Abstract
Public organizations face higher demands for innovation while operating under institutional structures that prioritize stability and control. This study develops a theoretical model that explains how entrepreneurial leadership strengthens innovation capability in public organizations. Although research on leadership and public sector innovation has expanded in recent years, the two literatures have evolved separately, leaving limited understanding of how leadership orientations shape the conditions needed for sustained innovation. This study integrates insights from public entrepreneurship, leadership theory, and innovation capability research to explain how entrepreneurial leadership influences organizational processes that support continuous innovation. The model identifies five mediating mechanisms that translate leadership behavior into organizational capability: learning orientation, psychological safety, organizational agility, digital readiness, and absorptive capacity. It also specifies contextual moderators, including administrative burden, political support, digital infrastructure, public service motivation, and bureaucratic culture, which shape the effectiveness of entrepreneurial leadership. The framework positions innovation capability as a multidimensional construct incorporating knowledge management capability, technological capability, collaboration and networking capability, dynamic capabilities, and digital transformation maturity. By linking entrepreneurial leadership to innovation capability and ultimately to public value outcomes, the model advances theoretical understanding of how leadership contributes to organizational adaptability and modernization. The study concludes by outlining implications for leadership development, administrative reform, and digital transformation, while identifying opportunities for future empirical research to test and refine the proposed relationships.
References
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Ahmed, F., & Harrison, C. (2025). Entrepreneurial leadership development in teams: A conceptual model. The International Journal of Entrepreneurship and Innovation, 26(4), 267-279.
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Al-Shami, S. A., Rafeea, S. J., Kamalrudin, M., Widiastuti, T., & Al Mamun, A. (2023). The mediating role of absorptive capacity in the relationship between transformational leadership and corporate entrepreneurship. Cogent Business & Management, 10(2), 2226933.
Alblooshi, M., Shamsuzzaman, M., & Haridy, S. (2021). The relationship between leadership styles and organisational innovation: A systematic literature review and narrative synthesis. European Journal of Innovation Management, 24(2), 338-370.
Ansell, C., & Torfing, J. (2021). Co-creation: The new kid on the block in public governance. Policy & Politics, 49(2), 211-230.
Arundel, A., Bloch, C., & Ferguson, B. (2019). Advancing innovation in the public sector: Aligning innovation measurement with policy goals. Research policy, 48(3), 789-798.
Arundel, A., & Huber, D. (2013). From too little to too much innovation? Issues in measuring innovation in the public sector. Structural change and economic dynamics, 27, 146-159.
Bennett, D. L., Boudreaux, C., & Nikolaev, B. (2023). Populist discourse and entrepreneurship: The role of political ideology and institutions. Journal of International Business Studies, 54(1), 151-181.
Bergholz, C., Füner, L., Lubczyk, M., Sternberg, R., & Bersch, J. (2024). Infrastructure required, skill needed: Digital entrepreneurship in rural and urban areas. Journal of Business Venturing Insights, 22, e00488.
Bierschenk, T., & de Sardan, J.-P. O. (2021). The anthropology of bureaucracy and public administration. In Oxford Research Encyclopedia of Politics.
Clark, J. K. (2021). Public values and public participation: A case of collaborative governance of a planning process. The American Review of Public Administration, 51(3), 199-212.
Corrêa, V. S., Queiroz, M. M., Cruz, M. A., & Shigaki, H. B. (2022). Entrepreneurial orientation far beyond opportunity: the influence of the necessity for innovativeness, proactiveness and risk-taking. International journal of entrepreneurial behavior & research, 28(4), 952-979.
Cortes, A. F., & Herrmann, P. (2021). Strategic leadership of innovation: a framework for future research. International Journal of Management Reviews, 23(2), 224-243.
Demircioglu, M. A., & Chowdhury, F. (2021). Entrepreneurship in public organizations: the role of leadership behavior. Small Business Economics, 57(3), 1107-1123.
Ferreira, A., & Santos, C. (2025). Digital Transformation in Public Sector: Systematic Literature Review. Enhancing Public Sector Accountability and Services Through Digital Innovation, 265-288.
Fuchong, L. (2025). Bureaucratic Restructuring's Impact on Administrative Burden and Entrepreneurial Development. Public Administration and Development.
