LITERATURE REVIEW OF LEADER-MEMBER

EXCHANGE THEORY IN LEADERSHIP

GROUP-12

MARIE-LOU DULAC (IEP17042)

BELAMARA SAI KRUTHI (PGP31145)
DEEPIKA VUNDAVALLI (PGP31184)
SNEHA CHILIVERY (PGP31173)
RACHANA KANIKARLA (PGP31327)
LEADER-MEMBER EXCHANGE THEORY

 The leader–member exchange (LMX) theory is a relationship-based approach to leadership that focuses on the
two-way (dyadic) relationship between leaders and followers
 It suggests that leaders develop an exchange with each of their subordinates, and that the quality of these leader–
member exchange relationships influences subordinates’ responsibility, decisions, and access to resources and
performance
 Relationships are based on trust and respect and are often emotional relationships that extend beyond the scope
of employment. Leader–member exchange may promote positive employment experiences and augment
organizational effectiveness
OBJECTIVE
 Compare and contrast different authors’ views on an issue

 Group authors who draw similar conclusions

 Highlight exemplary studies

 Highlight gaps in research

 Show how your study relates to previous studies

 Show how your study relates to the literature in general

1. SELF-DETERMINATION AT WORK: UNDERSTANDING THE ROLE OF
LEADER-MEMBER EXCHANGE. MOTIVATION AND EMOTION
 Integrates self-determination theory with leader-member exchange theory to understand the role of a leader in the self-
determination of employees
 Used a sample of 283 participants responses to 7 item LMX scale and 21-item basic need satisfaction at work
 Hypothesis that high-quality leader member exchange facilitates greater employee self-determination by enhancing
psychological need satisfaction and autonomous motivation is tested
 Tested 3 hypotheses and used standardized structural model to examine the correlation to three need satisfaction
factors
 Conclusions:
 Employee’s perception of leader member exchange in positively correlated to factors of need satisfaction such as autonomy,
competency and relatedness
 Competency and autonomy are further positively correlated to autonomous motivation
 Autonomous motivation is in turn positively correlated to job satisfaction, affective commitment and subjective vitality

 Limitations of the research include focus based only from employee’s perspective but not from leader’s perspective
Hypothesis 1: LMX will be positively related to competence, autonomy and relatedness

Hypothesis 2: Competence, autonomy and relatedness will be positively related to autonomous motivation

Hypothesis 3: Automation motivation will be positively related to subjective vitality, job satisfaction and affective
organizational commitment
2. UNDERSTANDING DYSFUNCTIONAL LEADER-MEMBER
EXCHANGE: ANTECEDENTS AND OUTCOMES
 Identified limitations of leader-member exchange theory and argues that in some conditions of leader-member exchange
might be dysfunctional and proceeds to identify outcomes of dysfunctional LMX
 Extant literature and past research are used to identify limitations
 Antecedents to dysfunctions LMX can be due to flawed assessment of a member by the leader and upward influence
tactics by members
 Dysfunctional LMX develops when
 leaders facing failure in stable environment favor members who support their ineffective decisions
 leaders do not have an objective measure of performance
 Dysfunctional relationships are formed when
 the work environment is highly political
 performance appraisal date approaches
 members have limited control over their work performance
 members think of their performance as indistinguishable from others
 UNDERSTANDING DYSFUNCTIONAL LEADER-MEMBER EXCHANGE:
ANTECEDENTS AND OUTCOMES

 Outcome of the dysfunctional exchanges can be

 feeling of unfairness among the team
 negative reciprocal behavior
 reduced commitment to work
 increased social loafing
 reduced interest in extra-role behavior
 Increased co-operative behavior towards in-group members
3. HOW DO LEADER–MEMBER EXCHANGE QUALITY AND
DIFFERENTIATION AFFECT PERFORMANCE IN TEAMS?

