Authentic Leadership, Leader-Member Exchange, and Psychological Capital: A Relationship Analysis

This essay describes the relationship of authentic leadership with leader-Member Exchange (LMX) and Psychological Capital of employees. It highlights the importance of authentic leadership in meeting organizational challenges and its impact on the performance of followers based on PsyCap. The essay further discusses the left side of psychological capital with the help of new evidences related to PsyCap.

Running head: POSITIVE LEADER
Positive Leader
Name of the of the student
Name of the University
Author Note

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This essay intends to describe the relationship of authentic leadership with leader-Member
Exchange (LMX) and Psychological Capital of employees. Authentic leadership implies an
approach related to leadership. This approach gives importance on making of the authenticity of
leader by making an honest relationship with followers (Bouckenooghe, Zafar and Raja 2015). This
can provide importance to their input and consequently make an ethical foundation. In this context,
authentic people are considered as positive one containing reliable self-concepts. Therefore,
authentic leaders can successfully influence and an individual or a complete team with the help of
trust as well as motivation from their followers (Naseer et al. 2016). On the other side, leader-
member exchange theory is related with the concept of relationship-based approach of leadership
that chiefly highlights the two way relationship of leaders with followers. According to this theory,
a leader forms an exchange with his followers and this exchange quality influences responsibility,
performance and decisions of followers. This exchange relationship is chiefly based on respect and
trust. Therefore, emotional relationship sometimes goes beyond the employment scope. At present,
many managers use this relationship to improve working environment within organization.
Therefore, it could be beneficial to understand the relationship between these two approaches along
with PsyCap to understand their impacts of subordinates through describing each concept precisely.
To meet organisational challenges at present situation, the importance of authentic
leadership has increased significantly. This genuine, positive and ethical type of leadership provides
a positive approach related to the organisational leadership. This authentic leadership highlights
characteristics of a leader, such as openness, self-awareness and clarity behaviours. Therefore, this
type of leaders share required information with subordinates to make proper decisions, accept
other’s opinions and reveal personal values, sentiments and motives (Banks, McCauley, Gardner
and Guler 2016). This type of characteristics helps followers to access the mortality as well as
competence of actions accurately. To understand the actual mechanism of authentic leadership,
many scholars have developed many theories. For instance, attention has been considered as one of
the chief factors of the authentic leader. This feature further develops a dynamic relationship

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between authentic leaders along with their followers based on behaviours and attitudes. In this
context, Wang et al. (2014) has described about positive organisational behaviour along with
emotion, trust and identity theories. These theories further explain the mechanism with the help of
which authentic leaders can influence attitudes, performance and behaviours of followers. Thus,
various researches state that authentic leaders can effectively influence and motivate followers (Gu,
Tang and Jiang 2015). In this context, researchers have argued that authentic leaders can
significantly encourage and develop their subordinates through influencing their positive state of
psychology.
According to the complementary congruity theory, the authentic leader has significant
impact on the development of an organisation through influencing performance of followers. The
characteristics authentic leaders complement and contribute the required capabilities of followers to
perform well (Nie and Lämsä 2015). In the initial AL model, scholars have stated that authentic
leaders utilise their own knowledge of psychology to complement and contribute psychological
capital of their followers in order to improve performance. This psychological capital has become a
well-known framework that includes some positive psychological resources, such as efficacy, hope,
optimism and resiliency. Thus, the relationship between authentic leader and performance of
followers, based on PsyCap can be established.
Researchers have observed that leader-follower exchange is a process that transmits the
effect of authentic leader on the performance of followers based on two reasons. Firstly, it is stated
that leadership is a relational process, which considers relationship between leader and followers at
different stages of activities. Moreover, the quality as well as nature of this relationship can be
represented as a fundamental behaviour of leaders with the help of which a leader can influence
responses of his followers (Anderson et al. 2017). Secondly, to understand the effect of contingent
related to PsyCap on the performance linkage of AL-follower, it is essential to analyse the
mechanism of complementary congruity. Some previous articles have stated that an ongoing
interaction along with resultant exchange relationship can help leaders to utilise positive

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psychological condition into subordinates (Martin et al. 2016). In this context, researchers have
advocated that authentic leaders give their followers complementary congruity along with effective
performance. Instead of this, some researchers have argued that whether followers with distinct
PsyCap levels can be benefited accordingly based on the exchange relationship with leaders. Thus,
it can be said that PsyCap of followers have dynamic variations related to the LMX. This further
measures different effects of authentic leaders on the leaders’ performance.
When complementary congruity theory does not work out, leaders may become
comparatively less influential based on their capabilities and characteristics for subordinates. This is
because the requirement for leader’s development in this context is decreased significantly. On the
contrary, when specific capabilities of leaders complement requirements of their subordinates on
these contexts, leaders need to facilitate the situation powerfully. This further can help followers to
act in a specific domain. Based on the complementary point of view, one can state that authentic
leadership can improve performance of followers at the time of follower’s requirements regarding
psychological resources (Panaccio et al. 2015). However, this benefit reduces when followers have
PsyCap with high level, which means, followers are already optimistic, hopeful, efficacious and
resilient. In this context, it needs to be mentioned that authentic leaders has some equal impact with
PsyCap based on the magnitude. This magnitude can influence followers’ job performance based on
the construction of psychological resources. Therefore, each component of PsyCap shows the
positive resources related to psychology, which help an organisation to obtain its desirable
outcomes. Based on the meta-analysis, it can be said that PsyCap has influenced attitudes,
performance and behaviours of employees significantly from various aspects (Kim, Liu and
Diefendorff 2015). It can be seen from entire analysis that the role of positive psychology resources
of followers as well as relational processes mediate moderation model by an integrative may play
significant role between authentic leader and followers’ relationship based on their performance.
Researchers have observed that this positive relationship between authentic leader and performance
of job can be moderated by PsyCap of followers. Especially, it can be said that the relationship

