Management Concepts

Nurturing Entrepreneurship to Create a Learning Organization

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Transformational Leadership Impacts: Entrepreneurship
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Of all the delineating factors that differentiate effective leaders from those that aren’t is their ability to gain the trust of their organizations and infuse the culture with confidence and risk-taking mindsets (Tichy, Devanna, 1986). These delineating factors taken together define a transformational leader and also underscore their ability to encourage and promote entrepreneurship and create a learning organization over time. The organizational cultures and leaders who actively promote entrepreneurship share attributes of those organizations that promote and create intrapreneurial leaders as well. There are significant differences however between entrepreneurship and intrapreneurship. The main focus of this analysis is to describe how managers can encourage and promote entrepreneurship over time.

How Transformational Leadership Impacts Entrepreneurship

Across several studies and from empirical research of which factors most influence entrepreneurial activity in organizations (Chen, Barnes, 2006) (El Tarabishy, 2006) (Ling, Simsek, Lubatkin, Veiga, 2008) the emotional intelligence (EI) and ability to apply both transformational and transactional leadership approaches when needed typify leaders who get these results. Organizational cultures respond to leaders who know how to manage both and also show they have high levels of credibility and are capable or component in their management role (El Tarabishy, 2006). For entrepreneurship to be nurtured in an organization however there needs to be the emotional intelligence on the part of a leader to also use transformational leadership approaches as well (Ling, Simsek, Lubatkin, Veiga, 2008). In one of the more detailed analyses of how leaders nurtured entrepreneurship in smaller firms (El Tarabishy, 2006) this ability to use situationally appropriate leadership strategies was found to be significant across the cross-section of small and medium businesses who were involved in the study. The transformational leadership factors of communication accuracy and validity, credibility of leadership, empathy for subordinates and also for peers and the willingness to lead creatively all were shown to be significant predictors of an organization creating an entrepreneurial environment (Chen, Barnes, 2006) (El Tarabishy, 2006). What differentiated transformational leaders who were successful in developmental management strategies for their subordinates however was follower-centered leadership (El Tarabishy, 2006) and the ability to impart and stay consistently focused on a vision of what is trying to be accomplished for the long-term (Chen, Barnes, 2006). Because of all these factors being the foundation of support for employees that often goes on to create their own companies, truly transformational leaders manage to an individual’s innate strengths, not limiting subordinate’s growth to the constraints of their organizations. This level of empathy towards an individuals’ development is in part what makes a leader transformational and also serves to motivate others to increase their contributions and also aspire to greater accomplishment (Chen, Barnes, 2006) (El Tarabishy, 2006) (Tichy, Devanna, 1986). A transformational leader then is in many companies organization-agnostic, and is instead people-centered first. This aspect of transformational leadership is a powerful catalyst that leads to employees and subordinates gaining the self-confidence to attempt their own ventures (El Tarabishy, 2006).

Creating a Entrepreneurial, Learning Organization

For any organization to go through the transition of becoming a learning or knowledge-based organization the conditions of autonomy, mastery and purpose must be present for employees. These three characteristics are the catalysts of effective learning over time and the responsible for employees taking responsibility for their own learning (El Tarabishy, 2006). Transformational leaders who have the ability to sense when the best time to use transactional learning techniques are capable of nurturing autonomy, mastery and purpose into the roles of subordinates. This also leads to leaders being able to show employees how they can excel in their chosen professions while also contributing to the needs of the organization (El Tarabishy, 2006). When employees are managed for their potential in addition to their contribution, their willingness to openly share and contribute information significantly increases. Resistance to change and fear are minimized and employees perceive their role as contributor and knowledge expert over time, not as an employee who is being automated out of a job for example. The critical factors that lead to a learning organization are put into motion by transformational leaders who seek to define a culture inside their organizations of professional growth for subordinates. The focus on autonomy, mastery and purpose is critically important for organizations to grow entrepreneurs (El Tarabishy, 2006) while at the same time overcoming resistance to change as employees don’t see the need to hoard information but to add rapidly to it to master their field and be an acknowledged expert or guru in their fields. The difference in behaviors is mastery over one’s position relative to the protection of it. Transformational leaders realize that mastery is a foundational element for employees and organizations progress towards entrepreneurship.

As transformational leaders also through their leadership approaches and practices create intrapreneurs, it’s worth comparing how this aspect of innovative change compares to entrepreneurship as well. Both entrepreneur and intrapreneur are primarily motivated by independence. Yet an entrepreneur seeks it through the opportunity to create and attain mastery of a specific field and be compensated for it. The intrapreneur also seeks mastery but relies on the organization to deliver rewards (Molina, Callahan, 2009). Entrepreneurs have a much greater sense of urgency however as they are intent on achieved a 5-year and 10-ear goal for their enterprises, while intrapreneurs have self-imposed objectives that dominate their schedules. The risk however is much greater for an entrepreneur to attain their objectives on schedule and keep their company solvent and growing. What both entrepreneurs and intrapreneurs share in common is that both are seeking autonomy, mastery and purpose in their visions for their organizations. Transformational leadership is the catalyst that makes both of these types of new venture creation possible.


The ability of any leader to create an organization that nurtures and serves as a catalyst for entrepreneurship is directly related to their ability to use transformational and transactional leadership skills at the best possible time. These are leaders who are people-centered first and seek to provide their employees with opportunities for growth and self-actualization (El Tarabishy, 2006) even if it means they eventually leave the organization and start their own venture. There are many more differences between entrepreneurs and intrapreneurs yet this study has briefly discussed how they vary in perspective of rewards and perception of time.


Li Yueh Chen, & F. Barry Barnes. (2006). Leadership Behaviors and Knowledge Sharing in Professional Service Firms Engaged in Strategic Alliances. Journal of Applied Management and Entrepreneurship, 11(2), 51-69.

Karina Skovvang Christensen. (2005). Enabling intrapreneurship: the case of a . European Journal of Innovation Management, 8(3), 305-322.

El Tarabishy, Ayman (2006). An exploratory study investigating the relationship between the CEO’s leadership and the organization’s entrepreneurial orientation. Ed.D. dissertation, The George Washington University, United States — District of Columbia.

Ling, Y., Simsek, Z., Lubatkin, M., & Veiga, J.. (2008). Transformational leadership’s role in promoting corporate entrepreneurship: Examining the CEO and Top Management Team Interface. Academy of Management Journal, 51(3), 557.

Carlos Molina & Jamie L. Callahan. (2009). Fostering organizational performance: The role of learning and intrapreneurship. Journal of European Industrial Training, 33(5), 388-400.

Tichy, Noel M., & Devanna, Mary Anne. (1986, July). The Transformational Leader. Training and Development Journal, 40(7), 27.