Social exchange theory (SET), first proposed by Blau (1964), posits that norms of reciprocity, mutual trust, and perceived balance between contributions and returns govern social and organizational relationships. In organizational settings, leadership behaviors play a critical role in shaping employees' perceptions of exchange quality, fairness, and trust. When leaders violate reciprocity norms, employees are likely to reassess the exchange relationship, leading to negative emotional and attitudinal responses (Breevaart et al., 2014). ML, characterized by manipulation, self-interest, and a disregard for ethical considerations (Stradovnik and Stare, 2018), represents a leadership style that challenges the fundamental assumptions of social exchange. Such behaviors can undermine trust and signal an imbalanced exchange relationship (Chiaburu et al., 2013; Arias-Pérez et al., 2023), making SET particularly relevant for understanding the potential negative consequences of Machiavellian leadership for employees' HAW.

From the SET (Blau, 1964) perspective, psychological contracts capture employees' beliefs regarding mutual obligations between themselves and their organizations (Wu et al., 2025). Perceptions of psychological contract breach reflect employees' evaluations of whether exchange expectations have been fulfilled and thus represent an important mechanism linking leadership behaviors to employee outcomes (Mehraein et al., 2023; Robinson and Morrison, 2000). In addition, when CWX quality is high, employees may turn to reciprocity and support from colleagues as compensatory resources to cushion negative impacts (Sherony and Green, 2002).

The pursuit of happiness appears to be one of humanity's most enduring and resilient goals across time and cultures. In the organizational context, HAW is widely recognized as an expression of positive employee attitudes (Fisher, 2010). HAW is commonly conceptualized as a multidimensional positive employee attitude encompassing work engagement, job satisfaction, and affective organizational commitment (Salas-Vallina and Alegre, 2021; Fisher, 2010). Due to its positive impact on both individual and organizational wellbeing, HAW has attracted significant attention from organizational researchers (Farooq et al., 2024; Lyubomirsky et al., 2005; Meyer et al., 2002). Prior research indicates that higher levels of HAW are associated with greater engagement in organizational citizenship behaviors (Singh and Banerji, 2022). Additionally, higher levels of HAW have also been linked to improved employee mental health (Sudibjo and Manihuruk, 2022). Taken together, HAW represents a critical attitudinal outcome for organizational functioning.

Happiness has also been conceptualized in a variety of ways beyond the workplace. Some define it as subjective wellbeing, which refers to a person's overall positive evaluation of life (Diener et al., 1999). This view usually includes both feelings, such as positive and negative emotions, and cognitive judgments, such as life satisfaction (Haller and Hadler, 2006). Others, following a philosophical tradition, see happiness more as a matter of virtue, for example, being fair, honest, or courageous, and suggest that such traits often bring more positive emotions (Oravecz et al., 2020). In organizational research, attention has shifted to the workplace, where leadership is seen as especially important because it affects employees' motivation, trust, and commitment (Salas-Vallina et al., 2020; Botha and Steyn, 2023; Barile et al., 2015). With numerous definitions, it is crucial to clarify the meaning of happiness in this study (Salas-Vallina and Alegre, 2021). Accordingly, this study focuses on HAW as the operational definition, because it provides a comprehensive and context-specific representation of employees' positive work experiences and is more directly related to organizational outcomes than broader notions of happiness.

Current research has identified leadership as a key antecedent of HAW, particularly through its influence on employees' perceptions of the work environment and organizational support (Farooq et al., 2024; Fisher, 2010). Existing studies mainly emphasize the positive influence of positive leadership styles on employee HAW (Salas-Vallina et al., 2020). However, despite the growing focus on the impact of leadership on HAW and exceptionally positive leadership styles, research on dark leadership styles remains in its early stages, particularly regarding ML. Although some studies suggest that Machiavellian leadership may generate short-term benefits in highly competitive or high-pressure environments where leader and employee interests temporarily align (Deluga, 2001), the majority of research highlights its destructive long-term consequences, particularly for relational quality and employees' attitudes. ML, as a form of dark leadership, is characterized by manipulation, strategic deception, and a strong focus on personal gain, with leaders pursuing power and success by prioritizing self-interest over mutual obligations (Dahling et al., 2009; Paulhus and Williams, 2002; Stradovnik and Stare, 2018). Machiavellian leaders typically use manipulation, power plays, and deceit to advance personal goals, which undermines the trust and quality of relationships between employees and their leaders or supervisors, leading to adverse organizational outcomes (Karatepe et al., 2023; Arias-Pérez et al., 2023). As highlighted in a case study by Stradovnik and Stare (2018), the cunning and unethical behaviors of Machiavellian leaders lead to negative emotions and attitudes among employees toward the organization.

