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LODJ
42,3 Entrepreneurial leadership:
the key to develop creativity
in organizations
434 Muhammad Shahid Mehmood and Zhang Jian
School of Economics and Management, University of Science and Technology Beijing,
Received 10 January 2020 Beijing, China
Revised 6 July 2020
14 December 2020
Accepted 14 December 2020
Umair Akram
Guanghua School of Management, Peking University, Beijing, China, and
Adeel Tariq
NUST Business School, National University of Sciences and Technology,
Islamabad, Pakistan

Abstract
Purpose – Entrepreneurial leadership has been developed from the existing leadership and entrepreneurship
literature as a new leadership theory to meet the dynamic changes in the 21st century. Accordingly, the main
purpose of this study is to investigate the effect of entrepreneurial leadership on employee creativity and the
mediating influence of psychological empowerment and psychological safety, with the lens of social learning
theory.
Design/methodology/approach – Data were collected from the manufacturing sector of Pakistan with a
sample size of 280 dyads of managers and employees. A two-step analytical strategy was adopted through
which the measurement model was validated by using confirmatory factor analysis and structural equation
modeling to estimate the structural model to fit the data. The bootstrapping method was applied for testing the
mediation analysis.
Findings – The current study found that entrepreneurial leadership positively related to employee creativity.
Moreover, it was found that psychological empowerment and psychological safety mediated the relationships
between entrepreneurial leadership and employee creativity.
Research limitations/implications – The findings of the current study provide guidance to managers and
businessmen on how to develop the creative skills of employees by adopting entrepreneurial leadership
behaviors. Besides, this study enriches the literature by exploring the performance mechanism of
entrepreneurial leadership to develop employee creativity.
Originality/value – The current study is considered the first to examine the role of entrepreneurial leaders in
stimulating employee creativity through psychological safety and psychological empowerment. As such, it
enriches the creativity literature by exploring the employee creativity mechanism through entrepreneurial
leadership and validating the importance of psychological factors in the development of creativity compared to
previous studies, which have focused primarily on the concept or scale development of entrepreneurial
leadership. Furthermore, it provides several theoretical and managerial implications along with future
opportunities.
Keywords Entrepreneurial leadership, Psychological empowerment, Psychological safety, Creativity,
Opportunity exploration and exploitation
Paper type Research paper

