Role of Emotional Intelligence in Leadership Effectiveness: Evidence from Mid-Sized Enterprises

Abstract

Emotional intelligence (EI) has become a key factor in determining leadership success, especially in dynamic and resource-limited settings such as mid-sized enterprises (MSEs). This research explores how EI influences leadership outcomes in MSEs, which have 50-250 employees, within the manufacturing, services, and technology sectors in the United States, India, and Europe. Using a mixed-methods approach, the study gathered primary data through structured surveys from 620 leaders and 1,450 employees, complemented by semi-structured interviews with 45 executives. The theoretical framework was based on Daniel Goleman’s four-domain EI model, which includes self-awareness, self-management, social awareness, and relationship management.

Results from Structural Equation Modeling (SEM) reveal a significant positive correlation between overall EI and leadership effectiveness (β = 0.68, p < 0.001), accounting for about 52% of the variance in outcomes like employee engagement, team performance, innovation, and organizational adaptability. Self-regulation and empathy were identified as the most influential predictors. Differences across sectors were observed, with technology companies placing greater importance on relationship management to foster innovation-driven cultures. The findings highlight EI's advantage over traditional IQ in forecasting leadership success in MSEs, where leaders frequently juggle multiple tasks amid uncertainty.

Practical recommendations include implementing targeted EI training programs, incorporating EI assessments in recruitment, and fostering cultural integration to maintain competitiveness. This study adds to the literature by offering empirical evidence from the less-explored context of MSEs during post-pandemic recovery and digital transformation challenges. Limitations and suggestions for future longitudinal research are also discussed.