Article

Project Management Journal

Vol. 50(4) 409–417
Leading Through Innovation Project ª 2019 Project Management Institute, Inc.
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Setbacks: How Authentic Leaders Keep DOI: 10.1177/8756972819853124
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Their Innovators Resilient

Gisa Todt1, Matthias Weiss2, and Martin Hoegl1

Abstract
The failure rate of innovation projects is substantial. Even innovation projects that fare well are sometimes terminated before
completion. However, given the importance of innovator passion and commitment to innovative endeavors for successful
innovation, such terminations pose the clear and present danger of negatively affecting subsequent innovation projects. Therefore,
it is a key leadership task in the innovation arena to maintain innovator passion for their endeavors despite such setbacks. Our
research indicates that authentic leadership is likely to bolster innovator resilience potential in order to minimize the human cost
of innovation project terminations.

Keywords
innovation project terminations, failure, innovator resilience potential, authentic leadership, setbacks

Introduction
No organization, team, or individual simply dashes from one
success to another. Setbacks and failures are facts of life and, in
the long run, one’s resilience, in other words, the ability to
bounce back from significant adversity (Hartmann, Weiss,
Newman, & Hoegl, 2019; Sutcliffe & Vogus, 2003), deter-
mines one’s trajectory following adverse experiences. In busi-
ness, the field of technology and innovation is especially in
need of resilience. Varying among industries and product cate-
gories, the failure rate of innovation projects is substantial
(Kuratko, Covin, & Hornsby, 2014; Oeij, Dhondt, Gaspersz,
& Van Vuuren, 2017; Robertson & Williams, 2006). In the
pharmaceutical industry, for example, only a small fraction
(approximately 10%) of new product efforts actually make it
to the market (DiMasi, Grabowski, & Hansen, 2016). Beyond
failure, many innovation projects that fare well are still termi-
nated before completion, in many cases because of strategic
decisions rooted in innovation portfolio management consid-
erations (Krishnan & Ulrich, 2001; Unger, Kock, Gemüenden,
& Jonas, 2012).
Executives and business scholars, however, have remained
much more focused on what drives success versus failure,
while largely ignoring the inevitable aftermath of failed inno-
vation projects on the innovation capability of affected individ-
uals. For instance, on the individual level, previous research
shows that people involved, or better, emotionally invested in
projects are hardly able to simply move on to the next endeavor
as if nothing happened (Moenkemeyer, Hoegl, & Weiss, 2012;
Shepherd, Covin, & Kuratko, 2009; Shepherd, Haynie, &
Patzelt, 2013; Todt, Weiss, & Hoegl, 2018). Rather, project
terminations and other setbacks in innovation projects can sig-
nificantly drain innovator energy. It takes time for innovators to
recover, and many may never quite reach the same readiness to
invest themselves in future endeavors. Some attach positive
sounding labels to this phenomenon, such as getting more pro-
fessional about it all, yet the potential business consequences
are major. At SUN Microsystems (now part of ORACLE), for
example, the innovation trauma from one terminated project
was spread by innovators staffed onto other projects, almost
derailing teams that, up to that point, had performed perfectly
fine (Välikangas, Hoegl, & Gibbert, 2009).
The Human Cost of Setbacks in the Innovation Process
Of course, project terminations may be a managerial necessity
to avoid unnecessary expenses, to release bound resources from
unpromising endeavors, and to align the innovation project
portfolio with overarching strategy (Krishnan & Ulrich,
2001; Unger et al., 2012). However, no matter how necessary
and well-reasoned a termination may be, the innovators
involved are likely to frame such project terminations as a
setback. It is incumbent on leaders dealing with the aftermath
1
Ludwig-Maximilians-Universität München, Germany
2
Ruhr-Universität Bochum, Germany
Corresponding Author:
Gisa Todt, Ludwig-Maximilians-Universität München, Munich, Germany.
Email: todt@bwl.lmu.de
410
