Exploring the Role of Leader Member Exchange on Job Satisfaction and Employee Performance: an Empirical Study in Indonesian MSMEs

Abstract

Purpose: The purpose of this study was to analyze the relationship between leader member exchange (LMX) and job satisfaction, analyze the relationship between leader member exchange (LMX) and employee performance, analyze the relationship between job satisfaction and significant employee performance.
  
 Method: This research uses quantitative research methods. Quantitative research methods are used because in this study, the relationship between the variables to be studied has a causal relationship, to examine certain populations and samples, and aims to test the established hypotheses. The measurement scale in this study uses a Likert scale of 1 to 5 with categories namely strongly disagree, disagree, disagree, agree and strongly agree. With data collection techniques using online questionnaires. The analysis technique uses SEM (Structural Equation Modeling) with SmartPLS 3.0 software tools. Respondents in this study were 678 MSMEs owners in Indonesia who were determined by simple random sampling.
  
 Result: The results of this study indicate that the leader member exchange (LMX) has a positive and significant effect on job satisfaction. The leader member exchange (LMX) has a positive and significant impact on the performance of MSMEs employees. Job satisfaction has a positive and significant effect on the performance of MSMEs employees. Based on the results of the research and discussion it is concluded that LMX has an effect on job satisfaction. Furthermore, LMX has a significant positive effect on job satisfaction and job satisfaction has a positive and significant effect on the performance of MSMEs employees.
  
 Implication: MSMEs management can provide flexibility in completing tasks responsibly without feeling burdened, superiors must give confidence to subordinates that subordinates are able to complete their tasks so that subordinates will find their work very meaningful. As for maintaining employee performance from the application of empowerment by superiors, they must have trust in subordinates by giving freedom to subordinates to dare to make decisions quickly and precisely. The company builds a stronger corporate commitment so that employees feel more satisfied with their jobs. In maintaining employee performance by providing periodic training in dealing with future job demands