has different levels at which it can be transferred (Castanias & Helfat, 1992). Unger, Rauch,

Frese, and Rosenbusch (2011) elaborate that human capital is the sum of skills and knowledge

that the individual acquires after years of schooling, on-the-job training, and other types of

experience. Thus, human capital include inputs such as education, work experience,

capabilities and business ownership experience (Ucbasaran, Westhead & Wright, 2008).

Some studies have investigated the effect of the human capital inputs of an entrepreneur on his

or her productivity, including its effect on decisions such as whether to be independent, the size

of the firm (Bates, 1990; Otani, 1996), the longevity of the firm (Gimeno et al., 1997; Bru¨derl

et al., 1992) and the performance of the firm (Bosma et al., 2004). Becker (1975) and Davidsson

and Honig (2003) report that entrepreneurs with more human capital inputs should achieve

better-quality outputs. Shane (2003) also adds that in relation to entrepreneurship, output

includes the recognition, pursuit, and utilization of opportunities. This study, therefore, adopts

the human capital theory to explain that the more an entrepreneurial leader is educated,

experienced and exposed to foreign markets, the better the management of challenges and

higher levels of growth.


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CHAPTER THREE

CONTEXT OF STUDY

3.0 Introduction

It is important that the reader is endowed with the required information that enables him/her to

understand the context within which the study is being conducted. This chapter, therefore,

provides rich information about SMEs: a brief history about Ghanaian SMEs, some definitions

of SMEs, its importance and some of the sector challenges. In addition, the study provides a

general overview of the selected companies.

3.1 Country Profile

Ghana, formerly known as Gold Coast, attained independence from the British on the 6th of

March, 1957 (UNDP, 2017). It is located near the Equator on the Gulf of Guinea in the sub-

Saharan region of West Africa (Specifically, West Africa). It is bordered by Ivory Coast on

the west, Burkina Faso on the north, Togo on the east and the Gulf of Guinea on the south.

Ghana’s capital city called Accra. The official language and currency in Ghana is English and

the Ghana Cedi (GH¢) respectively. Ghana’s growth rate in her real Gross Domestic Product

(GDP) as at 2011 was 15%, but has reduced drastically to 4.2% after three years, i.e. 2014

(ISSER, 2015). Ghana is endowed with several natural resources including, minerals (such as

gold, diamonds, bauxite, carbon, etc.), forests, vegetation, and water bodies, among others.

Ghana can also boast of tourists attractions such as castles and forts, national parks at Kakum

and Mole, mountains, waterfalls, artificial lake, just to mention a few. Ghana is an emerging

economy, with a growing population of over twenty-six million as at 2015 (IWS, 2016).

Ghanaians are hospitable and enterprising. This explains why over 90% of enterprises in the

country are SMEs.


39

3.2 The History and Development of SMEs in Ghana

SMEs development in Ghana began as far back as 1970s, in a time where the management of

the national economy by Ghanaians became very crucial. Previously, there was no form of

private owned enterprises/ indigenous entrepreneurship during the colonial era. Any attempt

by indigenes to establish enterprises were discouraged by the colonial masters. After

independence in 1957, H.E. Dr. Kwame Nkrumah believed that the country was late in

developing the economy through indigenous entrepreneurship. So he established a holding

company, the GIHOC, which owned a number of enterprises. Some of which include the

following: Ghana Publishing Corporation, Cement works at Tema, Government Electronics

Industry at Tema, Ghana Textile Corporation, Cocoa Processing Factories (Takoradi and

Tema), Glass Manufacturing Corporation at Aboso, sugar factory at Akuse, Six rattan factories,

television assembly plant at Tema, two fibre factories, Tomato Processing Factory, Wenchi,

Match Factory, Kade, Tarkwa, Pwalugu Tomato Factory, and Ghana Glass Factory, among

others. Dr. Nkrumah was largely influenced by the Soviet Union and therefore frowned upon

private entrepreneurship because he held that it was slow in development. During that time,

import substitution was used to supplement any product or service that was lacking.

After some series of military interventions, majority of the economic activities in Ghana at the

time was largely handled by the foreigners, especially the Lebanese and Nigerians (Ghanaian

Enterprises Development Commission Annual Report, 1976). The government at the time then

resorted to rural development, which still had some problems. According to Tsamenyi,

Enninful-Adu & Onumah (2007), these SMEs were assisted by some institutions, such as, The

Office of Business Promotion (now, Ghana Enterprise Development Commission, GEDC);

whose major task was to aid Ghanaian businesspersons to penetrate into industries which had

formerly been dominated by foreigners. This is because the ‘Alliance Compliance Order’ made

such industries accessible to Ghanaians (Tsamenyi et al. 2007). The Ghanaian Business


40

Promotion Act 334 (1970), which was aimed at promoting private entrepreneurship, followed

the ‘Alliance Compliance Order’ (Tetteh-Ossom, 2013). GIPC (2013) reports that some

industries in the economy such as leather products, garment manufacturing, and few others

were reserved solely for the operation of Ghanaians, as per the Investment Policy Decree 329

(1975).

The National Redemption Council Decree (NRCD) 330 (1975) established the Ghanaian

Enterprise Commission to ensure the growth of SMEs. The Commission provides the sector

with advisory services, financial and technical assistance (Tetteh-Ossom, 2013). He further

posit that the government of Ghana developed keen interest in the issue of industrialization and

its importance to the country’s economic development. In the course of 1983, the economy was

opened to everyone as the government sold majority of the state-owned enterprises to private

individuals. However, there was still some level of state control to provide structures as well

as maintain law and order, hence, the need for an amalgamated institution that could respond

to the needs of the SME sector (Tetteh-Ossom, 2013).

In view of that, the National Board for Small Scale Enterprises (NBSSI) was established (to

manage the development of the SME sector in the Ghanaian economy) by an Act of Parliament

in 1985. The primary responsibility of the Board is to enable Ghanaian SMEs make significant

contributions to the development of the economy. The Board achieves this by ensuring the

production and distribution of goods and services are performed effectively and efficiently.

Ironically, the Board performed poorly, because it was deficient in providing the SME sector

with; adequate finance and credit to SMEs, adequate and relevant capacity building

programmes, appropriate and improved technology to improve the sector’s productivity for

higher growth, among others (Ganu & Boateng, 2012, Tetteh-Ossam, 2013). As a result, it


41

became necessary for other institutions to be fused into the NBSSI; GEDC joined NBSSI in

1991, and the Department of Cottage Industries coalesced in 1994.

In spite of all these programmes and interventions by both government and non-governmental

institutions, the rate at which Ghanaian SMEs grow seem to be dawdling and hardly grow into

large businesses. This may be significantly due to the form of leadership being exhibited by

the entrepreneur and his/her human capital. Villars in 2006 discovered that majority of

conglomerates in Ghana are owned by immigrants. This, therefore, emphasizes the need to

research the factors that affect SMEs growth.

3.3 Concept of SMEs

There has been varying views in relation to the definition of SMEs within extant literature. As

revealed by Storey (1994), there is no clear, consistent and uniformly acceptable definition for

small firms. This may be as a result of contextual differences in the economic systems as well

as differences in the variables used in describing SMEs globally. In the same vein, firms differ

in their level of capitalization, sales, and employment (Kayanula & Quartey, 2000). Thus, a

definition for SMEs which employ measures of size when applied to a particular industry may

not be suitable for another industry.

Some scholars and organisations have given varying definitions of what constitutes SMEs. For

instance, SMEs is defined by Jordan et al (1998) as firms with fewer than 100 employees, and

turnover not more than €15 million. Again, the United States of America Small Business

Administration in 2004, viewed SMEs as businesses that are individually owned and operated,

and are not market leaders in its field of operation. Whereas, World Bank (1976) defines SMEs

as enterprises with fixed assets (excluding land) not exceeding US$ 250,000 in value; Grindle

et al (1989; p.9-10) posit that “small scale enterprises are firms with less than or equal to 25


42

permanent members and with fixed assets (excluding land) worth up to US$ 50,000.” The

USAID, in the 1990s, describe corporations who sell about half of its total production and have

below 50 employees, as SMEs (see also Mead, 1994). Interestingly, UNIDO used the quantity

of employees to differentiate SMEs in industrialized countries from SMEs in emerging

countries.

In developing countries, businesses with under five workers are micro, enterprises with five up

to a maximum of 19 employees are small, medium enterprises have twenty to a maximum of

ninety-nine workers, and an enterprise with a hundred or more employees are described as

large businesses. In industrialized countries, the situation is different. Firms with over five

hundred workers are large, below five hundred to a minimum of hundred employees are

medium, and beneath hundred employees are known as small enterprise.

Again, López & Aybar (2000) suggest that SMEs are companies with sales below €15 million.

Similarly, Ayyagari, Beck, and Demirguc-Kunt (2003) conceptualize SMEs as formal

enterprises with, not more than two hundred and fifty (250) employees. European Commission

(2010) also classified businesses based on their number of employees- The staff strength of

small-sized firm is below 50 employees; that of medium-sized firm has a minimum of 50

employees but not more than 250 employees; Large-sized firms have at least 250 employees.

As stated mentioned earlier, it is important to know that there are varying definitions due to the

contextual differences in the economic systems as well as differences in the variables used in

describing SMEs globally. A careful look at all these definitions above suggest that variables

such as number of employees and the value of assets seem to be consistent across contexts.


43

3.4 Ghanaian Understanding of SMEs

Similarly, the concept of SMEs in Ghana, also varies depending on the statutory institutions.

In Ghana, the number of employees of the enterprise is the most commonly used criterion

(Abor & Quartey, 2010; Kayanula & Quartey, 2000); although the different governmental

agencies have its own definition and criteria for identifying micro, small, medium and large

sized enterprises. At one point, working capital and investment in machinery and equipment is

used; while at another time, turnover and the capital employed are used.

Confusion often arises, when applying this definition, with respect to the uncertainty and

threshold points used by the various official sources. For example, Ministry of Local

Government and Rural Development (Ghana) deems any organization that commissions one

to nine people as a small scale enterprise, ten to twenty employees as a medium scale enterprise,

and beyond twenty employees as a large scale enterprise. Also, the Ghana Statistical Service

(GSS) considers firms with less than ten employees as small-scale enterprises, and above ten

employees as medium and large-sized enterprises. Ironically, Kayanula and Quartey (2000)

observed that in the national accounts, GSS regarded SMEs as companies with up to 9

employees.

Similarly, Osei et al (1993), and Steel and Webster (1991), used the cut-off point of 30

employees to define Ghanaian small scale enterprises. Osei et al (1993), further, categorized

small-scale enterprises into three categories, namely: (i) micro (employing below 6 people);

(ii) very small, (which hires 6-9 people); (iii) small (which appoints between 10 and 29

employees). Recently, the Regional Project on Enterprise Development Ghana manufacturing

further grouped businesses into (i) micro enterprises, (ii) small enterprises, (iii) medium

enterprises, and (iv) large enterprises. Micro firms constitute less than 5 employees; small


44

enterprises range from 5 - 29 employees; medium enterprises employ 30 – 99 employees; and

large enterprises have 100 and more employees (Teal, 2002).

Alternatively, the firm’s value of fixed assets is another criterion used in defining SMEs. The

National Board for Small Scale Industries (NBSSI) in Ghana combines both criteria, i.e. “fixed

asset and number of employees,” to define SMEs. The Board defines a firm that has less than

nine employees, and plant and machinery (excluding land, buildings, and vehicles) not

exceeding 10 million Ghanaian cedis in value, as a small-scale enterprise. This study adopts

the NBSSI’s definition of SMEs. Also, The Ghana Enterprise Development Commission

(GEDC), applies the 10 million Ghanaian cedis upper limit definition for plant and machinery.

It is important to note that the process of valuing fixed assets is problematic, due to the

continuous depreciation of the local currency (i.e. GH¢) as compared to major trading

currencies (such as USD/British Pound Sterling). This often makes such definitions outdated

(Kayanula & Quartey, 2000, cited in Peprah, Mensah & Akosah, 2016). After defining SMEs,

it is important to look at their nature.

3.5 Structure/Nature/Characteristics of SMEs

According to Ministry of Trade and Industry Report (2004), Ghana’s economy is made up of

a few large firms, a considerable number of medium enterprises and the masses are within the

small and micro enterprises. Mensah (2004) also discovered that there is no factual data (partly

because many of these SMEs are unregistered) on the exact number of SMEs in the country.

However, a critical look at the data from the Ghana Registrar General’s department suggests

that about 90 percent of all registered companies are SMEs. This may be due to the ease with

which SMEs are established. Unlike the case of large companies, Tetteh-Ossom (2013) found

that the capital, technology; management and utilities required of SMEs are simple. For this


45

reason, SMEs are more prominent in the Ghanaian economy, representing about 92 percent of

all Ghanaian businesses, according to Abor and Quartey (2010).

In Ghana, the SME industry has been categorized into two broad strands: the formal sector and

the informal sector. Abor & Quartey (2010) discovered that SMEs in the formal sector are more

likely to have an organogram, registered office(s), salaried employees and business unit(s),

whereas enterprises in the informal sector are craftspeople who operate in provisional

structures, open spaces, or even from home with few or no paid employees. The latter mostly

comprise of individuals artisans, family members and women who are largely involved in food

production of local crops, textiles, and leather, agro processing, timber and mining, among

others (Kayanula & Quartey, 2000). The major activities in this industry consists of various

businesses such as provision and retailing shops and supermarkets, restaurants and food

vendors, hair dressing and barbering saloons, clothing and tailoring shops, carpentry and

furniture making shops as well as small and medium scale manufacturers of assorted items

such as fruit drinks, sachet water, soap, detergents, pharmaceuticals, among others (Kayanula

& Quartey, 2000; Ackah & Vuvor, 2011). It is, however, important to note that the activities

mentioned above is not limited to the informal sector.

Ackah and Vuvor (2011) noted that Ghanaian SMEs, in particular, are not contributing

significantly in the international and local capital markets as compared to larger firms, and this

exclusion may be due to the higher cost of intermediation of smaller projects. This phenomenon

is attributed to the nature of the financial system. Also, though a small number of SMEs have

the capacity to market their products abroad, majority of products and services produced by

SMEs is mainly targeted at the local market. This could be as a result of various reasons such

as; the huge capital requirement for engaging in export trade and the low level of education,

training, and awareness of some small business owners.


46

Generally, SMEs in Ghana are owned by sole proprietors i.e. a single person, who takes all

major decisions. These sole proprietors usually have limited formal education, and lack

information in the use of new technologies and the credit market (Mensah, 2004). Ghanaian

SMEs are mostly labour intensive and operate with low technological know-how and

innovation. Again, SMEs are mostly family-owned businesses thus, there is a high tendency

for entrepreneurs to employ workers who are often relatives to the owner-manager making it

almost impossible to separate ownership from the control of the enterprise. Additionally,

differentiating between the finances of the business from that of the entrepreneur’s is very

difficult (Ackah & Vuvor, 2011). As compared to larger firms, SMEs are more labour intensive

and therefore have lower capital costs associated with job creation (Anheier & Seibel, 1987;

Liedholm & Mead, 1987; Schmitz, 1995). SMEs are also characterized by weak management

skills, lack of technical know-how and extreme working capital volatility (Mensah, 2004).

Anheier and Seibal (1987) postulate that urban and rural SMEs in the informal and industrial

sector are very heterogeneous in terms of productivity, entrepreneurial talents, and profits, level

of technology, capital assets, and development prospects.

Aryeetey and Ahene (2005) discovered that most Ghanaian SMEs begin small and end small

with no form of growth regarding the output and number of employees. Furthermore, the

growth propensity of SMEs are low in spite of their profitable operations. This is confirmed in

Villars’ observation in 2006 that about 5% of SMEs progress into large enterprises. Therefore,

SMEs need additional concentration in order to prolong their potential for growth, expansion

and lifespan. Thus, this study investigates whether leadership influences SMEs growth and in

what ways.


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3.6 Importance of SMEs

The emergence of Small and Medium- Sized Enterprises (SMEs), over the years, have greatly

imparted economies all over the world, and its importance cannot be overstated. SMEs are

usually viewed as drivers of economic development (Cyril Eze, Guan Gan Goh, Yih Goh, &

Ling Tan, 2013; McCann & Ortega-Argilés, 2016). Some studies in both advanced and

emerging countries have highlighted the progressive role that SMEs play in any given economy

(Abor & Quartey. 2010; Karadag, 2015; Paul, Whittam, & Wyper, 2007). Globally, SMEs are

said to account for approximately 95 per cent of all the companies in the world; as well as solve

the twin problems of unemployment and poverty. They.

As a catalyst for economic growth, SMEs significantly reduce unemployment rates in both

developed and developing economies, create revenue for both the government and the

populace, as well as serve as an avenue for innovation (Abor & Biekpe, 2005; Cuckovic &

Bartlett, 2007; Mensah, 2004; Imeokparia & Ediagbonya, 2014; Taiwo, Falohun & Agwu,

2016). The contribution of small and medium enterprises operating in the manufacturing,

service and business industries in most countries, are significantly greater than that of large

enterprises in terms of optimum utilization of latent resources, innovations, and productive

employment including self-employment.Thus, the development of SMEs to accelerate

economic growth is the new trend for global economic policies, especially that of Africa (Calza

& Goedhuys, 2016; Robson, Haugh & Obeng, 2009).

Developed economies have used SMEs as the medium in achieving rapid industrialization and

accelerated economic growth (Harris & Gibson, 2006; Sauser, 2005). For example, according

to European Commission (2010) and Schmiemann, (2008), 99.8% of all enterprises in the

European Union are SMEs, and they constitute 95% in most developed countries, and employ


48

over 60% of available workforce. The situation is no different from that of Asia (Frederick,

Bair & Gereffi, 2015; Knight, 2000; OECD, 1997).

Contextually, most dominant form of business in Ghana is found in the SME sector

(representing 92% of businesses in the economy). Abor and Quartey (2010) posit that SMEs

contribute about 70% towards Ghana’s GDP; thus, there is significant impacts on economic

growth, income, and employment. SMEs constitute 90% of current businesses in Ghana, and

provide approximately 85% of manufacturing employment (Aryeetey, 2001), as well as the

provision of basic goods and services, the generation of export and tax revenues, and job

creation for socio economic development in Ghana (Frimpong, 2013).

