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

Abstract

Scholars have proposed that taking risks in organizations is important in explaining innovation performance. Analysis of this link has traditionally been based on two unconnected perspectives. From a managerial perspective, entrepreneurial orientation and leadership theories have been used to explain the positive relationship between managers' 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’s 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.