Article

Effects of Leadership on Financial Performance at the Local Level of an Industrial Distributor

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Abstract

An important component in the industrial products supply chain is the distribution segment of the channel. The health and success of industrial distributors can often influence the success of manu- facturers whom they represent. Although research has demonstrated how leadership is a key ingredient in the success of large corporations across industries, very little leadership research has been conducted in the industrial distribution market segment—especially at the local level. This research fills the gap between what is known about leader- ship in larger organizations, and the need for greater understanding of leadership at the local level of an industrial distributor. The authors of this study ask: how does leadership style affect the branch- level sales and margin performance of industrial sales organizations? To answer this question, this study collected transformational and transactional leadership data from 100 branch-office locations of a national wholesale distributor using the Multifac- tor Leadership Questionnaire (MLQ). Both leader and follower data were collected at each location. In all, nearly 300 people participated in the study. The authors calculated the predictive relation- ship between leadership style and average change in year-over-year sales and profit margin using a multiple regression analysis. The results show that a leader’s self-reported transformational leadership was positively associated with sales and profit mar- gin performance at the local level of an industrial distributor, while followers’ ratings of a leader’s transactional leadership style was negatively associ- ated with sales performance.

Keywords: industrial distribution, human relations, research, supply chain management

How to Cite:

Flanigan, R. L., Stewardson, G., Dew, J., Fleig-Palmer, M. M. & Reeve, E. M., (2013) “Effects of Leadership on Financial Performance at the Local Level of an Industrial Distributor”, The Journal of Technology, Management, and Applied Engineering 29(4).