Transformational Leadership's Role in Promoting Corporate Entrepreneurship: Examining the CEO-TMT Interface

Abstract

Research about transformational CEOs' impact on firm-level outcomes, particularly corporate entrepreneurship, has been equivocal, partially because the underlying mechanisms remain largely unexplored. Given that the individuals most closely influenced by a firm's CEO are its top management team (TMT) members, we focus on the CEO-TMT interface as a salient intervening mechanism. We posit that transformational CEOs influence TMTs' behavioral integration, risk propensity, decentralization of responsibilities, and long-term compensation and that these TMT characteristics impact corporate entrepreneurship. Data from 152 firms supported most of our hypothesized links, underscoring how the CEO-TMT interface helps explain transformational CEOs' role in promoting corporate entrepreneurship.