The relationship between strategic

leadership and organization performance in

Jordan industrial estates company
Cite as: AIP Conference Proceedings 2016, 020023 (2018); https://doi.org/10.1063/1.5055425
Published Online: 27 September 2018

Waleed Mohammad Kayed Alhyasat, and Zainon Mat Sharif

ARTICLES YOU MAY BE INTERESTED IN

The effect of eco- innovation on organization performance in Jordan industrial estates

corporation
AIP Conference Proceedings 2016, 020085 (2018); https://doi.org/10.1063/1.5055487

Trust in management, communication and organisational commitment: Factors influencing

readiness for change management in organisation
AIP Conference Proceedings 1891, 020019 (2017); https://doi.org/10.1063/1.5005352

The determinants impacting the adoption of cloud computing in Yemen institutions

AIP Conference Proceedings 2016, 020022 (2018); https://doi.org/10.1063/1.5055424

AIP Conference Proceedings 2016, 020023 (2018); https://doi.org/10.1063/1.5055425 2016, 020023

© 2018 Author(s).
 The Relationship between Strategic Leadership and
Organization Performance in Jordan Industrial Estates
Company
Waleed Mohammad Kayed Alhyasat1, a) and Zainon Mat Sharif2, b)

1
Universiti Tenaga Nasional, Graduate Business School,
Putrajaya Campus, Jalan IKRAM-UNITEN, 43000 Kajang, Selangor, Malaysia
2
College of Graduate Studies, Universiti Tenaga Nasional, Malaysia
a)
Corresponding author: w_heyasat@yahoo.com
b)
zainon@uniten.edu.my

Abstract. The purpose of this study is to examine the relationship between strategic leadership and organization
performance in Jordan Industrial Estates Company. Self-administration questionnaire was used as a quantitative
instrument to collect the data. The simple random sample of 30 employees from Jordan industrial estate company (JIEC)
was the sample for this study. Statistical Package for the Social Sciences (SPSS) was used to determine the relationship
between variables. The results of this study shows a positive relationship between strategic leadership and organization
performance.

Keywords: Strategic Leadership; Organization Performance; Jordan Industrial Estate Company.

INTRODUCTION

This Jordan Industrial Estates Company (JIEC) is a semi-governmental company was established in 1980 to
support the Jordanian industrial sector. JIEC manages five main industrial states which is distributed on five
governments in Jordan [1]. These five Industrial Estates is significantly contribute to Jordanian Gross domestic
product (GDP) [2]. Moreover the main goal of establishing JIEC was to attract foreigner investor and accommodate
their investment in the mentioned five industrial estate to develop Jordanian industry and help government to decrease
the unemployment rate in Jordan [3].
Organization performance (OP) is the transformation of inputs into outputs to achieve a certain outcomes. The
main purpose of organizations is to increase their performance to meet the market competitiveness [4]. Moreover, the
organization leaders work hard to improve the organizational performance and gain the highest planed level of
performance [5]. Scholar developed different ways of measurement to measure organization performance like ROI,
sales, market share, and profitability, [6].
Leadership plays a very important and a major role in the success of all organizations all around the world and this
role is different from country to country. Strategic leadership (SL) is defined as the thinking and decision making that
needed to develop and affect the strategic plan of the organization [7]. Moreover strategic leadership is the ability to
influence others to be voluntarily make daily decisions that enhance the long-term viability of organization, while at
the same time maintaining its short-term financial viability [8]. Additionally, [9] emphasized the main role of strategic
leadership is to manage the human and social capital. From strategic perspective and resource based view theory of
[10, 11] and other scholars, the human and social capital is a main strategic assets of organizations. these assets is
create value for the organization [9]. Furthermore Strategic leadership enhance and increase the organization

Proceedings of the 3rd International Conference on Applied Science and Technology (ICAST’18)
AIP Conf. Proc. 2016, 020023-1–020023-5; https://doi.org/10.1063/1.5055425
Published by AIP Publishing. 978-0-7354-1734-2/$30.00

