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Procedia Manufacturing 00 (2018) 000–000
ScienceDirect
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Procedia Manufacturing 00 (2018) 000–000 www.elsevier.com/locate/procedia
www.elsevier.com/locate/procedia

Procedia Manufacturing 32 (2019) 1035–1042

Procedia Manufacturing 00 (2017) 000–000
www.elsevier.com/locate/procedia

The
The 12th
12th International
International Conference
Conference Interdisciplinarity
Interdisciplinarity in
in Engineering
Engineering

Assessment
Assessment of of Leadership
Leadership Effectiveness
Effectiveness Dimensions
Dimensions in in Small
Small & &
Medium
Medium
Manufacturing Engineering Society Enterprises
International (SMEs)
Enterprises (SMEs)
Conference 2017, MESIC 2017, 28-30 June
2017, Vigo (Pontevedra), Spain
a, b,c
Mitra
Mitra Madanchian
Madanchiana, *,
*, Hamed
Hamed Taherdoost
Taherdoostb,c
Costing models for capacity optimization in Industry 4.0: Trade-off
0F

0F

a
Research Club, Research and Development Department / Hamta Business Solution Sdn Bhd, Kuala Lumpur, Malaysia
a
Research Club, Research and Development Department / Hamta Business Solution Sdn Bhd, Kuala Lumpur, Malaysia
between used capacity
Training Center,and operational
/ Hamta Group,efficiency
b
Advanced Academic and Industrial Training Center, Hamta Academy / Hamta Group, Kuala Lumpur, Malaysia
b
Advanced
c Academic and Industrial Hamta Academy Kuala Lumpur, Malaysia
Research & Development Department / Ahoora Ltd / Management Consultation Group, Kuala Lumpur, Malaysia
c
Research & Development Department / Ahoora Ltd / Management Consultation Group, Kuala Lumpur, Malaysia

A. Santanaa, P. Afonsoa,*, A. Zaninb, R. Wernkeb

Abstract a
University of Minho, 4800-058 Guimarães, Portugal
Abstract b
Unochapecó, 89809-000 Chapecó, SC, Brazil
In order to understand the economic development goals, SMEs play an important and potential role. In Malaysia, after the
In order to understand the economic development goals, SMEs play an important and potential role. In Malaysia, after the
establishment of the National SME Development Council (NSDC) in 2004, the importance of SMEs as the main engine growth
establishment of the National SME Development Council (NSDC) in 2004, the importance of SMEs as the main engine growth
of the country’s economy was recognized. The contribution of SMEs to the country growth and economy development is a
of the country’s economy was recognized. The contribution of SMEs to the country growth and economy development is a
Abstract
crucial feature of economic development in Malaysia. According to many researchers, leadership effectiveness is an important
crucial feature of economic development in Malaysia. According to many researchers, leadership effectiveness is an important
factor rolling organizational performance, however the research on this factor in small businesses, especially SMEs in Malaysia,
factor rolling
Under organizational
the concept of in performance,
"Industry 4.0",however the research
production on thiswill
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small businesses,
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is still lacking. Therefore, order to improve the performance of SMEs in the the to
rolebeof increasingly
SMEs must be interconnected,
equilibrium with
is still lacking. Therefore, in order to improve the performance of SMEs in the future the role of SMEs must be equilibrium with
information based on aThe
leadership effectiveness. realpurpose
time basis and,
of this necessarily,
study is to assessmuch more efficient.
the leadership In this dimensions
effectiveness‘s context, capacity
in SMEs, optimization
specifically,
leadership effectiveness. The purpose of this study is to assess the leadership effectiveness‘s dimensions in SMEs, specifically,
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Malaysia theThe
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research method maximization, contributingmethod
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management and as a sample.
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suggestthat capacity
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plays an important
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capacity effectiveness
optimization and which has
costing impactisonanSMEs
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important research topic that deserves
plays an important role to measure the leadership effectiveness which has impact on SMEs performance.
contributions from both the practical and theoretical perspectives. This paper presents and discusses a mathematical
©
© 2018
2019forThe Authors. management
Thecapacity
Authors. Published byby Elsevier Ltd.different costing models (ABC and TDABC). A generic model has been
model
© 2018 The Authors. Published
Published by Elsevier
based on
Elsevier Ltd.
Ltd.
This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/)
developed and access
This is an open it was article
used to analyze
under idleBY-NC-ND
the CC capacity and to design
license strategies towards the maximization of organization’s
(https://creativecommons.org/licenses/by-nc-nd/4.0/)
Selection and peer-review under responsibility of the 12th International Conference Interdisciplinarity in Engineering.
Selection
value. andtrade-off
The peer-review under responsibility
capacity maximization of the
vs 12th International
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efficiency Interdisciplinarity
is highlighted and itinisEngineering.
shown that capacity
optimization might hide operational inefficiency.
Keywords: Leadership Effectiveness; Leadership; SMEs
Keywords:
© 2017 TheLeadership
Authors.Effectiveness;
Published byLeadership; SMEs
Elsevier B.V.
Peer-review under responsibility of the scientific committee of the Manufacturing Engineering Society International Conference
2017.