SMEs also serve as an avenue for innovation and provide the platform for entrepreneurship.

Aryeetey & Ahene (2004) described SMEs as the seedbed for indigenous entrepreneurship.

That is to say that, SMEs have provided a podium for homegrown private enterprises to spring

in areas and industries that was generally ignored. These small businesses have generated many

little investments, which would otherwise not have taken place. A combination of these

investments has given rise to indigenous entrepreneurship in Ghana (Alembummah, 2015). In

view of these significant contributions made by SMEs, it is expedient that the sector is

developed since most large enterprises usually start as small ones. Also, De la Torre et al.

(2010) pointed the fact that SMEs need to be promoted to become the backbone of the

economy.

3.7 Factors influencing the growth of SMEs

Though SMEs are great contributors to the economic development of any given economy, they

are faced with a number of obstacles that seem to drag their growth propensity and therefore


49

cannot be overlooked. Buame (2012) outlined some challenges facing Ghanaian SMEs. These

have been explained below briefly.

Inadequate Financing

Cook and Nixson (2000) viewed finance as a vital constituent of SMEs development. Of all

the challenges that small and medium enterprises encounter in the country, financing is the

most dominant one. Aryeetey et al (1994) report that a Ghanaian survey revealed that 38% of

SMEs find inadequate financing as an impediment to their development and growth. Therefore,

these financial glitches significantly affect the overall macroeconomics performance of SMEs

in Ghana.

Access to finance

Another key problem facing SMEs is access to capital. Inadequate financial resources

significantly affect SME development. Cook and Nixson (2000) note that, though SMEs have

a vital role to play in the developmental stages of many emerging economies, their development

is always controlled by the limited availability of financial resources to meet a variety of both

operational and investment needs. Parker et al. (1995) also stated that about 90% of small

enterprises in a World Bank study found that access to credit is a major predicament to new

investment. The access to financial resources available to smaller enterprises are limited,

compared to larger organisations (Levy (1993), thus impedes on their growth and development.

This may be as a result of the perceived risk associated with SMEs, management weakness,

informational barriers and high cost of intermediation (Hayford, 2010).

Access to raw materials and market

SMEs are also confronted with a number of limitations in the factor market, although the most

common constraints are raw material availability and cost (Levy, 1993). Aryeetey et al (1994)


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found that the high cost of obtaining local raw materials is highlighted by 5% of Ghanaian

SMEs in their survey. This may result from poor cash flows of small and medium enterprises.

This issue is country-specific, and the magnitude of the problem is dependent on how

businesses rate availability, access, or cost, and whether or not their activities are based

primarily on domestic or imported inputs (World Bank, 1993; Parker et al, 1995).

Inappropriate management skills

In today’s highly competitive environment, it has become very important for enterprises to

acquire the requisite skills needed to sustain its survival. Even though SMEs attract motivated

managers, they find it difficult competing with larger firms; as King and McGrath (2002) noted

that majority of those who run these small and medium enterprises are individuals with low

levels of education and are therefore unequipped to carry out managerial routines for their

enterprises. Although there are several institutions providing training and advisory services,

there is still a skills gap in the whole SME sector (Kayanula & Quartey, 2000). This is due to

complacency on the part of some entrepreneurs as well as high cost of training and advisory

services. For that reason, scarcity of management talent greatly impacts the growth of SMEs.

SMEs generally do not need highly skilled labour, because of the adoption of simple

technology in their operations. However, when the need arises for specific managerial skills,

the amount of skilled labour available is not enough. This limits the opportunities in that

specialty; increases costs and reduces flexibility in managing the ventures (Hayford, 2012).

Technological advancements

People’s lives and businesses today are being shaped dramatically as a result of technology

(Kotler & Keller, 2006). Though improvements in technology increase SMEs capabilities, it

simultaneously poses new challenges to the enterprise. This is because most Ghanaian

entrepreneurs lack the theoretical knowledge and background to strengthen their skills since


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most of them have low levels of education (Buame, 2012). According to Aryeetey et al. (1994)

many SMEs in developing countries like Ghana, frequently have drawbacks when gaining

access to information on available techniques and appropriate technologies, thus limiting

innovation and SME competitiveness. In addition, Hayford (2010) noted that most

entrepreneurs are unaware of new technologies, and those aware face difficulties with the

availability, affordability, and accessibility of the new technology. Alternatively, SMEs in most

cases mostly acquire foreign licenses, because local patents are hard to come by. This de-

motivates Ghanaian SMEs from learning and enjoying the vast benefits of improvements in

technology, such as growth and development.

Domestic Demand

Though the Ghanaian market is quite sizeable (i.e. 28 million people), the impoverished

economic situation has rendered majority of the populace with low purchasing power. Thus,

SMEs are pressurised in terms of quality, customer satisfaction, price, and efficiency.

Unfortunately, those who can pay for the products and services of SMEs, prefer foreign goods

because they are relatively cheaper and of a higher quality. For instance, since the advent of

trade liberalization, some tailors went through a month without any orders (Riedel et al, 1988).

Unfair competition from foreign companies

Previously insulated from international competition, many SMEs are now faced with greater

external competition and the need to expand market share. However, Aryeetey et al. (1994),

posit that limited international marketing experience, poor quality control and product

standardisation, and little access to international partners, continue to inhibit SMEs’ expansion

into international markets. Also, owners of small and medium enterprises lack the necessary

information about foreign markets.


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Unfavorable government policies

Another issue for Ghanaian SMEs has been the arduous legal processes for both registering

and commencing business ventures. For example, the legalities required of SMEs in processing

export documents and/or clearing goods from the port; as well as settling legal claims in court

proceedings, are time-consuming and expensive. Also, SMEs are encumbered with the high

start-up costs, which includes, registration costs and licensing. These regulatory controls

negatively affect the smooth running of SMEs towards their development and growth.

Although a number of wide-ranging structural reforms have led to some improvements,

prospects for enterprise development remain to be dealt with at the firm-level.

3.8 Supporting, Facilitating and Regulatory Agencies of SMEs in Ghana

There are some institutions and agencies in Ghana that promote and develop SMEs by

supporting, facilitating and regulating them. A number of these agencies and institutions

include; Ministry of Trade and Industry (MOTI), National Board for Small Scale Industries

(NBSSI), Association of Ghanaian Industries (AGI), Ghana Standards Authority (GSA),

Ghana Export Promotion Authority (GEPA), Ghana Investors Advisory Council (GIAC),

Private Enterprise Federation (PEF), Ghana Investment Promotion Centre (GIPC), Ghana

National Procurement Agency (GNPA LTD), Gratis Foundation, Rural Enterprises Programme

(REP), Ghana Free Zones Board (GFZB) among others. A few of them are reviewed below:

Ministry of Trade and Industry (MOTI): The Ministry of Trade & Industry is the overarching

agency and the lead policy advisor to government on trade, industrial and private sector

development. It also has the sole responsibility for the formulation, implementation, and

monitoring of the country’s domestic and international trade as well as for industrial policies.

The Ministry also ensures that Ghana derives maximum benefit from international trade

relations and that domestic trade is conducted in a smooth and orderly manner. It is also


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responsible for strengthening trade relations with other countries consistent with Ghana’s

membership of the WTO.

National Board for Small Scale Industries (NBSSI): NBSSI is one of the top most

governmental bodies regulating the promotion and development of the Micro and Small

Enterprises (MSE) sector in Ghana. It was established in 1985 by an Act of the Parliament of

the Third Republic of Ghana (Act 434 of 1981) because Government views the sector as having

the potential to contribute substantially to the reduction of the high unemployment rate and to

the growth of the economy of Ghana. Its objectives are to create enabling environments and

develop an enterprise culture in Ghana, promote MSE sector associations and facilitate access

to credit for small enterprises.

Association of Ghanaian Industries (AGI): AGI is a voluntary business association of over

1200 members, made up of small, medium and large scale manufacturing and services

industries in agro-processing (food and beverages), agri-business, pharmaceuticals, electronics

and electrical, telecommunications, information technology, utilities, service industries,

transport, construction, textiles, garments and leather, banking and advertising. The association

has been in existence since 1957, and it is committed to assisting the industrial sector by

advocating for a better business climate in Ghana. Specifically, it seeks to provide a central

organization for the promotion of the interest of the industry, thus defining its identity as the

leading voice of the private sector.

Ghana Investment Promotion Authority (GIPC): The Centre was re-established under the

Ghana Investment Promotion Centre Act, 2013 (Act 865). It has been authorized to encourage,

promote, coordinate and monitor all investments, with the exception of mining and petroleum,

in the Ghanaian economy. Act 478 also enjoins the Centre to coordinate and monitor all


54

investment activities; as well as assists domestic and foreign investors, and also provide reliable

information as they seek opportunities to engage in the Ghanaian business domain. GIPC

partners with both private and public sectors including; Bank of Ghana, Ghana Immigration

Service (GIS), Ghana Chamber of Commerce & Industry, Invest in Africa, and many others.

GIPC bears a mission is to make Ghana “the first destination of choice for investing in Africa,”

and its vision is to be “the official and most accurate information hub for investors in Ghana

by providing seamless one stop shop – high value added services”. The Centre has instituted a

number of activities that help it carry out their mandate effectively and efficiently. One of the

activities is the Ghana Club 100 initiative which was launched in 1998 to reward firms and

investors who have significantly contributed to Ghana’s development. Since its inception, the

initiative allows GIPC to annually recognize and award the top 100 businesses in Ghana.

Businesses are ranked based on their average score with regard to size, profitability and growth.

Companies that make it on the list must serve as role models for the other companies in Ghana

and also provide a platform for interacting with policy makers. That is where the researcher

selected transformational entrepreneurs so as to draw valuable lessons for SMEs in Ghana.

3.9 Overview of selected firms

This section provides a brief profile of the firms that have been selected for the study with

regard to the name, the industry within which they operate, their major activities, board of

directors, vision and mission

3.9.1 Kama Health Services Limited (now known as Mikkado Holdings)

Kama Health Services Limited was established under the Companies Code of 1963 on

24th January 1983 to carry on business in manufacturing of drugs, animal, and vegetable farms

for proteins and vitamins, operating a clinic and management consultancy on health service.


55

Kama Health Service was wholly owned by Dr. Michael Agyekum Addo, a renowned

Ghanaian.

Kama Health Services began operations in 1986 from small beginnings as pharmacy in Kumasi

with a modest capital of ¢50,000 (Now GH¢ 5). It has since established eleven (11) outlet

pharmacies in six regions in Ghana and currently holds distributorship license for eight

international pharmaceutical manufacturers. Kama Health Services is also a main distributor

for most of the major pharmaceuticals manufacturers in Ghana.

Through the pioneering spirit, entrepreneurial attributes and leadership qualities of the CEO,

the Promoter, Kama Health Services has achieved spectacular growth within a relatively short

period to attain a position as one of Ghana’s leading enterprises and a major player in the

Ghanaian pharmaceutical sector. The company manufactures drugs for both local and

international markets producing 42 different types of syrups, suspensions, and mixtures, 10

kinds of tablets, 7 kinds of capsules and 1 powder product. Within just a decade of operations,

it became possible for the company’s stated capital to increase from ¢50,000 (old cedis,

equivalent to GH¢ 5), to ¢200,000,000 (old cedis, equivalent to GH¢ 20,000) in 1998. Also,

the staff strength of the company increased from one person in 1983 to one hundred and fifty

(150) people in 2000 and to two hundred and fifty people (250) in 2010. The remarkable

achievements within the past decade have enabled Kama Health Services to develop into an

integrated health group of companies comprising: Kama Health Services Limited, Kama

Industries Limited, Kama Clinic, Kama Forex Bureau Limited, Kama Real Estates Limited,

and Kama Conference Center. The Kama Group is headed by an eight-member board of

directors, comprising of six Ghanaians and two Dutch nationals, to which the CEO reports. The

deputy CEO supervises administration, production, marketing, and accounts.


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The vision of the Kama Group is to place Kama as a center of excellence for the production of

quality drugs and provision of services, which are marketable, worldwide. The mission of the

Kama Group is to enhance and promote good health of its entire customers through the

production, distribution, and sale of quality pharmaceutical products and services in partnership

with the company’s affiliates worldwide.

Source: Adapted from Field data (2017), Sutton & Kpentey (2012) and

http://www.gipcghana.com/89-ghana-club-100/sector-leaders/353-kama-health-services.html

3.9.2 Forever Clair Beauty Clinic

Mrs. Grace Amey Obeng is one of the best-known women entrepreneurs in Ghana. She is a

U.K. and U.S. trained professional medical aesthetician and the CEO of Forever Claire Group

of companies and the founder of Grace Amey Obeng Foundation International. The whole idea

of Forever Clair was birthed to minimize and in a long run solve the issue of skin bleaching

among lots of Ghanaian and African women in the 1980s and 1990s since it was in vogue at

the time. Forever Clair launched its cosmetics product lines, which promoted the beauty of

black African skin at a time when many of the competing product lines were selling standard,

but harmful, skin lightening formulas; plus soaps and body cream.

A beauty clinic was established with financial support from her family to enhance this course

and by 2013, the beauty clinic has developed over eight (8) branches in Ghana. The clinic has

grown to the stage of international trade through exporting its products to some international

countries which include; Togo, Nigeria, United Kingdom, Switzerland, Ivory Coast and several

West African counties. Mrs. Obeng has been recognized for he numerous achievements and

has won lots of awards in the industry. In 1999, the FC Beauty College was established, and

has to date, trained up to 5,000 young people, mostly women. The company has more than 250

trainee staff currently, who are engaged in hairdressing and beauty therapy


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Forever Clair group of companies provides a variety of services such as beauty services

manufacturing, education, equipment, and building. In the past years, Forever Clair group of

companies has grown into five other subsidiaries and is worth about USD 8billion in annual

turnover. For a business that started with only $100, it has achieved tremendous success

promoting an idea and brand that may have been very unpopular at the time. The CEO was

brave and determined to create a special niche that catered to the unique needs of black African

women who needed to preserve or return to their natural skin colour. The company also seeks

to help the less privilege in the society through the Grace Amey Obeng Foundation

International. Her zeal in entrepreneurship has brought more success and global recognition of

Forever Clair Group of Companies.

Source: Adapted from Field data (2017) and Iwuoha (2013). Forever Clair – The business that

fights skin bleaching by preserving the African natural skin, http://www.smallstarter.com/get-

inspired/forever-clair-grace-amey-obeng/ (Accessed on 12/04/2017).

3.9.3 DAASCO Group

DAASCO group of companies started in the year 1986 as a sole proprietorship under the name

‘DAASCO Enterprise’ owned by Mr Dasmond Alex Akpagbli. Through the entrepreneurial

spirit of Mr. Akpagbli, DAASCO Enterprise has blossomed to become DAASCO Group of

Companies which constitute several companies among which include; DAASCO International

Limited, Emmajet Forex Bureau, His Presence Hotel, Ceragem Ghana, and DAASCO farms;

with several branches spread across Ghana and Europe. DAASCO group of companies was

launched in 1994 and has been in operations for the past twenty-three years. DAASCO Group

has its Global Head Quarters located in Tema, Ghana. DAASCO international limited has

gained international recognition and won an award in Geneva.


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DAASCO international limited deals in the distribution of Digital TV Broadcast equipment

and visual presentation systems; as well as distributing other equipment such as computers,

stationary, digital radio broadcast equipment, and telecom products. DAASCO International

Limited mostly deals in B2B (Business to Business) as it offers quality services and world class

products to a wide range of organisations which include; banks, government institution, hotels,

churches, individuals, tertiary institutions and many others. Emmajets Forex Bureau is also one

of the leading forex bureaus in the country with about eight branches spread across the Greater

Accra Region. Also, Ceragem Ghana (sole distributers of Ceragem massage products) supplies

massaging beds to the hospitals and other health centres as well as some individuals.

DAASCO partners with international companies such as JVC and SAHARA (Sahara

presentation systems plc), Zenith Bank, and VISA. DAASCO’s mission and vision is to

organise resources and solutions to solve today’s problem with the future in mind. The group

also believes in a balanced economic growth to business growth and environmental existence;

the reason it thoroughly explains its timely innovative solutions.

Source: Adapted from Field data (2017) and http://www.daascogroup.com/about.html

(Accessed on 13/06/2017)

3.9.4 Jandel Limited

Jandel Limited is a wholly owned Ghanaian company with an excellent trade record in the

business of Event Planning, Interior and Exterior decoration, Landscaping, Renovations,

Export and Import of general goods and services. It was established by Madam Afi Amoro

(Founder and CEO of Jandel Limited) in the year 1996. Thus, Jandel has been in existence for

the past 21years, gathering experience in the total event management business which includes

management of state, corporate and private events such as weddings and parties. The

company’s core business is into event planning and décor, however over the years is has


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blossomed into other subsidiaries that provide construction, interior decoration, horticulture

and landscaping, and purchasing and supply.

Before Jandel, Madam Afi Amoro was working in the civil service while at the same time

moon lighting as a florist. The conversion of her hobby into a business was fueled by people

offering to pay her for her services. The motivation behind Jandel limited started from a need

to supplement her meagre salary to provide a better quality of life for her family since she was

the first child of her parents, so, a lot rested on her shoulders. Eventually, the demand for her

services begun to grow she went back to the University as a matured student. She found herself

multi-tasking as a single parent, a student, a worker and a founder of a fledging business.

Having assessed the viability of the business, it became necessary to concentrate and grow it.

The growth of the business was determined by her client’s demands. Once a client was in need

of her services, she would find a way of providing it. She just had to make a little profit on it.

So she would subcontract, observe and implement it herself the next time. From a sole

proprietorship, grew the business to 3 employees, then 6 employees, and she can currently

boast of a staff strength of 62 workers with various levels of qualification. Her clientele base

has also grown to include large organisations such as MTN, Tigo, Zenith Bank PLC, Barclays

Bank, Standard Chartered Bank, and Ecobank amidst increasing individual clients.

