Leader–member exchange (LMX) differentiation and work outcomes: Conceptual clarification and critical review

Abstract

Summary According to leader–member exchange (LMX) theory, leaders develop different quality relationships with followers in their team (termed LMX differentiation). An important theoretical question concerns how different LMX relationships within a team affect followers' work outcomes. This paper provides a critical review of the concept of LMX differentiation. We propose that the LMX differentiation process leads to patterns of LMX relationships that can be captured by 3 properties (central tendency, variation, and relative position). We describe a taxonomy illustrating the different ways these properties have been conceptualized and measured. We identify 2 approaches to LMX differentiation as being a “perspective of the team” (that are shared perceptions amongst team members) or a “perspective of the follower” (subjective perceptions unique to each follower). These perspectives lead to different types of measures that predict different outcomes at the individual and team levels. We describe theoretical models employed to explain the effects of LMX differentiation (justice, social comparison, and social identity theories). Generally, the lower the within‐team variation in LMX or the more a team member's LMX is higher than the mean team LMX, the better are the work outcomes, but many moderators condition these effects. Finally, we identify some key areas for future research.

Leader–member exchange social comparisons and follower outcomes: The roles of felt obligation and psychological entitlement

“…To date, most of the research on LMX has been dyadic in nature, focusing on how perceptions of relationship quality influence employee attitudes and behaviour. However, scholars are increasingly acknowledging that each leader–follower dyadic relationship occurs within the context of work groups in which multiple leader–follower relationships exist (see Martin, Thomas, Legood, & Dello Russo, ). As such, it is vital to acknowledge that an individual's LMX relationship is not isolated from other followers’ LMX relationships with the leader, and that, through interactions, informal conversations, and shared events, individuals will be aware of and compare their own LMX relationship with those their co‐workers have with the leader (Hu & Liden, ).…”

“…Given the social context in which LMX relationships occur (e.g., Martin et al ., ), a pertinent question is whether LMX comparisons influence the social exchange process at the heart of LMX theory. In other words, regardless of one's relative standing to others, is having a high‐quality LMX relationship sufficient to generate strong feelings of obligation?…”

“…For instance, a recurring argument within LMX theory is that LMX relationships cannot be fully understood without considering the team contexts that shape them (e.g., Uhl‐Bien et al ., ). Thus, a pertinent question is whether followers’ obligation to their leader is based purely on the quality of the relationship or whether it is also driven by broader considerations of the team context in which the relationship is embedded (see Martin et al ., for a review). A key assumption of LMX theory rests on the concept of differentiation (Liden & Graen, ), which highlights the fact that, for various reasons, leaders tend to treat followers within the same team differently (Erdogan & Bauer, ).…”

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“…Next, Martin, Thomas, Legood, and Dello Russo () review the literature on leader–member exchange (LMX) differentiation. LMX theory is one of the most popular leadership theories, and it is amazing to see how far the study of leader–member dyads has come since its early days (see, e.g., Graen & Scandura, ; Graen & Uhl‐Bien, ).…”

The importance of being psychologically empowered: Buffering the negative effects of employee perceptions of leader–member exchange differentiation

“…Given that leaders’ time, effort, and resources are limited (Hooper & Martin, ), leaders differentiate among followers, developing high‐quality relationships with certain employees and not with others, a process that is referred to as LMX differentiation (e.g., Henderson, Liden, Glibkowski, & Chaudhry, ). Although it is a central premise of LMX theory, LMX differentiation has only recently gained momentum in the literature (Epitropaki et al ., ), with a growing number of papers theoretically conceptualizing LMX differentiation as a group‐level process and operationalizing it as the standard deviation across workgroup members’ LMX scores (Martin, Thomas, Legood, & Dello Russo, ). While this burgeoning literature has shed light on LMX differentiation and its outcomes, particularly at the group‐level of analysis (Anand, Hu, Liden, & Vidyarthi, ; for a meta‐analysis, see Yu, Matta, & Cornfield, ), relatively, little is known about individual‐level perceptions of LMX differentiation and how employees respond to these perceptions (Anand et al ., ; Hooper & Martin, ; Kauppila, ; Van Breukelen, Konst, & Van Der Vlist, ; Van Breukelen, Van Der Leeden, Wesselius, & Hoes, ).…”