 Develops and tests a theoretical framework on how LMX differentiation leads to different performance outcomes in
teams
 Multi-phase data from 375 employees and 82 teams has been used to test hypothesis in the article
 Conclusions:
 LMX quality positively correlated to individual performance that is customer rated by enhancing role engagement
 LMX differentiation has negative influence on financial performance of team by affecting team performance
 Teams that have two LMX sub-groups of same size have more negative correlation due to difficulty in coordination
of team members
 Relationship between LMX quality & role engagement is strengthened with LMX differentiation and relationship
between individual performance & role engagement varied with team.
4. LINKING LEADER-MEMBER EXCHANGE DIFFERENTIATION TO
WORK TEAM PERFORMANCE

 Aims at understanding the implications of LMX on team processes and outcomes

 Two mechanisms were used in the paper defined as team-member exchange and team affective climate
 Paper is based on extant literature and past research
 Conclusions:
 LMX differentiation is negatively related to TMX as members with low quality LMX members have low-quality TMX
with high-quality LMX team members
 TMX is positively related to team performance as the effect of LMX differentiation transmits to team performance
as members react and work in teams based on quality of relationships with supervisors and team members
 Indirect effect of LMX differentiation on team performance is stronger in teams with high affective climate.
 Limitations of the article include use of only two variables i.e. team-member exchanges and team affective climate
5. LEADER–MEMBER EXCHANGE, DIFFERENTIATION, AND PSYCHOLOGICAL
CONTRACT FULFILMENT: A MULTILEVEL EXAMINATION

 Examined how LMX operating at the within-group level (relative LMX, or RLMX) and the group level influenced
perceptions of psychological contract fulfilment and employee-level outcomes
 Used a sample of 278 members and managers of 31 intact work groups at 4 manufacturing plants
 When controlled for individual-level perceptions of LMX quality, it resulted in a positive relationship between
RLMX and fulfilment, which was strengthened as group-level variability in LMX quality increased
 Perceptions of fulfilment mediated the relationship between RLMX and performance and sportsmanship
behaviours
 The importance of conceptualizing LMX as simultaneously operating at multiple levels is highlighted
 Tested 5 hypotheses and used hierarchical linear modelling (HLM) to examine them, due to the nested structure
of the data and the multilevel nature of the hypotheses
Hypothesis 1: RLMX quality is positively related to PC
fulfilment, controlling for individual-level perceptions of
LMX quality.

Hypothesis 2: Group-level variability in LMX quality moderates

the positive relationship between RLMX quality and
PC fulfilment, such that the relationship is stronger as group
level
variability in LMX increases.

Hypothesis 3: PC fulfilment is positively related to employees’

in-role performance.

Hypothesis 4: PC fulfilment is positively related to employees’

OCB.

Hypothesis 5: PC fulfilment mediates the relationships between

RLMX and in-role performance and OCB, controlling
for the effects of individual-level perceptions of LMX.
6. ONE MEMBER, TWO LEADERS: EXTENDING LEADER–MEMBER
EXCHANGE THEORY TO A DUAL LEADERSHIP CONTEXT
 Developed and tested a model that extends leader–member exchange (LMX) theory to a dual leadership context
 Drawing upon relative deprivation theory, asserted that when employees work for 2 leaders, each relationship exists
within the context of the other relationship
 The level of alignment/misalignment between the 2 relationships has implications for employees’ job satisfaction and
voluntary turnover
 Employed polynomial regression on time-lagged data gathered from 159 IT consultants nested in 26 client projects and
found that employee outcomes are affected by the quality of the relationship with both agency and client leaders, such
that the degree of alignment between the 2 LMXs explained variance in outcomes beyond that explained by both LMXs
 Lack of alignment in the 2 LMXs led to asymmetric effects on outcomes, such that the relationship with agency leader
mattered more than the relationship with one’s client leader
 Frequency of communication with the agency leader determined the degree to which agency LMX affected job
satisfaction in the low client LMX condition
 Tested 5 hypotheses and prior to testing them, conducted a Confirmatory Factor Analysis
7. EXCHANGE LOST IN LEADER–MEMBER EXCHANGE THEORY AND
RESEARCH: A CRITIQUE AND A RECONCEPTUALIZATION
 Reconceptualised LMX as a behaviour-based construct that consists of four exchange aspects: tangible work,
tangible social, work communication, and social communication
 By retesting and developing LMX theory, researchers examine how the four aspects of LMX evolve to contribute
to role-development processes, how relationship quality (e.g., in-group vs. out-group membership) may affect
substance and quantity of 4 exchange aspects; and how the four LMX aspects exert impact on employee
outcomes
 Positive relationships between certain exchange behaviours and employee outcomes require managers to be
trained to maintain or exhibit more such exchange behaviours
 This behavioural approach to LMX alleviates the problem of low applied value of the earlier behaviour-less
cognitive approaches
 From the behavioural aspect, LMX can be viewed as consisting of tangible and communication exchanges:
8. META-ANALYTIC REVIEW OF LEADER-MEMBER EXCHANGE THEORY:
CORRELATES AND CONSTRUCT ISSUES

