Abstract:
Organizational culture is a key in developing traits and skills in business enterprises. Organizational culture
affects employee performance thereby the business success. Amidst many other models, Geert Hofstede
introduced a model to evaluate the cultural influence in business organizations over four dimensions, namely
power distance, uncertainty avoidance, individuality, and masculinity. Despite many scholars have researched on
organizational culture using this four-dimensional approach, an in-depth study has not been carried out in Sri
Lanka, particularly on the relationship between power distance and employee performance. Thus, this study
attempts to answer the question; how has the level of power distance influenced on employee performance in
small-medium agro-based enterprises (SME) and the leadership styles? Agro-based SMEs over four product
categories including dairy, tea, plant production (ornamental and timber plant), and agro-input supply in
Sabaragamuwa Province, Sri Lanka were considered. Secondary data was obtained through published documents
and primary data was gathered through a questionnaire survey, which elicited questions enveloping both
quantitative and qualitative data. Simple random sampling technique was employed to draw a sample of 100
operational-level staff from 10 agro-based SMEs obtained from the lists of Sabaragamuwa Chamber of
Commerce. Northouse leadership questionnaire was adopted to investigate the leadership styles. Every variable
was rated at a five-point Likert scale from 1 to 5 (1- strongly agree and 5- strongly disagree). Democratic
leadership style was prominent in all SMEs with moderate employee performance. Encouraged teamwork culture,
collaborative problem solving, and high employee engagement, open discussions are noticeable. A modest power
distance has been reported by all the entities in a range of 50-68 (PDI dairy= 68.71; PDI tea= 50.52; PDI plant= 66.21;
PDI agro-input= 50.24). It indicates a harmonious relationship between superiors and workers. Despite Sri Lanka has
been classified as a country with a high-power distance (80) in 2011, the findings reveal a moderate power
distance (58.92) in agro-based SMEs in the Sabaragamuwa Province.
