Unleashing employees’ entrepreneurial potential in Saudi start-up companies: the role of psychological empowerment as a mediator between entrepreneurial leadership and employees’ entrepreneurial behavior

Abstract

The business market through which start-ups operate has become intensively competitive in recent years. Developing employees’ entrepreneurial behavior is thus a priority for thriving in such conditions. This research attempts to explore the antecedent of such behavior by testing a research model that incorporates the linkages between entrepreneurial leadership, psychological empowerment, and employees’ entrepreneurial behavior. The structural equation modeling analysis performed on a sample of 256 employees working in Saudi start-up companies showed that entrepreneurial leadership has no direct effect on employees’ entrepreneurial behavior; instead, the impact turned out to be indirect through enhancing employees’ psychological empowerment. The study holds several implications for researchers and practitioners in the field.

Introduction

Growing in the market and maintaining the organization’s sustainability is no longer guaranteed through traditional approaches. Hence, organizations should be inclined toward building innovative, flexible, visionary, and entrepreneurial competencies to react effectively to the constantly changing competitive environment [1]. This process is incredibly challenging for start-up companies, given the sensitive nature of these businesses that require them to make extra efforts to maintain their longevity. One unconventional approach that has proven its vital and valuable contribution in boosting organizations’ growth is employees’ entrepreneurial behavior (hereafter, EB) [2, 3].

The EB literature has primarily focused on entrepreneurs’ behaviors [e.g., 4,5,6,7]. Nevertheless, in recent years, research has shown that such behavior is not limited to entrepreneurs and can be extended to individual workers within organizations [e.g., 8]. This behavior could be viewed as an “extra-role behavior” [9] associated with employees’ contribution and involvement in the organization’s development and entrepreneurial prosperity. Nevertheless, such contribution is exhibited voluntarily when it is neither a mandatory obligation nor a part of their job requirements [10]. Meaning that to behave in an entrepreneurial way remains the employee’s choice. Given this, identifying the triggers that motivate employees to exhibit such behavior has become vitally important.

Previous research has sought to identify the antecedents of this behavior and how it can be encouraged in organizations. Leadership, among other antecedents, has received significant attention, which could be attributed to the ability of leaders to influence employees’ behaviors and attitudes [11]. More precisely, scholars have found several leadership styles to be significant contributors to employees’ EB, including transformational [e.g., 12,13], empowering [e.g., 14] and authentic [e.g., 9,13] leadership styles. However, even though entrepreneurial leadership (EL)– one of the recent leadership styles - was noted by Renko et al. [15] as a potential driver of EB, efforts to study how such leadership style may promote employees’ EB within organizations remain scarce.

EL reflects a style of leadership that emphasizes leading and influencing followers to look for and utilize entrepreneurial avenues to attain business objectives [15]. This leadership style is deemed to be one of the most effective for various kinds of organizations. However, It is primarily familiar in startup businesses [16] due to the entrepreneurial nature of these businesses. EL has been identified as a driving force for many positive work outcomes, including creativity [17] and excellence [18], thereby emphasizing the influential role of this leadership style in supporting and stimulating positive work behaviors within the organizational context.

Indeed, few contributions were found concerning the impact of EL on different types of work behaviors that are indirectly linked to the EB, like innovative work behavior [e.g., 19–22] and proactive work behavior [e.g., 11, 23]. Although these contributions provide valuable insights into how EL fosters several aspects linked to EB, it does not capture the whole meaning of this behavior, given that an entrepreneurial employee is mainly recognized by demonstrating innovative, proactive, and risk-taking behaviors [8, 13]. Accordingly, one might argue that the impact of EL on the three dimensions of EB simultaneously under one construct remained unexplored, which indicates a need for further studies to understand better the direct impact of EL on EB. Exploring the association between these constructs is crucial for organizations aiming to motivate their employees to be engaged in EB.

Besides the previously mentioned gap, the mechanism through which EL may influence employees’ EB might not be fully elucidated in the current literature. Indeed, previous research shows that leadership’s impact on certain behaviors is not only limited to the direct one, as they found that psychological empowerment (PE) is one factor that can be impacted by leadership and, in turn, plays a role in shaping employees’ behaviors [24]. As Maynard et al. [25] noted, the PE literature has been concerned with PE as a bridge through which they understand the nexus between leadership styles and several work-related outcomes. However, in the context of the EL-EB relationship, even though prior works have documented that EL strengthens an employee’s PE [17], and PE encourages and motivate employees to behave in an entrepreneurial way [13], no study, to the best of our knowledge, has investigated these three constructs in one research model. That is, how PE can contribute as a mediator in the relationship between EL and EB seems to be overlooked. This, in fact, demonstrates a gap in our understanding of the underlying psychological mechanism that facilitates this relationship, which warrants further research to better comprehend the psychological process through which employees’ EB can be stimulated.

