The Entrepreneurial Leadership, Innovative Behaviour, and Competitive Advantage Relationship in Manufacturing Companies: A Key to Manufactural Development and Sustainable Business

Entrepreneurship involves individuals, teams, and organizations seeking new economic opportunities. As entrepreneurs explore new opportunities, leaders must respond to challenges and innovations to secure their firms’ success. Fernald et al. [27] emphasized that enterprises can enhance their competitiveness by embracing entrepreneurial leadership in dynamic environments. New approaches to developing the necessary skills are needed in a business environment that is changing quickly so that managers can react quickly to ongoing changes. Interestingly, the need for entrepreneurial leadership is growing every day in order to promptly adjust to continuous changes in a global economy. It should be noted in this context that entrepreneurial leadership is a blend of various personality traits rather than a single attribute. Imagination, foresight, strategic thinking, and collaboration are a few of the personality attributes exhibited by entrepreneurial leaders [28].

Van Zyl and Mathur-Helm [29] found a positive association between entrepreneurial leadership, innovation, and business performance. Entrepreneurial leadership has been defined in various ways, including as a leadership style that fosters visionary scenarios and mobilizes participants for strategic value creation [30]. It serves as a framework for examining leadership’s role in entrepreneurial contexts [31,32,33,34]. Entrepreneurship is widely acknowledged as a driver of economic development and entrepreneurship research, as highlighted by Carlsson et al. [35], and consistently addresses key themes of opportunity recognition, innovation, and risk-taking. These attributes align with classical notions of entrepreneurs as risk-takers, creators, and economic equilibrium arbiters, inherently making them leaders. Leadership and entrepreneurship are developing as major research areas [36,37]. Leaders are integrated into entrepreneurship’s application via entrepreneurial leadership, as shown by Gupta et al. [30] and Kuratko [1], and a recent study [38]. The growing body of literature on EL from both empirical and conceptual standpoints notwithstanding [34], there is limited consensus on the definition and attributes of entrepreneurial leadership. According to the study of Harrison C. et al. [34], the result is a diverse literature base with a distinct research gap in the knowledge and understanding about entrepreneurial leadership, both conceptually and empirically. Entrepreneurship is often cited as a major engine of economic growth [39]. Vecchio [40] defined entrepreneurial leadership as a style of leadership confined to entrepreneurial ventures. Entrepreneurial leadership addresses followers’ demands to improve performance, but its success depends on an organization’s adaptability to new opportunities [41]. Envisioning future success, a forward-thinking mindset, identifying opportunities, encouraging innovative actions, effective problem-solving, and an innovation-promoting organisational culture are required. Gupta, MacMillan, and Surie [30] describe entrepreneurial leadership conceptually as consisting of three dimensions. First, innovation fosters team creativity and novel product and service creation. The second dimension, proactiveness, engages people in continual competition with other organizations. Thirdly, risk-taking involves facing uncertainty and taking responsibility. It seems that entrepreneurial leadership has a relationship to firm growth, as it creates a competitive advantage and ensures sustainability [42]. However, the study of the relationship between entrepreneurial leadership and business model is still limited; thus, an investigation on this relationship needs to be conducted. According to Palalic [42], entrepreneurial leadership helps firms develop and survive. Therefore, entrepreneurial leaders align their teams to proactively seek opportunities, take measured risks, and build a culture of creativity and change to drive innovation and competitiveness. Companies seeking long-term success in flexible business contexts need these entrepreneurial leadership-based traits. Entrepreneurs and leaders in established companies have been extensively studied [43]. Leitch and Volery [5] examined entrepreneurs’ unique traits and personalities. Entrepreneurial leaders’ ability to guide innovation and discover opportunities has been highlighted in previous studies [44,45]. Gupta et al. [30]’s entrepreneurial leadership framework tackles entrepreneurial leaders’ psychological and functional challenges. It stresses personal competencies in visualizing a successful future, building an innovative workplace culture, and spotting opportunities. These competencies motivate team members to engage in innovative and entrepreneurial endeavours. This research emphasizes the importance of entrepreneurial leadership in supporting entrepreneurial behaviour inside an organization, emphasizing the role of entrepreneurial leaders in establishing culture and motivating people to pursue innovative and entrepreneurial opportunities. Renko et al. [3] found that entrepreneurial leaders influence employees’ creativity and opportunity identification, underlining the need for more research to fully understand its impact on organizational outcomes. Porter [46] characterized competitive advantage as essential to business success. It means that a business can outperform its competitors by reducing costs, seizing market opportunities, and limiting hazards to improve entrepreneurial outcomes [47]. In dynamic environments with significant uncertainty about future competition and market conditions, businesses must be flexible and rooted in prior experiences to develop a competitive advantage [48]. Leaders help employees to achieve a firm’s strategic goals, including utilizing competitive advantage.

Entrepreneurial leadership, particularly within top management teams (TMTs), is widely recognized in the literature as a critical driver of a company’s global competitiveness [49,50,51,52]. Proponents of TMTs argue that personnel should be able to leverage potential competitive advantage to achieve a company’s strategic goals [49,50]. The RBV emphasizes that many companies have consistently harnessed their resources and capabilities to establish and maintain competitive advantage [53]. Globalized organizations face intense competition. Building strong competitive advantage through active human resource management is crucial. Organizational effectiveness and fair treatment of human capital drive competitive advantage, as highlighted by Pfeffer, J., et al. [54]. To outperform rivals, organizations must differentiate their performance and strategy, enhancing their resources, a top priority per Khawaja et al. [55]. Entrepreneurial leaders, with their entrepreneurial qualities and strategic perspectives, play a vital role in shaping effective strategies in today’s global economy. Their initiatives can enhance an organization’s competitive advantage by identifying and capitalizing on entrepreneurial opportunities that foster innovation and competitiveness. The RBV stresses the need of human and social capital for competitive advantage sustainability [56,57,58].

According to Khawaja et al. [55], organizations need to differentiate their performance and strategy from other organizations, and by improving the resources, organization can gain competitive advantage. Every organization is striving hard to achieve competitive advantage over others. The competitive advantages of businesses also require superior-quality resources, such as the creative leadership role. This leadership is often identified with entrepreneurial leadership [59]. When a leader who engages in proactive entrepreneurial behaviour by optimizing risk, innovating to take advantage of opportunities, taking personal responsibility, and managing changes in the environment certainly have an impact on competitive advantage for businesses. Prior literature implies a link between entrepreneurial leadership and competitive advantage, but more research is needed to validate it. In highly competitive and frequently changing situations, an entrepreneurial mindset that identifies and evaluates opportunities is crucial to businesses’ competitive advantage [60]. A recent study showed that an entrepreneurial attitude helps organizations to develop competitive advantage-generating strategies [61,62]. Entrepreneurs might see uncertainties as opportunities, which can lead to a competitive advantage for enterprises [62]. Based on this concept, our hypothesis is as follows: