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The current study tests the relationship between transformational leadership, empathy and excellent team performance, based on the HEalthy & Resilient Organizations (HERO) Model (Salanova, Llorens, Cifre & Martínez, 2012) in positive institutions, the third pillar of positive psychology (Seligman & Csikszentmihalyi, 2000). The study of empathy and its role in companies is important because it is not yet widely known the benefits that can provide to any institution. The study attempt to show a full mediating role of empathy in this relationship. The sample consist on  69 work teams, from 7 Small -and Medium- sized Enterprises (SMEs) including 4 educational institutions and 3 institutions of medical services from Spain. The Interclass Correlation Coefficients (ICC1 and ICC2) and the Average Deviation Index (ADM(J)) supports data aggregation at the team level. The results using SEM, through work teams, supported the hypothesis, that is, the empathy plays a full mediating role between transformational leadership and excellent team performance. Finally, theoretical and practical implications of the results are discussed

Positive Institutions and their relationship with transformational leadership, empathy and team performance