Based on that, this research aims to fill the gaps mentioned above and shed light on the impact of EL on EB and its mechanisms by incorporating PE as a mediator.

The remainder of this article is outlined as follows: a literature review will be provided in Sect. 2, followed by the research hypotheses in Sect. 3. In Sect. 4, an explanation of the research methodology will be demonstrated. Then, in Sects. 5 and 6, the research findings will be presented and discussed, whereas in Sect. 7, the research implications will be highlighted. Finally, in Sect. 8, a conclusion will be drawn, the limitations will be discussed, and possible research avenues will be identified.

Literature review

Employees’ entrepreneurial behavior (EB)

Much scholarly attention has been placed on employees’ EB inside organizations over the past years. Accordingly, several attempts have been made to clarify and conceptualize this concept and its dimensions. For the purpose of this research, employees’ EB is conceptualized as a multidimensional construct manifested in three main types of behaviors, namely, innovativeness, proactiveness, and risk-taking [8, 12, 13, 26]. That is, behaving entrepreneurially implies having the capacity to search for innovative ways and solutions and proactively take the lead to identify new business opportunities while taking some calculated risks [8]. Indeed, the rationale behind conceptualizing the employees’ EB as a construct reflected in these three dimensions (i.e., innovativeness, proactiveness, and risk-taking) is that it allows us to comprehensively capture the whole meaning of entrepreneurial activities rooted in the organizational-level construct of entrepreneurial orientation (EO). Thereby extending this line of research and examining the individual side of this phenomenon.

Employees’ EB is a bottom-up approach [13] that can be observed at all organizational levels. It reflects “the extent to which individual workers proactively engage in the creation, introduction, and application of opportunities at work, marked by taking business-related risks” [8, p. 2]. Demonstrating such behavior can be regarded as a significant force that assists organizations in fostering the ability to innovate [27] to develop novel, enhanced, and innovative offerings [28]. As Simsek et al. [29] stated, this behavior is more about making novel things instead of improving the current ones. Indicating that encouraging such behavior inside organizations can result in numerous benefits for business renewal.

Notably, due to its potential to contribute to business prosperity, an increasing number of organizations have started identifying and developing the means by which they can stay entrepreneurial and foster employees’ EB [30]. Although EB is promoted in big, established organizations [31], it is also vital for start-up businesses. In consideration of this, Moser et al. [32] highlighted that the presence of such behavior in new ventures is particularly important due to its pivotal role in overcoming obstacles that may prevent business success. This means that having such employees is expected to help these companies navigate business challenges effectively and flourish in their entrepreneurial state.

Despite the significant benefits of EB, triggering it remains a difficult mission [30] as it is mainly viewed as an extra-role behavior that is performed voluntarily. This, therefore, requires a detailed investigation from the side of these organizations to identify the means by which this behavior can be stimulated among employees. In this regard, an extensive body of literature explored the role of several organizational, individual, and contextual antecedents [33], such as personality traits [e.g., 32], job design [e.g., 8], work context [e.g., 10], and different styles of leadership [e.g., 9, 12,13,14]. Although these studies enriched our understanding of the different factors that may foster EB, more research is still required to examine other variables that were not identified previously and may positively influence this behavior; such variables may include EL due to its ability to drive innovation [35] and creativity [36].

Entrepreneurial leadership (EL)

Starting from the early 1990s, research on EL has evolved tremendously [37]. Excessive scientific efforts have been demonstrated in the literature to conceptualize EL from different perspectives. However, there is still a lack of agreement on the term’s conceptualization [38], which might be attributed to the ongoing debate on the origins of EL. Even though the origin of EL is critical to the literature, the focus of this research is on its characterization and impact as a leadership style on followers. Accordingly, EL in this research is conceptualized by adopting the definition provided by Renko et al. [15], who stated that “Entrepreneurial leadership entails influencing and directing the performance of group members toward the achievement of organizational goals that involve recognizing and exploiting entrepreneurial opportunities” [p.2].

EL emphasizes entrepreneurial outcomes [39] and has been proven to influence various positive behaviors and outcomes. Research has shown that leaders who adopt such a leadership style can direct their follower’s behaviors toward innovation [20] and creativity [17, 40]. On top of that, if successfully implemented, EL can enhance the organizations’ competitiveness [41]; accordingly, it is a needed leadership style to tackle the challenges associated with today’s business conditions [42].

