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Leader-member exchange and work-related outcomes

There are many ascendants associated with the emergence of LMX. Team members showing that they invest attention and effort in cultivating a good relationship with their leader will facilitate the emergence of a high leader-member exchange quality (Maslyn & Uhl-Bien, 2001). Employees seeking feedback from their supervisors might further value their leaders’ opinion which in turn leads to the development of LMX quality (Lam, Huang & Snape, 2007). Lee, Park, Lee and Lee (2007) discovered that employees were much more likely to actively seek feedback from their supervisors when LMX quality was high. In turn, supervisors were found to be more favorable to providing feedback if the relationship was well-functioning (Harris, Harris & Eplion, 2007).

A meta-analytic study by Gerstner and Day (1997) found that LMX quality is an indicator for individual performance. The meta-study further investigated correlations between LMX and performance ratings done by followers. For leader- reported LMX the mean sample-weighed correlation was higher than for memberrated LMX and member-rated performance. The authors further found associations of LMX with satisfaction, commitment, and role clarity. Testing leader-rated LMX and performance and member-rated LMX and performance the scholars found that there is a difference whether LMX is rated by leaders or team members. Results indicate that the relationship between LMX and performance is stronger when LMX is measured from the leaders’ perspective (Gerstner & Day, 1997, p. 833). This outcome might be justified as performance ratings were done by supervisors in the majority of studies. As supervisors with high quality LMX tend to rate followers more highly in performance (Kacmar et al., 2003) this might be an issue of which side responses are collected on. For supervisors rating followers’ performance LMX thus might produce higher correlations. Self-ratings of performance by followers are therefore predicted to correlate more strongly with follower ratings of LMX.

A different study analyzed 106 dyads for leaders’ and subordinates’ perceptions of LMX and the correlation with the level of delegation they encounter in their jobs

(Schriesheim, Neider & Scandura, 1998). For evaluating leader-member exchange they used a six-item scale by Schriesheim, Neider, Scandura and Tepper (1992). The researchers show that leaders’ and followers’ perceptions of LMX are significantly correlated with delegation. Delegation also shows a significant relationship to follower performance. In support of the multidimensionality of LMX, delegation did not account for most of the variance in the regression model as it probably would have done if LMX was merely a task-related concept, the authors argue. Supervisors’ ratings of LMX also moderated the relationship between delegation and individual performance. Erdogan and Bauer (2014, p. 412) explain delegation as a way for leaders to test their subordinates. The ability of a leader to delegate thus comes with a higher level of job autonomy in which the follower may decide themselves how to perform the work (Erdogan & Bauer, 2014).

Murphy and Ensher (1999) investigated the effects of high quality LMX relationships on performance outcomes. The researchers discovered that supervisors liked subordinates better who were higher in self-efficacy. Those participants who were perceived to be more similar to their supervisors, experienced higher quality relationships and were rated as better performers compared to those lower in selfefficacy. Furthermore, similarities with regards to perceptions of supervisors and followers were found to be pivotal compared to demographic similarities.

Another study tested the effects of LMX and communication frequency on performance ratings by supervisors (Kacmar et al., 2003). In a sample of 188 private sector workers, the researchers found evidence that LMX was positively related to performance ratings by supervisors. This finding indicates that followers in high LMX relationships received significantly higher performance ratings by supervisors than did those in low LMX relationships. Furthermore, for those followers reporting frequent communication, LMX was related more strongly to job performance. For those communicating infrequently, the relationship was weak. When LMX was low, frequent communication corresponded to unfavorable job performance ratings, whereas infrequent communication correlated with higher job performance ratings. At high levels of LMX quality, outcomes were the opposite. Followers communicating frequently with their managers received the highest job performance ratings while those communicating infrequently received unfavorable ratings. Summarizing the findings, frequency of communication moderated the relationship between LMX and job performance ratings. In high LMX relationships, the more frequently supervisor and subordinates communicated with each other, the higher the job performance ratings. Conversely, in low LMX quality relationships, the more frequently the two parties communicated the further job performance ratings dropped. The second study confirmed outcomes of the first study (Kacmar et al., 2003).

Wang et al. (2005) investigated the relationship between transformational leadership and task performance taking mediating effects of leader-member exchange into account. The researchers found transformational leadership to correlate significantly and positively with task performance and organizational citizenship behavior. LMX showed similar results correlating with both outcomes. Mediation analysis revealed that LMX fully mediated the effects of transformational leadership on performance. The finding was true for both task performance and organizational citizenship behavior. Conclusions of the work entailed the potential of transformational leadership to foster high quality LMX relationships and to encourage “extrarole behaviors, through processes of personal and/or social identification” (Wang et al., 2005, p. 429). LMX makes transformational leadership meaningful to followers.

Bauer, Erdogan, Liden and Wayne (2006) investigated the effects of leader- member exchange on performance, turnover intention, and actual turnover during new executive development. The authors tested for the moderating role of extraversion and found it to be moderating the relationship between LMX, turnover intention, and turnover. Interestingly, the researchers found extraverts to be performing at the same level, regardless of their LMX relationships. Yet, for introverts LMX quality did matter. Those introverted individuals that failed to establish high LMX relationships were rated lower in performance by supervisors. Findings of the study suggest that LMX could be regarded as a substitute for extraversion and might thus act as moderator as the difference between extraverted and introverted followers with regards to performance and turnover only existed in low quality LMX relationships.

