Int Entrep Manag J

DOI 10.1007/s11365-011-0196-x

The influence of transformational leadership

and organizational identification on intrapreneurship

Juan A. Moriano & Fernando Molero &

Gabriela Topa & Jean-Pierre Lvy Mangin

# Springer Science+Business Media, LLC 2011

Abstract Managers play a vital role in encouraging and supporting the initiatives of
individual employees to explore new opportunities, to develop new products or to
improve work procedures for the benefit of the organization. This study examines
the influence of manager leadership styles on employee intrapreneurial behavior and
the mediating role of organizational identification. Partial Least Squares modeling
was used to analyze the data from 186 employees belonging to several Spanish
public and private organizations. The results show that transformational leadership
has a positive impact on employee intrapreneurial behavior, whereas transactional
leadership negatively influences it. Furthermore, these effects are found to be
partially mediated by organizational identification.

Keywords Leadership . Intrapreneurship . Transformational . Identification

Introduction

The global economy is creating deep and rapid changes for organizations and
industries all over the world. The answer to todays fast-changing and competitive
environment is proactiveness, risk taking, and innovativenessin one word:

J. A. Moriano (*) : F. Molero : G. Topa

Universidad Nacional de Educacin a Distancia (UNED), Juan del Rosal, 10, 28040 Madrid, Spain
e-mail: jamoriano@psi.uned.es
F. Molero
e-mail: fmolero@psi.uned.es
G. Topa
e-mail: gtopa@psi.uned.es

J.-P. Lvy Mangin

Universit du Qubec en Outaouais (UQO), 283 boul. Alexandre-Tach, Gatineau, Qubec,
Canada J8X 3X7
e-mail: jean-pierre.levy-mangin@uqo.ca
 Int Entrep Manag J

intrapreneurship (Covin and Slevin 1991; Lumpkin and Dess 1996). The evidence
indicates that organizations that embrace intrapreneurship are more competitive and
perform better than those that do not (see Rauch et al. 2009, for a review). However,
organizational structures, processes, and culture often hinder rather than encourage
intrapreneurship; making it challenging for employees to convert new ideas into new
products or to develop new processes to improve organization efficiency. The
employees who are willing to take real risks in sharing and pushing innovative
projects are considered to be intrapreneurs (Pinchot 1985).
Previous research has identified management support as being one of the most
important organizational factors that influence intrapreneurship (Elenkov and Manev
2005; Hornsby et al. 2002; Kuratko et al. 1990). Management support refers to the
willingness of managers to facilitate and encourage intrapreneurship; including the
championing of innovative ideas and providing the resources that employees need to
take intrapreneurial actions. Accordingly, it seems plausible that managers
leadership style might play an important role in encouraging intrapreneurship
among the members of their staff. However, until now, the influence of leadership
styles on promoting intrapreneurship has not been examined in the literature.
Therefore, there is a need for studies that explore the relations between different
manager leadership styles and employee intrapreneurial behavior (hereafter, IB).
Among the leadership theories in organizational research, transformational
leadership has captured scholars interest most over the past two decades (Bass
1985; Bass and Bass 2008; Lowe et al. 1996). Transformational leadership has been
positively linked to employees behaviors that are indirectly associated with
intrapreneurship such as proactive, work innovative and organizational citizenship
behaviors (Elenkov and Manev 2005; Eyal and Kark 2004; Jung et al. 2003; Ling et
al. 2008; Podsakoff et al. 1990). An underlying intermediate effect that accounts for
the exceptional impact of transformational leadership on employees in-role and
extra-role performance is organizational identification (hereafter, OID). When
individuals identify with their organization, they base their self-concept and self-
esteem partly on their belonging to the organization. In this sense, organization
successes and failures are experienced as personal successes and failures (Ashforth
et al. 2008). Transformational leaders base their success in connecting employees
self-concept to the interests and goals of the organization, such that employees
behavior for the sake of the organization becomes self-expressive (Shamir et al.
1993). Recent findings support this assertion, showing that leaders who raise
employees OID increase employees willingness to contribute to organization
objectives (Cicero and Pierro 2007; Kark et al. 2003; Martin and Epitropaki 2001).
The aim of this article is twofold. First, we examine how different leadership
styles (i.e. transformational, transactional, and passive-avoidant leadership) influence
employee IB. Second, we analyze the moderating role of OID on the relationship
between these leadership styles and employee IB. To accomplish this purpose, the
article utilizes data collected from 186 employees belonging to several Spanish
public and private organizations. Using this data, we develop a predictive Partial
Least Squares (hereafter, PLS) regression model to explore the complex relations
between leadership styles, OID, and IB.
After this introduction, the next section develops theoretical arguments and
testable hypotheses about the relations between leadership styles, OID, and IB.
Int Entrep Manag J

