Leadership and entrepreneurial orientation in a dynamic context: implications for organisational performance

2017-01-16T23:21:17Z (GMT) by Dembek, Krzysztof
The purpose of this study was to investigate how the leadership styles and intercultural communication competence of managers were related to the entrepreneurial orientation of their organisational units, and how this entrepreneurial orientation was related to unit performance. Leadership was considered in terms of the “Globe” culturally endorsed dimensions, namely charismatic value based, team oriented, participative, humane oriented, self-protective, and autonomous leadership. Intercultural communication competence consisted of five dimensions, namely cognitive, affective, behavioural, encoding, and decoding. Entrepreneurial orientation consisted of innovativeness, risk taking, pro-activeness, competitive aggressiveness and autonomy dimensions. Unit performance was measured in terms of financial and overall performance. For each of the two main sets of relationships examined (entrepreneurial orientation to performance, and leadership to entrepreneurial orientation) the moderating effects of organisational hierarchy, environmental dynamism and the global financial crisis were tested in order to contextualise the study. Next, intercultural communication competence, its association to leadership, and its impact on the relationship between leadership and entrepreneurial orientation were analysed using quantitative and qualitative methods. This cross-sectional study conducted during the world financial crisis of 2009 gathered quantitative and qualitative data from 119 unit managers and 308 of their direct reports in units of a large, culturally diverse corporation in Indonesia, using an online survey. Quantitative data from both managers and their direct reports were matched in 77 units, accounting for 32 per cent of all units in the participating organisation. The two sets of relationships, entrepreneurial orientation to performance, and leadership to entrepreneurial orientation, were analysed using simple linear and moderated regressions. First, no relationships between entrepreneurial orientation and both financial and overall performance were found. However, when moderating effects were introduced, organisational hierarchy and environmental dynamism negatively moderated the relationships of innovativeness to financial and overall performance, whereas the global financial crisis moderated the relationship between pro-activeness and overall performance. Second, charismatic value based leadership emerged as a positive, direct predictor of entrepreneurial orientation across all organisational units. Numerous significant differences in the impact of leadership on entrepreneurial orientation were found among organisational units when the moderating effects of organisational hierarchy, environmental dynamism and the global financial crisis were taken into account. Next, the intercultural communication competence of managers moderated the relationships between leadership and entrepreneurial orientation, although some results were counterintuitive. For instance, the relationship between team oriented leadership and innovativeness was negatively moderated by encoding, whereas positive moderating effects would be expected. Content analyses of qualitative data and triangulation were used to better interpret the regression results. These qualitative analyses found common attributes shared between all leadership dimensions and intercultural communication competence. These findings identify leadership as a predictor of entrepreneurial orientation in a large company, with charismatic value based leadership positively contributing to entrepreneurial orientation irrespective of context. The findings also indicate that leadership and entrepreneurial orientation may have opposite results in the same organisation at the same time depending on the environmental context. Further, the results of this cross-sectional study, which found only a limited number of moderated relationships between entrepreneurial orientation and performance, support previous research recommendations that the impact of entrepreneurial orientation on performance should be addressed through longitudinal studies. Finally, the study suggests that the construct of intercultural communication competence is an important element of effective leadership in culturally diverse organisations. Accordingly, it is recommended that managers and researchers of large organisations be alerted to the possible different effects of leadership and entrepreneurial orientation among organisational units. Also, intercultural communication competence and leadership should be considered in combination to better manage the entrepreneurial orientation and performance of organisations in the current dynamic business environment.