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
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EDBA Université Paris-Dauphine Thesis Vincent Giolito - 28 April 2014
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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.
Vincent Giolito - EDBA dissertation 3
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.
Vincent Giolito - EDBA dissertation 4
TABLE OF CONTENTS
Abstract ................................................................................................................................................................... 2 Acknowledgements ................................................................................................................................................. 3 Foreword ................................................................................................................................................................. 5 Part One - Introduction ......................................................................................................................................... 6
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
Table 2. Descriptive statistics for education level (whole sample: N = 654) 2 All figures here and in sample statistics are calculated from respondents, not company records.
Vincent Giolito - EDBA dissertation 50
The company where the investigation took place had a tradition of long employment. This is partly
reflected by the width of the range in job tenures. Some workers had worked for more than 30 years
with the chain! At the other extreme, the company strived to attract young talent in sales and store
leader positions. In the yard, where work is of very physical nature, the company remained a home for
school dropouts, some of them eventually getting the opportunity of promotion and/or further
professional education.
Tenure with leader Tenure in the job Mean SD Range Mean SD Range Yard – workers
LEADERS 2,4 4,0 0-29 6,2 5,6 0-29 Table 3. Descriptive statistics for Tenure with leader and in the job (N = 654)
b. Procedure
I visited 71 out of the 72 stores (in the one left apart the manager had changed just weeks prior to the
data collection so the assessment of the authenticity of the leader was hardly relevant). I submitted
paper-and-pencil questionnaires to all, leaders and followers alike but separately in each store, in
seven weeks in July and September 2013. A total of 654 persons filled in the questionnaire, which
represents over 99% of the people present at time of visit and 72% of the global headcount concerned
(not all collaborators were present at the time of the visit). Eventually I excluded the stores in which
the store manager was in place for less than 19 months – the period over which the financial data was
available. The sample was reduced thus to 63 stores (N = 552 respondents) for the analysis of the
proposed model.
The risk of bias due to common source and same instruments (Podsakoff, MacKenzie, Lee and
Podsakoff, 2003) was a preoccupation in the research design. Performance was estimated from
Vincent Giolito - EDBA dissertation 51
financial company information. Other data were obtained via a 73-item questionnaire including a set
of control questions (sex, age, education, tenure with leader, tenure in the job). For practical reasons it
was not possible to submit the questionnaire at two separate points in time. But other precautions were
taken. The questionnaire was divided in seven different sections, with three different scales. Total
anonymity was guaranteed to the respondents. The researcher was present on the premises so as to
explain the anonymity procedure to respondents and supervise the procedure. Neither the store
manager nor any other company person were there while the respondents dealt with the questionnaire.
Stores were not referred to by their location but by a code. This procedure has been accepted both by
an ethics committee of the doctoral school at Université Paris Dauphine and by the company's "comité
d'entreprise", the body where union representatives entertain dialogue with the company leadership
under French law.
c. Measures
The current investigation relied on existing, validated instruments. Before undertaking the analysis of
correlation between constructs, we conducted a statistical verification of each of the scales used via a
confirmatory factor analysis with the followers sample (N = 552 nested in 63 business-units). Because
team-shared properties should be assessed at the level of origin (Klein & Kozlowski, 2000), we did so
at the level of individuals with all respondents. Models fit were assessed with the comparative fit
index (CFI), the incremental fit index (IFI) and the root mean square of error approximation. Cutoff
values we adopted were in line with those generally accepted in leadership: e.g. CFI > .90; IFI > .90;
RMSEA < .08 for reasonable fit if combined with a SRMR of no more than .09; Browne & Cudeck,
1992; Kline, 2005; Hu & Bentler, 1999). Scale reliabilities were assessed by measures of the
Cronbach's alpha (Cronbach, 1955), with a value of .7 considered as a minimum. For most analyses
we used the Mplus-7 software package (Muthén & Muthén, 1998-2012; Geisen, 2013). Assessment of
the conditions for aggregation and other calculations were conducted with R software and its
multilevel package (Bliese, 2013). Some additional calculations were made with EQS (Bentler, 1985).