1. Introduction
The dynamic business environment and rapid technological developments have augmented
the importance of employee creativity with respect to gaining a competitive advantage and
achieving organizational sustainability (Binyamin and Carmeli, 2010; Chow, 2018). Creativity
Leadership & Organization
Development Journal
refers to the production of novel and useful ideas related to services, products or procedures
Vol. 42 No. 3, 2021
pp. 434-452
© Emerald Publishing Limited
0143-7739
Funding: This research is funded by National Natural Science Foundation of China (71771022) and
DOI 10.1108/LODJ-01-2020-0008 Beijing Natural Science Foundation (9202010).
in the workplace (Zhou and Shalley, 2003). Creativity is a different concept from innovation; Entrepreneurial
creativity is mere creation of novel ideas, whereas an innovation refers to creation and leadership
execution of such ideas (Anderson et al., 2014). Creativity is a critical factor for all type of
businesses, either new ventures or established organizations. Thus, scholars have dedicated
develop
their attention to investigating its antecedents (Shalley et al., 2004; Zhou and Hoever, 2014). creativity
Because leadership has been explored as a key contextual factor that significantly affects
employee creativity (Qu et al., 2015; Shalley and Gilson, 2004), scholars have examined the
impact of different leadership styles on employee creativity (Jaiswal and Dhar, 2017; Li and 435
Zhang, 2016; Ma and Jiang, 2018; Xu et al., 2017; Yang et al., 2017). Although it has been
argued that transformational leadership is the most effective leadership style for developing
employee creativity, studies reveal conflicting findings regarding how to improve creativity
(Khalili, 2016; Khurosani, 2018; Tse et al., 2018). Accordingly, scholars have introduced
entrepreneurial leadership as a new leadership theory that has emerged from the leadership
and entrepreneurship literature (Gupta et al., 2004; Leitch and Volery, 2017; Renko et al., 2015).
Entrepreneurial leadership, which is recognized as a leadership style, suggests that the
leader possesses the competencies to motivate and direct followers to achieve organizational
goals that encompass recognition and exploitation of entrepreneurial opportunities (Renko
et al., 2015). With that said, the anticipation of failure and uncertainty regarding the results of
creative efforts comprises the main barriers preventing the promotion of creativity in
organizations. Thus, those organizations that are ambitious and are seeking to advance their
creativity and innovations must pursue entrepreneurial leaders who motivate and support
employees to creatively recognize and exploit entrepreneurial opportunities for business
growth (Huang et al., 2014). However, the mechanism as to how entrepreneurial leaders
develop employee creativity has yet to explore. Hence, the core objective of the current study
is to investigate the impact of entrepreneurial leadership on employee creativity. Given that
entrepreneurial leaders predict the future perspectives of their businesses and identify the
goals of the organization, among which are opportunity recognition and exploitation (Koryak
et al., 2015), it must be understood that to accomplish such goals, entrepreneurial leaders must
ensure their employees that they possess the entrepreneurial abilities to explore creative
ideas that will lead to innovation and that they, as leaders, will support them in their
endeavors (Fontana and Musa, 2017). Entrepreneurial leaders are risk takers, creative,
visionary and motivational (Harrison et al., 2018; Renko et al., 2015). Social learning theory
(SLT) (Bandura and Walters, 1977, Bandura, 1986) argues that employees learn from their
experiences and by observing the behaviors of others within the context of social interactions,
and they then integrate these learned behaviors and components of information into their
thinking and actions in a given situation. Based on these founding tenants of SLT, the current
study expects that working with entrepreneurial leaders will facilitate the development and
enhancement of employees’ creative skills.
As scholars have determined that entrepreneurial leadership is a new leadership theory,
further research is required to understand its performance mechanisms within organizations
(Miao et al., 2019; Renko et al., 2015). Thus, a second purpose of this study is to determine the
mediating mechanism through which entrepreneurial leaders improve employee creativity.
Recent studies have suggested that psychological factors are the key drivers of creativity
(Zhou and Shalley, 2011). In a similar vein, SLT has also argued that thoughts and actions are
not always anticipated by the influence of contextual factors but those psychological factors
also play an important role, as which determine how individuals will be affected by their
experiences and give direction to their future thoughts and actions. In that vein,
psychological empowerment, which is a form of intrinsic motivation, has been identified as
a critical factor in inspiring creativity in employees (Spreitzer, 1995; Zhang and Bartol, 2010).
Consistent with this, previous studies have found that leadership positively influences
employees’ creativity through psychological empowerment (Ali Chughtai, 2016; Ma and
LODJ Jiang, 2018). Similarly, scholars have argued that entrepreneurial leaders build the confidence
42,3 of their employees (Harrison et al., 2018; Renko et al., 2015). Therefore, the current study aims
to investigate the effect of entrepreneurial leadership on employee creativity through
psychological empowerment to validate the capabilities of entrepreneurial leaders to boost
employees’ creativity through psychological empowerment. Furthermore, unlike routine
tasks in organizations, creativity entails risks and uncertainties that may bear negative
consequences if the new idea does not produce the desired results. Thus, developing a
436 psychologically safe environment is critical as employees must feel safe to engage in creative,
albeit perhaps risky, activities (Wang et al., 2018). Consistent with SLT, this study expects
that working with leaders who are creative and who promote innovation allows employees to
feel empowered and secure when sharing and creating new ideas. Therefore, drawing on
SLT, the current study has developed a model that integrates entrepreneurial leadership,
psychological empowerment, psychological safety and employee creativity. The research
model of hypotheses is presented in Figure 1.
Finally, the current study contributes to the existing literature in several ways. First, the
current study responds to the call by previous studies that recommended further studies be
conducted to validate the concept of this emerging leadership theory across cultures and to
examine its performance mechanism (Miao et al., 2019). Second, a major contribution of the
current study is to examine the role of entrepreneurial leadership which is a new leadership
theory in stimulating employee creativity through psychological safety and psychological
empowerment. As such, it enriches the creativity literature by exploring the employee
creativity mechanism through entrepreneurial leadership and validating the importance of
psychological factors in the development of creativity compared to previous studies, which
have focused primarily on the concept or scale development of entrepreneurial leadership
(Bagheri and Harrison, 2020; Leitch and Volery, 2017; Renko et al., 2015). Third, the current
study validates entrepreneurial leadership theory in established organizations, as suggested
by eminent scholars of entrepreneurial leaders who have identified it is a new leadership
theory that is applicable to any size and any type of organization (Renko et al., 2015). In
contrast, earlier scholars have recognized entrepreneurial leadership as a leadership style of
entrepreneurs or applicable in new ventures and thus examine its implications in new
ventures or small and medium enterprises (Bagheri et al., 2020; Dean and Ford, 2017; Leitch
and Volery, 2017).

2. Literature review and development of hypotheses

2.1 Entrepreneurial leadership
Entrepreneurial leadership is an evolving leadership style that is still in its initial stages of
theoretical and empirical development (Leitch and Volery, 2017). As a leadership theory, it

H2
Psychological
Empowerment

Entrepreneurial Employee
H1
Leadership Creativity

Figure 1. Psychological
Research model with Safety
hypotheses
H3
has evolved from the existing entrepreneurship and leadership literature (Leitch and Volery, Entrepreneurial
2017; Renko et al., 2015). Entrepreneurial leadership is defined as a leadership style that leadership
inspires and directs employees to explore and exploit entrepreneurial opportunities (Renko
et al., 2015). The basic theoretical framework of entrepreneurial leadership, which was
develop
developed by Gupta et al. (2004), includes five roles of entrepreneurial leaders, namely, creativity
framing the challenge, path clearing, absorbing uncertainty, building commitment and
specify limits. The first three roles are related to scenario enactment, i.e., to envision future
opportunities for the business. The last two roles are related to cast enactment, i.e., to inspire 437
and direct team members and manage resources to attain established goals. More recently,
researchers have attempted to develop roles and scales of entrepreneurial leadership
(Fontana and Musa, 2017; Harrison et al., 2018; Renko et al., 2015).
Entrepreneurial leadership is based on the three cross-cultural perspectives of leadership,
namely, neo-charismatic, team-oriented and value-based leadership (Gupta et al., 2004).
Moreover, entrepreneurial leadership has some common characteristics with
transformational leaders such as intellectual stimulation; however, they have
dissimilarities, particularly, in the area of inspirational motivation and charismatic role
modeling (Renko et al., 2015). Furthermore, transformational leaders use charisma, dramatic
presentation and impression management tactics to inspire their followers. Conversely,
entrepreneurial leaders, charismatic or not, act as a role model by performing entrepreneurial
practices (Harrison et al., 2018; Renko et al., 2015). Finally, individual consideration is the main
component of transformational leadership, i.e., transformational leaders identify the
particular needs and limits of their employees, keep up balanced communications and
consider their valuable talents (Bass and Avolio, 1995). However, entrepreneurial leaders do
not entail the individual consideration element and they, first and foremost, consider their
employees based on their entrepreneurial self-efficacy and passion (Renko et al., 2015).
Besides, entrepreneurial leaders build the employees’ confidence in entrepreneurial skills and
develop a passion for creativity and innovation (Cardon et al., 2009). Hence, the
entrepreneurial leadership concept is based on opportunity exploration and exploitation
behaviors by the leaders and their employees (Renko et al., 2015).