Drawing on SET, workplace relationships are fundamentally governed by norms of reciprocity and mutual obligation. When employees perceive fair, supportive, and trustworthy treatment from their leaders, they are likely to develop positive work-related attitudes (Kaur and Kaur, 2024). In contrast, when leaders behave in manipulative or self-serving ways, employees tend to interpret such behavior as a violation of mutual obligations, leading to the erosion of trust and perceptions of fairness (Arias-Pérez et al., 2023; Soral et al., 2022). Within this theoretical framework, employees' HAW reflects their overall evaluative response to the quality of ongoing social exchange relationships with leaders and organizational representatives. ML, characterized by self-interest, manipulation, and strategic deception, fundamentally violates these exchange norms by prioritizing personal goals over reciprocal obligations and relational fairness (Dahling et al., 2009). Such behaviors signal to employees that the exchange relationship is imbalanced and instrumental, prompting them to reassess the value and quality of their relationships with leaders and, by extension, with the organization. As part of this reassessment process, employees are likely to withdraw positive work-related attitudes grounded in reciprocal expectations, including work engagement, job satisfaction, and affective organizational commitment (Chiaburu et al., 2013; Moorman et al., 2025; Teven et al., 2006), which collectively constitute HAW. Consistent with SET, the continued erosion of reciprocal exchange under ML ultimately undermines employees' HAW. Therefore, this study proposes the following hypothesis:

H1: ML negatively impacts employees' HAW.

The psychological contract refers to the implicit, unwritten agreements between employees and employers based on mutual trust and expectations (Rousseau, 1995). It includes employees' expectations, commitments, and responsibilities toward the organization and the organizational expectations and commitments toward the employees (Rousseau, 1995). PCB occurs when employees perceive that the organization has failed to fulfill its implicit promises (Robinson and Morrison, 2000). As a negative work experience, PCB plays a critical role in shaping employees' attitudes and behaviors, as it reflects perceived violations of exchange expectations (Li et al., 2018). Accordingly, PCB provides an important lens for understanding how work environments and leadership behaviors influence employees' HAW (Stankevičiute et al., 2021). However, previous research on the impact of leadership on HAW has not addressed the mediating effect of PCB.

Drawing on SET, interpersonal and organizational relationships are sustained through reciprocal exchanges grounded in trust and mutual obligation (Blau, 1964). Within this framework, employees form expectations based on prior interactions that their organization and its representatives, particularly leaders, will honor implicit promises and maintain fair and balanced exchanges (Eisenberger et al., 2010). ML, characterized by manipulation, deceit, and self-serving behavior, fundamentally disrupts these reciprocal exchange processes by prioritizing personal interests over mutual obligations (Stradovnik and Stare, 2018). Such leader behaviors signal an imbalanced, instrumental exchange relationship, undermining trust and reciprocity in leader–employee interactions (Mehraein et al., 2023). Empirical research further indicates that destructive and toxic leadership behaviors frequently result in unmet psychological expectations among employees (Hattab et al., 2022), thereby increasing the likelihood that employees perceive PCB. Consistent with this view, Kayani and Alasan (2021) demonstrate that toxic leadership styles are positively associated with employees' perceptions of PCB. Therefore, employees exposed to ML are more likely to interpret their exchange relationship with the leader as violating implicit organizational promises, giving rise to PCB.

In addition, from a social exchange perspective, when employees perceive PCB, they interpret the exchange relationship with the organization or its representatives as failing to fulfill reciprocal obligations (Robinson and Morrison, 2000). In particular, employees may interpret leaders' manipulative and exploitative behaviors as signals of insufficient organizational support (Ahmed and Nawaz, 2015), thereby reinforcing perceptions that implicit promises have not been honored. Such perceptions prompt employees to reassess the value and quality of the exchange relationship and adjust their attitudes accordingly. In response to perceived violations of reciprocal obligations, employees are likely to withdraw from positive work-related attitudes grounded in expectations of fairness and support (Li et al., 2018). Empirical evidence consistently indicates that PCB is associated with lower levels of work engagement (Rayton and Yalabik, 2014), reduced job satisfaction (Robinson and Rousseau, 1994), and weakened affective organizational commitment (Lapointe et al., 2013), which together constitute HAW. Through this process of exchange reassessment and attitude withdrawal, PCB serves as a key psychological mechanism linking ML to diminished HAW. Therefore, this study proposes the following hypothesis:

H2: PCB mediates the negative effect of ML on HAW.