Vincent Giolito - EDBA dissertation 52
i. Authentic leadership.
I assessed authentic leadership with the authentic leadership questionnaire (ALQ) developed by
Avolio, Gardner & Walumbwa (2007) it its French version available on the site
www.mindgarden.com (see Walumbwa et al., 2008). Three to five items assess each of the four
dimensions of authentic leadership (self-awareness, transparent communication, balanced information
processing and internalized moral perspective) for a total of 16 items. Items include: "My leader
accurately describes how others view his or her capabilities" (self-awareness); "My leader says exactly
what he or she means" (transparent communication); "My leader analyzes relevant data before coming
to a decision" (balanced information processing); "My leader makes difficult decisions based on high
standards of ethical conduct" (internalized moral perspective). Items are rated on a 0 to 4 point Likert
scale. Ends are "Not at all" (0) and "Frequently if not always" (4).
We found very good reliability for all but one of the dimensions with Cronbach alphas of .857 (self-
awareness), .850 (transparent communication), .814 (internalized moral perspective) and .650
(balanced information processing) respectively. The overall alpha of the ALQ is calculated at .935. All
those figures are consistent with results obtained in the scale development (Walumbwa et al., 2008),
including factor definition and loadings. The confirmatory factor analysis we conducted then allowed
us to validate that authentic leadership as a whole constitutes a higher-order construct. Results
confirmed a better model fit with the higher-order model, with a χ2(98) = 456.0 and χ2/df = 4,56. Fit
indices fall within accepted values (CFI = .93; TLI = .92; RMSEA = .080 with a 90% confidence
interval of .073–.088; SRMR = .043). Those results are very much in line with the confirmatory factor
analyses of other researchers in a variety of contexts (see Rego et al., 2012 for an example in
Portugal).
ii. Eudaimonic well-being.
Based on Seligman's (2011) theorization, the PERMA eudaimonic well-being profiler was developed
by Butler and Kern (in press) in three stages. First, two samples of 408 and 3751 respondents
respectively filled in a questionnaire of 199 items, of which 109 were directly pertaining to the PERMA
model generated from a bank of 700 items. Next, two more samples (N = 3029 and N = 4717) were
Vincent Giolito - EDBA dissertation 53
used to refine the measure. The authors eventually created and a 15-item, 11-point Likert scale. This
short profiler includes three items for each domain of the PERMA construct (positive emotions,
engagement, good relationships, meaning, and accomplishment). One additional question on overall
well-being and four negative questions were added for the sake of verification, which leads to a 20-
item questionnaire. A version of the profiler for the workplace was created at the same time by adding
the mention "at work" in the items. Items include: "At work, how often do you feel joyful?" (positive
emotions); "At work, how often do you become absorbed in what you are doing?" (engagement); "To
what extent do you receive help from your coworkers when you need help?" (relationships); "To what
extent do you feel you generally feel that you have a sense of direction in your work?" (meaning);
"How often do you feel you are making progress towards accomplishing your work goals?"
(accomplishment). I translated the PERMA well-being at work profiler into French following the
commonly accepted procedure of double translation (Brislin, 1979). In the current study, the items
were evaluated on a 10-point Likert scale (never-always or not at all-absolutely depending on the
formulation of the question). Following Butler and Kern's recommendations (2014), we conducted a
confirmatory factor analysis only on the core 15 items. Although reliability indices for each of the
dimensions were rather low (Cronbach alpha = .726 for positive emotions, .597 for engagement, .749
for relationships, .747 for meaning and .672 for accomplishment), we found a good alpha value for the
whole measure: .871. When testing the model fit with our final sample only consisting of followers,
we found that the PERMA profiler fits better as a five-factor construct, with values of χ2(80) = 390.68
and χ2 / df = 4.88. CFI and TLI values were .90 and .87 respectively. RMSEA was .084 (90% CI:
.076–.092) with a SRMR of .063. All values were much in line with Butler and Kern's (2013) findings.
