Authentic leaders, energized employees? Indirect beneficial and adverse effects of authentic leadership on intrinsic motivation and exhaustion

Abstract Current research is unclear regarding the associations between authentic leadership (AL), intrinsic motivation, and exhaustion. Following self‐determination theory (SDT), we hypothesize that AL indirectly increases intrinsic motivation and decreases exhaustion by increasing basic psychological need satisfaction (BPNS). We propose that these processes occur through increased AL in leader‐employee interactions and a higher average display of AL. To test these hypotheses, we conducted three studies using a mixed‐methods approach. Results of Study 1 (cross‐sectional survey; N = 597) supported the indirect effects of AL on employees' intrinsic motivation and exhaustion via BPNS. Study 2 (experience sampling; two samples, replication, Ns = 63; 128 observations = 231; 460) supported the indirect effects of AL experiences in daily leader‐employee interactions. Study 3 (semi‐structured interviews; N = 38) provided additional support for the proposed effects. However, Study 3 also showed potential adverse effects of AL. Some employees perceived a fully open leader as irritating, exhausting, and damaging to the job climate, particularly, when leaders violated role expectations and engaged in hostile behaviors. As these adverse effects were rare, we conclude that the beneficial effects of increased and higher average AL on employees' BPNS, motivation, and exhaustion outweigh the adverse effects.