CWX refers to the quality of interpersonal interactions among employees under the same leadership supervision (Sherony and Green, 2002). CWX reflects a horizontal relationship among colleagues based on mutual trust, respect, and support (Pfrombeck et al., 2020; Chiaburu and Harrison, 2008). In the hospitality industry, where daily work requires extensive coordination and emotional labor, CWX plays a particularly vital role (Kim and Qu, 2020; Ye et al., 2021). Furthermore, the quality of CWX plays a crucial role in the work environment, as it significantly affects employee attitudes and behaviors (Kim and Qu, 2020). For example, when CWX quality is higher within a team, employees are more inclined to engage in helping behaviors (Lin et al., 2024). High-quality CWX enhances employees' customer-oriented perspective-taking, improving service quality (Dong and Hon, 2025). In collectivist cultures, the positive effects of CWX are particularly pronounced, as these cultures emphasize collective welfare and teamwork (Dong and Hon, 2025). Therefore, studying CWX in the Chinese context is of significant importance. However, current research has rarely focused on the moderating effects of CWX, especially whether CWX can mitigate the harmful effects of dark leadership.

According to SET (Blau, 1964), employees rely on social resources such as support, trust, and reciprocity to maintain positive work-related attitudes, particularly when their primary exchange relationships are strained. Within organizations, leaders are typically the most salient source of exchange resources because they represent the organization and exert substantial influence on employees' attitudes and behaviors (Kurtessis et al., 2017). At the same time, coworker relationships constitute an important supplementary form of social exchange, especially in teamwork-intensive contexts such as the hospitality industry, where daily work requires close coordination and emotional labor (Kim and Qu, 2020). CWX represents a form of horizontal social exchange that provides employees with trust-based and supportive relational resources (Sherony and Green, 2002). High-quality CWX facilitates understanding, cooperation, and assistance among coworkers, promotes the development of workplace friendships, helps reduce psychological stress, and enhances employees' psychological safety (Mao, 2006). When employees are exposed to ML, the quality of vertical exchange relationships with leaders may deteriorate, resulting in reduced access to socio-emotional resources. Under such conditions, high-quality CWX can serve as an alternative source of social support (Kim and Qu, 2020), compensating for the lack of supportive leadership and buffering the negative impact of ML on employees' HAW. Empirical research further indicates that high-quality CWX strengthens employees' organizational identification and positive work-related attitudes by increasing mutual support and assistance among coworkers (Zhang et al., 2022). Accordingly, when CWX quality is high, employees are better able to maintain positive work-related attitudes after exposure to ML, thereby weakening the negative effect of ML on HAW. In contrast, when CWX quality is low, employees lack alternative exchange resources and are more vulnerable to the detrimental effects of ML. Therefore, this study proposes the following hypothesis:

H3: CWX moderates the negative impact of ML on employees' HAW.

The research framework is shown in Figure 1.

This study makes several contributions to the existing literature. Firstly, as a form of dark leadership, ML often brings negative consequences by damaging organizational interests and hindering organizational development (Karatepe et al., 2023; De Hoogh et al., 2021). However, empirical research on the negative impact of ML remains scarce, especially within the hospitality industry (e.g., Karatepe et al., 2023; Huertas-Valdivia et al., 2022). By adopting a SET (Blau, 1964) perspective, this study moves beyond documenting negative outcomes. It provides a process-oriented, exchange-based account of how ML erodes positive work-related states. In doing so, the study advances existing research by shifting the focus from whether ML is harmful to why and how such leadership disrupts exchange relationships in service contexts.

Secondly, this study advances the literature by theorizing PCB as a key process mechanism through which ML undermines employees' HAW. PCB has long been an important area of research in organizational behavior, focusing on employees' perceptions of organizational commitment and expectations, and on how these expectations are fulfilled (Robinson and Morrison, 2000). However, limited research has examined how ML influences employees' HAW by affecting PCB. By integrating PCB into a Social Exchange Theory framework, this study clarifies how ML erodes employees' trust and perceptions of reciprocal obligation, thereby triggering a sense of PCB that leads employees to withdraw positive attitudes toward their work and organization. In doing so, the study shifts the emphasis from viewing PCB primarily as an outcome to conceptualizing it as a dynamic process mechanism that explains why and how ML ultimately diminishes employees' HAW, thereby enriching theoretical explanations of leadership-induced wellbeing erosion.

Third, this study found that CWX plays a significant moderating role in the relationship between ML and employees' HAW, responding to the suggestion by Breidenthal et al. (2020) that the quality of exchange (e.g., CWX) and its interaction with organizational contextual factors warrant further exploration. From an exchange perspective, when ML undermines vertical exchange relationships with leaders, high-quality CWX can compensate for depleted exchange resources by providing emotional support and instrumental assistance among coworkers. This finding broadens SET by illustrating that employees' HAW is not solely determined by leader-centered exchanges, but is also shaped by horizontal exchange processes that buffer the negative consequences of dark leadership. In this way, CWX is theorized as a critical contextual condition that constrains the extent to which ML erodes employees' HAW.