A prior confirmatory factor analysis with all respondents, leaders and followers included, had
determined a better fit for a single higher-order model.
iii. Performance
The company provided performance data relating to every store visited. The data included sales and
operating profit or Ebit (earnings before interests and taxes) for the first semester of three successive
years (2011-2012-2013). The company insisted the methods for calculating the data were identical for
Vincent Giolito - EDBA dissertation 54
all stores. In the whole sample of stores, sales for the first semester of 2013 averaged 2,77 million
euros (SD: 1,59 million euros; range: 0,54—8,74 million euros). The average operating profit of stores
was 0,23 million euros (SD: 0,22 million euros; range: - 0,07—1,19 million euros). The average
profitability calculated as the ratio of operating profit on sales was 1.14% (SD: .72%; range: -1%—
3%). I chose to compare figures from 2012 to those of 2011. Consistently with leadership studies
using objective financial data (e.g. Hmieleski et al., 2011), performance was estimated
straightforwardly by calculating the percentage difference between periods of reference, i.e. from the
first semester of 2012 to the first semester of 2013. Sales evolution in this period was -1.87 % on
average. This figure reflects the lackluster conjuncture in the housing market in France but masks very
high variations from store to store (SD: 9.33%; range: -19.0%—27.0%). Operating profits evolution of
the stores was even more diverse: average profit growth was -19.3% with a standard deviation of
52.6%. Two stores are manifest outliers and determine an extremely wide range (-144–477% with
signs reflecting the direction of evolution). Store performance indicators within this subsample are
indicated in table 4 along with performance over 2 years.
Mean SD Range
Sales growth over 1 year -1,87 9,33 -19 27 Ebit growth over 1 year -19,35 52,63 -114 477 Profitability at period end 1,14 0,72 -1 3 Sales growth over 2 years -0,85 12,77 -22 47
Ebit growth over 2 years -29,12 244,75 -3096 1096
Table 4. Business-unit performance figures in the definitive subsample (63 stores), all figures in percentage points (boldface indicate main indicators tested in hypotheses)
iv. Leader-member exchange (LMX)
Leader-member exchange was assessed with the multidimensional LMX scale (Liden & Maslyn,
1998). The scale consists of 12 items loading on four factors (affect, loyalty, contribution, professional
respect). It was translated into French according to generally accepted methods (Brislin, 1979) and
very slightly adapted for the current investigation. Questions include: "My manager is the kind of
person one would like to have as a friend" (affect); "My manager defends my work actions to a
Vincent Giolito - EDBA dissertation 55
superior, even without complete knowledge of the issue in question" (loyalty); "I do work for my
manager that goes beyond what is specified in my job description" (contribution); I am impressed with
my manager's knowledge and competence on the job" (professional respect). Items were rated on a 5-
point Likert scale (absolutely disagree – absolutely agree). Overall Cronbach alpha for the measure
was .914. Confirmatory factor analysis based on the four-factor model developed by the authors
indicated the data fit the model well: χ2(48) = 246.89; χ2 / df = 5.14; RMSEA =.087 (90%CI: .076—
.098) CFI = .95; TLI = .93; SRMR = .047.
v. Servant leadership.
The instrument we used to measure Servant leadership in the stores we investigated is a short version
of the scale developed by Liden, Wayne, Zhao and Henderson (2008). There were 28 items in the
original scale, with four items for each of the seven domains of servant leadership. The short version
uses the item with the highest loading on each factor. Examples of questions are: "My manager notices
right away when there is a work-related problem"; "My manager makes my career development a
priority"; "I would seek help from my manager if I had a personal problem". A 1-to-5 point Likert-
type scale permits rating from "absolutely disagree" to "absolutely agree". According to Liden and
colleagues (2013), based on a field study with 219 leader-follower dyads, the correlation between the
28-item and the 7-item composites is .97. Because Liden and al.'s study proposed that the seven items
form a single factor, we conducted a confirmatory factor analysis to test how our data fit the model.