Jandel’s vision is to be number one in every aspect of its businesses while protecting the

environment and humanity at large within the West African sub Region and beyond. The

mission of Jandel Limited is to maintain its lead in the creative industry, as well as improve

their performance and market share in all areas of their core businesses.

Source: Adapted from Field data (2017) and http://www.jandellimited.com/index.php/jandel



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CHAPTER FOUR

METHODOLOGY

4.0 Introduction

This chapter provides an overview of the methods that the researcher selected in carrying out

the research so as to address the research problem and achieve the purpose of the study. The

general approach for executing a research project is also known as ‘Research Methodology’

(Leedy & Ormrod, 2001). Potter (1996) once said that “methods are the tools used in a study

while methodology is the blueprint of the study.” Saunders, Lewis and Thornhill (2009) also

defined research methodology as “the procedural framework within which a research is

conducted.” According to Taylor and Bogdan (1984), the manner in which the researcher

examines and looks for solutions to pre-defined/already existing research problems constitutes

research methodology. Also, serves as a set of guidelines for analysis, where the assessment of

data can be used to elicit conclusions (Eldabi, Irani, Paul, & Love, 2002). This chapter adopts

the “research onion” proposed by Saunders, et al (2009). Thus, this chapter explores the

research philosophy supporting the study, the research approach, research design, research

strategy, population and sampling design, issues concerning data collection, data analysis

techniques, as well as ethical considerations.

4.1 The Research Onion

“Research onion,” as developed by Saunders, et al (2009), refers to a diagrammatic

representation of the various methodological approaches used in conducting the study (see

figure 4.1). Thus, the researcher adopts it to provide a snapshot of the methodological choices

made in this study.


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Figure 4.1: Research Onion for the study

Source: Adapted from Saunders et al. (2009).


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4.2 Research Philosophy underpinning the study

It is essential that in all research projects, there should be a relationship between the

researcher’s own values, worldview about knowledge, theory underpinning the study, research

methods and the aims of the research (Buame, 1996; Taylor & Bogdan, 1984). For that reason,

it is imperative to discuss the research philosophy and paradigm underlying the research before

embarking on a study of this nature.

Research philosophy relates to how knowledge is developed and the forms of that knowledge

(Saunders et al., 2009). Generally, research depends entirely on a particular view of reality

adopted by the researcher. Thus, as posited by Saunders et al. (2009), the research standpoint

embraced by the researcher contains central assumptions made by the researcher concerning

opinions about how the world works. Again, they opine that the research strategy and the

methods chosen to examine the phenomenon will depend on these assumptions. Guba (1990)

and Creswell (2009) referred to this view of reality as the “Worldview,” which means the belief

systems that guide one’s action. According to Blaikie (2000, p. 8), this worldview, commonly

referred to as ontology in research poses assumptions “about what exists, what it looks like,

what units make it up and how these units interact with each other.” Bhattacherjee (2012, p.17)

also refers to ontology as the “colored glasses” through which one views the world.

Gummesson (2000) discovered that the concept of paradigms was proposed by Thomas Kuhn

(in the early 1960s) to stand for “people’s value, standards, frames of reference, perspectives,

ideologies, myths, theories, and approved procedures that govern their thinking and action.”

Kuhn (1962) defined paradigms as the “entire constellation of beliefs, values, techniques, and

theories shared by members of a scientific community”. The concept of paradigm can also

refer to “a set of assumptions about the social world, and about what constitute proper

techniques and topics for inquiry” (Punch, 2013). Similarly, according to Mangan, Lalwani, &


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Gardner (2004), the concept of paradigm is a general conception of the nature of scientific

endeavor within which a given enquiry is undertaken. After reviewing extant literature,

Boateng concluded in 2014 that there are numerous and different paradigms with several

taxonomies to distinguish between them. The most dominant paradigms commonly referred to

in social science research include, Positivism. Interpretivism, Realism, Relativism and Critical

Realism (Boateng, 2014). Creswell (2007) noted that each paradigm has a structure that

differentiates itself from other paradigms though its own set of epistemological, ontological

and methodological assumptions.

According to Boateng (2014), researchers in support of the positivist paradigm are of the view

that there is a reality that is single, objective and tangible. On the contrary, the interpretivist

ontology believes there are several truths which are reliant on human experiences and

interpretation. The realist viewpoint also believes that a triangulation from many sources is

required to try to know “reality” because though it is real, it is improperly understood (Boateng,

2014). Saunders et al., (2009) simply explain the theory of realism as there exists a reality that

is to a certain extent independent of the mind. Furthermore, the critical realist paradigm, argues

that experiencing the world is a two-step process- first of all, there is the thing itself and the

sensations it conveys (Saunders et al., 2009; the transitive world, see Boateng (2014)); and

secondly, there is the psychological processing that goes on sometime after that sensation meets

our senses (the intransitive world, see Boateng (2014)). The relativism theory also perceive

that multiple realities exist. Thus, reality as truth is not “absolute,” it is dependent on

‘something’ and it does exist (Boateng, 2014).

Considering the research objectives outlined in chapter one, the researcher deems it appropriate

to follow the interpretivist approach or view. This stance is enlightened by Bhattacherjee

(2012), who postulates that the social scientist needs to understand the social actions of their


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research subjects through interpretive means- considering the meaning and purpose they place

on their actions. The interpretivist view has a concern to understand the world as it is- see the

world as an emergent social process, and seek to understand at the level of subjective

experience. According to Whitley (1984), interpretivists try to find the implications and

rational behind people’s actions like: how they behave and interact with others in the society

and culture. Likewise, Elster (2007) and Walsham (1995b) explain interpretivism as the

approach which highlights the expressive nature of people’s character and involvement in both

social and cultural life. Saunders et al. (2009) explain that interpretivism is an epistemology

that differentiates conducting research among people rather than objects (such as trucks and

computers), because it advocates that the researcher needs to understand variances between

people in our role as societal beings. Hence, the researcher has to take it upon him/herself to

enter the social world of the research subjects and understand their world from their perspective

because Schwandt (2000; p. 191) opines that “what an action means can be grasped only in

terms of the system of meanings to which it belongs.”

As against the positivist paradigm which simplifies the complex nature of the world into a

series of law- like generalisations, those in support of the interpretivist paradigm consider the

complexity of the world to avoid losing rich insights (Saunders et al., 2009). Thus,

interpretivism provides an understanding of differences between the human actors

Conversely, Lin (1998) explained that interpretivist researchers look for specific ways in which

a relationship is established and the setting within which it occurs. As a result, these scholars

are able to understand how a relationship occurred, rather than simply knowing what has

occurred (Chowdhury, 2014; Kelliher, 2005; Lin, 1998). The interpretivist is fundamentally

not interested in generalizing his/her findings because life is dynamic (Saunders et al., 2009)

and how every research subject reacts to a particular issue is dependent on their viewpoint and

environment. Therefore, as researchers try to interpret what they see, hear and understand


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(Creswell, 2009), they work towards theory building through interpretive methods such as

action research and ethnography (Bhattacherjee, 2012).

4.3 Research Approach

There are two major approaches to research, which include the deductive and inductive

research approaches (Saunders et al. 2009). They further suggest that the approach a researcher

adopts should be influenced by the paradigm that (s)he belongs to. This is because the research

approach will also influence the research design and strategy that will be adopted.

Malhotra (2007) refers to a form of thinking in which a conclusion is validly inferred from

some premises as deduction; and these conclusions are true only if those premises are true.

Hence, understanding data in the deductive approach makes use of existing knowledge, since

it serves as a guide. The premises of deductive arguments is formed from the building and

establishment ‘facts’. This reasoning begins from general principles from which the deduction

is to be made, and proceeds to a conclusion by way of some statement relating the particular

case in question. Ali & Birley (1999) posit that well-established existing theory underpins a

deductive research, which informs the development of hypotheses, the choice of variables and

the resultant measures. The deductive approach therefore commences with theory articulated

in the form of hypotheses, which are then tested (Malhotra & Birks, 2006). The use of

quantitative data, controls to allow the testing of hypotheses, and highly structured

methodology to facilitate replication (Gill & Johnson, 2010) describes the deductive approach

(Saunders et al., 2009). Additionally, in deduction approaches, principle of reductionism is

followed in that, concepts need to be operationalized in a way that enables facts to be measured

quantitatively; the; and generalizations are made (ibid).


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Induction, as explained by Malhotra and Birks (2006), is a form of reasoning that draws from

an instance or repeated combination of events in order to conclude or may be make universally

accepted generalizations. In Saunders et al. (2009) view, the induction approach allows the

researcher to appreciate the way in which humans interpret their social world; unlike the

deduction approach which enables a cause–effect link to be made between certain variables

without understanding humans and the context within which they find themselves. The strength

of the inductive approach therefore lies on the developing of the understanding of humans and

how they interpret their social world. Furthermore, unlike the deductive approach, the inductive

approach provides a less structured/flexible methodology that is likely to reveal some

additional explanations to the phenomenon under study. Also, the context in which events took

place is greatly important to the inductive approach (Saunders et al., 2009). It is therefore more

appropriate to use a small number of respondents in an inductive approach as against a large

number in the deductive approach. Thus, researchers inclined towards the inductive approach

should work with qualitative data and triangulate data collection methods in order to establish

different views of the phenomena (Easterby-Smith, Thorpe, & Lowe, 2002). For these reasons,

the researcher adopts an inductive approach to better understand entrepreneurial leadership

from the Ghanaian perspective/context.

4.4 Research Design

Malhotra & Birks (2006) defined research design as “a framework or blueprint for conducting

the marketing research project. It also specifies the details of the procedures necessary for

obtaining the information needed to structure or solve marketing research problems.” However,

research design is not only limited to the field of marketing, but can be used in any field of

research. In order to structure or solve research problems, the research design specifies the

necessary process that the researcher needs to go through to obtain the information needed. It

also provides both the framework and road map for the research (Kuada, 2015). Thus, Teyi


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(2014) concludes that the research design sets the basis for conducting the project. McGivern

(2006) notes that the research design’s purpose of is to organize the research such that it

provides evidence necessary to answer the research problem as “accurately, clearly and

unequivocally” as possible. A research design also ensures that the researcher strives toward

objectivity (Guy, Edgley, Arafat, & Allen, 1987).

Also, the process of turning a research question into a research project can be referred to as a

research design as (Robson, 2002). However, a research design is different from research

tactics (Saunders et al. 2009). The overall plan for the research is the research design, and the

finer detail of data collection and analysis is the tactics. Other scholars also postulate that, the

choice of a research design shapes the subsequent research activities; for instance, what data to

collect and how it should be collected (Ghauri & Grønhaug, 2005; Kornhauser & Lazarsfeld,

1955). The research design invariably exposes the type of research (whether exploratory,

descriptive or casual) and the researcher’s priorities (Ghauri & Grønhaug, 2005). These

priorities are reflected in the purpose of the study which then seeps into the research questions

asked.

Usually, the research methods’ literature classifies research purpose into three, namely:

exploratory, descriptive and explanatory (Saunders et al 2009). They however noted that, the

research project may have more than one purpose, just as a research question can be both

descriptive and explanatory.

Descriptive research, as the name suggests “portrays an accurate profile of persons, events or

situations” (Robson, 2002; p.59). In addition, Malhotra and Birks (2006) postulate that the

major goal of descriptive research is to describe something, such as, market characteristics or

functions. In conducting this kind of research, Saunders et al. (2009) are of the view that the


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formulation of specific research questions and hypotheses precedes data collection; therefore,

the researcher needs to understand the phenomena on which (s)he wishes to collect data before

collecting it. As a result, descriptive research is pre-planned and structured, as the information

needed is clearly defined. It is most appropriate for surveys, because it is based on large

representative samples. Again, Malhotra and Birks (2006) is of the view that descriptive

research design lays down the methods for selecting data sources and how to collect data from

those sources.

According to Saunders et al. (2009), explanatory studies are studies that prove the existence of

causal relationships between variables. In order to explain the relationships between variables

in explanatory studies, the emphasis is on studying a situation or a problem. So, a researcher

has two options: either collect qualitative data to explain, in order to get a clearer view of the

relationship, or subject the data to statistical tests such as correlation (ibid).

An exploratory research refers to a research design that is characterized by a flexible and

evolving approach to understand events that are inherently difficult to measure (Malhotra &

Birks, 2006). Robson (2002; p.59) also highlight that a study exploratory in nature, is a

constructive way of finding out “what is happening; to seek new insights; to ask questions and

to assess phenomena in a new light.” in cases where the exact nature of the problem is

uncertain, yet the researcher wishes to explain the problem, exploratory research is most

appropriate (Saunders et al., 2009).

A search of the literature; interviewing ‘experts’ in the subject; and conducting focus group

interviews are the three main ways of conducting exploratory research (Saunders et al., 2009).

They further postulate that exploratory research’s advantage over both descriptive and

explanatory is its flexible nature and the fact that it is adaptable to change. Thus, when


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conducting the exploratory study, a pollster must be willing to make adjustments where

necessary, due to new data that appear and new insights that may occur. Metaphorically, Adams

and Schvaneveldt (1991) compared exploratory research with the activities of a traveler or

explorer because of the flexible nature of their expedition. They however emphasize that, the

flexibility in this context does not mean there is no direction to the investigation. Instead, it

means, the researcher initially has a broad focus and as the research progresses, the broad

picture becomes progressively narrower.

Thus, this research is exploratory in nature as it tries to explain the concept of entrepreneurial

leadership and get new insights on the concept within the Ghanaian context, as well as find out

how and/or in what ways this concept influences SME growth.

4.5 Research Strategy

Research strategy is the roadmap for undertaking a systematic research of a phenomenon of

interest (Marshall & Rossman, 1999). Similarly, Saunders et al. (2009) also refers to research

strategy as the general plan regarding the answering of research questions that have been set.

Again, Remenyi, Williams, Money and Swartz (1998) proffer that every research is guided by

a strategy, and that strategy gives a general guideline for the research, which includes the

manner in which the research is to be conducted.

A researcher has the opportunity to choose from a variety of research strategies. Yin (2013;

2003) posits that irrespective of whether the study is exploratory, descriptive or explanatory,

these strategies can be used; although, some of these strategies are deductively inclined while

others are biased towards the inductive approach. It is also important to note that none of the

research strategies is inherently superior or inferior to any other (Saunders et al., 2009);

however, a researcher’s choice of strategy is directed by the research question(s) and


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objectives, the extent of existing knowledge, the amount of time and other resources that he/she

may have available, as well as the researcher’s own philosophical viewpoints.

Thus, Saunders et al. (2009) postulate that the most important thing is not the label that is

attached to a particular strategy, but that the chosen strategy should help the researcher solve

the research question(s) and meet the research objectives. In view of that, Saunders et al (2009)

outline seven research strategies that any researcher can select from.These include: experiment,

ethnography, action research, archival research, grounded theory, survey and case study. Some

of the strategies are discussed below followed by a justification for using the case study

approach.

Ethnography

Ethnography is a typical inductive approach believed to explain social world at first hand

(Saunders et al, 2009). This strategy is a qualitative design, which according to Creswell

(2007), includes studying how people of the same culture behave, relate to one another and

their language. The researcher adopting this strategy should describe and interpret the shared

and learned patterns of values, behaviors, beliefs, and language of a cultural-sharing group

(Harris, 1968, cited in Creswell, 2007). Saunders et al (2009) therefore opine that the researcher

ought to immerse him/herself in the daily lives of the people sharing the same culture, with the

intention of observing and interviewing them. The research process has to be flexible and

responsive to change since the researcher will constantly be developing new patterns of thought

about what is being observed. Ethnography research strategy is timewasting; yet, the

researcher’s purpose for choosing this strategy is to describe and explain the social world in

which the research subjects live just as they would describe and explain it (Saunders et al,

2009).


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Archival Research

As the name suggests, archival research strategy makes use of documents in the archives.

Saunders et al (2009) explain that in archival research, the researcher relies on administrative

records and documents as the primary source of data. In addition, Bryman (1993) noted that

archival research can refer to both recent and historical documents, although the term has

historical connotations. As a result, this strategy allows researchers to ask questions related to

past events and changes that have occurred over time; irrespective of whether exploratory,

descriptive or explanatory in nature (Saunders et al, 2009). However, the ability to answer such

questions is however limited by the kind of the administrative records and documents available.

Thus, Saunders et al. (2009) suggest that the researcher using this strategy needs to establish

what data are available and also design the research to make the most of it.

Grounded theory

According to Saunders et al. (2009), grounded theory is developed from data generated by a

chain of observations. Collis and Hussey in 2003, referred to this strategy as

inductive/deductive approach, why because, researchers continually refer to the data, to

develop and test theory. This strategy according to Goulding (2002), helps in predicting and

explaining behaviors and is geared towards developing and building theory. The strength of

grounded theory lies in the generation of theories regarding social phenomena: that is, to

develop higher level understanding that is “grounded in, or derived from a systematic analysis

of data. (Lingard, Albert & Levinson, 2008). The aim of this strategy is to describe processes

rather than test or verify existing theories. Grounded theory is therefore suitable for studies

concerning social to social relations or experiences (Saunders et al 2009).


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Case Study

Case study is a "systematic inquiry into an event or a set of related events which aims to

describe and explain the phenomenon of interest. A case study is “a strategy for doing research

which involves an empirical investigation of a particular contemporary phenomenon within its

real life context using multiple sources of evidence” (Robson, 2002; p. 178). Saunders et al

(2009) also describes case studies as a study of a phenomenon in its real context. Yin (2003)

defines case study as an empirical inquiry that investigates a contemporary phenomenon within

its real life context, especially when the boundaries between phenomenon and context not

clearly evident. He further adds that a case study allows the researcher to explore individuals

or organizations simply through complex interventions, relationships, communities or

programs (Yin, 2011). Case study approach is most appropriate for researchers in search for

rich understandings of a phenomenon in a given context and the processes being enacted

(Morris & Wood, 1991). Most often than not, a case study is used in explanatory and

exploratory research, and it has a substantial capability to generate answers to ‘why’, ‘how’

and ‘what’ questions although what and how questions tend to be more associated survey

strategy (Saunders et al., 2009).

