edba université paris-dauphine thesis vincent giolito - 28 april 2014

The role of Authentic Leadership on Followers' Eudaimonic Well-being

and Business-unit Performance

Dissertation submitted by Vincent Giolito

In partial fulfillment of the degree of Executive Doctorate in Business Administration

Université Paris-Dauphine

Supervisor: Prof. Robert C. Liden University of Illinois at Chicago

Marche au vrai. Le réel c'est le juste, vois-tu Et voir la vérité c'est trouver la vertu

Victor Hugo, Contemplations, III:8

Vincent Giolito - EDBA dissertation 2

Abstract Within the current of positive organizational scholarship, the theory of authentic leadership claims that

leaders perceived as "true to themselves" get better performance from their followers, while those

followers enjoy a higher level of well-being. This study empirically tested the hypothesized positive

relationships between authentic leadership and a) objective measures of performance (sales and profit

growth) at the business-unit level and b) a composite measure of subjective "eudaimonic" well-being

coming from positive psychology that encompasses not only job satisfaction but also meaning, flow,

quality of relationships and personal accomplishment. Eudaimonic well-being was hypothesized to

partially mediate the relationship between authentic leadership and performance. Power distance and

team-member exchange were hypothesized as moderating variables.

A cross-sectional research was conducted in a French retail chain (N = 552 employees in 63 stores).

Data were primarily analyzed by multilevel structural equations modeling and secondarily with

aggregated data and mediated moderation. In the multilevel model, results validate the positive

relationship between authentic leadership and eudaimonic well-being, but not the other relationships.

Two of the four dimensions of authentic leadership are shown to have a stronger impact on

eudaimonic well-being than the global composite construct. With the aggregated data analysis,

authentic leadership a positive relationship is found with both eudaimonic well-being and sales

growth; no moderation effect is verified. An alternative theory, servant leadership, is shown to have a

stronger positive influence than authentic leadership on both sales growth and employees' eudaimonic

well-being.


Acknowledgements This work has been a long journey that I have travelled with the help of many companions. By order

of appearance, first comes Professor Pierre Romelaer. From the outset and all along the way, he gave

me the right directions. Then naturally there is Bob – I mean Professor Robert C. Liden. Due to his not

being often in Paris, we had only rare, but long and rich conversations. Multiple e-mail exchanges

allowed us to have a close collaboration. His encouragements, his relentless enthusiasm, only

tempered by occasional reminders for the rigor that science deserves, have been more than precious.

Eric Campoy also has been key to the endeavour. What I now know about statistics owe much to his

explanations. Thanks also to Fred Walumbwa, a key researcher in authentic leadership, for his backing

some of my initial ideas and taking part in the defense committee. Pierre Volle, the current director of

the Dauphine EDBA program, also helped. More remotely, Margaret "Peggy" Kern and Prof.

Seligman at University of Pennsylvania gave me their support and advice.

Without the warm welcome I received in the company where I collected the data, nothing would have

been possible. I am indebted to Patrice Richard, CEO of Saint-Gobain Distribution, his executive HR

team, particularly Olivier Griveaud and Emmanuel Boulineau, and the greater Paris area subsidiary

managers – especially CEO Patrick Bourdon and the area managers. I express warm thanks to the

store managers who welcomed me and to the more than 600 employees who took the time to respond

to my lengthy questionnaire. My colleagues in the 5th cohort of the Dauphine University Executive

Doctorate in Business Administration were a permanent source of support – special mention for

Cédric Woindrich, who has been instrumental for finding where to conduct the research.

I received multiple encouragements from my family, parents and friends. Many thanks all. All along,

my partner Ariane was on the frontline, not only enduring my not being here but also, when home,

sharing my doubts about just the idea of going on or the value of the results I was getting at. She

somehow made the whole thing possible and I send her all my gratitude.


TABLE OF CONTENTS

Abstract ................................................................................................................................................................... 2 Acknowledgements ................................................................................................................................................. 3 Foreword ................................................................................................................................................................. 5 Part One - Introduction ......................................................................................................................................... 6

1. Background .................................................................................................................................................. 6 2. Research questions ...................................................................................................................................... 8 3. Contributions ............................................................................................................................................. 10

Part Two: Overview of the constructs ................................................................................................................ 13 4. The authentic leadership construct ............................................................................................................ 13

a. Authentic leadership within positive organizational scholarship .......................................................... 13 b. The emergence of authentic leadership ................................................................................................. 13 c. The dimensions of authentic leadership ................................................................................................. 15

5. The eudaimonic well-being construct ........................................................................................................ 18 a. Emergence of eudaimonic well-being in positive psychology and organizational scholarship ............ 18 b. Dimensions of eudaimonic well-being .................................................................................................. 18

6. Alternative leadership constructs ............................................................................................................... 22 a. Leader-member exchange (LMX) ......................................................................................................... 23 b. Servant leadership ................................................................................................................................. 24

7. Moderating variables ................................................................................................................................. 25 a. Power distance ....................................................................................................................................... 25 b. Team-member exchange ....................................................................................................................... 25

Part Three - Theoretical model and underpinnings .......................................................................................... 27 8. Relationships between Authentic leadership and performance ................................................................. 27

a. Global authentic leadership and performance ....................................................................................... 27 b. The components of authentic leadership and performance ................................................................... 28

9. Relationships between authentic leadership and eudaimonic well-being ................................................. 30 a. Global authentic leadership and eudaimonic well-being ....................................................................... 30 b. Components of authentic leadership and eudaimonic well-being ......................................................... 32

10. Relationships between eudaimonic well-being and business performance ............................................ 36 a. Global eudaimonic well-being and work performance ......................................................................... 37 b. Components of eudaimonic well-being and performance ..................................................................... 39

11. Rationale for proposed moderation effects ............................................................................................. 45 Part Four: Empirical Study ................................................................................................................................. 47

12. Settings .................................................................................................................................................... 47 a. Context ................................................................................................................................................... 47 b. Procedure ............................................................................................................................................... 50 c. Measures ................................................................................................................................................ 51 d. Analysis method .................................................................................................................................... 56

13. Results ..................................................................................................................................................... 58 a. Descriptive statistics .............................................................................................................................. 58 b. Aggregation criteria ............................................................................................................................... 61

14. Testing hypotheses .................................................................................................................................. 64 Part Five – Discussion and conclusion ................................................................................................................ 71

15. Discussion ............................................................................................................................................... 71 a. Implications for positive organizational scholarship ............................................................................. 71 b. Implications for authentic leadership theory ......................................................................................... 72 c. Implications for positive psychology ..................................................................................................... 75

16. Limitations .............................................................................................................................................. 76 17. Recommendations for future research .................................................................................................... 77 18. Implications for practice ......................................................................................................................... 78 19. Conclusion .............................................................................................................................................. 79

References ............................................................................................................................................................. 80


Foreword

Over my career as a business reporter and editor, then as an executive coach, I had the opportunity of

hundreds of conversations with leaders and managers of all levels, in all industries over four

continents, from foremen in car factories to entrepreneurs in the Internet to financiers to CEOs of

Fortune 50 companies. Whatever their level of responsibility, they all held organizational growth as a

primary objective. It is probably a reason why I chose growth as performance indicators in that study.

Yet I know what a strain this imperative imposes on people, both followers and leaders. In parallel I

discovered "positive" psychological and organizational theories. They posit that leaders what they

think and feel right and true to their own selves often get better results to the benefit of all parties.

Authentic leadership is the most advanced stream, and its promises and conclusions match many of

my observations in the real world of business.

For the sake of simplicity, reliability and, hopefully, generalizability, I chose to do the investigation at

the lowest possible level in the organization – frontline employees and their direct managers. But due

to my experience, an implicit background of my research was the strategic framework at the corporate

level. What if inspired leaders of big companies embraced authentic leadership? What would the

results be? Building on his own resource-based view of the firm, Barney (1986; 1991) envisioned

organizational culture as a potential source of sustainable competitive advantage. A number of

scholars in strategy follow suit in highlighting how important managing people is (e.g. Pfeffer, 1995).

Could authentic leadership be embedded in culture and result in really happy people in thriving

organizations? This is my belief. This is all I can wish for.

Boulogne, April 5, 2014


Part One - Introduction

1. Background

For over a decade, positive psychology and positive organizational scholarship studies have developed

to better comprehend individual and organizational phenomena that put desirable antecedents and

outcomes into play. In its first conceptualization, positive psychology has been defined as a

framework for a science of positive subjective experience, positive individual traits and positive

institutions that promises to improve quality of life and prevent pathologies (Seligman &

Csikszentmihalyi, 2000). Since then, it has vastly expanded the knowledge on positive emotions,

subjective well-being and related topics (e.g. Fredrickson, 1998; Diener, 2012). In parallel, positive

organizational scholarship has developed as the "scientific, theoretically based, and rigorous

investigation of positive phenomena" in and throughout organizations (Cameron & Caza, 2003).

Positive organizational scholarship revolves around four areas of convergence: a) the premise that

positivity elevates individuals, groups and organizations; b) a deliberate focus on virtuousness,

desirable traits, and behaviors, c) a focus on "positively deviant performance" – or simply put, much

better than average; and d) an "alternative perspective" in which the "interpretation of phenomena is

altered so that, for example, challenges and obstacles are reinterpreted as opportunities and strength-

building exercises" (Cameron & Spreitzer, 2012: 2). Promoters of positive organizational scholarship

now claim that their discipline is "coming of age" (Spreitzer & Cameron, 2012: 1034). In the

meantime, other authors have proposed positive organizational behavior to study individual positive

psychological conditions and human resource strengths that are related to employee well-being or

performance improvement (Bakker & Schaufeli, 2008).

Within positive organizational scholarship, authentic leadership is the most developed stream of

research in the leadership area. It has been conceived of as the root construct underlying all positive

forms of leadership (Avolio & Gardner, 2005). Authentic leadership refers to:


"a pattern of leader behavior that draws upon and promotes both psychological capacities

and a positive ethical climate, to foster greater self-awareness, an internalized moral

perspective, balanced processing of information, and relational transparency on the part

of leaders working with followers, fostering positive self-development" (Walumbwa,

Avolio, Gardner, Wernsing, & Peterson, 2008).

The promoters of the construct made two bold promises. On the one hand, authentic leadership would

unleash potential individual- and group-level performance regardless of the leaders' level of

responsibility or personal leadership style (Gardner & Schermerhorn Jr, 2005; Avolio & Mhatre,

2012). On the other hand, it would bring about well-being on the part of leaders and followers alike.

The notion of well-being at stake here is not the hedonic, or pleasurable well-being, but a eudaimonic

vision of well-being that encompasses several components: self-realization, personal growth and

expressiveness and the realization of one's true nature (Ilies, Morgeson, & Nahrgang, 2005), and

dimensions such as self-acceptance, purpose in life, positive relationships (Ryff, 1989), engagement,

meaning and accomplishment (Seligman, 2011).

Since its inception, authentic leadership has gained in theoretical grounding and empirical validation.

A literature review suggests that the concept has passed the stage of introduction and elaboration and

now enters the stage of evaluation and augmentation (Gardner, Cogliser, Davis, and Dickens, 2011).

Early criticisms (e.g. Cooper, Scandura and Schriesheim, 2005; see also Algera & Limps-Wiersma,

2011) triggered a refinement in definitions (Walumbwa, et al., 2008). Investigations verified positive

correlations between authentic leadership and outcomes ranging from individual job performance to

job satisfaction to group-level business performance (Gardner, et al., 2011 for a review). Empirical

studies confirmed the relevance of authenticity and authentic leadership not only in the US, but also in

Europe (e.g., Endrissat, 2007; Rego, Sousa, Marques, & Cunha, 2012), Asia (e.g. Wang & Hsieh,

2013) and Africa (Walumbwa, et al., 2008). Interest has risen not only in the corporate world but also

in the police and the military (Peterson, Walumbwa, Avolio, and Hannah, 2012; Hannah, Walumbwa,

and Fry, 2011). Yet the theory's promises deserve further attention in two ways. The performance

aspect has hardly been examined in objective terms. Specifically, financial indicators should be

examined as critical for the objective assessment of the organizational effectiveness of the construct.


Second, as noted by Gardner and colleagues (2011), followers still do not receive as much attention as

leaders in the authentic leadership literature, even though both academic and practitioner literature

emphasized authentic followership from the outset (Luthans & Avolio, 2003; George, 2003; Shamir &

Eilam, 2005). Available studies have focused on either simple (e.g. job satisfaction) or ad hoc

indicators (e.g. psychological capital: Luthans & Youssef, 2004), rather than eudaimonic well-being.

Moreover, authentic leadership scholars call for broadening the range of mediating mechanisms in the

relationship between authentic leadership and performance (e.g. Avolio & Mhatre, 2012). Given

recent advances made by positive psychologists (Seligman, 2011; Huppert & So, 2013; Diener, 2012),

eudaimonic well-being is a natural candidate for mediating effects.

2. Research questions

Within the criteria of positive organizational scholarship, one may raise a series of issues. The first

one is: whether authentic leadership is positively related to objective indicators of success at the

business unit level, such as sales and profit growth? This is critical because for positive organizational

scholarship and authentic leadership theory, organizational performance is a central outcome. The

second question is: whether authentic leadership is positively related to the eudaimonic well-being of

the followers. Research so far has revealed that authentic leadership is positively related to job

satisfaction (e.g. Jensen and Luthans, 2006). But positive psychologists tend to extend their research

beyond those broad, even vague measures that relate essentially to positive emotions. They recently

developed more precise and complete definitions of well-being, sometimes referred to as flourishing

(e.g. Seligman, 2011; Huppert & So, 2013) or eudaimonic well-being. Eudaimonia refers to Aristotle's

view of happiness, which is what makes a life worth living, as opposed to the hedonic, emotion-based

vision of happiness (see Waterman, 1993).


Figure 1. Proposed model of interaction between constructs. Dotted arrows indicate moderation.

The combination of the first two questions leads to a theoretical model represented in figure 1 where

authentic leadership is positively related to business-unit financial performance. Authentic leadership

fosters financial performance in part thanks to the mediation of followers' eudaimonic well-being. This

model builds on the thesis that workplace happiness brings about better business performance (Harter,

Schmidt, and Hayes, 2002, 2003; Harter, Schmidt, Asplund, Killham, and Agrawal, 2010; Wright &

Cropanzano, 2000; Wright, Cropanzano, and Bonett, 2007) and neatly matches the promises of

positive organizational scholarship. In addition, the model includes two moderating variables. The first

one comes from cross-cultural leadership studies, as leadership perception in part depends on national

cultures (House, Hanges, Javidan, Dorfman, and Gupta, 2004). Citing Bandura (1986), Vogelsgang,

Clapp-Smith and Palmer (2009) note that authenticity is of particular importance for leaders

confronted to other cultures. The moderating variable in the current investigation is power distance,

that is, the degree to which members of an organization or society expect and agree that power should

be unequally shared (House, Hanges, Ruiz-Quintanilla, Javidan, Dickson, Gupta, 1999; Dorfman &

Howell, 1988). Low as opposed to high power distance perceived by followers should imply a greater

impact of authentic leadership on employee's eudaimonic well-being. The second moderating variable

is introduced because team dynamics have been shown to be an essential element of team performance


(Hackman, 1992). The model tested includes team-member exchange quality, or the team members'

perception of their own willingness to assist others, share ideas and feedback and in turn, how readily

information, help and recognition are received from other members (Seers, 1989). High as opposed to

low team-member exchange perceived by followers should reinforce the relationship between the

eudaimonic well-being of the followers and the effort they put in their jobs, leading to better

performance.

In other words, the proposed model means that leaders who are perceived as authentic have better

business results, in part due to the fact that their followers enjoy a higher level of eudaimonic well-

being. Whereas power distance tends to dampen the indirect effect of authentic leadership on

performance, team-member exchange tends to strengthen it.

3. Contributions

The current investigation sets out to empirically test the model represented in figure 1, in which the

authenticity of a leader is positively correlated to the financial performance of his or her business-unit,

and this correlation is partially mediated by the followers' degree of eudaimonic well-being, with

power distance and team-member exchange as moderating variables. Because the literature insists that

both authentic leadership and positive organizational scholarship theories apply regardless of leader

charisma and the type of organization (e.g. Gardner and Schermerhorn, Jr, 2004), the model has to be

tested with several managers in charge of comparable business-units. In order to rule out potential

external influences, the focus is on the direct relationship between those managers and their respective

team members – that is, their followers. The unit of analysis is the business-unit that is, a

suborganization with a formally assigned common leader, interdependent tasks among team members,

and a stable membership (Hackman, 2002, as cited by Hu, 2011) and separate financial accounts.

Several contributions to the current knowledge should be added. First, this study should enrich the

positive organizational scholarship literature (Cameron & Spreitzer, 2012: 2) both theoretically and

empirically: a) it focuses on attributes (authenticity, well-being) universally considered positive

(Kernis & Goodman, 2006; Seligman, 2004); b) it has been deliberately conducted in a "positively

deviant" organization, a retail group that is the leader in its market and grows its edge over


competitors; c) it indeed aims at testing the relationships of a form of positivity (authentic leadership)

with the elevation of individuals, groups and organizations; and, d) authentic leadership, the theory

this study is based on, was developed with leader development (Avolio, 2010) since the beginning,

thus allowing the reinterpretation of challenges into opportunities. In addition, the current

investigation aims at e) connecting positive organizational scholarship and positive psychology

literatures through the first empirical exploration of the relationships between two separate, albeit

theoretically linked constructs, authentic leadership and eudaimonic well-being; and f) verifying the

hints at "positive spirals" where positive psychological and organizational phenomena trigger and

sustain each other (e.g. Sekerka, Vacharkulsemsuk, & Fredrickson, 2012; Salanova, Bakker, &

Llorens, 2006; Walter & Bruch, 2008).

Second, the current investigation also attempts at deepening the authentic leadership literature. Trying

to confirm the rare insights already identified between authentic leaders and financial performance

(Clapp-Smith, Vogelsgang, and Avey, 2008; Jensen & Luthans, 2006) is but one part of the

contribution. This study should refine the knowledge of the positive outcomes of authentic leadership.