2.2 Entrepreneurial leadership and employee creativity

Creativity involves finding new solutions to challenges in the workplace (Amabile, 1988), and
as such, it is an important factor in the long-term survival and growth of a business in that it
generates novel ideas for the production of new or the modification of existing products,
services and procedures. As business market problems are increasingly becoming more
complex and unpredictable, it is difficult for the leaders to tackle every problem by
themselves (Owens and Hekman, 2012). It is for this reason that creativity and innovation are
no longer confined to the research and development department but rather are extended to all
employees, either directly or indirectly, at all levels of the organization (Bai et al., 2016). More
importantly, it is leadership that is recognized as an important factor in engaging employees
in creative activities (Hemlin and Olsson, 2011; Shalley and Gilson, 2004; Zhou and Hoever,
2014). Past studies have concluded that leadership develops employee creativity (Chen and
Hou, 2016; Koh et al., 2019; Qu et al., 2015; Ribeiro et al., 2020).
Entrepreneurial leaders envision the future possibilities of the business, create new ideas
and struggle to improve business performance (Fontana and Musa, 2017), they embrace
opportunity recognition and exploitation as core goals to stimulate innovation within the
organization (Fontana and Musa, 2017; Koryak et al., 2015). Given that entrepreneurial
leadership is important in fostering creativity and innovation (Cai et al., 2019; Huang et al.,
2014), the entrepreneurial leaders encourage their employees to participate in opportunity
recognition and in the execution process to develop new products, services and business
LODJ practices to accomplish their goals (Bagheri, 2017; Renko et al., 2015). Consequently, while
42,3 pursuing such creative opportunity-oriented tasks, entrepreneurial leaders enhance the
employees’ creative potential to identify new ideas and practices (Renko et al., 2015), all of
which is consistent with the tenants of SLT that suggest employees react to the external
influences of different situations in the workplace and employ their learning to guide their
future thoughts and actions. It is these psychological processes that solve problems by
predicting the actions and consequences of different alternatives without actually
438 implementing the plan in practice. As risk takers themselves, entrepreneurial leaders must
also encourage their employees to engage in the exploration of new ideas and activities
(Bagheri, 2017; Renko et al., 2015). Finally, by observing their leaders’ risk taking behaviors
and creative actions, it is expected that employees will develop the confidence to create and
execute new ideas.
Entrepreneurial leaders not only depend on the commitment and competencies of their
employees to execute creative tasks but they also must serve as role models to
their employees (Renko et al., 2015). This premise is supported by SLT, which argues that
employees learn from those role models with whom they have close interactions, and later
implement what they have learned in their subsequent decisions and actions with respect to
creativity. In addition to role modeling, entrepreneurial leaders must direct and guide their
employees as they engage in creative activities (Harrison et al., 2018; Renko et al., 2015). SLT
illustrates that employees learn more from leaders who are model, direct and guide their
employees because learning only from observational learning cannot sufficiently teach
complex procedures as such procedures demand verbal support and explanations. This is
especially true when tasks are complex and mistakes are costly and dangerous. In such
instances, employees must learn from competent leaders who know how to perform such
activities without unnecessary errors. In this way, employees are able to apply what they
have learned as they seek to identify creative solutions to multifarious problems. The
behaviors and actions of the entrepreneurial leader also serve as a catalyst to motivate
employees to engage in creative activities. Previous studies have determined that
entrepreneurial leadership has a positive influence on employee creativity (Cai et al., 2019;
Mehmood et al., 2020). Therefore, based on SLT and the aforementioned studies, the following
hypothesis is proposed.
H1. Entrepreneurial leadership has a positive influence on employee creativity.