Results for the 7-item scale are in line with theirs: χ2(14) = 47. 97; χ2 / df = 3.43; RMSEA = .066 (90%
Table 5. Descriptive statistics for main variables with individual responses (N=654) from both followers and leaders. Boldface indicates main constructs. All scales are corrected to be read as rated on a 1-5 Likert scale. Next tables indicate scores on the real scales.
Vincent Giolito - EDBA dissertation 59
For all scales, individual responses appear consistent with those obtained in other studies both in
average value and dispersion (e.g. for authentic leadership: Rego et al., 2012; for servant leadership:
Liden et al., 2013; for LMX: Liden & Maslyn, 1998). Because the PERMA (Butler & Kern, in press)
profiler has been recently introduced and not fully tested in its workplace version, I looked at how my
results differed from those of the larger, exploratory study. Overall, the means in the five dimensions
of eudaimonic well-being differed only slightly from those in the scale development study. The
general mean for the PERMA construct as a whole was very similar. However, standard deviations
were noticeably higher in Butler and Kern's study (1.75 vs. 1.07 in the current study), which may
reflect the greater diversity of their respondents – their investigation spanned over many countries.
Potential influences of control variables on authentic leadership, eudaimonic well-being and other
variables were sought. I performed one-way Anova tests on all variables against sex, education level
and function that is, leaders or followers. Regarding sex, although male participants responded
consistently higher on all scales, differences were found to be small and poor levels of significance (p
< .052 for authentic leadership, p > .1 for all other variables). Lower ratings by female participants are
worth noticing, since the Butler and Kern's study indicated a higher average rating by females. In the
current investigation, it might be explained by the fact that fewer of them have responsibilities in the
stores and well-being appears correlated with status (see below). Level of education of individual
respondents also seemed not be significantly correlated with any of the variables under review – with
the exception of rare respondents having more than a masters' degree who expressed lower well-being
and appreciation of their leaders' authenticity. To the opposite, the role or function of individual
respondents appeared to bear a noticeable relationship with most of the variables. On all but one scale,
store leaders granted themselves and their own leaders noticeably higher ratings than followers did,
and the dispersion was smaller. The difference was found to be very significant (p < .001) for
eudaimonic well-being and authentic leadership. It was less significant (p < .05) for servant leadership
and team-member exchange, and poorly significant for leader-member exchange. As an exception,
followers in average expressed smaller power distance than leaders did, but with a greater standard
deviation (p < .01). Table 6 provides with more detailed information on means and standard deviations
broken down between categories for authentic leadership and eudaimonic well-being.
Table 7. Bivariate correlations between constructs and with demographics at individual level. N=552 followers. Boldface figures in diagonal are Cronbach alphas for each construct. *: p < .05, two-tailed; **: p < .01, two-tailed.
The preliminary analyses led me to the conclusion that the data appeared without particular bias due to
the population's demographics, and were set for further investigation.
b. Aggregation criteria
Multilevel analysis poses specific challenges because researchers risk confounding effects that arise at
the within-group level with those between groups. This risk is particularly high when one uses data
that have been collected at the individual-level and then aggregated to the group level. This risk can be
mitigated under certain conditions. Bliese (2000) reviews the main issues with aggregation and the
indicators most commonly used to check whether those conditions are met. Those indicators' serve
different purposes. In spite of some theoretical and mathematical issues (Bliese, 2000), inter-rater
agreement or within-group agreement that is, the degree to which members of a group express an
Vincent Giolito - EDBA dissertation 62
opinion close to one another, is generally measured by the way of the rwg and rwgj indices (James,
Demaree, et Wolf, 1984; 1993). The rwg is used for single items, rwgj for constructs with multiple items.
In both cases, a value of .7 or more is considered acceptable for aggregating the data at the group
level. Anova-based intra-class correlation coefficients ICC(1) and ICC(2) are related to the reliability
of the aggregation, by way of comparing the variance of responses among raters within one group
relatively to the variance observed between groups. In addition, ICC(1) also signals non-independence
or the responses in a group that is, to what extent individual responses on a given variable can be
explained by their being part of the group. There are no clear cutoff values for ICCs, though Bliese
(2000) indicates that typical ICC(1)values encountered in organizational research range from .05 to
.20.