Notwithstanding the contributions of EL, the role an entrepreneurial leader plays is impactful yet demanding. In this regard, Gupta et al. [43] highlighted two main related challenges that entrepreneurial leaders usually confront: “scenario enactment” and “cast enactment” [p.247]. According to them, for entrepreneurial leaders to add value, they have to provide a vision for the company’s prospects (scenario enactment) and then assemble a team of skilled and competent individuals to attain this envisioned future (cast enactment). In the same vein, Renko [39] highlighted two pillars of EL, which entail entrepreneurial leaders acting as both accelerators and doers. While the former reflects the entrepreneurial leaders’ role of channeling their followers’ energy to stimulate innovative behaviors to challenge the organizations’ conventional approaches in their business, the latter reflects the entrepreneurial opportunity-seeking behaviors that entrepreneurial leaders themselves engage in to attain entrepreneurial endeavors and to gain their followers’ commitment to imitate their EB.

EL is not limited to specific organizations’ type, size, or age [15]. Nevertheless, its benefits in the start-up business context have been emphasized in the literature [e.g., 42]. The nature of start-up businesses’ environment is dynamic and represented by uncertainty [45], which imposes more pressure on these companies to reinforce innovative behaviors among their employees. In this regard, Huang et al. [35] have shown that this leadership style serves as a substantial driver of Chinese venture innovation and performance. Similarly, Chen’s study [36] revealed that EL is an impetus for teams’ creative potential in Taiwan’s ventures. Besides their role in enhancing creativity and innovation capabilities, entrepreneurial leaders can also stimulate start-up employees’ knowledge-sharing and affective commitment [16]. Consequently, the value of such a leadership style for start-up companies revolves around the influence an entrepreneurial leader can exert to stimulate their followers’ positive behaviors and attitudes, which, in turn, will lead to better outcomes for the company as a whole. In addition, since entrepreneurial leaders demonstrate a greater tendency toward consistent learning and flexibility in response to rapidly changing environments [41], one might argue that they may successfully guide start-ups to survive and thrive in the market, thereby enhancing their entrepreneurial status.

Phycological empowerment (PE)

Research investigating empowerment has identified two perspectives in which it can be understood: structural and psychological [46, 47]. While the former is concerned with the delegation of responsibilities across organizational levels, the latter can be understood as the state of mind about one’s empowerment [25]. In this paper, we focus our attention on the psychological type of empowerment, which focuses on the inner psychological status of the empowered person [48] and reflects the cognitive state that enhances a person’s self-belief in having control and a sense of authority while performing work-related tasks [24, 25].

In recent decades, a significant amount of research works have taken place to develop the theoretical foundation of PE further while examining its causes and outcomes [49]. In an attempt to provide a comprehensive conceptualization of it in the organizational context, Spreitzer [50], on the basis of Thomas & Velthouse’s work [51], defined PE as “a motivational construct manifested in four cognitions: meaning, competence, self-determination, and impact.” [p.1444]. She found it to be a multidimensional construct comprising the four facets mentioned in the definition above; these facets form the construct’s base instead of acting as antecedents or consequences of it [52].

The first dimension, i.e., the (meaning) dimension, illustrates the extent to which an individual perceives the work as valuable with respect to personal beliefs [51, 53]. In contrast, the (competence) dimension is linked to self-efficacy and reflects individuals’ inner beliefs regarding their capability of performing work-related tasks competently [51, 54]. Moreover, the (self-determination) dimension is defined as an employee’s sense of independence over the performance of work tasks [13], whereas (Impact) is illustrated as the influence an individual can exert on several aspects of work outcomes [53, 54].

PE has been widely regarded as a motivational factor [24, 50, 51, 55] that enhances employees’ enthusiasm and contributes to many positive outcomes. In this context, Kamil et al. [56] showed that psychologically empowered employees are more likely to demonstrate innovative work behavior, while Muduli and Pandya [55] found that fostering PE in employees led to increased resilience among them. Similarly, Farrukh et al. [13] found that psychologically empowered employees tend to get involved in extra-role behaviors, like the EB. Likewise, LIorente-Alonso et al. [24] found in their meta-analysis that PE has significantly affected employees’ creative capabilities, performance, and citizenship behaviors. This elucidates the vital role PE plays in motivating and encouraging several positive consequences that have an essential role in the overall success of organizations, which necessitates dedicating sincere efforts to foster and increase the sense of PE among employees in organizations.

Hypotheses development and research model

Hypotheses development

Entrepreneurial leadership and entrepreneurial behavior

The literature on EB suggests that the willingness of an employee to exhibit such a behavior can be driven and influenced by several leadership styles [e.g., 9,12–14]. In light of the start-up businesses context, Yamg et al. [57] noted that start-up companies’ leaders are widely acknowledged to impact how employees act. This may point to the potential substantial role leaders in such companies can play in inspiring, fostering, and increasing the likelihood of employees exhibiting EBs and practices.

In this research, the Social Learning Theory (SLT) serves as a theoretical lens that can assist in explaining the relationship between EL and EB. This theory asserts that experience and observation of others’ behaviors are the means by which an individual can learn and acquire a new behavior [58]. The theory presumes that in organizational contexts, role models are a crucial tool for achieving behavioral transformation and developing new habits [59]. That is, Individuals learn most of their exhibited behaviors either consciously or unconsciously through the influence of role modeling [58]. Role models in our research context could be entrepreneurial leaders, given that role modeling is a significant part of this leadership style [15, 39]. Consequently, the utilization of the idea of social learning in the leader-subordinate context allows us to argue that interacting with and observing a leader with an EL style may lead the subordinates, i.e., employees, to learn and display EB. That is, when entrepreneurial leaders themselves behave in an entrepreneurial way, they will inspire their followers to acquire and simulate the same behavior [15], as they will observe their leaders actively and successfully searching for new entrepreneurial opportunities, finding new solutions and ideas, and bearing the risks of failure.

Indeed, several studies provided partial support for the above argument. Particularly, the studies of Newman et al. [22], Malibari and Bajaba [21], Li et al. [20], and Ercantan et al. [60] revealed that EL possesses the ability to influence employees’ innovative work behavior in numerous contexts. Moreover, Bilal et al. [11] and Awad et al. [23] pointed out an entrepreneurial leader’s essential role in shaping employees’ proactive work behavior. Although these studies are not directly linked to EB, they may serve as a base to support the possibility of a potential relation between EL and EB, given that innovative and proactive work behaviors reflect two dimensions of employees’ EB construct [8, 12, 13].

Therefore, on the basis of social learning theory, we propose the following hypothesis:

H1. Entrepreneurial leadership has a positive impact on employees’ entrepreneurial behavior.

Entrepreneurial leadership and psychological empowerment

PE has been recognized as an essential aspect that is embedded in leadership studies. In a meta-analysis of the nexus between leadership and PE, Schermuly et al. [61] revealed that various styles of leadership (i.e., transformational, empowering, and servant) can be regarded as positive contributors to PE.

EL, in essence, is characterized by the inspiration those leaders provide to motivate their followers to look for entrepreneurial avenues [15, 39]. Therefore, when an entrepreneurial leader urges their followers to identify entrepreneurial work ideas and growth opportunities that can be utilized, those followers will realize that their contribution to the organization goes beyond the performance of day-to-day tasks and extends to cover other major success areas at the organizational level. This, consequently, may contribute to experiencing higher levels of PE in terms of meaning and impact. The key here is that the inclusion of employees in such value-adding activities may strengthen their belief in the meaning of their role [62] and the influence they can exert in their workplace.

Besides, entrepreneurial leaders, instead of motivating their teams with incentives, provide them with an inspiring opportunity-focused vision [15]. Articulating a vision clarifies the path and increases employees’ sense of independence to determine how they work rather than waiting for others’ instructions [63]. It should also signal to them that they are in charge not only of their company’s entrepreneurial prospects but also of their own [15], which, as a consequence, fosters their feelings of self-determination.

Moreover, even though employees in start-up companies may experience a lower sense of competence due to the uncertainty that characterizes their offerings in the market [64], entrepreneurial leaders have a substantial role in mitigating such uncertainty, thereby boosting their followers’ confidence to work as if nothing hinders reaching the envisioned goals [43]. Because of this, entrepreneurial leaders are thus expected to boost employees’ beliefs in their abilities to accomplish their tasks competently.

Extant research has supported the above arguments and highlighted a positive connection between EL and PE [e.g., 17,58]. These studies provided empirical evidence regarding the crucial role played by entrepreneurial leaders in facilitating employees’ PE. Such a role will contribute to the organization’s value and underline the employees’ worthiness and self-assurance that they act as agents who contribute to the organization’s development [15, 17]. Hence, it is possible to hypothesize:

H2. Entrepreneurial leadership has a positive impact on employee’s psychological empowerment.