The model's assessment should bring about a better comprehension of the mechanisms – direct and

indirect – by which authentic leadership generates positive results as theorized a decade ago.

Responding to calls for a multi-level perspective (Yammarino, Dionne, Schriesheim, & Dansereau,

2008), the study should add to the growing stream of research that examines small groups as the unit

analyzed and tries to delineate the role of the components of authentic leadership. It also attempts to

clarify the impact of authentic leadership as compared to other positive theories, namely leader-

member exchange (Henderson, Liden, Glibkow, and Chaudrhry, 2009 for a review) and servant

leadership (van Dierendonck, 2011 for a review).

The study also aims to advance knowledge in the positive psychology area, by validating an

instrument for measuring eudaimonic well-being (or "flourishing") in the workplace. Another advance

will be the assessment of the role of authentic leadership as an antecedent of eudaimonic well-being

and performance as an outcome, in a rather rare empirical connection between positive organizational

scholarship and positive psychology.


The present dissertation is organized as follows. The next part presents in more detail the main

constructs of the proposed model, authentic leadership and eudaimonic well-being, as well as

alternative and moderating variables(sections 4 through 7). In part three, sections 8 through 11

introduce the underpinnings of the model and formulate the hypotheses put to test. The part four

presents the empirical study that has been conducted in order to test this model. The settings and

methods of the study are explained, and then its results are exposed (sections 12-14). The final part

(sections 15-19) is devoted to the discussion of the results, including the limitations identified and

implications for both scholars and practitioners. The conclusion offers suggestions for future research.


Part Two: Overview of the constructs

4. The authentic leadership construct

a. Authentic leadership within positive organizational scholarship

The study of authentic leadership has developed in close association with positive organizational

scholarship from the outset and remains so (see Luthans & Avolio, 2003; Avolio & Mhatre, 2012).

Authentic leadership is the only current in leadership research that matches the expressed criteria of

positive organizational scholarship. Several other streams of research focus on positive aspects and

desirable behaviors and outcomes such as servant leadership (e.g. van Dierendonck, 2011) or

appreciative inquiry (e.g. Cooperrider & Godwin, 2012), but neither their conceptual developments

nor the empirical validations were explicitly related to positive organizational scholarship. Besides,

compared to other currents of leadership research that are closest to it, authentic leadership is the only

one that claims the role of a root construct for all forms of positive leadership (Avolio & Gardner,

2005). By contrast, the lack of an ethical dimension in transformational leadership has long been an

issue (Bass & Steidlmeier, 1999). Transformational leadership was never a part of positive

organizational scholarship.

b. The emergence of authentic leadership

Authenticity in leadership is an idea with old roots. Aristotle linked authenticity with virtuousness and

eudaimonic well-being. Since then, authenticity depicts people "as being rich in complexity, actively

and intentionally pursuing a life in accord with their deepest potential" – which points to individual

and collective performance (Kernis & Goodman, 2006: 285). The word "authenticity" derives from the

Greek word Authento, "to have full power" (Trilling, 1972 cited by Gardner et al., 2011) and is

broadly defined as being true to oneself (Novicevic, Harvey, Buckley, Brown & Evans, 2006; Avolio,

Gardner, Walumbwa, Luthans & May, 2004). It is often referred to as symbolized by the maxim

"Know thyself" that is reflected in Socrates' as well as Confucius' ideals (Kernis & Goodman, 2006;


Bass & Steidlmeier, 1999) and cited in literary works from Shakespeare to Rabelais. In the

contemporary era, authenticity reflects the idea of self-realization put forward by humanistic

psychologists Maslow (1968) and Rogers (1961). Taking stock of philosophical and psychological

research, Kernis (2002, 2003) and Kernis & Goodman (2006) eventually offer a multicomponent

definition of authenticity that consists of "awareness, unbiased processing, behavior and relational

orientation" (italics in original) and serves as the base for the current conception of authenticity in

leadership research.

Authentic leadership as a construct emerged progressively. Novicevic and colleagues (2006) trace

authentic leadership back to Barnard's works on the executives in the 1930s and 40s. They identify

authenticity as a "leader's moral capacity to align responsibilities of the self, to the followers, and to

the public in efforts to sustain cooperative efforts within and outside of the organization". Since the

financial scandals of the turn of the century, authentic leadership has become of interest for both

practitioners and scholars. On the practitioner side, Bill George recounted the story of his successful

medical company, Medtronic, in the best-selling book 'Authentic leadership: rediscovering the secrets

to creating lasting value' (2003). He emphasized self-awareness, consistency and self-discipline,

meaning, values, enduring relationships, refuse to compromise, and personal development. Among

scholars, a milestone was the introduction of authenticity in the construct of transformational

leadership (Bass & Steidlmeier, 1995). Building on Hoy and Henderson's works in educational

leadership (1986), Bass and Steidlmeier included a moral dimension in their model and termed it

authentic transformational leadership – arguing that only this form of transformational leadership may

liberate human potential and develop effective, satisfied followers (Bass & Steidlmeier, 1995: 211).

The first use of the phrase authentic leadership in the sense of the current investigation is traced to the

contribution by Luthans & Avolio to Dutton, Quinn & Cameron's edited book Positive Organizational

Scholarship: Foundations for a New Discipline (2003). In their words, leaders' authenticity means

owning one's personal experience and acting in accord with one's true self, and elicits behaviors such

as giving priority to developing associates (Luthans & Avolio, 2003). The construct and its main

components were developed before and during the University of Nebraska at Lincoln Gallup

Leadership Institute Summit in Omaha, Nebraska, in 2004. Despite various criticisms, including


definition and measurement issues (e.g. Cooper, Scandura, & Schriesheim, 2005), level-of-analysis

questions (Yammarino et al., 2008) and even theoretical problems (e.g. Algera & Lips-Wersma,

2011), authentic leadership has generated an abundant stream of research as noted by Gardner and

colleagues' review (2011). Oddly enough, not much research has been undertaken on its antecedents.

One exception is psychological capital, which has also been proposed as an outcome (Luthans &

Avolio, 2003; Jensen & Luthans, 2003).

Authentic leadership is seen as a psychological state-like characteristic of the leader. On a continuum

between traits that are essentially fixed and moods or fleeting emotions which fluctuate in a matter of

hours, authentic leadership has been posited as relatively durable, but also malleable (Avolio &

Luthans, 2003; see also Avolio, et al., 2005). This implies that authentic leadership can be developed

in individuals (Shamir & Eilam, 2005). The definition of authentic leadership is now close to a

consensus that builds on conceptualizations by psychologists (see Goldman & Kernis, 2002; Kernis,

2003a; 2003b, Kernis & Goldman, 2006). It comprises of four elements: self-awareness, transparent

communication, an internalized moral perspective, and balanced processing of information (Walumba,

et al., 2008). Although leader authenticity is designed to be appraised by followers, it is worth noting

that only transparent communication explicitly involves a relationship between leader and followers.

c. The dimensions of authentic leadership

i. Self-awareness

Kernis' (2002) model of authenticity mentions awareness of, and trust in, one's motives, desires and

self-relevant cognitions as a condition of authenticity. Gardner & Schermerhorn (2004) highlight the

need of knowledge of one's emotions, values and beliefs. Shamir and Eilam (2005) insist that

authentic leaders achieve a high level of self-clarity, with strongly held values and convictions. In their

qualitative study of German-speaking Swiss managers, Endrissat, Müller and Kaudela-Baum (2007)

write that leadership is seen as successful if the leader is honest and true with others and with

themselves. Not playing roles is important "because employees are able to notice and sanction the

leader's unauthentic behavior" (Endrissat et al., 2007: 212). Self-awareness does not mean painting a


rosy or even a totally consistent self-image. Rather, it supposes overcoming the systematic self-

overestimation bias (e.g. Dunning, 2005) accepting one's own weaknesses (Diddams & Chang, 2012),

and inherent contradictory self-aspects (Ilies et al., 2005). Introspection, though, may remain

contingent - Goffee and Jones (2009) advocate a "good enough" self-knowledge and suggest practical

ways to achieving it.

ii. Transparent communication

The third component of authentic leadership, transparent communication, refers to "presenting one's

authentic self (as opposed to a fake or distorted self) to others" (Walumbwa, et al., 2008). Kernis &

Goodman (2006) posit that relational authenticity involves valuing and striving for openness, sincerity

and truthfulness. This type of communication, which implies a large degree of divulgation, allows

others to see the leader's "real" self and facilitates a truthful dialogue with followers. This kind of

relationships hinges on leaders' and followers' need for self-knowledge, were it only to get

confirmation of preexisting self-conceptions (Swan, 1983, as cited by Kernis & Goodman, 2006).

Transparent communication also helps avoiding pitfalls inherent to the relationship: Authentic

leadership should result in authentic followership, where followers do not entertain illusions or

delusions about their leader and work under the leaders' supervision out of sincere engagement – not

because they feel they have no other way of earning their living (Gardner & Avolio, 2005).

iii. Balanced processing

The second component of Authentic leadership is termed balanced processing of information and

refers to "leaders who show that they objectively analyze all relevant data before coming to a

decision" and "solicit views that challenge their deeply held positions" (Walumbwa et al., 2008). Some

conceptualizations seemed to make it an accessory of self-awareness, since it essentially consisted of

processing self-relevant information (Kernis & Goodman, 2006). In authentic leadership theory this

element refers to an unbiased processing of all information relevant to the relationship between the

leader and their followers and to the context. Eliminating prejudices is not sufficient: authentic


leadership must be fact-based. As Ilies et al. (2005) put it, this involves the selection of information-

generating situations even if they entail some risk. This concern for search and processing for relevant

factual information is reflected in Endrissat's study (2007): on the one hand, followers at all levels

consider that the attention paid by leaders to business facts and objective data is key to an effective,

authentic relationships between leaders and followers; on the other hand, leader themselves consider

their duty to base their decisions on factual evidence.

iv. Internalized moral perspective

The fourth and final element, an internalized moral perspective, has proved more controversial in the

early theoretical developments of authentic leadership. Cooper, Scandura & Schriesheim (2005)

cautioned against the moral dimension as too normative and on the grounds that the possibility to

teach ethics can be questioned. Other important theorists did not include the ethical/moral component

in their definition of authentic leadership. Neither Shamir & Eilam (2005) nor Sparrowe (2005) retain

the idea that self-disclosing leaders necessarily will reveal in moral champions. However, following

the line of reasoning by Walumbwa and associates (2008), the ethical and moral component of

authentic leadership is retained in this study as an "internalized and integrated form of self-regulation"

that is "guided by internal moral standards, and values versus group, organizational and societal

pressures" and results in behaviors that are consistent with those standards and values. This choice is

consistent with Bass & Steidlmeier's view of authenticity in transformational leadership (1999) as

confirmed by Price (2003), and the model developed by May, Chan, Hodges and Avolio of dealing

with moral dilemmas (2003). It also aligns with the stance of positive organizational scholarship and

Positive psychology that is, identifying and delineating phenomena that represent positive deviance

(Cameron, Dutton, & Quinn, 2003). The ethical and moral dimension reflects that authentic leadership

is not value-neutral – just like positive organizational scholarship (Cameron & Spreitzer, 2012).


5. The eudaimonic well-being construct

a. Emergence of eudaimonic well-being in positive psychology and positive organizational

scholarship

Eudaimonic well-being refers to the Aristotelian definition of happiness. The highest of all goods, it

results of activities people do for their own sake, as self-realizing, not in the intention of some further

goal (Aristotle, Nicomachean ethics, XII, 3; Seligman, 2004). It is commonly presented as opposed to

a hedonic version of well-being, that is the pursuit of pleasures and avoidance of pain (Waterman,

1993; 2007). In positive psychology, hedonic well-being has been the first focus of positive

psychology in the 2000s (Seligman & Csikszentmihalyi, 2000a; Seligman, 2011). Theoretical and

empirical advances have brought about a much better understanding of positive emotions and life

satisfaction, for example (e.g. Fredrickson, 1998; Diener, 2012). Researchers now focus on

eudaimonic well-being, sometimes with different denominations such as flourishing (Huppert & So,

2013) or positive health (Ryff & Singer, 1998). In the positive organizational scholarship current

similarly, eudaimonic well-being was not of much concern in the first endeavors. But in part with the

inspiration from psychologists (see Peterson & Seligman, 2003) and in relation with research on

intrinsic motivation (Waterman, Schwartz, and Conti, 2006) eudaimonic well-being gained interest

from scholars. Positive organizational scholarship had started by suggesting research on excellence,

transcendence and performance at the organizational level (Cameron, Dutton, & Quinn, 2003). At

present, scholars have made leaders' and followers' eudaimonic well-being part of their agenda:

according to Cameron and Spreitzer (2012), positive organizational scholarship examines the

development of and the effects associated with what is good for its own sake.

b. Dimensions of eudaimonic well-being

In order to explore the nomological network of eudaimonic well-being, positive psychologists

employed different methods. Ryff and Singer (1989) reviewed the psychological theoretical literature

relating to positive functioning from Maslow's (1968) self-actualization to Rogers' (1961) fully

functioning person to Jung's concept of individuation among others. The dimensions identified are


self-acceptance, positive relations with others, autonomy, purpose in life and personal growth. Keyes'

notion of "flourishing" that is, complete mental health, compounds emotional, psychological and

social well-being (Keyes, 2002). She notes that the dimensions of positive mental health form clusters

that mirror the symptoms from the Diagnostic and statistical manual of mental disorders (DSM).

Huppert and So (2013) expanded this method with three categories of the DSM-IV and the

international classification of diseases; then defined the mirror opposites. Flourishing, in their

theorization, includes ten dimensions that combine emotional and eudaimonic well-being. Building on

previous works, Diener, Wirtz, Tov, Kim-Prieto, Choi, and colleagues (2009) developed new scales to

measure not only subjective, emotional well-being and life satisfaction, but also other constructs such

as one's purpose in life and quality in personal relationships with others. Eudaimonic well-being is

also part of the self-determination theory of intrinsic motivation (Deci & Ryan, 2000). Self-

determination theory entails three components: autonomy, competence and relatedness. A simple

synthesis of the various dimensions for eudaimonic well-being has been provided by Seligman (2011).

It is made up of five dimensions and represented under the acronym PERMA: Positive emotions,

Engagement, good Relationships, Meaning and Accomplishment.

i. Positive emotions

The positive emotions component of the PERMA model first denotes the agreeable feelings and moods

that one can experience at any moment. Emotions begin with an individual assessment of the personal

meaning of some antecedent event, which triggers loosely coupled responses such as subjective

experience, facial expressions, thoughts and physiological changes (Fredrickson, 2001). Genuine or

so-called Duchenne smiles are typical expressions of positive emotions (e.g. Johnson, Waugh,

Fredickson, 2010). Joy and interest are the most typical families of positive emotions, along with

contentment – free-floating positive mood people experience when continuing any line of thinking of

action they have initiated (Clore, 1994, cited by Fredrickson, 2001). Besides fleeting moods,

Seligman's (2011) model includes in positive emotions the longer-term of life satisfaction. The

positive emotions component of the PERMA model of eudaimonic well-being matches what Diener and

other scholars terms Subjective well-being that is, people's evaluations of their lives in terms both of


cognitions and feelings. Among antecedents of subjective well-being, Diener (2012) cites social

support and fulfillment of basic needs, that can be considered universal. But he insists on cultural

differences and, more precisely, on the consistency between the beliefs and values of the individuals

and that of the society they live in.

ii. Engagement

Engagement is synonymous with the concept of flow. Developed by Csikszentmihalyi (1990) from

interviews and observations of professionals engaged in all walks of life, flow refers to what people

experience when their attention momentarily can be freely invested to achieve their personal goals.

The individual may lose consciousness of him- or herself and of the passing time. Flow has been

described not only with high performing athletes and musicians, but also with factory workers. It's

probably what Keith Richards, lead guitar of the Rolling Stones, mentions when talking about being

on stage: "We're elsewhere" (Shine a light, Martin Scorsese director, 2008). Flow is distinct from

positive emotions as it often comes with frequent physical tension, sometimes even actual pain – and

almost never laughter or other manifestations of joy. Flow depends on the balance between challenge

and mastery (Csikszentmihalyi, 1991), two dimensions that mirror autonomy and competence in the

self-determination theory of well-being (Ryan & Deci, 2000).

iii. Good Relationships

"Very little that is positive is solitary", Seligman (2011) writes in order to explain the inclusion of

positive Relationships as the third component in the PERMA model of eudaimonic well-being. "Central

among the core criterial goods comprising optimal living is having quality relationships to others",

Ryff and Singer (2000) confirm. So does Keyes (2002): "Individuals are functioning well when …

they have warm and trusting relationships". Her study on the larger concept of mental health

continuum uses Ryff and Keyes (1995) measure of well-being, which includes the quality of

relationships. In a research on very happy individuals which echoes positive organizational

scholarship's requirements, Diener and Seligman (2002) highlighted that highly social character and


behavior and stronger romantic and other social relationships were the key differentiators between the

happiest 10 percent of a group compared to the average and unhappiest members. Good relationships

were been shown as partly determined by prior positive emotions. Waugh & Fredrickson (2006)

explain that positive emotions enhance the overlap between oneself and the other person's, thus

facilitating communication. Some authors have attempted a more precise definition of what "good" or

"positive" relationships are. According to Dutton & Heaphy (2003), elements of high quality

connections are the ability to carry emotions, "tensility" that is, the ability to bend so as to withstand

strain under difficult circumstances, and the degree of reciprocal openness.

iv. Meaning

Meaning is briefly defined as "Belonging to and serving something that [people] believe is bigger than

the self" (Seligman, 2011). It could be argued that the need for meaning in life is foundational for all

religions and many social movements. In the recent era, Viktor Frankl's (1948) book Man's search for

meaning is often quoted as the modern reference for the concept: "Man's search for meaning is the

primary motivation in his life and not a secondary rationalization of instinctual drives". Recalling his

own experience as a prisoner in a concentration camp, he writes that there, "what really mattered was

not what we expected from life, but what life expected from us" (Frankl, 1948). The meaning

component has interrelations with positive emotions (see Fredrickson, 2001). It is also related to

Engagement or flow, since only personal meaning explains the dedication individuals can put in their

trade or practice, to the extreme point that some of them display little interest in life beyond their

passion. In that regard, Csikszentmihalyi (1991) cites the examples of Picasso and chess champion

Bobby Fischer. In the workplace, it has been shown that people unambiguously ascribe a meaning to

their occupation. Building on a prior conceptualization (Bellah, Madsen, Sullivan, Swidler, and

Tipton, 1985) Wrzesniewski, McCauley, Rozin and Schwartz (1997) showed how workers in clerical

or supervising positions see their activity either as a job, a career, or a calling. A job is felt as a

constraint, with financial compensation being its main advantage. In the career view, individuals don't

think much of their daily tasks, but focus on the advancement perspective. When the meaning of

calling is attributed, individuals focus on personal self-fulfillment through serving a cause.


v. Accomplishment

Fifth and last, the Accomplishment component of the PERMA model refers to the actual behavior of

setting short- to medium-term objectives for oneself and attaining those goals. This component has

been introduced because the first four didn't adequately describe objectives people choose to pursue

for their own sake (Seligman, 2011: 18). Personal striving, goal-setting and goal attainment is

associated with well-being (see Emmons, 1986; 1992; Sheldon & Elliot, 1999; Sheldon & Houser-

Marko, 2001) at least in some domains. Accomplishment in that sense is naturally related to meaning,

since intermediary goals should reflect the broader values that one ascribes to one's own life.

