Trust in Organizational Leaders and Entrepreneurship: Factors Influencing Trust and Implications for Business Success

1. Relationship Between Trust in Organizational Leaders and Entrepreneurship:Roles Played by Work and Individual Factors BYOLUFEMI LAWAL, PhDLagos State University, Ojo, Lagos StateNigeria

2. INTRODUCTION SMEs & business giants across nations: Employ billions of people. Render services and produce goods. Are the anchors of the economies of nations and instruments of wealth creation. To sustain these: Existing businesses must be preserved. Employees must be trained and motivated to be innovative. Innovative ideas must be developed into realistic intentions Employees must be motivated to bring these to bear in their organization, or supported to start new businesses SMEs must be able to survive and grow.

3. INTRODUCTION The Situation in Nigeria Power supply is poor all over the country The energy sector is not doing well. Interest rate remains high (2 digits) The value of the Naira has been falling steadily since December 2014. Consequently: Businesses have either been closing down or relocating their Nigerian plants to other African countries Rate of business start-up is very low Cost of doing business is too high The private sector has started to lay off their employees. Rate of unemployment is high Insecurity has increased. Most people in Nigeria blame the government for these Trust for people in government is very low

4. INTRODUCTION Some Key Factors in Entrepreneurship Individual and Work-Related Factors Self-Efficacy, Personal (Entrepreneurial) Attitude, Work Engagement/Commitment, Locus of Control, Risk Propensity, Gender, Age, e.t.c Other (External) Factors Political Stability Natural Resources Climate Geography Leadership

5. Conceptual Framework The Implicit Leadership Theory (Lord & Maher, 1991) holds that leadership is as perceived by followers. The Romance of Leadership Concept (Meindl, 1995) stresses that people in business organizations prefer to explain events in their organization—good or bad—in terms of the organizational leadership; and this predisposes them to regard actions of people in leadership positions as more important for organisational survival and success than other organizational factors.

6. Conceptual Framework • For many reasons, entrepreneurship, in all climes, goes with a good measure of risk. • Entrepreneurship in organizations—in form of creative inputs, innovations, or even new enterprise start-ups—require the guidance, support, and inspiration of organizational leaders. • The way and manner this “risky” component is managed may determine how far employees go in their entrepreneurial undertakings. • When an organization is not doing well, most employees tend to blame this on their organizations’ leaders, a situation that may see them perceiving those leaders as ineffective or incompetent. employees • Consequently, such employees may not be inclined to exhibit their entrepreneurial intentions. • There are several other reasons employees may not have good perceptions of their organizational leader. • Whatever the reasons, one of the outcomes of such perceptions is diminished trust for the leader.

7. Conceptual Framework From the employee—leader standpoint, trust can be defined as the intention of an employee to accept vulnerability based upon positive expectations of the intentions or behaviour of his/her organization’s leader (Rousseau, Sitkin, Burt, and Camerer, 1998 ). Where employees’ trust for their leader diminishes, then such a leader can no longer successfully provide the guidance, motivation, and inspiration the employees would require to realize their entrepreneurial intention. Put simply, the leader is no longer competent to manage the employees’ entrepreneurial risks.

8. The Problem Apart from geography, climate, and natural resources, virtually every other factor—external to employees—is a responsibility of the leader. Therefore, when leaders fail or are perceived by their subordinate employees to have failed in their responsibility (e.g., of providing support, motivation, encouragement), employees who are subjected to them will distrust the leaders Their distrust for the leaders will reduce their likelihood of nurturing and pursuing their entrepreneurial goals.

9. Some Literature • The natural ability to give and receive trust is a major characteristic of people usually rated as great leaders (Nicholson, 2000). • When employees believe their leaders have integrity, capability or benevolence, they will be more comfortable engaging in behaviors that put them at risk (Mayer, Davis, & Schoorman, 1995) • When employees believe their leader cannot be trusted (e.g., because the leader is perceived not to have integrity), they will divert energy toward "covering their back“ (Mayer & Gavin, 1999), • The distrust of superiors by subordinates results in high levels of suspicion and anxiety (Harper, 2004; Trickey, 2006)

10. Method Sample Two hundred and twelve (212) male and female, middle-level and senior managers whose job tenures had ranged from1—30 years were sampled across five service organizations in Lagos Nigeria. Measures A survey comprising four measures was used: Trust in Organizational Leadership Personal Attitude to Entrepreneurship Scale Entrepreneurship Intention Questionnaire General Self-Efficacy Scale Work Engagement Scale Analysis Moderated Regression Analysis was used.

11. Results TABLE 1: REGRESSION COEFFICIENTS FOR THE MAIN PREDICTIONS OF ENTREPRENEURIAL INTENTION Model 1 Model 2 Model 3 PREDICTORS B Beta(β) B Beta(β) B Beta(β) TRUST (IN LEADERSHIP) -0.01 -0.01 0.04 0.02 0.02 0.01 WORK ENGAGEMENT -0.04 -0.09 -0.03 -0.06 SELF-EFFICACY 0.15. 0.17** 0.13 0.15** PERSONAL ENTREP. ATT 0.45. 0.50** 0.46 0.51** WORK ENG*TRUST 0.01 0.04 SELF-EFFICACY*TRUST -0.02 -0.04 PERSONAL ENTERP. ATT.*TRUST -0.03 -0.08 ** significant at the 0.01evel * Significant at the 0.05 level

12. TABLE 2: REGRESSION COEFFICIENTS FOR THE JOINT PREDICTION OF ENTREPRENEURSHIP Model 1 Model2 Model 3 R2 0.000 0.325 0.334 CHANGE IN R2 0.000 0.325 0.009 F for change in R2 0.007 33.16** 0.93 ** significant at the 0.01evel

13. Conclusion Entrepreneurship intentions appear to be intact, but attitudes to actualizing the intentions are poor. Personal factors like self-efficacy and entrepreneurial attitude still play very significant roles in entrepreneurship Trust in organizational leadership seems not to affect trustors’ entrepreneurship Regardless of the levels of individual factors (i.e., self-efficacy, personal entrepreneurial attitude, or work engagement), trust in leadership would not impact trustors’ entrepreneurship.

14. Recommendations Top management of organizations in developing countries need to focus attention on employees’ creative and innovative potentials with a view to preserving and nurturing them by mobilizing more organizations’ resources in their support, especially in times of social and economic adversities. Organizations should significantly involve employees in efforts to survive during periods of adversity. This may bring out the employees’ innovative potentials which may help solve the problems.

15. Limitations of the Study • Non-inclusion of government (at all levels) as referent in the trust in leadership measure the employees responded to. • Use of managerial employees only. THANK YOU FOR LISTENING!