Funko, I. S., Vlačić, B., & Dabić, M. (2023). Corporate entrepreneurship in public sector: A systematic literature review and research agenda. Journal of innovation & knowledge, 8(2), 100343.
Goetzinger, P., Spremić, M., & Jaković, B. (2025). The Role of Digital Leadership Capabilities in Enterprise-Wide Digital Transformation. Foresight and STI Governance, 19(2), 68-76.
Gökalp, E., & Martinez, V. (2022). Digital transformation maturity assessment: development of the digital transformation capability maturity model. International Journal of Production Research, 60(20), 6282-6302.
Hameduddin, T., & Engbers, T. (2022). Leadership and public service motivation: a systematic synthesis. International Public Management Journal, 25(1), 86-119.
Hoang, G., Luu, T. T., & Babalola, M. T. (2025). Entrepreneurial leadership: a systematic literature review and research agenda. Leadership & Organization Development Journal, 46(2), 285-313.
Holm, J. R., Nielsen, K., & Timmermans, B. (2025). Bureaucracy, work organization, and the transition to entrepreneurship. Small Business Economics, 64(4), 2179-2195.
Iqbal, A., Nazir, T., & Ahmad, M. S. (2022). Entrepreneurial leadership and employee innovative behavior: an examination through multiple theoretical lenses. European Journal of Innovation Management, 25(1), 173-190.
Kattel, R., Drechsler, W., & Karo, E. (2022). How to make an entrepreneurial state: Why innovation needs bureaucracy. Yale University Press.
Kattel, R., & Mazzucato, M. (2018). Mission-oriented innovation policy and dynamic capabilities in the public sector. In (Vol. 27, pp. 787-801): Oxford University Press.
Klein, P. G., Mahoney, J. T., McGahan, A. M., & Pitelis, C. N. (2010). Toward a theory of public entrepreneurship. European management review, 7(1), 1-15.
Kousina, E., Deligianni, I., & Voudouris, I. (2025). Entrepreneurial leadership and innovation in the public sector: The role of causal‐and effectual‐logic processes. Public Administration, 103(1), 313-334.
Lakshman, C., & Rai, S. (2021). The influence of leadership on learning and innovation: Evidence from India. Asian Business & Management, 20(3), 307-338.
Lecuna, A., Cohen, B., & Mandakovic, V. (2020). Want more high-growth entrepreneurs? Then control corruption with less ineffective bureaucracy. Interdisciplinary Science Reviews, 45(4), 525-546.
Leitch, C. M., & Volery, T. (2017). Entrepreneurial leadership: Insights and directions. International Small Business Journal, 35(2), 147-156.
Lundqvist, D., Wallo, A., Coetzer, A., & Kock, H. (2023). Leadership and learning at work: A systematic literature review of learning-oriented leadership. Journal of Leadership & Organizational Studies, 30(2), 205-238.
Mehmood, M. S., Jian, Z., Akram, U., Akram, Z., & Tanveer, Y. (2022). Entrepreneurial leadership and team creativity: the roles of team psychological safety and knowledge sharing. Personnel Review, 51(9), 2404-2425.
Mehmood, M. S., Jian, Z., Akram, U., & Tariq, A. (2021). Entrepreneurial leadership: The key to develop creativity in organizations. Leadership & Organization Development Journal, 42(3), 434-452.
Mendoza-Silva, A. (2021). Innovation capability: a systematic literature review. European Journal of Innovation Management, 24(3), 707-734.
Migdadi, M. M. (2022). Knowledge management processes, innovation capability and organizational performance. International journal of productivity and performance management, 71(1), 182-210.
Mintrom, M., & Norman, P. (2009). Policy entrepreneurship and policy change. Policy studies journal, 37(4), 649-667.
Moeini Gharagozloo, M. M., Askarzadeh, F., & Moeini Gharagozloo, A. (2022). More power for international entrepreneurs: the effect of digital readiness of economies on channeling national R&D resources to entrepreneurship. Journal of International Entrepreneurship, 20(3), 474-502.
Nguyen, N. T., Hooi, L. W., & Avvari, M. V. (2023). Leadership styles and organisational innovation in Vietnam: does employee creativity matter? International journal of productivity and performance management, 72(2), 331-360.
