Leadership and Small Firm Financial Performance: The Moderating Effects of Demographic Characteristics

The present study builds on extant leadership literature by examining the role demographic variables (including age, tenure as a leader at the current company, experience in the industry, and level of education) play as moderating effects on the relationship between leadership style and small business financial performance in the industrial markets. Financial data, leadership data, and demographic data were collected from 100 small, industrial distribution organizations. Statistical regression models were used to examine the relationship between the independent variables (transformational and transactional leadership styles) and dependent variables (year-over-year sales and profit margin performance), as well as the potential moderating effect of demographic variables (age, tenure, education, experience). The findings showed that transformational leadership was positively associated with the financial performance of an industrial distribution firm. It was also shown that the demographic characteristics examined did not moderate the relationship between leadership and firm performance.