Accomplishment is also related to positive emotions when a goal is attained.

Altogether, early empirical studies via confirmatory factor analysis (Butler & Kern, 2013; and the

current investigation) confirm that the positive psychology's PERMA model of eudaimonic well-being

may be considered a valid construct, including its five separate but related components. This model

appears compatible with the conditions of positive organizational scholarship by its scientific

approach, its focus on the best in people and organizations, based on the premise that positivity

triggers desirable outcomes (Cameron & Spreitzer, 2012).

6. Alternative leadership constructs

In order to better situate authentic leadership among other positive theories, the current study tests two

other major constructs. Before presenting them, a precision appears necessary. In the current

investigation I deliberately chose not to test the concept of transformational leadership (Bass, 1990;

1997), which as defined by Bass (1990) and refined by Bass and Steidlmeier (1999), comprises of

charisma, inspiration, intellectual stimulation, individualized consideration, and strong ethics. The

rationale behind the choice is twofold. First, even though the two concepts remain close to one

another, Walumbwa and colleagues (2008) found manifest differences and a better explicating power

for authentic leadership. Based on the studies of scale development, Neider and Schriesheim (2011)

recommended considering authentic and transformational leadership as two distinct constructs.


Second, transformational leadership is not associated with positive organizational scholarship, nor

does it comply with its criteria. For example, the notion of transformational leadership does not

demand any virtuousness on the part of the leader. In addition, transformational leadership remains

focused on upper-echelons leaders as denoted by its components, authentic leadership theory better

addresses daily issues at all levels (Gardner & Schermerhorn Jr, 2004).

The two major constructs of leadership theories that will serve as alternatives to authentic leadership

are leader-member exchange (LMX) and servant leadership. They are close to positive organizational

scholarship, although they are usually not presented as part it.

a. Leader-member exchange (LMX)

Cited as "pathbreaking" in a meta-analysis by Dulebohn, Bommer, Liden, Brouer and Ferris (2012),

the Leader-member exchange theory explicitly focuses on the relationship between leaders and

followers. In that it has in part been paving the way to authentic leadership theory. Initially based on

the observation of vertical, dyadic linkage between superior and collaborator (Graen & Uhl-Bien,

1995), leader-member exchange owes much – like Authentic leadership – to the social exchange

theory (Blau, 1964) which posits interpersonal, implicit need for and accomplishment of reciprocity as

an important basis for workplace relationships. Dulebohn and colleagues expose a continuum, where

low-LMX relationships are characterized by economic, formal reciprocation and high-LMX

relationships are signaled by increased feelings of mutual obligation. Main antecedents of high LMX

are the follower's competence in their job, the contingent rewards behavior shown by the supervisor,

"liking" and perceived similarity, transformational leadership and trust attributed to the leader.

Followers' psychological traits were correlated to LMX level to a much lesser extent. LMX level

consequences range from perceptual satisfaction with supervisor and organization to perception of

empowerment to intentions to quit (Dulebohn, et al., 2011). The concern for the relationship between

leader and followers is reflected in Authentic leadership theory by the idea of "authentic followership"

(Avolio, Gardner & al, 2004). However, the closeness of the two concepts has so far inspired few joint

studies. An exception is a multilevel study in which LMX appears to mediate the relationship between

authentic leadership and employee voice behavior (Hsiung, 2011).


b. Servant leadership

Servant leadership is a term coined by Greenleaf (1977), a former executive of US

telecommunications firm AT&T (George, 2003). "The Servant-Leader is servant first… The test, and

difficult to administer is this: Do those served grow as persons?" (Greenleaf, 1977 as cited by van

Dierendonck, 2011). Graham goes on highlighting the paradox: "It is the leader who models service

by humbly serving the led, rather than expecting to be served by them… [Servant leadership] is a gift;

it also tends to be contagious so that followers of servant leaders are inspired to pass on the gift"

(Graham, 1991). In part inspired by the Bible – especially St. Paul – servant leadership has only been

loosely defined, Van Dierendonck (2011) regrets. His review notes several characteristics: the servant-

leader is governed by the concern to help followers grow; he or she is "primus inter pares", equal

rather than superior to the followers; then "serving and leading become almost exchangeable". Major

elements are: empowering and developing people; authenticity; humility; interpersonal acceptance;

providing direction; and stewardship (Van Dierendonck, 2011). Liden, Wayne et Zhao and Henderson

(2008) determined nine dimensions as starting points for servant leadership, including emotional

healing, helping subordinates grow and succeed, putting subordinates first, behaving ethically, and

servanthood. Empirical analysis found support for seven dimensions. Key antecedents to servant

leadership are part individual, part organizational. On the individual side, according to van

Dierendonck (2011), the servant leader must demonstrate a willingness to serve, based on self-

determination (cf. Deci & Ryan, 2000), moral cognitive development, and cognitive complexity. On

the organizational culture side, servant leadership depends on two parameters, humane orientation and

power distance (van Dierendonck, 2011, citing House, et al., 2004). Servant leadership has been

associated with a series of positive outcomes, from organizational trust (e.g. Dannhauser & Boshoff,

2006, as cited by van Dierendonck, 2011) to organizational commitment and in-role performance

(Liden, et al., 2008) to overall corporate success (Graham, 1991). Investigation on potential overlaps

between servant leadership and Authentic leadership is warranted since the constructs share several

common elements including, but not limited to the notion of authenticity, the emphasis on follower's


development, and the moral dimension. Extant literature calls for such delineations (e.g. Walumbwa,

et al., 2008).

7. Moderating variables

a. Power distance

For years scholars have called for more culturally diverse studies of authentic leadership (e.g. Gardner

et al., 2011), were it only to verify whether it can be associated with universally recognized styles or

value-contingent styles of leadership (Dorfman, Javidan, Hanges, Dastmalchian and House, 2012).

Power distance is one of the cultural dimensions used to assess national cultures (Hofstede, 1980).

Hofstede took the phrase from Mulder (1977) to express "a measure of the interpersonal power or

influence between [boss] and [subordinate] as perceived by the less powerful of the two, the

[subordinate]". In a more recent definition, it refers to "the degree to which members of a collective

expect power to be distributed equally" (House, et al; 1999, Castel, Deneire, et al., 2007). Power

distance deserves inquiry in the study of how authentic leadership is felt by followers because, of all

cultural dimensions, it is the most closely linked to leadership (see Walumbwa, Wang, et al., 2010).

Hofstede's first studies had located France as noticeably high on this measure, unlike neighboring

countries. In the GLOBE project on leadership in 62 countries (House, et al., 2004), the French index

for power distance appears in the average range. Castel et al. (2007: 568) wonder whether the concept

can accurately render France's conceptions of hierarchy and power. Introducing this measure in my

model also aims at identifying cultural issues in comparable studies, past and future.

b. Team-member exchange

It has been argued that leadership is commonly given too big a role in the attribution of business

performance, much of this performance being possibly explicated by external factors (Meindl, Ehrlich,

and Dukerich, 1985; Meindl & Ehrlich, 1987). Several authors have pointed out that group dynamics

and peer relationships may play the most part in the quantity and quality of effort individuals put in on

their job, partly because of the confidence the group generates regarding its own efficacy (Hu &


Liden, 2011). Bandura (1977) also determined that group interactions are key to learning. Building on

the importance of the group factors for the individual, Seers (1989) developed the Team-member

exchange construct, later defined by Liden, Wayne and Sparrowe (2000) as "an individual's overall

representation of exchanges with other members of the work group". Among antecedents, authors

noted the team-oriented culture of the system (Seers, 1989). Team-member exchange was positively

and directly correlated with interesting outcomes, in particular work satisfaction, organizational

commitment and job performance rating (Seers, 1989; Liden et al., 2000). In this study, I will

introduce team-member exchange as a moderating variable for the relationship between Authentic

leadership and business-unit performance so as to make sure what effects depend on the group and on

the leader respectively.


Part Three - Theoretical model and underpinnings

We propose that there exists a three-leg relationship between Authentic leadership, eudaimonic well-

being as expressed by the PERMA model, and the financial performance as measured by growth in

sales and profit at the business-unit level. More precisely, a direct, positive relation links Authentic

leadership and financial performance; this relationship is partially mediated by followers' eudaimonic

well-being in their business-unit. Additionally, power distance moderates the relationship between

Authentic leadership and eudaimonic well-being; and team-member exchange moderates the

relationship from eudaimonic well-being to performance. The proposed model was depicted in figure

1. The following subsections will highlight the theoretical underpinnings of each part of the model as

well as empirical evidence gathered so far.

8. Relationships between Authentic leadership and performance

This section deals with the direct relationships between authentic leadership and performance, first as

a global, multicomponent construct, then in each of its four dimensions. Relationships between other

constructs are presented in the next sections. In each section, theoretical rationale for the links will be

presented first, then empirical evidence will be provided when available.

a. Global authentic leadership and performance

From the beginning authentic leadership researchers have proposed that the global construct of

authentic leadership is positively correlated with organizational performance. On the practitioners'

side, Bill George's (2003) advocacy for authenticity hinged on his success as the CEO of his company.

On the academic side, in line with positive organizational scholarship principles, early theorists as

well insisted that authentic leadership should bring about "veritable and sustainable performance". The

term veritable refers to the genuine and ethical values used to attain sustained performance and growth

(Avolio & Gardner, 2005).


Why would authentic leadership result in high levels of organizational performance? The first and

major rationale has to do with the complex interaction with followers. Because authentic leaders act

consistently upon their deepest values and beliefs, followers are elicited to consider their leaders as

models (Gardner et al., 2005), or even to personally identify themselves to them (Avolio et al., 2004;

Walumbwa, Wang, Wang, Schaubroeck, & Avolio, 2010). Personal identification refers to a process

whereby the individual's belief about a leader becomes self-referential or self-defining (Avolio et al.,

2004). Followers in turn feel motivation and engagement and adopt favorable attitudes and behaviors

such as extra effort and individual performance. This is consistent with social exchange theory (Blau,

1964), which posits expected reciprocation in interactions. In other words, authentic leaders create a

positive self-fulfilling prophecy based on the notion that people respond to the way they are treated

(Gardner & Schermerhorn Jr, 2004). Such leaders then leverage the heliotropic principle highlighted

by positive organizational scholars which means that people are attracted to what is good in its own

right (Cameron & Caza, 2003).

A second rationale for a direct correlation between authentic leadership and performance lies in the

leader's decision making process, regardless of the followers. A leader is generally a manager as well

(Bass & Bass, 2008). Because authentic leaders are self-aware and can seek information without being

impeded by excessively strong ego-defense mechanisms (Gardner et al., 2005), they are better at

surrounding themselves with the right competencies – were it only to compensate for their own

identified shortcomings. In addition, because authentic leaders have an internalized moral perspective,

they are better equipped to recognize the ethical issues invoked by business situations and to strive for

win-win situations (May et al., 2003).

b. The components of authentic leadership and performance

Because the components of authentic leadership have been shown as linked to desired performance

outcomes in isolation from each other, the overall positive link between authentic leadership and

performance is believed to be strong. Self-awareness is the first component of authentic leadership. In

a sample of high- and average-performing managers in four different industries, Church (1997)

determined that the former group demonstrated consistently greater self-awareness than the latter.


When the leader's self-awareness includes recognition not only of his or her own weaknesses, but also

of what he or she doesn't know, this leader will be less likely to fall into a hubristic trap, and more

willing to reach out for task-relevant information (Diddams & Chang, 2012). Higgs and Rowlands

(2010) demonstrated that self-awareness was associated with successful, as opposed to failed, change

efforts by managers. Transparent communication also plays a role: the clearer the objectives

expressed, the easier the task for followers (Gardner et al., 2004). This is all the more true that

followers use any cue they can get, including facial appearance, authenticity of expression to form

their perception of a leader (Trichas & Schyns, 2012). Still in the leader-followers interaction,

unbiased processing of information fosters followers' adhesion as employees view the processes as

just, fair and impartial. Moreover, the relationship of ethical behavior on follower performance is

supposed to have a clear impact, since it sends a strong message to followers affecting how they

construct they own roles (May, et al., 2003). In their literature review on ethical leadership, Brown &

Treviño (2006) confirm that the moral dimension should promote follower satisfaction, motivation and

commitment and discourage counterproductive behavior.

Several empirical studies confirm positive correlations between authentic leadership and performance.

As a first example, Walumbwa, Avolio and colleagues (2008) showed that, controlling for

organizational climate, authentic leadership was positively linked to individual job performance as

rated by supervisors (r =.44; p <.01). Authentic leadership has been shown as positively related to

organizational citizenship behavior, organizational identification, work engagement and organizational

commitment (Walumbwa, et al., 2010; Leroy, et al., 2012; Miele & Seguin, 2010; Wang & Hsieh,

2013; Jensen & Luthans, 2006). Two studies conducted in parallel in the military and a police

organization showed authentic leadership ratings by followers as correlated to followers' to

achievements in an intense tactical training exercise and to supervisor-evaluated competence and

effectiveness respectively (Peterson, Walumbwa, et al., 2012).

At the group- or meso-level, Hannah, Walumbwa, & Fry (2011) indirectly established a link between

authentic leadership and team productivity as assessed by the team leader in military commandos.

Hmieleski, Cole & Baron (2011) developed a two-pronged model that significantly connects shared

authentic leadership with sales growth and employment growth in 181 newly founded firms in the US.


Eventually, Clapp-Smith, Vogelsgang & Avey (2008) showed a positive relationship between

management authenticity as appraised by followers, and sales growth as the indicator of favorable

economic outcomes.

Hypothesis 1: Consistently with earlier findings in authentic leadership theory and positive

organizational scholarship, the financial performance of a business-unit is positively related to the

level of authenticity of its leader as rated by his or her followers.

Hypothesis 1a: Financial performance expressed as the business-unit sales growth is positively

related to the level of authenticity of its leader as rated by his or her followers.

Hypothesis 1b: Financial performance expressed as the business-unit profit growth is positively

related to the level of authenticity of its leader as rated by his or her followers.

Hypotheses 1c to 1f: Financial performance expressed as the business-unit sales growth is

positively related to the level of self-awareness / transparent communication / balanced

processing / internalized moral perspective of its leader as rated by his or her followers.

Hypotheses 1g to 1j: Financial performance expressed as the business-unit profits growth is

positively related to the level of self-awareness / transparent communication / balanced

processing / internalized moral perspective of its leader as rated by his or her followers.

9. Relationships between authentic leadership and eudaimonic well-being

The current section exposes the theoretical underpinnings of a correlation between authentic

leadership and eudaimonic well-being, the attainment of which is a key objective of both positive

psychology and positive organizational scholarship.

a. Global authentic leadership and eudaimonic well-being

Gardner and colleagues (2005: 367) proposed that followers of more as opposed to less authentic

leaders experience higher levels of workplace well-being and engagement. They assert that this

linkage naturally follows from theoretical and empirical relationships between authenticity,


engagement and well-being. In the Greek philosophy of authenticity, as Kernis and Goldman (2006)

remind, eudaimonic well-being is attained through self-realization that is, performing activities that

reflect one's true calling. Xenophon, a disciple of Socrates, also had connected the authenticity of a

leader and the eudaimonic well-being of the followers (Humphrey, Williams, Clayton, and Novicevic,

2011). Since authenticity and eudaimonic well-being possess so closely related elements, leaders who

are authentic should experience a higher level of well-being (Avolio et al., 2004).

