How to Foster Corporate Entrepreneurship in Multidivisional Firms?

Abstract

Integrating theories of transformational leadership and corporate entrepreneurship, we developed and tested a multilevel model of transformational leadership congruence (among CEOs and divisional managers) mediating the relationship between firm- and division-level corporate entrepreneurship. Analyses of multisource data from 102 senior managers, 357 division managers, and 671 employees across 51 multidivisional Taiwanese electronics firms indicated that the transformational leadership congruence partially mediates the relationship between firm-level corporate entrepreneurship and division-level corporate entrepreneurship. Further, high-performance work system and division-level collective efficacy positively moderate the relationship between transformational leadership congruence and division-level corporate entrepreneurship. Finally, transformational leadership congruence positively influences division-level performance through division-level corporate entrepreneurship. Taken together, we demonstrate that transformational leadership congruence between a CEO and division-level managers has important implications for determining the percolation of corporate entrepreneurship to divisions in a firm and division performance.