The aforementioned paragraphs highlighted the various research strategies that can be espoused

in this study. Guy et al (1987) however warns that the researcher must be cautious when

selecting a research strategy. They suggest that the researcher must consider the unit of

analysis, research period, research setting and research purpose before deciding which research

strategy will be most appropriate for the research.

In view of that, this research adopts the case study strategy, it is inductive, and

nonexperimental. This is because; Morris and Wood (1991) postulate that case study approach

is most appropriate for researchers in search for rich understandings of a phenomenon in a


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given context and the processes being enacted. Thus, since the researcher’s main aim is to gain

in-depth understanding of entrepreneurial leadership and SME growth, case study strategy is

the most appropriate. Creswell (2007) also argues that a case study is a good approach when

the enquirer has clearly identifiable cases with boundaries and seeks to provide an in-depth

understanding of the cases or a comparison of several cases. This is evident in the cases the

researcher used as all the respondents are Ghanaian transformational entrepreneurs who are

CEOs of their various companies. As posited by Yin (2011), the case study strategy provides

the researcher the liberty to explore a number of Ghanaian transformational entrepreneurs

through complex interventions, relationships, communities or programs. Last but not the least,

one of the objectives of this study is to understand ‘how’ transformational entrepreneurs in

Ghana understand entrepreneurial leadership, and Saunders et al. (2009) opines that the most

appropriate strategy that answers why’, ‘how’ and ‘what’ questions is the case study strategy;

hence my choice of the case study strategy.

4.6 Choice of Research Method

In any research, the researcher is normally confronted with the choice of method to employ in

data collection and analysis. A researcher may choose either a qualitative method or a

quantitative method or a blend of both methods (normally referred to as mixed methods).

Quantitative vs. Qualitative

This study is exploratory; and in exploratory research, there are two kinds of approaches- the

quantitative approach or qualitative approach. Quantitative research refers to the research

techniques that seek to measure data and, apply some form of statistical analysis. On the

contrary, qualitative research is mainly an exploratory design, which is unstructured and based

on small samples, with the aim of to providing insight and understanding.


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When it comes to making a choice, Malhotra and Birks (2006) point out that, assertive positions

(i.e. which approach is perceived to give the most accurate understanding of the phenomenon

(or phenomena)) are often taken in favor of either qualitative or quantitative research by both

researchers and decision-makers alike. Many quantitative researchers are quick to dismiss

qualitative studies completely because they believe it provides no valid findings – indeed as

being little better than journalistic accounts (ibid). They further assert that qualitative

researchers ignore representative sampling, with their findings based on a single case or only a

few cases (Malhotra & Birks, 2006). Some qualitative researchers too firmly reject statistical

and other quantitative methods as yielding shallow or completely misleading information. They

believe that to understand some phenomenon such as cultural values and consumer behavior,

involves interviewing or intensive field observation. Strauss and Corbin in 1998, posit that

qualitative researchers see qualitative techniques as the only method of data collection sensitive

enough to capture the differences in consumer attitudes, motives and behavior.

According to Wilson and Hutchinson (1996), there is a close parallel in the distinctions between

exploratory and conclusive research and qualitative and quantitative research. Quantitative

research involves the use of structured questions where the response options have been

predetermined and a large number of respondents is involved. That‘s, a large sample and

structured questionnaire make up quantitative research. A researcher is able to measure and

analyze data as well as establish a detailed relationship between an independent and dependent

variables using the quantitative approach. This is possible because quantitative research gives

room for more objectivity about the findings of the research. It is most appropriate for testing

hypotheses in experiments because of its ability to measure data using statistics. However,

Burns and Bush (2000) points that in quantitative research, the context of the study is ignored.

Unlike qualitative research, quantitative research does not study things in a natural setting.


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Also, large samples are always preferred in quantitative research. This is because the larger the

sample, the more statistically correct the results will be.

On the other hand, qualitative research involves an explanatory and realistic approach to the

world. According to Denzin and Lincoln (2005), qualitative researchers study things in their

natural settings, attempting to make sense of, or interpret phenomena in terms of the meaning

people give them. As a result, qualitative research provides an in-depth examination of the

phenomenon in question. It, as well, examines complex questions which cannot be possible

with quantitative research. In addition, it is not limited to rigidly definable variables. However,

it is very expensive and labor-intensive as well as time consuming to use qualitative research.

As a result of its subjectivity, there are procedural problems associated with qualitative

approach. This also makes replicability very difficult for researchers, not to mention that the

qualitative approach is riddled with researcher bias as result of its subjective nature. In spite of

all these complexities, this study adopts the qualitative research approach because according to

Creswell (2007), it is gives holistic account. In other words, it develops a complex picture of

the phenomenon under study. Hence, the qualitative research approach in this study provides a

complete account of entrepreneurial leadership. Also, the researcher seeks to understand how

transformational entrepreneurs in Ghana understand entrepreneurial leadership and whether it

influences the growth of their enterprise(s) in any way.

4.7 Types of data

As identified by Ghauri and Gronhaug (2005), the two sources used in collecting data are

primary and secondary sources. Hence, the origin of the data is the main difference between

primary data and secondary data (Patzer, 1995). Both can be of extreme importance to a

researcher. Malhotra (2007) labelled the type of data invented by the researcher to specifically

address the research problem as primary data. It is custom-made just for the imminent problem.


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Secondary data, conversely, are data collected for some goal other than the problem at hand,

but has some significance to the current research (Hair, Wolfinbarger, Ortinau, & Bush, 2008;

Malhotra, 2007). Some examples of secondary data include data generated within an

organization, information made available by business and government sources, commercial

marketing research firms, and computerized databases. Using secondary data is cost-effective

and provides a quick source of background information.

In contrast, primary data is regarded as more authentic and reliable as well as objective since

it has not been published yet (Patzer, 1995). Primary data has a higher validity than secondary

data because it has not been altered by anybody. Among the numerous advantages of primary

data include greater control of data, address of specific issues, more efficient budget spending,

and so on and so forth. However, primary data is very expensive and time consuming.

Secondary data, on the contrary, is relatively cheaper and easier to obtain but it is prone to

distortion and therefore has less reliability and validity value.

Thus, the researcher chooses to use primary data in order to avoid distortion and inconsistencies

that come with secondary data. Also, although secondary data is cheap, there is no readily

available secondary data on transformational entrepreneurs and how their entrepreneurial

leadership have influenced the growth of their business in the Greater Accra Region of Ghana,

hence the researcher’s choice of primary data.

4.8 Population and Sampling

A population refers to the total of all the elements, sharing some common set of characteristics,

which comprises the universe for the purpose of the marketing research problem. A sample is

a subgroup of the elements of the population selected for participation in the study; and a

sample frame consists of a list or set of directions for identifying the target population


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(Malhotra & Birks, 2006; 2007). In this research, the population includes all SMEs in Ghana,

and the sampling frame includes transformational entrepreneurs in the Greater Accra Region,

who have been enlisted on the Ghana Club 100 at one point in time. This means that once an

entrepreneur’s firm has made it to the Ghana Club 100, that entrepreneur is a transformational

entrepreneur. The sample therefore refers to the people the researcher selected for the

interview.

As noted by Malhotra and Birks (2006), a number of qualitative elements such as:(1) the

importance of the decision, (2) the nature of the research, (3) the number of variables, (4) the

nature of the analysis, (5) sample sizes used in similar studies, (6) incidence rates, (7)

completion rates, and (8) resource constraints were taken into consideration when determining

the sample size; thus, the sample size for this research is four (4). The researcher chose four

respondents because according to Baker, Edwards & Doidge (2012), one respondent is enough

provided that respondent provides the needed information. Also, Creswell (2007), suggests that

between four to five respondents is appropriate for a multiple case study.

Sampling Techniques

There are the two main types of sampling techniques: probability sampling and non-probability

sampling (Malhotra & Birks, 2006).

Probability Sampling

Saunders et al, (2009) explain that with probability sampling each member of the population

has equal chance or probability of being selected. In other words, every individual in the

population has the same opportunity of being selected. Also, Malhotra & Birks (2006) refers

to probability sampling as the sampling procedure in which each element of the population has

a fixed probabilistic chance of being selected for the sample. Consequently, probability


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sampling is often associated with survey and experimental research strategies (Saunders et al,

2009). They further indicated that across disciplines, four types of probability sampling are

generally accepted techniques standard. These include; random sampling (i.e. it refers to the

random choosing an individual or sample from a sampling frame); systematic sampling (i.e.

this involves selecting a sample at even intervals from the sample frame); stratified random

sampling (i.e. it involves dividing the sample into two or more strata and later using either

random sampling or systematic sampling to select from each strata); and cluster sampling (i.e.

this involves the division of the population into discrete groups and later selecting the sample

from the groups). In probability sampling, sampling units (a single element or group of

elements subject to selection in the sample (Zikmund, 1994), are selected by chance.

Non-Probability Sampling

On the other hand, non-probability sampling is a sampling technique in which the sampling

units are selected based on the personal judgments of the researcher. According to Saunders et

al (2009) and Barnett (1991), there are four different categories of non-probability sampling:

(1) quota sampling, which is a two-stage, restricted judgmental sampling. It ensures that the

various subgroups of the population will be represented on certain key characteristics to the

exact extent that the investigator desires (Zikmund, 1994). (2) Snowball sampling is the type

of non-probability sampling where the first group of respondents is selected randomly, and

then the second group are selected based on the recommendations of the first group. (3)

Judgmental sampling (also known as purposive sampling) is a form of convenience sampling

in which the population elements are selected based on the experience and beliefs (what the

researcher deem as appropriate characteristic) of the researcher. Babbie (1990) also suggests

that the researcher can select based on his/her own knowledge about the population, its

elements, and the nature of the research aims. The last but not the least is convenience sampling

where the researcher obtains the sample units that are most conveniently available to him/her


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(Zikmund, 1994). The selection of sampling units is left primarily to the interviewer (Malhotra

& Birks, 2006). Marshall (1996) explained that researchers use this technique because it is the

least costly, in terms of time, effort and money. Malhotra and Birks (2006) explain that often,

respondents are selected because they happen to be in the right place at the right time.

In this study, the researcher uses the non-probability sampling technique (i.e. convenience and

snowballing) to select the respondents. These sampling techniques (i.e. convenience and

snowballing) rely on the researcher’s own judgement (Malhotra & Birks, 2007). The researcher

used convenience sampling because the sample units are based in Accra and also, the researcher

sees some of the people very often. Due to the nature of the study, the researcher chose the

respondents based on the fact that they are Ghanaian entrepreneurs who have ‘transformed’

their businesses (through innovation & creativity, proactiveness, good leadership among

others) over the years and have achieved some level of significant growth, hence their

recognition to be enlisted on the Ghana Club 100. Anecdotal evidence also shows that coming

by such top-notch entrepreneurs could be a frustrating process (due to their busy schedules and

other encumbrances), thus, a snowballing technique was used to get some of the respondents.

That is to say that, after interviewing the first respondent, he recommended another

entrepreneur of his caliber to the researcher. This eased the respondent acquisition process for

the researcher.

Sampling size

As indicated above, the researcher chose equal number of two males and two females to avoid

gender biases or any unfair influence of gender on the validity and reliability of the study

results.


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4.9 Data Collection Instrument

According to Malhotra and Birks (2007), there are four data collection instruments, viz.;

participant observation, personal interviews, telephone interviews and self-administered

questionnaires used in collecting primary data. Creswell (2009) also identified some common

data collection instruments that are exclusive to qualitative researchers. These are interviews,

observation, documents, and audio-visual materials. Other scholars add pictures, archival

records, and physical artefacts (Miles, Huberman & Saldana, 2013; Saunders et al, 2009; Yin,

2015). Each of these data source brings strength to the findings as these different strands of

data are joined together to enable the researcher understand the entire phenomenon (Baxter &

Jack, 2008; Teyi, 2014).

Bhattacherjee (2012) is of the view that, qualitative researchers generally employ qualitative

methods such as unstructured interviews and participant observation to study a social

phenomenon. According to Kajornboon (2005), interviews are systematic ways of collecting

information through talking and listening to individuals who may provide relevant data for a

research. Interviews can be structured or unstructured and can be implemented with one or

more persons. They can also be done over the phone. Creswell (2009) however cautions that

the responsibility lies on the researcher to understand and report the meanings that participants

give to their experiences, as well as taking measures to restrict meanings that the researcher

would have regarding the issue.

Interviews are appropriate to use when you want to know the underlying reasons for

respondents' standpoint. Patton (2002; p. 278) opined that the “purpose of interviewing is to

find out what is in and on someone else’s mind.” Thus, the researcher used personal interviews

to collect data in order to:


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a) To explore how Ghanaian entrepreneurs understand the concept of entrepreneurial

leadership.

b) To evaluate the effect(s) of entrepreneurial leadership or the lack of it on SME growth.

c) To identify the challenges faced by entrepreneurial leaders in achieving SME growth.

d) To evaluate the effect(s) of entrepreneurial leadership on SME growth.

Additionally, Patton (2002) outlined some frequently used interview techniques such as

standardised open-ended interviews, informal conversational interviews, the general interview

guide approach and close, fixed response interview. Also, since “the quality of the information

obtained during an interview is largely dependent on the interviewer” (Patton, 1990; p. 279),

the researcher employed semi-structured in-depth interview, with questions drawn from the

interview guide (see Appendix 1) for the study. Where necessary, informal conversational

(follow-up) questions were also asked to gain better clarification of their understanding of the

concept(s) under study. In the process, some additional information were volunteered (Baxter

& Jack, 2008).

Furthermore, the interviewer started with some pep talk to break the ice, and just before the

interview began, the interviewer asked permission to record and also assure them of utmost

confidentiality. As much as possible, the interviewer used simple English that the interviewees

would understand. To ensure that accurate responses were captured, the researcher periodically

asked for clarification and confirmation. The interviewer also ensured a cordial atmosphere by

not showing disapproval nor personal opinions for any of the answers. This made the

respondents feel at ease and ready to provide the information needed for the study.

The researcher used the smartphone to record the interview proceedings and paused, anytime

there were some interruptions. This is because all but one of the interviews took place in the


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respondents’ offices. This made the respondent feel comfortable knowing that their normal

business dealings were off record. Also manual records were taken as back-up. This is because

the second interview had to be redone because some phone calls interrupted the recordings (i.e.

it automatically stopped the recording on the phone. After that experience, the phone was put

on flight mode before commencing all the other interviews. After each interview session, the

researcher thanked the respondents and reassured them of confidentiality after which

interviewees advised the researcher on life and business issues.

After the interviews, the researcher transcribed all the recordings. It was a tedious and time-

consuming process. However, it was necessary as it enabled the researcher become familiar

with the scripts and made analysis more effective.

4.10 Data Analysis

Creswell (2013) suggests that the type of qualitative research strategy will determine the type

of analysis that will be carried out. For instance, in ethnographic studies the most appropriate

form of analysis is the conversational analysis. Also, in grounded theory research, the most

appropriate data analysis is coding. For case studies, either content analysis or thematic analysis

can be used to analyze the data gathered, however, Saldana (2009) is of the view that thematic

analysis is appropriate for all qualitative studies. Therefore, since this study employs the case

study strategy, it will adopt the thematic data analysis in analyzing the data collected from the

interviews.

Braun and Clarke (2006) in their paper “Using thematic analysis for qualitative study”,

described thematic analysis as one of the foundational qualitative analysis. Thematic analysis

can be defined as “a method for identifying, analyzing, and reporting patterns (themes) within

Data” (Braun & Clarke, 2006; p. 6). Holloway and Todres (2003) also described thematic


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analysis as a type of qualitative analysis done based on the underlying theme the study is based

on and which has also been discussed in literature. According to the researchers the themes,

include important topics that are in relation to the research objectives formulated. The study

adopted to use thematic analysis because of its flexibility as has been discussed by Smith and

Osborn (2003) and Hutchby and Wooffitt (1998); and the ability to easily identify the themes

for data analysis for the study from the literature and research questions.

The qualitative analysis aims to highlight the underlying pattern and processes that exist in the

data by finding the leading words explaining the content (Miles, Huberman, & Saldana, 2013).

The analysis will be conducted based on the thematic qualitative process; the pattern of leading

key words comes from the theory and secondary data. Thus, by transcribing the interview and

establishing the connection with the questions, relevant data is drawn. The following coding

will therefore be used for the transcription. The first respondent will be coded as MK, the

second respondents will be named as GC, the third respondent will be identified as DA; and

the last respondent will be codded as AJ. The interviewer will be coded as I (interviewer).

4.11 Time Horizon of the study

The two main fundamental time horizons used in research are cross-sectional and the

longitudinal time horizons. Saunders et al (2009) refers to the cross-sectional time horizon as

the “snapshot” and the longitudinal time horizon as the “diary,” or a study conducted over a

period of time (usually above one year). Boateng (2014) however identifies a third time

horizon referred to as the time series. Saunders et al (2009) further stress that the “time horizons

to research design are independent of which research strategy you are pursuing or your choice

of method” (p. 148).


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Cross-sectional study

Cross-sectional studies refer to the study of a particular phenomenon (or phenomena) at a

particular time (Saunders et al, 2009). Malhotra and Birks (2006) also add that in cross-

sectional studies, the researcher collects information from any given sample of population

elements only once. A lot of academic research projects are necessarily time constrained.

Though cross-sectional studies often employ the survey strategy (Easterby-Smith, Lyles, &

Tsang, 2008; Robson, 2002), they can also be used in qualitative methods. This is because

many case studies are based on interviews conducted over a short period of time. This study

therefore employs the cross sectional time horizon because the interviews were conducted over

a short period of time (i.e. two weeks).

4.12 Validity and Argument Reliability

The necessary steps were taken to ensure both content and construct validity. In line with Si

and Bruton (2005), the researcher conducted a face-to-face interview with all the respondents

and also assessed their businesses. In addition, a summary of the findings were given to all

respondents to confirm if they have been well represented, and also make suggestions

(Goodwill, Mayo, & Hill, 1997). Thus, the researcher can confidently defend the credibility,

reliability and validity of the results.

