Enhancing Authentic Leadership, Psycap, Job Stress and Job Satisfaction: Innovating Combined Effect


The purpose of this paper is to review the relationship of authentic leadership, psychological capital or PsyCap, job satisfaction, and job stress. The job satisfaction has great importance in any organization because employees who are highly stressed in their workplace may not be satisfied. Many kinds of research already tried to develop authentic leadership and psychological capital, researchers also attempted to find out different job outcomes by practicing authentic leadership and PsyCap. A number of previous studies reviewed to understand the relationship between job stress and job satisfaction, and how job stress affects job satisfaction. Each component of authentic leadership and psychological capital will be supportive of increasing leaders and employee's job satisfaction. The components of authentic leadership and psychological capitals are described in a manner that assists to prove its ability to minimize job stress and achieve job satisfaction. Observing from the previous literature present paper proposing that authentic leadership and psychological capital together could be one of the solutions to decrease job stress and increase job satisfaction. Furthermore, this study put together previous studies, which supports the proposed solution and concludes by discussing the reasons behind this proposed solution;

Keywords: Authentic leadershippsychological capitaljob stressjob satisfaction


The World Health Organization has confirmed work-related stress to be a global concern. According to Riga recent study found that in a typical company, employees spend about 20% of their payroll to handle job stress related issues, and due to overloaded responsibilities, risky work environment, and lengthy work times, in American people spotted that work is their main reason of stress (Riga, 2006).

To meet present challenges, authentic leadership (AL) may be recognized as a favourable approach to organizational leadership. Authentic leadership is a genuine, optimistic and principled form of leadership (Avolio & Gardner, 2005; Avolio, Gardner, Walumbwa, Luthans, & May, 2004; George, 2003; Luthans, Avolio, Cameron, Dutton, & Quinn, 2003; Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008).

Psychological capital expresses a person's positive intellectual improvement. To minimize the job stress in working place employees can get help from psychological capabilities, like resilience, optimism, hope, and self-efficacy. Wang found that these resources are important for employees to minimize their job stress (Wang, 2014).

Problem Statement

Job stress is an alarming issue and employees experiencing increased job stress and less job satisfaction at every level. In literature, there is evidence that PsyCap can minimize job stress, but there is a limited amount of study performed that attempts to explore the direct role of authentic leadership to minimize job stress. Taking a new approach, this paper proposing that, through leader's authentic leadership and employee's psychological capital, it is possible to minimize leaders and employees job stress and increase job satisfaction.

Research Questions

The article discusses these research questions to reveal an effective solution to decrease workplace stress and increase job satisfaction -

- Do Authentic Leadership decrease job stress of the leaders?

-To what extent PsyCap decrease employees job stress?

Purpose of the Study

National Institute of Occupational Safety and Health declared job stress as toxic for both mental and physical health. Employees feel stress as their job demands are not matched with their capability and commitment. Although stress is a usual part of life, excessive stress hampers our productivity and decreases our physical and emotional strength, so it is important to find solutions to keep it under control. Employees who are highly stressed in their workplace may not be satisfied with their job and consequently, they will not be happy to work here. Human resource managers in some organizations are facing stress phenomenon to be a great obstacle in the employee's job satisfaction. Many pieces of research previously showed that job stress is one of the major reasons to decrease employee's job satisfaction. In these circumstances, the purpose of this study is to reveal a constructive way to reduce job stress and increase job satisfaction.

Research Methods

In accordance with the purpose of the study, the methods of theoretical and content analysis of previous literature and study results in the field of authentic leadership, psychological capital, job stress and job satisfaction were used in this article.


According to Avolio and Wernsing, (2008) we need more authentic leaders in this unstable time. Bill George advanced this leadership style to make a remedy for the uncertain environment (George, 2003). This leadership style is influenced by positive psychology. For modern organizations, when everything changing rapidly, authentic leadership becomes a new faith that helped individuals to be more honest and capable in their work (Wang, 2014).

The Authentic Leadership construct comprises four dimensions. Brief details about authentic leadership components.