Keywords: Cost Models; ABC; TDABC; Capacity Management; Idle Capacity; Operational Efficiency

1. Introduction
* Corresponding author. Tel.: +60 17 374 5956.
* The
Corresponding
cost author.
of idle Tel.: +60
capacity is 17 374 5956.
a fundamental information for companies and their management of extreme importance
E-mail address: mitra.madanchian@gmail.com
E-mail address: mitra.madanchian@gmail.com
in modern production systems. In general, it is defined as unused capacity or production potential and can be measured
in several ways:
2351-9789© 2018Thetons of production,
Authors. available
Published by Elsevier Ltd. hours of manufacturing, etc. The management of the idle capacity
2351-9789© 2018The Authors. Published by Elsevier Ltd.
This is anAfonso.
* Paulo open access
Tel.:article under
+351 253 510the761;
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This is an open access article under the CC fax:
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license(https://creativecommons.org/licenses/by-nc-nd/4.0/)
Selection
E-mail and peer-review
address: under responsibility of the 12th International Conference Interdisciplinarity in Engineering.
psafonso@dps.uminho.pt
Selection and peer-review under responsibility of the 12th International Conference Interdisciplinarity in Engineering.

2351-9789 © 2017 The Authors. Published by Elsevier B.V.

Peer-review
2351-9789 © under
2019responsibility
The Authors. of the scientificbycommittee
Published Elsevier of the Manufacturing Engineering Society International Conference 2017.
Ltd.
This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/)
Selection and peer-review under responsibility of the 12th International Conference Interdisciplinarity in Engineering.
10.1016/j.promfg.2019.02.318
1036 Mitra Madanchian et al. / Procedia Manufacturing 32 (2019) 1035–1042
2 Mitra Madanchian and Hamed Taherdoost / Procedia Manufacturing 00 (2018) 000–000

1. Introduction

Debate between experts and a review of organization and leadership literature reveals a vital need to address
leadership development issues in small and medium sized enterprises (SMEs). At the present time, the purpose of
any organizations is to endure and maintain its entity via improving their performance. Consequently, the role of
leaders in ensuring excellent organizational performance cannot be over emphasized. Small and Medium Enterprises
(SMEs) performance, as a topic, is generating numerous discussion between researchers, practitioner, academics and
politicians [1-3]. The contribution of SMEs to the country growth and economy development is a crucial feature of
economic development in Malaysia. According to many researchers, leadership effectiveness is an important factor
rolling organizational performance, however the research on this factor in small businesses, especially SMEs in
Malaysia, is still lacking [1, 4]. Therefore, the purpose of this study is to evaluate the leadership effectiveness’
dimensions in SMEs.

2. Literature Review

2.1. Malaysia SMEs

Based on different definitions of SMEs in different countries, SMEs defined in Malaysia based on the industry
categories and number of full-time employees or the annual sales turnover. In spite of the fact that in many
countries, SMEs are recognized as a significant factor of growth, and compare to the SMEs contribution in
developed countries, the contribution of SMEs to the Malaysian economy is still comparatively inadequate [5-10].
Moreover, according to literature, Malaysia SMEs have lack of managerial and leadership skills [2, 9-13]. In view of
that, it is crucial that the leaders of the SMEs should provide themselves with diverse skills such as effectiveness
skill to enhance and improve their performance in the organization and tone down failures.

2.2. Leadership

As stated by [14] , leadership is “a relationship between those who aspire to lead and those who choose to
follow”, and success in leadership “is and will continue to be a function of how well people work and play together”
(p. 58). To drive the success of organization, good leadership has been recognized as the key elements [15]. The
literature in SMEs shows that insufficient and weak leadership skills are main factors cause failure of SMEs [3, 9,
15-18]. For that reason, SMEs need to develop their leadership behaviour to guide their firms through all situations
either crisis times.

