The impact of ethical leadership on leadership effectiveness among SMEs in Malaysia

One of the important sources for economic growth is the development of small and medium enterprises (SMEs). Research has shown that leadership is an important factor for organizational success. But the literature has indicated that leadership research in small businesses, especially SMEs in Malaysia, is still lacking. Thus, this study concentrates on the ethical leadership and leadership effectiveness among SMEs in Malaysia. To achieve this, this study begins by reviewing the literature in the areas of ethical leadership and leadership effectiveness. The quantitative approach is employed for data collection and analysis. To test the hypothesis data were collected from 150 Malaysia' SMEs operating in service sector specifically Information Communication Technology (ICT). Exploratory factor analysis, confirmatory factor analysis and structural equation modelling (SEM) using path analysis were used to test the model and verify the hypothesis on the direct and positive effects of ethical leadership on leadership effectiveness. The findings of this research shows that ethical leadership have direct and positive effect on leadership effectiveness. (C) 2018 The Authors. Published by Elsevier B.V.