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The Influence of Entrepreneurial Leadership on Social Capital Research Paper

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Updated: Jun 15th, 2022

Abstract

The last three decades have been characterized by an increased number of research studies examining how the management of organizations has become a critical area of concern in modern literature. This paper presents a systematic literature review of the influence of entrepreneurial leadership on social capital and change propensity. The work clearly states the research question on how these variables affect a firm’s success. The methodology involved drawing ideas from recent studies that have explored the association between leadership styles and an organization’s ability to achieve consistent social capital and effective change management. Relevant literature was accessed on Google scholar search and used to examine the relationships between the variables. This study seeks to fill a gap in the literature by presenting a theoretically-grounded methodology that helps leaders design and adopt approaches that focus on achieving and integrating social capital in managing change in organizations.

Introduction

Entrepreneurial leadership is the cornerstone of development for any organization that aims at achieving outstanding milestones in business. While various researchers have focused on the importance of proper management of companies, there is a need for methodical approaches to assess the significance of actualizing social capital to initiate and implement change processes (Dean & Ford, 2017; Chitsaz et al., 2019; Ximenes et al., 2019). The paper provides the literature review based on the role of entrepreneurial leadership in articulating common organizational values, vision, risk-taking, effective communication, and creativity.

A number of scholars have drawn parallels between social capital and change propensity historically and conceptually (Clark et al., 2019). In this emerging concept, some scholars define entrepreneurial leadership within a narrow view, specifically within the context of small businesses (Leitch & Volery, 2017; Felix et al., 2019; Dost et al., 2018; Yani et al., 2020). Although it may appear as if there is a single leadership approach to the actualization of social capital, a closer examination would reveal that numerous strategies may be necessary to align these to favor the propensity of change within an organization. Mehmood et al. (2019a) argue that this new paradigm of management stretches beyond the convergence of fields and is linked to the characteristics of leadership styles across diverse conditions and contexts.

The purpose of this paper is to provide an insight into the development of entrepreneurial leadership. The resulting systematic literature review and discussion delve into providing a conceptual map of the prevailing state of research in the new paradigm with a view of identifying directions into future studies. It provides a benchmark for further investigation into the influence of entrepreneurial leadership on social capital and inclination to change.

Research Question

Does entrepreneurial leadership influence the development of social capital and enable organizations to have a high propensity to change?

The Motivation to Investigate the Research Question

Current studies have explored the link between leadership style and the organizations’ ability to attain social capital and effective change management. Nevertheless, there is growing confusion because these studies claim that such a relationship depends on the leadership approach. Despite its growing influence on the two aspects of business, most of these studies undermine the role of entrepreneurial leadership in developing social capital and the ability of the organizations to cope with emerging changes in the business environment. Besides, studies attempting to explore the link between entrepreneurial leadership and social capital have appeared to ignore this leadership strategy’s role by contending that social capital only associates with transformational and democratic leadership approaches. Other researchers have argued that social capital depends on multiple factors, including individual attitudes and behaviors in the workplace. Therefore, there is a need to determine the role of entrepreneurial leadership in developing social capital and effective change management.

Research Methodology

The primary method that would be applied in the literature review is the systematic review methodology. It involves a critical description and appraisal of current and previous studies associated with a particular research inquiry to determine relationships between themes and ideas (Linares-Espinós, 2018; Mehmood et al. 2019b; Bazan et al., 2020; Mishra & Misra, 2017). The systematic review strategy will involve two significant steps: identifying the research process and determining which secondary research sources would help provide the study with the resources. The study will adopt two search strategies. The first one will involve using Google Search Engine to locate studies relevant for the systematic review. The second one will include using specific searching terms and phrases such as “influence of entrepreneurial leadership on social capital” or influence of entrepreneurial leadership on change management.”

