Entrepreneurial Leadership and Self-Efficacy: A Moderated Mediation Study of Psychological Empowerment and Empowering Climate in NPD Projects

Abstract

Entrepreneurial leaders are expected to make employees more innovative, but the psychological route through which they build employees' belief in their own capabilities is less well documented, particularly in technology firms in developing economies. Drawing on social cognitive theory, we tested a model in which entrepreneurial leadership strengthens psychological empowerment, empowerment in turn raises self-efficacy and an empowering climate conditions the first link. We surveyed 445 IT professionals across Pakistan, recruited through snowball sampling and measured in three time-lagged waves. Partial least squares structural equation modeling supported the reliability and convergent validity of all four constructs. Entrepreneurial leadership predicted psychological empowerment (β = .455, p < .001) and psychological empowerment predicted self-efficacy very strongly (β = .790, p < .001, f² = 1.665). The model explained 38.4% of the variance in empowerment and 62.5% in self-efficacy. Empowering climate did not moderate the leadership–empowerment link (β = −.026, p = .521), possibly because climate and leadership overlapped heavily (r = .721). The results place psychological empowerment at the center of how leadership becomes employee confidence. For firms, they suggest building empowerment directly instead of waiting for a supportive climate to amplify leadership. We discuss implications for social cognitive theory and outline multilevel, multisource designs for future work.