Many researches support that, to develop authentic leadership, self-awareness added as an essential element in this leadership theory (Avolio & Luthans, 2005; Gardner, Avolio, Luthans, May, & Walumbwa, 2005; Luthans, , Avolio, Cameron, Dutton, & Quinn, 2003; Luthans, Avey, Avolio, Norman, & Combs 2006). In 2005 Avolio and Gardner mentioned that self-awareness is a developing procedure; through this people can constantly identify their particular capability, stability, logic, principles, thinking, and ambitions.

Authentic leaders always need to be true to their principles to achieve their self-awareness. It is important for authentic leaders to thinks positively and inspires their followers to practice positive thinking. Authentic leaders have to recognize their identities under different situations and have to be goal-oriented.

6.2. Internalized Moral Perspective

Ryan and Deci stated that a complete personalizes the appearance of self-guideline is internalized moral perspective (Ryan & Deci, 2003). Such guideline is made with some moral standards, which performs as a support and increase morality when leaders take decisions. (Avolio & Gardner, 2005; Gardner et al., 2005).

This regulation process is completely aligned to be rational with a person's self-feelings, and accordingly authentic. Authentic leaders are determined for ambition that follows their own values of behavior. (Deci & Ryan, 1995, 2000; Gardner et al., 2005).

Balanced Processing

According to Kernis (2003) unbiased processing is an essential element of authentic leadership. He described unbiased processing as a presence of confirmations, truth, perfection, or knowledge of external occurrence, ordinary judgment, and self-internal evaluations. Balanced processing is excellently implied in the background of self-respect.

Luthans et al., says that authentic leaders developed information impartially and they are not biased about unfavorable results (Luthans et al., 2006). Authentic leaders utilize the capability of balanced processing to promote the recognition and alteration of individual partiality before taking an essential step (Berson, Nemanich, Waldman, Galvin, & Keller, 2006).

Relational Transparency

Relational transparency also a significant element in authentic leadership. Kernis proposed that relational transparency is a person's ability to appreciate and learn honesty in his close relations (Kernis, 2003). According to relational transparency, a leader should always try to understand his true self through unbiased feelings, because an authentic leader never illustrates an unreal personality in front of his followers. In authentic leadership development, transparency for sharing information is very important (Avolio, 2005; Luthans et al., 2003; May, Chan, Hodges, & Avolio, 2003).

Authentic leadership is known for producing various constructive results, both organizational and personal. Significant results are - excellent performance, organizational citizenship behaviour, organizational dedication, and employee's satisfaction with leaders (Walumbwa et al., 2008); job satisfaction, empowerment and job commitment (Avolio et al., 2004).

According to Authentic leadership theory, it is expected that job satisfaction would be linked to authentic leadership. It is related to some actions which are related to authentic leadership, for example- self-confidence, high-quality relations (Deci & Ryan, 2000; Ilies, Morgeson, & Nahrgang, 2005) and moral behaviour(Brown, Treviño, & Harrison, 2005). Significantly, job satisfaction found as a part of a person happiness, which is constantly related to authentic leadership (Fisher, 2010;Judge & Watanabe, 1993; Turner, Barling, & Zacharatos, 2002). In recent research, the result shows that authentic leadership notably and positively influenced employee's fundamental acceptance, which helps to increase job satisfaction and performance (Laschinger, Wong, & Grau, 2012).

From literature and recent studies, it is well established that authentic leadership has a positive relationship with job satisfaction (Azanza, Moriano, & Molero, 2013; Laschinger et al., 2012). This paper proposing that through authentic leadership, there is a possibility to minimize job stress. If authentic leadership has a direct result on job stress and simultaneously on job satisfaction, it will be a better approach for managers and employees to minimize their job stress and increase job satisfaction.