Phycological empowerment and entrepreneurial behavior

The attitudes and job-related behaviors of individual workers can be developed with empowerment strategies [65], and employees tend to provide positive contributions when they perceive that they are empowered at their workplace [47]. Accordingly, it is possible to state that PE may act as a motivational factor that increases the chances of behaving entrepreneurially. That is, employees have a higher probability of acting innovatively and proactively while taking calculated risks when they have a strong sense of competence, independence, influence, and meaningfulness. As Kim and Beehr [14] argued that getting involved in such behavior may require employees to feel certain about their capabilities or the value of what they do. Likewise, Farrukh et al. [13] noted that previous research works have elucidated that companies that foster their employee’s sense of PE enhance their positive attitude toward their job duties, leading them to exhibit extra-role behaviors. These arguments align with Mahmoud et al. [66] and Farrukh et al. [13] studies, which found that PE catalyzes employees’ EB. Hence, when employees are psychologically empowered, chances are better that they will be motivated to exhibit EB.

In addition to the direct impact of PE in fostering employees’ EB, Farrukh et al. [13] noted that an extensive body of literature suggests that empowerment is a variable through which one can understand the indirect association between leadership and employees’ work deliverables. In this regard, researchers have investigated the mediator role of PE in the nexus between EL and innovative work behavior, which reflects a dimension of employees’ EB. For example, Miao et al. [62] concluded that two dimensions of PE, namely impact and meaning, proved to mediate the link through which EL impacts the innovative behavior of public sector employees. Although the role of PE as a mediator between EL and EB is not explored yet, one might argue that this relationship may exist, taking into account that previous contributions have found that EL positively impacts PE [e.g., 17, 58] and PE leads employees to get involved in EB [e.g., 13, 62].

Thus, drawing on the discussion above, we hypothesize:

H3. Psychological empowerment has a positive impact on employee’s entrepreneurial behavior.

H4. Psychological empowerment mediates the positive relationship between entrepreneurial leadership and entrepreneurial behavior.

Research model

The following research model represented in Fig. 1 can be proposed based on our discussion of the research hypotheses.

Fig. 1

The research model

Research methodology

Research instrument development

A quantitative research methodology was employed in this research, in which a self-administrated electronic questionnaire (i.e., SurveyMonkey forums) was used as the data collection method. The survey instrument was administrated in Arabic language and constructed based on items previously used in the literature. These items were all measured on a 5-point Likert scale. The process began with a forward translation, in which a bilingual Saudi translator translated the items into Arabic. The translator was provided with the necessary information about the research constructs being measured to maintain the meaning of the items. Then, the researchers reviewed the translated version to ensure its compatibility with the original version. Finally, before proceeding with data collection, two bilingual academics in the business field assessed the face validity of the research instrument, and only minor adjustments to the Arabic version were suggested and addressed.

The instrument comprises three parts: the first clearly and concisely explains the research aim and includes the consent form that emphasizes the participation’s voluntary nature and the confidentiality and anonymity of the provided responses. The second part contains the research items, and the last part collects demographic information (i.e., age, experience, the department they work in, and their qualifications).

Sample and data collection

The research population comprises employees working in start-up companies operating in Saudi Arabia; we chose to focus on this research context given that entrepreneurial leaders are primarily common in these companies [16]. In this research, start-up companies are defined as recently established companies with an age that does not exceed ten years. Such companies come in different sizes and are within different developmental stages. They are characterized by limited operational history and focus fundamentally on developing innovative products and services.

Due to the time constraint and difficulty of accessing the entire population of Saudi start-up companies, the non-probability convenience sampling technique was utilized to draw the research sample. To collect the data, an invitation describing the aim of the research was randomly sent through LinkedIn to 743 employees working in 47 Saudi start-ups, of whom 316 agreed to participate. After two weeks, a reminder was sent to those who initially agreed to take part in this research, asking them to submit their responses and emphasizing the importance of their participation for the fulfillment of the research objectives; however, upon finalizing the data collection stage, only 256 surveys were submitted, with a response rate of 34.4%.

The demographics of the study’s sample are demonstrated in Table 1. As can be noted, the majority of the participating employees were male (64.8%), held bachelor’s degrees (82.4%), and their ages ranged from 25 to 34 years old (79.7%). Regarding the department, the respondents work in various departments; however, it can be noted that most of them work in operations (22.7%) and marketing (13.7%). Finally, as the table depicts, most participants have 1 to 4 years of work experience (59.8%).

Measures

Entrepreneurial leadership

To assess the leader’s EL style, we utilized the “ENTRELEAD” scale provided by Renko et al. [15]. The scale comprises eight items designed to measure the level of employees’ agreement or disagreement regarding how much the items reflect their leader’s leadership style. A sample item includes “Challenges and pushes me to act in a more innovative way.” Empirical research that used this scale in the Saudi context provided suffecint validaty and reliability values [e.g., 67].