2.3. Leadership Effectiveness

Researchers have discussed that effective leadership is a key interpreter of organizational success or failure while
examining the factors that guide to organizational success [19]. Furthermore, leadership effectiveness is the outcome
when leaders are able to influence a group to perform their roles with positive organizational outcomes [8, 20].
According to [21], effective leadership is significant and influence organizational outcomes. Therefore, effective
leadership can has impact on organizational performance. To evaluate an effective leader examining the
consequences of a leader’s actions is the most common outcome measure [10, 20, 22, 23].
Moreover, several researchers [10, 24-28] also have claimed that leadership has been receiving greater attention
in the SMEs literature since it has been recognized that SMEs cannot successfully develop new small businesses
without the presence of effective leadership.
Therefore, the current study intends to further develop into the existing literature of Malaysian SMEs by looking
specifically at the insight of leadership effectiveness’s dimensions and the importance of leadership effectiveness
towards SMEs success. As [29] suggest that due to the small size and limited amount of resources, an understanding
of leadership effectiveness of the leaders of SMEs is crucial to ensure further development of SMEs in the country
[29].
 Mitra Madanchian et al. / Procedia Manufacturing 32 (2019) 1035–1042 1037
Mitra Madanchian and Hamed Taherdoost / Procedia Manufacturing00 (2018) 000–000 3

In order to evaluate an effective leader, examining the outcomes of a leader’s actions are the most common
measure [20, 30, 31]. Effective leadership is recognized when the leader has ability to influence his/her followers or
organizational unit in same way that obtains positive results [10]. In doing that, this study adopted Dhar and
Mishra’s (2001) measure of leader effectiveness in service organizations. Dhar and Mishra’s assessment asks the
leader’s subordinate to evaluate the effectiveness of the leader based on the leader’s ability to inspire, facilitate,
motivate, influence, be accountable, have a positive attitude, and monitor the performance of subordinates.
A recent conducted research by [24] found that leadership effectiveness can maintain organizational
performance, and help managers recognize the effective leadership process inside organizations. additionally,
studies (e.g. [32, 33]), suggest that to understand the effect of leadership on organizational performance, leadership
require to play as a key role in developing organizational performance, accordingly, in order to organization
enhancement the firm requires a sustainable competitive effective leadership [34-36].

3. Methodology

Regarding data collection and analysis this study employs quantitative approach. The population of this study
includes the small and medium-sized categories of SMEs in the service sector in Malaysia. According to [37],
selecting acceptable number of the intended population referred as sampling process and overview on the total
population. Since this study evaluate the leadership effectiveness’ dimensions, the managers of SMEs in Malaysia
context were selected as the intended sample of the population.
As stated by [38], managers of SMEs have a clear conception of their business process and leader’s behaviour,
since SMEs tends to have quite limited number of technologies and products, consequently they enhance the
accuracy of their responses. Therefore, the managers were selected to be the respondents of this study in order to
evaluate dimensions of the leadership effectiveness due to their knowledge regarding the operation and direction of
their organization. In doing that, this study used the lists of SMEs established in SME Corp. Malaysia at
http://www.smecorp.gov.my and also at http://www.smeinfo.com.my. Furthermore, probability sampling was
employed in this study in which every number of populations has an equal chance to be selected as sample.
With the purpose of assess leadership effectiveness’s dimensions, this study was used manager’s assessment of
leadership effectiveness’s dimensions adopting [20] measure of leadership effectiveness for leaders in a service
organization. The Dhar and Mishra measure has 24 items and assesses the leadership effectiveness using seven
dimensions. Dimensions include the ability to facilitate, be accountable, influence, inspire, motivate, have a positive
attitude, and monitor. The following table shows the questionnaire items used to measure leadership effectiveness
via its dimensions.
In order to analyze the data, descriptive analysis were conducted in this study. In doing that, SPSS (Statistical
Package for the Social Sciences) was used. The SPSS is a dominant and user-friendly software for statistical
analysis of data used in social science research [39-41]. In general, one of the common scales in the field of
leadership and social science and also common practice for surveys which adopted by leaders of organization as a
source of information is Likert scale. Based on most of studies showed five-point scale is better that any other scale;
therefore, this study is used five-point scale. Therefore, this study conducted an online survey and data were
collected from companies in service industry of SMEs context in Malaysia which 186 companies were responded.