Then, the method section describes the sample, procedure, measures, and data
analysis used to test the hypotheses. The section that follows presents the results
obtained. The article ends up with a discussion of the theoretical and managerial
implications of our results.

Intrapreneurship

Intrapreneurship is a term used to describe entrepreneurial behaviors within an

existing organization (Antoncic and Hisrich 2001; Hisrich 1990; Pinchot 1985).
More specifically, this refers to both the creation of new ventures within existing
organizations and the transformation of these organizations through innovation and
strategic renewal (Guth and Ginsberg 1990; Parker 2011). The organizational context
can range from a small business to a large multinational corporation. Even, non-
profit and public sector organizations are also susceptible to intrapreneurship
(Kearney et al. 2008; Stull and Singh 2005).
Although some researchers appear to distinguish entrepreneurship from intra-
preneurship (e.g. Hisrich 1990), the similarities in regard to the process, the required
inputs, and the potential outputs are greater than the differences. However, when the
context is an established organization, the entrepreneurial process becomes subject to
a number of constraints not found with most independent start-ups. Based on the
type of organization involved, differences are likely to exist in terms of assumption
of risk, personal reward possibilities, availability of existing resources, and the
amount of freedom and control exercised by the intrapreneur (Hisrich 1990; Morris
and Sexton 1996; Pinchot 1985).
Intrapreneurship takes place at both organizational and individual levels
(Krauss et al. 2005; Stull and Singh 2005; Wakkee et al. 2008). At the
organizational level, intrapreneurship is usually conceptualized as entrepreneurial
orientation (Covin and Slevin 1991; Lumpkin and Dess 1996), which is
comprised of three key dimensions: risk taking, innovation and proactiveness.
Risk taking is defined as venturing into unknown areas for the organization,
without knowledge of the outcome. Innovativeness reflects the tendency to
engage in activity that results in new ideas, and experimentation, which may result
in new processes, products, or services. Proactiveness relates to pioneering and
acting in anticipation of future needs, changes, or challenges that may lead to new
opportunities.
The construct of intrapreneurship can be also studied at the individual level
of analysis, because it is implicitly a psychological assessment of individual IB
based on self-reports (Krauss et al. 2005; Stull and Singh 2005). In this sense,
intrapreneurship is about bottom-up, proactive work-related initiatives of
individual employees. More specifically, intrapreneurship at the individual level
involves networking behavior, out of the box thinking, initiative, taking charge,
championing, and some degree of risk taking. Therefore, intrapreneurs are the
driving forces behind product development or improvement and/or market
penetration. These employees have similar drives and characteristics as entrepre-
neurs (Pinchot 1985). They are innovative, motivated to succeed, enjoy
overcoming challenges and have a philosophy of continuous learning (Lumpkin
and Dess 1996).
 Int Entrep Manag J

Transformational leadership

Top and middle managers play a vital role in creating an organizational environment
that promotes and facilitates intrapreneurship (Hornsby et al. 2002; Kuratko et al.
2005b), They can lead their subordinates to embrace intrapreneurial activities in
many forms, including the championing of innovative ideas, providing necessary
resources or expertise, or supporting small experimental projects (Kuratko et al.
2005a). Among leadership theories, the one that seems most applicable to
intrapreneurship is transformational leadership because recent research has shown
that this style stimulates employees creativity and innovation (Elenkov and Manev
2005; Eyal and Kark 2004; Jung et al. 2003; Ling et al. 2008; Shin and Zhou 2003).
Transformational leadership theory distinguishes between three leadership styles:
transformational, transactional, and passive-avoidant leadership (Bass 1985; Bass
and Bass 2008).Transformational leadership refers to the leader inspiring their
followers to adopt the vision of the organization as if they were their own and focus
their energy toward the achievement of collective goals. Using the Multifactor
Leadership Questionnaire (MLQ; Avolio and Bass 2002), the following components
of transformational leadership have been identified: inspirational motivation,
idealized influence (attributed and behavioral), individualized consideration, and
intellectual stimulation. The first two components represent the notion of charisma
(Jung et al. 2003). Inspirational motivation includes the creation and expression of
an attractive vision of the future, and the demonstration of optimism and enthusiasm.
Idealized influence includes leadership behaviors such as sacrificing for the benefit
of the group and demonstrating high ethical standards that inspire followers
admiration, respect and trust. The third component, individualized consideration,
includes providing support, encouragement, and coaching to followers. The fourth
component, intellectual stimulation, comprises of behaviors that increase awareness
of problems and challenge followers to be innovative by questioning assumptions,
reframing problems, and approaching old situations in new ways.
Extensive research over the last decades has shown that those managers rated
higher on transformational leadership components by their followers were associated
with generating higher levels of extra effort, work innovation and organizational
citizenship behavior (Howell and Higgins 1990; Jung et al. 2003; Koh et al. 1995;
Podsakoff et al. 1990). In the same vein, transformational leadership may set the
basic conditions for intrapreneurship for several reasons. Firstly, transformational
leaders develop a clear organizational vision and mechanisms that may be used to
discover opportunities (Eyal and Kark 2004). Secondly, transformational leaders
stimulate their followers to think on their own, to develop new ideas and to question
the operating rules and systems that no longer serve the organizations mission and
goals (Howell and Higgins 1990; Jung et al. 2003). Thirdly, transformational leaders
enhance followers confidence and skills to devise and implement innovative
responses to current problems facing their organization goals (Howell and Higgins
1990; Jung et al. 2003). Hence, the following hypothesis is proposed:
H1a. Transformational leadership will be positively related to IB.
Transactional leadership is the second major style identified by the literature (Bass
1985; Bass and Avolio 1994; Bass and Bass 2008).Transactional leaders work
Int Entrep Manag J

through creating clear structures and roles that allows their subordinates to reach
goals. The relationship between leader and subordinates is transactional (i.e. if
you give me that, I will give you this), where the leader controls the rewards and
contingencies. Transactional leadership is composed of two components (Bass and
Bass 2008): Contingent reward, which indicates to what extent the leader is capable
of acknowledging and rewarding work well done; and active management-by-
exception, which concerns the leaders behaviors aimed at foreseeing and solving
mistakes and failures. This style of leadership implies closely monitoring for
deviances, mistakes, and errors in order to preserve stability in the workplace. It
might, however, be experienced by subordinates as disempowering (Spreitzer et al.
1999). In this sense, transactional leadership seeks to ensure consistency to the status
quo rather than innovation or change. Therefore, followers are extrinsically
motivated to perform their job, which may hold creativity or innovation at the
minimal level (Jung 2001). Furthermore, managers with this leadership style can
often do best by committing to a policy of passing up innovations discovered by
followers to maintain them focused on their key tasks (Parker 2011). Consequently,
the following hypothesis is proposed:
H1b. Transactional leadership will be negatively related to IB.
Passive-avoidant leadership is composed of two components (Avolio et al. 1999):
Laissez-faire, i.e., leadership that exhibits passive indifference to tasks and to
subordinates; and passive management-by-exception, which uses contingent punish-
ments and other corrective actions when faced with deviations from performance
standards. Such passive leaders avoid specifying agreements, clarifying expect-
ations, and providing goals and standards to be achieved by followers (Bass and
Bass 2008). Managers who apply this style of leadership are likely to behave in
ways which will not inspire ideas, innovation, creativity or willingness to promote
change (Eyal and Kark 2004). Hence, the following hypothesis is proposed:
H1c. Passive-avoidant leadership will be negatively related to IB.

Organizational identification

The importance of the psychological bond between employees and organization has
been underlined by many researchers (Ashforth and Mael 1989; Haslam 2001; Hogg
and Terry 2001). This bond is usually called OID and it has been defined as the
perception of oneness with or belongingness to the organization (Ashforth and Mael
1989, p. 34). It has been argued that OID is a particular form of social identityone
associated with membership of a given organization (Haslam 2001). OID implies that
employees have linked their organizational membership to their self-concepts, either
cognitively (e.g. internalizing organizational values), emotionally (e.g. pride in being
part of the organization), or both. OID can lead employees to adopt the interests and
goals of the organization as their own. Several empirical studies have provided
evidence of the relation between identification and efforts for the benefit of the
organization (see Baron and Kenny 1986, for a review). As a result, employees with
high OID are likely to adopt converging goals and to sacrifice (short-term) individual
interests (e.g. by working over-time) in order to archive (more long-term) collective
 Int Entrep Manag J

outcomes (e.g. attracting new business). This in turn increases work motivation and
eventually extra-role performance. In fact, Rikettas (2005) meta-analysis showed that
overall measures of OID were positively correlated with extra-role behaviors (r=.35,
p<.001). It thus seems likely that employees with high OID are motivated to go
beyond their designated role and get involved in intrapreneurial activities. Conse-
quently, the following hypothesis is proposed:
H2. OID will be positively related to IB.
Furthermore, it seems plausible that OID could mediate, at least partially, the
relationship between leadership styles and IB. In fact, the links between leadership
processes and OID have been analyzed in several studies (Cicero and Pierro 2007;
Hogg 2001; Kark et al. 2003; Martin and Epitropaki 2001; Shamir et al. 1993).
Transformational leaders provide ideological explanations that link followers
identities to the collective identity of their work group or organization, thereby
increasing followers intrinsic motivation to perform their job (Jung et al. 2003). In
turn, priming the collective level of followers self-identity would increase the
probability that followers might engage in cooperative behavior towards organiza-
tional mission and goals rather than personal aims (Kark et al. 2003). In contrast,
transactional leadership might create an environment in which subordinates define
their relationship with the organization as an economic exchange where emphasis is
on providing rewards in exchange for meeting agreed-upon objectives (Pillai et al.
1999). Moreover, transactional leadership is found to accentuate feelings of
anonymity associated with alienation among employees (Sarros et al. 2002). Finally,
passive-avoidant leadership includes behaviors such as staying away from employ-
ees, shirking supervisory duties, and being inactive, rather than reactive or proactive.
These leadership behaviors are accompanied by little sense of accomplishment, scant
clarity, and little sense of group unity (Bass and Bass 2008). It is probably for these
reasons that passive-avoidant leadership may not be directly associated with
employees OID.
Based on the theoretical arguments presented above, the following set of
hypotheses is proposed:
H3a. Transformational leadership will be positively related to OID.
H3b. Transactional leadership will be negatively related to OID.
H3c. Passive-avoidant leadership will not be related to OID.
A resulting theoretical model that includes all the hypotheses is depicted in Fig. 1.
In addition, demographic variables such as gender, job tenure, educational and
professional level, and organizational size and sector (public vs. private) may
influence employee IB and may need to be controlled for as well.

Method

Sample and procedure

A sample of 186 participants (58.3% women) was recruited to participate in the study
using a snowballing technique (with the assistance of PhD psychology students who
Int Entrep Manag J

OID
+
Transformational H3a
+
Leadership
H2
+
- H3b H1a

Transactional -
Leadership
IB
H1b

ns H3c ns
H1c
Passive /
Avoidant

Note. ns indicates non-significant.

Fig. 1 Theoretical model and hypothesis

recruited up to 15 participants each). The study was carried out in the central area of
Spain. To avoid a possible bias in the results due to the use of a single kind of
organization, the sample was made up of 29 work teams belonging to organizations
performing different kind of activities from the public (health, education, and local
administration; 25.4%) and private sector (financial services, consumer services, software
and computer services, and transportation and communication; 74.6%). Most of these
organizations were large (more than 250 employees, 62.3%) or medium size (between 50
and 250 employees, 20.2%). The number of participants per work team ranged between 3
and 13 (not including the manager or supervisor), and the mean was 5.5 persons per work
team. The mean age of the sample was 36.2 years (SD=8.33) and the mean job tenure in
the organization was 6.49 years (SD=5.52). Most of participants had a university
degree (64.7%), but only 19.5% held a management position.
Variables were measured using a questionnaire. Employees were informed in a
cover letter that their participation was voluntary and all information would be
strictly confidential and used only for research purposes. All respondents were
requested to rate the leadership style of the manager or supervisor in the work team.

