Authors: Budi Harsanto; Hein Roelfsema
Addresses: Center for Management and Business Studies, Faculty of Economics and Business, Universitas Padjadjaran, Jl. Dipati Ukur 35, Bandung 40132, Indonesia ' Utrecht Center for Entrepreneurship, Utrecht University School of Economics (U.S.E.), Kriekenpitplein 21-22, 3584 EC Utrecht, P.O. Box 80125, The Netherlands
Abstract: This paper analyses the connection between leadership style of senior management, entrepreneurial orientation of the firm, and business performance. The data are for 209 small and medium sized companies in the Greater Bandung Area. When looking at different leadership styles, we establish that transformational leadership has a strong positive effect on sales growth, but only in the context of the entrepreneurial firm. Through structural equation estimation, we establish the direct and indirect effects of transformational leadership on firm performance and find that it has mainly indirect effects mediated by entrepreneurial orientation. Hence, the positive effects of transformational leadership are contextual in the Asian context. We also find evidence that traditional leadership styles that stress liberal laissez faire attitudes are more effective than transformational leadership.
Keywords: transformational leadership; entrepreneurial orientation; innovation; business performance; Asian leadership styles; entrepreneurship; senior management; small and medium-sized enterprises; SMEs; structural equation modelling; SEM; laissez faire attitudes.
International Journal of Entrepreneurship and Small Business, 2015 Vol.26 No.4, pp.490 - 499
Available online: 27 Oct 2015 *Full-text access for editors Access for subscribers Purchase this article Comment on this article