Tabulated Systematic Literature Review

Author/s Year Title Sample Country
of Origin
Main Aspect Method Main Findings Future Directions
Al Mamun, Ibrahim, Yusoff, & Fazal 2018 Entrepreneurial leadership, performance, and sustainability of micro-enterprises in Malaysia 100 people Malaysia Establishing the link between entrepreneurial leadership, performance d sustainability of micro-enterprises. Cross-sectional research design Entrepreneurial leadership contains emotional intelligence that sustains micro-enterprises. Future studies should incorporate relevant constructs in the present model to explain detailed aspects of entrepreneurial leadership in relation to achieving social capital and change mobility.
Leitch & Volery 2017 Entrepreneurial leadership: Insights and directions Sampled previous studies/no
Primary study.
Not specified Providing insights and directions about the link entrepreneurial leadership and its impact on social capital Entrepreneurial leadership is still evolving. It lacks appropriate tools to determine its traits and nature. Should focus on determining the key attributes of entrepreneurial leadership
Mishra & Misra 2015 Entrepreneurial leadership and organizational effectiveness: A comparative study of executives and non-executives. 410 workers for India’s firms India Determining the relationship between entrepreneurial leadership and organizational effectiveness Executives and non-executives differed on the role of this leadership style on a firm’s effectiveness. Future studies should include other organizational variables to draw possible links.
Mehmood, Jian, Waheed, Younas, & Khan 2019 Impact of Entrepreneurial Leadership on Employee’s Innovative Behavior: Mediating role of Psychological Empowerment 301 managers and employees
of SMEs
Pakistan The mediating role of psychological empowerment that entrepreneurial leaders have on workers. Entrepreneurial leadership has a direct impact on intelligent behaviors in workers and an indirect impact on intelligent behavior through psychological empowerment. Future researchers must adopt longitudinal to validate the existing link between entrepreneurial leadership and intelligent behavior.
Ranjan 2018 Entrepreneurial leadership: a review of measures, antecedents, outcomes, and moderators. Review of 50 studies India Reviewing measures, antecedents, outcomes, and moderators. Examining the dimensions of Entrepreneurial leadership (strategic factors, communicative factors, motivational factors, personal factors, and leadership behaviors. The research discovered EL traits, including ambitiousness, performance-oriented, diplomatic behaviors, inspiration, positive attitude, intellectual stimulation. Extend future research on the possible link between the mentioned constructions and employee performance.
Yang, Pu, & Guan 2019 Entrepreneurial Leadership and Turnover Intention of Employees: The Role of Affective Commitment and Person-job Fit 427 workers China The mediating role of affective commitment created by EL on-employee turnover intentions. The study discovered that EL promotes effective commitment, which eventually reduces employee turnover intentions. Future research can collect data from more companies to gather more insights into the relationship.
Ximenes, Supartha, Manuati Dewi, & Sintaasih 2019 Entrepreneurial leadership moderating high-performance work system and employee creativity on employee performance. 200 workers Indonesia Entrepreneurial leadership as a moderator of performance work systems, employee creativity, and performance The research discovered that EL influences high-performance work systems, which eventually influence employee creativity and performance. The results could not be generalized. Hence, future studies should expand the scope of the study beyond cooperatives.
Miao, Newman, Schwarz, & Cooper 2018 How Leadership and Public Service Motivation
Enhance Innovative Behavior.
281 Chinese civil servants China How various leadership approaches influenced innovativeness in employees. Entrepreneurial leadership influences innovation in employees. Future researchers should use objective data to determine innovative behavior.
Cai, Lysova, Khapova, & Bossink 2019 Does entrepreneurial leadership foster creativity among employees and teams? The mediating role of creative efficacy beliefs? 43 leaders and 237 employees China Using social cognitive theory, the researchers wanted to establish the link between EL, individual creativity, and team creativity. There is entrepreneurial leadership creativity generated by creative efficacy beliefs. Future research on this subject should focus on other countries that nurture collectivist cultural norms.
Li, Makhdoom,& Asim 2020 Impact of Entrepreneurial Leadership on Innovative Work Behaviour: Examining Mediation and Moderation Mechanisms 350 China The influence of entrepreneurial leadership on innovative work behavior and culture among employees. There was a significant relationship between entrepreneurial leadership and innovative work behavior. The study relied on cross-sectional data of a single country. Future researchers should focus on more countries.

Results

Entrepreneurial Leadership, Social Capital, and Change Propensity

Despite some studies ignoring the influence of entrepreneurial leadership on the organization’s social capital, others have captured the issue and provided evidence for such relationships. First, it is vital to ascertain the nature and characteristics of entrepreneurial leadership before drawing the connection between the two subjects. To evaluate the critical attributes of entrepreneurial leadership, Leitch and Volery (2017) defined this leadership approach as one that involves influencing other individuals in a workplace to engage in collective efforts towards achieving shared goals. In a different study that explored entrepreneurial leadership in the context of organizational performance and sustainability, entrepreneurial leadership generally involves a combination of leadership and entrepreneurial capabilities (Al Mamun et al., 2018). Such combinations portray a hybrid leader who can effectively influence others to achieve a common goal, optimize risks, encourage innovation, and take advantage of presenting opportunities in a dynamic environment.