How does this transfer to followers? A first mechanism is emotion contagion. As followers interpret

not only cognitive expressions but also cues taken from vocal, facial and postural expressions, they are

unconsciously influenced in their own feelings (Sy, Côté, and Saavedra, 2005). Emotion contagion has

been shown to be able to trigger "upward spirals" where positive emotions at time 1 translate in

broader emotional well-being later on at the dyadic level (Fredrickson & Joiner, 2008). Beyond

positive emotions, which by themselves belong to the hedonic version of well-being, followers can

experience a higher level of eudaimonic well-being when their leaders are authentic because those

leaders foster personal and organizational identification, as well as a positive behavioral model (Ilies

et al., 2005). Authentic leaders provide their followers with the sensation and cognition of value

congruence. Followers perceive the leader as compatible with their own true selves, and they tend to

identify themselves with the leader. Building on the idea of organizational identification rooted in the

social identity theory (Tajfel, 1982), Ilies and colleagues argue that followers in turn experience a

better sense of belongingness that extends to the work group and the organization as a whole. As a

complement, Macik-Frey, Quick and Cooper build on the attachment theory (Bowlby, 1982) to

suggest that self-reliant (i.e. authentic) leaders become powerful and positive attachment figures for

their followers, allowing those followers to develop eudaimonic well-being in the form of self-

mastery, positive self-regard and quality connections with others. Macik-Frey, Quick and Cooper

(2009) concurred by explicitly bridging authentic leadership with positive health, a construct that

closely parellels eudaimonic well-being.


b. Components of authentic leadership and eudaimonic well-being

The four separate components of authentic leadership have themselves been shown positively related

to one or more dimensions of eudaimonic well-being, either theoretically or empirically.

i. Self-Awareness and eudaimonic well-being

If authentic leaders, as Walumbwa and colleagues suggest (2008), are to help others to know and act

upon their true values, beliefs and strengths in order to bring about employee well-being, they first

have to know what those are. The impact on followers can happen out of what Taylor (2010) terms the

second component of self-awareness that is, the process through which leaders become aware of their

influence on those they seek to lead. Effective leaders develop an improved comprehension of what

their followers' value and form a deeper dialogue, which can result in an improved sense of meaning

from the followers. The leader's self-awareness may be complemented by epistemic humility that is,

the recognition of what the leader doesn't and can't know (Diddams & Chang, 2012). In that case, the

relationship with the followers may be improved as the leader will seek out for more feedback and

professional interaction.

Empirically, the leader's self-awareness has been shown to be a key to facilitating how followers

withstand the circumstances of a downsizing or a plant closedown (Boman, Sofipour, Toremark,

2012). Self-aware leaders seem more able to detach themselves from their own feelings and to provide

followers with a better support. In another challenging situation, a major change program, Higgs and

Rowlands (2010) found that self-aware leaders were perceived as calmer and more inspirational, thus

fostering both the emotional reactions of followers and the meaning they could ascribe to the

circumstances.

ii. Transparent communication and eudaimonic well-being

Transparent communication promotes high quality relationships between leader and followers. A

leader who commits him- or herself to helping others see both positive and negative aspecs of their

true selves, who presents one's genuine as opposed to a "fake" self (Gardner & al., 2005), will


encourage good relationships with followers. Those bonds are based on intimacy and trust. While

investigating the notion of positive health, Ryff and Singer (2000) cite Reis (2000) and note that

intimacy interactions are those in which self-disclosure occurs and there is responsiveness to such

disclosure. The strongest predictor of satisfying interactions are ones in which the individual feels

understood and appreciated by the other. Trust is another mechanism through which authentic leaders

foster high quality relationships with their followers (e.g. Ilies & al., 2005). Trust is an expression of

confidence in an exchange of some kind, confidence that they will not be harmed or put at risk by the

actions of the other party (Axelrod, 1984, and Bateson, 1988, cited by Jones & George, 1998).

Genuine self-disclosure on the part of the leader may shed light on vulnerabilities, but can also foster

mutual confidence by encouraging followers to exchange more information and develop stronger

relationship (see Blau, 1964). In addition, transparent communication as practiced by authentic leaders

develops the meaning followers can find in their job. Building on self-monitoring theory, Bedeian and

Day note that low self-monitors leaders, who tend not to act as chameleons but express their true

values, develop relationships in which they and their associates can be trusted and are especially

responsive to trustworthiness (Bedeian & Day, 2004). What can happen then is that leader and

followers share values to such an extent that those values now structure the social situation, thus

creating unconditional trust (Jones & George, 1998). Values in that sense are general standards that

are considered intrinsically desirable ends. Typical outcomes of unconditional trust include improved

relationships and communications at the group level, and can extend to subjugation of personal needs

and ego and high involvement. This points to another dimension of well-being – engagement. In

empirical studies, trust indeed appears correlated with authentic leadership. In a sample of employees

of large Taiwanese companies, trust is an outcome authentic leadership, insofar as words and deeds

remain aligned (Wang & Hsieh, 2013). Two previously cited studies also associate authentic

leadership and trust (Clapp-Smith et al., 2008; Walumbwa et al., 2011). Another investigation in

various industries in Germany found a positive relationship between leader's self-knowledge and

followers' satisfaction with supervisor. Regarding relational transparency, a study in a Canadian

hospital shows a standardized estimate of the link between relational transparency and trust in

management of .64 (Wong & Cummins, 2009).


iii. Internalized moral perspective and eudaimonic well-being

The internalized moral perspective, another component of authentic leadership, may play a similar role

in fostering followers' eudaimonic well-being. Leaders discover great personal meaning when they act

consistently with their own beliefs in adverse situations, May and colleagues argue (2003). The ethical

decision making process they delineate, whereby leaders recognize moral dilemmas, assess their

magnitude, then take action by using moral capacity, efficacy, courage and resiliency, implies that

their very identity may be at stake. Acting upon their values throughout difficulties, that is acting

authentically (Kernis & Goldman, 2006) represents for the leader a source of both meaning and

accomplishment, two dimensions of eudaimonic well-being (Seligman, 2011): it is indeed in the name

of something greater than the self that the leader makes such decisions; once they're made, they not

only are an achievement, but they facilitate coping and adaptation to future, even more threatening

situations (May et al., 2003). How the leader's moral internalized perspective can impact the followers'

eudaimonic well-being? A first level is positive emotions or satisfaction. It has been identified in the

research on ethical leadership, a construct that shares commonalities with authentic leadership

(Gardner et al., 2011; Brown & Treviño, 2006). Brown and Trevino (2006) cite employee satisfaction

as an outcome of ethical leadership defined as the demonstration of normatively appropriate conduct

through personal actions, interpersonal relationships and the promotion of such conduct to followers

through two-way communication, reinforcement and decision making. They also proposed that ethical

leadership should be positively correlated with ethical decision-making and behavior on the part of the

followers themselves, in turn resulting in positive emotions and feelings of accomplishment. In a rare

empirical study of the outcomes of ethical leadership, Toor and Ofori (2009) indeed found a

significant positive relationship with employee satisfaction. The ethical or moral dimension of

authentic leadership also appeals to followers' notion of meaning. This process has been delineated by

Lord and Brown (2001). In taking ethical stances and making ethical decisions, authentic leaders

develop personal values that can become salient to collaborators. Self-concordance can then emerge

for both leaders and followers. As previously noted, it can serve as a base for unconditional trust

(Jones & George, 1998) and positive relationships. As a complement, when authentic leaders engage


in a storytelling that integrates a moral dimension, they can bring members of an organization

connected to a larger community and a larger purpose (Driscoll & McKee, 2007), which matches

precisely the meaning component of eudaimonic well-being and connects to the virtuousness sought

for by positive organizational scholarship.

iv. Balanced processing of information and eudaimonic well-being

Regarding balanced processing of information and its potential effects on the eudaimonic well-being

of both leaders and followers, theorists initially focused on self-relevant information on the part of the

leader. Building on Kernis' (2003) work and the positive premise that people are naturally oriented

toward growing, developing and increasing in complexity (see Cameron & Caza, 2012; Ryan & Deci,

2000), Gardner and associates along with Ilies and colleagues (2005) proposed that balanced (or

unbiased) processing of information would enhance the leader's self-awareness, thus facilitating his or

her endeavors toward self-realization – or their own eudaimonic well-being. Ilies and colleagues

(2005) suggested that with more accurate information, leaders would more easily meet the conditions

for experiencing engagement or flow (Csikszentmihalyi, 1991). The authors also extended the notion

of balanced processing to the active selection of information-generating situations, and eventually,

balanced processing of information became more relational. It implies that leaders show that they

objectively analyze all relevant data before coming to a decision (Walumbwa, et al., 2008). How can

this contribute to the followers' eudaimonic well-being? First, the balanced processing of information

on self and others is conducive to high quality relationships. When the leaders don't exhibit ego-

defensive behaviors, when they don't need to protect themselves by choosing clearly inferior

opponents (Kernis & Goldman, 2006; Ilies et al., 2005), they encourage a peaceful exchange that is

beneficial for all. Second, this behavior on the part of the leaders also rules out a potential source of

negative emotions. Employees who view the decision-making process as just, fair and impartial don't

resort to protestations or calls for legal protection, May and colleagues explain (2003). Third, thanks

to positive role modeling, followers who observe and learn from their leaders eventually seek and get

more accurate feedback. They develop a better understanding of their own skills and qualities and are

able to take on challenges that they are more likely to succeed in (see Ilies et al., 2005), resulting in


engagement or flow, and in frequent accomplishments. It is also remarkable that the conditions for the

self-determination conception of eudaimonic well-being are then met (Ryan & Deci, 2000).

Altogether, the four components of authentic leadership appear to have strong theoretical links with

the eudaimonic conception of well-being. The following hypotheses are made in alignment with the

promises of positive organizational scholarship, since the questions at hand are about "virtuous"

behaviors – namely, authentic leadership – and they will be verified in a positively deviant

organization. Following propositions from Macik-Frey and associates (2009), those hypotheses also

reflect the current investigation's objective of connecting leadership literature with positive

psychology in order to better understand positive phenomena at work in organizations.

Hypothesis 2a: The level of eudaimonic well-being reported by followers in a business-unit is

positively correlated with the level of authenticity they attribute to the leader of their business-unit.

Hypothesis 2b: The level of a eudaimonic well-being reported by a business-unit leader is positively

correlated with the level of authenticity attributed to him or her by followers.

10. Relationships between eudaimonic well-being and business performance

It is beyond the scope of the current document to exhaustively present the literature that attempts to

establish links between the well-being of employees and performance at work. It would be impossible

as well to expose the converse relationships between absence of well-being and the negative

consequences in the workplace (see for Danna & Griffin for a review centered on health issues). This

section will summarize essential theoretical and empirical findings of the "positive" research. It

introduces several composite constructs that are close to this study's view of eudaimonic well-being,

and their relationship with various performance outcomes. It then reviews insights gained about

separate components of well-being that are closes to the PERMA model which grounds the current

study. Consistent with the developmental approach in positive organizational scholarship, all

constructs here are conceived of as state-like that is, relatively stable but malleable over time (see

Luthans, et al., 2007). In that they differ from fixed traits or trait-like characteristics such as "big five"


personality traits (extroversion, agreeableness, neuroticism, conscientiousness, openness) and, in

positive psychology, signature character strengths (Peterson & Seligman, 2004).

a. Global eudaimonic well-being and work performance

Well-being as a whole and its relationships with performance has been thoroughly examined by the

Gallup organization for more than 15 years. Harter, and colleagues (2002; 2003) describe a

multicomponent construct termed "employee engagement" which they say is founded on positive

psychology and refers to the individual's involvement and satisfaction with as well as enthusiasm for

work:

"Employees are emotionally and cognitively engaged when they know what is expected of

them, have what they need to do their work, have opportunities to feel an impact and fulfillment

in their work, perceive that they are part of something significant with coworkers whom they

trust, and have chances to improve and develop" (Harter et al., 2002: 269)

At least three of those elements are represented the PERMA model of eudaimonic well-being, namely

the quality relationships, meaning and accomplishment dimensions (Seligman, 2011). A fourth one,

positive emotions, is reflected in an overall assessment of satisfaction with job and company. Though

Harter and associates do not elaborate in much detail about their notion of fulfillment, it seems close

to the definition of engagement in the PERMA model that is, the "flow" an individual experiences when

immersed in an activity that matches their best abilities and offers substantial challenge

(Csikszentmihalyi, 1991). The theoretical model Harter and colleagues work on is based on the

premise that the combination of those components generates higher frequency of positive affect that is,

positive emotions. Their instrument is a 13-item questionnaire – one item for general satisfaction and

12 items for employee engagement – for which they report a Cronbach alpha of .91. In the Gallup

studies, the business-unit is the level of analysis. The meta-analysis indicates of 7,939 business units

and close to 200,000 respondents indicates significant relationships between employee well-being (or

engagement in their definition) and business performance. The correlations appear moderate but

significant for productivity (a measure that includes sales) and profitability. For productivity, true

score correlations range from .2 (satisfaction) to .25 (employee engagement); for profitability, they


stand at .15 and .17 respectively (Harter et al., 2002). In later studies, thanks to measurements at

different points in time, Harter and colleagues were able to trace a causality effect from employee

engagement to business outcomes. Reverse causality was found, but it was weaker (Harter, et al.,

2010).

Two other composite constructs related to well-being confirm the potential link to business

performance. The first one is psychological capital or PsyCap. It was deliberately connected to

positive organizational behavior (Luthans & Youssef, 2004; Luthans, et al., 2007). It is made up of

hope, resilience, optimism and self-efficacy, all desirable qualities that are part of happiness

(Seligman, 2004). Hope constitutes the will to succeed and the ability to identify and pursue the way

to success (Snyder, 2002, cited by Luthans et al., 2007). Resilience is viewed as the capacity to

rebound, from adversity … and progress and increase responsibility. Building on Bandura's works

(1997) self-efficacy is posited as a positive belief, specifically the employee's conviction about his or

her abilities to mobilize the motivation and resources to successfully execute a task and, more broadly,

to succeed in the work domain (Stajkovic & Luthans, 1998, cited by Luthans & al., 2007). In the

authors' view, the four components of PsyCap are antecedents to positive emotions, which in turn

result in better performance. The PsyCap questionnaire has good internal reliability (alpha over .88 in

preliminary studies). The construct was found to have positive correlation with individual satisfaction

with the job (r = .32 in and r = .53 in two separate firms) and job performance (r =.22 and r=.32). At

the business-unit level, PsyCap was found to be positively associated with performance expressed in

sales growth through the partial mediation of trust in the top management of the firm (Clapp-Smith et

al., 2008). Interestingly, PsyCap also appeared to be an outcome of authentic leadership.

The second multicomponent model that connects employee well-being and job performance hinges on

the self-determination theory. Given that its arena is defined as the investigation of people's inherent

growth tendencies and innate psychological needs that are the basis for self-motivation and personality

integration (Ryan & Deci, 2000), self-determination theory fits well with the positive organizational

scholarship's "heliotropic" principle (Cameron et al., 2003). The theory identified three needs or

"nutriments" that appear to be essential for an individual to experience an ongoing sense of integrity or

"eudaimonia": competence, autonomy and relatedness (Ryan & Deci, 2000: 74-75). Those needs are


opposed to simple desires that can prove harmful in the long run (Baard, Deci, & Ryan, 2004).

Individuals who feel those three needs are fulfilled are intrinsically motivated, as opposed to people

who are externally controlled that is, who work for external rewards such as pay. Intrinsic motivation

involves people doing an activity because they find it interesting and derive spontaneous satisfaction

from the activity itself and in many circumstances external rewards undermine the effects of intrinsic

motivation (Gagné & Deci, 2005). The components of self-determination theory bear notable

resemblance with the PERMA model of eudaimonic well-being. The relatedness, or the need to feel

belongingness and connectedness, is central for the internalization of motivation, Ryan and Deci insist

(2000), which mirrors the high quality relationships in the PERMA model. The notions of competence

and autonomy associated with optimal challenge included in the model can be associated to the

circumstances of mastery and challenge, which are also the conditions that are essential to feelings of

flow or engagement (Csikszentmihalyi, 1991). Self-determination theorists posit that the pursuit and

attainment of some life goals provide direct satisfaction of the basic needs that condition well-being,

thus echoing the dimension of accomplishment (Seligman, 2011). How is self-determination theory

important relative to the issue of performance? The level of satisfaction for the three basic needs

should predict positive work-related outcomes through internalized or intrinsic motivation. In an

empirical study, Baard and associates (2004) found confirmation of such a relationship (r = .24, p <

.001), with performance assessed by means of self-reporting of the latest individual evaluation on a 3-

point scale.

b. Components of eudaimonic well-being and performance

Because they are relatively recent, multicomponent constructs of eudaimonic well-being provide with

only interesting cues of correlations with performance. More findings have been derived from the

study of various components of well-being taken individually.


i. Positive emotions and performance

Positive emotions are certainly the most explored area. Because people feel good on the job, they

should work better, so goes the happy-productive worker theory (see Wright & Cropanzano, 1997;

2000). Positive psychology has given it new theoretical support. According to Fredrickson (1998), the

evolutionary function of positive emotions is to broaden people's thought-action repertoire; they elicit

discarding automatic behaviors and trying new responses. Furthermore, accumulation of positive

emotions such as joy, interest, contentment and love serves to build physical, intellectual and social

resources in a durable way (Fredrickson, 1998: 307). As a consequence, one can expect "upward

spirals" that can help organizations change and thrive (Fredrickson, 2003). This theory makes sense

with earlier empirical research by Isen and others (e.g. Isen, Daubmann, and Nowicki, 1984), which

related positive emotions and creativity. In the context of salespeople, George (1998) theorized that

positive moods that is, the general affective states workers experience on their jobs which affectively

color their experiences, would enhance their helping behavior, facilitate dialogue with and attention to

customers' needs, and improve the likelihood of actual transactions. In a rare group-level study in a

service setting, George (1998) found support for the hypothesis that the sales managers' positive mood

would predict group performance.

Countless empirical studies link positive emotions to positive outcomes. In a vast multi-method meta-

analysis, Lyubomorski, King and Diener (2005) report correlations between emotional measurements

and various outcomes. In the workplace, positive emotions were positively linked to sales,

performance as assessed by supervisor evaluations and autonomy at work (r ranging from .13 to .47)

and negatively related to absenteeism (r = .36). An explanation for those correlations may reside in

health. Items such as reported global health and physical recovery were found to be positively

associated with positive emotions (r = .50 and r = .35 respectively). In their famous "nun study",

Danner, Snowdon, and Friesen (2001) showed that positive emotions at age 22 were predictive of

longevity 60 years later, with a mortality rate 2.5 times higher for the least happy quartile than for the

happiest quartile. Another, consistent avenue for examining the relationship between positive

emotions and work outcomes was to use not the amount of positive emotions, but the notion of

subjective well-being that is, people's evaluations of their lives at work, both in terms of cognitions


and feelings (Diener, 2012). Although earlier studies almost dismissed the happy/productive thesis in

that sense (see Iaffaldino & Muchinsky, 1985), fresh looks gave it a renewed vigor. A meta-analysis

by Judge, Bono and Thoresen (2001) provided an estimated population value of the correlation

between overall job satisfaction and and general job performance of .30. Operationalization issues,

however, might explain the discrepancy between studies (Wright, Cropanzano, Denney & Moline,

2002). In any case, the results exposed so far justify that positive emotions – job satisfaction included

– be included in the model put to test.

