17 Importance of Leadership in Modern Business

Leadership has unique importance and role in modern business and non-business organizations. In each business organization, although collective efforts are undertaken to fulfill the predetermined objectives, the role of the and leadership should also be not ignored.

importance of leadership in modern business
importance of leadership in modern business

The success or failure of an institution to a large extent depends upon the quality of the leadership also. If the activities of the employees are well executed, and proper guidance is provided to them, the success of the institution is sure.

“Most of the organizations or businesses and Institutions get the failure because they lack good leadership.

So the importance of good leadership for a successful business is essential.

Importance of Leadership in Modern Business

The following are the role and importance of leadership in modern business:

1. Achieving Objectives of Business

The Entrepreneur establishes and starts the institution. The policies and schemes of the organization are implemented, aiming at the overall objectives of the business organization and the institution.

Besides, policies and schemes of the business organization are executed only through leadership.

As the leader, the entrepreneur encourages the persons to willingly make efforts for achieving mutual objectives.

As a result, the achievement of the objectives becomes easy and convenient.

2. Success of Business Enterprise

By leadership, not only the policies and schemes determined by the entrepreneur are properly implemented, but proper and timely control also becomes possible.

Besides, the activities of the employees are also properly implemented and effectively guided through leadership.

As a result, the objectives of the business are achieved and entrepreneurs become successful.

The success or failure of any business undertaking depends upon the quality of leadership.

3. Performance Management Functions

The successful execution of various functions of business management, like planning, organization, coordination, communication, direction, motivation, and control is possible only by foresighted leadership.

It has been correctly observed by a scholar that “leadership is that inspiring force which gets the tasks accomplished by others.

In a good business organization, there is no substitution for leadership.” The organization is only complementary.

Thus, leadership is the key to success for managerial functions.

Related: 12 Major Factors Affecting Entrepreneurship Development.

4. Improvement in Organisational Behaviour

The importance and role of leadership in modern business are also due to the reason that it is an important improver of organizational behavior, meaning thereby in that the entrepreneur has qualities like managerial ability, knowledge of human relations and flexibility of Mind, which he uses according to the circumstances.

5. Addition in Managerial Effectiveness

Leadership is a foundation of entrepreneurship.

Leadership is an important requirement for effective management of business organizations.

The laxity develops in the power of entrepreneurship if proper leadership is lacking and it also puts obstacles in achievements of the targets.

6. Successful Execution of Collective Activities

The leadership is also very important for successfully executing collective activities, the reason being that the function of consolidating various activities performed by the entrepreneurs on the contrary if then to produce do not execute the collective activities required for achieving the objectives is performed by the entrepreneur alone.

On the contrary, if the entrepreneur does not execute the collective activities, the group becomes haphazard and the activities by the group will not succeed in fulfilling the collective objectives.

The group becomes activities by the group will not succeed in fulfilling the collective objectives.

7. Development of Personality

Efficient leadership has an important contribution to developing the personality of the persons working in the organization.

The efficient leader provides sufficient cooperation in the development of the personality of his followers and also develops leadership qualities in them.

The leadership makes the vision of the persons broader and high, provides heights to work performance and creates a personality with enormous capacities.

Related: 18 Aims and Objectives of Advertising (Explained).

8. Transforms Business into a Social Process

The entrepreneurship/business is a social process because it procures various resources from society and serves society, viewing social responsibilities.

However, the entrepreneurship is transformed into a social process through effective leadership, the reason being that the entrepreneur changes the formal relations into such a formal environment, that he regularly remembers his goals.

The entrepreneurs lead their employees towards achieving the determined goals through proper coordination and guidance.

By efficient leadership, the employees become ready to dispense with their personal interests, and for safeguarding the interests of the Institution.

9. Development of Feelings of Coordination

Coordination among the functions and activities of the members is essential for achieving the objectives of the organization.

For doing that, leadership has distinct importance, as it provides necessary directions in guidelines for coordinating the activities of the members and also develops feelings of coordination among them.

10. Inspiration To the Members for More Work

Leadership has been regarded as the source for motivating the employees to do more work because this is such a power that provides inspiration to all the members of the group for achieving targets of the institution.

importance of leadership in modern business
importance of leadership in modern business


On the one side, efficient leadership motivates the employees, and on the other side, human relations also.

That way, the leadership provides opportunities for exposure to the qualities of various persons and motivates them for doing more work.

11. To Make Collective Efforts More Dynamic

To always maintain the collective efforts dynamic in a coordinated manner, the role of leadership is significant, because dynamic leadership maintains the loyalty of the members of the group towards the business organization and objectives, by adopting the techniques, in accordance with the circumstances, and also provides motivations to them.

Leadership also seeks their trust and cooperation.

12. Development of Contended Working Class

An important identification of good leadership is that its members and followers always remain contented and happy.

But, it is possible only with effective leadership, since a good entrepreneur maths all-out efforts to satisfy them with his good conduct and behavior.

That way, efficient leadership helps in the development of the contended working class.

13. Building up of Good Environment in Business

Good and efficient leadership builds a good environment for its working employees.

As a result, their grievances get reduced and even these are resolved expeditiously.

By development of feelings of contentment and satisfaction, the emergence of good people and good activities becomes easier.

Related: 23 Key Factors Affecting Business Environment (With Examples).

14. Attainment of High-Level Cooperation and Trust

Leadership is the foundation for attaining cooperation and trust.

High-level cooperation and trust are possible because of an efficient entrepreneur:

  1. Removes the mutual contradictions and non-cooperation among its specific departments and their members.
  2. Resolves various complaints, and grievances by his conduct and behavior.
  3. He gains the position of getting work done by any member and follower.
  4. Develops mutual faith and cordiality among the employees.

15. Spontaneous Development of Feelings of Discipline

The entrepreneur establishes discipline among the employees working in the enterprise by his leadership abilities.

Discipline always follows flows from top to bottom.

If the leading person is himself disciplined, the feelings of discipline spontaneously develop among the subordinates.

16. Building up of High Morale

The role of effective leadership is important for building up the morale of the employees, the reason being that through effective leadership, more attention is paid on group interests in place of individual interests.

As a result, the followers develop the approach of touching the Heights, their work performance gets improved and their personality is suitably built.

That way, leadership in entrepreneurship has an important role in building up of high morale.

17. Effective Measure to Face Competition

With the effective leadership plans in operation, a producer can make his competing position strong.


Rather, he can disrupt competitors marketing strategies.

He can motivate them to sell the products on a priority basis and to maintain maximum stock with them.

Thus, now you know the importance of leadership in modern business.

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