Business Owner-Employees Contagion of Work-Related Affect and Employees’ Innovative Behavior in Small Firms

The aim of this study was to explore cross-level mechanisms stimulating employees’ innovative behavior in small firms, specifically emotional contagion between small business owners and their employees. Using data from three European countries and applying a multilevel approach, we tested how small business owners’ work-related affect—enthusiasm and comfort—relate to their employees’ work-related affect and innovative work behavior. The sample consisted of 85 small business owners and 711 employees from firms operating in the Netherlands, Poland, and Spain. Controlling for country, the results of multilevel modeling showed that small business owners’ work-related affect was positively related to their employees’ work-related affect. The hypothesized contagion of work-related affect in small firms was, thus, supported. Employees’ work-related affect, in turn, was positively associated with their innovative behavior. Employees’ work-related affect mediated the relationship between small business owners’ work-related affect and employees’ innovative behavior. The results also showed cross-country differences in the strength of some of the relationships. The study is a step forward in understanding innovation in small firms, extending the insights gained from single-level investigations.