Other single components of the PERMA model are less documented, but evidence for a relationship

with performance appears consistent nevertheless.

ii. Engagement (flow) and work performance

In the current study's model, engagement refers to what Csikszentmihalyi (1991; 2012) called "optimal

experience", "autotelic experience" or "flow" and refers to activites that are an end in themselves, that

are intrinsically rewarding (Csikszentmihalyi 2012: 67). Conditions include a sense that one's skills

are adequate to cope with the challenges at hand in a goal-directed, rule-bound action system that

provides clear clues as to how well one is performing. How does this relate to performance? The

studies cite the cases of high-performing athletes, musicians and surgeons, but also factory workers.

One of them, who lived his job as an autotelic experience, "mastered every phase of [his] plant's

operation and was able to take anyone's place if the necessity arose" (Csikszentmihalyi, 2012: 148).

When monitoring diverse people over the course of several weeks, Csikszentmihalyi found that work

accounted for more flow experiences than leisure activities, and that managers and supervisors were

significantly more likely to be in flow at work than clerical and blue-collar workers. Salanova, Bakker

and Llorens (2006) found a positive correlation between experience of flow and building of

organizational resources in a secondary school in the Netherlands. No study we are aware of tried to

test a potential correlation between flow and performance at the group level. Flow studies parallel

those by Ericsson and Charness (1994) and Ericsson (1996) on the acquisition of top-level expertise.

Ericsson advocates "deliberate practice". The conditions are a well-defined field (e.g. chess, tennis,

calculus) with clear goals and challenging subgoals, available means for training, constant monitoring


and feedback from a knowledgeable coach, and repetition of training over a long period of time – ten

years as a rule of thumb. Although Ericsson asserts that deliberate practice is not inherently

motivating, it is arguable that "flow" sensations at least facilitate, if not condition the necessary efforts

to gain the best level of expertise. A lab experiment centered on individual typing proficiency

confirmed the validity of the major elements of the deliberate practice findings (Keith & Ericsson,

2007).

iii. Good relationships and work performance

Positive interpersonal relationships or close, meaningful ties to others are essential to eudaimonic

well-being (Ryff & Singer, 2000; Ryan & Deci, 2001; Seligman, 2011; Huppert & So, 2013), but how

can they contribute to individual and/or group and organizational performance? As Kozlowski and

Ilgen (2006) point out, studies of the emotional dimension of relationships in teams, though promising,

remain in their infancy. In line with positive organizational scholarship premises, Dutton and Heaphy

(2003) assert that "life-giving", or flexible, strong, resilient emotional as opposed to life-depleting

relationships at work have direct, measurable effects on collaborators' health. Lower blood pressure

and a better stress regulation system were tied to high quality connections. This then relates to fewer

sick days and absenteeism. Good relationships may also offset the negative effects felt by

collaborators who have to work in teams even if they prefer to work autonomously (Grant,

Christianson, and Price, 2007). Good relationships can be delineated according to their circumstances.

On the one hand, high-quality connections that is, short term, emotional positive dyadic interactions

have been associated with positive health outcomes at the individual collaborators' level and with

performance indicators such as learning, coordination and error detection at the group and

organizational level (Heaphy & Dutton, 2008). On the other hand, longer-term relationships

comprising of some intimacy that is, a sense of connectedness related to mutual self-disclosure and

motivation to foster mutual well-being were shown to predict enhanced followers' social identification

and organizational commitment (Kark & Medler-Liraz, 2007). Although empirical confirmation is still

lacking, such quality relationships could be conducive to interpersonal trust with many organizational

benefits (Jones & George, 1998).


iv. Meaning and work performance

As Seligman (2011) puts it, meaning is feeling that one is belonging to and serving something bigger

than the self. It combines both a subjective (being part of something) and an objective element (this

something can be shared with others). Meaning is a tool used by individuals to impose stability on life,

Wrzesniewski and Dutton posit: it is a connection between two different entities that create a non-

physical reality accessible to humans. Meaning people ascribe to their work matters in terms of

performance. Building on Bellah (1985), Wrzesniewski and colleagues (1997) identified the

mechanisms by which it can happen. In their study of 135 collaborators in a hospital including

doctors, nurses and clerical staff, they found that roughly one third of people live their work as a job,

one third as a career, and the remainder as a calling, with very little overlap between categories. The

notion of calling refers to a socially valuable occupation, an end in itself, involving activities that may,

but need not be, pleasurable. In this study, people viewing their occupation as a calling reported better

health, as well as better satisfaction with life and job and fewer days of work missed. More recent

studies confirmed those insights. It was shown that living a calling was positively associated with

career commitment (Duffy, Bott, Allan, Torrey and Kik, 2012). In addition, a study on 625 employees

in a single firm indicated a relation between perceived meaningfulness of and engagement at work,

with engagement correlated with lower absenteeism (Soane, Shantz, Alfes, Trus, Rees and Gatenby,

2013). Wrzesniewski and Dutton (2001) proposed a model in which employees may be active

"crafters" of the meaning they assign to their work. This responds to positive organizational

scholarship demands that research lend itself to positive development.

v. Accomplishment and work performance

What are the potential linkages between the accomplishment dimension in the PERMA model of

eudaimonic well-being and the business performance? Accomplishment pursued for its own sake

(Seligman, 2011) bears close similarity with the notion of personal strivings, the characteristic,

recurring goals that a person is trying to accomplish through his or her everyday behavior (Emmons,


1986, 1992). Some characteristics of personal strivings, such as past fulfillment, can predict subjective

satisfaction (Emmons, 1986) – and satisfaction in turn is related with various positive performance

individual outcomes. A second potential relationship between accomplishment and performance

comes from the self-concordance of goals researched by Sheldon and Elliot (1999). Building on self-

determination theory (Ryan & Deci, 2001), the authors determined that when personal goals are

concordant with the person's interest and core values, more effort is devoted to attaining those goals.

Goals become easier to achieve. The first of three longitudinal studies with students showed a

moderate positive correlation (r = .20) between goal self-concordance and attainments in the

semester, fully mediated by the degree of effort put in it. Building on those results, further studies

developed the idea of an upward spiral where goal self-concordance at time 1 predicts goal attainment

at time 2, which fosters self-concordance and facilitates attainment at time 3 (Sheldon & Elliot, 1999).

During this process, it is shown that subjective well-being (or positive emotions) increases, with a

reinforcing effect on performance outcomes.

Taken together, many theoretical arguments and empirical findings grounded in positive studies

support the idea that a correlation exists between employees' eudaimonic well-being and the

performance of the business-unit they work in. Given prior developments, eudaimonic well-being

would then mediate the hypothesized positive correlation between authentic leadership and business

performance. Because of the importance of leadership in a business unit, this mediation should be

partial.

Hypothesis 3a: The level of well-being experienced by the followers in a business-unit is positively

correlated with the sales growth of their business-unit.

Hypothesis 3b: The level of well-being experienced by the followers in a business-unit is

positively correlated with the profit growth of their business-unit.

Hypothesis 3c: The level of well-being experienced by the leader of a business-unit is

positively correlated with the sales growth of their business-unit.


Hypothesis 3d: The level of well-being experienced by the leader of a business-unit is

positively correlated with the sales profit of their business-unit.

Hypothesis 4a: The followers' level of well-being partially mediates the relationship between

authentic leadership and business-unit growth in sales.

Hypothesis 4b: The followers' level of well-being partially mediates the relationship between

authentic leadership and business-unit growth in profit.

11. Rationale for proposed moderation effects

Power Distance is defined as the degree to which members of an organization or society expect and

agree that power should be unequally shared (House et al., 1999). It is hypothesized that for followers

who report high power distance, the degree of individual well-being is less strongly predicted by

authentic leadership than followers who report low power distance. Followers reporting high power

distance may experience their work as simply a job, as opposed to a career or a calling (Wrzesniewski

et al., 1997). As an example, the construct of power distance as operationalized by Dorfman and

Howell (1988) used in this study specifies that leaders and followers shouldn't be friends. If one

follower thinks so, he or she will pay less attention to whether the leader is worth being a friend. In

turn, this will affect to a lesser extent the degree to which the follower experiences well-being along

the dimensions of positive emotions and good relationships. The assumption here is that authentic

leadership can be equated with being worth of becoming friends. This assumption is supported by the

high correlations between authentic leadership and leader-member exchange that measure some

emotional closeness across hierarchical level. In the simplest terms, high power distance means a

relative indifference of followers as to how authentic leaders are. Followers' well-being logically

should have other sources. In particular, team-member exchange, or what team members perceive of

what they give to their colleagues and what they can expect from them either emotionally and

cognitively, is expected to play a role. The relationship with peers is indeed more important in the

daily routines than that with the leader. For a given level of individual eudaimonic well-being, the


quality of this relationship should positively affect the effort followers put in their jobs and, in turn,

performance at the business-unit level.

Hypothesis 5: Power distance moderates the positive relationship between authentic leadership and

the level of well-being of followers in a business-unit, such that the level of association will be

stronger when power distance is low and weaker when power distance is high.

Hypothesis 6a: Team-member exchange moderates the positive relationship between followers' well-

being and sales growth in a business unit, such that the association is stronger when team potency is

high and weaker when team potency is low.

Hypothesis 6b: Team-member exchange moderates the positive relationship between followers' well-

being and profit growth in a business unit, such that the association is stronger when team potency is

high and weaker when team potency is low.


Part Four: Empirical Study

12. Settings

The model exposed above has been subjected to an empirical verification in a retail chain that is a

division of one of France's major groups. This section exposes in more detail where and how the

investigation has been undertaken.

a. Context

Johns (2006) highlighted the importance of context for the comprehension of organizational

phenomena – context being defined, in his words, by situational opportunities and contexts that affect

the occurrence of behavior as well as functional relationships between variables. Following this

recommendation, the present section briefly presents key information on the company and the field

where the investigation took place.

The study was undertaken in a retail chain that distributes construction materials (from sand to cement

to wood to sanitary items) and equipment (from shovels to safety shoes to high performance drilling

machines). It aims at being a reference for professional contractors such as masons, painters and roof-

making specialists who account for 80 percent of the chain's sales (corporate source). DIY adepts

looking for professional quality items form a secondary clientele. The company's origins date back to

1901. A first phase of expansion occurred in the 1960s, which gave it a national scope. New

acquisitions in the 1990s made it a leader in its market in France. The chain by itself employs more

than 12,000 people in 900 stores. The culture of the company owes much to the CEOs who were in

charge at the turn of the century and through 2006. In the headquarters as well as in the stores, he is

still often quoted as saying: "If you want to make [collaborators] do a good work, first make them

happy." Since then the focus has been on marketing. Customers' needs and habits have become focal

elements. As an example, since customers go shopping very early in the morning before getting to

their jobs' sites, all stores have a vending machine where coffee is almost assumed to be on the store


for customers. The coffee machine corner is a central point in every store, where customers and

collaborators exchange construction tips and general gossip. Since the current CEO took the helm in

2010, efficiency has been top priority, with headcount reduced and many services reorganized. For

instance, whereas every store had its own truck and truck driver and managed its own deliveries, a

fleet of trucks managed centrally now directly serves customers on their sites and delivers materials to

the stores only if needed. A new shift is currently happening. Says the CEO, "we've trimmed much of

what was possible. We are now looking to seek further growth." As a consequence, the hiring policy

evolves towards attracting managers coming from other industries. Three out of four "directeurs de

secteur" (the management layer between store leaders and regional general management) had been

named for less than a year at the time of the investigation and come from outside companies, whereas

the tradition emphasized internal promotion.

The chain has been selected both for practical reasons (prior personal contacts) and because it has a

tradition for looking to the human side of doing business. Since homogeneity was key to a comparison

between business units, only stores in the greater Paris area have been selected. All are part of the

same legal structure and under the same hierarchical line. In each store, the store manager – an

employee not a franchisee – is the sole person in charge. Their main function is to manage a team

ranging from 3 to 40 employees (average 8.7 employees in the surveyed sample), with tasks ranging

from attending to daily sales figures to conducting monthly meetings and annual performance reviews

with every collaborator. In addition, especially in smaller stores, the store manager often keeps a role

of a salesperson. They frequently have to fill a position at the sales counter when an employee is

missing.

Followers break down into four main categories: a) sales clerks, with some employees responsible for

a portion of the store and referred to as forepersons; b) yard workers and yard forepersons, in charge

of delivering bulk materials to customers; c) sales representatives visiting customers outside the store

premises (one in each store); d) administrative staff. Sample statistics are presented in table 1. Among

the 654 respondents, the sex repartition is 78% male, 19% female (2% or 9 respondents did not

indicate sex). Average age is 39.7 years overall (SD: 10.5 years; range 19—64 years). Compared to

followers, leaders were older (45.5 years vs. 39.1 years for followers), and more homogeneous (SD:


6.4; range: 32—61 years vs. SD: 10.5 years and range19–64 for followers). There were noticeably

fewer females among the store leaders (12% vs. 20%)2.

Sex repartition Age

Count Male % Fem. % n/r % Mean SD Min Max Yard workers 159 157 99% 2 1% 0 0% 40.2 10.6 20 64

Yard foremen 42 42 100% 0 0% 0 0% 44.0 8.7 26 62 Store clerks 203 140 69% 63 31% 0 0% 36.6 10.6 19 60

Store forepeople 82 61 74% 21 26% 0 0% 41.4 8.2 25 56 Sales reps 34 31 91% 3 9% 0 0% 35.2 10.0 22 57

Administrative 55 29 53% 24 44% 2 4% 41.1 11.1 24 62 n/r 12 2 17% 3 25% 7 58% 33.5 12.4 20 48

FOLLOWERS 587 462 79% 116 20% 9 2% 39.1 10.5 19 64

LEADERS 67 59 88% 8 12% 0 0% 45.5 6.4 32 61

TOTAL 654 521 78% 124 19% 9 39.7 10.3 19 64 Table 1. Descriptive statistics for functions, sex, age (whole sample: N = 654)

The level of formal education was not very high, with close to 80% of the total population studied

having no more than a high school degree (French baccalauréat). More than 70% of the yard workers,

including foremen, didn't reach this level. The education of store managers was noticeably higher than

that of employees: 72% of managers have either a high school or a bachelor degree, but only 47% of

employees. Overall, only 24 persons or 3.7% have a master's degree or above. See table 2 for details.

Some high school

High school graduate

Bachelor degree Master's degree Above master

Yard workers 118 74% 32 20% 8 5% 0 0% 1 1%

Yard foremen 30 71% 8 19% 3 7% 1 2% 0 0%

Store clerks 65 32% 68 33% 63 31% 5 2% 2 1%

Store forepersons 30 37% 23 28% 19 23% 6 7% 4 5%

Sales reps (road) 11 32% 10 29% 12 35% 0 0% 1 3% Administrative

staff 21 38% 22 40% 8 15% 4 7% 0 0% FOLLOWERS 285 49% 165 28% 113 19% 16 3% 8 1%

LEADERS 15 22% 24 36% 24 36% 4 6% 0 0%

Table 2. Descriptive statistics for education level (whole sample: N = 654) 2 All figures here and in sample statistics are calculated from respondents, not company records.


The company where the investigation took place had a tradition of long employment. This is partly

reflected by the width of the range in job tenures. Some workers had worked for more than 30 years

with the chain! At the other extreme, the company strived to attract young talent in sales and store

leader positions. In the yard, where work is of very physical nature, the company remained a home for

school dropouts, some of them eventually getting the opportunity of promotion and/or further

professional education.

Tenure with leader Tenure in the job Mean SD Range Mean SD Range Yard – workers

3,8 4,0 0-34 7,4 6,9 0-34 Yard - foremen 5,0 5,3 1-26 9,3 7,2 1-26

3,6 4,0 0-33 6,6 6,2 0-33 Store clerks 3,6 4,3 0-29 6,8 6,45 0-29

Salespersons (road) 3,2 4,5 0-25 4,6 5,3 0-25 Administrative staff 3,8 6,1 0-14 4,8 3,6 0-14

FOLLOWERS 3,7 4,4 0-34 6,7 6,3 0-34

LEADERS 2,4 4,0 0-29 6,2 5,6 0-29 Table 3. Descriptive statistics for Tenure with leader and in the job (N = 654)

b. Procedure

I visited 71 out of the 72 stores (in the one left apart the manager had changed just weeks prior to the

data collection so the assessment of the authenticity of the leader was hardly relevant). I submitted

paper-and-pencil questionnaires to all, leaders and followers alike but separately in each store, in

seven weeks in July and September 2013. A total of 654 persons filled in the questionnaire, which

represents over 99% of the people present at time of visit and 72% of the global headcount concerned

(not all collaborators were present at the time of the visit). Eventually I excluded the stores in which

the store manager was in place for less than 19 months – the period over which the financial data was

available. The sample was reduced thus to 63 stores (N = 552 respondents) for the analysis of the

proposed model.

The risk of bias due to common source and same instruments (Podsakoff, MacKenzie, Lee and

Podsakoff, 2003) was a preoccupation in the research design. Performance was estimated from


financial company information. Other data were obtained via a 73-item questionnaire including a set

of control questions (sex, age, education, tenure with leader, tenure in the job). For practical reasons it

was not possible to submit the questionnaire at two separate points in time. But other precautions were

taken. The questionnaire was divided in seven different sections, with three different scales. Total

anonymity was guaranteed to the respondents. The researcher was present on the premises so as to

explain the anonymity procedure to respondents and supervise the procedure. Neither the store

manager nor any other company person were there while the respondents dealt with the questionnaire.

