Leader-Member Exchange Theory

During the early 1970s, the generally accepted practice for studying leadership was to use an average leadership style—that is, asking subordinates to report on their manager’s leadership style and then averaging their responses across the work unit. Leader-member exchange (LMX) theory, which originated as the vertical dyad linkage (VDL) model, offered a contrast to this approach by presenting a dyadic model of leadership. The VDL model demonstrated that it is not appropriate to assess a common managerial leadership style because managers have a different type of relationship with each of their subordinates.

From its origins in the VDL model, LMX theory evolved into a study of leadership relationships in the workplace. Its central assumption—that higher-quality LMX relationships are positively related to work outcomes—is supported by a substantial body of evidence. This theory addresses questions such as, what types of relationships do managers have with their subordinates? Do these different relationships have different effects on work outcomes? Why do these different types of relationships develop? How can we generate more effective leadership relation-ships in the workplace? Although LMX theory has opened the door to relational leadership approaches, empirical evidence of how leadership relationships develop and how LMX relationships fit within the larger networks of exchange is still lacking.

Vertical Dyad Linkage Model

The VDL model was developed from a longitudinal investigation of socialization processes among managers and subordinates. Researchers found that managers engage in different kinds of exchanges with their subordinates. These exchanges can be characterized based on the amount of negotiating latitude that managers grant to subordinates in determining their roles (i.e., role making). With a select group of subordinates, designated the in-group, supervisors develop leadership exchanges that involve greater negotiating latitude. These individuals communicate more frequently and are more closely involved with the supervisor. For the remainder of the subordinates, designated the out-group, interactions are formal and contractual and based on the job description—they are more like hired hands. These differences, researchers explain, are the result of the manager’s need to have trusted assistants to help in the functioning of the work unit but limited resources to develop these assistants. In particular, because the in-group relationships require more time and social resources from the manager and because these resources are limited, the manager can maintain only a small number of in-group relationships.

Leader-Member Exchange Model

As research in this area progressed throughout the 1980s, the model became known as leader-member exchange, and the focus shifted from work unit differentiation to the characteristics of dyadic leader-member relationships and their association with antecedents and work outcomes.

The Nature of LMX Relationships

A key focus of LMX research is describing the nature of the differentiated relationships. For example, LMX research describes relationships as being on a continuum from low- to medium- to high-quality leader-member exchange. