Transformational leadership in informal entrepreneurship

Introduction

South Asia's informal economy is full of stories we rarely hear—especially those of women who, without formal jobs or bank accounts, build livelihoods from sheer resourcefulness. In India, more than 90% of working women are part of this informal sector, many running small, home-based businesses that exist outside formal records (ILO, 2018; Mehrotra, 2020). They teach, create, serve, and sell—often juggling social expectations and household demands with quiet determination. Yet mainstream entrepreneurship literature continues to spotlight formal ventures led by men, backed by capital, and framed by growth. This narrow focus leaves women's everyday enterprise not just underappreciated, but largely invisible (Dey and Steyaert, 2016; Welter, 2011).

This note brings attention to one such woman: “Mehendi Didi,” a henna artist and informal teacher from a Mumbai neighborhood. Her business may be small, but her impact is wide. Without branding, staff, or digital platforms, she mentors young girls, builds a loyal client base, and adapts to demand with a professionalism rooted in care and trust. She is not following a business model; she is creating her own.

To understand this kind of grassroots entrepreneurship, the paper turns to three key lenses. Transformational leadership helps explain how she enables others to grow. Social capital highlights the value of trust and networks in the absence of contracts. And emotional labor reveals how managing people's feelings—especially in service work—is not soft, but strategic. This paper weaves these ideas together to show how such entrepreneurs lead, organize, and thrive—even when the world fails to call them entrepreneurs.

Transformational leadership beyond titles

When we think of transformational leaders, we often imagine CEOs or public figures delivering rousing speeches. But leadership does not always wear a suit or stand at a podium. Sometimes, it appears quietly, in the corners of local communities, shaping lives without fanfare. Transformational leadership is defined as the ability to inspire a shared vision, serve as a moral guide, and uplift others to reach their potential (Avolio and Bass, 2004). While this is usually associated with formal institutions, everyday settings can be just as rich with leadership—if we choose to look.

Take, for instance, the story of Mehendi Didi, a self-taught henna artist in Mumbai. Her entrepreneurial journey starts not with a business plan but with a spontaneous act of service at a wedding. What emerges from that moment is not just a business, but a practice of leadership—deeply rooted in trust, care, and the desire to uplift others.

Henna, or mehendi, in South Asia is not merely decoration. It is a cultural expression—a ritual woven into weddings, festivals, and celebrations. Mehendi—also known as henna—is a natural dye used to draw temporary designs on hands and feet during weddings and festivals like Eid and Diwali. These designs carry cultural meaning and are applied using a handmade cone, similar to a tiny icing bag. Making the paste, rolling the cone, and applying it skillfully is a craft that takes patience and precision—something Mehendi Didi has mastered and now teaches others. Making and applying henna requires not only creativity but technical precision. Mehendi Didi rolls her own cones, blends the paste herself, and teaches others to do the same. This quiet craftsmanship—often excluded from business textbooks—is its own form of innovation.

She runs her practice with intention: part service, part school. She teaches neighborhood girls how to draw designs, handle clients, and navigate seasonal demands. Her teaching is not limited to skills; it's about confidence, timing, tact. These are leadership lessons disguised as daily tasks.

During busy times like Eid or Diwali, her home becomes a buzzing workshop. Clients come and go, cones are filled, and learners rotate shifts—all under her calm direction. Her ability to manage chaos with compassion reflects “individualized consideration”—a hallmark of transformational leadership (Bass and Riggio, 2006).

And yet, she has no formal role or digital presence. She chooses to stay local, rooted in relationships rather than reputation. Her leadership does not follow institutional models—it grows in the soil of lived experience and community care. By seeing her through the lens of transformational leadership, we recognize that true influence often flows from the ground up, not the top down.

Social capital as strategy

In the world of informal work, where there are no contracts, business licenses, or marketing budgets, relationships do the heavy lifting. This is where social capital comes in—the trust, goodwill, and networks that hold everything together when the system offers little support (Coleman, 1988; Portes, 1998). For many grassroots entrepreneurs, it's the backbone of their work.

For Mehendi Didi, her entire business thrives on word-of-mouth. She does not advertise or rely on Instagram reels. Her clients come from a chain of neighbors, cousins, friends of friends. One happy bride leads to another. Each appointment becomes a tiny act of reputation-building. This kind of trust-based economy is a “local trust system,” where personal reliability carries more weight than paperwork (Lyon and Snoxell, 2005).

And importantly, her choice to stay within a few familiar streets is not about limitation—it's strategy. By staying close, she knows her clients, their preferences, their rhythms. She can adjust quickly when plans change, offer flexibility during peak times, and build relationships that last beyond one event. Her business does not grow outward—it deepens inward.

In low-resource urban settings, intimacy and trust often outweigh scale (Basu and Goswami, 2017). Mehendi Didi's business proves that point. She does not need to expand to be successful. Her strength lies in staying rooted—in knowing that sometimes, small and steady is smarter than fast and flashy.