A study by Johnson et al. (2009) assessed the relationship between organizational and departmental fairness and follower work performance while investigating moderation effects of leader-member exchange quality. The researchers found that overall organizational fairness was positively correlated with organizational citizenship behavior targeting individuals. Yet, the relationship became insignificant when departmental fairness was included in the model. This finding strongly suggests that organizational fairness and departmental fairness are distinct and of utmost importance. It was detected that task performance as well as organizational citizenship behavior towards the organization were more intensely impacted by the extent of perceived departmental fairness. The authors further found interaction between organizational fairness and leader-member exchange quality indicating that LMX assumes a moderating role in the relationship between fairness and task performance. Results of positive correlations between perceptions of overall organizational fairness and in-role task performance occurring only under low LMX relationships lead to the assumption that fairness takes on higher relevance when trust is lacking (Johnson et al., 2009, pp. 444-445). LMX was furthermore found to moderate the relation between departmental fairness, in-role task performance, and organizational citizenship behavior towards the organization. In high quality LMX relationships departmental fairness did not predict performance, whereas in low quality LMX relationships departmental fairness did matter.

Liden, Erdogan, Wayne and Sparrowe (2006) studied the influence of LMX differentiation on individual performance and group performance with a sample of 834 employees from six organizations. Findings included that LMX differentiation predicted neither individual performance nor group performance, yet individual LMX did positively predict individual performance. A link between LMX differentiation and individual performance for team members with a low degree of LMX was confirmed. Followers low in LMX who belong to a team with high LMX differentiation could gain motivation to increase their performance with the aim of achieving a similar high quality relationship with their leader to that of their peers. For members high in LMX, the level of LMX differentiation had limited effects (Liden et al., 2006). For teams with high task interdependence, LMX differentiation positively predicted group performance. LMX median further moderated the relationship between LMX differentiation and group performance. For groups with a low median, LMX differentiation was positively and significantly related to team performance, whereas for high LMX median groups, the relationship could not be confirmed.

Conducting three field studies, Mayer and colleagues (2008) found that coworkers’ LMX moderated the relationship between individual LMX and work-related outcomes. In other words, relationships were stronger when coworkers’ LMX was high. In summary, individual-level outcomes (job satisfaction, organizational commitment, competence perceptions, group identification, organizational citizenship behavior, deviance, performance) were more promising when LMX scores of individual team members and peers were consistent.

Research by Golden and Veiga (2008) was undertaken to explore effects of working virtually and how the condition influences the relationship between LMX quality and work-related outcomes. Testing for moderation of working virtually on LMX and organizational commitment, the authors found that the influence of LMX on commitment, job satisfaction, and job performance was affected by the degree of virtual work. For instance, team members with well-established LMX relationships showed high commitment when frequently working virtually. Members with less established LMX showed less commitment when working similarly frequently in virtual mode. The degree of virtual work also moderated the influence of LMX on job satisfaction in the sense that job satisfaction was highest when members were working extensively virtually and had good LMX relationships. When established relationships were limited, job satisfaction decreased when working even more virtually. Finally, the researchers found the degree of virtual work also moderated the influence of LMX on job performance. Findings show that LMX (on all levels) was more positively linked to individual performance when jobs are performed virtually.

LMX was tested as potential mediator in the dyadic leader-follower relationship in a study by Carter, Jones-Farmer, Armenakis, Field and Svyantek (2009). The authors found that LMX and interactional justice mutually mediated the relationship between transformational leadership and follower job performance. It was discovered that LMX and interactional justice form a reciprocal relationship, yet if one mediator was excluded, the model was still significant. This outcome indicates that LMX alone still acts as a mediator. Major results of the research include that transformational leadership stimulates leader-follower dyadic relationships. Furthermore, followers are able to interpret relationships and, most importantly, the quality of their relationship did impact their job performance. A study published shortly afterward investigated effects of organizational justice on work performance while assessing mediating roles of organizational justice and leader-member exchange (Wang, Liao, Xia & Chang, 2010). The researchers discovered that organizational commitment and LMX generally mediated the relationship between organizational justice and work performance.

Particular attention in leader-member exchange theory was placed on the leader in published work by Schwind-Wilson, Sin and Conlon (2010). The conceptual framework discusses the question of what leaders derive from their dyadic relationships followers. The authors claim that, for instance, friendship is shared by both leaders and followers and may thus benefit both parties. Yet, there are some relationship outcomes that are beneficial exclusively to leaders. The researchers suggest that followers should know their leaders in order to provide the best support reciprocally (Schwind-Wilson et al., 2010, p. 369).

Davis and Bryant (2010) undertook the attempt to research LMX, trust, and performance in an academic and scientific environment (research centers). The authors treated LMX and trust as distinct indicators which were confirmed in their study. Findings revealed that research center performance fully mediated the relationship between LMX and satisfaction with the research center, as well as between trust and satisfaction with research centers, and between LMX and commitment to research centers. Research center performance further predicted satisfaction and commitment to research centers. Yet, LMX and trust did not mediate any relationship.

Looking for mediation effects of self-efficacy on the relation between LMX and job performance, self-efficacy turned out to fully mediate this relationship. In addition, LMX was found to be a positive direct predictor of job performance (Luo & Cheng, 2014). Yet, leader-member exchange quality is not only linked to better performance, it also works the other way around. Sue-Chan, Au and Hackett (2012) found that job performance did predict supervisors’ trust in employees positively. The study further outlined that better job performance led to higher assessment in LMX. Trust was found to mediate the relationship between followers’ job performance and leaders’ experience of LMX.

In their review of more than 400 studies, Erdogan and Bauer (2014) conclude that there is no consistency in demographic variables linked to LMX. The only variable which showed frequent significance was dyad tenure. It is yet unclear whether dyad tenure is a predictor or a consequence of LMX as team members that do not get along with their leader well would presumably leave the team earlier (Erdogan & Bauer, 2014, p. 411).

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