Measures

The questionnaire was divided in four parts that contained items to measure
leadership styles, OID, IB, and demographic data. These variables were all measured
at the individual level.

IB This construct was measured using a 15-item scale developed by Stull and
Singh (2005) and validated in previous studies carried out in The Netherlands
 Int Entrep Manag J

(Wakkee et al. 2008) and Spain (Moriano et al. 2009). This scale consists of three
dimensions that may independently vary in strength and effect, namely proactive-
ness (e.g., I take the initiative to start projects), risk-taking (e.g., I take
calculated risks despite the possibility of failure), and innovativeness (e.g., I
develop new processes, services or products). Each of these dimensions is
measured using five items on a 5-point Likert scale ranging from 1 (completely
disagree) to 5 (completely agree).

Transformational, transactional, and passive-avoidant leadership The Spanish

version (Molero et al. 2007) of the 36-item MLQ-Short Form 5X (Bass and Bass
2008) was used to measure leadership behaviors. Transformational leadership
includes four subscales: Idealized influence attributed and behavioral (e.g., [My
manager] specifies the importance of having a strong sense of purpose),
inspirational motivation (e.g., Articulates a compelling vision of the future),
intellectual stimulation (e.g., Seeks differing perspectives when solving problems)
and individualized consideration (e.g., Treats each of us as individuals with
different needs, abilities, and aspirations). Transactional leadership consists of two
subscales: Contingent reward (e.g., Makes clear what I can expect to receive, if my
performance meets designated standards), and active management-by-exception (e.g.,
Keeps track of my mistakes). Passive-avoidant leadership comprises of two
subscales: laissez faire (e.g., Does not tell me where he or she stands on issues),
and passive management-by-exception (e.g., Things have to go wrong for him/her to
take action). Participants were asked to judge how frequently their direct manager
engaged in the specific leadership behaviors on a 5-point Likert scale ranging from 1
(not at all) to 5 (Frequently, if not always).

OID This variable was assessed with a Spanish translation (Sobel 1982) of Mael and
Ashforths (1992) six-item scale (e.g., When I talk about this organization, I usually
say we rather than they). This scale is one of the most widely used measures of
OID and empirically distinguishable from organizational commitment measures
(Baron and Kenny 1986; Shin and Zhou 2003; van Knippenberg and van Schie
2000). Responses were given on a 5-point agreement scale ranging from 1
(completely disagree) to 5 (completely agree).

Demographic data Age was measured in years. Job tenure was measured by the
number of years an individual has been employed in his or her current organization.
Education consisted of six levels from school (1) to doctorate (6). Participants were
also asked to indicate their level of job position and the sector of activity of their
current organization.

Data analysis

Data were analyzed using SmartPLS (Ringle et al. 2005), a recent software
implementation of the PLS approach. The objective of the PLS is predicting
dependent variables, latent and manifest, maximizing the explained variance (R2) of
the dependent variables and minimizing the residual variance of endogen variables
Int Entrep Manag J

in any regression run of the model (Wold 1985). To evaluate the model against
observed data, an iterative procedure fits observed measures to corresponding latent
variables, and then estimates relationships among the latent variables. At each stage
of the iteration a least squares fit, between observed and modeled parameters, is
computed and the model is considered as a best-fit solution when the least squares
function stabilizes between iterations.
PLS has two strengths that make it well suited to this study. First, PLS was
developed to avoid the necessity of large sample sizes and hard assumptions of
normality. For this reason, it is often referred to as a form of soft modeling (Falk and
Miller 1992). Although PLS can be used for theory confirmation, it is generally
recommended for situations where theory or model is to be built, rather than for
confirmation proposes (Chin 1998). Second, PLS accounts for measurement error
and should provide more accurate estimates of interaction effects such as mediation
(Chin 1998).
Standardized data were used in the analysis and, as the number of cases with
missing data was low (n=9), missing cases were excluded from the sample.
Significance was evaluated using bootstrapping of 500 samples of 177 cases, which
led to a critical t-value of 1.96 for p<.05.