020023-1
performance by developing human and social capabilities [9]. Human and social capital is an internal issues in the
organization, and will be studied to measure strategic leadership.
Leadership history shows that the scholar changed their focus from supervisory leadership to strategic leadership
in last 20 years [7, 12]. Strategic level of Leadership is the key issue facing 21st-century organizations [9, 13].
Strategic leadership is one of the leadership style, which is very noticeable and has an effective role in making
competitive advantages [14]. Human capital is a main issues in the organization which is skills and knowledge of the
employees in the organization, the understanding of human capital need is the key of how to develop new human
capital knowledge, skills, and attitudes and these issues help employees to be ready for new challenges during their
work in the organizations [15].
[16] Suggest that there is needed to study the role of leadership in organizational performance not because of the
limited but contradictory results from previous studies. [17] Claimed in their research that a recent review has also
called for more research on strategic leadership. Strategic leaders can have noticeable effect on organizational
performance through understanding the job and environmental conditions and establishing interaction with
employees. Therefore, it is important to examine how leadership influences business innovation in business
performance in JIEC in Jordan.

BACKGROUND OF STUDY

Organization performance is very important issues that used to measure the organization success [18]. [19]
Defined performance as the record of outcomes produced on a specified job function or activity during a specified
period of time. Therefore the measurement of performance is the output and outcome, profit, internal processes and
procedures, employee attitudes, organizational structures, and organizational responsiveness to the environment [16].
According to [20] study about Jordan, he used two component to measure organization performance which is returned
on assets (ROA) and returned on equity (ROE). Moreover organization performance is measured in different ways in
literature, and they used different variables. [16] Measured organization performance by market share, profitability,
sales, growth, and competitive advantage. Additionally, [21] measured organization performance as innovation
propensity. In the other hand a good way to measure performance is market share, returned on investment (ROI),
profit, sales [6], organization performance in this study will be measured by [6], (for example [22] used this model in
their study). In addition [23] measure the organization performance by positioning for the future, growth, longevity,
profitability, and consistency. [24] And his colleagues developed a model to measure the organization performance
that model consist of product market performance like (market share, sales, etc.), financial performance like (ROA,
ROI, profit, etc.), and the return on shareholder.
[23] found in his study that the impact of strategic leadership is positively affecting the business organizations
performance in both way directly and indirectly. While [16] found in their study that leader’s behavior is directly
related to organizational performance. Meanwhile Strategic leaders who understanding the job and environmental
conditions, can have noticeable effect on organizational performance [25]. Moreover [13] found in his study that
strategic leadership will positively influence strategic alignment which, in turn, will have a beneficial effect on
organizational performance. Finally The role of leaders behavior is related directly to organization performance [21].
[22] Claimed that the leaders of Chinese organization play a main and critical role of Chinese organizations success,
and this success due to their powerful and autocratic than developed country leaders. This result support that the
leadership plays a very important and a major role in the success of all organizations all around the world but this role
is differ from country to country.
In addition, Strategic leaders who understand the job, environmental issue, and create interaction with employees
can make effect on organizational performance [25]. In the other hand, few studies have focused on examining the
relationship between strategic leadership and the organization's performance [23].
[16] Found in their study that there is a relationship between leadership and organization performance. Wang and
his colleagues found that leader’s behavior is directly related to organizational performance [16]. Meanwhile
organization strategic leaders who understanding the job needed and working environmental conditions, can have
noticeable effect on organizational performance [16].
Few studies have examined the relationship between strategic leadership and the organization’s performance [26].
[5] indicated in his study that the role of leadership (from previous studies) in achieving the organizational
performance has a different results. Hence, the role of leadership in organization performance needs more study. [17]
Claimed in their research that a recent review has also called for more research on strategic leadership.

020023-2
 METHODOLOGY

Figure 1: shows the research framework.

Human Capital
Organization
Performance

Social Capital
FIGURE 1. Research Framework
‘
This research employs the exploratory and descriptive design with quantitative approach. Random simple
sampling is used to collect data by self – administrated questionnaires. Sample size was chosen among five industrial
estate from JIEC. 30 company is acceptable as a sample size [27] (for example [28] and her colleagues applied this).
The questionnaire is adopted from [9] for strategic leadership and from [6] for the organization performance.

RESULT AND DISCUSSION

TABLE 1. Reliability Analysis

Variables No. of Items P or (α) M SD
DV 11 .937 3.033 .952
IV1 7 .898 3.279 .036
IV2 9 .904 3.129 .825
Note: M- Mean, SD- Standard Deviation

TABLE 2. Person Correlation Matrix

Variables DV IV1 IV2
DV 1.000
IV1 .468* 1.000
IV2 .584** .836** 1.000
Note: ** Correlation is significant at the 0.01 level (two- tailed)
* Correlation is significant at the 0.05 level (two- tailed)

TABLE 3. Model Summary

Std. Error of the
Model R R2 Adjusted R2
Estimate
1 0.584a .341 .318 .786
Note: a. Predictors: (Constant) HC, SC.
b. Dependent Variable: OP.

020023-3
 TABLE 4. ANOVA Analysis
Model Sum of Square DF Mean Square SDF-Test Sig.
Regression 8.963 1 8.963 14.498 .01b
Residual 17.310 28 0.618
Total 26.273 29
Note: ** Correlation is significant at the 0.01 level (two- tailed)
a. Predictors: (Constant) HC, SC.
b. Dependent Variable: OP.

This study was conducted in Jordan Industrial Estate Company in Jordan. Reliability test in table 1 shows that the
value of (α) for Cronbach’s alpha test is excellent for organization performance (DV) and social capital (Iv2), but the
human capital (IV1) is a very good. According to [29] if the value of α above 0.8 and less than 0.9 it is considered as
very good, and if the value of α above 0.9 is considered as excellent. Organization performance having the highest α
value at 0.937, followed by Social capital with P= 0.904, and the lowest value is for Human capital with P=0.898, as
shown in table 1.
Person correlation analysis in table 2 shows that all independent variables have a positive correlation with
dependent variable. The result of person correlation analysis shows that social capital have a correlation with (P=
0.583), and human capital have a correlation with (P=0.468). The result of person correlation analysis confirmed that
the social capital is more important than human capital to achieve the highest of organization performance in Jordan
Industrial Estate Company. On the other hand both social capital and human capital still have a good and positive
correlation with organization performance, both of human capital and social capital need more development from the
leadership of all organizations in Jordan Industrial Estate Company to insure that their companies achieved the
desired and planed performance. As a result human capital and social capital as independent variables can explain
34.1% (R2) of the variance reflects the organization performance as a dependent variable which is showed in table 3.
Table 4 of ANOVA shows the pilot study test model is fit model with significant value of P<0.05.

CONCLUSION

Achieving organization performance need more and more development to human capital and social capital
between the employee them self and between them and the strategic leadership. Internal and external training is a very
important issue that leadership should pay attention of it, and plan it carefully with strategic plan of organization. The
friendly relationship between employees and leadership increase the employee performance. In the other hand inside
and outside good relationship between employees may increase the employee performance.
The main recommendation for this study is to repeat it in actual sample (more than 200) so that the result will be
more accurate and apply the same test model to test the variables.

REFERENCES

1. JIEC, “JIEC 2015 report,” Amman, 2015.

2. A. Yacoub and A. Mahmoud, Jordan industrial estates corporation (JIEC) the Hashemite Kingdom of
Jordan, J. Econ. Coop 20(4), 107–110 (1999).
3. J. P. Gaffney, “Jordan’s Qualified Industrial Zones : A Qualified Success ?,” Ms.C. Thesis, University of
Pennsylvania in Partial, 2005.
4. A. Arslan and S. Staub, Theory X and Theory Y Type Leadership Behavior and its Impact on
Organizational Performance: Small Business Owners in the Şishane Lighting and Chandelier District,
Procedia - Soc. Behav. Sci 75, 102–111 (2013).
5. A. U. Karamat, “Impact of Leadership on Organizational Performance,” 2013.
6. S. Im and J. p. Workman, Market orientation, creaeivity, and New Product Performance in, J. makieting 68,
114–132 (2004).
7. K. B. Boal and R. Hooijberg, Strategic leadership research, Leadersh. Q 11(4), 515–549 (2000).

