The effects of entrepreneurs’ moral awareness and ethical behavior on product innovation of new ventures

Abstract

Purpose The purpose of this paper is to apply the social cognitive theory and social learning theory to examine the different mechanisms through which entrepreneurs’ moral awareness and ethical behavior affect the product innovation of new ventures. Design/methodology/approach The authors collected survey data from 150 founders and 389 founding team members of new ventures in China in 2015. The final sample contained 113 questionnaires from entrepreneurs and 246 questionnaires from their founding team members. Regression analyses were used to test direct effects, and Preacher and Hayes’ (2004) formal mediation test approach with bootstrapping method was used to evaluate the mediation effects. Findings The findings indicate that the ethical levels of entrepreneurs can affect the product innovation of a new venture through two paths: entrepreneurs with low levels of moral awareness tend to be more individually creative, which facilitates product innovation, and entrepreneurs with high levels of ethical behavior can make founding teams more creative, which also promotes product innovation. Practical implications The findings of this study suggest that entrepreneurs are not negatively affected by their low moral awareness as long as they exhibit high ethical behavior with founding team members. But such low moral awareness has to be genuine. The best way to promote product innovation in the long run is to create an organizational culture of ethical behavior rather than to ignore moral issues in decision-making. Originality/value This study challenges the assumption that moral awareness and ethical behavior are always consistent. It takes an initial step to resolve the contradiction in the current literature regarding the relationship between the ethical levels of entrepreneurs and product innovation in the context of founders and founding teams in new ventures.

Leader’s strategy to encourage employee’s innovative work behavior in multicultural workplace: do supportive colleagues matter?

“…Meaning-making and empathetic ML are close to charismatic leadership tactics, which are positively associated with innovation implementation behavior (Michaelis et al, 2009). Finally, the positive communication methods contribute to the achievement of innovative goals by increasing the creativity of the workforce (Mai et al, 2018). In this way, the leader's ML (DGL, MML and EL) will help employees to generate, promote and implement novel ideas.…”

New venture entrepreneurship and context in East Asia: a systematic literature review

“…Technology-intensive new ventures are required to systemically integrate resources and knowledge to efficiently manage a variety of product innovations required in this large emerging market (Guo et al, 2019). Environmental dynamism, entrepreneurial leadership and ethical leadership are also crucial for innovation activities and new venture performance (Mai et al, 2019).…”

“…Khavul et al (2010a) found that firms led by Chief Executive Officers (CEOs) who possess general management experience invest more in strengthening HRM practices. Furthermore, ethical awareness among top management teams has been found to enhance product innovation (Mai et al, 2019).…”

“…When measuring outcomes, studies tend to consider firm behavior and performance. The three major behavioral outcomes studied are innovation (Liu et al, 2015;Mai et al, 2019), strategic decision making and management practices (Khavul et al, 2010a). The most commonly employed performance outcomes investigated include economic performance such as IPO pricings (e.g., Wang et al, 2018), financial performance (Guo et al, 2019) and the competitive advantages of new ventures (Wu et al, 2009;Xiong, 2020).…”

“…Li et al (2020) found that CEO humility is able to reduce relationship conflict in entrepreneurial teams and enhances the performance of new ventures. Mai et al (2019) examine outcomes of Chinese entrepreneurs' moral awareness and ethical behavior and find that while low levels of moral awareness are positively associated with individual creativity, entrepreneurs with high levels of ethical behavior have the capacity to establish more creative founding teams.…”