Steering the family firm: a cross-cultural study of transformational and authoritarian leadership styles and entrepreneurial orientation
Abstract
This study aims to examine how transformational leadership (TL) and authoritarian leadership (AL) relate to family firms' entrepreneurial orientation (EO), specifically innovativeness, proactiveness and risk-taking and whether these relationships vary across cultural contexts. The study uses survey data from 2,439 family-business leaders in 70 countries. The model is estimated using PLS-SEM, followed by multi-group comparisons across five cultural clusters. TL is positively associated with innovativeness and proactiveness in all profiles and, unexpectedly, with risk-taking – especially in high-uncertainty-avoidant or short-term-oriented settings (e.g. France/Japan; India/Saudi Arabia). AL is positively related to proactiveness and risk-taking in most profiles and enhances innovativeness in long-term, hierarchical East/Southeast Asian contexts (e.g. China/Singapore). We expand on upper echelons theory by opening the black box in family firms. We move beyond identifying outcomes to showing the internal mechanisms through which leadership styles are shaped and filtered by family dynamics. In doing so, we offer a more context-sensitive theoretical interpretation of how leaders' characteristics translate into strategic behaviors in family firms. The findings suggest that family-firm boards and decision-makers should align leadership approaches with cultural conditions. TL can support innovativeness and proactiveness across contexts, whereas AL may facilitate coordinated action and risk-taking in settings where hierarchy and clear authority are culturally accepted. Given that family businesses are the most prominent organization worldwide, understanding how they remain competitive is crucial to their regional economies. The study positions leadership style as an antecedent of EO in family firms and identifies culture-specific boundary conditions for these relationships. In doing so, it extends upper echelons theory beyond demographic proxies by emphasizing leadership behavior and cultural context.