Internal control systems, leadership style and operational performance of automotive dealerships in Uganda: case study of Spear Motors Limited

Abstract

The main objective of this study was to explore the internal control systems (ICS), leadership style, and operational performance of automotive dealerships in Uganda. Specifically, the study aimed to examine the relationship between internal control systems and operational performance of automotive dealerships in Uganda; to examine the relationship between internal control systems and leadership style; to examine the relationship between leadership style and operational performance; and to establish the mediating role of leadership style on the relationship between internal control systems and operational performance. This study employed a cross-sectional research design and adopted a quantitative approach, utilizing surveys to collect data from management and employees at Spear Motors Ltd. The study was grounded in agency theory and contingency theory. Findings revealed a significant positive relationship between ICS and operational performance, as well as between ICS and leadership style. Additionally, leadership style was found to partially mediate the relationship between ICS and operational performance. This suggests that while ICS directly improves operational performance, leadership style further enhances this effect by influencing how internal controls are implemented. The study concluded that strengthening internal control systems is vital for improving operational outcomes and that leadership plays a crucial role in this process. Recommendations for Spear Motors Ltd include investing in continuous evaluation and improvement of ICS. Future studies could focus on the influence of organizational culture on ICS effectiveness and its interaction with leadership styles.

Keywords: Internal Control Systems, Leadership Style, Operational Performance, Mediation, Corporate Governance, Spear Motors Ltd, Organizational Culture.