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

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