Before turning to the presentation of the rwg and ICC values obtained in the current study, it is worth
assessing their relevance for the various variables in our model. Building on Klein and Kozlowzki
(2000), Bliese (2000) first distinguishes three kinds of phenomena in bottom-up processes where
group-level variables are assessed through data observed at the individual level. The first kind is
termed compilation processes and happens when responses can only form at the group-level a
construct that is of a different nature than that at the individual level. For compilation processes,
neither agreement nor reliability measures tend to be relevant in order to establish the validity of the
constructs (Bliese, 2000). In my study, this is essentially the case for eudaimonic well-being, which
remains a fully individual combination of feeling and cognition. This should also be true for power
distance, which represents how individual respondents understand by notions of authority and
hierarchy. By contrast, in pure or "fuzzy" composition processes, the variable sought at the group level
is supposed to be isomorphic with what is measured at the individual level. That is, individual
responses supposedly help detect properties that are shared by the group to which the respondent
belongs. In that case, agreement measures (e.g. rwg) as well as reliability and non-independence indices
(e.g. ICCs) are important. Specifically, non-independence denotes that groups do differ with respect to
the variables studied. In my study, authentic leadership and alternative constructs leader-member
exchange and servant leadership resort to (probably fuzzy) composition processes; so does the team-
member exchange moderating variable.
Vincent Giolito - EDBA dissertation 63
Within-group agreement was strong with respect to all variables, with almost all rwg and rwgj values
exceeding the cutoff value of .7, ranging from .74 to .94. The only exception was power distance
(rwg = .60). The rwg value was .90 for authentic leadership and .95 for eudaimonic well-being. (see
Table 8 for the complete set of aggregation indices). As expected, ICC(1) was low for eudaimonic
well-being and power distance (.04 and .02 respectively). ICC(1) for all other variables, albeit weaker
than in some other studies (e.g. Clapp-Smith et al., 2008), fall within the values observed by Bliese
(2000), ranging from .09 to .19. ICC(1) value for authentic leadership was .19, which means that up to
19% of the perception of authenticity of a given leader by a given follower can be explained by being
part of the given business-unit. Again, ICC(2) was weaker for eudaimonic well-being and power
distance (.27 and .18 respectively) and higher for all other variables (range: .53–.67). The ICC(2) for
authentic leadership, at .67, was the highest of all variables, which indicates good reliability. For both
ICCs, the four dimensions of authentic leadership were within commonly accepted values for
reliability of aggregation at group level.
rwgj ICC1 ICC2
Authentic leadership .902 .194 .674
Self-awareness .738 .136 .574
Transp. communication .795 .184 .660
Int.moral perspective .744 .130 .561
Balanced info processing .666 .154 .610
Eudaimonic well-being .953 .041 .268
Leader-member exch. .918 .173 .642
Servant leadership .754 .116 .530
Power distance .601 .024 .176
Team-member exch. .913 .093 .466
Table 8. Aggregation criteria. Boldface indicates main constructs.