The psychological capabilities and the capability to build it is a most important part of the initial outline for authentic leadership development, which was recommended by Luthans and Avolio (Luthans et al., 2003). Experiential and theoretical evidence shows that PsyCap has four basic elements, namely, self-efficacy, optimism, hope and resilience (Luthans et al., 2006; Luthans, Avolio, Walumbwa, & Li, 2005; Luthans, Vogelgesang, & Lester, 2006; Luthans, Youssef, & Avolio, 2007). These components precisely assemble the PsyCap formation principles: supported by theory and research, modifiable to applicable dimension, flexible, and aligned with positive activities (Fred Luthans, 2002; Luthans & Youssef, 2004; Luthans, Youssef, & Avolio, 2007).

There is ample support for the relationship between each of PsyCap’s components and desirable work outcomes. Brief details about psychological capital's components are discussed below.


The efficacy's foundation is Bandura’s (Bandura, 1997) social cognitive theory. When an individual shows his ability by assembling inspiration, intellectual capability, and continuous processes to perform confidently and effectively to achieve a goal in a particular situation, this is PsyCap(Stajkovic & Luthans, 1998). There is a strong connection between efficacy and professional performance results (Bandura & Locke, 2003; Stajkovic & Luthans, 1998). Matsui and Onglatco found in their research that, employees feels more stressful when their sense of efficacy is lower (Matsui & Onglatco, 1992). In the same situation, who have higher self-efficacy do not feel stressed even with excessive duty. It is also revealed that efficacy could be linked new employees socialization and retention (Bauer, Bodner, Erdogan, Truxillo, & Tucker, 2007).

6.6. Optimism

In PsyCap optimism also included as both rational and adjustable (Luthans, Youssef, & Avolio, 2007; Schneider, 2001). Seligman describes a positive descriptive approach as one that aspects optimistic actions to individual, stable, and invasive reasons, and pessimistic actions to external, limited, and situation-specific ones. With a positive outlook, Optimism is related to an aspect of PsyCap but it is not an open method without practical assessment (Luthans, Youssef, & Avolio, 2007).

Totterdell, Wood, and Wall (2006) make an analysis on self-employed individuals, who manages several clients, and they found that optimism is a strong aspect of the relationship between job aspects and job tension. Totterdell et al. (2006) considered those self-employed individuals who have higher optimism, will not get stress easily.


Hope is a positive inspirational status and it is collectively accepted the goal-oriented planning and activities. Both determinations to achieve goals and in difficulties, the way power to plan an alternative way to achieve the goal is consist of hope. There is evidence from the previous study that leaders who have higher levels hope, their work performance is higher and their followers are more satisfied (Peterson & Luthans, 2003). Luthans and Jensen (2002) and Youssef and Luthans (2007) confirmed the links between hope and job satisfaction.


To handle a turbulent and stressful workplace, resilience is the most significant positive support. According to Luthans (2002) resilience is the ability, through this individuals can overcome the difficulties, breakdowns and it helps to accept or take more liabilities. Research indicates that, when a person is resilient, he does not fear to have a new experience. He can compromise his demands and he is more consistent when he works in a difficult situation. Recent studies found that there is a positive connection between resilience and job satisfaction and between resilience and work happiness (Youssef & Luthans, 2007).

There is ample support for the relationship between each of PsyCap’s components and desirable work outcomes (Stajkovic & Luthans, 1998; Youssef & Luthans, 2007). However, PsyCap has been established to add value to the contribution of its each component to performance and attitudinal outcomes in the workplace (Luthans, Avolio, Avey, & Norman, 2007). Recent meta-analytical results support positive links between PsyCap and desirable employee attitudes such as job satisfaction.

Luthans et al. proposed that PsyCap connected with employee's performance and job satisfaction. Their study found a significant positive connection between PsyCap and job satisfaction Luthans, Avolio, Avey, & Norman, 2007). In a recent study, Kaplan and Bickes (2013) mentioned that in Turkey and Bosnia-Herzegovina, Topcu and Ocak found a positive relationship between psychological capital and job satisfaction in a manufacturing sector. Literature and recent studies showed that there is an important positive relationship between PsyCap and job satisfaction. This paper suggesting that taking forward the relationship between psychological capital and job satisfaction, which in return will minimize the employee's job stress.

