The Effect of Leadership Competencies in the Performance of Start-Up Business in Addis Ababa, Ethiopia: The Case of Akufada Microfinance

Abstract

The study focused on examining the impact of leadership competencies on the performance of start-up businesses in Addis Ababa, specifically in the Akufada microfinance institution. It aimed to explore how analytical, personal, communication, organizational, and disciplinary leadership competencies influence the success of new start-ups. A mixed research approach combining descriptive and explanatory research designs was employed, utilizing both primary and secondary data sources. Quantitative data were collected through questionnaires completed by 70 respondents, while qualitative insights were gathered from interviews with six key informants. Data collection methods included purposive sampling for interviews and a census method for questionnaires. The qualitative data were analysed using narrative analysis, while quantitative data were processed using descriptive statistics (frequency, mean, percentage) and inferential statistics (correlation and regression) with SPSS software (version 26). The findings revealed a positive and significant correlation between leadership competencies and start-up business performance, with all dimensions of leadership competencies—analytical, personal, communication, organizational/managerial, and disciplinary—having a notable impact on performance. Among these, disciplinary leadership competency had the strongest effect, followed by communication, organizational, personal, and analytical competencies. The study concluded that leadership competencies are critical for enhancing start-up performance and recommended that start-ups prioritize leadership education through continuous formal training to improve the understanding and application of these competencies. Furthermore, it emphasized the importance of regularly assessing and utilizing all dimensions of leadership competencies to foster employee and customer satisfaction, ensure consistent service delivery, and develop effective leadership practices that contribute to the overall growth and success of the business.

Key Words: Analytic Leadership Competency, Personal Leadership Competency, Communication Leadership Competency, Organizational Leadership Competency & Disciplinary Leadership Competency

DOI: 10.7176/JTHS/70-02

Publication date: June 30^th 2026