THE IMPACT OF LEADERSHIP STYLE ON ORGANIZATIONAL CULTURE AND EMPLOYEE PERFORMANCE: A CASE STUDY IN THE PRIVATE SECTOR IN THE REPUBLIC OF NORTH MACEDONIA

Abstract

Leadership represents one of the most influential factors shaping organizational culture and, indirectly, the performance and effectiveness of employees in modern organizations. As private sector companies in the Republic of North Macedonia continue to adapt to competitive market pressures, digital transformation and post-pandemic changes in the way people work, the leadership style adopted by managers has become an important determinant of the values, norms and everyday practices that constitute organizational culture. This study examines the impact of leadership style on organizational culture and employee performance in the private sector in the Republic of North Macedonia. The research investigates whether transformational and participative leadership behaviors contribute to a stronger organizational culture, higher employee performance and increased job satisfaction, compared with more directive or transactional approaches. A quantitative cross-sectional survey was conducted among 104 employees working in private companies from various industries, including information technology, finance, marketing, education and administrative services. Data were collected using a structured questionnaire consisting of demographic questions and a set of statements measured on a five-point Likert scale, covering perceived leadership style, organizational culture, employee performance and job satisfaction. The findings indicate a generally positive perception of leadership and organizational culture among respondents, with more than half of the sample rating these aspects favourably. The highest average score was recorded for employee performance (M = 3.84), while leadership style (M = 3.78) and organizational culture (M = 3.71) also received high evaluations; job satisfaction received a comparatively lower, though still positive, average score (M = 3.63). Pearson correlation analysis revealed a moderate to relatively strong positive relationship between leadership style and organizational culture (r = 0.62), between organizational culture and employee performance (r = 0.58), and between leadership and job satisfaction (r = 0.55), suggesting that employees who perceive their leaders as supportive and engaging also report a stronger organizational culture and higher performance. The results demonstrate that leadership represents a significant organizational resource capable of shaping organizational culture and supporting employee effectiveness. Nevertheless, the findings suggest that a positive organizational culture is not created by leadership style alone, but also requires consistent communication, employee involvement and supportive human resource policies. Organizations that invest in developing their leaders and in reinforcing a shared set of values across teams are likely to see long-term benefits in employee performance, retention and job satisfaction. Future research could expand the sample to include more organizations, different economic sectors and comparative analysis across countries, in order to gain a more detailed understanding of the long-term effects of leadership on organizational culture and human resource management.