of such setbacks to maintain the motivation and passion of
innovators whose projects have been terminated. Yet managers
tend to struggle with minimizing the human cost of innovation
project terminations. In this regard, human costs comprise neg-
ative consequences on the ability and willingness of innovators
to innovate, for example, through reduced well-being, commit-
ment, or negative affect (Shepherd, Wiklund, & Haynie, 2009;
Todt et al., 2018). On the one hand, this surely is because many
managers responsible for innovation projects are not keen on
dealing with what might follow from an innovation project
termination. They often tend to deny the necessary personal
leadership and would rather move on to projects and tasks they
feel require their attention, quietly hoping the affected innova-
tors will do the same without any hesitation.
On the other hand, even those managers who do wish to
reduce the human cost of innovation project terminations tend
to perceive a lack of evidence-based recommendations on how
to do so. While the literature on project management acknowl-
edges the general role of leadership to facilitate project success
(Müller et al., 2018; Tyssen, Wald, & Spieth, 2013, 2014),
research on the role of leadership in the context of project setbacks
is still in its infancy (Todt et al., 2018). This is surprising, given
that the leadership literature suggests that leaders gain particular
importance in difficult and adverse situations (e.g., Combe &
Carrington, 2015; Vessey, Barrett, & Mumford, 2011).
In the context of innovation project terminations, the key
leadership task is to prevent a steady erosion of innovative
capacity in innovation projects across the organization. It is the
passion of innovators for their endeavors that is a key ingredi-
ent for successfully developing new products, services, and
processes (Gemüenden, Salomo, & Hölzle, 2007). After all,
these innovators are those who enable technological advance-
ment and are a company’s most important innovation resources
(Dyer, Gregersen, & Christensen, 2009). In this study, we sug-
gest that authentic leadership encompasses a set of relevant
leadership attitudes and behaviors that are likely to support
innovators in adverse situations—such as innovation project
terminations—and reducing the human cost of such termina-
tions. However, while previous research has considered the
role of authentic leadership in project management (Lloyd-
Walker & Walker, 2011), the extant literature has not yet inves-
tigated the role of authentic leadership in the context of
resilience after innovation project terminations. To address this
gap in the literature, we conducted a study with 146 innovators
from a software development laboratory to investigate the role
of authentic leadership in the context of innovation project
terminations. The core research questions underlying this study
therefore are:
1. Are authentic leaders better geared to support innovator
resilience after setbacks compared with their less
authentic counterparts?
2. Which moderating conditions might enhance or reduce
the relationship between authentic leadership and inno-
vator resilience?
Project Management Journal 50(4)
Our study marks a significant contribution to exploring the
role of authentic leadership, specifically in adverse contexts,
complementing the dominant focus on explaining variance in
the performance of completed projects.
What Makes Innovators Resilient?
A series of studies (e.g., Moenkemeyer et al., 2012; Todt et al.,
2018) identified a set of qualities that are likely to help inno-
vators overcome the negative side effects of innovation project
termination, called innovator resilience potential (IRP). IRP
builds on the concept of resilience (Moenkemeyer et al.,
2012), which captures the ability of people to positively adapt
to an adverse situation and return to levels of performance and
well-being that at least reach those levels experienced prior to
adversity (Sutcliffe & Vogus, 2003). IRP can thus be viewed as
a context-specific set of resilience factors tailored to the unique
setting of innovation, where a substantially elevated degree of
unpredictability, complexity, and risk compared to non-
innovative environments prevails (Moenkemeyer et al.,
2012). Thus, IRP incorporates qualities that are essential pre-