Results

PLS results are presented in two parts: tests of validity and reliability of the measures
(outer model), and the tests of hypotheses (inner model). Tables 1 and 2 present

Table 1 Individual loadings (1), composite reliabilities (c), and AVE

Construct Indicators 1 AVE c

Transformational leadership Idealized influence .72 .67 .88

Inspirational motivation .72
Intellectual stimulation .88
Individualized consideration .91
Transactional leadership Contingent reward .92 .76 .86
Management by exception active .82
Passive/Avoidant Laissez-Faire .93 .81 .89
Management by exception passive .80
OID OID1 .78 .60 .90
OID2 .79
OID3 .76
OID4 .82
OID5 .79
OID6 .67
IB Innovation .95 .87 .95
Proactiveness .93
Risk taking .92
 Int Entrep Manag J

Table 2 Means, standard deviations, correlations, and discriminant validity

Constructs Mean SD 1 2 3 4 5

1. Transformational leadership 3.42 .66 .82

2. Transactional leadership 3.37 .66 73** .87
3. Passive/Avoidant 2.07 .68 .49** .51** .90
4. OID 4.15 .69 .35** .14 .19* .78
5. IB 3.98 .60 .27** .02 .12 .55** .93

Diagonal elements are the square root of AVE between the constructs and their indicators. For discriminant
validity, diagonal elements should be greater than off-diagonals elements in the same row and column
*p<.05; **p<.01

results concerning the reliability and validity of the scales, and Figs. 2 and 3 show
the path coefficients relevant to hypothesis testing.

Outer model

The outer model is the relationship between the manifest indicators and the
hypothesized latent constructs. The model proposed involved 17 manifest indicators
(measures) loading on to 5 latent constructs (see Table 1). The analysis essentially
needs to answer the question of how well the identified measures predict or construct
the latent variables.

Reliability of reflective constructs First, the individual reliability of each indicator is

given by loading or correlations between the indicator and the construct (1).
Researchers postulate that a latent variable should explain a substantial part of each
indicators variance (usually at least 50%). Accordingly, the standardized outer
loadings should be higher than .60 (Hair et al. 2006). Second, the scale reliability
allows measuring internal coherency of all indicators in relation with the construct.
The composite reliability (c) is a preferred alternative to Cronbachs as a measure
of internal consistency reliability. While Cronbachs assumes that all indicators are
equally reliable. PLS prioritizes indicators according to their reliability, resulting in a
more reliable composite (Henseler et al. 2009). The acceptable cutoff for c would be
the same as the researcher sets for Cronbachs since both attempt to measure
internal consistency reliability. Consequently, c value should be above .70, whereas
a value below .60 indicates a lack of reliability (Nunnally 1978). Table 1 shows the
results of the outer model and indicates that the constructs of transformational
leadership, transactional leadership, passive-avoidant leadership, OID, and IB
exceeded the minimum requirements.

Convergent and discriminant validity The convergent validity represents the

common variance between the indicators and their construct, and it signifies that a
set of indicators the same underlying construct (Henseler et al. 2009). Fornell and
Larcker (1981) recommend using the average variance extracted (AVE) as a
criterion. The higher the AVE value, the more representative the indicators are of
the construct on which they load. In general, Its value should be above .50 (Fornell
Int Entrep Manag J

and Larcker 1981). As shown in Table 1, the AVE for each construct was satisfactory.
To assess discriminant validity among constructs, the AVE square root should be
higher than the squared correlation with all other constructs (Fornell and Larcker
1981). Therefore, each construct should share more variance with its own block of
indicators than with another construct representing a different block of indicators
(Henseler et al. 2009). Table 2 shows the correlations between the constructs and,
along the diagonal, the AVE square root. In view of this data, there is discriminant
validity among the constructs assessed, although transformational and transitional
leadership are highly correlated, which is in line with previous studies (Epitropaki
and Martin 2005; Pillai et al. 1999).

