Differentiated leader-member exchange and group effectiveness

Abstract

Leader-member exchange (LMX) differentiation, the extent to which the leader forms different quality exchange relationships with group members, is the fundamental premise of LMX theory. The present study tests whether, why, and when LMX differentiation increases group outcomes. More specifically, I suggest a dual perspective model of LMX differentiation and group effectiveness, which includes both leaders’ and members’ perspectives on LMX differentiation. To explicate the effects of leaderand member-rated LMX differentiation on group effectiveness, I delineate two group processes (task and socio-emotional processes) to link LMX differentiation to two aspects of group effectiveness (group performance and group viability). I propose that leader-rated LMX differentiation increases group performance via task group processes (group role clarity and group coordination) whereas member-rated LMX differentiation decreases group viability via socio-emotional processes (relationship conflict and group potency). Furthermore, I propose moderators (distributed expertise, leader-leader exchange, leader prototypicality, and group power distance) suggesting when leader-rated LMX differentiation relates to task group processes more strongly and positively, and when member-rated LMX differentiation relates to socio-emotional group processes less strongly and negatively. Survey data, based on the US and South Korean employees working in 57 teams, were collected from three different sources (group leaders, members, and upper-level managers) at two points in time (with 3-month time lag). Results revealed three important findings: (a) leader-rated LMX differentiation is positively correlated with group role clarity, group coordination, and group potency and negatively correlated with relationship conflict, (b) group mean member LMX and group mean leader LMX were more robustly, positively related to most group process and effectiveness variables, and (c) leader prototypicality moderates the relationship between member-rated LMX