Since it appeared possible to aggregate data at the business-unit level, bivariate correlations between hypothesized independent and dependent variables were examined for the 63 stores in the definitive sample. Rating of leaders with respect to authentic leadership, leader-member exchange, and servant leadership was estimated as the mean of all raters in each business-unit. Leaders themselves had rated their own felt level of eudaimonic well-being. Table 8 shows positive significant correlations between authentic leadership and sales growth over one year (r = .312; p < .05) and over two years (r = .264; p < .05). Three of the subdimensions of authentic leadership are more strongly correlated with sales growth: leader self-awareness (r = .331 over one year; p < .01; r = .382 over two years; p < .01), leader transparent communication (r = .317 over one year; p < .05) and leader internalized moral perspective (r =
Vincent Giolito - EDBA dissertation 64
.283 over one year; p < .05). Servant leadership and leader-member exchange exhibit the same range of correlations with sales growth over both one and two years. There were almost no correlation between a) authentic leadership and its subdimensions, servant leadership and leader-member exchange and b) other indicators of performance, specifically in terms of growth of operating profit and profitability. The one exception is the moderate correlation between authentic leadership's internalized moral perspective and profit growth over one year (r = .253; p < .05). Interestingly, the only correlation between leader self-declared level of eudaimonic well-being and the performance of their business-unit is negative (with sales growth over one year: r = -.272; p < .05). Neither were there any significant correlations between leaders' eudaimonic well-being and the degree to which their followers judged them on the scales of authentic leadership, leader-member exchange or servant leadership (as an example, leader's well-being is negatively correlated with authentic leadership with r = -.229; p < .1).
Table 9. Bivariate correlations at the business-unit level (n = 63). Boldface denotes main constructs. Followers' eudaimonic well-being has not been averaged at the business-unit level.
14. Testing hypotheses
I tested the hypotheses with the two-level analysis procedure in Mplus described by Preacher (2011;
model K). I used the syntax for for 1-1-2 models where 1 represents constructs measured at the
individual level and 2 stand for measures at the group level (Bauer, Preacher and Gil, 2006) as
Figure 2: two-level analysis. Symbols in italics a, b and c' indicate path coefficients(adapted from Bauer et al., 2006).
All models were run while testing direct and indirect effects simultaneously, as MSEM allows.
Models were fully saturated, with perfect fit as noted by Preacher and al. (2010). Unless otherwise
indicated, all results are given with standardized path coefficients. The notation follows that of Bauer
and colleagues' (2006) as indicated in figure 2, where a represents the direct effect of the independent
variable X on the mediating variable, b represents the effect of the mediator on the dependent variable
Y, c' represents the direct effect of X on Y, and c = ab + c' the total effect of X on Y. Relationships not
mentioned in figure 2 are denoted by path coefficient q.
Hypothesis 1 related to several aspects of a positive relation between authentic leadership and
financial performance in a given business-unit. Hypothesis 1a suggested a positive relationship from
authentic leadership to sales growth. It was not supported within accepted limits of significance (c' =
.22; p < .19 ns; 90%CI: -.10–.48). Alternative constructs were better predictors of sales growth, either
in terms of correlations or significance. The difference was not great for leader-member exchange (c'
= .25; p < .12 ns; 90% CI: -.01—.50). However, servant leadership was shown significant within
generally accepted limits (c' = .32; p < .05; 90% CI: .07—.56).
Vincent Giolito - EDBA dissertation 66
Hypothesis 1b predicted a positive relationship between authentic leadership and profit growth, but
was not supported. No relationship was found (c' = .07, p < .68 ns; 90% CI -.38—.52). Leader-
member exchange and servant leadership were not better predictors (c' = .10, p < .44 ns and c' = .12, p
< .43 ns, respectively). Hypotheses 1c to 1f proposed positive relationships between the various
components of authentic leadership and performance in terms of sales growth. Self-awareness
(Hypothesis 1c) was well related to performance but again with unacceptable level of significance (c'
= .28; p < .23 ns; 90% CI: -.07—.58). Support for a relationship between transparent communication
and sales performance (hypothesis 1d) was stronger (c' = .25; p < .15 ns); 90% CI: -.04–.53) if still not
good. Significance of the link between internal moral perspective (hypothesis 1e) and sales was not