Inner model

The inner model is the structural relationship (i.e. path model) among constructs
(Chin 1998). It involves an evaluation of the pathways between latent constructs
using linear regression in which the regressors can be interpreted as standardized
beta coefficients. The confidence intervals of the path coefficients are based on a
bootstrapping of 500 samples that permits the generalization of the results and the
computation of the Student t for each hypothesis. The essential criterion for
assessing the structural model is the coefficient of determination (R2) of each
endogenous latent variable (Henseler et al. 2009), this should exceed .10 (Falk and
Miller 1992). Additionally, the path coefficients generated by PLS can be used to
assess mediation effects; similarly to the traditional regression approach of Baron
and Kenny (1986). This approach, also called the causal steps approach, requires the
estimation of the two types of models presented in Figs. 2 and 3.

Transformational Educational
level
leadership .54**
.25**

Transactional -.35**
IB
leadership
R2 = .28

-.09

Passive /
Avoidant

** p < .01.
Fig. 2 Direct effects model. **p<.01
 Int Entrep Manag J

.53** OID
Educational
R2 = .16 level

Transformational
.40**
.21**
leadership
.33**
-.32**

-.27**
IB
R2 = .37
Transactional
leadership
-.09
-.02

Passive /
Avoidant

** p < .01.
Fig. 3 Partially mediated model

The first model shows the direct effects of leadership styles on IB (see Fig. 2).
Transformational leadership had a positive and significant influence on IB, whereas
transactional leadership had a significant but negative effect on it. Hence, H1a and
H1b are supported. However, there was not a significant effect of passive-avoidant
leadership on IB (=.04; t=0.62). Consequently, H1c is not supported. These
results confirm that managers leadership style plays an important role in
encouraging (transformational leadership) or dissuading (transactional leadership)
intrapreneurship among the members of their staff.
Among all the control variables (gender, job tenure, educational and professional
level, and organizational size and sector), only educational level of participants was
found to significantly influence the IB (=.25; t=3.29; p<.01). Therefore, the higher
of educational level achieved by employees, the more likely they will develop IB.
The second model shows OID as the mediator in the relationship between leadership
styles and the IB (see Fig. 3). As expected, transformational leadership had a positive
and significant effect on OID (=.53; p<.01), whereas transactional leadership had a
significant but negative impact on OID (=.32; p<.01). On the other hand, passive-
avoidant leadership did not have any significant effect on OID (=.10; t=1.19).
OID, in turn, had the strongest significant influence on the IB (=.40; p<.01).
Hence, H3a, H3b, H3c, and H2 are supported. In addition, the predictive capability of
the model is satisfactory because all R2 are >.10 (.16 for OID and .37 for IB).
According to the Baron and Kenny (1986) approach, mediation exists if the
coefficients of direct paths between transformational and transitional leadership, and
the IB (Fig. 2) were significantly reduced when the indirect paths via the OID were
Int Entrep Manag J

introduced into the model (Fig. 3). The significance of the indirect effects was
assessed using the Sobel test (Sobel 1982). The results of the Sobel test confirmed
that OID significantly mediate the relationship between transformational leadership
and IB (Z=2.67, p<.01), as well as the negative relationship between transactional
leadership and IB (Z=2.33, p<.01). Moreover, OID increases the variance
explained of IB from 28% in model 1 to 37% in model 2. These findings confirmed
that OID not only motivates employees to get involved in intrapreneurial activities
but also mediates the impact of managers leadership style (i.e. transformational or
transactional) on employees IB.

Discussion

It is logical to suppose that managers leadership style influences employees IB.

