HOW DEMOCRATIC LEADERSHIP DRIVES DIGITAL ENTREPRENEURSHIP: A MODERATED MEDIATION APPROACH

Abstract

Purpose – This study aims to critically examine the dominant assumption that democratic-style leadership adversely affects enterprise reform while exploring its relationship with digital entrepreneurship in technology-driven start-ups. Through a moderated mediation framework, the research further investigates the mediating role of strategic schema change and the moderating effect of the digital VUCA environment within the proposed model. Design/Methodology/Approach – This study employed a cross-sectional design, collecting data through structured questionnaires from a sample of 398 high- and middle-level managers working in five digital entrepreneurship parks in Shanghai, P.R. China. Hypotheses were tested using structural equation modelling (SEM) with AMOS 24.0. Findings – The findings confirmed the hypothesised moderated mediation model. Democratic leadership was found to have a positive influence on digital entrepreneurship in technology-driven start-ups. Additionally, strategic schema change mediated the relationship between democratic leadership and digital entrepreneurship. The moderating role of the digital VUCA environment in the link between strategic schema change and digital entrepreneurship was supported, with results indicating that higher VUCA conditions strengthened the indirect effect of democratic leadership on digital entrepreneurship. Overall, the study demonstrates that democratic leaders foster digital entrepreneurship in technology-driven start-ups by leveraging strategic schema change, contingent upon a clear understanding of the VUCA environment. Originality/Value – This study seeks to challenge the prevailing bias that democratic leadership negatively affects enterprise reform and, based on this premise, elucidate the underlying procedural mechanisms that connect democratic leadership with digital entrepreneurship.