Psychological climate in the organization: A determinant of entrepreneurial behavior

Abstract

Entrepreneurial behavior is reflected through independent individuals/entrepreneurs who are ready to start new enterprises and therefore take risks in newly created circumstances. Increasing, dynamic markets, and competition create powerful pressure on organizations by enforcing them to continually grow and develop as a basic condition to survive. Innovation is the biggest potential for growth and thus becomes a continual business need in the cited circumstances so participants can have the necessary flexibility, competitiveness and adequate answers in the face of change. Circumstances considered as favorable to generate innovations within the organization are dominantly entrepreneurial because of their features, necessary creativity of active people and readiness to take risk and they are strong enough to generate ‘something new’, as the most authors in this field define internal entrepreneurship. While analyzing motivators that cause internal entrepreneurship, on the one side there is the organizational context (psychological climate of organization) or management style and personal interests of internal entrepreneurs/employees on the other. According to past research, an entrepreneurial climate is essential for awakening the individual entrepreneurial potential of employees such as innovativeness, risk taking and being proactive. These characteristics require the following organizational factors to flourish: management support for new ideas and projects, participation in strategic decisions, tolerance of risk-taking, autonomy and resource allocations. The primary purpose of this research chapter is to present an empirical study framed by the theory that task-oriented and relations-oriented leadership behaviors (or different leadership style) are positively related to the employees’ perceptions of organizational climate. The study introduces this theoretical perspective and examines the relevant literature that supports the significance of leadership behavior and the organizational climate. Results of empirical research will be presented in the second part of the chapter. Many authors identified leadership/management behaviors as an emergent process that acts on both the organizational climate and conditions for entrepreneurship. An organizational climate has been conceptualized as a mediator of the relationship between leadership style and organizational entrepreneurship.