Stores were not referred to by their location but by a code. This procedure has been accepted both by

an ethics committee of the doctoral school at Université Paris Dauphine and by the company's "comité

d'entreprise", the body where union representatives entertain dialogue with the company leadership

under French law.

c. Measures

The current investigation relied on existing, validated instruments. Before undertaking the analysis of

correlation between constructs, we conducted a statistical verification of each of the scales used via a

confirmatory factor analysis with the followers sample (N = 552 nested in 63 business-units). Because

team-shared properties should be assessed at the level of origin (Klein & Kozlowski, 2000), we did so

at the level of individuals with all respondents. Models fit were assessed with the comparative fit

index (CFI), the incremental fit index (IFI) and the root mean square of error approximation. Cutoff

values we adopted were in line with those generally accepted in leadership: e.g. CFI > .90; IFI > .90;

RMSEA < .08 for reasonable fit if combined with a SRMR of no more than .09; Browne & Cudeck,

1992; Kline, 2005; Hu & Bentler, 1999). Scale reliabilities were assessed by measures of the

Cronbach's alpha (Cronbach, 1955), with a value of .7 considered as a minimum. For most analyses

we used the Mplus-7 software package (Muthén & Muthén, 1998-2012; Geisen, 2013). Assessment of

the conditions for aggregation and other calculations were conducted with R software and its

multilevel package (Bliese, 2013). Some additional calculations were made with EQS (Bentler, 1985).


i. Authentic leadership.

I assessed authentic leadership with the authentic leadership questionnaire (ALQ) developed by

Avolio, Gardner & Walumbwa (2007) it its French version available on the site

www.mindgarden.com (see Walumbwa et al., 2008). Three to five items assess each of the four

dimensions of authentic leadership (self-awareness, transparent communication, balanced information

processing and internalized moral perspective) for a total of 16 items. Items include: "My leader

accurately describes how others view his or her capabilities" (self-awareness); "My leader says exactly

what he or she means" (transparent communication); "My leader analyzes relevant data before coming

to a decision" (balanced information processing); "My leader makes difficult decisions based on high

standards of ethical conduct" (internalized moral perspective). Items are rated on a 0 to 4 point Likert

scale. Ends are "Not at all" (0) and "Frequently if not always" (4).

We found very good reliability for all but one of the dimensions with Cronbach alphas of .857 (self-

awareness), .850 (transparent communication), .814 (internalized moral perspective) and .650

(balanced information processing) respectively. The overall alpha of the ALQ is calculated at .935. All

those figures are consistent with results obtained in the scale development (Walumbwa et al., 2008),

including factor definition and loadings. The confirmatory factor analysis we conducted then allowed

us to validate that authentic leadership as a whole constitutes a higher-order construct. Results

confirmed a better model fit with the higher-order model, with a χ2(98) = 456.0 and χ2/df = 4,56. Fit

indices fall within accepted values (CFI = .93; TLI = .92; RMSEA = .080 with a 90% confidence

interval of .073–.088; SRMR = .043). Those results are very much in line with the confirmatory factor

analyses of other researchers in a variety of contexts (see Rego et al., 2012 for an example in

Portugal).

ii. Eudaimonic well-being.

Based on Seligman's (2011) theorization, the PERMA eudaimonic well-being profiler was developed

by Butler and Kern (in press) in three stages. First, two samples of 408 and 3751 respondents

respectively filled in a questionnaire of 199 items, of which 109 were directly pertaining to the PERMA

model generated from a bank of 700 items. Next, two more samples (N = 3029 and N = 4717) were


used to refine the measure. The authors eventually created and a 15-item, 11-point Likert scale. This

short profiler includes three items for each domain of the PERMA construct (positive emotions,

engagement, good relationships, meaning, and accomplishment). One additional question on overall

well-being and four negative questions were added for the sake of verification, which leads to a 20-

item questionnaire. A version of the profiler for the workplace was created at the same time by adding

the mention "at work" in the items. Items include: "At work, how often do you feel joyful?" (positive

emotions); "At work, how often do you become absorbed in what you are doing?" (engagement); "To

what extent do you receive help from your coworkers when you need help?" (relationships); "To what

extent do you feel you generally feel that you have a sense of direction in your work?" (meaning);

"How often do you feel you are making progress towards accomplishing your work goals?"

(accomplishment). I translated the PERMA well-being at work profiler into French following the

commonly accepted procedure of double translation (Brislin, 1979). In the current study, the items

were evaluated on a 10-point Likert scale (never-always or not at all-absolutely depending on the

formulation of the question). Following Butler and Kern's recommendations (2014), we conducted a

confirmatory factor analysis only on the core 15 items. Although reliability indices for each of the

dimensions were rather low (Cronbach alpha = .726 for positive emotions, .597 for engagement, .749

for relationships, .747 for meaning and .672 for accomplishment), we found a good alpha value for the

whole measure: .871. When testing the model fit with our final sample only consisting of followers,

we found that the PERMA profiler fits better as a five-factor construct, with values of χ2(80) = 390.68

and χ2 / df = 4.88. CFI and TLI values were .90 and .87 respectively. RMSEA was .084 (90% CI:

.076–.092) with a SRMR of .063. All values were much in line with Butler and Kern's (2013) findings.

A prior confirmatory factor analysis with all respondents, leaders and followers included, had

determined a better fit for a single higher-order model.

iii. Performance

The company provided performance data relating to every store visited. The data included sales and

operating profit or Ebit (earnings before interests and taxes) for the first semester of three successive

years (2011-2012-2013). The company insisted the methods for calculating the data were identical for


all stores. In the whole sample of stores, sales for the first semester of 2013 averaged 2,77 million

euros (SD: 1,59 million euros; range: 0,54—8,74 million euros). The average operating profit of stores

was 0,23 million euros (SD: 0,22 million euros; range: - 0,07—1,19 million euros). The average

profitability calculated as the ratio of operating profit on sales was 1.14% (SD: .72%; range: -1%—

3%). I chose to compare figures from 2012 to those of 2011. Consistently with leadership studies

using objective financial data (e.g. Hmieleski et al., 2011), performance was estimated

straightforwardly by calculating the percentage difference between periods of reference, i.e. from the

first semester of 2012 to the first semester of 2013. Sales evolution in this period was -1.87 % on

average. This figure reflects the lackluster conjuncture in the housing market in France but masks very

high variations from store to store (SD: 9.33%; range: -19.0%—27.0%). Operating profits evolution of

the stores was even more diverse: average profit growth was -19.3% with a standard deviation of

52.6%. Two stores are manifest outliers and determine an extremely wide range (-144–477% with

signs reflecting the direction of evolution). Store performance indicators within this subsample are

indicated in table 4 along with performance over 2 years.

Mean SD Range

Sales growth over 1 year -1,87 9,33 -19 27 Ebit growth over 1 year -19,35 52,63 -114 477 Profitability at period end 1,14 0,72 -1 3 Sales growth over 2 years -0,85 12,77 -22 47

Ebit growth over 2 years -29,12 244,75 -3096 1096

Table 4. Business-unit performance figures in the definitive subsample (63 stores), all figures in percentage points (boldface indicate main indicators tested in hypotheses)

iv. Leader-member exchange (LMX)

Leader-member exchange was assessed with the multidimensional LMX scale (Liden & Maslyn,

1998). The scale consists of 12 items loading on four factors (affect, loyalty, contribution, professional

respect). It was translated into French according to generally accepted methods (Brislin, 1979) and

very slightly adapted for the current investigation. Questions include: "My manager is the kind of

person one would like to have as a friend" (affect); "My manager defends my work actions to a


superior, even without complete knowledge of the issue in question" (loyalty); "I do work for my

manager that goes beyond what is specified in my job description" (contribution); I am impressed with

my manager's knowledge and competence on the job" (professional respect). Items were rated on a 5-

point Likert scale (absolutely disagree – absolutely agree). Overall Cronbach alpha for the measure

was .914. Confirmatory factor analysis based on the four-factor model developed by the authors

indicated the data fit the model well: χ2(48) = 246.89; χ2 / df = 5.14; RMSEA =.087 (90%CI: .076—

.098) CFI = .95; TLI = .93; SRMR = .047.

v. Servant leadership.

The instrument we used to measure Servant leadership in the stores we investigated is a short version

of the scale developed by Liden, Wayne, Zhao and Henderson (2008). There were 28 items in the

original scale, with four items for each of the seven domains of servant leadership. The short version

uses the item with the highest loading on each factor. Examples of questions are: "My manager notices

right away when there is a work-related problem"; "My manager makes my career development a

priority"; "I would seek help from my manager if I had a personal problem". A 1-to-5 point Likert-

type scale permits rating from "absolutely disagree" to "absolutely agree". According to Liden and

colleagues (2013), based on a field study with 219 leader-follower dyads, the correlation between the

28-item and the 7-item composites is .97. Because Liden and al.'s study proposed that the seven items

form a single factor, we conducted a confirmatory factor analysis to test how our data fit the model.

Results for the 7-item scale are in line with theirs: χ2(14) = 47. 97; χ2 / df = 3.43; RMSEA = .066 (90%

CI: .046—.088; CFI = .97 ; TLI = .95 ; SRMR = .047; Cronbach alpha = .820.

vi. Power distance

In the current investigation the construct of power distance was assessed thanks to the scale developed

by Dorfman and Howell (1988), translated into French and slightly adapted. The instrument is formed

of 6 items loading on a single factor and rated along a 5-point Likert-style scale ("absolutely agree"

and "absolutely disagree" at opposite ends). Here are some of the items: "Managers should make most


decisions without consulting subordinates"; "It is frequently necessary for a manager to use authority

and power when dealing with subordinates"; "Managers should seldom ask for the opinions of

employees". Confirmatory factor analysis with our data yielded moderately good results: χ2(9) = 47.61;

χ2 / df = 5.29; RMSEA = .088 (90% confidence interval: .065—.114); CFI = .92; TLI = .86. However

Cronbach alpha was only .66.

vii. Team-member exchange (TMX)

Seers (1989) elaborated and tested a 34-item scale for TMX. Building on it, Liden, Wayne and

Sparrowe (2000) developed a shorter version with an item set narrowed down to nine. The current

study used this short version, translated into French with rare specific rewordings. Questions include

"I feel that I am loyal to my coworkers"; "My coworkers have asked for my advice in solving a job-

related problem of theirs"; "My coworkers value the skills and expertise that I contribute to our work

group". Raters respond on a 1-to-5-point scale along with their degree of agreement (from "absolutely

disagree" to "absolutely agree"). The assessment of the model fit with our data set was not excellent:

χ2(27) = 282.52; χ2 / df = 10.46; RMSEA = .131 (90% confidence interval: .118—.146); CFI = .85; TLI

= .79 i.e. below the commonly accepted cutoff values of .90 (Browne & Cudeck, 1992; Kline, 2005;

Hu & Bentler, 1999); SRMR = .085. Reliability of the instrument as measured by the Cronbach alpha

was good, at .847.

After the confirmatory factor analyses essentially validated the chosen instruments, we ran the

statistical tests of our model and its hypotheses according to the method that is described in the next

section.

d. Analysis method

Several options are available for researchers who seek relationships between leadership characteristics

and outcomes. In their literature review of authentic leadership, Gardner and colleagues (2011) noticed

that the earliest studies relied most often on simple correlations at the individual level, but as the field

is maturing, recent investigations make use of more sophisticated methods. As researchers follow the


call by Yammarino et al. (2008) for studies at different levels – individual, dyadic, group, organization

– they adopt techniques such as hierarchical linear modeling (e.g. Jensen & Luthans, 2006; Wang &

Hsieh, 2013) to delineate the respective impact of individual and group differences and path analysis

within the structural equations modeling framework.

The design of the current investigation involves groups. The business-unit is the level of analysis. The

study is multilevel by nature. The main independent variable, authentic leadership, is assessed at the

level of individuals (level 1) nested in their business-units. So are the key mediating variables,

followers' eudaimonic well-being and the moderating variables, power distance and team-member

exchange. The constructs tested as a reference, servant leadership and leader-member exchange, are

also assessed at the levels of individual employees. The performance is assessed at the group or

business-unit level (level 2). The model addresses emergent "bottom-up" phenomena, in which

individual attributes determine group-level outcomes (Klein & Kozlowski, 2000). Multilevel studies

pose a problem because of non-independence of the responses that is, the degrees to which responses

from the individuals in the same group are influenced by, depend on, or cluster by group (Bliese,

2000). In such settings, at least three strategies may be used. The first strategy involves aggregation of

the data at the group level (level 2). The group then becomes the unit of analysis, group means being

substituted for the individual responses, and the researcher can rely on single-level methods of

analysis. Because the replacement of individual data by cluster means suppresses much information, a

condition for the aggregation strategy is that inter-rater agreement within clusters meets certain

criteria. Inter-rater agreement is generally measured by rwg indices (James, Demaree, and Wolf, 1984,

1993) with values of .70 of above considered adequate support for aggregation. In addition, high intra-

class correlation coefficients ICC(1) and ICC(2) are also a base for aggregation at the cluster level (for

an application with path analysis in structural equation modeling, see Clapp-Smith et al., 2008).

The second strategy for multi-level analysis relies on hierarchical linear modeling or multilevel

modeling. Both options, however, have been criticized for yielding potentially biased results in the

case of mediated correlations, in that they confound the effects of within-group variance and between-

groups variances (see Zyphur & Preacher, 2008; Preacher, Zyphur, & Zhang, 2010). The third strategy

is proposed by Preacher, Zyphur and Zhang (2010) and relies on what the authors term a general


multilevel structural equation modeling framework (MSEM) that is based on mathematical works by

Muthen and Asparouhov (2008). That framework subsumes classical structural and multilevel

equation modeling as special cases. Because MSEM is the most complete framework for assessing

mediation, and because it allows for a precise delineation of within- and between-groups effects, I

adopted it for the multilevel assessment of main variables and the simple mediation hypotheses. In the

test of hypotheses, business-unit performance is a group-level variable. All other variables have been

measured by followers' individual responses. Authentic leadership, leader-member exchange and

servant leadership have been aggregated as the mean of individual responses for a given business-unit.

So have been moderating variables, power distance and team-member exchange. Eudaimonic well-

being has been retained at the individual level both for followers and leaders (hypotheses 3c and 3d).

13. Results

a. Descriptive statistics

Since the following results sections will essentially deal with business units as the units of analysis,

this section only briefly reviews the individual responses. Table 5 provides a quick view of mean,

standard deviation and median for all variables observed in the definitive sample (N = 552 followers

nested in 63 business units).

Mean SD Median Eudaimonic well-being 3,62 0,69 3,69 Authentic leadership 3,58 0,78 3,69

Self-awareness 3,51 0,91 3,75 Transparent communication 3,65 0,87 3,80 Internalized moral perspective 3,62 0,86 3,75 Balanced information processing 3,49 0,84 3,67

Servant leadership 3,58 0,80 3,57 Leader-member exchange 3,86 0,74 3,92 Power distance 2,51 0,77 2,50 Team-member exchange 3,96 0,59 4,00

Table 5. Descriptive statistics for main variables with individual responses (N=654) from both followers and leaders. Boldface indicates main constructs. All scales are corrected to be read as rated on a 1-5 Likert scale. Next tables indicate scores on the real scales.


For all scales, individual responses appear consistent with those obtained in other studies both in

average value and dispersion (e.g. for authentic leadership: Rego et al., 2012; for servant leadership:

Liden et al., 2013; for LMX: Liden & Maslyn, 1998). Because the PERMA (Butler & Kern, in press)

profiler has been recently introduced and not fully tested in its workplace version, I looked at how my

results differed from those of the larger, exploratory study. Overall, the means in the five dimensions

of eudaimonic well-being differed only slightly from those in the scale development study. The

general mean for the PERMA construct as a whole was very similar. However, standard deviations

were noticeably higher in Butler and Kern's study (1.75 vs. 1.07 in the current study), which may

reflect the greater diversity of their respondents – their investigation spanned over many countries.

Potential influences of control variables on authentic leadership, eudaimonic well-being and other

variables were sought. I performed one-way Anova tests on all variables against sex, education level

and function that is, leaders or followers. Regarding sex, although male participants responded

consistently higher on all scales, differences were found to be small and poor levels of significance (p

< .052 for authentic leadership, p > .1 for all other variables). Lower ratings by female participants are

worth noticing, since the Butler and Kern's study indicated a higher average rating by females. In the

current investigation, it might be explained by the fact that fewer of them have responsibilities in the

stores and well-being appears correlated with status (see below). Level of education of individual

respondents also seemed not be significantly correlated with any of the variables under review – with

the exception of rare respondents having more than a masters' degree who expressed lower well-being

and appreciation of their leaders' authenticity. To the opposite, the role or function of individual

respondents appeared to bear a noticeable relationship with most of the variables. On all but one scale,

store leaders granted themselves and their own leaders noticeably higher ratings than followers did,

and the dispersion was smaller. The difference was found to be very significant (p < .001) for

eudaimonic well-being and authentic leadership. It was less significant (p < .05) for servant leadership

and team-member exchange, and poorly significant for leader-member exchange. As an exception,

followers in average expressed smaller power distance than leaders did, but with a greater standard

deviation (p < .01). Table 6 provides with more detailed information on means and standard deviations

broken down between categories for authentic leadership and eudaimonic well-being.


Authentic leadership Eud. Well-being Leader-member exch. Servant leaderships

Mean SD Mean SD Mean SD Mean SD

Sex Female 2.39 0.89 7.15 1.11 3.77 0.72 3.46 0.85 Male 2.53 0.75 7.17 1.10 3.84 0.76 3.56 0.81

Role Followers 2.50 0.79 7.16 1.10 3.82 0.75 3.54 0.82

Leaders 2.94 0.61 7.75 0.68 3.90 0.66 3.74 0.73

Table 6. Authentic leadership (5-point; 0-4 scale) and eudaimonic well-being (10-point; 1-10 scale), leader-member exchange and servant leadership (1-5 scales). N = 552 followers; 63 leaders.

In order to assess possible relationships of the investigated variables with demographic factors, I

examined the correlations between them in the definitive sample (N = 552 followers). The age of the

respondents was found to carry a small positive relationship with how authentic they feel their leaders

were (r = .098; p < .05) and how they report their own level of eudaimonic well-being (r = .075, ns).

