Impact of Leadership Style to Financial Performance of Enterprises

Background: Measurement of financial performance of enterprises is an important part of balanced scorecard system. Previous research has indicated a relationship between leadership and financial performance of enterprises.

Objectives: Purpose of the paper is to investigate the impact of leadership styles in Croatian enterprises to their financial performance.

Methods/Approach: Survey research has been conducted on the sample of Croatian companies, measuring their financial performance and presence of leadership styles.

Results: Overall, democratic style is the most often present in Croatian enterprises, followed by the authoritarian and laissez-faire styles.

Conclusions: Small enterprises are more successful financially in the presence of the democratic style. Enterprises in the stagnation phase are more successful if all leadership styles are mixed together in practice, indicating the need to push the employees with all possible styles. Enterprises oriented towards international markets are more successful financially in the presence of the democratic style and the laissez-faire style.