Olumekor, M. (2024). Towards an evidence-based consensus on the impact of public sector entrepreneurship on public administration. Management Review Quarterly, 1-33.
Razzaque, A., Lee, I., & Mangalaraj, G. (2024). The effect of entrepreneurial leadership traits on corporate sustainable development and firm performance: a resource-based view. European Business Review, 36(2), 177-200.
Rehman, K. U., Aslam, F., Mata, M. N., Martins, J. M., Abreu, A., Morão Lourenço, A., & Mariam, S. (2021). Impact of entrepreneurial leadership on product innovation performance: intervening effect of absorptive capacity, intra-firm networks, and design thinking. Sustainability, 13(13), 7054.
Renko, M., El Tarabishy, A., Carsrud, A. L., & Brännback, M. (2015). Understanding and measuring entrepreneurial leadership style. Journal of small business Management, 53(1), 54-74.
Samuvel, D. J., Szymański, J. R., Żurek-Mortka, M., & Sathiyanarayanan, M. (2024). Building human capabilities for an increasingly complex entrepreneurial ecosystem. Foresight and STI Governance, 18(3), 55-68.
Tang, K., Wang, Y.-y., & Wang, H.-j. (2024). The impact of innovation capability on green development in China's urban agglomerations. Technological Forecasting and Social Change, 200, 123128.
Teece, D. J. (2023). The evolution of the dynamic capabilities framework. Artificiality and sustainability in entrepreneurship, 113, 238.
Tello-Gamarra, J., & Fitz-Oliveira, M. (2021). Literature on technological capability: past, present and future. International Journal of Innovation Science, 13(4), 401-422.
Thuy, D. T., Viet, T. Q., Phuc, V. V., Pham, T.-H.-D., Lan, N. T. N., & Ho, H. (2022). Impact of leadership behavior on entrepreneurship in state-owned enterprises: Evidence from civil servant management aimed at improving accountability. Economies, 10(10), 245.
Vivona, R. (2024). The new era leadership for the public sector? Entrepreneurship, effectiveness, and democracy. Public Management Review, 26(6), 1566-1582.
Vivona, R., Clausen, T. H., Gullmark, P., Cinar, E., & Demircioglu, M. A. (2025). Public sector entrepreneurship: an integrative review. Small Business Economics, 64(4), 1791-1815.
Wegrich, K. (2023). Public sector innovation: which season of public sector reform? In Handbook of public administration reform (pp. 131-145). Edward Elgar Publishing.
Ahmed, F., & Harrison, C. (2025). Entrepreneurial leadership development in teams: A conceptual model. The International Journal of Entrepreneurship and Innovation, 26(4), 267-279.
Aityassine, F. L. Y., Alzoubi, A., Al-Momani, A. a. M., Al-shanableh, N., Alajarmeh, N. S., Al-Majali, R. T., Alzyoud, M., Mohammad, A. A. S., Al-Hawary, S. I. S., & Alshurideh, M. T. (2024). The relationship between leadership agility and entrepreneurial resilience among Jordanian small and medium-sized enterprises (SMEs). In Business Analytical Capabilities and Artificial Intelligence-enabled Analytics: Applications and Challenges in the Digital Era, Volume 2 (pp. 17-31). Springer.
Al-Shami, S. A., Rafeea, S. J., Kamalrudin, M., Widiastuti, T., & Al Mamun, A. (2023). The mediating role of absorptive capacity in the relationship between transformational leadership and corporate entrepreneurship. Cogent Business & Management, 10(2), 2226933.
Alblooshi, M., Shamsuzzaman, M., & Haridy, S. (2021). The relationship between leadership styles and organisational innovation: A systematic literature review and narrative synthesis. European Journal of Innovation Management, 24(2), 338-370.
Ansell, C., & Torfing, J. (2021). Co-creation: The new kid on the block in public governance. Policy & Politics, 49(2), 211-230.
Arundel, A., Bloch, C., & Ferguson, B. (2019). Advancing innovation in the public sector: Aligning innovation measurement with policy goals. Research policy, 48(3), 789-798.
Arundel, A., & Huber, D. (2013). From too little to too much innovation? Issues in measuring innovation in the public sector. Structural change and economic dynamics, 27, 146-159.