However, up until now, this influence has not been confirmed empirically, and this
was the main goal of this article. Consistent with our hypotheses, the results show
that transformational leadership sets the most favorable managerial circumstances for
intrapreneurship. Consequently, managers are most effective in facilitating entrepre-
neurial behavior within the organization when they share a sense of mission (i.e.
inspirational motivation), provide mentoring or coaching (i.e. individualized
consideration), arouse employees to think in new ways (i.e. intellectual stimula-
tions), and gain their employees trust and confidence (i.e. idealized influence). This
is in line with other studies that found that these transformational leadership
components foster employees creativity and innovation (Howell and Higgins 1990;
Jung 2001; Jung et al. 2003; Koh et al. 1995; Shin and Zhou 2003). In contrast,
transactional leadership is found to have a negative effect on employees IB. Under
transactional leadership, employees are extrinsically motivated (i.e. contingency
rewards and active management-by-exception) and thus they are less willing to go
beyond their job responsibilities to try out innovative ideas for the benefit of the
organization.
Unlike the effects of transformational and transactional leadership on IB, no
significant relationship was found between passive-avoidant leadership and intra-
preneurship. This leadership style appears to be the antithesis of the leadership
construct because there are generally neither transactions nor agreements with
followers. In this sense, passive-avoidant managers may either not intervene in the
work affairs of their followers or may completely shirk their supervisory
responsibilities (Topa et al. 2008). Therefore, there are no active and intentional
efforts made by the passive-avoidant leader to enhance or impede followers IB.
The results in relation to the second research question, the mediating role of OID,
supported the hypotheses proposed. Firstly, OID had a significant and strong impact
on IB. Hence, if employees identifies with the goals and values of the organization
where their works, it is more likely that they take risks and pursue innovative actions
that will be to the advantage of the whole organization. Secondly, OID is found to
partially mediate the effects of transformational and transactional leadership on
employees IB. This is in line with previous studies that have suggested that
transformational or charismatic leaders influence employees actions by increasing
their OID (Kark et al. 2003; Shamir et al. 1993). The more the leaders enhance
 Int Entrep Manag J

employees OID, the more employees are likely to experience the organization as
desirable and attractive to belong to; thereby increasing their motivation to turn any
innovative idea or project into a profitable venture for their organization. On the
contrary, transactional leadership has a negative impact on employees OID. In this
sense, managers that employ individual systems of incentives (i.e. contingency
rewards) reduce the investments of employees in behaviors that serve organizational
interests (e.g. intrapreneurship) because employees focus merely on individual
concerns and goals (Pillai et al. 1999; van Knippenberg and Ellemers 2004).
Although this study has provided several encouraging results, it is important to
recognize that the current findings are limited by several factors. First, the sample
size was relatively small, thus this study should be replicated with a larger and more
diverse sample. Second, it would be appropriate to have a broader array of measures
to test a more complete model. For example, diverse focal points of identification
(Hogg and Terry 2001; van Knippenberg and van Schie 2000), such as the whole
organization, the department or work-group, and the occupation or profession could
be considered. In this sense, one could explore whether these different ways of
identification significantly affect IB in any way, or whether they mediate the effects
of transformational and transactional leadership. Third, this study has examined the
role of transformational leadership and OID in facilitating entrepreneurial behavior
within the organization. However, the organizational environment is complex,
involving many additional factors. Beside managers support and OID, employee IB
is also a function of the reward system, time and resources availability, and work
discretion (Hornsby et al. 1993; Kuratko et al. 2005b). An effective reward system
must consider goals, feedback, and results-based incentives that enhance employees
willingness to assume the risks associated with intrapreneurial activity. In addition,
the availability of resources and autonomy for innovative activities encourages
employees experimentation and risk-taking behaviors. Furthermore, these aspects of
the organizational environment may be affected by the extent to which managers
permit subordinate participation in establishing budgets and performance standards
and in the latters performance evaluation (Jung et al. 2003).
Notwithstanding these limitations, this article contributes to a better under-
standing of the organizational factors, such as leadership and OID, which
influence intrapreneurship. Specifically, the research findings in this article
suggest that promoting and facilitating transformational leadership and OID can
be a great investment for organizations that wish to embrace intrapreneurship. By
training managers to exert transformational leadership, organizations may
stimulate intrapreneurial activity. Additionally, these managers can help organ-
izations retain valuable employees from quitting to exploit their ideas in an
independent start-up. Moreover, managers can develop a competitive hiring
advantage by positioning their organizations strategically as ones with offer
supportive environment for intrapreneurship.

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