When a person experiences discomfort because of work situation and typically this discomfort occurs when an inequality arises between job demands and resources, which is job stress (Beehr, 2014; Lazarus & Folkman, 1984). Workplace stressors are linked to the absence of independence, interpersonal clash, irresistible job demands, and any other things a person feels as stressful (Spector & Fox, 2005). Job satisfaction has been the most frequently examined variable in organizational behavior (Spector, 1997). Research says that, if employees are highly satisfied, their effectiveness also will be higher to achieve the organizational goal. The previous researches show that because of excessive job stress employees could be unsatisfied with their job.

Several researches have tried to determine the relationship between stress and job satisfaction. Fletcher and Payne (1980) said that the absence of satisfaction could be the source of stress and high level of satisfaction could minimize the stress. According to Stamps and Piedmonte (1986) job satisfaction has a significant connection with job stress. In another study, Vinokur-Kaplan (1991) confirmed that excessive workload and working situation were negatively linked with job satisfaction. These studies disclose that there is a negative relation between job stress and job satisfaction.

In recent study, Sultana, Darun and Yao (2018) applied the combined relationship of Authentic leadership and Psychological capital to reduce employees job stress and increase their job satisfaction at Bangladesh Pharma industry. In their study self-awareness, Internalized Moral Perspectives; Balanced Processing and Relational Transparency was hypothesized to positively influence job satisfaction. The hypothesis received empirical support for three components except Internalized Moral Perspectives. This finding is consistent with the finding of recent studies (Fallatah, Laschinger et al., 2017; Laschinger & Wong et al., 2012; Braun & Hornuf, 2018; Fallatah & Laschinger et al., 2017).

In their study, Sultana et al. (2018) also hypothesized that self-efficacy, optimism, hope and resilience positively influences job satisfaction. Except self-efficacy other three hypothesizes were found significant. Other findings are consistent with previous studies that examined psychological capital in relation to job satisfaction. For example, (Avey, Reichard, Luthans, & Mhatre, 2011; Luthans, Avolio, Avey, & Norman, 2007; Agarwal & Farndale, 2017; Abbas & Raja, 2015).

Recently, job stress is becoming an epidemic in the work environment. Just like the study of (Wang, Sui, Luthans, Wang, & Wu, 2014), in the present study, it has also been accepted that job stress was negatively related to job satisfaction. So, the present study proposing that the combine effect of authentic leadership and psychological capital could be an efficient solution to manage workplace stress.


The literature and recent studies support that authentic leadership can increase employee's job satisfaction, which discussed above. However, there is no significant research which shows authentic leadership has a direct effect on job stress. Laschinger & Grau found in their research that authentic leadership had a negative direct effect on workplace bullying, which in turn had a direct positive effect on emotional exhaustion or burnout (Laschinger et al., 2012). Burnout is a well-recognized psychological reaction to constant job stressors (Leiter & Maslach, 2004). According to Laschinger et al. to date, many researches successfully discover the relationship between authentic leadership and positive work attitudes and behaviours, now it is logical to expect that authentic leadership may have a protective effect against burnout or job stress (Laschinger, Finegan, & Wilk, 2011).

Furthermore, from the literature, there is ample evidence that psychological capital or PsyCap have a negative relationship with job stress and the characteristics of authentic leadership could help leaders to increase their job satisfaction and minimize job stress. Based on these circumstances, this article proposing an approach, which is consists of authentic leadership and psychological capital to increase both employees and leaders job satisfaction and minimize their job stress. Further study will confirm how this approach will work on different business industry.


This work is funded by PGRS Grant (grant number- PGRS 160390), University Malaysia Pahang.


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Sultana, U. S., Darun, M. R., Yao, L., & Andalib, T. W. (2019). Enhancing Authentic Leadership, Psycap, Job Stress and Job Satisfaction: Innovating Combined Effect. In C. Tze Haw, C. Richardson, & F. Johara (Eds.), Business Sustainability and Innovation, vol 65. European Proceedings of Social and Behavioural Sciences (pp. 80-88). Future Academy. https://doi.org/10.15405/epsbs.2019.08.9