Psychological empowerment

The employees’ PE was measured using Spreitzer’s PE scale [50]. The scale is divided into four main sub-scales, each with three items to evaluate different facets of the PE construct. Example items are (meaning) “The work I do is meaningful to me,” (competence) “I am confident about my ability to do my job,” (self-determination) “I can decide on my own how to go about doing my work,” and (impact) “I have significant influence over what happens in my department.” The employees were requested to evaluate whether they agreed or disagreed that the items reflected their beliefs about their PE. The reliability and validity of this scale was confirmed in past studies conducted in the Saudi context [e.g., 68, 69].

Entrepreneurial behavior

A 15-item scale of the EB was adopted from Stull’s study [70]. More specifically, five items were utilized to assess each dimension of the construct. A Sample item includes, (innovativeness) “I approach business tasks in innovative ways,” (proactiveness) “I act in anticipation of future problems, needs, or changes,” and (risk-taking) “I will take calculated risks despite the possibility of failure.” The employees were asked to rate their agreement or disagreement levels to whether the items describe their usual way of doing work.

Table 1 Sample demographics (N = 256)

Statistical analysis

A two-step structural equation modeling (SEM) approach was employed in this research to first evaluate the measurement model and then test the hypothesized structural relationships. Choosing SEM for the current study is justified by the fact that SEM is appropriate when testing complex relationships between latent and observed variables while counting for measurement error [71]. To apply this approach, in the first step, we carried out a Confirmatory Factor Analysis (CFA) to test the measurement model’s factor structure and its fit with the data. Such factor analysis is suitable when the measurement model, i.e., the relations between the factors and their indicators, are hypothesized based on previous theories [72, 73].

Once the first step was finalized, we moved to the second step, which involved testing the structural model in which we tested the research hypotheses. The CFA and SEM analyses were all estimated using the WLSMV estimator in MPLUS software (version 8.9).

Results

Measurement model assessment

To verify the constructs’ psychometric properties, we ran the CFA analysis for all the constructs simultaneously while treating the EB and PE constructs as second-order factors as specified in earlier studies [e.g., 13,48] The model fit of the factorial structure was evaluated based on the widely used data-model fit indices criteria of Hu and Bentler [74]. Accordingly, as can be noted in Table 2, our three-factor model resulted in an almost excellent fit (CFI = 0.955, SRMR = 0.069, RMSEA = 0.055).

Concerning the items’ factor loadings, three items of the EB scale (i.e., two items from the risk-taking dimension and one item from the proactiveness dimension) were dropped as they showed low factor loadings (< 0.5); nevertheless, the remaining factor loadings as displayed in Table 3 are statistically significant and substantial in magnitude ($\:\varvec{\lambda\:}\:$> 0.5) [75], reflecting that the factors are well-defined by their indicators. A probable reason for the low factor loadings on certain risk-taking and proactiveness items could be that more than 50% of the sample have limited work experience, i.e., less than five years, which might make them cautious about some situations mentioned in the eliminated items, potentially affecting their response patterns.

The internal consistency of the items was examined through Cronbach’s alpha test. As Table 3 depicts, based on the thresholds presented by Ursachi et al. [76], most of the values show a very good level of reliability (α > 0.80), while the remaining are within the acceptable range (i.e., α = 0.6–0.7). Furthermore, to examine the convergent validity, we relied on the Average Variance Extracted (AVE) and Composite Reliability (CR) metrics of Fornell and Larcker [76]. As illustrated in Table 4, most of the AVE and CR values have met the accepted threshold of 0.5 and 0.7 for the AVE and CR, respectively [75]. Nevertheless, although the AVE value of the PE was slightly below 0.5, this will not affect the convergent validity, given that all the values of the CR were within the acceptable level (> 0.7). As Fornell and Larcker [77] stated, “On the basis of ρc alone, the researcher may conclude that the convergent validity of the construct is adequate, even though more than 50% of the variance is due to error” [p. 46]. Based on that, we can conclude that an adequate level of convergent reliability was achieved.

To evaluate the discernment validity, we relied on the criterion of Fornell and Larcker [77]. As Table 4 shows, all the square root values of the AVE exceeded the correlations between the latent factors except for the correlation between PE and EB; as the square root of the AVE equaled the correlation between the two constructs. Therefore, to further examine the discriminate validity between these constructs, a chi-square difference test was performed according to the procedure mentioned in Anderson and Gerbing’s paper [78]. This process involves the estimation of two CFA models in which the correlation between the constructs will be freely estimated in the first model while it will be constrained to 1 in the second model [79]. A significant difference in the chi-square values between the two models indicates the presence of discriminate validity.

