Authentic Leadership, LMX & Psychological Capital: A Review

This essay provides a comprehensive literature review examining the intricate relationship between authentic leadership, Leader-Member Exchange (LMX), and employees' Psychological Capital (PsyCap). It delves into how authentic leaders, characterized by balanced processing, relational transparency, and self-awareness, foster trust and improve individual and team performance. The essay explores the LMX theory, emphasizing the bidirectional relationship between leaders and team members and its influence on knowledge exchange and decision-making. Furthermore, it discusses the four capacities of PsyCap—resilience, hope, optimism, and self-efficacy—and their role in enhancing dedication, vigor, and absorption at work. The essay also investigates how to build PsyCap in various employee groups, including professional, administrative, blue-collar, and white-collar workers, considering the unique demands of each role. Finally, it addresses the significant impact of emotions on employee performance, highlighting how emotions affect team spirit, decision-making skills, leadership abilities, and interpersonal relationships. The essay concludes that fostering positive behavior and developing PsyCap are crucial for employees to thrive and achieve peak performance.

Running head: EFFECTIVE LEADER MEMBER EXCHANGE
Effective Leader Member Exchange
Name of the Student
Name of the University
Author’s Note:

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Introduction
The leadership is the significant practical skill, which is responsible for helping the
individuals in encompassing the basic capability of a specific company and individual to
either lead or guide an entire company, project teams or other individuals (Kimura 2013).
Leadership has produced some of the major theories by including the attributes, values,
behaviours, functionalities, charisma, power and vision within the other members of the
teams. Leadership has even involved in undertaking relevant decisions and then creating or
articulating a clarified vision for the core purpose of establishing the achievement of
organizational goals and objectives. These could be done by providing some of the most
significant tools, techniques or knowledge of the people involved. The core relationship
between authentic leadership, PsyCap or psychological capital and leader member exchange
for the staffs and employees of any company (Wang et al. 2015). This essay would be
depicting a proper literature review to explain each and every process to build PsyCap for the
several organizational staffs. Furthermore, there is a significant impact of the emotions over
the performance of employees and these would also be explained in the essay properly.
Discussion
Authentic Leadership
Authentic leadership can be stated as the specified approach for leadership that is
responsible for emphasizing on building of leader legitimacy through the subsequent
relationship with every other member, who could value the inputs and is then built on an
ethical foundation. According to Li and Liao 2014, all the authentic leaders comprise of
positivity with the specific truthful self-concepts. Once, trust, support and enthusiasm is built,
authenticated leaders could easily improvise the team performances or individual

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performances. Three distinctive qualities are present for authentic leadership, viz. balanced
processing, relational transparency and self-awareness.
Leader Member Exchange Theory
The theory of LMX or Leader Member Exchange is a specified approach on the basis
of relationship for leaders. It emphasizes on the bidirectional relationship between leader and
other team members (Tse et al. 2013). This theory provides the suggestion that leaders can
develop the exchange of ideas and knowledge for getting effective performance and
decisions. The theory of LMX or leader member exchange is used by various managers and
team leaders after replacing the previously existing management theories.
Psychological Capital or PsyCap
PsyCap or psychological capital is a positive development state for a particular
individual according to few of the characteristics. There are four capacities of this
psychological capital, which are resilience, hope, optimism and self-efficacy. Jha and Jha
2013 state that it is a new approach to gain popularity within the psychology getting linked
with emotional capital. This psychological capital could easily bring the significant results of
making a specific link within the outcomes of psychology as well as economies by
considering the socio technical competencies. High psychological capital has the most
significant impact on various organizational changes.
Relationship between Authentic Leadership, Leader Member Exchange and
Employees’ Psychological Capital or PsyCap
The relationship within authentic leadership, psychological capital and leader member
exchange plays one of the most important roles for providing higher effectiveness and
efficiency for the organization (Chernyak-Hai and Tziner 2014). This relationship
subsequently exists for leadership emergence by including individual attributes such as

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extraversion, conscientiousness, adjustments, self-efficacy and several others. The four
dimensions of psychological capital are majorly responsible for the improvement of
dedication, vigour and absorption within work. Furthermore, this PsyCap could easily
mediate the relation within authentic leadership and engagement of work. The several
members of the organization could easily manifest a high level of organizational commitment
for producing more.
According to Sun et al. 2013, the significant connection within PsyCap as well as
employee o employee relation quality could be easily achieved by taking the help of the
theory of Leader Member Exchange. The relationship even explains about the procedural
effect of employees’ engagement over the performances of employees within their various
work roles. To provide core insights to the psychological capital, LMX or Leader Member
Exchange has provided a significant influence over the work role performances or process of
employee engagement. The higher PsyCap of every organizational staff comprises of a
positive relationship for each and every individual in the various work roles.
Building Psychological Capital for Different types of Employees
The four effective capacities of the psychological capital are hope, optimism, self-
efficacy and resilience are extremely important and significant to make the employees obtain
positivity and better leadership or decision making skills (Gooty and Yammarino 2016).
Moreover, the employees would also have the ability of identifying the major strengths and
weaknesses for providing better output to the respective organization.
Professional versus Administrative Employees
Professional employees are those specified individuals, who are the subsequent
members of the profession or company or even the individual, who could earn living from the
professional activity. All the professional employees can describe significant educational

