Int Entrep Manag J (2014) 10:103119 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

Published online: 14 July 2011 # 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

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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 selfesteem 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.

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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, nonprofit 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 intrapreneurship (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 entrepreneurs (Pinchot 1985). They are innovative, motivated to succeed, enjoy overcoming challenges and have a philosophy of continuous learning (Lumpkin and Dess 1996).

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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

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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-byexception, which concerns the leader s 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 punishments and other corrective actions when faced with deviations from performance standards. Such passive leaders avoid specifying agreements, clarifying expectations, 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

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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. Consequently, 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 organizational 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 employees, 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

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OID
+
Transformational Leadership

H3a

+ + H2

Transactional Leadership

H3b

H1a H1b

IB

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. V ariables 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

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(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 proactiveness (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

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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 Transformational leadership Indicators Idealized influence Inspirational motivation Intellectual stimulation Individualized consideration Transactional leadership Passive/Avoidant OID Contingent reward Management by exception active Laissez-Faire Management by exception passive OID1 OID2 OID3 OID4 OID5 OID6 IB Innovation Proactiveness Risk taking 1 .72 .72 .88 .91 .92 .82 .93 .80 .78 .79 .76 .82 .79 .67 .95 .93 .92 .87 .95 .60 .90 .81 .89 .76 .86 A VE .67 c .88

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Table 2 Means, standard deviations, correlations, and discriminant validity Constructs 1. Transformational leadership 2. Transactional leadership 3. Passive/Avoidant 4. OID 5. IB Mean 3.42 3.37 2.07 4.15 3.98 SD .66 .66 .68 .69 .60 1 .82 73** .49** .35** .27** .87 .51** .14 .02 .90 .19* .12 .78 .55** .93 2 3 4 5

Diagonal elements are the square root of A VE 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 indicator s 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 (A VE) as a criterion. The higher the A VE value, the more representative the indicators are of the construct on which they load. In general, Its value should be above .50 (Fornell

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and Larcker 1981). As shown in Table 1, the A VE for each construct was satisfactory. To assess discriminant validity among constructs, the A VE 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 A VE 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 leadership

Educational level

.54** .25**

Transactional leadership

-.35**

IB
R2 = .28

-.09
Passive / Avoidant

** p < .01.

Fig. 2 Direct effects model. **p <.01

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.53**

OID
R2 = .16
Educational level

Transformational leadership

.40** .33**

.21**

-.32**

-.27**
Transactional leadership

IB
R2 = .37

-.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, passiveavoidant 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

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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 entrepreneurial 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 stimulations), 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 intrapreneurship. 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

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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 latter s performance evaluation (Jung et al. 2003). Notwithstanding these limitations, this article contributes to a better understanding 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 organizations 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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