Age was a slightly better predictor of individual ratings on other variables (servant leadership: r =

.168; p < .001); leader-member exchange (r = .116; p < .01) power distance (r = .093; p < . 05; team-

member exchange: r = .107; p < .05). I couldn't find a significant association between the length of job

tenure and either the perception of authentic leadership or eudaimonic well-being, leader-member

exchange and power distance. There was a small positive correlation between job tenure and both

servant leadership and team-member exchange (r = .090; p < .05 and r = .100; p < .05 respectively).

Working with the same leader for a long time also had relatively little effect overall. Again, no

significant correlation could be found with authentic leadership and eudaimonic well-being. Bivariate

correlations revealed just one relationship between the length of the tenure with the leader and team-

member exchange quality (r = .10; p < .05).

More importantly, several positive relationships between the variables of interest proved strong and

significant. At the individual level, eudaimonic well-being was noticeably correlated with authentic

leadership (r = .450; p < .01) and, to an even greater extent, to servant leadership (r = .505; p < .01),

leader-member exchange (r = .498; p < .01) and team-member exchange (r = .541; p < .01). This

confirms the importance of the relational dimension in workplace well-being. Authentic leadership

was also strongly linked to the other forms of leadership that are part of positive organizational


scholarship, leader-member exchange (r = .738; p < .01) and servant leadership (r = .760; p < .01).

The highest correlation was observed between related constructs leader-member exchange and servant

leadership (r = .802; p < .01). Regarding moderating variables, power distance appeared not strongly

related to most of the other variables, save a weak negative correlation with leader-member exchange

(r = - . 096; p < .05). The correlation of team-member exchange with all leadership constructs was

comparable and moderate (range: .29–.37, p < .01).

1. Authentic leadership

2. Eud. well-being

3. Leader-member

exch.

4. Servant leadership

5. Power distance

6. Team-member

exch.

1. Authentic leadership .94

2. Eud. well-being .450** .87

3. Leader-member exch. .738** .498** .91

4. Servant leadership .760** .505** .802** .82

5. Power dist. .049 -.067 .095* .078 .66

6. Team-member exch. .291** .541** .345** .370** -.031 .85

Table 7. Bivariate correlations between constructs and with demographics at individual level. N=552 followers. Boldface figures in diagonal are Cronbach alphas for each construct. *: p < .05, two-tailed; **: p < .01, two-tailed.

The preliminary analyses led me to the conclusion that the data appeared without particular bias due to

the population's demographics, and were set for further investigation.

b. Aggregation criteria

Multilevel analysis poses specific challenges because researchers risk confounding effects that arise at

the within-group level with those between groups. This risk is particularly high when one uses data

that have been collected at the individual-level and then aggregated to the group level. This risk can be

mitigated under certain conditions. Bliese (2000) reviews the main issues with aggregation and the

indicators most commonly used to check whether those conditions are met. Those indicators' serve

different purposes. In spite of some theoretical and mathematical issues (Bliese, 2000), inter-rater

agreement or within-group agreement that is, the degree to which members of a group express an


opinion close to one another, is generally measured by the way of the rwg and rwgj indices (James,

Demaree, et Wolf, 1984; 1993). The rwg is used for single items, rwgj for constructs with multiple items.

In both cases, a value of .7 or more is considered acceptable for aggregating the data at the group

level. Anova-based intra-class correlation coefficients ICC(1) and ICC(2) are related to the reliability

of the aggregation, by way of comparing the variance of responses among raters within one group

relatively to the variance observed between groups. In addition, ICC(1) also signals non-independence

or the responses in a group that is, to what extent individual responses on a given variable can be

explained by their being part of the group. There are no clear cutoff values for ICCs, though Bliese

(2000) indicates that typical ICC(1)values encountered in organizational research range from .05 to

.20.

Before turning to the presentation of the rwg and ICC values obtained in the current study, it is worth

assessing their relevance for the various variables in our model. Building on Klein and Kozlowzki

(2000), Bliese (2000) first distinguishes three kinds of phenomena in bottom-up processes where

group-level variables are assessed through data observed at the individual level. The first kind is

termed compilation processes and happens when responses can only form at the group-level a

construct that is of a different nature than that at the individual level. For compilation processes,

neither agreement nor reliability measures tend to be relevant in order to establish the validity of the

constructs (Bliese, 2000). In my study, this is essentially the case for eudaimonic well-being, which

remains a fully individual combination of feeling and cognition. This should also be true for power

distance, which represents how individual respondents understand by notions of authority and

hierarchy. By contrast, in pure or "fuzzy" composition processes, the variable sought at the group level

is supposed to be isomorphic with what is measured at the individual level. That is, individual

responses supposedly help detect properties that are shared by the group to which the respondent

belongs. In that case, agreement measures (e.g. rwg) as well as reliability and non-independence indices

(e.g. ICCs) are important. Specifically, non-independence denotes that groups do differ with respect to

the variables studied. In my study, authentic leadership and alternative constructs leader-member

exchange and servant leadership resort to (probably fuzzy) composition processes; so does the team-

member exchange moderating variable.


Within-group agreement was strong with respect to all variables, with almost all rwg and rwgj values

exceeding the cutoff value of .7, ranging from .74 to .94. The only exception was power distance

(rwg = .60). The rwg value was .90 for authentic leadership and .95 for eudaimonic well-being. (see

Table 8 for the complete set of aggregation indices). As expected, ICC(1) was low for eudaimonic

well-being and power distance (.04 and .02 respectively). ICC(1) for all other variables, albeit weaker

than in some other studies (e.g. Clapp-Smith et al., 2008), fall within the values observed by Bliese

(2000), ranging from .09 to .19. ICC(1) value for authentic leadership was .19, which means that up to

19% of the perception of authenticity of a given leader by a given follower can be explained by being

part of the given business-unit. Again, ICC(2) was weaker for eudaimonic well-being and power

distance (.27 and .18 respectively) and higher for all other variables (range: .53–.67). The ICC(2) for

authentic leadership, at .67, was the highest of all variables, which indicates good reliability. For both

ICCs, the four dimensions of authentic leadership were within commonly accepted values for

reliability of aggregation at group level.

rwgj ICC1 ICC2

Authentic leadership .902 .194 .674

Self-awareness .738 .136 .574

Transp. communication .795 .184 .660

Int.moral perspective .744 .130 .561

Balanced info processing .666 .154 .610

Eudaimonic well-being .953 .041 .268

Leader-member exch. .918 .173 .642

Servant leadership .754 .116 .530

Power distance .601 .024 .176

Team-member exch. .913 .093 .466

Table 8. Aggregation criteria. Boldface indicates main constructs.

Since it appeared possible to aggregate data at the business-unit level, bivariate correlations between hypothesized independent and dependent variables were examined for the 63 stores in the definitive sample. Rating of leaders with respect to authentic leadership, leader-member exchange, and servant leadership was estimated as the mean of all raters in each business-unit. Leaders themselves had rated their own felt level of eudaimonic well-being. Table 8 shows positive significant correlations between authentic leadership and sales growth over one year (r = .312; p < .05) and over two years (r = .264; p < .05). Three of the subdimensions of authentic leadership are more strongly correlated with sales growth: leader self-awareness (r = .331 over one year; p < .01; r = .382 over two years; p < .01), leader transparent communication (r = .317 over one year; p < .05) and leader internalized moral perspective (r =


.283 over one year; p < .05). Servant leadership and leader-member exchange exhibit the same range of correlations with sales growth over both one and two years. There were almost no correlation between a) authentic leadership and its subdimensions, servant leadership and leader-member exchange and b) other indicators of performance, specifically in terms of growth of operating profit and profitability. The one exception is the moderate correlation between authentic leadership's internalized moral perspective and profit growth over one year (r = .253; p < .05). Interestingly, the only correlation between leader self-declared level of eudaimonic well-being and the performance of their business-unit is negative (with sales growth over one year: r = -.272; p < .05). Neither were there any significant correlations between leaders' eudaimonic well-being and the degree to which their followers judged them on the scales of authentic leadership, leader-member exchange or servant leadership (as an example, leader's well-being is negatively correlated with authentic leadership with r = -.229; p < .1).

Table 9. Bivariate correlations at the business-unit level (n = 63). Boldface denotes main constructs. Followers' eudaimonic well-being has not been averaged at the business-unit level.

14. Testing hypotheses

I tested the hypotheses with the two-level analysis procedure in Mplus described by Preacher (2011;

model K). I used the syntax for for 1-1-2 models where 1 represents constructs measured at the

individual level and 2 stand for measures at the group level (Bauer, Preacher and Gil, 2006) as

represented in figure 2.

(see next page)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 1. Authentic

leadership -

2. Self-awareness .933** - 3. Transparent

communication .964** .862** -

4. Balanced processing .919** .847** .824** -

5. Moral perspective .943** .806** .899** .838** - 6. Servant

leadership .804** .785** .790** .689** .741** -

7. Leader-member exchange .777** .749** .711** .752** .728** .842** -

8. Leader eud. Well-being -.229 -.202 -.232 -.22 -.197 -.058 -.127 -

9. Sales growth 2 years .264* .382** .24 .223 .147 .344** .281* -.208 -

10. Ebit growth 2 years .016 .025 .002 .06 -.009 -.009 .045 -.034 .23 -

11. Sales growth 1 year .312* .331** .317* .224 .283* .309* .317* -.272* .737** .073

12. Ebit growth 1 year .169 .134 .129 .13 .253* .159 .173 -.01 .231 .073 .547

13. Profitability .068 .048 .07 .1 .05 .036 -.016 -.185 .127 .323** .187 .192

** p <.01; * p < .05 (2-tailed).


Figure 2: two-level analysis. Symbols in italics a, b and c' indicate path coefficients(adapted from Bauer et al., 2006).

All models were run while testing direct and indirect effects simultaneously, as MSEM allows.

Models were fully saturated, with perfect fit as noted by Preacher and al. (2010). Unless otherwise

indicated, all results are given with standardized path coefficients. The notation follows that of Bauer

and colleagues' (2006) as indicated in figure 2, where a represents the direct effect of the independent

variable X on the mediating variable, b represents the effect of the mediator on the dependent variable

Y, c' represents the direct effect of X on Y, and c = ab + c' the total effect of X on Y. Relationships not

mentioned in figure 2 are denoted by path coefficient q.

Hypothesis 1 related to several aspects of a positive relation between authentic leadership and

financial performance in a given business-unit. Hypothesis 1a suggested a positive relationship from

authentic leadership to sales growth. It was not supported within accepted limits of significance (c' =

.22; p < .19 ns; 90%CI: -.10–.48). Alternative constructs were better predictors of sales growth, either

in terms of correlations or significance. The difference was not great for leader-member exchange (c'

= .25; p < .12 ns; 90% CI: -.01—.50). However, servant leadership was shown significant within

generally accepted limits (c' = .32; p < .05; 90% CI: .07—.56).


Hypothesis 1b predicted a positive relationship between authentic leadership and profit growth, but

was not supported. No relationship was found (c' = .07, p < .68 ns; 90% CI -.38—.52). Leader-

member exchange and servant leadership were not better predictors (c' = .10, p < .44 ns and c' = .12, p

< .43 ns, respectively). Hypotheses 1c to 1f proposed positive relationships between the various

components of authentic leadership and performance in terms of sales growth. Self-awareness

(Hypothesis 1c) was well related to performance but again with unacceptable level of significance (c'

= .28; p < .23 ns; 90% CI: -.07—.58). Support for a relationship between transparent communication

and sales performance (hypothesis 1d) was stronger (c' = .25; p < .15 ns); 90% CI: -.04–.53) if still not

good. Significance of the link between internal moral perspective (hypothesis 1e) and sales was not

better (c' = .20; p < .23 ns; 90% CI: -.07–.48). Hypothesis 1f, suggesting a relationship between

balanced information processing and business-unit sales growth, was not supported either (c' = .17; p

< .24 ns; 90% CI: -.06—.40). Regarding hypotheses 1g to 1j that posited relationships between the

components of authentic leadership with business-unit profits, only one in the four domains of

authentic leadership, internalized moral perspective, exhibited a correlation (c' = .20; p < .14 ns; 90%

CI: -.02–.42). Overall, the Hypothesis 1 was not supported at the commonly accepted levels of

significance. Relationships of profit growth with leader-member exchange quality were as poor: c' =

.10; p < .46 ns; 90% CI: -.12–.32. Servant leadership was also disappointing (c' = .12; p < ;43 ns; 90%

CI: -.13–.38)

Hypothesis 2 proposed a positive relationship between authentic leadership and eudaimonic well-

being. According to hypothesis 2a, how authentic a business-leader is rated by their followers

predicted those followers' eudaimonic well-being. A strong correlation supported Hypothesis 2a

(a = .43; p < .02; 90% CI: .58—.82; between-units level). Relationships were a little weaker between

eudaimonic well-being and alternative constructs leader-member exchange (a = .34; p < .08) and

servant leadership (a = .34; p < .10). However, contrary to the prediction of hypothesis 2b, no

significant link was found between how a leader is rated and their own experienced degree of well-

being (q = -.10; p < .54 ns; 90% CI: -.08—.036). Hypotheses 2c to 2f posited a positive relationship

between the components of authentic leadership and eudaimonic well-being. The strongest and most

significant relationship was found with leader self-awareness (a = .611; p < .1; 90% CI: .30–.92,


between level), thus supporting Hypothesis 2c. Support was also found for Hypothesis 2d on a link

from leader transparent communication to follower eudaimonic well-being (a = .42; p < .05; 90% CI:

.12–.72) and internalized moral perspective (Hypothesis 2e; a = .37; p < .1; 90% CI: .03–.71).

However, Hypothesis 1f (leader balanced information processing influencing well-being was not

supported (a = .22; p < .32; 90% CI: -.14–.59).

Hypothesis 3 suggested positive relationships of the level of eudaimonic well-being experienced by

followers and leaders to business-unit financial performance. Hypothesis 3a, which proposed that

followers' well-being and sales growth were positively related, found a good but unsignificant support

(b = .37 ns; p < .23; 90% CI: .-.12—.87). Hypothesis 3b linked profit growth with eudaimonic well-

being and was not supported either (b = .38; p < .26 ns; 90% CI: -.15–.84). Hypothesis 3c predicted a

positive relationship between the well-being of leaders and the sales growth of their business unit. It is

not supported: counter-intuitively, the estimate appeared negative (q = -.12; p < .31 ns; 90% CI: -.30—

.07). The relationship between leader eudaimonic well-being and profits growth was not significant (q

= .08; p < .36 ns; 90% CI: -.22—.06).

Hypothesis 4 posited that eudaimonic well-being mediated the effect of authentic leadership on the

financial performance of business-units. Hypothesis 4a suggested that followers' eudaimonic well-

being partially mediated the correlation between authentic leadership and sales growth year on year.

The effects are as follows (unstandardized figures, between groups): c' = 6.58 (p < .19 ns);

a = . 36 (p < .08); b = 13.30 (p < .37 ns); c = ab = 4.83 (p < .29 ns); see figure 3 for a representation

based on the proposed model. In other words, notwithstanding the significance issue, the

hypothesized model would have meant that the effect of authentic leadership on sales growth was

explained at some 57% by a direct effect of authentic leadership (c' path) and 43% by authentic

leadership as mediated by followers' eudaimonic well-being (ab or c path). In that case, a one-point

increase in authentic leadership ratings would have translated in a 11 percent increase of sales. The

three-way model was finally not supported in particular due to the execrable level of significance of

the relationship between eudaimonic well-being and sales growth.

When I tested the model with servant leadership in lieu of authentic leadership, the model was partly

validated. The direct effect of servant leadership on sales growth was acceptable (c' = 11.49; p < .04)


and so was the first part of the indirect effect (a = .37; p < .1). But the second part was not significant

(b = 12.435; p < .32), thus making the indirect effect unsignificant (ab = 4.15; p < .23). With

confidence levels even poorer in all parts of the proposed model, any support for Hypothesis 4b,

which suggested a partial mediation of eudaimonic well-being between authentic leadership and profit

growth was out of the question.

Figure 3: Unstandardized path coefficients for the proposed model (1-1-2 multilevel structural equation modeling). Dependent variable: sales growth over one year.

For a last verification of mediation hypotheses, and for once giving up the MSEM framework, I

examined the interaction between the three main variables aggregated at the business-unit level as

depicted in figure 3, with the 1-1-1 syntax proposed by Preacher (2010, syntax 1, unstandardized

results) based on bias-corrected bootstrapping with 5,000 iterations. Aggregated authentic leadership

strongly predicted aggregated eudaimonic well-being (a = .50; p < .01; 90% CI: .27–.72) and

business-unit sales growth (c' = 5.57; p < .1; 90% CI: .56–10.67). Impact of eudaimonic well-being on

sales growth was insignificant (b = 3.74; p < .26 ns). Eudaimonic well-being indeed partially mediated

– but insignificantly – a positive effect of authentic leadership on sales growth (c = ab = 1.88; p < .27

ns; 90% CI: -.52–5.10). Following the same aggregation method, no relationship was found between

authentic leadership and profit growth.


Figure 4. Unstandardized path coefficients for a simplified model with all variables aggregated at the business-unit level (1-1-1 mediation model). Dependent variable: sales growth over one year.

Regarding hypotheses 5 and 6 it was not possible to test moderation hypotheses within the multilevel

framework. I tested them with data aggregated at the level of the business-unit (N = 63), with

individual data replaced by business-unit means even for eudaimonic well-being and power distance. I

followed the recommendations by Preacher, Rucker, and Hayes (2007) for solving issues regarding

moderated mediation. I specifically used the corresponding Mplus code offered by Hayes (2007;

model 4) with 5000 bias-corrected bootstrapping iterations. The model fit was hardly acceptable (χ2(§)

= 9.55; χ2 / df = 1.59; CFI = .93; TLI = .87; RMSEA = .10 [90% CI: .00–.21]; SRMR = .08). Because

scales were very different (Muthen & Muthen, 1998), I centered and reduced all variables. I tested the

total indirect effect with values of moderating variables set alternatively to -1 and 1 that is plus or

minus one standard deviation. I did so one moderating variable at a time that is, with the other

moderating variable set to 0 so as so isolate the respective effects of the variables. Hypothesis 5

predicted that low as opposed to high power distance would reinforce the positive relationship of

authentic leadership with eudaimonic well-being (and then the effect on performance). The

hypothesized moderating impact was indeed found but not significant: the total indirect effect is .07


when power distance is set at minus one SD (p < .39 ns) and at .11 when power distance is set at plus

one SD (p < .24 ns). In Hypothesis 6a, a moderating effect was suggested from team-member

exchange on the positive relationship between eudaimonic well-being and financial performance such

as high as opposed to low team-member exchange would translate in a stronger impact. Actually, no

such moderating effect was found. The total indirect effect in the model was measured at .09 on sales

growth with team-member exchanged set either at minus or plus one SD and grossly insignificant in

both cases (p < .25 and p < .36 respectively). Given the poor significance of the overall model

regarding profit growth, Hypothesis 6b was not tested.