Bennett, D. L., Boudreaux, C., & Nikolaev, B. (2023). Populist discourse and entrepreneurship: The role of political ideology and institutions. Journal of International Business Studies, 54(1), 151-181.
Bergholz, C., Füner, L., Lubczyk, M., Sternberg, R., & Bersch, J. (2024). Infrastructure required, skill needed: Digital entrepreneurship in rural and urban areas. Journal of Business Venturing Insights, 22, e00488.
Bierschenk, T., & de Sardan, J.-P. O. (2021). The anthropology of bureaucracy and public administration. In Oxford Research Encyclopedia of Politics.
Clark, J. K. (2021). Public values and public participation: A case of collaborative governance of a planning process. The American Review of Public Administration, 51(3), 199-212.
Corrêa, V. S., Queiroz, M. M., Cruz, M. A., & Shigaki, H. B. (2022). Entrepreneurial orientation far beyond opportunity: the influence of the necessity for innovativeness, proactiveness and risk-taking. International journal of entrepreneurial behavior & research, 28(4), 952-979.
Cortes, A. F., & Herrmann, P. (2021). Strategic leadership of innovation: a framework for future research. International Journal of Management Reviews, 23(2), 224-243.
Demircioglu, M. A., & Chowdhury, F. (2021). Entrepreneurship in public organizations: the role of leadership behavior. Small Business Economics, 57(3), 1107-1123.
Ferreira, A., & Santos, C. (2025). Digital Transformation in Public Sector: Systematic Literature Review. Enhancing Public Sector Accountability and Services Through Digital Innovation, 265-288.
Fuchong, L. (2025). Bureaucratic Restructuring's Impact on Administrative Burden and Entrepreneurial Development. Public Administration and Development.
Funko, I. S., Vlačić, B., & Dabić, M. (2023). Corporate entrepreneurship in public sector: A systematic literature review and research agenda. Journal of innovation & knowledge, 8(2), 100343.
Goetzinger, P., Spremić, M., & Jaković, B. (2025). The Role of Digital Leadership Capabilities in Enterprise-Wide Digital Transformation. Foresight and STI Governance, 19(2), 68-76.
Gökalp, E., & Martinez, V. (2022). Digital transformation maturity assessment: development of the digital transformation capability maturity model. International Journal of Production Research, 60(20), 6282-6302.
Hameduddin, T., & Engbers, T. (2022). Leadership and public service motivation: a systematic synthesis. International Public Management Journal, 25(1), 86-119.
Hoang, G., Luu, T. T., & Babalola, M. T. (2025). Entrepreneurial leadership: a systematic literature review and research agenda. Leadership & Organization Development Journal, 46(2), 285-313.
Holm, J. R., Nielsen, K., & Timmermans, B. (2025). Bureaucracy, work organization, and the transition to entrepreneurship. Small Business Economics, 64(4), 2179-2195.
Iqbal, A., Nazir, T., & Ahmad, M. S. (2022). Entrepreneurial leadership and employee innovative behavior: an examination through multiple theoretical lenses. European Journal of Innovation Management, 25(1), 173-190.
Kattel, R., Drechsler, W., & Karo, E. (2022). How to make an entrepreneurial state: Why innovation needs bureaucracy. Yale University Press.
Kattel, R., & Mazzucato, M. (2018). Mission-oriented innovation policy and dynamic capabilities in the public sector. In (Vol. 27, pp. 787-801): Oxford University Press.
Klein, P. G., Mahoney, J. T., McGahan, A. M., & Pitelis, C. N. (2010). Toward a theory of public entrepreneurship. European management review, 7(1), 1-15.
Kousina, E., Deligianni, I., & Voudouris, I. (2025). Entrepreneurial leadership and innovation in the public sector: The role of causal‐and effectual‐logic processes. Public Administration, 103(1), 313-334.
Lakshman, C., & Rai, S. (2021). The influence of leadership on learning and innovation: Evidence from India. Asian Business & Management, 20(3), 307-338.
Lecuna, A., Cohen, B., & Mandakovic, V. (2020). Want more high-growth entrepreneurs? Then control corruption with less ineffective bureaucracy. Interdisciplinary Science Reviews, 45(4), 525-546.