Since the WLSMV estimator is used in this research, this test was performed using the DIFFTEST option in Mplus software [80]. Accordingly, our results showed that the difference between the freely estimated and constrained models is significant ($\:\:\varDelta\:\:{x}^{2}\:$(df) = 37.707 (1); p = 0.000), indicating that the correlation between PE and EB is different from unity and that the unconstrained model has a significantly better fit than the constrained model. Hence, based on the results of Fornell and Larcker [77] criterion, and based on the chi-square difference test, it can be stated that a sufficient degree of discriminate validity is achieved in the study’s model.

Finally, as the data for all variables were gathered from the same respondent through one data collection method, the Common Method Bias (CMB) may present an issue [81] that requires special attention. Harman’s one-factor test is among the vastly applied statistical procedures to check for the existence of CMB [82]. This test can be applied by performing a factor analysis either through exploratory factor analysis (EFA), in which we check whether the first factor explains more than 50% of the variance, or CFA, where all items will be loaded on one general factor and assess whether the data fits the model well compared to the hypothesized CFA model [81]. In this research, we applied both the EFA and the CFA methods. First, the exploratory factor analysis performed in SPSS yielded more than one factor, i.e., eight factors with an eigenvalue greater than one. The first factor explained 23.1% of the variance. In addition, we performed a CFA using MPLUS software and loaded all the items on one factor and, as a result, obtained the following model fit indices (RMSEA = 0.165, CFI = 0.578, TLI = 0.549, SRMR = 0.173), which shows that the data does not fit the one-factor model. Comparing these indices with our three-factors CFA model and drawing on the results provided by the EFA analysis, we can conclude that the issue of CMB is not present in this research.

Structural model assessment

Descriptive statistics

The descriptive statistics of the research constructs (i.e., mean, standard deviation, and correlations among the latent constructs) are shown in Table 5.

Hypotheses testing

A covariance-based (SEM) was employed to test the proposed hypotheses. As depicted in Table 6; Fig. 2, our SEM analysis shows that EL has a negative but insignificant influence on employees’ EB (β = -0.106); as such, H1 is not supported. Our results also demonstrate that the paths between EL and PE and between PE and EB were all positively significant (β = 0.360, p < 0.001; β = 0.729, p < 0.001), thereby supporting H2 and H3. Finally, our mediation analysis supports H4 and reveals that PE has a positive full mediator role between EL and EB (β = 0.263, p < 0.0010. Regarding the explained variance in the dependent variables, as per the findings reported in Table 7, the EL accounts for 13% of the variance in the PE, whereas other variables in the model account for 49% of the EB construct’s variance.

Table 2 CFA model fit indices

Table 3 Standardized factor loadings

Table 4 Reliability and validity tests for the Second-order factors

Table 5 Descriptive statistics (Mean and standard deviation and correlations between latent factors)

Table 6 Standardized hypotheses testing results

Table 7 R-square

Fig. 2

Standardized estimates for the structural paths. Note. (significance level *** P < 0.001) (NS) = Not Significant

Discussion

Due to the adaptation required to survive the dynamic nature of their environment, start-ups are expected to demonstrate entrepreneurial outcomes by empowering their employees and fostering their EB. Hence, this research aimed to examine if EL is an antecedent that promotes employees’ EB in startup businesses. This relationship was investigated directly and indirectly by incorporating psychological empowerment as a mediator.

The study’s results revealed some unexpected findings regarding H1, which determine the relationship between EL and EB. Surprisingly, there was no statistical support for this hypothesis. This finding contradicts the research conducted by Newman et al. [22], Malibari and Bajaba [21], Li et al. [20], Ercantan et al. [60], Bilal et al. [11] and Awad et al. [23], which found that EL fosters extra-role behaviors linked to the EB, such as innovative and proactive work behaviors. A possible explanation for this insignificant effect could be that EB is usually viewed as an extra-role behavior [9] that is not part of the job requirements; as such, for this behavior to occur, employees may need to feel empowered to some extent; otherwise, the effects that entrepreneurial leaders can exert may become limited.

On the contrary, our study shows statistical support for H2 regarding the impact of EL on PE. This result supports previous contributions that revealed that EL positively influences PE [e.g., 17]. This indeed points out the entrepreneurial leaders’ instrumental role in enhancing their employees’ sense of empowerment and strengthening their inner beliefs about their impact, meaning, competence, and self-determination.

Furthermore, our research also revealed support for H3, which proves the role of PE as a motivational factor that instigates employees’ positive deliverables, which is well-established and supported in the literature [24, 25, 50, 55, 66]. Mainly, It aligns with Farrukh et al. [13] and Mahmoud et al. [66] studies in which they found that PE positively influences EB. This, therefore, indicates that to foster employees’ willingness to display EBs, employees should be psychologically supported and empowered so that they can take the initiative to pursue entrepreneurial outcomes.

