Leadership's impact on employee engagement: Differences among entrepreneurs and professional CEOs

The purpose of this study is to identify similarities and differences between the leadership practices of managing entrepreneurs and professional CEOs and to investigate how these impact on their immediate subordinates' satisfaction, commitment, motivation, and effectiveness (engagement).

A multiple‐respondents survey, aiming at CEOs and their immediate subordinates, was conducted. Factor analysis, correlations and moderated regression analysis were used in order to reach conclusions.

Two leadership dimensions are found to be most influential: being a good manager/mentor and articulating vision. Although good manager/mentor characteristics prove crucial for both types of CEOs, the effect of vision articulation on subordinates is moderated by the type of company the CEO is leading. No significant differences are found in the leadership style that the two types of CEOs adopt, except for their calmness and self‐possession, which is lower among entrepreneurs.

The findings raise questions regarding the differences in subordinate expectations from owners – CEOs, as opposed to professional CEOs; and point at certain characteristics which could be developed in order to enhance leadership effectiveness in both groups of top managers.

The study underlines the importance of sound vision development and articulation in entrepreneur‐run firms, as it appears that people working for such firms expect more direction from the Head. It is also sustained that good management and mentoring are essential in any kind of firm, in order to develop an effective, committed and motivated top management team, which will bring corporate success.