4.13 Ethical Considerations

As recommended by Miles and Huberman (1994), ethical considerations are paramount and

the onus lies on the researcher to be sincere with respondents, and also treat the confidential

information appropriately. These were adhered to during the data collection process. In

accordance with this, the researcher allowed the respondents to take part in the research

voluntarily (meaning, neither of them was forced nor threatened to join in the research), and

also ensured that participants were not harmed in anyway. Verbal permission was sought form


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each respondent before any digital recording was done. In all, participants were also assured

that the study is for academic purposes only. Also, the privacy of all the respondents was

protected as codes (i.e. MK, representing Respondent 1; GC, representing Respondent 2; DA,

representing Respondent 3; and AJ representing Respondent 4) were given to them to conceal

their identity.


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CHAPTER FIVE

DATA ANALYSIS AND DISCUSSION OF FINDINGS

5.0 Introduction

This chapter presents the analysis of the results as well as the discussion on the findings from

the four cases. The interpretations related to the findings are in tandem with the main objectives

of this study and some emerging issues that came out from the responses. Extracts from the

interviews which support the presentation of the findings, were coded using letters (i.e. MK,

representing Respondent 1; GC, representing Respondent 2; DA, representing Respondent 3;

and AJ representing Respondent 4) in order to ensure anonymity.

5.1 Presentation of findings

This section reports the data obtained from the interview sessions. The information received

are grouped under themes to address the research objectives and questions raised in chapter

one.

5.1.1 Characteristics of the Respondents

The table below (Table 5.1.1) shows that a total of four respondents who have collectively been

in business for over 100 years took part in the study. Each of the respondents is over fifty years

old, and a well-educated CEO in his/her company, with the least qualification being a Master’s

degree. In addition, all respondents are married with children, except one who is a single parent.

Of the four respondents, two of them are males and the other two are females. All respondents

are above 50 years old and are leaders in their field of endeavour.


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Table 5.1.1: Characteristics of the Respondents

Source: Researcher’s own developed from Field data, 2017

RESPONDENT PROFILE

MK He is a renowned pharmacist in his late sixties. He is the CEO of Company X and has been in business for over three decades. He’s well

educated and is currently in the third year of his PhD studies, although he has a Doctor of Science honorary causa from Kwame Nkrumah

University of Science and Technology. Company X comprises of at least twelve other subsidiaries. MK is married with nine children,

and has won many awards (See Exhibit 1) to his credit. He has also served a number of boards such as; Ghana Red Cross Society,

Pentecost University Council, Ghana Investments Promotion Center, Centre for Scientific and Industrial Research, and among others.

GC She is a US & UK trained Medical Aesthetician with over thirty years’ experience in the Beauty Therapy Industry. She is currently the

Chief Executive Officer of Company Y which consists of six other subsidiaries all in Accra, Ghana. Her products are enjoying good

patronage amongst black people in the Diaspora and Africa. GC is married with three children and has won a number of prestigious

awards (See Exhibit 2) due to her invaluable contribution to the beauty therapy industry in Ghana. She also serves a number of boards

including; Association of certified Entrepreneurs, Ghana Association of Women Entrepreneurs, Executive Member of Chartered Institute

of Marketing, Ghana (CIMG), British Association of Beauty Therapists & Cosmetologists and a host of many others.

DA He is a well-educated man in his early sixties with over thirty years’ of international experience in business. He can be referred to as

“jack of all trade” due to the diverse nature of his business. DA is the CEO of Z group of companies, which constitutes six other

companies with several branches in Ghana and Europe. He is a husband to one wife and a father of seven children. He gained international

recognition and won an award in Geneva. He has also won other awards to his credit.

AJ She is a strong-willed woman in her late fifties, who has been in the total event management business for a little over two decades. She

is currently the CEO of Q Limited. Q Limited has four other subsidiaries that offers services such as construction, interior decoration,

horticulture and landscaping, and purchasing and supply. She is well-educated with her current qualification is an MA in Business

Administration (Human Resource Management option). AJ is a single mother of two. She has won several awards. Some of which

include Most Outstanding Interior Design Professional at the Feminine Ghana Achievement Awards 2016 and Event Management

Entrepreneur Of the year 2015 at the Ghana Entrepreneur Awards 2016. In that same year she was also recognized as a designate (to

represent the Ghanaian woman entrepreneur) at the Japan-Africa Business Women Exchange Seminar in Tokyo, Japan. She has served

on a number of boards including the Board of Microfinance and Small Loan Centre (MASLOC).


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5.1.2 Understanding entrepreneurial leadership

In order to achieve the first objective (i.e. to explore how Ghanaian entrepreneurs understand

the concept of entrepreneurial leadership), the researcher asked a number of questions (i.e. six

questions) to help expose the respondents’ understanding of entrepreneurial leadership. When

asked “How do you understand the concept of entrepreneurial leadership?” the respondents

have this to say:

“….. Well, I understand entrepreneurial leadership as someone who can create jobs- not only

fixed to one job but who can create other jobs; innovate other things- services or products that

are available and lead the staff to organize new things. Entrepreneurial leadership is a

pacesetter. If you are an entrepreneurial leader, then I believe that you should bring out new

things for people to rather copy you, not you copying other people.” –MK

“I think entrepreneurial leadership is… is the ability of leaders and entrepreneurs to conceive

the ideas number one and two; start implementing it, not only implement it but try and get all

the other resources such as human, capital and everything and more importantly be able to

work through others to also achieve that goal or whatever they have.” – GC

‘My understanding of entrepreneurial leadership is someone who mobilizes people, directs

them and taking the risks. [] Yeah, I think that’s my little understanding of entrepreneurial

leadership, you have to mobilize people, being proactive, taking risk, like being

entrepreneurially oriented, ahaaa. If you are entrepreneurial leader, you must be

entrepreneurially oriented; meaning that you have to take risk, you have to be proactive, create

self-autonomy, and being competitively aggressive.” – DA

“Entrepreneurial leadership is the leadership that directs. You have become a figure. [….]

Some people who are also meant to be at the second level who will look up to the entrepreneur


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because the entrepreneur is a risk taker. Not many people have that- the oomph to take risk

and then when they get their fingers burnt, they back out. An entrepreneur is a leader who

directs the path of the business” -AJ

From the responses above, it appears respondents have an idea of what entrepreneurial

leadership is all about. While all respondents try to link entrepreneurship and leadership

concepts in explaining entrepreneurial leadership, it seems the gender of participants play a

role in how they perceive entrepreneurial leadership. For instance, the males’ understanding of

entrepreneurial leadership is inclined toward an entrepreneurship approach as seen in MK’s

response “Well, I understand entrepreneurial leadership as someone who can create jobs- not

only fixed to one job but who can create other jobs; innovate other things- services or products

that are available and lead the staff to organize new things”; while the females view the

concept is inclined toward a leadership approach. This is evident in AJ’s response

“Entrepreneurial leadership is the leadership that directs... An entrepreneur is a leader who

directs the path of the business.”

5.1.2.1 Description of an Entrepreneurial leader

Having shared their view on the meaning of entrepreneurial leadership, the researcher asked

the respondents to describe who entrepreneurial leaders are, and whether or not they are one?

All respondents claim to be entrepreneurial leaders because they believe they possess some

attributes such as: the ability to spot opportunities, take risks, be innovative, proactive,

motivate/influence, and being visionaries. The exact responses obtained from the field study

are stated below:

I think so. I think so. Because I create and share. I have 16 subsidiaries of my company, so

which means that I can easily organize business in any form. If I’m into farming, I’m into

pharmaceuticals, I’m into printing, I’m into microfinance, that should tell you that I’m an


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entrepreneur; and a leader means I get my staff, my people to follow me willingly, and to me

I’m an entrepreneurial leader. –MK

“He should not be risk-averse. […] He should also be able to invest. […] You should be

somebody who is a team player, … because as you know now entrepreneurship and business

generally globally is now talking about networking and partnership because the truth is that

nobody has… you know, you have something but others too have something and when they join

it, it will move it. Entrepreneurial leader is somebody who thinks about two or three

generations ahead. I think somebody who also gives back to society.... of course you have to

be innovative and… I think… that’s why I’m telling you that she’s an ideas factory….” -GC

“I’ll say entrepreneurial leader is someone who will influence his people, to achieve or let me

say mobilize people… people are resources. So somebody who maybe have identified an

opportunity and mobilizing people to achieve something. Yes, I’m one based on the description

we just gave, I fall in most of the attributes.” –DA

“I had to do an article and which was in relation with entrepreneurship. (Reading from the

article) entrepreneurship is about creativity and innovation to provide solutions to unmet

needs. So an entrepreneur always looks at where the society is lacking and where he or she

can also make money. […] So you have to look at unmet needs and see how you can carve you

niche wherever you want to. Entrepreneurship is also about providing employment to others

and supporting them with their growth and development. [….] You must be a visionary…Risk

taking.” - AJ

It can also be inferred from the response that, Ghanaian women entrepreneurs believe that

giving back to society one unique characteristic of an entrepreneurial as said by GC “…I think


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somebody who also gives back to society....” and AJ “Entrepreneurship is also about providing

employment to others and supporting them with their growth and development.”

5.1.2.2 Innovativeness

When asked to explain the various adjectives used in describing who an entrepreneurial leader

is, all participants explain innovativeness as either creating something new or enhancing

something or adding value to something. It is thus obvious that all participants have very similar

views to explaining the innovativeness dimension of an entrepreneurial leader. Below are their

responses:

“Of course, to bring out new things. And for now under the sun, God has created everything,

so whatever we are doing, we are just adding value to it. Yes, and to me that is innovative.” –

MK

“Innovation… your product…product development is very important ... We’ve improved upon

our products … In terms of our courses that we do here we’re always looking at ways we can

improve the courses, content wise and everything. Our business processes we’re also looking

at ways of improving it, making sure that our clients are satisfied. So innovation cuts across.”

–GC. Interestingly, GC adds that as a social entrepreneur finding different avenues of

sustaining an NGO’s operations (rather than seeking external aid), is one way of innovating.

“So the very smart entrepreneur, social entrepreneur for that matter will say okay “Let’s find

avenues of sustaining our operations … Last year it was about asking somebody to give you

money, this year it’s about you yourself making the money’’

“Creativity is developing something, pretty much out of nothing or enhancing that thing to

become a better product. Innovative and procedure are linked. You must have an opened mind

for new things. You shouldn’t be myopic in your thinking.” –AJ


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Surprisingly, one respondent believes that innovation is what enables an entrepreneurial leader

“to remain in business.” It is a “byproduct,” which is triggered as a result of competition. An

extract of the interview is provided below.

DA: … I mean, you don’t just start innovating, innovation comes in when you are facing

competition, when challenges are coming, then you have to innovate to be able to remain in

business. You understand, so innovation to me is (for lack of better words), let me say a

byproduct. … again it’s the competition because you want to create value for your customers

and so you must innovate. Sometimes by cutting down cost along the line, so that your product

can still be cheaper, so that the cost of you know, you can still make the same profit. It’s a way

of innovation. ... You see, innovation does not necessarily mean new products…..eeerm, you

see, for instance, you see this bottle of water … and you want to innovate, so you can just add

a feature. It’s an innovation. You see, the product doesn’t change, but something that can add

value to the customer is innovation.

I: So is creativity at play here?

DA: In fact creativity is the source of innovation. If you are not creative, you cannot be

innovative. Let me say, creativity is the antecedent of innovation.” –Excerpt of Respondent

DA’s interview.

5.1.2.3 Proactiveness

On the issue of proactiveness, all respondents agree that entrepreneurs see issues (it may be

challenges/opportunities) ahead and take initiative to respond or take the necessary action. This

is how MK puts it, “I don’t wait until things are done before. I can see problems ahead.

Proactive means you see things and you work on them before they would even arrive.” DA, on

the other hand, links proactiveness to taking advantage of opportunities. He said “Well, I

understand an entrepreneur’s proactiveness to be mobilizing resources to achieve an outcome


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(let’s say your mission/vision). Ahaaa, that’s proactiveness; pro-active” AJ related her

explanation of proactiveness to her story (see Appendix 2 Respondent AJ’s transcription) about

the German brothers. She answers, “In the case of the German, he was proactive. He didn’t sit

down. He was not reactive. He went for the opportunity.” Interestingly, one respondent is of

the view that being proactive includes dealing with issues quickly, as and when they arise- “J:

You should be an action person. That is it. If there’s a problem, don’t sit down and play

commentary about the problem, stand up and do something…” -GC

5.1.2.4 Risk-taking

When asked how they understood risk-taking, all participants admit that no one is uncertain of

what the future has in store. Thus, any investment or initiative undergone by the entrepreneurial

leader is risky as the person is unsure of the outcome as seen in MK’s response “… Sometimes

you lose, sometimes you gain…” Surprisingly, Respondent DA brings to light that the risk in

question is a “calculated risk,” i.e. not putting all your investments into a particular project.

“Oh yeah, because you don’t know the future. The future you don’t know it so, entrepreneurs

take risk, but it must be a calculated risk.

Calculated risk is you know, you don’t put all your eggs in one basket. Ahaaa, if you do that,

and it falls, you lose everything.” -DA

It is also observed that Respondent GC shares in this assertion- “He should not be risk-averse.

[…] the opportunity that the average person and for that matter the average woman would run

away from, she will take it […]. He should also be able to invest. You know risk comes with

investment. We are always constantly trying some many things at the same time.” In relation

to AJ’s story, she also adds that risk-taking also includes venturing into “unknown terrain. …

And risk taking also has to do with funding. Some people are very scared of taking loans. If

you are an entrepreneur and you are afraid of loans, goodnight.”


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5.1.2.5 Visionary

Pertaining to entrepreneurial leaders being visionaries, participants concur that being visionary

is in relation to the future. Thus, the entrepreneurial leader’s ability to see ahead of time (i.e.

into the future) is what makes him or her a visionary. The question of explaining an

entrepreneur is a visionary resulted in the following responses:

“To be able to see in advance, a vision, like a dream. To see things in advance so you see

opportunities, business opportunities in advance.” –MK

“Entrepreneurial leader is somebody who thinks about two or three generations ahead-

Visionary. You should be visionary. Don’t think about yourself. You should think generations

ahead of you.” -GC

“Yeah, entrepreneurs are visionaries. You see if you don’t have vision… Vision is futuristic.

What you want to achieve maybe in the next 5 years, 10 years, 20 years, ok, that is your vision.

So what an entrepreneur does is that (s)he has to craft strategies, how to get, how to achieve

that, ok… ” –DA

One respondent on the other hand, reveals that being a visionary is an important element of

entrepreneurial leadership and hence, uses the word “must” to connote a necessary variable.

This is how AJ puts it “You must be a visionary.”

5.1.2.6 Influencer/Motivator

All interviewees intimate that entrepreneurial leaders exert some amount of influence on the

society within which they operate. MK states that “In a society when you are a leader, you

influence, you advice, you are a counselor, you are a director, you are a consultant. So you are

everything to everybody. Yeah.” Also, the entrepreneurial leader influences their employees,

as well as motivate them to achieve organizational goals. All participants use things such as

money, vacations, education, among others to motivate their employees. For instance, “I

motivate my employees by giving them little tips here and there. Paying them sometimes for


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their overtime, giving them some days off after a hectic time. I also motivate them by sending

them outside the country. Some of them have gone on holidays, some of them have gone to

school. Funding some of them to go to school in South Africa, China, and Dubai. ….” –AJ

One respondent however leaves the option to his employees to decide and choose what

motivates them. He states that “I allow them to do things that they themselves want to do. Not

necessarily keep increasing their pay, or you know, I do that. But I think what has made a lot

of impact is allowing them to achieve the height that they themselves wanted to while working

for/with me.” –DA

Ironically, another respondent believes in “self-motivation.” She explains that self-motivation

reflects in an employees’ output, attitude and energy level among others. “I strongly believe in

self-motivation. … Number one. Number two, she also believes in being encouraging. … She

doesn’t want anything to deflate you so she’ll do whatever she can to advise you. She’ll

encourage you.” -GC

Similarly, another respondent believes that he’s doing his best, thus when employees don’t

perform or deliver, it breaks his heart. With emotions he said “….And so when they disappoint

me, I get heart broken. I have taken the person on an excursion, give you good salary, give you

accommodation, thinking that I’m doing my best so that you’ll not leave….” –MK

5.1.2.7 Instances that make respondents believe that they are entrepreneurial leaders

The researcher further asked respondent to state ways in which they have been innovative,

proactive, risk-taker, visionary and motivator. This question was asked in order to ascertain

whether indeed the respondents understood the adjectives they used in describing an

entrepreneurial leader, and could relate to it. Participants confirmed that they understood the

words that they used and cited instances which made them eligible to be classified as an

entrepreneurial leader. Gender did not have any significant impact on the explanations of the

words used. These are their responses:


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“Because I create and share. I have 16 subsidiaries of my company, so which means that I can

easily organize business in any form. If I’m into farming, I’m into pharmaceuticals, I’m into

printing, I’m into microfinance, that should tell you that I’m an entrepreneur; and a leader

means I get my staff, my people to follow me willingly, and to me I’m an entrepreneurial leader

… God has created everything, so whatever we are doing, we are just adding value to it. Yes,

and to me that is innovative … I don’t wait until things are done before I can see problems

ahead… I create businesses that do not work, and I don’t really mind if they did not work.

Sometimes you lose, sometimes you gain, and so I see myself as a risk lover… Yeah, if I create

new businesses then that means you have the vision, and I think I’m a visionary.” –MK

“…she started a business and now we have so many people. But she started alone and then her

husband bought into it [….] now the children too… […] the opportunity that the average

person and for that matter the average woman would run away from, she will take it […].You

should be somebody who is a team player, a strong team player is somebody who is selfless.

… You should think generations ahead of you. I think somebody who also gives back to

society… We travel to the Volta region and do donations and all that from her pocket […]

You want this to be done and somebody is just delaying your time so she just… before I realised

she’s gone down and come back [….] the problem is solved. She is just too proactive…

Motivation? She strongly believes in self-motivation. She normally likes people who are self-

motivated... Number two, she also believes in being encouraging […] … and then she generally

encourages. Her personality is really motivating […] It takes an entrepreneur who is thinking

outside the box.