Table 1. Items for Leadership Effectiveness

Ability to Inspire
1 A leader inspires his/her subordinates
2 A leader has an understanding of interpersonal behaviour
3 A leader instils confidence in subordinates
4 A leader recognizes the importance of situational factors
5 A leader encourages subordinates to contribute towards the fulfillment of organizational mission
Ability to Facilitate
1038 Mitra Madanchian et al. / Procedia Manufacturing 32 (2019) 1035–1042
4 Mitra Madanchian and Hamed Taherdoost / Procedia Manufacturing 00 (2018) 000–000

1 A leader provides clear and appropriate role perception

2 A leader is able to negotiate
3 A leader frames norms for improving organizational objectives
4 A leader builds teams in order to achieve organizational objectives
5 A leader manages his/her time
6 A leader inspires task commitments amongst people
Ability to Motivate
1 A leader motivates his/her subordinates
2 A leader is able to praise and give rewards to deserving persons
Ability to be Accountable
1 A leader provides support as and when required
2 A leader is able to explain responsibilities and assign work
Positive Attitude
1 A leader provides feedback
2 A leader has positive attitude
3 A leader listens to his/her subordinates
Ability to Monitor
1 A leader monitors performance of his/her subordinates
2 A leader has an ability to analyze complex events
3 A leader influences subordinates to get organized
Ability to Influence
1 A leader always influences his/her subordinates while setting objectives
2 A leader promotes group identity and culture in an organization
3 A leader rewards a task well done

4. Discussion and Results

The first part of the questionnaire was about the demographic information of participants such as gender, age and
education. Table 4.1 presents the demographic characteristic of respondents. The total number of retained
respondents for further analysis is 186 (N=186).

Table 2. Demographic Characteristics of Participants

Characteristics Number Percent%

Gender
Male 101 54
Female 85 46
Age
20-29 42 23
30-39 97 52
40-49 31 17
50-59 10 5
60 or older 6 3
 Mitra Madanchian et al. / Procedia Manufacturing 32 (2019) 1035–1042 1039
Mitra Madanchian and Hamed Taherdoost / Procedia Manufacturing00 (2018) 000–000 5

Education
Certificate/Diploma 66 36
Degree/Bachelor 84 45
Master 25 13
PhD or Doctorate 11 6
Work Experience
Less than 2 years 3 2
2-4 24 13
4-6 64 34
6-8 73 39
More than 8 years 22 12

The table shows that the majority of respondents were male (54%), aged between 30-39 and the majority of
respondents had at Bachelor Degree, representing 45%. In terms of work experience, the table illustrates that
Seventy three respondents (39%) were working between 6-8 years.

Table 3. Descriptive Statistics

Range Mean Std. Deviation Variance

Items of the Dimensions
Statistic Statistic Std. Error Statistic Statistic
A leader inspires his/her subordinates 2.00 4.5753 .03713 .50642 .256

A leader has an understanding of interpersonal behaviour 2.00 4.4946 .04396 .59953 .359

A leader instills confidence in subordinates 3.00 4.4140 .04795 .65398 .428

A leader recognizes the importance of situational factors 3.00 4.5215 .04774 .65104 .424
A leader encourages subordinates to contribute towards the
2.00 4.5000 .04262 .58124 .338
fulfilment of organisational mission
A leader provides clear and appropriate role perception 2.00 4.5054 .04776 .65138 .424
A leader is able to negotiate 2.00 4.5699 .04091 .55795 .311
A leader frames norms for improving organisational
1.00 4.5860 .03621 .49387 .244
objectives
A leader builds teams in order to achieve organisational
2.00 4.4946 .03831 .52244 .273
objectives
A leader manages his/her time 2.00 4.6075 .04324 .58978 .348

A leader inspires task commitments amongst people 4.00 4.2204 .06423 .87599 .767
A leader motivates his/her subordinates 1.00 4.7473 .03195 .43573 .190
A leader is able to praise and give rewards to deserving
2.00 4.6075 .03670 .50054 .251
persons
A leader provides support as and when required 4.00 4.6667 .04082 .55670 .310
A leader is able to explain responsibilities and assign work 2.00 4.5860 .03929 .53587 .287
A leader provides feedback 2.00 4.6022 .03833 .52277 .273
A leader has positive attitude 2.00 4.6183 .04102 .55943 .313

