The effect of entrepreneur’s passion and transactional leadership style on the performance of employees

Abstract

Passion is at the heart of entrepreneurship because it can foster creativity and the recognition of new information patterns critical to the discovery and exploitation of promising opportunities. Entrepreneurs who are passionate have been thought by both academics and practitioners to be more successful and affect their employees’ performance than those who are not. The purpose of the present study is to investigate the effect of an entrepreneurs’ passion and transactional leadership style on the performance of employees as only few scholars have investigated these relationships separately. Data was collected from 103 entrepreneurs and 206 employees (two per entrepreneur) working in SME’s using questionnaires. Our findings indicate that entrepreneurs’ passion and transactional leadership style have a significant effect on the performance of employees, and entrepreneurs’ passion moderated the relationship between transactional leadership style and performance of the employee. This study has clearly demonstrated that the effect of transactional leadership style (passive management by exceptionlaissez-faire) on the performance of employees is higher when the entrepreneur is passionate about his/her job. Passion (especially harmonious passion) mediated the effect of some factors of transactional leadership on the performance of the employee. Data analysis reveals that one of several ways transactional behaviors boosts the performance of the employee is through the leader’s type of passion.

Keywords: Entrepreneur, passion, transactional leadership, performance of the employees