… Innovation… We’ve improved upon our products … the courses, content wise and everything

… business processes … It takes somebody who is crazy. It doesn’t take an ordinary person on


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the street. It takes someone who is crazy. My boss says she is someone who is a rebel. […] She

is. She really is. She is an entrepreneurial leader. Trust me over the years I’ve seen her build

other companies within the beauty industry, you would be amazed. She’s not only about FC,

all the other companies.” -GC

“Eeerm, (thought about it for a while) I must say my innovation has rather come from

diversifying, because that has made me stay in business; and also because when you take DA

for instance, we supply products, products manufactured by other people, you understand, so

the innovation we do is to rather see where people need the items, yeah. …taking the same

products to a different place, a new market….

Yeah. A lot of people have copied me. For instance, I can boast of myself as the first person to

bring projectors, overhead projectors to Ghana, the first person as a dealer to Ghana… And

then a lot of people just copied. …For instance, global wallet was a product that the Ghana

Association of Forex Bureau and Visa. It’s a product that we came… it’s our product and the

bank of Ghana said we cannot do it on our own, and that we can do it through a bank. And

that was how Zenith Bank came in, and now everybody is doing it.…

Yeah. Absolutely, I’ve taken risks so much. For instance, recently, I took over a company, let

me say Company A. Company A was a company I was running with South Korean partners,

and now the Koreans have pulled out, and so I have to take over the company. It was a big risk

because …. I’m taking over both the assets and liabilities… So in fact I went into it and I’m

just stuck at a crossroads; did I get it right or I got it wrong? … Visionary because I’ve been

able to achieve more than 70% of the things that I wanted to do. These are things that I said

maybe in five years’ time, and I’ve been able to achieve them. So if visions are futuristic, and

I’ve been able to achieve them, then I can call myself a visionary…I’m a motivator because a


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lot of people have been able to achieve their dreams through me. Most of my workers who hold

master’s degree, etc. they started with SSS and went to the university, did their master’s and

they are still working for me…Yeah, a lot who have even copied me have left doing the same

thing that I’m doing...” – DA

“I started the business with nothing. Somebody paid me for his plan and I kept ploughing it

back but when I got to a certain stage, even the bank that I was banking with saw that I was

labouring. I could not keep up and they offered a loan. I didn’t blink, I took it… I could invest

in things which could make us more visible. My motivation has been always to, first of all is to

provide for my family. Secondly which is more important is, to give back to society. I motivate

my employees by giving them little tips here and there. Paying them sometimes for their

overtime, giving them some days off after a hectic time. I also motivate them by sending them

outside the country. Some of them have gone on holidays, some of them have gone to school.

Funding some of them to go to school in South Africa, China, and Dubai… They always go on

courses, professional courses, we know what we are doing. It’s a fluid thing and those people

who are in that, we call ourselves creative. You have to be very dynamic and every time people

are bringing out new things … We do interior decoration, we are into provision of construction

materials and we also do a bit of construction on the side and pretty much we do a bit of

purchasing of supply…” AJ

Having received all these responses from the participants, the researcher believes that Ghanaian

transformational entrepreneurs have a fair understanding of the concept of entrepreneurial

leadership and are practicing it. The researcher theorises that this could probably results from

the newness of the concept. Although the concept is being practiced in Ghana, Ghanaian

entrepreneurs are not aware of it. This is evident in DA’s response, “…I see this concept to be

more academic because when we are out there, some of these things are not major concerns to


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us, the concern is how to achieve your mission, your vision… It’s not much of a focus whether

you are entrepreneurial leader or whatever. The focus is how you achieve your vision.”

5.2 Human Capital of an entrepreneur and SME growth

On the issue of the human capital of the entrepreneur, the researcher asked whether the

entrepreneurs’ educational qualification, training, skills, as well as exposure and experience

that he/she may have acquired have contributed to the growth of their enterprise. The researcher

observed that all respondents have some education in management with the least form of

educational qualification being a Master’s degree. Notable again was the fact that all

participants have had prior working experience before setting up their own enterprises.

Similarly, respondents have the opportunity of going outside the country to observe what goes

on in other foreign markets as well as transact business. One respondent stated that,

“…Education, I have observed that it’s a way bit of a success factor in business... The only

advantage I have as a pharmacist is the English language, the fact that I can write reports, I

can also manufacture with my interest in the profession. My exposure I’ll say is about 60% the

success factor. Exposure in the sense that you see what others have done, then you can also

copy. You can innovate whatever you know. Exposure by way of excursions is very, very

important… Exposure in the sense of Christianity, my religion. It teaches me to be humble, and

I think it’s also very crucial and very important in business… and travelling, travelling outside

Ghana exposes the other side of Ghana, i.e. Europe and America how they run their pharmacy

businesses. It has helped me to improve my services to the community… [for example] in

Europe, pharmacy shops are also supermarkets. So whatever you need as a toiletry, you can

get it in a pharmacy, so I introduce it in Ghana and I think it is helping. Right now I’ve added

a snack bar, so as you wait for your prescription, you can always go to the snack bar and get

something to munch.” –MK


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Another participant adds that, “… and I must say that my educational background and again

my drive… It has actually brought me this far, because, for instance, accounting, I know very

much accounting. Sometimes I prepare my own books and then give it to the auditors. So the

educational background has been so helpful, very, very, very helpful to drive the company to

this far… sometimes the supplier out there will want to have a personal, encounter with you…

I have come this far because I have been out there meeting people who actually supply my

goods, because you build more trust when they see you and sit down on a round table and talk

business. So out there it has been so helpful that I meet the people who I do business with; I

convince them at the round table that I can do this and I can do that. So it has been so helpful…

I’m a broadcasting engineer. That has helped me a lot. Through that I have had several

contracts especially in Nigeria. In Ghana here at a point I was rehabilitating GBC (Ghana

Broadcasting Corporation), I do a lot of supply to them and other small small media houses

like NAFTI, Radio Gold and Joy FM…” –DA

Again, one respondent adds that, “I would say that education is pivotal to the sustenance of a

business… You can build the business up to a certain level with a certain level of education but

if you don’t augment yourself or hire people of higher learning, you will be stagnated… So

education is very, very important… it has helped me in at least understanding the books… it

also helps in communication… it also broadens your perspective. Once you are educated, you

also seek to be educated a bit more, you see, you have a very curious mind and that helps.

Because most of the time, what you start with is not what you end with. You can expand to

various areas that are totally unrelated to what you started with…” -AJ

AJ is however quick to add that, “I don’t want people to feel that if you don’t have education

you cannot. If you don’t have education and you are willing to hire education and whiles the

people are manning it, you are also learning. So in as much as you cannot write as well as

them, you can give direction.”


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5.3 Challenges of Entrepreneurial Leadership

The issue of challenges was addressed by asking participants about the challenges they

encounter in ensuring the growth of their enterprise. Additionally, respondents were asked to

recall the challenges they encountered when they began their enterprises. These questions were

asked to help the researcher ascertain if there are any similarities or differences in the

challenges that face entrepreneurs in their early stages of business and after some level of

growth. The responses are presented below in a tabular form:

Table 5.3.1: Early Stages Challenges and current challenges of MK

Early Stages Challenges Current Challenges

… I didn’t have capital… Another challenge

was the staffing… when staff decide to

pilfer… Another challenge in our business is

expiry dates… political situation in the

country. Taxes. Inflation… I woke up with my

pharmacy all burnt down… legal issues…

Armed robbers also have attacked me

before…

… Challenges confront us from all angles,

and the most important one is the

manpower… People poach a lot, and when

they poach, all the training that you have

given to the person goes to naught… Money

is another challenge… inflation is also very

high, exchange rate is bad…

-MK


Table 5.3.2: Early Stages Challenges and current challenges of GC


…She didn’t have a shop, she didn’t have

anything… she realised that she couldn’t do

it alone so she trained two people for free to

help… Oh the normal challenges

[Challenges includes access to finance,

skilled labor, fluctuating exchange rate, high

duties, high cost of running business, and

changing the perception of beauty at the

initial stages of business start-up was also

challenging.]… People don’t know you…

Bleaching was in vogue then…

The lack of affordable capital… the

depreciating currency, frigidity, power

fluctuations, the lack of technical skills…

human resource has always been a

challenge.

-GC



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Table 5.3.3: Early Stages Challenges and current challenges of DA


There were a lot of challenges… they will

buy on credit and will not pay… Personally,

I never had enough money when I started.

…the challenges that I had was rather within… if

you want to diversify, you take a chunk of money

out… your working capital is reduced… venturing

into the unknown…” -DA


Table 5.3.4: Early Stages Challenges and current challenges of AJ


… I didn’t have the experience… and then it

was not easy because I realized that I had to

give in other to receive… I started the

business with nothing. .. even the bank that I

was banking with saw that I was labouring.

First thing is attitude and if people don’t

have the right attitude… Secondly, people

who think they can poach… and challenges

has always been finance… In our industry,

we are female biased… the challenge comes

when you are going to meet men for jobs...

You just have to be a woman but at times

things like sexual harassment do happen. It

is real… As for sexual harassment, it is real

no matter how old you are… People also

want to get into that industry. So the strain of

trying to always keep ahead of the

competition…

-AJ


From the above Tables (i.e. Tables 5.3.1, 5.3.2, 5.3.3, & 5.3.4), the researcher notes that there

are some unique challenge(s) faced by the entrepreneurial leaders. This is largely due to the

fact that they operate in different industries. For instance, MK laments that “Another challenge

in our business is expiry dates…” In another industry too, GC’s peculiar challenge was the fact

that “Bleaching was in vogue then…” Interestingly, though respondents operate in different

industries, certain challenges such as financial, human resource and infrastructure (assets) were

common among them. Also, having compared the early challenges and current challenges, the

notable difference was that in the early stages of the business, respondents cite finance as a

major challenge, however after achieving a major transformation the prime challenge has to do

with the human resource. This is because three respondents confess saying:


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“… Challenges confront us from all angles, and the most important one is the manpower…”

-MK

“…human resource has always been a challenge…” -GC

“First thing is attitude and if people don’t have the right attitude… Secondly, people who

think they can poach…” -AJ

The main problem associated with human resource as mentioned by two respondents is

poaching. With emotions MK said “…People poach a lot, and when they poach, all the training

that you have given to the person goes to naught…” however; AJ is quick to add that “…So

people actually come into the thing and they think that it’s the employees who make the

company thick. It is the entrepreneur that gives the direction. The employee is just a raw

material. So the worker cannot have what is inside you… So it doesn’t really scare me when

people poach.” Another respondent cited lack of technical skills to augment their business

functions within the country. GC explains that “… the lack of technical skills because you’re

starting a factory and you don’t have enough scientists, don’t have a lot of chemists, you don’t

have a lot of formulators to formulate the products, you don’t have packaging experts, you

don’t have all these things so the human resource to even manage the whole value chain is

even a challenge. That’s how come we started the beauty college in the first place. She had the

salon but you don’t have people so she had to train them. So human resource has always been

a challenge...”

Aside the human resource issue, all respondents admit that “finances will always be a

challenge.” The other challenges such as taxes, inflation, power fluctuation, lack of affordable

capital, exchange rate and/or depreciating currency, political stability, legal issues among

others, are macro environmental issues that entrepreneurial leaders have no control over. Their

only solution is to manage the various threats that these challenges pose. Again, DA remarked,


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“…the challenges that I had was rather within… if you want to diversify, you take a chunk of

money out… your working capital is reduced… Those are the big challenges because you are

deploying- taking money into a different sector… venturing into the unknown…” This is

because DA relies on diversification to grow the business. Thus, when the opportunity to

diversify comes, money is withdrawn from the old sector into the new one, creating some form

of stagnation in the old sector.

In a highly masculine country (drawing from Hofstede’s study) like Ghana, the female

entrepreneurial leaders in this study were asked if their gender (as females) have been a

challenge to their business growth, and their response indicated the negative. They further

explained that their feminine nature has not been a challenge largely because they operate in

female-dominated industries. GC also indicated that “I have always refused to allow my gender

to limit my business aspirations. Even though you get to face daunting challenges along the

way, your response should always be that of defiance, strong will and commitment. I have

always been a rebel - I find myself always challenging the status quo and doing things in sharp

contrast to accepted conventions of the day. I can hardly recollect situations in which people’s

disbelief in my abilities and my gender hindered my business goals. More importantly, I have

a husband who is a partner, a friend, and a serious critic and allows me to develop myself in

all facets of life. I do not lack the needed support in order to succeed in business.” However,

AJ reveals that “…the challenge comes when you are going to meet men for jobs. You just have

to be a woman but at times things like sexual harassment do happen. It is real. But you will

have to stand your ground… As for sexual harassment, it is real no matter how old you are…”

5.3.1 Managing Challenges of Entrepreneurial Leaders

In order to help upcoming transformational entrepreneurs, the researcher asked the respondents

how they were able to overcome the various challenges that they mentioned earlier. All


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participants agreed that challenges will always be there, at best, they only manage them. MK

put it this way, “…they are with us. It’s like eeh…erh…erh… an albatross. Challenges are like

an albatross hanging on your neck…” this statement then forced the researcher to rephrase the

question to ask “how do you manage the challenges?” Some iconic remedies were suggested

for upcoming entrepreneurial leaders to take into consideration.

One respondent recommended, “You manage eeeerm… if you are not getting money from the

banks, or from your friends, or any institutions; it means that you have to reduce your

expenditure pattern; and you do things that are needful and not things that you want. And you

also have to explain to the staff that you might not be able to increase salary this year- bonus

might not come as much as 100% or 50% as usual. You have to understand it will come down.

These are some of the management style, the strategies… you always have to explain things,

you communicate with your staff, and when they understand, that will be fine. You also have to

buy cheap- buying cheap does not mean you have to buy inferior quality things, but rather ask

for discounts and commissions and cumulatively all these will add up to help you get your

profit to manage financial crisis. When it comes to machine getting obsolete, you have to

maintain them, which means you are going to get skillful technicians to maintain your machines

for you. If you need to bring them from outside, the expatriates, they are so expensive, so you’ve

got to know, you have to have the knowledge as to who is within the country, a Ghanaian for

that matter, who can do your maintenance work for you. In our pharmaceutical world, we are

confronted with expiry dates, expiry of our goods; so you have to keep an eye (a serious eye)

on it. So you have a staff, whose responsibility is to check expiry date, so you can reduce the

quantity of goods that will expire on you. So these are things that we use to manage.” –MK

Another respondent recommended that, “…Challenges will always be there, you do your best

to try and solve them but you can only do as much as you can. There are some of them that are


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external. You know the business environment there is very little you do. It’s really influenced

by external factors, government policy, general economic outlook, global economic trend and

all that. Those you can do very little about. It is rather influenced by government policy and

government interventions and all that government will be put about to help. So that one there’s

very little. For instance if government says that everybody’s going to pay 40% VAT there’s

very little you can do about it. It’s going to affect the business. But if government say we’re

going to pay 3% flat rate it helps us. So there are somethings we can do very little about but

the ones that we can do something about, we do much…. For instance, during power cuts, we

brought in generators to control the situation” –GC

5.4 Effect(s) of Entrepreneurial leadership on SME growth

5.4.1 Number of employees (loyal)

Relating to the effects of entrepreneurial leadership on SME growth, all respondents agree that

exhibiting entrepreneurial leadership traits has reduced employee turnover leading to more

loyal staff. All participants can boast of a staff strength of over fifty employees. Although, this

may not be definite, the researcher posits that entrepreneurial leaders are able to retain

employees as a result of their participatory/democratic leadership style. Thus entrepreneurial

leaders manage by objectives (MBOs), such that they respect the views and suggestions made

by their employees. These make employees feel part of the company, hence their obligation to

be loyal. It is however worth mentioning that the male entrepreneurial leaders in this study

have over hundred employees while the female entrepreneurial leaders can boast of over sixty

employees. Probably, this may be as a result of the differences in the industry within which

they operate and its optimum employee requirement, and the entrepreneurs’ own urge to either

employ more people or not. The following responses is a testament to this.

“The number of human beings that I’ve employed also tells me that the company is growing…

It has helped me get loyal staff. Some of them have worked with me for the past 30 years, which


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means that these attributes are good- good human relations, a good visionary, you are

proactive- so I don’t wait until the staff have problems before I react- I have to see them in

advance; give them accommodation, help them get T&T to come to work. All these things help

the business to grow and it has helped my business as such. I started with one staff, who was

my sister, and now we are over 300. It’s all signs of the growth.” –MK

“We have over 70 staff that we are working with across board … She is a go-getter, she is

someone who is a visionary. She is somebody who I’ll call a generational thinker […] leader…

She is someone who…believes in teamwork, believes in developing people… So the leadership

style, that of teamwork, teamwork, teamwork. Madam believes in developing people and

building others… For me I think that it is because of the leadership style that is why we are

where we are first off… My management style incorporates the value of humility, constant

education and training and also keeping with latest trends and research and development

(R&D)… We have someone who has worked with us for over 15years. […] there are people

who have worked here for 10 years … People come to us to partner with us to sell their products

[…] We have someone who’s into wellness training in […] who want to partner with us. It will

bring about growth. People always come to the school it is a first class…nobody wants to be a

repeatee in the college. There’s a culture of growth so we keep on growing” –GC

“…if you take our number of employees… Yeah, I started as a sole proprietorship and I was

the only shareholder. Later on, I brought in my wife and children. Currently, I have over 150

employees at DASCO group… So I think that it has helped in that, I have somebody working

with me here for about 30years now because of my leadership style. Otherwise, people would

have left by now. Sometimes people marvel…. Yeah, I think in terms of the growth, I can

attribute it to my influence, motivation, yeah; because when the challenges come, everybody

look up to me. Yeah, I think I should tap my own shoulder and say ‘I’ve done well’ (doing the


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gesture), because it’s not easy. Looking retrospectively, looking back, even from where I’m

coming from…. But I give glory to God anyway. I give glory to God for how far he has brought

me. That I’ve been able to make an impact into people’s lives, into my own life, yeah.” –DA

“One (me). Then I added another, then another. So even having a work force of sixty two, I

know my business has grown …and I think that because my strength is in employing young

staff, they all look at me as a mother figure so to speak… have the experienced eye, I am able

to direct them as to how to achieve what they need to achieve… For me I would say the best

people to speak to is my workers because I have margins in the business because a lot of them

have been going forward not less than five years. The highest person who has stayed with me

longest is 18years ...” –AJ

5.4.2 Number of Subsidiaries and branches

Respondents further add that due to the qualities that they possess as entrepreneurial leaders,

they have been able to expand their business from the core business. The researcher also notes

that though the four entrepreneurial leaders interviewed for this study have expanded their

businesses, the males have subsidiaries spread across a number of different industries as

compared to the females whose subsidiaries are closely related to their core business. The

researcher therefore theorises that this may be due to the fact that men have a higher tendency

to undertake risky ventures unlike women. Another factor that may cause these differences

may result from the experience of the entrepreneur in relation to how long (s)he has been in

business. Below are some statements that attest to these facts:

“… so around my Mikaddo Holdings which comprise of Pharmacy (and the pharmacy, I have

eleven outlets spread all over the country); I have a manufacturing unit in Tema called

Mikaddo Laboratories. I’m into estates, commercial estates called Mikaddo Estates. I have a

microfinance, called KamaFin. Then, I have a clinic in Kumasi, a conference center in


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Koforidua, guest houses in Accra and Kumasi, farm in Kumasi. … I have 16 subsidiaries of my

company, so which means that I can easily organize business in any form. If I’m into farming,

I’m into pharmaceuticals, I’m into printing, I’m into microfinance…” –MK

“We have five different subsidiaries… We have FC Skin and Beauty Clinic…then we have the

Beauty College… Salon which has the beauty supplies… FC Perfume and Cosmetics… We

have the Grace Amo Obeng Foundation which dedicated to eradicating the menace of sex for

money…” –GC

Another respondent also proffers that, “I diversified into other things, like the forex bureau (I

own up to 8 forex bureaus)… we have Dasco International which is the mother company, ok,

and that is also run by… it’s an entity on its own. When I say entity, I mean it’s a registered

company on its own. The forex bureaus too are registered businesses on their own. The hotel

too, Dasco farms, Seragem Ghana, they are all, you know; but they are all under the umbrella

of Dasco Group of companies… When you say sectors, I’ll relate it to the industries. So we are

in the hospitality industry, the non-financial industry (i.e. the forex bureaus). For instance,

Emajet forex bureau is the 2nd best, if not the best forex bureau in Ghana, according to the

books of Bank of Ghana” –DA

“We do interior decoration, we are into provision of construction materials and we also do a

bit of construction on the side and pretty much we do a bit of purchasing of supply. For instance

if we have a contract to supply, we just source it and then we supply.” –AJ


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5.4.3 Assets and finances

Another significant impact entrepreneurial leadership has on SME growth is the improvement

of the firm’s assets and finances. Thus, when posed with the question, respondents has this to

say:

“My accounts show, mmmm, my accounts show, and then the quantity of assets that I’m having-

the buildings. Right now, I’m running my pharmacies in my own buildings. I’m not renting,

and that’s a sign that there’s growth… The stock level in my warehouses is also a sign that my

company is growing.” –MK

“I think last year, our [Emajet forex bureau] turnover was about USD45million. I don’t have

the exact figures, but I know that we are the best. Every year, Bank of Ghana does the

rankings... okay, and then our worth (in terms of properties, we have invested into buildings

on the Spintex Road and elsewhere, putting these together, we worth so much)…” –DA

Two respondents were not willing to provide the researcher with neither their financial

statements over the years nor their current net worth, as expected. In view of that, the researcher

asked for an estimated value of their worth but to no avail. When asked whether GC’s

company’s net worth could be more than ₵10,000,000.00, this was her reply, “It should be but

of course I can’t get you the figures too…” –GC Similarly, AJ did not readily provide the

researcher with the financial information, not even a rough estimate. However, after persistent

guesses she said, “Let’s just say we are worth GH₵10,000,000.00” though the researcher

believes that she will be worth more than that because of the investments she has made into

other subsidiaries, company’s buildings, automobiles among others. The researcher also

observed that both AJ and GC run their company in their own buildings and automobiles among

others.


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Interestingly, these two respondents are females, thus the researcher surmises that though

businesspeople are expected to withhold financial information, businesswomen are more likely

retain financial information more than businessmen. Drawing from the masculinity dimension

in Hofstede’s study (2011), this maybe so because men naturally like to brag about their

achievements whereas women prefer to “lay low” in other to avoid the envy and jealousy of

other people.

5.4.4 Market Share

Relating to market share also, two respondents readily provided some figures (though it was

guessed) while the other two respondents remained silent on it. The figures were guessed

because Ghana is characterized by poor record keeping skills, as in any developing country,

hence difficulty in obtaining accurate information. One participant remarked “Erm, in Ghana,

it’s very difficult to know the market, for that matter, knowing where you belong. But I can

guess, that I have about 15% of the market share.” –MK

Another respondent also guessed that “….our market share (about 35-43%)… Comparatively,

we are about, let me say about 35%” –DA

Again, the women entrepreneurial leaders were not ready to guess their market share, though

they admit that they have loyal customers with whom they relate and transact business. This is

how they put it:

“I cannot give you exact figures about the market share because you know we’re in Ghana and

information is very difficult to get. There hasn’t been any reliable data on the kind of market

share that we have… We are in a niche market and our products are products are […] you

can’t just go to the market and just pick and use just like that. It has to be something that a

therapist recommended that use this and that based on your peculiar skin condition, so I cannot


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just give you figure on it… we have distributors who are distributing our products here in

Ghana and elsewhere. So I mean if you look at the value chain you’ll realise that the business

has grown” –GC

“What makes me think my company is growing, is the size our market share… Oooh, I don’t

want to hazard a guess but I will say we are not doing too badly. Yes… That I would like to

keep…Yes. We are not doing too badly. We have a high profile companies and organization

whom we work for. We have loyalty for people who started with us and who continue to show

that loyalty to our brand.” -AJ

5.5 Other findings

5.5.1 Supernatural Being supporting growth

One interesting finding was the fact that all respondents highlight that though entrepreneurial

leaders need traits such as innovativeness, risk-taking propensity, proactiveness, visionary, and

ability to motivate, the ‘God-factor’ is also very important. They give credit to a supreme being

at one point during the interview. Two respondents give glory to God for how far He has

brought them. One respondent believes that anytime he prayed to God when confronted with

challenges, by some supernatural power, it gets settled. Another also admit that the strength

used in manning the business comes from God. Below are their responses:

“…I believe there is an unknown supporter, a hand, who I’ll describe as “God.” He’s always

at my beck and call. When I’m in crises, I pray, and that solves my problems...” -MK

“I am not afraid of taking risks and I have this strong belief that I can do anything through

God who strengthens me.” -GC

“…. But I give glory to God anyway. I give glory to God for how far he has brought me. That

I’ve been able to make an impact into people’s lives, into my own life, yeah…” -DA


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“In fact, I can only give praise and glory to God because I never thought that I would become

like a household name, people will know more about Jandel” -AJ

Though not definite, the researcher posits that contextually, religion has some influence on

SME growth. This may be as a result of the superstitious nature of Ghanaians and Africans in

general.

5.5.2 Gender and SME growth

It was revealed by the female respondents that sexism does not affect the growth of their

enterprises largely because most women in Ghana (including they) are operating in female

dominated industries. One of them however couldn’t hide the fact that sexual harassment is a

troubling concern especially in cases where they have to meet men for business deals.

“…the challenge comes when you are going to meet men for jobs … but at times things like

sexual harassment do happen. It is real. But you will have to stand your ground… As for sexual

harassment, it is real no matter how old you are…” – AJ

5.5.3 Government support

On the issue of government support and whether or not it helped in the growth of their (the

respondents) enterprises, participants revealed that they did not receive any support from

government in terms of resources, instead, the government created the enabling environment

to enable them run their businesses smoothly though certain policies affected them. Thus,

though government may not directly support SMEs, it is important to note that SMEs are

affected by their actions and inactions. This is what they have to say:

“We always get promises, but we don’t get the support per say.” -MK

“Not at all in terms of finance… So I’ve never, in terms of money, government support, no.

maybe the environment, you see, government does not give money alone, but also through the


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institutions creates conducive business environments. So, yeah, we’ve enjoyed some of the

government policies which has helped us… Contracts, yes but not financial supports…” –DA

“Government has supported the growth of my business in that, I have worked with the

government a lot. Almost 18years of operating my business, I have worked with the government

in various organisations. But the government has not given me any form of funding.” –AJ

One of the respondent however confesses that the government offered some financial

assistance, yet it was declined as a result of fear. The participant stated, “…It will interest you

to know that I’ve not in Ghana here gone for a loan. I started small, rather the first thing was

when I was in the UK, the Department of Trade and Industry wanted, at the time as far back

as 1986, wanted to give me 100,000 pounds, but I was afraid to take it. Ei, what am I going to

do with that money? So I never took it, rather somebody supplied me with goods, and I built

small small on it to come this far...” This statement also reveals that there are some government

support (in terms of finances) available to SMEs however the entrepreneurs are afraid to go for

it.

Another respondent also acknowledged the bank for supporting the business financially

through loans. She recalls that “…even the bank that I was banking with saw that I was

labouring. I could not keep up and they offered a loan. I didn’t blink, I took it, paid back and

they gave me more, I paid back.… So I have just built my business on the loans. Because the

business was growing and because I had access to funding… Exactly. It is the bank that… The

bank for which I am eternally grateful to is the trust bank [now] Ecobank. …the head of small

to medium scale businesses. The department who gives credit. They identified my need. At that

time, I was struggling, it didn’t occur to me that I could go and get a loan because I didn’t have

collateral … Also my mother was a huge support … she went further to give me her only house

as collateral to the bank.”


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The researcher postulates that the sole responsibility of supporting SMEs should not lie on the

government alone, however other institutions should be play a part in helping SMEs rise above

their challenges. As mentioned earlier, the major setback for SMEs in their early stages is

finances, but are however unable to access the loans normally due to no collaterals and high

interest rates.

5.5.4 Reasons why Ghanaian SMEs hardly grow into large firms

Having gone through the stages of growth to achieve this feat, the researcher wanted to know

why the entrepreneurial leaders/respondents think SMEs in Ghana are not growing

exponentially. Below are their responses:

“Oh, I think they lack the knowledge as to how to grow. They don’t know how to grow, because

they only copied other people… If you know, if you know what to do, how to expand your

business, you must have the knowledge, academic knowledge can also help- business

administration, management or entrepreneurship option. It will tell you how to grow your

business in terms of management functions, your staffing style, your decision-making,

motivation and control of your business. Eeeeeerh… all these you need to know and that will

help you expand. Otherwise, you would attempt to expand and you will rather kill your

business. So knowledge is power. Knowledge and wisdom is whatever I think is necessary” –

MK

“It’s a combination of factors… if the business environment is not favourable for business, they

will not grow generally. Number two, if the entrepreneurs themselves…the entrepreneurs

themselves sometimes they are not committed to their vision… sometimes too they don’t push

hard enough, they are not innovative enough, they don’t produce products that are world class.

We look at this environment, we don’t look beyond….” –GC


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“…1) Their own ability; 2) maybe the business in which they find themselves, eeerh, there’s no

prospect… Sometimes, people find themselves in businesses that have no future. That one

there’s nothing you can do, when it gets to the peak, it will fall. And most of us, Ghanaians,

find ourselves in that area. We get into businesses that cannot grow. That is also the cause…

No, no, no. no matter the support that they get, when they get to its saturated point, (you see

saturation eh, no amount that you can add to it will change anything), so when it gets to the

saturated point, and again too, we find ourselves doing the same thing all over; because what

you are doing, I’m also doing it; and somebody is doing the same thing all over.” –DA

“…It is difficult to sustain the business. Most of them don’t have good book keeping and also

a lot of SME`s do not trust… an acumen and he also had a passion for what he was doing… If

your children have the passion for what you are doing, that’s a good thing. But if they do not

have a passion and you do not want your business to die, then you have to put structures in

place… If you don’t have that mentality, the business cannot grow and diversification is key.

Because if one is going down, another is going up. So you can always rob Peter to pay Paul. ”

–AJ

From the responses above, it can be inferred that the main reason why SMEs are not growing

at an encouraging rate in Ghana, is largely because of the entrepreneur. This is because,

although other factors such as the business environment come to play, it is obvious that several

Ghanaian entrepreneurs lack either the requisite knowledge, commitment to the vision,

acumen, passion, innovative abilities to diversify or improve, ability to see a viable opportunity,

or has a myopic outlook to business, hence their inability to grow into large firms.


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5.6 A Summary of the Cross-Case Analysis in relation to the objectives of the study

Themes/Cases MK GC DA AJ

EL Dimensions

Religion (R) * * * *

Visionary (V) * * * *

Risk Taking (Rt) * * * *

Team Player (Tp) * *

Proactiveness (P) * * * *

Innovativeness (I) * * * *

Ability to Motivate (Am) * * * *

Socially responsible (Sr) * *

Human Capital

Exposure (Ex) * * * *

Education (Ed) * * * *

Work experience (We) * * * *

Challenges

Financials (F) * * * *

Infrastructure (I) * * * *

Human resources (Hr ) * * * *

Growth/Result

Assets (A) * * * *

Employee (E) * * * *

Profitability (Py) * *

Subsidiaries (S) * * * *

Market share (Ms) * *

Note

(*) means variable of the theme has impact on case.

Source: Adapted from Blankson and Crawford (2012)

Thus, from Table 5.6, it can be deduced that innovativeness, proactiveness, risk-taking,

visionary, ability to motivate and religion are the dominant qualities of entrepreneurial

leadership in the Ghanaian context. Also, human capital is of great essence to all respondents.

Challenges such as financial, human resource and infrastructure generally affect all the cases

though they operate in different industries. And finally, for an SME to achieve growth, the

entrepreneur must exhibit entrepreneurial leadership qualities and possess high quality human

capital; which will enable him/her to effectively and efficiently manage challenges.


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5.7 Discussion of Findings

This section discusses the findings from the field in relation to existing literature. That is,

whether the findings affirm or contradict existing literature.

5.7.1 Understanding Entrepreneurial leadership (Objective 1)

Concerning this objective, the research asked questions to elicit views on the respondents’

understanding of entrepreneurial leadership, characteristics of an entrepreneurial leader, and

instances that make one an entrepreneurial leader. The results showed that respondents merge

their understanding of both entrepreneurship and leadership to explain/define entrepreneurial

leadership. This is aligned with Stevenson & Jarrillo-Mossi (1986) and Yukl (2002) who opine

that entrepreneurial leadership draws insights from both entrepreneurship and leadership

disciplines. Contrary to some literature on entrepreneurial leadership which is inclined toward

the leadership discipline (Ireland, Hitt, & Sirmon, 2003; Kuratko, 2007; Gupta, MacMillan &

Surie, 2004; Dover, Hariharan, & Cummings, 2014; Yu & Kwan, 2015), the findings in this

study reveals that entrepreneurial leadership leans more towards the entrepreneurship

discipline. Hence, the debate still goes on as to where exactly entrepreneurial leadership lies.

Respondents’ description of an entrepreneurial leader aligns with Chen’s study in 2007 which

examines entrepreneurial leadership along the strands of the entrepreneurial orientation

constructs i.e. innovativeness, proactiveness and risk-taking propensity (Lumpkin & Dess,

1996; Covin & Miles, 1999). In addition, the respondents indicated an extension of the

entrepreneurial orientation constructs to include visionary and ability to motivate which is in

line with Renko et al’s study in 2015. It is also interesting to note that Ghanaian female

entrepreneurs perceive an entrepreneurial leader as someone who is a team player and is

socially responsible. This finding is consistent with Chen (2007) and Reich (1987) who found


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out that joint entrepreneurship inspires creativity among other team members, such that its

impact on growth is greater than the individual contributions combined.

From the Ghanaian context, religion is relevant to the entrepreneurial leader as it plays a vital

role in the success of the enterprise. This finding aligns with Makhbul and Hasun (2011) who

found that the best factor that induces entrepreneurial success is the religious duty factor. Other

studies also suggests that good values (i.e., honesty, spiritual, and ethical aspects) stemming

from religious backgrounds can create a healthy organisation (Kriger & Hanson, 1999), while

the opposite negatively affect people as well as the economic system (Machan, 1999).

Parboteeah, Hoegl, & Cullen (2008) also proffer that ethics and moral values are becoming

important in the current global market regardless of demographic or cultural factors.

Furthermore, respondents generally understood the words that they used to describe an

entrepreneurial leader. An interesting find revealed that proactivity did not only mean spotting

an opportunity or challenge ahead of time and taking measures to either take advantage of it or

deal with it before it actually happens; but it also includes acting promptly to challenges and

opportunities as and when they arise. This agrees with Coulthard (2007) who argues that

proactiveness is not necessarily always being the first mover in the market. Respondents also

believe that they are entrepreneurial leaders because they possess majority (if not all) of the

qualities of an entrepreneurial leader and accurately cited instances that make them one.

5.7.2 The role of Human Capital in achieving SME growth (Objective 2)

Respondents agree that the human capital of the entrepreneur is pivotal to the growth of SME,

although the idea of surrounding oneself with people with high levels of human capital in case

the entrepreneur lacks in that area was also relevant. This is because the human capital of an

entrepreneur enables him/her to understand things better and accurately apply certain theories


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when undertaking certain business practices, as well as manage challenges in a way that its

influence on SMEs will not be grave. This is in tandem with Abbas (2014) who concluded that

an entrepreneurial leader needs high levels of quality education, relevant work experience and

skills including the persistent desire to succeed as this will help him/her manage the unforeseen

challenges in addition to competing effectively and efficiently.

The findings also revealed that the respondents’ exposure in terms of their experience outside

the country provides them with a competitive advantage over their competitors. Exposure has

helped them provide better services (by adapting certain strategies learned in the foreign

country), get access to raw materials directly, and also build trust relationship with their foreign

suppliers. This aligns with Ruzzier, Antoncic, Hisrich, & Konecnik (2007) who discovered that

firms with more internationally experienced entrepreneurs and a bigger international

orientation realize international aspirations more readily than do entrepreneurs without these

attributes. In view of that, entrepreneurial leaders are able to easily enter into partnerships

agreements with individuals or organisations in the foreign country.

