Business scandals, be it at the international or national level (e.g., Lehman Brothers, Enron, Punjab National Bank, Sharada Chit fund) have indicated business failures due to ethical and financial misconduct (Salancik & Pfeffer, 1978). Such scandals question the integrity and authenticity of the leaders, as it also erodes the trust among stakeholders. Ethical and moral lapses of such magnitude cannot be due to a single leader (Manda & Rao, 2019; Salancik & Pfeffer, 1978). Hence, it is critical to explore how leaders across a hierarchy demonstrate authentic leadership behaviour.
Previous studies have revealed the positive impact of authentic leadership on various attitudinal and behavioural outcomes of followers (e.g., Malik & Dhar, 2017; Oh et al., 2018; Ribeiro et al., 2020). However, previous studies also indicate that scant attention has been paid towards the examination of followers’ outcomes at the multi-level. This is an important research gap that needs to be addressed. Moreover, it needs to be ascertained does leaders model their team members to demonstrate authentic behaviour. However, the review of authentic leadership studies illustrates more emphasis on the examination of outcomes such as innovation, intention to leave, voice behaviour and creativity (e.g.,Černe et al., 2013; Penger&Cerne, 2014; Rego et al., 2012; Xu et al., 2017). A significant question that the present study examines is whether authentic leadership develops authentic followership in the workplace.
The COR theory proposed by Hobfoll (2002) describes human behaviour based on ‘the evolutionary need to acquire and conserve resources for survival, which is central to human behavioural genetics’ (Hobfoll et al., 2018, p.140). Human beings have a formidable urge to obtain, assimilate and save ‘personal strength and social bonds’ (Hobfoll et al., 2018, p.104). In the present business scenario, it becomes important to enhance such personal resources to address challenges. The COR theory suggests that there are some key resources such as health, well-being, sense of purpose and meaning in life, which are universally valued by individuals. Also, support from leaders and favourable social conditions can enhance personal resources (Hobfoll, 2002) among followers. Previous studies indicate that authentic leadership enhances health and well-being (Ilies et al., 2005; Macik-Frey et al., 2009; Zhang et al., 2020), authenticity and meaning in life (Algera& Lips-Wiersma, 2012). Drawing from the COR theory (Hobfoll, 2002), we propose that an increase in personal resources among followers affected by authentic leadership will increase the sense of purpose and the capability to address various challenges. Further, the mechanism of the crossover process facilitates the transfer of positive experiences to the followers (Fredrickson,2001). We propose that indirect processes and spurious processes make the crossover of positive emotions between leaders and followers happen.
This study considers the multi-level research design to build on the Conservation of Resource (COR) theory to help develop a model that links authentic leadership to followers’ outcomes. The findings of the study, from a sample of 547 dyads from the financial sector in India, revealed that authentic leadership has a significant impact on authentic followership and team-level work engagement. The cross-level analysis indicated that significant variance in authentic followership is attributable to authentic leadership at the team level. Likewise, the multi-level analysis revealed the variance in work engagement between the teams is attributable to authentic leadership. The findings from the present study advance the perspective of the crossover model, signifying authentic leadership as an external resource for the follower’s authentic behaviour and work engagement. Our results offer strong practical implications that may be taken into consideration to develop authentic leadership in the workplace.