Leitch, C. M., & Volery, T. (2017). Entrepreneurial leadership: Insights and directions. International Small Business Journal, 35(2), 147-156.
Lundqvist, D., Wallo, A., Coetzer, A., & Kock, H. (2023). Leadership and learning at work: A systematic literature review of learning-oriented leadership. Journal of Leadership & Organizational Studies, 30(2), 205-238.
Mehmood, M. S., Jian, Z., Akram, U., Akram, Z., & Tanveer, Y. (2022). Entrepreneurial leadership and team creativity: the roles of team psychological safety and knowledge sharing. Personnel Review, 51(9), 2404-2425.
Mehmood, M. S., Jian, Z., Akram, U., & Tariq, A. (2021). Entrepreneurial leadership: The key to develop creativity in organizations. Leadership & Organization Development Journal, 42(3), 434-452.
Mendoza-Silva, A. (2021). Innovation capability: a systematic literature review. European Journal of Innovation Management, 24(3), 707-734.
Migdadi, M. M. (2022). Knowledge management processes, innovation capability and organizational performance. International journal of productivity and performance management, 71(1), 182-210.
Mintrom, M., & Norman, P. (2009). Policy entrepreneurship and policy change. Policy studies journal, 37(4), 649-667.
Moeini Gharagozloo, M. M., Askarzadeh, F., & Moeini Gharagozloo, A. (2022). More power for international entrepreneurs: the effect of digital readiness of economies on channeling national R&D resources to entrepreneurship. Journal of International Entrepreneurship, 20(3), 474-502.
Nguyen, N. T., Hooi, L. W., & Avvari, M. V. (2023). Leadership styles and organisational innovation in Vietnam: does employee creativity matter? International journal of productivity and performance management, 72(2), 331-360.
Olumekor, M. (2024). Towards an evidence-based consensus on the impact of public sector entrepreneurship on public administration. Management Review Quarterly, 1-33.
Razzaque, A., Lee, I., & Mangalaraj, G. (2024). The effect of entrepreneurial leadership traits on corporate sustainable development and firm performance: a resource-based view. European Business Review, 36(2), 177-200.
Rehman, K. U., Aslam, F., Mata, M. N., Martins, J. M., Abreu, A., Morão Lourenço, A., & Mariam, S. (2021). Impact of entrepreneurial leadership on product innovation performance: intervening effect of absorptive capacity, intra-firm networks, and design thinking. Sustainability, 13(13), 7054.
Renko, M., El Tarabishy, A., Carsrud, A. L., & Brännback, M. (2015). Understanding and measuring entrepreneurial leadership style. Journal of small business Management, 53(1), 54-74.
Samuvel, D. J., Szymański, J. R., Żurek-Mortka, M., & Sathiyanarayanan, M. (2024). Building human capabilities for an increasingly complex entrepreneurial ecosystem. Foresight and STI Governance, 18(3), 55-68.
Tang, K., Wang, Y.-y., & Wang, H.-j. (2024). The impact of innovation capability on green development in China's urban agglomerations. Technological Forecasting and Social Change, 200, 123128.
Teece, D. J. (2023). The evolution of the dynamic capabilities framework. Artificiality and sustainability in entrepreneurship, 113, 238.
Tello-Gamarra, J., & Fitz-Oliveira, M. (2021). Literature on technological capability: past, present and future. International Journal of Innovation Science, 13(4), 401-422.
Thuy, D. T., Viet, T. Q., Phuc, V. V., Pham, T.-H.-D., Lan, N. T. N., & Ho, H. (2022). Impact of leadership behavior on entrepreneurship in state-owned enterprises: Evidence from civil servant management aimed at improving accountability. Economies, 10(10), 245.
Vivona, R. (2024). The new era leadership for the public sector? Entrepreneurship, effectiveness, and democracy. Public Management Review, 26(6), 1566-1582.
Vivona, R., Clausen, T. H., Gullmark, P., Cinar, E., & Demircioglu, M. A. (2025). Public sector entrepreneurship: an integrative review. Small Business Economics, 64(4), 1791-1815.
Wegrich, K. (2023). Public sector innovation: which season of public sector reform? In Handbook of public administration reform (pp. 131-145). Edward Elgar Publishing.
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