IMPACT OF ENTREPRENEURIAL LEADERSHIP ON ORGANIZATIONAL INNOVATION: MEDIATING ROLE OF EMPLOYEE CREATIVITY IN INFORMATION TECHNOLOGY SECTOR OF PAKISTAN

Abstract

The purpose of this study is to examine the impact of Entrepreneurial Leadership (ENTL) as predictor of Employee Creativity and Organizational Innovation in Pakistan’s Information Technology (IT) sector, utilizing Upper Echelons Theory (UET) as the guiding theoretical lens. Employee creativity is investigated as mediating variable in the relationship between leadership style and organizational innovation. The study employed cross-sectional, quantitative design, and data was collected through self-administered structured questionnaires using non-probability purposive sampling technique. Data were collected from 218 managers including senior, middle, and junior level managers working in small-sized Information Technology (IT) firms across Islamabad, Rawalpindi, Lahore, Karachi, and other regions of Pakistan. Structural Equation Modeling (SEM) was conducted using Smart PLS to analyze hypothesized relationships. The results of study revealed that entrepreneurial leadership significantly predicts organizational innovation. Moreover, employee creativity acts as a significant mediator, underscoring its critical role in linking leadership behaviors to innovative outcomes in product and process domains. The findings contribute to the literature by integrating Upper Echelon Theory (UET) with micro-foundations of innovation, demonstrating how leaders’ cognition and behaviors influence organizational innovation through employee creativity. For managers, policy makers and practitioners this study highlights the significance of cultivating entrepreneurial leadership practices and developing employee creativity to build an innovation-supportive culture, particularly in resource-constrained small-sized Information Technology (IT) firms of Pakistan. This research bridges gaps in leadership and innovation literature by focusing on small-sized Information Technology (IT) firms in an emerging and developing economy like Pakistan, while also aligning with global calls for innovation to advance United Nations (UNs), Sustainable Development Goal 9, namely Industry, Innovation and Infrastructure. This research offers original contributions on the role of both entrepreneurial leadership and employee creativity to jointly drive innovation outcomes, reinforcing both local organizational growth and global sustainable development agendas. The study concludes by addressing limitations and proposing areas for future research.