 Relationships between LMX and its correlates are examined, as are issues related to the LMX construct, including
measurement and leader-member agreement
 Significant relationships between LMX and job performance, satisfaction with supervision, overall satisfaction,
commitment, role conflict, role clarity, member competence, and turnover intentions are observed
 The relationship between LMX and actual turnover was not significant and Leader and member LMX perceptions
were only moderately related
 Partial support was found for measurement instrument and perspective (i.e., leader vs. member) as moderators of
the relationships between LMX and its correlates
 Meta-analysis showed that the LMX7 (7-item LMX) measure has the soundest psychometric properties of all
instruments and that LMX is congruent with numerous empirical relationships associated with transformational
leadership
9. LEADER-MEMBER EXCHANGE AS A MEDIATOR OF THE RELATIONSHIP
BETWEEN TRANSFORMATIONAL LEADERSHIP AND FOLLOWERS'
PERFORMANCE
 Model in which leader-member exchange mediated between perceived transformational leadership behaviors and
followers' task performance and organizational citizenship behaviors.
 Sample comprised 162 leader-follower dyads within organizations situated throughout the People's Republic of
China.
 Hypothesis 1. Transformational leadership is positively related to the task performance and organizational
citizenship behaviors of followers.
 Hypothesis 2. Leader-member exchange relates positively to the task performance and organizational citizenship
behaviors of followers
 Hypothesis 3. Leader-member exchange mediates the relationship between transformational leadership and
followers' task perform
 Conclusion: Transformational leadership behaviors are social currency, nourishing high-quality LMX;
transformational leadership is associated positively with task performance and OCB
 Limitations: Followers rated both transformational leadership behaviors and LMX, and supervisors rated both
the OCB and task performance of subordinates, giving rise to concern about possible common source bias
10. JUSTICE AND LEADER-MEMBER EXCHANGE: THE MODERATING
ROLE OF ORGANIZATIONAL CULTURE

 To test the hypothesis that organizational culture moderates the relationship between jus tice perceptions and
leader-member exchange (LMX). Sample of 516 teachers from 30 high schools in Turkey
 Study suggest that the amount of attention paid to the fairness of interpersonal treatment and rewards varies
with the extent to which cultural values reflect respect for people, aggressiveness, and team orientation.
 Conclusion: one dimension of culture from the Organizational Culture Profile, respect for people, strengthened
the relationship between interactional justice and LMX, and another dimension, team orientation, weakened that
relationship.
 Furthermore, aggressiveness strengthened, whereas team orientation weakened, the relationship between
distributive justice and LMX. Finally, we found that in team-oriented schools, LMX was higher.
 Limitations: A sample of teachers in public schools. The schools were non profit, had flat structures, professional
employees, and wide spans of control. These characteristics may have affected some of the variables, such as
culture.
11. THE TIES THAT BIND: THE IMPACT OF LEADER-MEMBER EXCHANGE,
TRANSFORMATIONAL AND TRANSACTIONAL LEADERSHIP, AND DISTANCE
ON PREDICTING FOLLOWER PERFORMANCE

 The authors examined the linkages between leader-member exchange (LMX), transformational and transactional
leadership, and physical distance in predicting performance of 317 followers over a 1-year period
 Hypothesis 1: Transformational leadership will positively predict follower performance over a 1-year period.
 Hypothesis 2: Contingent reward leadership will positively predict follower performance over a 1-year period.
 Hypotheses 3a and 3b: Management-by-exception leadership, either active or passive, will negatively predict
follower performance over a 1-year period.
 Conclusion: LMX was related positively to transformational and contingent reward leadership and negatively to
management-by-exception. LMX and active management-by-exception positively predicted follower performance,
and physical distance moderated leadership-performance relationships. Transformational leadership produced
significantly higher follower performance in close versus distant situations, whereas LMX produced high follower
performance irrespective of physical distance between leaders and followers.
12. ORGANIZATIONAL JUSTICE, VOLUNTARY LEARNING BEHAVIOR,
AND JOB PERFORMANCE:

