Does LMX Differentiation Affect Work Group Effectiveness? The Role of Leader-Leader exchange

Abstract

In this study, we propose that the upward leader-leader exchange (LLX) relationship is an important moderating condition in predicting the consequences of LMX differentiation within work groups. We assert that the structural and operating efficiencies created by LMX differentiation will depend on group member’s appraisal of the legitimacy of the within group LMX disparity. Drawing on relative deprivation theory, we argue that the level of perceived legitimacy of LMX disparity varies with levels of LLX. Using data collected from 590 subordinates and 75 managers in 75 work groups over two time periods, we propose and test hypotheses that the quality of a leader’s LLX relationship will moderate the mediated relationship between LMX differentiation, group-level teamwork, and team effectiveness. We find support for our moderated mediation model and suggest implications for theory and practice.