Entrepreneurial leadership and innovation in the public sector: The role of causal‐ and effectual‐logic processes

Abstract

Entrepreneurial leadership in the public sector has attracted the interest of both scholars and policymakers, as it is seen as a key determinant of innovation. This study adopts a contingency view of leadership and examines the entrepreneurial leadership–innovation relationship while also considering the moderating effects of the causal‐ and effectual‐logic processes employed. Based on multisource data across 105 municipal departments in Greece, the findings suggest that entrepreneurial leadership exerts a positive effect on exploratory innovation; this effect is further reinforced by formalization. In contrast, entrepreneurial leadership's influence on exploitative innovation depends on collaboration and conditions of working with limited means, in such a way that the impact is positive only at high levels of these effectual‐logic processes; at low levels, it is negative. Practical implications are discussed for public organizations seeking to translate entrepreneurial leadership into innovation.