better (c' = .20; p < .23 ns; 90% CI: -.07–.48). Hypothesis 1f, suggesting a relationship between
balanced information processing and business-unit sales growth, was not supported either (c' = .17; p
< .24 ns; 90% CI: -.06—.40). Regarding hypotheses 1g to 1j that posited relationships between the
components of authentic leadership with business-unit profits, only one in the four domains of
authentic leadership, internalized moral perspective, exhibited a correlation (c' = .20; p < .14 ns; 90%
CI: -.02–.42). Overall, the Hypothesis 1 was not supported at the commonly accepted levels of
significance. Relationships of profit growth with leader-member exchange quality were as poor: c' =
.10; p < .46 ns; 90% CI: -.12–.32. Servant leadership was also disappointing (c' = .12; p < ;43 ns; 90%
CI: -.13–.38)
Hypothesis 2 proposed a positive relationship between authentic leadership and eudaimonic well-
being. According to hypothesis 2a, how authentic a business-leader is rated by their followers
predicted those followers' eudaimonic well-being. A strong correlation supported Hypothesis 2a
(a = .43; p < .02; 90% CI: .58—.82; between-units level). Relationships were a little weaker between
eudaimonic well-being and alternative constructs leader-member exchange (a = .34; p < .08) and
servant leadership (a = .34; p < .10). However, contrary to the prediction of hypothesis 2b, no
significant link was found between how a leader is rated and their own experienced degree of well-
being (q = -.10; p < .54 ns; 90% CI: -.08—.036). Hypotheses 2c to 2f posited a positive relationship
between the components of authentic leadership and eudaimonic well-being. The strongest and most
significant relationship was found with leader self-awareness (a = .611; p < .1; 90% CI: .30–.92,
Vincent Giolito - EDBA dissertation 67
between level), thus supporting Hypothesis 2c. Support was also found for Hypothesis 2d on a link
from leader transparent communication to follower eudaimonic well-being (a = .42; p < .05; 90% CI:
.12–.72) and internalized moral perspective (Hypothesis 2e; a = .37; p < .1; 90% CI: .03–.71).
However, Hypothesis 1f (leader balanced information processing influencing well-being was not
supported (a = .22; p < .32; 90% CI: -.14–.59).
Hypothesis 3 suggested positive relationships of the level of eudaimonic well-being experienced by
followers and leaders to business-unit financial performance. Hypothesis 3a, which proposed that
followers' well-being and sales growth were positively related, found a good but unsignificant support
(b = .37 ns; p < .23; 90% CI: .-.12—.87). Hypothesis 3b linked profit growth with eudaimonic well-
being and was not supported either (b = .38; p < .26 ns; 90% CI: -.15–.84). Hypothesis 3c predicted a
positive relationship between the well-being of leaders and the sales growth of their business unit. It is
not supported: counter-intuitively, the estimate appeared negative (q = -.12; p < .31 ns; 90% CI: -.30—
.07). The relationship between leader eudaimonic well-being and profits growth was not significant (q
= .08; p < .36 ns; 90% CI: -.22—.06).
Hypothesis 4 posited that eudaimonic well-being mediated the effect of authentic leadership on the
financial performance of business-units. Hypothesis 4a suggested that followers' eudaimonic well-
being partially mediated the correlation between authentic leadership and sales growth year on year.
The effects are as follows (unstandardized figures, between groups): c' = 6.58 (p < .19 ns);
a = . 36 (p < .08); b = 13.30 (p < .37 ns); c = ab = 4.83 (p < .29 ns); see figure 3 for a representation
based on the proposed model. In other words, notwithstanding the significance issue, the
hypothesized model would have meant that the effect of authentic leadership on sales growth was
explained at some 57% by a direct effect of authentic leadership (c' path) and 43% by authentic
leadership as mediated by followers' eudaimonic well-being (ab or c path). In that case, a one-point
increase in authentic leadership ratings would have translated in a 11 percent increase of sales. The
three-way model was finally not supported in particular due to the execrable level of significance of
the relationship between eudaimonic well-being and sales growth.
When I tested the model with servant leadership in lieu of authentic leadership, the model was partly
validated. The direct effect of servant leadership on sales growth was acceptable (c' = 11.49; p < .04)
Vincent Giolito - EDBA dissertation 68
and so was the first part of the indirect effect (a = .37; p < .1). But the second part was not significant
(b = 12.435; p < .32), thus making the indirect effect unsignificant (ab = 4.15; p < .23). With
confidence levels even poorer in all parts of the proposed model, any support for Hypothesis 4b,
which suggested a partial mediation of eudaimonic well-being between authentic leadership and profit
growth was out of the question.