Entrepreneurial Leadership and Change Propensity

A propensity to change is the likelihood of a company to change its structure and functioning in response to emerging issues (Harrison et al., 2015; Sarabi et al., 2020; Sawaean et al., 2020). The research associates this unique potential of companies to high levels of innovativeness and creativity often nurtured through a careful application of the entrepreneurial leadership approach. As discussed by Dean and Ford (2017), entrepreneurial leaders discover and tap opportunities in a dynamic business environment to alleviate risks, create new ways of thriving, and increasing organizational innovativeness.

Limitations of the Literature Review

The research method used in this systematic literature review has numerous merits and demerits. A distinguished usefulness of the methodical search is the use of up-to-date and peer-reviewed sources to provide applicable responses to the research question. Nonetheless, the literature review has been restrained by the phrases “influence of entrepreneurial leadership on social capital” and the influence of entrepreneurial leadership on change management” used to identify and retrieve the information. As a result, further studies should look for better sources that have not been included in the synthesis. The approach to selecting the vital terms and keywords was intentionally meant for the identification of reliable literature on the relationship between entrepreneurial leadership and achievement of social capital in organizations. The second limitation of the study was that the search method was constrained to publications written in the English language, which led to a bias inclining to researches conducted in English-speaking countries.

Directions for Future Research

As highlighted by the systematic literature review, the concept of entrepreneurial leadership opens vast opportunities for further research. Although this area of study has drawn increased attention recently, the influence of entrepreneurial leadership on social capital and change propensity has received little consideration (Ha et al., 2020). Intellectual developments in this concept have presented researchers with opportunities to explore the role and influence of leaders in shaping the abilities of workers to accept change processes (Dabić et al., 2020; Pasricha et al., 2018). Since entrepreneurs from different countries face unique challenges due to discrepancies in GDP per capita, policies and conditions suitable for business may not favor them equally (Setini et al., 2020; Theodoraki et al., 2018; Hsiao et al., 2018; Hsu & Chen, 2019). The review has raised questions that would be useful in conducting future research. For instance, how can entrepreneurial leadership attributes be developed to realize social capital and change propensity? Consequently, there is a need to carry out further surveys to come up with a definitive model of entrepreneurial leadership that clearly expresses the link between the mentioned variables.

Conclusion

Many studies undermine the role of leadership styles in actualizing social capital and effective change management in organizations. While many of the authors acknowledge that little research has been done to draw relationships between social capital and change propensity, the systematic literature review proves that entrepreneurial leadership is a relatively new area of study. Nonetheless, facts from the review indicate that it is an essential factor in the development of an enterprise through capitalization on human resources and active management of change. The findings of the study underpinned the conceptual development of management frameworks that promote shared values, vision, risk-taking, effective communication, and creativity. A concern that arose from the literature review is that some studies overlooked the influence of entrepreneurial leadership on the organization’s social capital, while others adequately covered the issue by providing evidence for such relationships.

References

Al Mamun, A., Ibrahim, M. D., Yusoff, M. N. H. B., & Fazal, S. A. (2018). Entrepreneurial leadership, performance, and sustainability of micro-enterprises in Malaysia. Sustainability, 10(5), 1591. Web.

Bazan, C., Gaultois, H., Shaikh, A., Gillespie, K., Frederick, S., Amjad, A., & Belal, N. (2020). A systematic literature review of the influence of the university’s environment and support system on the precursors of the social entrepreneurial intention of students. Journal of Innovation and Entrepreneurship, 9(1), 4. ISSN: 2192-5372.

Cai, W., Lysova, E. I., Khapova, S. N., & Bossink, B. A. (2019). Does entrepreneurial leadership foster creativity among employees and teams? The mediating role of creative efficacy beliefs. Journal of Business and Psychology, 34(2), 203-217.

Chitsaz, E., Tajpour, M., Hosseini, E., Khorram, H., & Zorrieh, S. (2019). The effect of human and social capital on entrepreneurial activities: A case study of Iran and implications. Entrepreneurship and Sustainability Issues, 6(3), 1193-1203. Web.

