The link between risk taking and innovation has been analyzed from two disconnected perspectives. From a managerial perspective, the lenses of entrepreneurial orientation and leadership theories have provided useful insights to establish a direct relation between managers’ risk taking and innovation. From an employee perspective, scholars have pointed that an organizational climate promoting risk taking will be effective in fostering innovative behaviors among employees. However, little empirical research has analyzed this link through a combined perspective.
This paper aims to cover this gap by analyzing both theoretically and empirically the relationship between managers’ risk-taking propensity, employees’ perceived risk-taking climate and innovation. For this, we test a model where the impact of the manager’ risk-taking propensity on innovation is mediated by its effect over the employees’ perceived risk-taking climate. Structural equation modeling was used to test the research hypotheses on a data set of 182 firms from the Spanish and Italian ceramic tile industry. As expected, results indicated that employees’ perceived risk-taking climate plays a significant role in determining the effects of managerial risk taking on innovation.