Diffusion of innovation through individual and collective entrepreneurship: An empirical investigation in SMEs

Purpose This paper aims to develop an original framework of innovation and to explore the complexity of association between individual and collective (team-based) entrepreneurship, and their simultaneous impacts on innovation in context of small and medium enterprises (SMEs). Design/methodology/approach An integral theoretical framework is developed to encourage innovation and the hypothetical relations are tested with the help of structural equation modeling (SEM) through AMOS. Data were gathered through survey technique and the questioners were distributed through email among 700 entrepreneurs from SMEs operating in five major industrial cities of Punjab province Pakistan. Findings The results of SEM analyses confirm that both the individual entrepreneur and the collective efforts of all the business members contribute to innovation in SMEs. Entrepreneur’s personality traits have a direct positive impact on innovation while the centralized decision-making by entrepreneur is not associated with innovation. Centralized decision-making is found to be negatively associated with communication and have insignificant positive association with collaboration. Factors associated with the team-based entrepreneurship like communication and collaboration among members of the SME’s contribute to the entrepreneurial orientation and collective entrepreneurship. Entrepreneurial orientation and collective entrepreneurship have direct positive impact on innovation in SMEs. Practical implications It is imperative for SMEs to encourage decentralized organizational culture and participative leadership to bring innovation into their products and processes and further to improve their competitive advantage. Originality/value To the best of author knowledge, present study is a first attempt that explores the complex association between individual and team-based entrepreneurship and further, empirically investigate the simultaneous impacts of these variables on innovation in context of SMEs.