THE EFFECT OF LEADERSHIP STYLE ON ORGANIZATIONAL PERFORMANCE: THE CASE OF OROMIA INTERNATIONAL BANK S.C

Abstract

The aim of this study was to examine the effect of leadership style on the organizational performance of Oromia International Bank branches operating in Addis Ababa City. By taking in to account the research objectives and questions, quantitative research approach and, both descriptive and explanatory research design were used. The study was employed proportionate stratified, purposive and convenience sampling techniques. Quantitative data was collected through structured questionnaires that have been distributed to a sample of 318 employees of Oromia International Bank S.C. in Addis Ababa City. Out of the distributed questionnaires, 278 (87.42%) questionnaires have been returned and used for data analyses. The quantitative data were analyzed by using descriptive and inferential analysis. The findings of descriptive statistics have revealed that the mean score of leadership style variables, that is, transformational, transactional, autocratic and democratic was tended to agreement level. All independent variables have significant correlation with the dependent variable, performance where relatively transformational leadership style had a higher strong relationship with performance. Similarly, the result of multiple regressions showed that, predictor variables including transformational, transactional and democratic leadership styles have positive and significant effect on the performance of the bank whereas, autocratic leadership style doesn’t. The results also pointed out that these independent variables were significant common predictors of performance and jointly explained 65.2% of the variance in performance. Finally, recommendations were forwarded to the bank to exercise transformational, transactional and democratic leadership styles in combination emphasizing more on transformational leadership style.