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trainings to prepare themselves with proper knowledge and skills to perform professional
roles (Kim, Liu and Diefendorff 2015). Various important and significant ethical or moral
professional obligations are followed by them. There are four capacities of PsyCap, which are
optimism, resilience, self-efficacy and hope, which make the work much easier for
professional employees to maintain work efficiency.
On the contrary, administrative employees are responsible for exercising independent
judgment and discretion while the proper completion of the duties of that specific person. As
per Schermuly, Meyer and Dämmer 2013, various business operations as well as
organizational policies or techniques could be involved within the major responsibilities or
duties for the administrative employees. Two effective PsyCap capacities required for
building their psychological capital for the administrative employees are self-efficacy and
resilience.
Emotional Labour
The emotional labour is a basic process for managing as well as controlling the major
feelings or expressions to fulfil the emotional job needs. Various workers have the
expectation of regulating major emotions when they are interacting with superiors, co-
workers and customers. This emotional labour even includes the proper analysis or decision
making for the emotional expression. Hope, resilience and self-efficacy are the major
capacities of psychological capital, which could be termed as the core requirements of
emotional labour.
Blue Collar versus White Collar Employees
Blue collar employees are those specific individuals, whose jobs could entail the
physical labour completely and majorly. The blue collar employees could work within any
work shop and factory (Islam et al. 2013). End results of the outcomes of these employees are

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both identifiable and tangible. Each and every blue collar employee has the responsibility of
doing excessive manual hard work and thus the four capacities of resilience, optimism, hope
and self-efficacy. A positive work attitude is required for these blue collar employees for
completing their manual work.
White collar employees, on the contrary could be stated as those individuals, who
could easily perform the managerial, administrative and professional work. The works of the
white collar employees could perform their work in any admin office or setting (Gooty and
Yammarino 2016). The white collar employees should have the psychological capital
capacities of self-efficacy and optimism for the purpose of completing their works effectively
and efficiently.
Impact of Emotions on the Employees’ Performance
Emotions of any particular individual can be stated as the respective conscious
experience, which is being eventually featured by the intensified mental actions and even the
proper degrees of displeasure as well as pleasure. These emotions are also interlinked with
motivation, personalities, temperament, disposition and mood (Jha and Jha 2013). The most
important aspect of this emotion is cognition and this type of aspect, acting mainly on the
emotions or versions of emotions that the individuals are feeling. The several mental
procedures are quite vital for a proper interpretation of each and every event.
Emotions are quite complex and complicated and as per the theory of Leader Member
Exchange, there are certain feeling states, which substantially result within the major
psychological and physical changes, which influence the individual’s behaviours. The
respective physiology of the emotions is mainly associated with the effective arousal of
nervous systems with the several strengths and states of arousal relation for some specified

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emotions. These emotions are often considered as the driving force behind positive, negative
thought and motivation.
Hence, the emotions consist of strong impact over the overall employee performance
for any particular company. The respective team spirit, decision making skill, leadership skill,
job performances are highly affected by each and every emotion (Li and Liao 2014).
Furthermore, the innovations, creativities and even the interpersonal relationships are highly
influenced by these employees of the organization. The emotions such as interest, trust,
anger, grief are not at all instantaneous and hence they are not even prolonged like mood. On
the other hand, emotions are the brief summaries of various synchronized changes within
mind or body that is responsible for directly affecting the performances of the employees of
that organization.
Conclusion
Therefore, from the above discussion, conclusion could be drawn that the positive
behaviour mainly emphasizes on the core capability of the employees thriving in their work
places and even attaining their respective peak performance. As per a cross sectional and
qualitative survey, a proper measurement is required to retain the real factor. Although, the
subsequent measures of work engagement and followership are adapted by them, there is a
requirement of improvement for the internal reliability as well as validity construction for the
instruments. The best factor for the structure of psychological capital or PsyCap is eventually
confirmed. This above provided essay has clearly outlined the significant relationship within
authentic leadership, PsyCap or psychological capital and LMX or leader member exchange
theory. A subsequent process for the PsyCap building for numerous types of employees is
being demonstrated in the essay. Moreover, the impact of emotions on the employee
performances is also provided in this essay.

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References
Chernyak-Hai, L. and Tziner, A., 2014. Relationships between counterproductive work
behavior, perceived justice and climate, occupational status, and leader-member
exchange. Revista de Psicología del Trabajo y de las Organizaciones, 30(1).
Gooty, J. and Yammarino, F.J., 2016. The leader–member exchange relationship: A
multisource, cross-level investigation. Journal of Management, 42(4), pp.915-935.
Islam, T., ur Rehman Khan, S., Norulkamar Ungku Bt. Ahmad, U. and Ahmed, I., 2013.
Organizational learning culture and leader-member exchange quality: The way to enhance
organizational commitment and reduce turnover intentions. The Learning
Organization, 20(4/5), pp.322-337.
Jha, S. and Jha, S., 2013. Leader-member exchange: A critique of theory & practice.
Kim, T.Y., Liu, Z. and Diefendorff, J.M., 2015. Leader–member exchange and job
performance: The effects of taking charge and organizational tenure. Journal of
Organizational Behavior, 36(2), pp.216-231.
Kimura, T., 2013. The moderating effects of political skill and leader–member exchange on
the relationship between organizational politics and affective commitment. Journal of
Business Ethics, 116(3), pp.587-599.
Li, A.N. and Liao, H., 2014. How do leader–member exchange quality and differentiation
affect performance in teams? An integrated multilevel dual process model. Journal of
Applied Psychology, 99(5), p.847.
Schermuly, C.C., Meyer, B. and Dämmer, L., 2013. Leader-member exchange and innovative
behavior. Journal of Personnel Psychology.

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Sun, L.Y., Chow, I.H.S., Chiu, R.K. and Pan, W., 2013. Outcome favorability in the link
between leader–member exchange and organizational citizenship behavior: Procedural
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Wang, X.H., Fang, Y., Qureshi, I. and Janssen, O., 2015. Understanding employee innovative
behavior: Integrating the social network and leader–member exchange perspectives. Journal
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