requisites for accomplishing subsequent innovative tasks after
the experience of a setback, such as an innovation project ter-
mination. Following Todt et al. (2018), the specific compo-
nents of IRP are self-efficacy, outcome expectancy,
optimism, hope, organization-based self-esteem (OBSE), and
risk propensity (see Table 1 for descriptions of these compo-
nents). The managerial attractiveness of IRP arises from the
malleability of all its six components (Moenkemeyer et al.,
2012), which means that these components do not comprise
stable personality attributes or capabilities. Rather, all of these
IRP components are malleable and can be developed, trained,
supported and provide guidance to leaders as they deal with
setback in the innovation context They also appear to be highly
compatible with a leadership concept that has recently surged
in popularity and referred to as authentic leadership (Gardner,
Cogliser, Davis, & Dickens, 2011).
The Promise of Authentic Leadership
The concept of authentic leadership has received much atten-
tion in both management practice and scholarship (Gardner
et al., 2011; Lloyd-Walker & Walker, 2011). Authentic leaders
are described as being deeply aware of their values and beliefs,
focusing on the development of their followers by building a
positive work environment and possessing the necessary self-
confidence to behave genuinely (Avolio & Gardner, 2005;
Ilies, Morgeson, & Nahrgang, 2005). Thus, as explained in
Table 2, the key attributes of authentic leaders are self-
awareness, unbiased processing, consistent behavior, and rela-
tional orientation (Gardner et al., 2011; Kernis & Goldman,
2005). This, in turn, builds the basis for trusting relationships,
which are particularly relevant in tough times. At the same
time, being genuine and authentic also benefits the leaders
themselves in leading with ease, rather than more quickly
Todt et al.
Table 1. The Six Components of Innovator Resilience Potential
(Moenkemeyer et al., 2012)
Component Description
Self-efficacy The self-judgment of an innovator of how
successfully he or she can perform the job
(Riggs & Knight, 1994).
Outcome expectancy An innovator’s estimate that a given behavior
will actually lead to the intended outcomes
(Bandura, 1977).
Optimism An innovator’s attitude associated with an
expectation about his or her social or
professional future, which the innovator
regards as desirable and to his or her
advantage (Bandura, 1977).
Organization-based Innovators’ self-regard as organizational
self-esteem members acting within an organization
(Pierce, Gardner, Cummings, & Dunham,
1989).
Hope A cognitive set that is based on a reciprocally
derived sense of successful agency (goal-
directed determination) and pathways
(planning to meet goals) (Snyder et al., 1991).
Risk propensity Tendency for calculated actions to make
effective decisions that promote innovators’
goal attainment with the clear recognition of
these decisions’ potential for damage,
setbacks, and other losses (Tjosvold & Yu,
2007).
depleting their own emotional resources (Weiss, Razinskas,
Backmann, & Hoegl, 2018).
Authentic Leadership and IRP
While authentic leadership has been shown to result in an array
of positive follower outcomes (Gardner et al., 2011), we build
on the theory of authentic leadership and argue that being an
authentic leader appears particularly promising for strengthen-
ing innovators’ IRP. We do so because the combination of
authentic leadership’s key attributes (Gardner et al., 2011) is
likely to support each of the constituting components of IRP. In
summary, authentic leaders “demonstrate a passion for their
purpose, practice their values consistently, and lead with their
hearts as well as their heads. They establish long-term, mean-
ingful relationships and have the self-discipline to get results.
They know who they are” (George, Sims, McLean, & Mayer,
2007, p. 130). According to Avolio, Gardner, Walumbwa,
Luthans, and May (2004), these key attributes of authentic
leadership are directly and positively related to followers’ hope
and optimism, which are two components of IRP. Moreover,
Ilies et al. (2005) argue that the key attributes of authentic
leadership facilitate positive influence processes between lead-
ers and followers, including enhanced positive social
