Entrepreneurial leadership, organisational creativity, and firm performance in Chinese SMEs context

Abstract

Researchers have identified a wide range of factors that affect organisational creativity. The leadership behaviour of top managers is one of the most important. However, few studies have empirically examined the relationship between the leadership behaviour of these leaders and creativity at the organisational level. In this study, a style of leadership labelled “entrepreneurial” is considered in the context of Chinese SMEs, by considering its potential to create an environment in which creative activities can flourish. The entrepreneurial leader is central to the enterprise, creating visionary scenarios and facilitating a group of capable members to enact their vision, further fostering organisational creativity. As organisational creativity is important for business success, there is a significant need for research into the impact of entrepreneurial leadership. The study identifies gaps in the literature. First, a number of studies have contributed significant insights into the antecedents of employee creative behaviours and performance, but predominantly concentrate on the level of the individual employee. Hence, an investigation into the antecedents of organisational creativity beyond this level is needed. Second, the field of entrepreneurial leadership remains in the embryonic stages of conceptual and theoretical development. Considering leadership as one of the antecedents of organisational creativity, existing research mainly focuses on the mainstreams of leadership style as the determinant. Third, SMEs, as the major incubator of entrepreneurial leadership, provide a valuable research environment as they foster organisational creativity. Fourth, there is a dearth of literature on the mechanisms through which creativity may be enhanced in Chinese SMEs. Therefore, further research has a valuable contribution to make to the field. More specifically, this dissertation considers the following three research questions: RQ1: What are the characteristics exhibited by the entrepreneurial leaders to facilitate creativity in Chinese SMEs? RQ2: Do entrepreneurial leader’s behaviours enhance SME’s creativity performance? RQ3: How do these entrepreneurial leadership behaviours affect an SME’s creativity, which in turns stimulates their firm performance? Based on these research questions, the researcher further set a range of specific objectives: 1. To develop a model of entrepreneurial leadership in SMEs; 2. To understand entrepreneurial leaders’ background and behavioural characteristics as well as their firms’ creative capabilities and performance within the targeted sample in Chinese SME context; 3. To identify the mechanisms through which entrepreneurial leadership influences SMEs’ creativity; 4. To investigate the relationship between entrepreneurial leadership and Chinese SMEs’ creativity as well as their firm performance. To move forward with these aims, a theoretical model of entrepreneurial leadership is developed and the manner in which the entrepreneurial leadership styles of top managers directly and indirectly affect creativity within SMEs is investigated. A mixed methods research approach is applied, including a combination of a qualitative study (case study) and a quantitative study (questionnaire survey). In the qualitative study, case studies of four firms (in Zhejiang) were conducted and interviews were carried out with the firms’ top leaders and managers. The qualitative analysis creates an item pool for the scale development of entrepreneurial leadership in SMEs context. In the quantitative study, a pilot study was first conducted with a sample of 274 employees from various industries. Afterwards the scale of entrepreneurial leadership in SMEs context was validated and finalised. The sample for the final questionnaire survey was 139 Chinese SMEs in Zhejiang Province in various industries. The top leader and two middle managers from each firm were invited to participate in the surveys. Therefore, two survey questionnaires were used to collect data (one was designed for the top leaders and the other was for the managers). The findings support a direct and positive link between a style of leadership that has been labeled as “entrepreneurial” and organisational creativity. They also indicate that entrepreneurial leadership has significant and positive relations with empowerment, organisation-based psychological ownership, and employee’s entrepreneurial behaviour. Empowerment and employee’s entrepreneurial behaviour have been found to have a significant and positive relationship with organisational creativity, but organisation-based psychological ownership has an insignificant relation with organisational creativity. Moreover, the impact of entrepreneurial leadership on empowerment in the context of an SME is moderated by the level of trust such that the relationship will be stronger when trust is high rather than low. Furthermore, the findings also support the positive relationship between organisational creativity of an SME its performance. Three contributions are made to the leadership literature. First, successful business performance in the 21st century environment needs a new form of leadership, and entrepreneurial leadership may be able to provide it. Second, by examining empowerment, organisation-based psychological ownership, and employee’s entrepreneurial behaviour as mediating variables, the study enhances understanding of the mechanisms through which entrepreneurial leadership promotes organisational creativity as well as firm performance. Third, this study contributes to the understanding of the applicability of leadership in the Chinese context, helping advance entrepreneurial leadership research in emerging market economies. The findings may help entrepreneurial leaders to recognise the influence of their unique cultural heritage and organisational context on their leadership styles. This study discusses the implications of the findings and identifies possible directions for future research.

Date of Award	12 Nov 2016
Original language	English
Awarding Institution	Univerisity of Nottingham
Supervisor	Thomas Wing Yan Man (Supervisor) & Carl Fey (Supervisor)