Part Five – Discussion and conclusion

15. Discussion

a. Implications for positive organizational scholarship

The primary intent of the present investigation was to further the knowledge in positive organizational

scholarship. Designed and conducted as a scientific, theoretically based investigation of virtuous

phenomena (Cameron & Caza, 2003), this study sought to verify whether, or to what extent, positivity

elevates individuals, groups and organizations; it focused on desirable traits, behaviors and outcomes,

so as to suggest alternative perspectives on corporate and leadership issues – that is, the key conditions

of positive organizational studies (Cameron & Spreitzer, 2012). More specifically, the aim was a) to

measure a positive leadership construct, namely authentic leadership, against objective, corporate-

relevant performance measures; b) to shed light on the mechanisms of the links between authentic

leadership and performance, by using advances in positive psychology – especially the constructs of

flourishing or eudaimonic well-being. I did so by laying out a very simple model that proposes a direct

effect of authentic leadership on sales growth and an indirect effect through the mediation of

followers' eudaimonic well-being.

Despite some serious flaws in the results that will be acknowledged later on in this section, several

steps were achieved towards those purposes. Because the direct effect of authentic leadership on

performance as measured by sales growth was shown significant when aggregating leader authenticity

at the level of their business-unit, this study yields a still rare empirical validation to positive

organizational scholarship (Cameron & Spreitzer, 2012) and positive organizational behavior (Bakker

& Schaufeli, 2008) theories which posit that financial performance, virtuousness and well-being can

go hand in hand. This is all the more important that the performance outcome was measured by

objective criteria. As hoped for by early theorists (Luthans & Avolio, 2003), this effect seemed

sustainable, as it was measured over one year and confirmed over two years. Comparable studies had

revealed similar effects, but over a much shorter period of time. Clapp-Smith and colleagues (2008)

indeed a relationship between authentic leadership and sales growth but only over a period of four

months, and they acknowledged that it was no longer the case a few months later. A recent publication


in settings very close to those of the current investigation also focused on four months (Rego, Reis

Junior, Pinha e Cunha, 2014).

However, this study also highlights that relationship between positive theories and the reality remains

relatively fragile. Though growing, the body of evidence reveals only moderate or weak links to

financial performance – and statistical significance is often an issue. The fact that no significant

relationship has been found between authentic leadership and performance as measured by business-

unit profit growth is difficult to interpret. It may be due in part to the nonlinearity of the indicator

(skewness > 5; kurtosis > 36).

As an aside, the study helps ground the positive organizational scholarship current in real-world

contexts. Whereas some parts of the academic and practitioner literature focus on extraordinary stories

(e.g. Cameron & Lavine, 2006; George, 2003) and others focus rigorous research on very narrow

fields with very specific measures (e.g. leader-rated task performance), this study potentially brings

conclusions that can be of use in a range of settings. Responding to calls by various authors (see

Cameron & Spreitzer, 2013), it confirmed that a positive theory, namely authentic leadership, can

apply to an average company in a very competitive environment. It highlighted that, for middle

managers who are no different in many respects otherwise, a positive state may have an important

impact for both followers and the organization. In that it fulfills a prediction by Gardner and

Schermerhorn Jr (2004) that one needs not be a visionary or a privileged inspired person to be a

positive leader. Authentic leadership, they stated, is "realizable, accessible and tangible". This study

may contribute to explain the success of relatively low-profile managers who do not match the larger-

than-life charismatic stereotype.

b. Implications for authentic leadership theory

Regarding authentic leadership specifically, and because the research design controlled for many

exogenous factors of influence on performance – same company, same activity, same top

management, same region etc. – the findings of this study could be of importance for research. Two

advances result from this study. First, in response to calls by theorists (e.g. Gardner et al., 2011;


Avolio & Mhatre, 2012), this investigation was one of the rare to delineate the impact of the four

components of authentic leadership. Leader self-awareness and transparent communication showed a

much higher correlation with followers' eudaimonic well-being than did ethical perspective and

balanced information processing. This gives a refined view of how the initial promises of authentic

leadership theory are fulfilled in its impact on followers. Regarding business outcomes (sales growth),

significance levels forbid any interpretation. But it's worth noticing that again, leader self-awareness

and transparent communication have stronger level of association whereas balanced information

processing and internalized moral perspective seemed to play a smaller role. In other words, relative to

authentic leadership theory, leader self-awareness and transparent communication seem to be the real

determinants, while the other two factors tend to mitigate it, only ensuring that the impacts are not

obtained at too unfair a price. Actually, leader it is self-awareness that stands out among the four

factors of authentic leadership by the widest margin. It illustrates the importance it has historically

been given to in philosophy, psychology and leadership studies (Novicevic et al., 2006; see also

Kernis & Goldman, 2003). It is also consistent with the scarce empirical evidence in the literature (e.g.

Church, 1997). Because many leadership theories such as transformational leadership (Bass, 1985) or

charismatic leadership (see Conger and Kanungo, 1998) focus on the leaders' awareness of their

organizational goals, their vision, the emphasis on self-awareness is clearly new light shed on how

leaders in general influence their followers. This finding may alter authentic leadership theory in the

future in that it counters the current presentation of four equally important factors in the construct

(Avolio & Gardner, 2005; Ilies & al., 2005). Perceived leader self-awareness is strongly related to the

other dimensions; one could hypothesize that leader self-awareness is an antecedent of the other three

components in the construct. This would be compatible not only with the ancient "Know thyself"

maxim, but also with psychological theories of the individuation (e.g. Jung, Erikson) and confirm

insights of Maslow (1968), Rogers (1961). The importance of self-awareness echoes Quinn's (2011)

notion of a "fundamental state of leadership" based not only on self-knowledge, but also on self-

transformation.


Second, this study helped better positioning of leadership theories that are more or less loosely

associated with positive organizational scholarship, namely authentic leadership, leader-member

exchange and servant leadership. Because the three theories yielded close results in the hypotheses

tested, one can see them as very measuring almost the same thing, perhaps the humane version of

leadership. The constructs, though, have been shown rather dissimilar (Gardner, et al., 2011). Same

source and common bias (Podsakoff et al., 2003) never can be ruled out as a potential partial

explanation. A key feature of leader-member exchange is that it focuses not on the leader or the

follower, but on the relationship between them (Bass & Bass, 2005). By contrast, even though some

scholars şemphasized the importance of relational authenticity (e.g. Eagly, 2005; Spitzmuller & Ilies,

2010; Ilies, Curseu, Dimotakis and Spitzmuller, 2012) and authentic followersip (Leroy et al., 2012;

Avolio & Reichard, 2008, as cited by Gardner et al., 2011), authentic leadership theory classically

studies the leader. Authentic leadership might not yet assess the complex interplay between leader and

followers as precisely as one might wish.

On the other hand, servant leadership appeared a better predictor of business-unit financial

performance than was authentic leadership, with a stronger path coefficients associated with

acceptable significance levels. Servant leadership was an even better predictor of performance in my

study, which might just reflect what followers need and want, namely a leader who cares. From an

academic standpoint, my study suggests a renewed interest for servant leadership as a theory to

understanding the mechanisms of performance. As is the case with authentic leadership, studies that

bridge servant leadership and objective or financial performance are scarce. However, from a

practitioner perspective, authentic leadership probably has a better potential for leader development

because it was based on relatively malleable psychological states that can modified over time (Luthans

& Avolio, 2003; Avolio & Gardner, 2005) by coaching (Fusco, Palmer and O'Riordan, 2011) or

education and training (Pietriglieri, Wood and Pietriglieri, 2011). The other two theories rest more on

the quality of personal relationships between leader and follower, which is probably more difficult to

teach and train to. the validity of the construct and the psychometric properties of the authentic

leadership questionnaire (Avolio, et al., 2007; Walumbwa, et al., 2008) have been confirmed in the


French context which has substantial particularities with respect to how people conceive of leadership

(Michel in House & Javidan, 2012).

c. Implications for positive psychology

This study clarifies and makes use of the construct of eudaimonic well-being that is, a notion of well-

being that goes beyond the satisfaction and positive emotions. The research sets authentic leadership

as a key antecedent of eudaimonic well-being in the workplace, and highlights the importance of the

leaders for most followers (Bass & Bass, 2005). Perhaps more importantly, this study introduced and

validated a new well-being construct. In a direct response to calls from positive organizational

scholars since the early days of the discipline (Cameron, Dutton and Quinn, 2003), I proposed the

PERMA model of well-being (Seligman, 2011), which offers several advantages compared to more

classical indicators of workplace satisfaction. In line with recent developments in positive psychology

that turn the attention from happiness, or hedonic well-being, to flourishing (e.g. Huppert & So, 2013;

Diener, 2012), it is based on a richer definition of what makes life worth living. With its five

dimensions – positive emotions, engagement (flow), relationships, meaning, and accomplishment –

this model describes in more detail the subjective cognitive and emotional work experience.

Compared to research based on self-determination theory for example (e.g. Leroy et al., 2012), my

study adds the meaning people ascribe to their job, and how it helps them fulfill their personal long-

term objectives. The fact that no significant correlation was found between well-being and

performance, no matter how it was measured, eventually ruins the model which was proposed as the

base to the investigation. It might not be so surprising as it seems. Abundant literature so far has only

shown how elusive, inconclusive the matter is (e.g. Wright & Cropanzano, 2004).

By bridging authentic leadership and eudaimonic well-being though, this study furthered

comprehension of the mechanisms of leadership at the theoretical, empirical and methodological

levels. Regarding theory, my research underscored how positive psychology findings such as emotion

contagion (Sy, Côté, and Saavedra, 2005), upwards emotional spirals (Fredrickson & Joiner, 2008)

and intimacy interactions (Reis, 2000) may explain how authentic leaders build on their true selves to

influence their followers towards sustainable performance. On the empirical side, the study reveals


strong relationships between the ratings of authenticity individual followers gave to their leaders and

the rating of their own eudaimonic well-being. Because authentic leadership can be trained for, this

could be of high importance for organizations where workplace well-being, not performance per se, is

the primary objective. Because they are highly correlated, authentic leadership, leader member

exchange and servant leadership predicted the level of followers' well-being in a very similar way,

both in magnitude and degrees of confidence. Remaining on empirical findings, the current study

brought at least two insights about leaders' well-being that sound surprising. One is that leaders do not

experience eudaimonic well-being in accord with the degree of authenticity their followers attribute to

them. There is essentially no correlation, which is curious given the importance of awareness in the

notion of authentic leadership (see Taylor, 2010). Another surprise comes from the absence of

relationship between leaders' experience of eudaimonic well-being and the performance of their

business-unit. This goes against most preconceived ideas of business and professional success

bringing about happiness. In any case, it tends to debunk the idea of a reverse causality from success

to emotional satisfaction. According to company surveys utilizing other techniques, it might be linked

to elevated levels of stress on the part of the most dedicated business-unit leaders. Eventually, in terms

of methods, this study confirmed the validity of the construct and its measurement model. Though

very recent and developed, the PERMA profiler of workplace well-being (Butler & Kern, 2013) was

found to be a robust instrument, with adequate psychometric characteristics even in the specific

context of a particular workplace in France.

16. Limitations

This study has a number of limitations. Some of them translate in an obvious caveat. The most

frustrating is the poor level of overall significance attained in the three-part, two-level model which

was proposed at the outset. Even though moderate to strong relationships were found at the

aggregated, business-unit level, the multilevel structural equation modeling technique revealed too

high risks of error (in the-18-23% range), especially when including the eudaimonic well-being

variable. The method retained is another limitation. Practical constraints led to the use of a cross-

sectional survey and precluded data collection at separate points of time. Personnel turnover couldn't


be taken into account. Yet another issue relates to the context. This investigation has been conducted

in a specific industry, retail, with respondents of a relatively low level of education. Certainly the basic

concepts addressed by the questionnaire were well understood. But again, there remains the possibility

that some respondents didn't figure out some subtleties of the items (e.g. questions with double

negations). Further inquiry may be warranted in more complex organizational environments. In the

same line of reasoning, it is worth reminding that the study was done in a specific country and region,

the Paris area in France. Previous authentic leadership studies have shown consistent results in various

geographies and sectors (e.g. Walumbwa, & al., 2008; Gardner, 2011 et al., for a review). Yet cultural

particularities cannot be ruled out. As an example, differences on how leaders and followers respond

on the scale of Power distance remind that the French have a very defiant conception of work (and

even possibly happiness and well-being). Future research will be better insofar as it takes those

particularities into account – or finds a way to accurately and reliably control for them.

17. Recommendations for future research

Speaking of future research, at least two avenues potentially deserve further interest. The first one

regards the relationship of authentic leadership with both eudaimonic well-being and performance at a

higher level of the organization. To what extent is it possible to transpose the conclusions of this study

in a three-layer organization? How does the degree of authenticity of the higher-level managers

diffuse to the intermediate managers and, ultimately, to the frontline collaborators? How does it affect

performance? In this investigation, some data has been collected on the region managers that is, our

leaders' leaders. But analysis was deemed unworthy as there were only four region managers – two of

them having been appointed just a few months before the survey was administered. A difficulty will

arise as the number of higher-level managers required for significance necessitates a large

organization. Should researchers overcome this issue, they will arrive at much richer understanding of

indirect leadership. Along the same lines, the influence of authentic leadership might be sought in top

management. An executive committee, or a board of administrators, could be interesting settings to

test the possible outcomes of authentic leadership. As noted by Gardner and colleagues, this type of

enquiry will likely call for a different methodology, more qualitative studies for example. A series of a


dozen semi-directive centered interviews I had conducted with CEOs prior to the current investigation

had revealed a high interest for the notion of authenticity and the dimensions of the authentic

leadership construct.

A second avenue for research concerns the accuracy with which the construct of well-being has been

studied. In the same way the four dimensions of authentic leadership have been delineated, examining

the various dimensions of eudaimonic well-being might yield more seizable conclusions. This might

be done for the antecedents of well-being as well as for outcomes - perhaps meaning is more important

for business-unit performance than positive emotions after all? Again, since the composite constructs

of well-being such as the PERMA model are recent, more consideration will necessary to make sure the

conclusions are valid across diverse cultures.

18. Implications for practice

Implications for practitioners are threefold. First, based on aggregated data analysis, the findings give

more strength to the notion of "positive spirals" (Fredrickson, 2003) where more positive states in the

leaders elicits more well-being from their followers, which in turn and partially results in better

outcomes at the group level. Better performance at least in terms of sales growth indeed appears to be

linked with leader authenticity. And if well-being does not imply performance, it is compatible with it.

This should reinforce executives and HR persons who persist in believing McGregor's "theory Y",

which posits that "the motivation, potential for development, the capacity for assuming responsibility,

the readiness to direct behavior toward organizational goals are all present in people" (1957, cited by

Gardner & Schermerhorn, Jr, 2004). The findings provide this intuition with empirical verification.

Second, as a consequence, personal development based on authentic leadership should be encouraged.

Several techniques are already at hand. In line with positive organizational scholarship principles, the

reflected best-self exercise is an example of training that closely matches the self-awareness

dimension of authentic leadership (Roberts, Dutton, Spreitzer, Heaphy and Quinn, 2005, Roberts,

Spreitzer, Dutton, Quinn, Heaphy, and Barker, 2005). Practices derived from appreciative inquiry

(Cooperrider & Whitney, 1999, Cooperrider & Godwin, 2011) help leaders improve transparent

communication and balanced information processing. Even the ethical or moral dimension of


authentic leadership could be, if not taught, at least trained for by relying on values that positive

psychology identified as universal across cultures (Peterson & Seligman, 2004). Interventions based

on a concept close to authentic leadership, psychological capital, yielded positive results (Luthans,

Avey, and Patera, 2008). Finally, practitioners should be reminded that leading does not preclude

managing. Authentic leadership was found to be unrelated with profits evolution across business-units

in my study. Regardless of data issues (i.e. nonlinearity), it might indicate that generating growth and

having people happy is one thing, keeping the numbers another one, and doing both as the same time

is yet another one. As documented long ago by Mintzberg (1973), managing organizations and people

is a multifaceted task. Authentic leadership is one tool to achieve results, but it has to be used in

combination with other tools.

19. Conclusion

Two main ideas emerge from this research. The first one regards specifically authentic leadership

theory. In more than ten years, the theory has proved robust with many empirical validations, and it

was probably time to dig further in its factors, not only the composite construct as a whole. Because

leader self-awareness appears so important to performance relative to the other dimensions, new

efforts should be devoted to explain the mechanisms by which this impact is obtained. For example,

precisely how do followers assess self-awareness? What are the cues? Can a leader fake them? In

parallel, it would be worthwhile to know how self-awareness "works" in combination to just one other

component of authentic leadership. For example, to what extent a self-aware leader must communicate

transparently? The second important idea has to do with the conception of well-being in the

workplace. So far, well-being has often been equated with "fun" or just feeling good. The construct of

eudaimonic well-being introduced in this study allows to take into account much more of what people

put in their professional daily investment. That the two constructs, authentic leadership and

eudaimonic well-being, are strongly related, is perhaps not surprising. But much remains to be learnt

as to one impacts the other – and possibly vice versa, particularly in the relationships between the

different dimensions of each of the constructs.


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