Findings also discovered that prior working experience impacts on the growth of the enterprise,

in that, entrepreneurial leaders who have worked elsewhere before setting up their enterprise

acquire and improve on certain skills (such as managerial, technical, networking and

negotiation skills) that enable their enterprises to perform better and positively impacts the

firms’ growth.

5.7.3 Challenges of entrepreneurial leaders (Objective 3)

In achieving this objective, entrepreneurial leaders who participated in the study, listed a

number of challenges that affect their businesses. The finding revealed that though all

respondents operate in distinct industries, certain challenges such as financial, human resource


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and infrastructure (assets) were common among them. Among these general challenges, the

entrepreneurial leader finds the human resource challenge to be the major challenge, although

financial challenges will always be there. The finding is similar to what other studies that

discovered that entrepreneurial leaders in developing economies are generally inhibited by

weak economy, limited access to financial capital, an inability to hire reliable employees, and

too much competition (Benzing, Chu, & Callanan, 2005; Chu, Benzing, & McGee, 2007; Pratt,

2001).

Also, a number of enlisted challenges were common to all respondents because all of them

operate within the same Ghanaian macro environment. These challenges include; taxes,

inflation, power fluctuation, lack of affordable capital, exchange rate and/or depreciating

currency, political stability, legal issues, social vices (such as armed robbery), fire outbreaks,

among others. These findings agree with Kiggundu (2002), Pope (2001), and Stevenson (1998),

who found that aside the unfavorable institutional/regulatory environment, there are additional

expenses of bribery and corruption.

Again, some unique challenges were brought to light. In the Ghanaian pharmaceutical industry,

expiry dates is a challenge, because unlike in advanced countries where they adopt the just-in-

time stocking, the situation is opposite in Ghana. Thus, businesses operating within the industry

stock their warehouses with large volumes of drugs, and the challenge occurs when the drugs

are not sold off before the expiry dates. Another peculiar challenge (which is more

psychological) in the beauty industry is the concept of bleaching. Being creative and abreast

with time is the distinctive challenge of the events and planning industry. The study also found

out that Ghanaian entrepreneurial leaders do not overcome challenges, instead, they manage

challenges. This is because human beings are very difficult to control thus, when the human


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resource have the wrong attitude, it threatens the firm’s success. Also, challenges are managed

because entrepreneurial leaders have very little/no control over the external environment.

5.7.4 Entrepreneurial Leadership and SME growth (Objective 4)

Respondents admit that having exhibited entrepreneurial leadership in their firms, they have

enjoyed a number of benefits which have amounted to the growth of their SMEs. Some of these

benefits include increase in the number of employees, subsidiaries, assets, profitability, and

market share which is consistent with what Koryak, Mole, Lockett, Hayton, Ucbasaran and

Hodgkinson (2015) noted. They noted that firms deliberately grow along the size, market share,

profitability, and asset dimensions. The results also confirm Matzler, Schwarz, Deutinger, &

Harms (2008), who indicated that transformational and entrepreneurial leadership has a

positive direct impact on innovation, growth and profitability, and that, innovation positively

impacts on growth and profitability. They further suggest that entrepreneurial leadership is the

appropriate approach for the management of SMEs.

Brown, Jones, and Leigh (2005) also discovered that entrepreneurial leadership fosters job

opportunities within the economy, and this is evident in the increase in the number of

employees since the inception of the firm (Liedholm & Mead, 1999). Tarabishy et al. (2005)

also noted that entrepreneurial leadership enables firms to implore strategies that are

entrepreneurially oriented and thus, promotes innovativeness, proactiveness, and risk-taking

behaviours. This is because research has indicated that firms that use entrepreneurially oriented

strategies perform better in dynamic markets than firms that do not adopt such strategies

(Tarabishy et al., 2005). They further advise that before a firm makes an initial public offering,

the entrepreneurial leader needs to balance innovativeness, proactiveness and risk taking

propensities; however, after the initial public offering, the entrepreneur needs to inspire and

promote more innovative and proactive activities than risky ones (Tarabishy et al, 2005).


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Again, it was revealed that Ghanaian entrepreneurial leaders instill some entrepreneurial values

and ethics in their employees. This is evident because, most employees who decide to leave,

resign to either set up their own enterprises around the same business idea(s), or manage other

organisations, by adopting the same leadership style as the entrepreneurial leader’s.

5.7.5 Gender and SME growth

The study found that gender did not play a significant role in SME growth. In most developing

countries, especially Sub-Saharan Africa, Ghana, a number of social institutions discriminate

(with regards to accessing credit facilities) against women owned enterprises which invariably

cause high levels of stunted growth resulting in more women entrepreneurs operating in the

informal sectors compared to that of men. Aterido, Beck, and Iacovone (2013) contend that,

female entrepreneurs need exceptional (unobservable) capabilities in order to operate in the

formal sectors due to the overall discrimination against female entrepreneurs.

In contrast, findings of this study revealed that female entrepreneurial leaders are not

discriminated against. This is because female entrepreneurial leaders, usually operating in the

formal sector, possess certain unique capabilities that enable them receive and access financial

credit. As a result, their gender is insignificant to the growth of the firm. This finding agrees

with Hansen and Rand (2014a) who concluded that women who are able to break the ‘glass

ceiling’ have relatively better capabilities on average, compared to that of the average male

entrepreneur. In view of that, female entrepreneurs possessing these remarkable capabilities

are more likely to get hold of formal credit facilities.

5.7.6 Government support

On the issue of government support, the respondents revealed that they did not receive any

support from government in terms of resources, rather, the government created the enabling


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environment to facilitate the smooth running of their businesses, although certain policies affect

them. Thus, though government may not directly support SMEs, it is important to note that

SMEs are affected by their actions and inactions. In addition, respondents noted that

governmental contracts awarded them made a significant contribution to the growth of their

enterprises. This finding is however inconsistent with Benzing, Chu, & Kara, (2009) who

realized that Turkish entrepreneurs regard government support and political involvement as

relatively insignificant to their firm growth.

5.7.7 Factors affecting SME growth

It was also brought to light that the entrepreneur is the prime reason why SMEs in Ghana do

not grow, though are a number of factors that also affect the growth of many SMEs in Ghana.

This is largely true because several Ghanaian entrepreneurs lack either the requisite knowledge,

commitment to the vision, acumen, passion, innovative abilities to diversify or improve, ability

to see a viable opportunity, or has a myopic outlook to business, hence a large number of

imitators in the sector, resulting in their inability to grow into large firms. This aligns with

Stefanovic, Prokic, & Rankovic (2010) who found out that Serbian entrepreneurs lack of

motives concerned with sustainable development of enterprise in a long run.


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CHAPTER SIX

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

6.0 Introduction

This final chapter presents a summary of the study and its major findings, conclusions, and

significance of the study. Based on the conclusions drawn from the findings of this research,

recommendations, as well as limitations and suggestions for future research are presented.

6.1 Summary of the study

Globally, entrepreneurship and the development of SMEs have contributed immensely to the

economic development of countries (both developed and developing) all over the world (Abor

& Quartey. 2010; Calza & Goedhuys, 2016). Contextually, the most dominant form of business

is found in the SME sector, representing 92% of all businesses and contributing about 70% to

Ghana’s Gross Domestic Product (Abor & Quartey, 2010). In spite of their contributions, they

are faced with a number of challenges, which will not be problematic if entrepreneurs possess

certain human capital, and also lead with an entrepreneurial eye. Thus, the research aimed to

investigate the relationship between entrepreneurial leadership and SME growth in Ghana by

drawing some lessons from transformational leaders in the country.

Extant literature was reviewed in relation to some thematic areas such as entrepreneurship,

leadership, entrepreneurial leadership and its definition, dimensions of entrepreneurial

leadership, challenges of entrepreneurial leadership, its effects, and the human capital theory.

In addition, a brief discussion on the SME sector in Ghana; and an overview of the companies

used in this research was also presented.

A qualitative design was adopted for this study, and gathered data from four Ghanaian

transformational entrepreneurs through face to face in-depth interviews. These discussions and


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interviews were recorded and transcribed and the data acquired were later analysed

thematically. The findings of this study were presented and the discussions were made in light

of extant literature and the objectives of the study.

6.2 Summary of Major findings

6.2.1 Understanding entrepreneurial leadership (Objective 1)

Objective 1 was to investigate how Ghanaian transformational entrepreneurs understood the

concept of entrepreneurial leadership. The findings suggested that Ghanaian transformational

entrepreneurs understood the concept by merging their understanding from both

entrepreneurship and leadership disciplines. This is similar to that of Stevenson & Jarrillo-

Mossi (1986) and Yukl (2002) assertion. In relation to the five dimensions of entrepreneurial

leadership, the findings indicated that respondents generally view innovativeness,

proactiveness, risk-taking, visionary, and ability to motivate as the essential qualities of an

entrepreneurial leader. Notwithstanding other variables such as team player, socially

responsible and religion are other qualities of entrepreneurial leader.

6.2.2 The role of Human Capital (Objective 2)

Concerning the second objective which sought to examine the role of human capital in

achieving SME growth, all respondents agree that human capital is pivotal in the growth of

their enterprises. Though, prior working experience and exposure of the entrepreneur provide

some competitive advantage to the company, respondents rated education as the most important

human capital. This is because education enables them to understand the firms’ financial books,

communicate better and broadens their perspective on issues. Also education has made them

aware of the various leadership styles of which all of them adopt the democratic/participatory

style of leadership which has also influenced their growth considerably. Respondents believe

that their company has grown to its current state as a result of their leadership style.


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6.2.3 Challenges of entrepreneurial leadership (Objective 3)

The third objective was to identify the challenge(s) faced by entrepreneurial leaders in

achieving SME growth. This objective was assessed using the respondents’ experiences that

has been gathered overtime. The findings point out that although the respondents operate in

distinct industries some challenges are common to all. These include, financial challenges,

human resource challenges and infrastructural challenges. Also, concerning the challenges,

respondents generally agree that, before they started the business, finances was the major

challenge, however after achieving some level of growth, the major challenge that they are

currently battling with is the human resource challenge (i.e. poaching and lack of technical

skills). Thus, the findings showed that human resource is the major challenge that affect

entrepreneurial leaders. Concerning strategies to combat these challenges, it was revealed that

entrepreneurial leaders cannot do away with challenges, largely because of the macro

environment within which they operate. At best, they only manage it.

6.2.4 The effects of entrepreneurial leadership (Objective 4)

The final objective regarding the effects entrepreneurial leadership has on SME growth was

assessed using respondents’ description of their growth pattern. Respondents indicated that

because they possess entrepreneurial leadership qualities and quality human capital, they are

able to effectively and efficiently manage the challenges that confront them, in order to accrue

benefits; which include increase in profitability, number of employees, assets, subsidiaries and

market share. This finding aligns with that of Koryak et al (2015).

6.2.5 Other notable finding

Another notable finding the data revealed was the fact that sexism did not affect the growth of

women owned enterprises. The female respondents agree that their gender did not negatively

affect the growth of their enterprises, largely because they operate in female dominated


128

industries. However, sexual harassment is a concern especially when they have to meet men

for business deals.

Also, majority of Ghanaian businesses do not grow mainly because, the entrepreneurs lack

either the requisite knowledge, commitment to the vision, acumen, passion, innovative abilities

to diversify or improve, ability to see a viable opportunity, or has a myopic outlook to business,

hence their inability to grow into large firms.

6.3 Conclusions

Based on the findings of this study, the following conclusions were drawn:

Entrepreneurial leadership coupled with quality human capital and effective and

efficient handling of challenges will result in SME growth.

Human capital (especially Education) is pivotal to SME growth.

The focus on challenges facing entrepreneurial leaders has shifted from financial

challenge to the human resource challenge.

In the Ghanaian context, religion and spirituality influences SME growth.

6.4 Recommendations

Drawing from the conclusions above, the study makes some recommendations to Ghanaian

entrepreneurs and policy makers.

The study noted that entrepreneurial leaders adopt the democratic style of leadership and

that has contributed to the growth of their enterprises. Thus, Ghanaian entrepreneurs who

are not using the democratic style of leadership should adopt it in order to enjoy the benefits

that associated with it.

Also, Ghanaian entrepreneurs should invest more in their human capital (especially

education) as it will help accelerate the growth process of SMEs. In addition, it was


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revealed that even if the entrepreneur him/herself is not well educated, (s)he can employ

well educated people to man the firm, and while they are it at, the entrepreneur will learn

and give direction.

Ghanaian entrepreneurs should avoid copying other people’s business ideas and rather spot

a viable opportunity. They should also remain committed to the vision and have a foresight

of the firm and a plan to achieve higher heights. Although the challenges, may arise, they

must fuel their innovativeness to manage and curb those problems.

Last but not least, policy makers, related governmental institutions as well as various

stakeholders must work together to create effective policies that will encourage education

and training of entrepreneurs, especially those with low levels of education, on a sustainable

basis.

6.5 Limitations and Suggestions for future research

To begin with, the study employed a small and homogenous sample. So, the results may not

apply to all entrepreneurial leaders in the country. The study suggests that future researchers

can consider a larger and varied sample to include young entrepreneurial leaders and

entrepreneurial leaders operating within the informal sector. A comparative study can also be

conducted to understand the distinctions among various entrepreneurial leaders in different age

brackets or different sectors.

Furthermore, the research was undertaker in a single geographic region i.e. Greater Accra

Region, and the conclusions drawn from the study may not apply to other entrepreneurial

leaders residing in other regions of the country. Future research can therefore look at studying

other entrepreneurial leaders in the Ashanti or Western Region of Ghana.


130

Also, the respondents operated in four different sectors, thus, future studies can conduct similar

research in a single industry across the country in order to better understand the concept within

that industry. Also a comparative study can be conducted between the male entrepreneurial

leaders and the female entrepreneurial leaders within that particular industry.

Finally, future studies can consider using a quantitative approach to test the various dimensions

of entrepreneurial leadership in Ghana. A quantitative research will provide a more accurate

generalisation of the findings.


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APPENDICES

APPENDIX 1: INTERVIEW GUIDE

TOPIC: ENTREPRENEURIAL LEADERSHIP AND SME GROWTH: LESSONS FROM

TRANSFORMATIONAL ENTREPRENEURS IN GHANA.

Exchange of pleasantries and a brief background of the study

1) Please give me a brief introduction of yourself- name, educational level, marital status,

2) I would also like to know the history of this great enterprise

3) What motivated you to start this enterprise?

4) What are some of the challenges that you came across?

5) In the beginning, did you intend the small enterprise to grow beyond yourself? did u

envision the SME (in the beginning) to be this big after some years?

6) Has your human capital (i.e. the investment made in yourself through education, skills

training, experience, etc) contributed to the growth of your company?

7) How? And in what ways?

8) How will you conceptualise the growth of your company (in terms of profitability, market

share, assets and size)?

9) Describe your leadership style. How has it affected the growth of your company?

10) How do you understand the concept of entrepreneurial leadership?

11) Describe who an entrepreneurial leader is. Are you one?

12) How do you understand the following:

-an entrepreneur is innovative

-an entrepreneur is proactive

-an entrepreneur is risk-loving

-an entrepreneur is visionary

-an entrepreneur is able to motivate his followers

13) In what ways have you been innovative, proactive, risk-loving, a visionary, and motivating?

-Has it influenced the growth of your company? How?

14) How do you influence your employees to copy you?

15) In ensuring the growth of your enterprise as an entrepreneurial leader, what are some of the

challenges you come/came across?

16) How do/did you surmount/overcome them?

17) Did government support help you in growing your business?

18) Why do you think a lot of SMEs in Ghana have not grown into large organisations like

yours?

19) Would you conclude that human capital is important to the growth of SMEs? Why?

20) Would you conclude that being a transformational entrepreneur is important to the growth

of SMEs? Why?

21) Would you conclude that being an entrepreneurial leader (not just a leader nor entrepreneur)

is important to the growth of SMEs? Why?


157

APPENDIX 2: EXCERPT OF RESPONDENT 4 (CASE AJ’s) INTERVIEW

I: Okay. But can you add some more adjectives, you mentioned the risk taker, maybe how you

can describe the entrepreneurial leader.

AJ: Okay, I wrote something, so I would just pick it. Some of the definitions don’t come easily.

Leadership magazine and eerm.

I: Okay.

AJ: … A classic example from a Harvard study stated that, two German brothers went to China

(couldn’t remember the exact country, but used China) and they found out that, everyone

walking there had no shoes but these two brothers had shoe factories in Germany. So one

brother said, I don’t know how long is going to take me to convince these people to wear shoes.

They don’t even know what shoe is about so I cannot work in this environment, am going back.

The other one said: “they do not have shoes, my God, what an opportunity”. So I will be more

creative. Once I give people free shoes and they realise that their feet do not get hurt, it is

protected and all that, I will make money from China and indeed he became the biggest shoe

maker in his time and that place. The other one just concentrated on his German, European

market but look at the market that he created for 1.6billion people. His business had gone

exponentially immediately. So you have to look at unmet needs and see how you can carve

your niche wherever you want to. “It is also about providing employment to others and

supporting them with their growth and development”. Because you know that you cannot do it

alone, you should get another person. Most of my staff here, I take them green. I don’t head-

hunt. I don’t head-hunt especially with those who work with the decorators and all that. I like

to take you green because I want you to learn my style of doing things. I don’t like taking

people with background of I’m a decorator. They come already too knowing. Keep training

them and therefore you are providing a skill to those people who did not have ideas since SHS.

The university graduates who are here have learnt how to write proposals because they have

responsible for that in other to send to our clients and make our pitch. So they have learnt new

things.

I: That’s very interesting. You mentioned some words, the innovative, you were looking at

reaching out to them as visionaries.

AJ: You must be a visionary.

I: Yes.

…………………………………………………………………………..

I: Thank you very much for your time.


158

EXHIBIT 1: PHOTO OF RESPONDENT 1’s AWARDS


159

EXHIBIT 2: PHOTO OF RESPONDENT 2’s AWARDS


Documents

UNIVERSITY OF GHANA ENTREPRENEURIAL LEADERSHIP AND …