Leadership in start-ups

Abstract

This article explores the role of leadership in start-ups and outlines a model of when, why and how leadership behaviour of founder-CEOs influences start-up performance. The model has been tested using a sample of 102 start-ups and their founder-CEOs and includes feedback from 372 employees, rating their leadership behaviour of founder-CEOs. The results indicate that transformational leadership has a significant and positive effect on start-up performance. However, no significant, direct effects on start-up performance were found for transactional leadership or laissez-faire leadership. Furthermore, the size of the start-up has a significant, positive, moderating effect on the relationship between laissez-faire leadership and start-up performance, as well as a significant, positive, moderating effect on the relationship between the transactional leadership dimension, management by exception and start-up performance. Results indicate that for start-ups and their performance, leadership behaviour is as important as their context. Today, leadership is neglected by most entrepreneurs and is not considered a motivation for founding a business. The results show that founders should focus more on leadership behaviour.