exchanges, supporting self-determination, and positive beha-
vioral modeling. These positive influence processes, in turn,
are theorized to enhance followers’ eudaemonic well-being,
411
Table 2. The Key Attributes of Authentic Leaders (Based on Gardner
et al., 2011)
Key Attribute Description
Self-awareness Knowledge and trust in one’s thoughts,
feelings, motives, and values.
Unbiased processing Objectivity about and acceptance of one’s
positive and negative attributes.
Consistent behavior Acting based on one’s true preferences, values,
and needs rather than merely acting to
please others, secure rewards, or avoid
punishments.
Transparent relational Achieving and valuing truthfulness and
orientation openness in one’s close relationships.
which comprises, among others, the IRP components of self-
efficacy, outcome expectancy, and self-esteem (Ilies et al.,
2005; Ryan & Deci, 2001). Finally, an outcome of the key
attributes of authentic leadership (i.e., openness and truthful-
ness) are high levels of trust and perceived safety (Agote, Ara-
mburu, & Lines, 2016; Ilies et al., 2005; Lloyd-Walker &
Walker, 2011). Such trust and psychological safety represent
core determinants of individuals’ risk taking propensity at work
(Carmeli & Gittell, 2009; Colquitt, Scott, & LePine, 2007), the
final component of IRP. In sum, given the expected positive
influence of authentic leadership on each of the six IRP com-
ponents, we posit:
Hypothesis 1: Authentic leadership is positively related
to IRP.
The Moderating Role of Setback Experiences
While we expect authentic leadership to generally support IRP,
we expect that this support is particularly strong after innova-
tors have actually experienced a setback such as an innovation
project termination. Then, IRP appears to be particularly prone
to negative influences. This rationale follows research on resi-
lience and vulnerability that emphasizes the exposure to adver-
sity as a condition threatening one’s disposition to master
subsequent adverse experiences (Masten, 2001; Riskind,
1999). The logic underlying this assumption is that individuals
tend to be more sensitized and vulnerable after having experi-
enced an adverse event (Moore, Grunberg, & Greenberg, 2004;
Overmier & Murison, 2005). As a consequence, having actu-
ally experienced such a setback, potential setbacks are likely to
become more salient for innovators in their work on innovation
projects, making them appear more likely to occur (Galak &
Meyvis, 2011; Riskind, 1999), and thus making a sense of
vulnerability likely to undermine innovator confidence (Todt
et al., 2018). Moreover, the experience of loss tends to make
people more fearful of subsequent losses (Edmondson &
Nembhard, 2009; Riskind, 1999), thereby further aggravating
innovators’ perceived vulnerability. This sense of vulnerability
is likely to compromise innovator IRP and therefore likely to
412
particularly emphasize the assumed IRP-supporting role of
authentic leadership. Hence, we posit:
Hypothesis 2: The positive relationship between authentic
leadership and IRP is stronger for innovators who have
experienced an innovation project termination.
Methods
Sample
The unit of analysis in this study is the individual innovator.
Our sample consisted of 146 innovators from a medium-sized
software development laboratory in Germany, roughly half of
whom had already experienced an innovation project termina-
tion. The software development laboratory offered an appro-
priate setting for our analysis, because the department is highly
innovative (i.e., developing new products and bringing them to
the market is a core task of this department, and it had been
successful in the decade prior to the time of data collection),
and many of its recent innovation projects had been terminated.
Data were collected by contacting all software developers in
the laboratory who were all working on software development
projects, via an online survey. Respondents’ participation in the
survey was strictly voluntary, and respondents were assured
their answers would be treated anonymously and confiden-
tially. Invitations were sent to 550 software developers, result-
ing in a response rate of 26.5%. Of the 146 software developers
in this sample, 76 had experienced an innovation project being
terminated; 37 of the respondents were women. The average
