Leadership styles, high-involvement human resource management, and employee performance in digital-era small and medium enterprises

Abstract

This study explores the positive connections between leadership styles, high-involvement human resource management practices, and individual employee performance within small and medium enterprises in the digital era. Specifically, it focuses on servant, shared, and empowering leadership styles to represent leadership approaches in today’s digital context. The research proposes four hypotheses and develops a conceptual framework to examine these relationships. Data were collected through an online self-report questionnaire distributed to 300 targeted participants, yielding 276 complete responses between November 2021 and January 2022. Employing a quantitative approach, the study uses structural equation modeling with SPSS and AMOS for data analysis. Results demonstrate that the collected data are well-distributed and that the indicators for the three main variables are both valid and reliable, as confirmed by confirmatory factor analysis. The goodness-of-fit analysis supports the suitability of the research model for small and medium enterprises. Hypothesis testing shows that leadership styles have a significant positive impact on both employee performance and high-involvement human resource management practices. However, the findings indicate that high-involvement human resource management practices do not mediate the relationship between leadership styles and individual employee performance in SMEs operating in Lubuklinggau. Overall, this research highlights the importance of effective leadership styles in enhancing employee performance directly, as well as their influence on human resource practices, in the context of small and medium enterprises adapting to the demands of the digital era.