12. Role of Leadership Style on Corporate Entrepreneurship and Firm Innovativeness: Learnings from Start-ups in Emerging Markets

Contemporary research on start-up firms primarily focuses on business growth and its contribution into the mainstream business economies. Research featuring leadership impact of business promotors on firm-level outcomes, particularly corporate entrepreneurship and firm innovativeness, have been unexplored. This is partially because the underlying mechanism remains largely unexplored in the context of start-ups. However, the way start-up promotors think is having an influence on firms’ strategies and outcomes. We examine how two distinct leadership styles, transformational and transactional, each influence firm innovativeness and corporate entrepreneurship. In our research, we propose that decentralization of decision-making and risk-taking ability of start-up promotors mediates the relationship between leadership style and firm innovativeness and corporate entrepreneurship. Using a sample of 109 start-ups registered under the government’s Startup India programme, we studied these relationships. Our results suggest that the transformational leadership style is strongly related to corporate entrepreneurship and influences firm innovativeness, whereas transactional leadership encourages centralized and risk-averse decision making.