The findings of this study provide several important implications for practice. Firstly, the findings of this study provide several important implications for practice. Firstly, given that ML often manifests through self-serving decision-making and manipulative interpersonal behaviors (Dahling et al., 2009), hotel organizations should remain vigilant toward leaders who exhibit such tendencies, as these behaviors are likely to erode employees' HAW. At the recruitment and promotion stages, hotels may incorporate personality assessments and situational judgment tests that emphasize empathy (Wu et al., 2024), reciprocity, and concern for employees' HAW, thereby reducing the likelihood of selecting leaders prone to exchange-disruptive behaviors. However, because selection mechanisms alone may not fully prevent ML, leadership development programs should move beyond generic training and instead integrate hospitality-specific case analyses that illustrate how manipulative leadership behaviors undermine positive employees' work attitude. In addition, establishing formal governance mechanisms, such as clear behavioral codes, confidential reporting channels, and accountability procedures, can help constrain opportunistic leadership behavior and reinforce norms of fairness and reciprocity.

Secondly, given that the negative effect of ML on employees' HAW operates through PCB, organizations should treat the management of employees' psychological contracts as a critical intervention point rather than a peripheral human resource practice. From a process perspective, PCB often emerges gradually as employees perceive misalignment between promised and actual work conditions, particularly under leaders who engage in self-serving or manipulative behaviors. To reduce the likelihood that such perceptions consolidate into a sense of breach, hotel organizations should actively monitor early signals of psychological contract strain, such as declining trust, increased cynicism, or disengagement among frontline employees. In practice, this requires not only clear communication and transparent decision-making but also timely clarification and recalibration of expectations related to workload, career development, and performance evaluation (Pfrombeck et al., 2020; Coyle-Shapiro et al., 2019). Importantly, psychological contracts in hospitality settings are often informal and dynamic (Wu et al., 2025). Accordingly, hotels should institutionalize regular opportunities for expectation review and renegotiation, especially following role changes, shift adjustments, or organizational restructuring. By intervening before perceptions of unmet obligations become entrenched, organizations can prevent the escalation of PCB and, in turn, protect employees' HAW even in the presence of problematic leadership.

Finally, the findings suggest that organizations can strengthen CWX as a compensatory resource when employees are exposed to destructive leadership behaviors that undermine vertical exchange relationships. When ML erodes trust and reciprocity between leaders and employees, supportive coworker relationships can serve as an alternative source of socio-emotional and instrumental resources, thereby buffering the negative impact on employees' HAW (Zhang et al., 2022). Rather than viewing coworker support as a general cultural ideal, hotel organizations should deliberately design work structures that facilitate high-quality CWX, particularly in contexts where leadership behavior is difficult to change in the short term. For example, when designed to promote sustained task interdependence and repeated interaction, team-based task allocation, peer mentoring systems for frontline staff, and cross-functional coordination mechanisms can increase opportunities for mutual assistance, trust-building, and shared problem-solving. By institutionalizing these horizontal exchange structures, organizations can reduce employees' dependence on a single exchange partner, enhance resilience to destructive leadership, and sustain employees' HAW even under adverse leadership conditions.

Like any research, this study has its limitations. First, the data were collected from frontline employees of five-star hotels in Southwest China. While this sample represents the hospitality industry in China, the findings may not be directly generalizable to other cultural or organizational contexts. As Farooq et al. (2024) have suggested, cross-national analyses should be conducted, as cultural differences across countries may shape employees' perceptions of HAW. In addition, future studies could extend the investigation to other labor-intensive service industries, such as healthcare and retail. Secondly, while the two-study design combining a scenario-based experiment and a multi-wave field survey strengthens internal validity and robustness, both studies relied on convenience samples, which may constrain the generalizability of the results. Future research could employ probability sampling or more diverse organizational contexts to enhance external validity. Thirdly, this study primarily examined the mediating role of PCB and the moderating role of CWX. However, ML may influence employees' HAW through additional mechanisms. Future research could explore alternative mediators (e.g., leader–member exchange, emotional exhaustion) or moderators (e.g., perceived organizational support, psychological safety) to provide a more comprehensive understanding of the relationship between ML and HAW. In addition, future studies may also examine whether CWX moderates the relationship between ML and PCB, as coworker support might buffer employees' perceptions of contract breach under manipulative leadership. Finally, this study focused on ML as a dark leadership style, but future research could extend this investigation by incorporating other forms of dark leadership, such as narcissistic leadership.