age in the sample was 43, ranging from 20 to 64. The average
tenure in the sample was 7.71 years, and 42.4% of the respon-
dents in the sample had completed some tertiary education.
Measures
We relied on existing measures in the literature where possible.
If not stated otherwise, seven-point Likert scales, with anchors
ranging from (1) strongly disagree to (7) strongly agree were
used for the items in this study.
To measure authentic leadership, we used eight items based
on the instrument by Neider and Schriesheim (2011). We used
this established scale as the theoretical rationale it is based on,
in other words, viewing authentic leadership as a second-order
construct comprising the components of self-awareness, rela-
tional transparency, internalized moral perspective, and
balanced processing, was in line with our theorizing. Moreover,
the scale items underwent extensive validation (Neider &
Schriesheim, 2011) and the instrument was used in many pre-
vious studies on authentic leadership (e.g., Braun, Peus, &
Frey, 2018; Steffens, Mols, Haslam, & Okimoto, 2016; Weiss
et al., 2018). We asked innovators to what extent they per-
ceived their leaders to fulfill these criteria of authenticity. The
Cronbach’s alpha score of this scale was 0.82.
To assess the second-order construct IRP comprising the
components of self-efficacy, outcome expectancy, optimism,
Project Management Journal 50(4)
organization-based self-esteem, hope, and risk propensity, we
asked innovators to evaluate themselves with respect to their
own IRP, using the measure developed by Todt et al. (2018). In
their development of this second-order scale, Todt et al. (2018)
performed an extensive validation in terms of construct valid-
ity, criterion-related validity, and incremental validity over and
above a measure of general resilience potential. In our study,
the scale showed satisfactory internal consistency in this study
(Cronbach’s alpha ¼ 0.73).
The binary moderator variable innovation experience covers
whether the innovators had experienced an innovation project
termination or not and was assessed by the innovators. An
innovation project termination was defined as definitely ending
the innovation project or a massive and substantial change in
the innovation project that changed the identity of the project.
In the statistical analysis, we controlled for the potential
effects of age (in years), education (i.e., whether respondents
held a degree of tertiary education such as a bachelor’s degree,
master’s degree, or Diploma) and gender. We controlled for
these variables since previous research suggests that demo-
graphic attributes might influence resilience and related con-
structs (Bonanno, Galea, Bucciarelli, & Vlahov, 2007). The
measurement scales and items used in this study are shown
in the Appendix at the end of this article.
Results
The descriptive statistics and correlations of all variables used
in the study are displayed in Table 3. Running regression anal-
yses, we found that authentic leadership is in fact positively
associated with innovator IRP, thereby supporting Hypothesis 1.
Even more interesting, we found a significant interaction term
surfacing that this role of IRP is contingent upon whether inno-
vators had already experienced an innovation project termina-
tion (see Table 4).
We probed the nature of the interaction term more closely
by plotting the simple slopes of the interaction effect (see Fig-
ure 1). While authentic leadership is generally positively
related to IRP among innovators, this relationship is particu-
larly strong for innovators who have already experienced what
it means to fail at an innovative endeavor and who are therefore
most vulnerable. In sum, the results therefore also support
Hypothesis 2.
Discussion
Theoretical Implications
The results of our empirical study have two main theoretical
implications for project management research. First, we estab-
lish the connection between specific leadership approaches,
such as authentic leadership, and innovators’ predisposition
to bounce back from innovation project setbacks such as the
termination of these projects. This connection enables expand-
ing and refining theories on the role of leadership for project
management success (Lloyd-Walker & Walker, 2011; Müller
Todt et al. 413

Table 3. Descriptive Statistics and Correlations

Variable Mean SD 1 2 3 4 5 6

1. Age 43.05 8.26 –

2. Gender (1 ¼ f, 2 ¼ m) 1.75 0.43 0.14 –
3. Education 0.42 0.49 0.12 0.06 –
4. IRP 5.15 0.75 0.07 0.13 0.05 –
5. Authentic Leadership 4.54 1.06 0.01 0.10 0.05 0.36** –
6. Termination Experience 0.52 0.50 0.28** 0.23** 0.01 0.03 0.04 –

Note: N ¼ 146. *p < 0.05, **p < 0.01 (two-tailed tests).

Table 4. Results of Regression Analysis other words, when an innovation project is failing or has been
terminated.
Innovator Resilience Potential Second, our results point to contingencies of the role authen-
Variable Model 1 Model 2 Model 3 tic leadership plays in innovator ability to handle setbacks with
regard to individual differences among innovators. Specifi-
Age 0.01 (0.01), 0.01 (0.01), 0.01 (0.01), cally, our analyses suggest that previous setback experiences
t ¼ 0.64 t ¼ 1.07 t ¼ 1.22 even enhance the positive relationship between authentic lead-
Gender 0.21 (0.15), 0.17 (0.14), 0.14 (0.14),
ership and IRP, indicating that such an adverse experience may
t ¼ 1.37 t ¼ 1.12 t ¼ 0.99
Education 0.09 (0.13), .13 (0.12), 0.13 (0.12), result in an elevated responsiveness for the benefits of leader
t ¼ 0.70 t ¼ 1.04 t ¼ 1.03 authenticity. More generally, this finding points to differences
Authentic Leaders. (AL) 0.27 (0.06), 0.27 (0.06), in the effectiveness of leadership approaches, depending on
t ¼ 4.73** t ¼ 4.83** follower attributes (Eisenbeiss & van Knippenberg, 2015). In
Termination Exp. (TE) 0.14 (0.13), 0.14 (0.13), this regard, our knowledge on follower-based contingencies of
t ¼ 1.06 t ¼ 1.07 project leadership effectiveness is still limited (Tyssen et al.,
AL*TE 0.23 (0.11),
2013) and more research appears warranted. The results of this
t ¼ 2.04*
F 0.96 5.35** 4.14** study provide a further step in this direction.
DR2 – 0.15** 0.03*
R2 0.02 0.17 0.19
Practical Implications: How Can Authentic Leaders
Note: N ¼ 146. Unstandardized coefficients with standard errors in parenth-
eses. *p < 0.05, **p < 0.01 (two-tailed tests).
Strengthen Innovators’ IRP?
Our research points to the important role played by leaders’
honest, open, and benevolent behavior, especially in the con-
7 text of innovation setbacks. More general research on the con-
No Termination Experience