In this light, her hyperlocality is not a lack of vision but a deliberate stance. She is not chasing clients; they come to her, because they know her, trust her, and feel seen. That is social capital in action—not a buzzword, but a living network that sustains her enterprise day after day.

Emotional labor as enterprise

When people think of entrepreneurship, they often picture innovation, investment, and growth curves. But in many women-led informal businesses—especially those built on service and craft—the most critical resource is less visible: emotional labor (Hochschild, 1983). This term refers to the work involved in managing emotions—your own and others’—in a professional setting. While scholars have studied it in formal workplaces like airlines or retail (Bolton, 2005; Grandey, 2000), its role in informal entrepreneurship remains largely in the shadows.

For henna artists like Mehendi Didi, emotions are part of the job. Weddings and festivals come with high expectations and even higher stress levels. A bride may arrive anxious about her design, her appearance, or the day ahead. In these moments, it is not just about drawing patterns—it is about calming nerves, offering reassurance, and creating an atmosphere of ease. What may seem like “natural” kindness is actually practiced, purposeful emotional work. Informal workers’ emotional labor is often misread as instinct rather than strategy (Constable, 2007).

This is where Mehendi Didi stands out. Her workspace is not just a service zone; it is a sanctuary. For her clients and her young trainees alike, she creates a sense of emotional safety—a space where people feel heard, respected, and supported. This is not just good ethics; it is good business. It builds loyalty, invites repeat visits, and turns word-of-mouth into reputation. Informality is not just about scraping by—it is also about redefining what counts as valuable labor (Gill and Kasmir, 2016).

In combining artistic skill, client care, and emotional intelligence, Mehendi Didi models a kind of entrepreneurship that doesn’t separate empathy from enterprise. She shows that being emotionally attuned is not a weakness but a strategic strength—one that sustains business in ways that profit margins alone cannot. In her world, emotional labor is not an add-on. It is the very heart of what she offers.

Recent studies highlight how relational embeddedness and trust serve as critical enablers of innovation, allowing enterprises to adapt fluidly to shifting demands and optimize resource use in real time (De Haan and Thorat, 2023). At the same time, recent research underscores how community-rooted entrepreneurs co-create sustainable social value alongside economic outcomes—particularly in informal and locally embedded contexts where care, trust, and responsiveness shape entrepreneurial success (Brown and Pattinson, 2025). While Mehendi Didi's business is hyperlocal and analog, her intuitive responsiveness to fluctuating demand and her ability to build durable, trust-based client relationships reflect these same principles of adaptive innovation and embedded value creation.

Discussion: Grounding entrepreneurial theory in context

Mehendi Didi's journey invites us to rethink what entrepreneurship really looks like. Her work may unfold in a small Mumbai neighborhood, but the ideas it brings forward are anything but small. Leadership, strategy, innovation—they all appear in her story. Just not in the form textbooks expect.

Entrepreneurial theory often centers on formal businesses: funded startups, digital scaling, and performance metrics. But that lens leaves out a huge portion of the world's entrepreneurs—especially women in informal economies. In Mehendi Didi's case, enterprise grows through social trust, emotional care, and local credibility—not through apps or accelerators. Her work adds to a growing scholarship that urges us to decolonize entrepreneurship theory, shifting attention from the boardroom to the bazaar, from the formal to the familiar (Dey and Steyaert, 2016; Welter, 2011).

In this reframing, leadership is not about job titles—it is about guiding others with care and clarity. Trust is not built through contracts, but through years of reliable service. Emotional labor is not a soft skill—it is a hard-earned strategy for business success. These aren’t side stories in entrepreneurship—they are central chapters, especially in the global South. Recognizing the emotional and embedded nature of informal work is not just inclusive—it is essential to understanding how business actually happens (Basu and Goswami, 2017; Gill and Kasmir, 2016).

We do not need to “include” people like Mehendi Didi into entrepreneurship theory as an afterthought. They have always been there—building, mentoring, and innovating. What needs fixing is not their visibility, but our academic lens. Expanding entrepreneurship theory means honoring these forms of work on their own terms—not as exceptions, but as important models of what enterprise can be.

Conclusion

Transformational leadership, emotional intelligence, and social trust are not fringe elements in informal enterprise—they are the foundation. Through the everyday example of Mehendi Didi, this research note shows how informal entrepreneurs—especially women—develop complex, thoughtful strategies for navigating work without formal support systems.

These strategies demand our attention. They show us that business can be built on care, not just capital. That leadership can happen on a neighborhood street, not just in a boardroom. That emotional labor is not a soft extra—it is what keeps clients coming back.

If we want entrepreneurship theory to reflect the world as it is, we must make space for these grounded, culturally rich, and deeply relational ways of working. Mehendi Didi's story is not just about mehendi. It is about meaning, identity, and place. And it reminds us that sometimes, the most powerful enterprises are those rooted in community, carried by trust, and held together by quiet, consistent acts of leadership.