Driving Forces of Employees’ Entrepreneurial Intentions - Leadership Style and Organizational Structure

Abstract

Research Question: The purpose of this paper is to explore how leadership style and organizational structure characteristics influence employees’ intentions to start their own entrepreneurial ventures, ideas or projects, within an organizational setting. Motivation: The main goal is to learn how to prevent innovativeness declining in a traditional organization and make internal environment friendly for entrepreneurial initiatives and for employees with propensity to develop new ideas, aiming to create sustainable competitive position. Idea: The paper explores how identified leadership variables, initiative, pioneer, proactive behaviour and ability to communicate vision affect employees’ entrepreneurial intentions. We also analyze the organizational structure impact, testing organic design, level of centralization and formalization. For measuring employees’ entrepreneurial intentions, we use a previously validated scale and measurements, innovation, risk propensity and autonomy. Data: The data are collected using a questionnaire on a random sample of 208 respondents employed in nineteen Serbian companies. Tools: A quantitative study methodology was designed and implemented, appropriate statistical methods performed, including correlation and linear regression analyses. Findings: We have found evidence that appropriate leadership style has a positive influence on employees' entrepreneurial intentions. More specifically, there is a positive correlation between the leader’s initiative, pioneer and proactive behaviour, and the employees’ intentions to start innovative entrepreneurial ventures. The employees’ willingness to act autonomously is affected by leader’s initiative and proactive attitude, but also by ability to clearly communicate the vision. The study also reveals that organic organizational structure, decentralization and low formalization have a positive influence on employees' entrepreneurial intentions. Contribution: The study contributes to a significant degree by filling gaps in knowledge base, revealing new perspectives about relevance of both leadership style and organizational structure for encouraging organizational entrepreneurship. The analysis also provides a more fine-grained perspective about characteristics of organizational design and improves understanding of the employees’ actions depending on authority delegation, procedures and overall flexibility of organizational structure. Practical implications represent guidelines for practitioners as to how to set up structure and adjust leadership style in order to foster entrepreneurship among employees.