6
Termination Experience sequences of failure has also pointed to the prominent role of
Innovator Resilience Potential

leadership in this respect (Harland, Harrison, Jones, & Reiter-

5 Palmon, 2005). In the following we provide several implica-
4
tions for authentic leadership in practice.

3 Acknowledge the emotional needs of the affected innovators. After

2
1 that leaders acknowledge the needs of the affected innovators.
Low Authentic Leadership
Figure 1. The interaction effect of authentic leadership and termi-
nation experience on IRP.
et al., 2018; Tyssen et al., 2013) to specific situational contin-
gencies such as the occurrence of failure or setbacks. While
previous work has argued that authentic leadership is generally
expected to facilitate project success in modern organizations
(Lloyd-Walker & Walker, 2011), our results suggest that
authentic leadership is also a promising approach toward proj-
ect leadership in a context when project success is absent, in
realizing the potential impact of the characteristics of an inno-
vation project termination on project members, it is necessary
High Authentic Leadership
Foremost, project members most often need emotional support
from the leader during this difficult time (Todt et al., 2018).
They need a leader who is supportive, takes care of project
members’ welfare, and shows empathy. For that, it is necessary
that the leader realizes what the project members are going
through and communicates this. Being visible and available for
project members during this difficult time appears important
here (Todt et al., 2018). To acknowledge the individual needs
effectively, leaders need self-awareness, self-regulation, moti-
vation, and empathy (Gardner et al., 2011; Lemoine, Hartnell,
& Leroy, 2019). However, even for leaders who are well-
equipped with these qualities, it is not always possible to assess
414
the right type and kind of emotional support. Leaders should at
least provide project members with a feeling of being valued
and cared as this will make it more likely they will ask the
leader for support or guidance in the future.
Create a climate of safety. A climate of safety fosters open and
trustful interactions within the work environment, seeing set-
backs as a part of the learning process (Bennett & Parks, 2015).
This is particularly helpful after the termination of an innova-
tion project (Todt et al., 2018). Leaders are important role
models for the establishment of such a climate. Being open
to questions and suggestions, encouraging risk taking, and
stressing the importance of feedback are important behaviors.
Further, leaders should explain to individuals that failure is
commonplace in innovation and encourage them to engage in
new and risky projects. Many leaders in innovative companies
already try to minimize the fear of failure and setbacks, yet
some high-profile leaders emphasize how a climate of safety
generally supports innovation. Consider, for example, how
Domino’s Pizza CEO Patrick Doyle created an explicit permis-
sion to fail culture in his company, or how Amazon’s Jeff
Bezos praises the value of failing like a mantra. However,
leaders need to make sure that such words are actually followed
by actions to really instill a climate of safety. This climate of
safety will encourage innovators to take risks even when a prior
innovative endeavor fell short of its goals. Two major ingredi-
ents of doing are behaving and leading in an authentic way.
Provide constructive feedback. Leader feedback is helpful for
innovators to assess their own performance and to process the
termination (Todt et al., 2018). Innovators can learn about their
actual contribution to the project and the termination. The set-
back and the connected feedback thus enable the affected inno-
vators to reflect, develop through the failure, grow stronger,
and advance in the future (Todt et al., 2018). An underlying
mechanism is that feedback is empowering and fosters a feel-
ing of control (Yu, Vaagaasar, Müller, Wang, & Zhu, 2018), as it
provides information about the relationship between behaviors
and outcomes. These control perceptions are very important
after the experience of a setback. In other words, innovators will
regain the feeling that they can influence the future, the future
will be positive, and this can foster IRP. For this to work, it is
essential that the feedback is perceived as honest, fair, and emo-
tionally supportive. In this regard, feedback should additionally
show appreciation and give attention to the achievements and
development of the affected innovators.
Leader awareness of own needs. Oftentimes it is difficult for
leaders to provide the support needed because they are suffer-
ing themselves, especially when they were strongly involved in
the project (e.g., project leaders). Involved leaders, therefore,
need to quickly make sense of the situation and develop a
future vision in order to convey it to their followers. None-
theless, it is not helpful to play a role and pretend everything
is fine. It is not expected and mostly unrealistic that leaders
instantly have a new direction. Until they develop a future
Project Management Journal 50(4)
vision, it is better to help people interpret and understand the
situation as it is. As such, leaders need to emphasize that the future
of the subordinates is of major concern, even if no concrete state-
ment can be given about future duties and functions. Leaders
should therefore try and level with their subordinates emotionally,
which is likely to help both grapple with the setback.
Authentic Leadership After Innovation Setbacks: The
Bottom Line
In summary, leadership in innovation is arguably most relevant
in terms of dealing with setbacks. While innovation has always
been a decisive driver for company development and success,
and viewed by many as the holy grail of running a business
(Arena, Cross, Sims, & Uhl-Bien, 2017), innovation is a highly
risky and uncertain endeavor with an inherent potential for fail-
ure, especially when aiming at radical innovations. While in this
context many corporate leaders and startups praise the virtue of
failing fast (Blank, 2013; McGrath, 2011), our research indicates
that it appears that a strong dose of authentic leadership helps
that such setbacks (whatever their learning potential) do not
silently erode the innovative capacity of the organization.
To conclude, our study puts the spotlight on the theory
development of the negative side effects of innovation project
terminations, still an under-researched topic. Meanwhile, suf-
ficient theoretical and empirical evidence has accumulated to
provide a solid foundation for research in this direction (e.g.,
Shepherd et al., 2013; Shepherd, Patzelt, & Wolfe, 2011; Todt
et al., 2018; Välikangas et al., 2009). However, clearly more,
and more systematic, research is needed to develop a compre-
hensive understanding of the human cost of project setbacks
and failure. We therefore hope this study sparks broader inter-
est in this relevant and timely topic.
Appendix. Measurement Scales and Items
Scale Item
Innovator Resilience Potential
Self-efficacy I have confidence in my ability to do my job.
I am very proud of my job skills and abilities.
I have all the skills needed to perform my job well.
Outcome- In this organization, I am well rewarded for my
expectancy good work.
In this organization, doing good work is worth the
effort.
In this organization, I must do a good job in order
to get what I want.
Optimism In uncertain times, I usually expect the best at
work.
I expect more good things to happen to me at
work.
I am optimistic about my future regarding my
work.
(continued)
Todt et al. 415