A leader listens to his/her subordinates 4.00 4.4086 .05362 .73133 .535

A leader monitors performance of his/her subordinates 4.00 4.3011 .05313 .72462 .525

A leader has an ability to analyse complex events 4.00 4.3817 .05388 .73484 .540
1040 Mitra Madanchian et al. / Procedia Manufacturing 32 (2019) 1035–1042
6 Mitra Madanchian and Hamed Taherdoost / Procedia Manufacturing 00 (2018) 000–000

A leader influences subordinates to get organised 4.00 4.0645 .06845 .93354 .871
A leader always influences his/her subordinates while
3.00 4.1828 .04168 .56847 .323
setting objectives
A leader promotes group identity and culture in an
3.00 4.2204 .04698 .64079 .411
organisation
A leader rewards a task well done 4.00 4.0269 .06024 .82155 .675

The most common measure of variability is the standard deviation (SD). The standard deviation is defined as the
numeric index that describes how far away from the mean the scores in the distribution are located. As shown in
table 4.2, the mean score for “A leader influences subordinates to get organized” is 4.531 (SD=.93354). This shows
that the respondents strongly agree on this dimension of the effective leadership.

Ability to Inspire
• Inspire Subordinates
• Interpersonal behavior
• Confidence in Subordinate
• Situational Factors
• Encourage Subordinate

Ability to Facilitate
• Provide Clear Role
• Negotiate 4.50
• Frames Norms
• Build Teams
• Manage Time 4.49
• Inspire Task Commitments
•

Ability to Motivate
• Motivate subordinates 4.67
• Praise and Rewards

4.63 Leadership Effectiveness

Ability to be Accountable
• Provides Supports
• Explain Responsibilities
4.59
Positive Attitude
• Provide Feedback
• Positive Attitude
• Listen to Subordinates 4.54
425
Ability to Monitor
• Performance of Subordinates
• Analyze Complex Events
• Influence Subordinates

Ability to Influence
• Influence Subordinates
• Promotes Group Identity
• Rewards a task well done

Fig 1. Leadership Effectiveness Dimensions Conceptual Model (LEM)

 Mitra Madanchian et al. / Procedia Manufacturing 32 (2019) 1035–1042 1041
Mitra Madanchian and Hamed Taherdoost / Procedia Manufacturing00 (2018) 000–000 7

The analysis of the data showed that the seven dimensions of leadership effectiveness for service organization.
The findings showed that an effective leader must inspire followers/employees, has an understanding of
interpersonal behavior, recognizes the importance of situational factors and also encourage followers/employees to
effectively contribute towards achievement of organizational task.
Moreover, managers were agree that a leader must always influence followers/employees through setting
objectives in organization, following inspire and motivate them while providing clear and appropriate role insight.
Also, they have the same opinion that an effective leader must be able to praise their potential followers/employees,
be able to explain responsibilities and assign work and must has positive attitude. Furthermore, most of the
respondents were agreed that an effective leader should provide feedback and provide supports and listen well to
their followers/employees.
In general, as the below Figure illustrates, the findings of this study support all dimensions of leadership
effectiveness; “leader’s ability to inspire, facilitate, motivate, influence, be accountable, have a positive attitude, and
monitor the performance of subordinates” as a significant factors to evaluate an leader’s effectiveness. Besides, the
results showed that the all dimensions of the leadership effectiveness play an important role towards enhancing an
organizational performance. Additionally, mangers, followers/employees are more knowledgeable now and require
more effective leadership being display by their leaders and they may no longer accept the simple use of positional
power and authority to lead them.

5. Conclusion

After haven passed through the review of the literature about leadership and leadership effectiveness practiced by
a leaders and its effect on the performance of SMEs, the study realized that effective leadership can authorize the
small businesses to have a performance that goes even beyond expectations [22] and hence obtain a strong
competitive advantage particularly in the SMEs sector that is faced with internationalization of competition and an
excellent technical revolution.
In sum up, effective leaders are able to turn other’s self-interests for the good of their group or organization [42].
Leadership effectiveness enhances the productivity of followers/employees in all the sectors of the economy in a
country and now it has motivated researchers, nationwide and global organizations to receive keen and intense
notice in it.

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