The impact of leadership on small business innovativeness

Abstract

Innovation is a fundamental requisite for small firms to achieve long-term viability. While relevant literature highlights the importance of leadership within small firms in order to establish and foster a climate conducive for innovation, evidence linking specific leadership attributes with innovation is lacking. This study examines the impact of the individual entrepreneur on fostering new product innovation within firms. An analysis of the responses collected from entrepreneurs indicates that leadership style, negotiation style and organizational efficacy each affect new product innovation. Specifically, we find evidence to support the idea that small business leaders who are inspirational, who negotiate competitively, and who lead efficacious organizations establish environments that are more likely to yield new product innovations.