Appendix. (continued) Avolio, B. J., Gardner, W. L., Walumbwa, F. O., Luthans, F., & May,
D. R. (2004). Unlocking the mask: A look at the process by which
Scale Item
authentic leaders impact follower attitudes and behaviors. The
Organization I count at work. Leadership Quarterly, 15(6), 801–823. doi:10.1016/j.leaqua.2004.
based self- 09.003
esteem Bandura, A. (1977). Self-efficacy: Toward a unifying theory of beha-
I can make a difference at work.
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Braun, S., Peus, C., & Frey, D. (2018). Connectionism in action:
Self-awareness My leader shows that he understands his strengths
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My leader openly shares information with others.
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Internalized My leader uses his core beliefs to make decisions.
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Declaration of Conflicting Interests ment teams. The Leadership Quarterly, 26(3), 307–322. doi:
10.1016/j.leaqua.2015.02.002
The author(s) declared no potential conflicts of interest with respect to
the research, authorship, and/or publication of this article. DiMasi, J. A., Grabowski, H. G., & Hansen, R. W. (2016). Innovation
in the pharmaceutical industry: New estimates of R&D costs. Jour-
Funding nal of Health Economics, 47(Supplement C), 20–33. doi:10.1016/
j.jhealeco.2016.01.012
The author(s) received no financial support for the research, author-
Dyer, J. H., Gregersen, H. B., & Christensen, C. M. (2009). The
ship, and/or publication of this article.
innovator’s DNA. Harvard Business Review, 87(12), 60–67, 128.
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Author Biographies
Gisa Todt (née Moenkemeyer) is a post-doctoral associate at
the Institute for Leadership and Organization (ILO) at Ludwig-
Maximilians-Universität München (Munich, Germany). She
earned her PhD at the WHU – Otto Beisheim School of Man-
agement (Vallendar, Germany). Her research focuses on proj-
ect terminations and resilience in organizations, especially in
the contexts of innovation and academic research. She regu-
larly conducts seminars and workshops for multi-national com-
panies in the area of human factors training and strategy and
has published her research results in journals, including Human
Relations and the Journal of Product Innovation Management.
She can be contacted at todt@bwl.lmu.de
Matthias Weiss is head of the Center for Entrepreneurship,
Innovation, and Transformation at Ruhr-Universität Bochum
(Germany). Prior to this position, he served as assistant professor
at the Institute for Leadership and Organization at Ludwig-Max-
imilians-Universität München and as post-doc at WHU - Otto
Beisheim School of Management, where he also received his
doctorate. He worked as visiting researcher at Bocconi Univer-
sity (Milan, Italy). His main research interests are in the areas of
teamwork, resilience, and innovation in organizations. In partic-
ular, he focuses on the innovation processes under changing or
adverse conditions. His research has been published, among
others, in the Journal of Product Innovation Management, Lead-
ership Quarterly, Journal of Organizational Behavior, Human
Relations, and the Journal of International Business Studies. He
can be contacted at matthias.m.weiss@rub.de
Martin Hoegl is head of the Institute for Leadership and Orga-
nization (ILO) at Ludwig-Maximilians-Universität München
(Munich, Germany). Before joining LMU Munich, he served
on the faculties of Washington State University (USA), Bocconi
University (Milan, Italy), and WHU – Otto Beisheim School of
Management (Vallendar, Germany). Moreover, he held visiting
professorships at the Kellogg School of Management, North-
western University (USA), Curtin University (Perth, Australia),
and at the National Sun Yat-Sen University (Taiwan). His main
research interests include leadership, collaboration, and innova-
tion in organizations. He has published in the Academy of Man-
agement Journal, Decision Sciences, Human Relations, Journal
of International Business Studies, Journal of Management, Jour-
nal of Product Innovation Management, MIT Sloan Manage-
ment Review, Organization Science, and other journals. He can
be contacted at hoegl@lmu.de