2.3 Mediating role of psychological empowerment

Psychological empowerment, which is a form of intrinsic motivation to accomplish tasks,
consists of four cognitive components, namely, self-determination, competence, meaning and
impact (Spreitzer, 1995). More specifically, psychological empowerment is maximized when
all four of these cognitive factors exist simultaneously at high levels (Maynard et al., 2012).
Employees who are psychologically empowered are confident that they are in control of their
work, and they are, therefore, more willing to consciously assume responsibilities.
Psychological empowerment is a concept that is consistent with the definition of
motivation (Gagn!e and Deci, 2005). That being said, it has been concluded that leaders
play a vital role in developing employee psychological empowerment (Ma and Jiang, 2018;
Zhang and Bartol, 2010).
Entrepreneurial leaders inspire employees to take risks and engage in creative activities,
such as opportunity exploration and exploitation (Renko et al., 2015). By emphasizing
activities that are important for departmental and organizational success, entrepreneurial
leaders indirectly inform their employees that their work is meaningful (Miao et al., 2018).
Entrepreneurial leaders serve as role models and enhance the confidence of their employees
by engaging in creative activities themselves rather than depending solely upon the
capabilities and commitment of the employees to complete all such entrepreneurial tasks Entrepreneurial
(Gupta et al., 2004; Renko et al., 2015). According to SLT, it is argued that working with leadership
leaders who are creative and who engage in creative activities that involve opportunity
recognition and exploitation facilitates the development of employees’ feeling of competency.
develop
Entrepreneurial leaders develop core objectives that are endorsed by employees, an attractive creativity
vision for the organization that is comprised of opportunity recognition and implementation
processes (Gupta et al., 2004). Furthermore, by eradicating the hurdles that set employees
back in their work and motivate them to explore new opportunities rather than performing 439
routine tasks (Gupta et al., 2004), entrepreneurial leaders foster the development of self-
determination among their employees, while also motivating and directing their employees to
become involved in opportunity recognition and execution processes to achieve their vision
(Renko et al., 2015). Such actions not only add value to the business but they also instill in the
employees a sense that they are part of something that will impact the overall value of the
organization.
Entrepreneurial leaders are also expected to promote the employees’ creative potential
through psychological empowerment. Psychological empowerment stimulates employees to
create valuable ideas about new products and processes (Amabile, 1996; Zhang and Bartol,
2010). More specifically, when employees perceive their job as meaningful and realize that
they have a certain degree of freedom with respect to what they do, they put forth more effort
to seek solutions to the problems confronting the organization (Ma and Jiang, 2018). As
psychologically empowered employees are more confident regarding their degree of
competency, they take risks and seek ways to solve complex problems through cognitive
means (Liu et al., 2019; Zhang and Bartol, 2010). Furthermore, when employees have the self-
determination to perform their duties and when they believe that their work has an impact on
the overall organizational outcomes, they are more inclined to pursue more creative activities
(Liu et al., 2019; Sun et al., 2012). Past studies have concluded that employees who are
psychologically empowered are more inspired to perform creative tasks (Ma and Jiang, 2018;
Miao et al., 2018; Yang et al., 2019a). Similarly, and consistent with SLT, this study anticipates
that through observation and by working with entrepreneurial leaders, employees will be
more motivated and confident as they pursue creative activities. Thus, based on the above
discussion and referenced studies, the following hypothesis is proposed.
H2. Psychological empowerment mediates the relationship between entrepreneurial
leadership and employee creativity.

2.4 Mediating role of psychological safety

Psychological safety refers to employees’ perception of safety while executing risky tasks in
the workplace (Edmondson and Lei, 2014). Knowing that they are operating in a
psychologically safe environment facilitates the formation of interactive relationships
among employees and their leaders, which, in turn, establishes a supportive environment in
the workplace that promotes creativity (Amabile, 1996). Hence, a safe environment is vital for
employees who are seeking to share new ideas and build interpersonal trust, and thus, such
an environment can motivate and encourage employees to take risks and demonstrate
creativity (Carmeli et al., 2010; Edmondson and Lei, 2014).
Leadership is an important antecedent to the development of the psychological safety of
employees as it is leadership that creates a work environment that encourages employees to
discuss their concerns (Edmondson and Lei, 2014; Liu et al., 2016). While entrepreneurial
leaders focus on the exploration and exploitation of entrepreneurial opportunities (Koryak
et al., 2015), they also motivate and direct their employees to take risks and become involved
in creative activities that comprise opportunity recognition and exploitation (Bagheri, 2017).
Accordingly, to attain their goals, entrepreneurial leaders create a supportive environment
LODJ where employees feel safe and comfortable as they create and share new ideas (Huang et al.,
42,3 2014). Entrepreneurial leaders also serve as role models for their employees by engaging in
creative tasks (Renko et al., 2015), and accordingly, by observing the behaviors of their
leaders, the employees feel psychologically safe to take interpersonal risks and share their
ideas. In addition, entrepreneurial leaders build the employees’ confidence and openly
communicate business ideas and future opportunities with their employees (Fontana and
Musa, 2017). Such social interactions between leaders and employees provide a clear
440 indication to employees that it is safe for them to speak out and discuss risky and novel ideas.
Finally, entrepreneurial leaders must reduce the pressure on employees regarding risk by
encouraging risk taking and assuming the responsibility for future uncertainties regarding
undesired outcomes (Gupta et al., 2004). Consistent with SLT, it is expected that by observing
the behavior of leaders, employees can determine whether the work environment is a safe
place to discuss and create new ideas with other employees and leader.
Creativity inherently comprises the factors of risk and uncertainty as it is not guaranteed
that new ideas will produce the anticipated results. Thus, a psychologically safe environment
is vital for the cultivation of creativity in the workplace (Edmondson and Lei, 2014). The
perception that the environment is safe eliminates employee anxiety and the fear of negative
outcomes. As a consequence, employees are willing to take risks and share their ideas (Wang
et al., 2018). In a psychologically safe environment, employees take more risks and engage in
in more creative and risky activities that include entrepreneurial opportunity exploration and
exploitation, and these employees are confident that their leaders will support them even if
their ideas are not successful (Miao et al., 2019). Employees are more inclined to develop
interpersonal trust when they experience psychological safety (Carmeli et al., 2014) and thus
are more emphatic about sharing their ideas regarding new products, services and
procedures that are vital for creativity (Chen and Hou, 2016), and are better able to overcome
the complexities faced during the implementation of these ideas in practice (Yang et al.,
2019b). Rooted in Bandura’s SLT, this study argues that employees experience greater
psychological safety when observing and working with entrepreneurial leaders who are
creative, openly communicate and encourage their employees to explore new opportunities
and develop new business ideas. Accordingly, they also feel safe and comfortable sharing
their ideas and engaging in creative activities. Consistent with this, previous studies have
concluded that employees with high levels of psychological safety accomplish more creative
tasks (Liu et al., 2016; Yang et al., 2019b; Yi et al., 2017). Therefore, on the basis of the
aforementioned studies and discussion, the following hypothesis is proposed.
H3. Psychological safety mediates the relationship between entrepreneurial leadership
and employee creativity.

