Effects of Authentic Leadership and Leader-Member Exchange on Employee Psychological Ownership and Organizational Commitment

Purpose – Small- and medium-sized enterprises often rely on the owner’s personal characteristics. This study aims to verify the impact of the awareness of such a business leader’s sincerity and the sincerity of their leader-member exchange (LMX) on employee psychological ownership and organizational commitment. The findings offer clues to how small- and medium-sized company leaders should engage with employees. Research design, data, and methodology – A total of 289 valid questionnaires were examined using frequency, descriptive statistics, and correlation analyses and structured equation modeling. Results – Authentic leadership and LMX were both found to have a positive impact on each trust factor, each trust factor had a positive impact on psychological ownership and organizational commitment, and psychological ownership had a positive impact on organizational commitment. Conclusion – These results suggest that small- and medium- size company leaders should use self-awareness and self-regulation to encourage the recognition of their sincerity, and strive to achieve a positive relationship with employees. It also suggests that leaders should improve trust between employees and establish various strategies to enable employee psychological ownership.