Differentiated LMX: Effects of Racial Diversity and Leader Style on Motivation and Performance

Abstract

Despite calls for more theoretical and empirical attention, race and racial diversity remain important, but largely ignored, aspects of team composition in previous leadership theory and research. As a result, scholars and practitioners know relatively little about how to best lead racially diverse organizations and their sub-units. We examine the moderating role that team racial diversity has on the relationship between leader-member exchange (LMX) differentiation and individual level, team member motivation. We also examine to what extent leaders’ use of consideration further explains these effects. Multilevel analyses of a sample of 198 United States Naval Academy midshipmen who were organized into 68 squads revealed that team racial diversity undermined the positive effects of LMX differentiation on member motivation. Leader style further explained these effects. In racially diverse squads, LMX differentiation had positive effects on member motivation when leaders were not seen as using consideration behaviors to influence their team members and negative effects on member motivation when leaders were seen as using consideration behaviors to influence their team members. Furthermore, we found evidence that these latter negative effects, in turn, partially explained the effects of LMX differentiation on member performance.