3. Research methodology
3.1 Sample and procedure
Data were collected from the manufacturing sector of Pakistan including textile, chemical,
automobile industries, etc. The manufacturing sector was selected as it comprised technical
processes that demand creativity. For instance, textile firms comprise a wide range of
technical processes such as: processing, cutting, stitching, quilting etc. For data collection,
personal contacts and companies’ email addresses were used. The directors of human
resources departments were informed about the purpose of the research and were assured
that the data would be kept confidential. The current study used recommendations from a
previous study to reduce the problems of common method and single source bias (Podsakoff
et al., 2003). To accomplish this, the questionnaires were comprised of three parts, specifically,
one for managers and two for employees. Data were collected in three phases with a one-
month time interval to reduce common method bias. At time 1, employees rated statements Entrepreneurial
about the entrepreneurial leadership behaviors of their managers. At time 2, employees rated leadership
statements about psychological empowerment and psychological safety. At time 3, managers
rated statements related to their employees’ creativity. Surveys were sent to 70 managers and
develop
350 employees working under their supervision. An identity code was used to pair the creativity
managers’ questionnaires with the questionnaires of their related employees. After the
questionnaires were matched via coding numbers, the final sample was comprised of
responses from 54 leaders, for a response rate of 77.1%, and 280 employees, for a response 441
rate of 75.6%. With respect to leaders, 83.4% were male, 75.9% were over the age of 30 years,
79.6% held a bachelor’s or master’s degree and 50% had more than 10 years of experience.
Regarding the employees, 88.6 were male, 40.7% were over 30 years of age, 90.4% held a
bachelor’s or master’s degree and 57.9% had fewer than five years of experience.

3.2 Measures
The measures used in this study were adopted from existing studies, and all items were
measured using a 5-point Likert scale.
Entrepreneurial leadership: An eight-item scale developed by Renko et al. (2015) was used
to measure entrepreneurial leadership. Employees were asked to assess the statements based
on their perceptions of their managers’ leadership behaviors. Sample items included, “My
manager has a vision of the future of our business,” and “My manager has creative solutions
to problems.”
Psychological empowerment: A 12-item scale developed by Spreitzer (1995) was used to
measure psychological empowerment. Employees were asked to evaluate statements
regarding psychological empowerment. Sample items included, “The work I do is meaningful
to me,” and “I am confident about my ability to do my job.”
Psychological safety: A five-item scale developed by Carmeli et al. (2010) and modified
using the team psychological safety scale developed by Edmondson (1999) was used to
measure employee psychological safety. Employees were asked to assess statements
regarding psychological safety. Sample items included, “It is safe to take a risk in this
organization,” and “It is easy for me to ask other members of this organization for help.”
Creativity: A thirteen-item scale developed by Zhou and George (2001) was used to
measure creativity. Managers were asked to assess statements their employees’ creativity.
Sample items include, “This employee comes up with creative solutions to problems,” and
“This employee often has a fresh approach to problems.”
Control variables: In this study, all demographic variables, such as age, gender, education
and tenure, were controlled because such variables can influence creativity (Shalley and
Gilson, 2004; Shin and Zhou, 2007).

3.3 Analytic strategy

The SPSS 22 and AMOS 22 were used for data analysis and a two-step analytical strategy
was adopted (Hair et al., 2006) through which we validate the measurement model by using
confirmatory factor analysis and structural equation modeling to estimate the structural
model to fit the data. The bootstrapping method of Hayes and Preacher (2014) was applied for
testing the mediation analysis.

4. Results
4.1 Common method bias testing
To test whether there is serious common method deviation in the data, the Harman single
factor method (Zhou and Long, 2004), which establishes a common factor, was used for the
LODJ test. Specifically, if the common factor explains all or most of the variation, the data are
42,3 considered to exhibit serious common deviation. Thus, the four latent variables, i.e.,
entrepreneurial leadership, psychological safety, psychological empowerment and employee
creativity, were set as common factors. The results revealed that the single factor model was
difficult to fit (χ 2/df 5 15.43, RMSEA 5 0.153, CFA 5 0.732, TLI 5 0.674, GFI 5 0.787),
indicating that no serious common methodological biases exist in the current study.
442
4.2 Descriptive statistics and correlations
The means, standard deviations and correlations for all measures are presented in Table 1,
and the results of the correlation analysis are used to initially identify the hypotheses
relationship. Table 1 indicates a significant and positive correlation between entrepreneurial
leadership and psychological safety (r 5 0.49, p < 0.001), psychological empowerment
(r 5 0.49, p < 0.05) and employee creativity (r 5 0.28, p < 0.001). Furthermore, psychological
safety and creativity are also positively correlated (r 5 0.49, p < 0.05). Thus, according to the
results of the relevant analyses, all hypotheses are supported.

4.3 Reliability and validity analysis

Cronbach’s alpha and composite reliability are used to test the reliability of the proposed
study. According to Nunnally (1978), Cronbach’s α and composite reliability values must be
above 0.7. The reliability analysis results, which are presented in Table 2, indicate that the
Cronbach’s α and composite reliability values for all variables are greater than 0.7. The
convergent validity and discriminant validities are measured using the average variance
extracted (AVE) and the square root of the AVE (Chin et al., 2003). As the AVE recommended
value must exceed 0.05 (Fornell and Larcker, 1981), Table 2 indicates that the values of the
AVE demonstrate good convergent validity. Discriminant validity is obtained by the taking
square root of the AVE, and it must be greater than the intercorrelation values. The diagonal
values in Table 2 reveal sufficient evidence of discriminant validity.