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between performance of followers and authentic leader is comparatively high among followers
while the impact of PsyCap is comparatively low. Through analysing the relational process,
researchers further analyse the entire effect of moderation through showing that authentic leader has
positive relationship with leader-member exchange. Moreover, this leader-follower exchange can
contribute significantly on the contingent performance based on the PsyCap of followers.
The essay further discusses about the left side of psychological capital with the help of new
evidences related to PsyCap. Researchers have conducted various analysis based on this concept. In
this context, researchers have conducted a meta-analysis and consequently have observed various
empirical studies that further have generated predictive validity related to PsyCap depending on
individual result. This meta analysis has also observed a significant lapse within the theoretical
development along with empirical research on PsyCap (Hirst et al. 2016). Therefore, researchers
have observed that limited number of studies have measured anything related to the PsyCap
formation. This means some researchers have argued about the left of PsyCap. This implies the
antecedents that come before the PsyCap in theoretical model. Based on previous literature review,
it can be said that a systematic method has operated to examine antecedents to PsyCap. This method
suggests that this area can provide significant opportunity to researchers for further investigation.
Previous articles have observed minimum seven characteristics and boundary conditions relating to
construct that can be useful for an operational understanding. These may be described briefly.
Firstly, PsyCap states represents as a multidimensional construct. Therefore, it does not
consider a single dimension rather shared variance related to four dimensions. According to
psychological resource theory, it states that psychological constructs are related to larger domain. In
this context, the researcher has considered four dimensions, which are hope, optimism along with
efficacy and resilience. These dimensions construct PsyCap (Alcover et al. 2017). Thirdly, PsyCap
indicates stability regarding the construct. In this context, some tests related to validity work states
that PsyCap is comparatively more stable than emotions though comparatively more open for
changing rather can personality. Developments interventions represent an increment in the PsyCap

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based on supports of participants. This further implies that PsyCap has developable impact although
this sustaining nature related to developmental change can be examined over time. This feature is
essential for the study that investigates that how PsyCap improves.
Fourthly, PsyCap construct can be referred as the self-opinion operation. Some literatures
have rated PsyCap of others. However, the basic operation of PsyCap has occurred for self. Fifthly,
the feature of PsyCap states about positive behaviour of organisation manifesto to measure it. To
measure PsyCap, various instruments can be used (Harms et al. 2017). However, the primary
instrument is the PCQ-24. This contains 24 items, where every item comes from four components.
The sixth feature of Psycap is supported by many researchers in their various studies. According to
them, Psycap performs predicatively. The basic reason to conduct this outcome is to know about
what firms can do for improving PsyCap of employees. The last feature describes the level of
analysis.
Researchers have done many analysis and learnt many things about psycap and suggested
that they can know very little of this issue and it is outside for their developmental interventions. To
know this problem systematically, researchers have observed that the extend of PsyCap and intend
to find minimum four possible features related to this antecedents. To investigate the fixed
antecedents of PsyCap, researchers have conducted various research and come to the conclusion
after analysing the relationship between positive organisational behaviour and PsyCap. Various
articles have been published over time to deal with predicted power and utility of psycap (Gill and
Caza 2018). This deal considers some longitudinal research along with many cross-sectional work
for linking psycap with performance, attitudes and behaviours along with a meta-analysis. Instead
of this, researchers have observed that PsyCap has not considered any empirical examination where
PsyCap starts the antecedents. Outcomes from two field studies advice that there may be fixed
constructs in the categories of demographics personage, differences, job characteristics, and
supervision that predict levels of PsyCap at work (Flynn, Smither and Walker 2016). With some

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convergence and replication, largely outcomes from the two samples propose PsyCap may have
some antecedents in these domains of category.
Firstly, these categories are based on some theoretical rationale (Day and Miscenko 2015).
Initially, it looks that these categories are constructed in a fair process. Motivation for this
conclusion is predicted by every category. Researchers have experienced a challenge within
empirical work through applying correlations and surveys. This statistical relationship is a
mysterious one and cannot be measured with third variable. For instance, researchers have found a
correlation between PsyCap and complexity. This means complexity of task has a basic correlation
with authentic leaders while does not have any relationship with the real outcome of PsyCap.
Previous articles have stated some categorical differences which are important to predict PsyCap.
Secondly, researchers have discussed about the replicated outcomes. According to these, individual
differences along with job characteristics and supervision are essential to predict PsyCap. In this
context, demographics play more or less important role.
In conclusion it can be said that positive factors receive more value compare to negative
factors, based on which organisations and individuals develop significantly. Moreover, researchers,
organisational practitioners along with corporate leaders believe that engagement of employees is
more crucial at present environment. For leaders, work engagement is a promising strategy that
increases retention rate, reduces absenteeism and develops productivity of firm. Therefore,
authentic leadership along with PsyCap and leader-follower exchange are considered as antecedents
regarding work engagement. Through these constructions, a positive lens can be obtained when
leaders think about future performance and take proper actions regarding positive changes. This
lens considers opportunities, strengths and capabilities as a chief point to focus. This affirmative
bias helps to improve greater psychology, employees’ resources and psychological wellbeing to
improve working engagement.

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