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Introduction It is undeniable that leaders play a crucial role in the performance of the employee in organizations. Leaders naturally have a complex and demanding task to perform in their organizations, ensuring the success of their organizations, delivering results that are positive and leading in such a manner that creates a positive, encouraging atmosphere for the employees. The benchmark for leaders is an authentic leader. An authentic leader is an individual who practices solid values, understands their purpose, leads with the heart, demonstrates self-discipline, and establishes a connected relationship. Authentic leadership is closely related to the Leader- Member Exchange (LME) theory, which highlights the relationship between leaders and their followers and is mainly an emotional relationship based on trust and respect. Besides, it is related to employee's psychological capital, which is an employee's positive perception of the circumstances at hand founded on perseverance and motivated effort. It is comprised of four distinct capabilities, which are efficacy, hope, optimism, and resilience. Various scholars have researched authentic leaders, LME, and employee's psychological capital. This paper will be a literature review where the center of research will be on how authentic leaders can build the psychological capacity of various types of workers and also examine why the emotions of leaders affect employee's productivity. Background To understand the impact which authentic leaders can have on psychological capital of workers, it is imperative first to understand how the Leader-Member Exchange (LME) theory impacts employees. Stewart Wherry researched the relationship that exists between LME and employee's behavior.Data for the study was collected from 32 leaders and 243 raters. The effects of the leader's level of authentic leadership were tested on the constructs, which are courtesy, civic virtue, and conscientiousness (Stewart Wherry, 2012, p. 4). The study established that authentic leaders influence individual follower's behaviors regarding rules and regulations (Stewart Wherry, 2012, p. 4). High levels of LME were associated with higher altruistic behaviors among followers.Dhivya and Sripirabaa conducted an empirical study which was aimed at investigating the impact of LME on work engagement. The study examined the link between the leader's conduct and the employee's work experiences. According to Dhivya and Sripirabaa (2015, p. 143), LME can only apply when the superiors and employees develop a mature work relationship. The factors of LME that were considered for the investigation were loyalty factors, contribution factors, vigor factors, dedication, professional respect factors, and absorption factors. The study found out that LME leads to high levels of engagement among employees, and they have less desire for leaving the company. Besides, the relationship between the supervisors and employees is an important determinant of the employee's work engagement. Mature
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  • Spring '10
  • Gelman
  • LME

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