Unraveling the link between managerial risk-taking and innovation: the mediating role of a risk-taking climate

Ana García-Granero, Óscar Llopis, Anabel Fernández-Mesa, Joaquín Alegre
Journal of Business Research

Scholars have proposed that taking risks in organizations is important for explaining innovation performance. Scholars traditionally have analyzed this link from two unconnected perspectives. From a managerial perspective, entrepreneurial orientation and leadership theories have been used to explain the positive relation between manager's risk-taking and innovation. On the other hand, research on creativity suggests that a risk-taking climate helps to explain the generation of novel ideas. However, there is little empirical research analyzing this link. This study examines the possibility of a connection between managerial risk-taking propensity, risk-taking climate and innovation performance. To do so, we test a quantitative model where the impact of the manager' risk-taking propensity on innovation is mediated by its effect on risk-taking climate. Structural equation modeling is used to test the research hypotheses on a data set of 182 firms from the Spanish and Italian ceramic tile industry