4.4 Confirmatory factor analysis

A confirmatory factor analysis was conducted to measure the proposed variables in the
study, namely entrepreneurial leadership, psychological empowerment, psychological safety
and creativity. Considering the small sample size compared with the measurement items, the
number of items was reduced following frequently used procedures. Based on the results of
factor analysis, the items with the highest and lowest loadings of each variable were first
combined. The items with the second highest and lowest loadings were then combined. By
following this procedure, all items for each variable were assigned to one of the indicators for

# Variables M SD 1 2 3 4 5 6 7 8

1 Age 4.76 0.43 1

2 Gender 3.29 0.86 0.23 1
3 Education 4.11 0.34 0.47 0.42 1
4 Tenure 456 0.84 0.86 0.54 0.73 1
5 EL 3.68 0.6 0.46 0.68 0.83 0.52 1
6 PE 4.98 0.36 0.52 0.69 0.66 0.48 0.38** 1
Table 1. 7 PS 4.19 0.57 0.76 0.78 0.59 0.65 0.49*** 0.64** 1
Means, standard 8 Creativity 3.94 0.73 0.82 0.72 0.49 0.72 0.28** 0.54* 0.49** 1
deviations and Note(s): n 5 280; Diagonal values are square roots of AVE that should be higher than inter-correlation for
correlations estimating discriminant validity; *p < 0.05, **p < 0.01, ***p < 0.001
Constructs Items FL CA CR AVE
Entrepreneurial
leadership
Entrepreneurial leadership 0.846 0.877 0.623 develop
EL1 0.745
EL2 0.723 creativity
EL3 0.787
EL4 0.721
EL5 0.734 443
EL6 0.754
EL7 0.865
EL8 0.781
Employee creativity 0.783 0.863 0.767
CRE1 0.798
CRE2 0.718
CRE3 0.712
CRE4 0.745
CRE5 0.734
CRE6 0.755
CRE7 0.739
CRE8 0.774
CRE9 0.817
CRE10 0.823
CRE11 0.719
CRE12 0.756
CRE13 0.856
Psychological empowerment 0.858 0.867 0.761
PE1 0.834
PE2 0.723
PE3 0.778
PE4 0.765
PE5 0.782
PE6 0.728
PE7 0.738
PE8 0.746
PE9 0.758
PE10 0.759
PE11 0.843
PE12 0.878
Psychological safety 0.864 0.868 0.786
PS1 0.758
PS2 0.747
PS3 0.762
PS4 0.784
PS5 0.729 Table 2.
Note(s): FL5Factor loading; CA5 Cronbach alpha; CR5Composite reliability; AVE 5 Average extracted Reliability and validity
variance estimates

each variable. The mean scores of the items and the scores of each indicator were then
computed. The CFA results, which are presented in Table 3, indicate that four-factor model
fits the data well, specifically, χ 2 (750.21) df 5 193, (p < 0.05), confirmatory fit index
(CFI) 5 0.92, Tucker–Lewis index (TLI) 5 0.91 and root mean square error of approximation
(RMSEA) 5 0.06, compared to more parsimonious models, including a three-factor mode, two
factor model and one factor model. All scores for the factor loadings exceed 0.6 and are
significant.
LODJ M Factors loaded χ2 df TLI CFI RMSEA
42,3
1 4-Factors: The base line model 750.21 193 0.92 0.91 0.06
2 3-Factors: Entrepreneurial leadership and psychological 1431.11 211 0.71 0.72 0.13
empowerment combined
3 3-Factors: Psychological empowerment and employee 1411.31 215 0.72 0.74 0.13
creativity combined
444 4 3-Factors: Entrepreneurial leadership and psychological 1487.25 221 0.75 0.71 0.15
safety combined
5 3-Factors: Psychological safety and psychological 1521.12 287 0.76 0.73 0.15
Table 3. empowerment combined
Confirmatory factor 6 1-Factors: All variables combined 1781.56 312 0.45 0.69 0.21
analysis of Note(s): M 5 Model number; χ 2 5 Chi-square; TLI 5 Tucker–Lewis index; CFI5 Confirmatory fit index;
discriminate validity RMSEA 5 Root mean square error of approximation

4.5 Hypothesis testing

Before testing the hypotheses, structural equation modeling was applied to estimate the
hypothesized model fit. Following the guidelines of Hair et al. (2006), an acceptable model fit
was attained, i.e., chi-square (χ 2) 745.67, df 5 312, CFI 5 0.918, GFI 5 0.845, AGFI 5 0.91,
RMSEA 5 0.06. The results of the direct effects are presented in Table 4 and indicate that
entrepreneurial leadership positively influences employee creativity (β 5 0.62, p < 0.01), thus
supporting H1. Further, the results indicate that entrepreneurial leadership has a positive
effect on psychological empowerment (β 5 0.32, p < 0.001) and a significant positive effect on
psychological safety (β 5 0.34, p < 0.001).
Finally, H2 and H3 involved intervening roles of psychological empowerment and
psychological safety between entrepreneurial leadership and creativity. The latest
bootstrapping method prescribed by Hayes and Preacher (2014) was followed to examine
the mediation effects of psychological empowerment and psychological safety. This method
used a process macro model with bias-corrected confidence estimates. Accordingly, 5,000
bootstrap resamples with lower and upper confidence intervals were obtained for estimating
the indirect effects of psychological empowerment and psychological safety. Table 5 presents
the bootstrapping results, which indicate that when psychological empowerment and
psychological safety are introduced to the model, the effects of entrepreneurial leadership on
creativity (β 5 0.27), (β 5 0.39) are significant. In the bootstrapped confidence interval
process, mediation is indicated by the nonexistence of zero in the confidence intervals for
determining an unstandardized indirect effect. The confidence intervals for the indirect
effects of psychological empowerment (LLCI 0.192, ULCI 0.294) and psychological safety
(LLCI 0.186, ULCI 0.163) on creativity do not include zero. Hence, it is concluded that the
indirect effect is significantly different from zero at p < 0.05, which indicates that both
psychological empowerment and psychological safety significantly mediate the relationship
between entrepreneurial leadership and creativity. Thus, the results support H2 and H3.

Paths Estimates SE CR

Entrepreneurial leadership → creativity 0.62 0.323 2.987**

Entrepreneurial leadership → psychological empowerment 0.32 0.654 2.342***
Psychological empowerment → creativity 0.43 0.764 2.650***
Table 4. Entrepreneurial leadership → psychological safety 0.34 0.429 2.985***
Results of Psychological safety → creativity 0.65 0.542 2.114**
structure model Note(s): SE5 Standard error; CR5 Critical ratio; **p < 0.01, ***p < 0.001
5. Discussions Entrepreneurial
Entrepreneurial leadership is an emerging style of leadership that has been evolved from the leadership
existing leadership and entrepreneurship literature to overcome the current challenges faced
by the organizations (Bagheri and Harrison, 2020). The aim of the current study was to
develop
examine the integrated model and the relationships among entrepreneurial leadership, creativity
employee creativity, psychological empowerment and psychological safety in the
manufacturing sector of Pakistan. The results of the current study support the H1, i.e.,
entrepreneurial leadership is positively linked with employee creativity. This conclusion is 445
consistent with earlier studies (Cai et al., 2019; Mehmood et al., 2020). Entrepreneurial leaders
are creative by nature in that they develop visions for their business that focus primarily on
opportunity recognition and exploitation (Renko et al., 2015). They also develop the creative
potential of employees by demanding intense participation and a change in roles to meet
dynamic changes and motivate employees through their communication skills (Gupta et al.,
2004). Moreover, as entrepreneurial leaders also serve as role models (Renko et al., 2015), by
observing and working with entrepreneurial leaders, employees develop their creative skills,
as explained by SLT.
Similarly, the results support the H2, i.e., entrepreneurial leadership and creativity are
mediated by psychological empowerment. The results of this study complement the
findings of a previous study (Miao et al., 2018). Entrepreneurial leaders clearly define their
vision with the main focus on the exploration of entrepreneurial opportunities that must be
endorsed by their employees, and they demand intensive participation from their
employees to accomplish their goals (Gupta et al., 2004), both of which contribute to the
perception of employees that their work is valuable to the organization. Furthermore,
entrepreneurial leaders must motivate and direct their employees as they engage in creative
endeavors (Harrison et al., 2018; Renko et al., 2015). Thus, entrepreneurial leaders develop
the confidence and competency level of employees to take risks and engage in creative
activities.
The findings also support H3; the results support the findings of a previous study (Miao
et al., 2019). Creativity is a complex task that involves the taking of risks given that the results
do not always align with the expected outcomes. Therefore, the support of the leader is
mandatory when asking employees to engage in creative behaviors. That said,
entrepreneurial leaders possess such abilities and are able to ensure their employees that
they are creativity-oriented (Fontana and Musa, 2017; Gupta et al., 2004; Harrison et al., 2018;
Renko et al., 2015), which then allows employees to more easily create and share new ideas.
Additionally, the findings are consistent with the tenants of SLT, which argues that
employees learn and adopt different thoughts and behaviors from their direct experiences
and through observations within the context of their social interactions. As these interactions
also affect their cognitive factors, including psychological safety and psychological
empowerment, the employees also use this information to influence their thoughts and
behaviors.

Direct effect
Effect of IV on Effect of M on Total effect of of IV on DV Bootstrap result for
M (a) DV (b) IV on DV (c) (c‘) indirect effect (ab)
DV B t B t B t B t LL 95% CI UL 95% CI

CRE 0.42** 12.87 0.68** 12.07 0.46** 19.34 0.27 9.29 0.192 0.294
CRE 0.28** 8.36 0.39** 10.78 0.52** 12.56 0.39* 11.83 0.186 0.263
Note(s): IV: entrepreneurial leadership; DV: creativity (CRE), mediators: psychological empowerment; Table 5.
psychological safety; **p < 0.01; *p < 0.05 Mediation results
LODJ 5.1 Theoretical implications
42,3 The current study has contributed to the leadership and creativity literature in several ways.
First, this study explored the mechanism with respect to how entrepreneurial leaders develop
and enhance their employees’ creative skills by promoting psychological empowerment and a
safe environment. Moreover, SLT explains the relationships in the integrated model of the
current study, whereas previous studies have explored the relationships between the
different leadership theories and creativity (Jaiswal and Dhar, 2017; Tse et al., 2018). However,
446 as recommended by the previous studies to validate the entrepreneurial leadership concept
across cultures, this study investigated the link between entrepreneurial leadership and
creativity (Miao et al., 2019). Findings of the current study also validate the results of the prior
study related to entrepreneurial leadership and creativity (Cai et al., 2019). Besides, this study
is considered first in Pakistan to explore the entrepreneurial leadership influence on employee
creativity. Nevertheless, scholars have explored the influence of other leadership styles one
employee creativity in Pakistani context (Shafique et al., 2019).
Second, rooted in SLT, this study has examined the constructive intervening role of
psychological empowerment and psychological safety in developing employee creativity.
While a recent empirical study applied social cognitive theory to explore the relationship
between entrepreneurial leadership and creativity (Cai et al., 2019), this study validates the
findings of that study using SLT. Moreover, the findings of this study empirically support
the arguments of the scholars; specifically, employees’ personal factors influence the
consequences of entrepreneurial leadership (Renko et al., 2015). Finally, this study contributes
to the understanding of psychological empowerment and psychological safety by unveiling
their importance for creativity and role of entrepreneurial leadership in developing the
psychological empowerment and psychological safety of employees.
Third, the current study empirically extends the understanding of the role of the
entrepreneurial leader in organizational behavior research, whereas previous studies focus
on the concept of entrepreneurial leadership and scale development (Bagheri and Harrison,
2020; Harrison et al., 2018; Renko et al., 2015). Moreover, previous studies have explored
entrepreneurial leadership consequences either in new ventures or in small and medium
enterprises (Bagheri et al., 2020; Miao et al., 2019). Even though eminent scholars have
suggested that it is a new leadership style that, similar to other leadership styles, can be
applied in any type of organization, irrespective of the size or nature of the business (Renko
et al., 2015). Accordingly, the current study enriches the literature by explaining the
performance mechanism and empirically validating the entrepreneurial leadership concept in
established organizations.