 Study presents and tests an integrative model of voluntary learning behavior. Drawing on social exchange theory,
study argues that individuals are more likely to pursue learning activities when they identify with their employing
organization and have a high quality leader-member exchange (LMX) relationship with their supervisor.
 It further argues that organizational identification is enhanced by both distributive and procedural fairness,
whereas LMX quality is enhanced by interpersonal and informational fairness. The model was tested with a
sample of 398 employees from a large automobile dealership.
 Hypothesis 1 : The effect of organizational identification on job performance will be partially mediated by
voluntary learning behaviour
 Hypothesis 2: The effect of leader-member exchange on job performance will be partially mediated by voluntary
learning behaviour
 Hypothesis 3: Distributive and procedural justice will predict organizational identification
 Hypothesis 4: The effect of distributive and procedural justice on voluntary learning behavior will be mediated by
organizational identification
13. CO-WORKER EXCHANGE: RELATIONSHIPS BETWEEN CO-
WORKERS, LEADER-MEMBER EXCHANGE, AND WORK ATTITUDES
 The study of leadership transfers is extended by examining both leader-member exchanges (LMXs) and coworker
exchanges (CWXs).
 Data from 110 coworker details were used to analyze relationships between LMXs and CWXs and between exchange
relationships and work attitudes. As predicted, the interplay between 2 coworkers' LMX scores foretold CWX quality
for the coworker dyad.
 Also, after checking for LMX, greater diversity in a worker's CWX relationships was negatively related to his or her
organizational engagement but not job content.
 The quality of a worker's CWX relationships, however, did not govern the relationship between CWX variety and work
attitudes.
 It may also help to present managers with the cautionary tale about how large discrepancies in leader-member
interpersonal relationships may prompt member secretive, exclusionary, or retaliatory behavior ( Townsend, Phillips, &
Elkins, 2000).
 Taken collectively, workgroup relationships play an instrumental role in individuals' lives and if leaders are not careful,
they may continue to advantage certain employees over others—where some members not only enjoy high-quality
LMXs, but also have trusted relationships in place with other high status peers ( Sherony & Green, 2002 ).
 This not only presents clear consequences for individual employees but ultimately will impact the effectiveness of the
work unit.
14. LEADER-MEMBER EXCHANGE AND MEMBER PERFORMANCE: A NEW
LOOK AT INDIVIDUAL-LEVEL NEGATIVE FEEDBACK-SEEKING BEHAVIOUR
AND TEAM-LEVEL EMPOWERMENT CLIMATE.

 From a basis in social exchange theory, the authors investigated whether, and how, negative feedback seeking
behavior and a team empowerment climate affect the association between leader-member exchange (LMX) and
member review. Results showed that subordinates' negative feedback seeking behavior mediated the relationship
between LMX and both objective and subjective in-role performance. Also, the level of a team's empowerment
climate was positively related to subordinates' personal sense of empowerment, which in turn negatively
moderated the effects of LMX on negative feedback-seeking behavior.
 The Leader-Member Exchange Theory first emerged in the 1970s. It focuses on the relation that arises between
managers and members of their teams.
 The theory states that all relationships between managers and subordinates go through three stages. These are:
 1. Role-Taking.
 2. Role-Making.
 3. "Routinization."
 15. COPING WITH WORK-FAMILY CONFLICT: A LEADER-MEMBER
EXCHANGE PERSPECTIVE.

