Entrepreneurial Leadership and Thriving Innovation Activity

Innovation has become the key to firm success, and entrepreneurial leadership displayed by the Top Management Team fundamentally drives innovation in firms. This paper discusses findings from an empirical study of factors influencing success of firms operating in developing economies in an industry where science drives pace of change. We find that success of firms in such industries depends on Thriving Innovation Activity that in turn is primarily driven by Effective Entrepreneurial Leadership of the Top Management Team. The paper presents the dimensions of entrepreneurial leadership and its linkage to innovation and firm success in the form of testable propositions. Finally, a preliminary theory of firm success in industries where science drives pace of change is also inducted from this empirical study and presented. Introduction Technology and innovation, in industries where science drives pace of change, have played a crucial role in the economic development of a number of countries like Japan and South Korea that are classified as “developed” today thereby providing empirical proof for this Schumpeterian theory of economic development [39]. This has led to considerable attention being paid to the role of science as a pacemaker of economic change and the crucial role of innovation in the process. While a number of elements drive economic growth in general [35], when science drives pace of economic change, the growth of a region is more immediately affected by its propensity to invent and innovate than the propensity to develop pure science [23]. The significant feature of an invention is that it discloses an operational method of creating something new. When an invention is introduced commercially as a new or improved product or process, it becomes an innovation. The economic success achieved by Japan and South Korea (called Newly Industrialised Countries or NICs hereafter) was indeed based on borrowing path-breaking scientific concepts from developed countries and inventing and innovating around them. The economic growth of these NICs was driven by the success of their firms in global markets in sectors/industries like electronics, automobiles and semiconductors. These sectors were the ones where they could be relatively competitive and their resources too effectively utilised [14]. Science drives the pace of change in these sectors. Such sectors/industries are characterised by rapid and discontinuous changes in demand, technology and/or regulation. Different researchers have analysed the reasons for such success from the limited perspective of their academic affiliations. However, no effort has been made to synthesise such work and induct a testable and empirically valid theory of firm success in industries where science drives pace of change, which is applicable to developing economies. Our research objective is to develop such a theory. Research Methodology We organised our research around three questions. First, why are some firms based in developing economies in industries where science drives pace of change more successful than others? Second, what are the factors influencing success of these firms? Third, how do those factors affect firm success?