5.2 Managerial implications

The current study offers several practical implications. First, it explores the importance of
entrepreneurial leadership’s role in fostering employee creativity in developing countries like
Pakistan, China, etc. Pakistan is located at the best trade route between Europe and Asia and
merges Western China, South Asia, West Asia and Central Asia (Shaikh et al., 2016). Besides,
the China–Pakistan Economic Corridor opens new ways for Pakistani firms to produce new
products and target new international markets. However, the failure rate of new ventures,
small and medium enterprises and established firms are higher. For instance, only 4% of
organizations have a life greater than 25 years after start-up in Pakistan (Khawaja, 2006).
Likewise, the failure of firms is greater than 67 % in the first year and 85% in the first ten
years after its establishment in China (Parnell et al., 2015). Consequently, it creates pressure
on businessmen, entrepreneurs and managers to develop their leadership abilities to adopt
emergent changes and train their employees as well for the growth and survival of their
businesses. Nevertheless, entrepreneurial leadership implications are not limited to firms’
size, nature and geographic location (Renko et al., 2015). Therefore, all organizations should Entrepreneurial
recognize the importance of entrepreneurial leadership by hiring managers who possess the leadership
entrepreneurial skills to develop creativity and innovation. Furthermore, managers should
embrace and practice entrepreneurial leadership concepts to stimulate employee creativity.
develop
For example, leaders must emphasize the value of the work by sharing the organizational creativity
goals with employees, directing employees when the tasks are complex and inspiring
employees by modeling valued behaviors. In this way, such behaviors will inspire employees
to follow their leaders, psychologically empower employees and ensure employee safety as 447
they engage in creative activities.
Second, realizing that the behaviors of entrepreneurial leaders can be developed and
learned (Bagheri and Pihie, 2011), scholars have attempted to develop an entrepreneurial
leadership learning and development framework (Leitch et al., 2013). Accordingly,
organizations should offer such training and development programs for their managers so
they understand the importance of entrepreneurial leadership skill development. SLT argues
that employees learn from their leaders and then integrate such knowledge into their thinking
and actions as they move forward. Therefore, to improve employee creativity, it is important
to improve the entrepreneurial behaviors of managers. However, it must be considered that
employees’ personal aspects also influence the efficiency of entrepreneurial leaders (Renko
et al., 2015). Thus, to meet such dynamic changes during furious market competition,
organizations should develop such skills according to an overall hierarchy rather than
focusing only on the development of managerial skills. Accordingly, organizations should
coordinate training and development programs for employees to develop their creative skills.
Third, this study suggests that managers should promote the psychological
empowerment of employees rather than focus only on job empowerment. Thus, it is
important to enhance employees’ confidence regarding their capabilities to engage in creative
behaviors in the workplace. Similarly, a psychologically safe environment is also critical if
employees seek to pursue creative endeavors. Therefore, managers should focus on creating
environments within their organizations that encourage employees to share their ideas with
group members and leaders and thereby cultivate creativity within the organization. Finally,
organizations must develop polices and structures within the organization that promote
characteristics necessary for the promotion of creative behaviors. These characteristics
include open communication, trust across functional teams and access to available
information.

5.3 Limitations and future opportunities

Although the current study has made important contributions to the literature, it also has
certain limitations. First, cross-sectional data were used in this study to analyze the casual
relationships. For instance, link between entrepreneurial leadership and employee creativity
can be affected due to contextual factors that might influence such variables. Thus, future
studies should consider longitudinal data to intensively analyze the casual inferences of
relationships that has been examined in this study. Second, there are limitations related to the
generalizability of the findings in that the sample consisted only of managers and employees
in Pakistan. The results may differ if the sample had included people from the supervisory
and/or employees from the research and development department. Thus, to conduct a more
in-depth analysis of such relationships, future studies should consider drawing participants
from each level of the organization. Third, in the current study, data were collected from only
a single country, in the future, scholars should attempt to gather data from many diverse
countries to analyze the cross-cultural effect. Fourth, entrepreneurial leadership is an
emerging leadership theory that is, admittedly, essential for developing creativity and
innovation (Fontana and Musa, 2017; Huang et al., 2014; Renko et al., 2015). Therefore,
LODJ upcoming studies should validate this new concept in diverse cultures as recommended by
42,3 scholars (Miao et al., 2019). Furthermore, as the current study focused on employee creativity,
scholars should consider team and organizational level outcomes such as team creativity,
team innovativeness, organizational innovation and performance to explore outcomes of
entrepreneurial leadership in organizations.

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Corresponding author
Zhang Jian can be contacted at: Zhangj67@manage.ustb.edu.cn

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