Ultimately, the indirect effect of EL on EB was tested using PE as a mediator. The current research findings demonstrated that PE fully mediates the relation between EL and EB, which supports H4. This result complements the study of Miao et al. [62], which showed that PE (i.e., impact and meaning dimensions) were significant mediators between EL and innovative work behavior. Hence, this implies that for entrepreneurial leaders to influence their employees’ EB, they must empower and support them psychologically. This, in turn, will lead them to display EB.

Implications

Theoretical implications

This research offers two implications for EB research. Specifically, while previous research opted to investigate the linkage between EL and PE [e.g., 17, 58] and between PE and EB [e.g., 13, 62] separately, our study is one of the first studies that took a step further and explored these relationships simultaneously in one research model. This advances the body of knowledge and provides novel evidence regarding the mechanisms by which EL influences EB through PE as a mediator. Furthermore, it emphasizes the notion that PE can act as a motivational factor that leads to positive outcomes at work.

Besides, given that most of the previous work on the association between EL and PE and between PE and EB were conducted in different contexts, i.e., the manufacturing sector in Pakistan, the public sector in Shanghai, the educational sector in Pakistan, and Micro firms in Nigeria [e.g., 13, 17, 58, 62], our study extended these efforts and provided evidence from the Saudi startups companies context. It thereby contributes further insights and enriches our understanding regarding the conditions on which these relationships may hold.

Practical implications

This research holds several valuable lessons for Saudi start-up companies looking to foster their employees’ EB. Our study mainly found that PE acts as a full mediator in the nexus between EL and EB. That is, PE was found to be a psychological factor that can be developed by EL and, in turn, catalyzes employees to show an EB. The practical implications of this finding extend to both decision-makers in start-up companies and entrepreneurial leaders.

First, based on our findings, start-up companies are advised to prioritize developing and attracting leaders with an entrepreneurial leadership style to leverage their full potential in enhancing their subordinates’ PE and, consequently, their EB. Mainly, Saudi start-up businesses should focus on recruiting leaders who demonstrate such a leadership style and placing them in different leadership roles that are not limited to the top management level but extend to cover middle and operational levels of management. Moreover, they are encouraged to provide training sessions for employees in leadership positions to help them learn and acquire the skills and qualities of EL.

Second, our finding further highlights that for entrepreneurial leaders to motivate their employees to behave in an entrepreneurial manner, they should dedicate their efforts to invest in and influence their employees to pursue entrepreneurial activities that will enhance their inner beliefs and self-perceptions regarding their competence, self-determination, meaning, and influence at work. Such an investment entails communicating a shared vision, providing job autonomy, and engaging those employees in entrepreneurial opportunities to foster their roles’ impact and meaning.

Limitations, recommendations, and future research

In this research, we attempt to examine the direct and indirect impact of EL on the employees’ EB in start-up companies operating in Saudi Arabia. By performing an SEM analysis on a sample of 256 employees, the findings have shown the direct effect between EL and EB to be negative and insignificant. Nevertheless, it revealed a direct relation between EL and PE on the one hand and between PE and EB on the other. Furthermore, it was found that EL can enhance employees’ EB indirectly through PE as a mediator.

Although this study adds novel contributions, it is subject to some limitations that could open the space for further research. First, this study employed self-report measures for the EB construct; that is, the employees were asked to rate their EB. This may increase the chances of bias due to social desirability. Therefore, future research is advised to measure this construct by using other rating methods, such as leaders’ ratings. Second, this research adopted a cross-sectional design in which the data was gathered at one time period; such a research design might limit our understanding of changes that may occur in the future regarding the relationship between the constructs. Therefore, future studies are thus suggested to employ a longitudinal design in which the data will be collected in two periods to explore the changes regarding the relationships between the studied constructs. Third, our study considered only the mediator role of PE. However, given that EL was found to affect other psychological factors, including psychological safety [17, 19] and that EB was found to be influenced by the same psychological factor [83], future research is suggested to examine if such a construct may explain the mechanism through which EL can affect EB. Fourth, as this research focused on the context of start-up companies, future research in Saudi Arabia are advised to draw samples from other sectors, such as the public sector, to extend the generalizability of current findings. Fifth, since our research has analyzed employees’ EB from the leader-follower influence perspective, future research could explore this behavior by employing different theoretical perspectives, such as motivation theories. Finally, although our research found a nonsignificant relationship between EL and EB, our study highlighted a neglected research area that is worth further exploration; by this, we urge researchers interested in this area to explore the potential association between EL and EB more in-depth.