Clark, C. M., Harrison, C., & Gibb, S. (2019). Developing a Conceptual Framework of Entrepreneurial Leadership: A Systematic Literature Review and Thematic Analysis. International Review of Entrepreneurship, 17(3).

Dabić, M., Stojčić, N., Simić, M., Potocan, V., Slavković, M., & Nedelko, Z. (2020). Journal of Business Research, 123, 683-695. Web.

Dean, H., & Ford, J. (2017). Discourses of entrepreneurial leadership: Exposing myths and exploring new approaches. International Small Business Journal 35(2): 178–196. Web.

Dost, M., Arshad, M., & Afsar, B. (2018). The influence of entrepreneurial orientation on types of process innovation capabilities and moderating role of social capital. Entrepreneurship Research Journal, 8(4).

Felix, C., Aparicio, S., & Urbano, D. (2019). Journal of Small Business and Enterprise Development, 26(3), 397-420. Web.

Flamholtz, E. G. (2011). The leadership molecule hypothesis: implications for entrepreneurial organizations. International Review of Entrepreneurship, 9(3), 1-23.

Ha, N. T., Doan, X. H., Vu, T. N., Nguyen, T. P. L., Phan, T. H., & Duong, C. D. (2020). The Effect of Social Capital on Social Entrepreneurial Intention among Vietnamese Students. The Journal of Asian Finance, Economics and Business (JAFEB), 7(8), 671-680. Web.

Harrison, R., Leitch, C., & McAdam, M. (2015) Breaking glass: Towards a gendered analysis of entrepreneurial leadership. Journal of Small Business Management 53(3): 693–713. Web.

Hsiao, C., Lee, Y. H., & Chen, H. H. (2016). The International Journal of Human Resource Management, 27(11), 1158-1172.

Hsu, B. X., & Chen, Y. M. (2019). Industrial policy, social capital, human capital, and firm-level competitive advantage. International Entrepreneurship and Management Journal, 15(3), 883-903.

Leitch, C. M., & Volery, T. (2017). International Small Business Journal, 35(2), 147-156. Web.

Li, C., Makhdoom, H. U. R., & Asim, S. (2020). Psychology Research and Behavior Management, 13, 105. Web.

Linares-Espinós, E., Hernández, V., Domínguez-Escrig, J. L., Fernández-Pello, S., Hevia, V., Mayor, J., & Ribal, M. J. (2018). Actas Urológicas Españolas, 42(8), 499-506. Web.

Mehmood, M. S., Jian, Z., Waheed, A., Younas, A., & Khan, S. Z. (2019a). In Proceedings of the 2019 3rd International Conference on Management Engineering, Software Engineering and Service Sciences (pp. 223-229). Web.

Mehmood, M. S., Jian, Z., & Waheed, A. (2019b). The influence of entrepreneurial leadership on organisational innovation: Mediating role of innovation climate. International Journal of Information Systems and Change Management, 11(1), 70.

Miao, Q., Newman, A., Schwarz, G., & Cooper, B. (2018). How leadership and public service motivation enhance innovative behavior. Public Administration Review, 78(1), 71-81. Web.

Mishra, P., & Misra, R. K. (2017). Procedia Computer Science, 122, 71-78. Web.

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Setini, M., Yasa, N. N. K., Gede Supartha, I. W., Ketut Giantari, I., & Rajiani, I. (2020). The Passway of Women Entrepreneurship: Starting from Social Capital with Open Innovation, through to Knowledge Sharing and Innovative Performance. Journal of Open Innovation: Technology, Market, and Complexity, 6(2), 25.

Theodoraki, C., Messeghem, K., & Rice, M. P. (2018). A social capital approach to the development of sustainable entrepreneurial ecosystems: an explorative study. Small Business Economics, 51(1), 153-170.

Ximenes, M., Supartha, W. G., Manuati Dewi, I. G. A., & Sintaasih, D. K. (2019). Entrepreneurial leadership moderating high performance work system and employee creativity on employee performance. Cogent Business & Management, 6(1), 1697512. Web.

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Yani, A., Eliyana, A., Hamidah, I. K. R., & Buchdadi, A. D. (2020). The Impact of Social Capital, Entrepreneurial Competence on Business Performance: An Empirical Study of SMEs. Systematic Reviews in Pharmacy, 11(9), 779-787.

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