 Leader-member exchange (LMX) theory is utilized as a framework for understanding coping with work-family
conflict.
 The effectiveness of four work-family coping strategies (i.e., preventive and episodic forms of both problem-
focused and emotion-focused coping) is reflected with emphasis on how the LMX relationship contributes to
each form of coping with work interference with family. The LMX-based model of work-family coping accounts
for the evolution of family-friendly work functions, use of organizational family-friendly policies, and the
negotiation of flextime and flexplace accommodations.
 Constraints on the relationship between LMX and work-family coping associated with supervisor authority and
resources and aspects of the organizational context are also addressed.
 Research and applied implications of the model are granted.
16. LEADER-MEMBER EXCHANGE AND CITIZENSHIP BEHAVIORS: A
META-ANALYSIS.
 This report gives a meta-analytic examination of the relationship between the kind of leader-member exchanges
(LMX) and citizenship behaviors conducted by employees.
 Results based on 50 independent samples (N = 9,324) show a moderately strong, positive correlation between
LMX and citizenship behaviors (rho = .37).
 The results also confirm the moderating part of the target of the citizenship practices on the magnitude of the
LMX-citizenship behavior relationship. As exacted, LMX prognosticated individual-targeted behaviors more fully
than it predicted organizational targeted functions (rho = .38 vs. rho = .31), and the deviation was statistically
significant.
 Whether the LMX and the citizenship performance evaluations were conducted by the same reference or not
also influenced the extent of the correlation between the 2 constructs.
 In addition, the relationship with objective task performance measures was found to be much limited, yet still
positive (Gerstner & Day, 1997).
 There is also meta-analytic evidence showing that LMX is positively related to citizenship performance (Dulebohn
et al., 2012; Ilies et al., 2007; Scott, Craven, & Green, 2006).
17. LINKING LEADER-MEMBER EXCHANGE DIFFERENTIATION TO
WORK TEAM PERFORMANCE

 Aims at understanding the implications of LMX on team processes and outcomes

 Two mechanisms were used in the paper defined as team-member exchange and team affective climate
 Paper is based on extant literature and past research
 Conclusions:
 LMX differentiation is negatively related to TMX as members with low quality LMX members have low-quality TMX
with high-quality LMX team members
 TMX is positively related to team performance as the effect of LMX differentiation transmits to team performance
as members react and work in teams based on quality of relationships with supervisors and team members
 Indirect effect of LMX differentiation on team performance is stronger in teams with high affective climate.
 Limitations of the article include use of only two variables i.e. team-member exchanges and team affective climate
18. LEADER-MEMBER EXCHANGE: EVOLUTION OF THEORIES

 Research into Leader-Member Exchange (LMX) theory has been gaining momentum in recent years, with a
multitude of studies investigating many aspects of LMX in organizations
 4 evolutionary stages of theorizing and investigation:

Stage 2: Stage 4:
Stage 1: Stage 3:
Focus on the Leadership
Validation of Partnership
relationship and structure as a
differentiation building
its outcomes network

Shift from “in-group” to “out-group” approach

19. EFFECTS ON LEADER-MEMBER EXCHANGE ON COMMITMENT

 High‐quality exchanges are characterized by a higher level of trust, interaction, support and rewards than
low‐quality exchanges
 In exchanges that have evolved beyond pure transactional exchanges (i.e. friendship), followers may have a sense
of commitment to the organization
 Strong correlation between transformational leadership and LMX: high quality exchanges involving loyalty and
respect can be developed by transformational leaders. By coaching and empowering followers, leaders can earn
trust and commitment

This issue can be addressed by combining transformational leadership and LMX. In order to increase its
employees’ commitment, an organization could implement training and development programs for them
and build high‐quality relationships between managers and subordinates
 20. LMX: FURTHER DEVELOPMENT 1/2

Recent studies focus on LMX development process rather than relationship:

Leader
characteristics
Member
Initial Leader Leader
behavior and
interaction delegation attributions
attributions
Member
characteristics
Leader
response

Nature of
exchange
LMX: FURTHER DEVELOPMENT 2/2

Description of the process:

 The leader and the member bring unique characteristics (attitudes, abilities, personality, experience, age, and
background) to the first meeting

 The initial interaction can “bypass” the other items because the leader may make an immediate judgement about
the member, which would determine the nature of the exchange (i.e. : sexism, racial discrimination…)

 Then, the leader delegates tasks and the member reacts accordingly

 All the interactions between the leader and the member determine the nature of exchange
THANK YOU!