Figure 3: Unstandardized path coefficients for the proposed model (1-1-2 multilevel structural equation modeling). Dependent variable: sales growth over one year.
For a last verification of mediation hypotheses, and for once giving up the MSEM framework, I
examined the interaction between the three main variables aggregated at the business-unit level as
depicted in figure 3, with the 1-1-1 syntax proposed by Preacher (2010, syntax 1, unstandardized
results) based on bias-corrected bootstrapping with 5,000 iterations. Aggregated authentic leadership
strongly predicted aggregated eudaimonic well-being (a = .50; p < .01; 90% CI: .27–.72) and
business-unit sales growth (c' = 5.57; p < .1; 90% CI: .56–10.67). Impact of eudaimonic well-being on
sales growth was insignificant (b = 3.74; p < .26 ns). Eudaimonic well-being indeed partially mediated
– but insignificantly – a positive effect of authentic leadership on sales growth (c = ab = 1.88; p < .27
ns; 90% CI: -.52–5.10). Following the same aggregation method, no relationship was found between
authentic leadership and profit growth.
Vincent Giolito - EDBA dissertation 69
Figure 4. Unstandardized path coefficients for a simplified model with all variables aggregated at the business-unit level (1-1-1 mediation model). Dependent variable: sales growth over one year.
Regarding hypotheses 5 and 6 it was not possible to test moderation hypotheses within the multilevel
framework. I tested them with data aggregated at the level of the business-unit (N = 63), with
individual data replaced by business-unit means even for eudaimonic well-being and power distance. I
followed the recommendations by Preacher, Rucker, and Hayes (2007) for solving issues regarding
moderated mediation. I specifically used the corresponding Mplus code offered by Hayes (2007;
model 4) with 5000 bias-corrected bootstrapping iterations. The model fit was hardly acceptable (χ2(§)
communication and balanced information processing. Even the ethical or moral dimension of
Vincent Giolito - EDBA dissertation 79
authentic leadership could be, if not taught, at least trained for by relying on values that positive
psychology identified as universal across cultures (Peterson & Seligman, 2004). Interventions based
on a concept close to authentic leadership, psychological capital, yielded positive results (Luthans,
Avey, and Patera, 2008). Finally, practitioners should be reminded that leading does not preclude
managing. Authentic leadership was found to be unrelated with profits evolution across business-units
in my study. Regardless of data issues (i.e. nonlinearity), it might indicate that generating growth and
having people happy is one thing, keeping the numbers another one, and doing both as the same time
is yet another one. As documented long ago by Mintzberg (1973), managing organizations and people
is a multifaceted task. Authentic leadership is one tool to achieve results, but it has to be used in
combination with other tools.
19. Conclusion
Two main ideas emerge from this research. The first one regards specifically authentic leadership
theory. In more than ten years, the theory has proved robust with many empirical validations, and it
was probably time to dig further in its factors, not only the composite construct as a whole. Because
leader self-awareness appears so important to performance relative to the other dimensions, new
efforts should be devoted to explain the mechanisms by which this impact is obtained. For example,
precisely how do followers assess self-awareness? What are the cues? Can a leader fake them? In
parallel, it would be worthwhile to know how self-awareness "works" in combination to just one other
component of authentic leadership. For example, to what extent a self-aware leader must communicate
transparently? The second important idea has to do with the conception of well-being in the
workplace. So far, well-being has often been equated with "fun" or just feeling good. The construct of
eudaimonic well-being introduced in this study allows to take into account much more of what people
put in their professional daily investment. That the two constructs, authentic leadership and
eudaimonic well-being, are strongly related, is perhaps not surprising. But much remains to be learnt
as to one impacts the other – and possibly vice versa, particularly in the relationships between the
different dimensions of each of the constructs.
Vincent Giolito - EDBA dissertation 80
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