020023-4
8. W. G. Rowe, Creating wealth in organizations: The role of strategic leadership. Acad. Manag. Exec 15, 81–
94 (2001).
9. M. A. Hitt and R. D. Ireland, The essence of strategic leadership : Managing human and social capital, The
Journal of Leadership and Organizational Studies 9(1), 3–14 (2002).
10. J. Barney, Firm Resources and Sustained Competitive Advantage, Journal of Management 17(1), 99–120
(1991).
11. J. B. Barney and J. A. Y. B. Barney, “Strategic Factor Markets : Expectations, Luck, and Business Strategy,
Management Science 32(10), 1231–1241 (2010).
12. A. Arundel, Measuring eco-innovation, Account. Financ 20(2), 146–146 (2009).
13. L. W. Lear, The relationship between strategic leadership and strategic alignment in high-performing
companies in South Africa, Thesis, pp. 1–235, 2012.
14. A. A. Palladan, K. B. Abdulkadir, and Y. W. Chong, The Effect of Strategic Leadership, Organization
Innovativeness, Information Technology Capability on Effective Strategy Implementation: A Study of
Tertiary Institutions in Nigeria, IOSR J. Bus. Manag 18(9), 109–115 (2016).
15. S. Sorooshian, A. Anvari, M. Salimi, and E. Falatoonitoosi, Interrelation study of Entrepreneur’s
Capability, World Appl. Sci. J 17(7), 818–820 (2012).
16. H. Wang, A. S. Tsui, and K. R. Xin, CEO leadership behaviors, organizational performance, and
employees’ attitudes, Leadersh. Q 22(1), 92–105 (2011).
17. “Ozar and Tinaztepe 2014 Effect of Strategic Leadership Styles on Firm Performance A Study in a
Turkish SME.pdf.”
18. W. B. Vessey, J. D. Barrett, M. D. Mumford, G. Johnson, and B. Litwiller, Leadership of highly creative
people in highly creative fields: A historiometric study of scientific leaders, Leadersh. Q 25(4), 672–691
(2014).
19. M. Armstrong, A handbook of human resource management practice, 357, 2006.
20. R. Zeitun, OWNERSHIP STRUCTURE, CORPORATE PERFORMANCE AND failure jordan.pdf, Corp.
Ownersh. Control 6(4), 96–114 (2009).
21. J. C. Ryan and S. A. A. Tipu, Leadership effects on innovation propensity : A two-factor full range
leadership model, J. Bus. Res 66(10), 2116–2129 (2013).
22. C. C. J. Cheng, C. L. Yang, and C. Sheu, The link between eco-innovation and business performance: A
Taiwanese industry context, J. Clean. Prod 64, 81–90 (2014).
23. J. J. Serfontein and P. Doctor, “THE IMPACT OF STRATEGIC LEADERSHIP ON THE
OPERATIONAL STRATEGY AND PERFORMANCE OF BUSINESS ORGANISATIONS IN,” 2010.
24. G. G. Dess and R. B. Robinson, Measuring organizational performance in the absence of objective
measures: The case of the privatelyǦheld firm and conglomerate business unit, Strategic Management
Journal 5(3), 265–273 (1984).
25. M. Pazireh, E. M. Akhlagh and M. Akbari, Evaluation the Role of Strategic Leadership in Organizational
Performance, 4(9), 23–28 (2014).
26. H. L. Chen, W. T. Hsu, and C. Y. Chang, Independent directors’ human and social capital, firm
internationalization and performance implications: An integrated agency-resource dependence view, Int.
Bus. Rev 25(4), 859–871 (2016).
27. “The Research Sample, _Part_I__Sampling.8.pdf.”
28. Z. B. Mat Sharif, N. B. Mohd Taib, M. S. Bin Yusof, M. Z. Bin Rahim, A. L. Bin Mohd Tobi, and M. S.
Bin Othman, Study on Handing Process and Quality Degradation of Oil Palm Fresh Fruit Bunches (FFB),
IOP Conf. Ser. Mater. Sci. Eng 203(1), 2017.
29. K. A. Markus, Principles and Practice of Structural Equation Modeling by Rex B. Kline, Structural
Equation Modeling: A Multidisciplinary Journal 19(3), 509–512 (2012).

020023-5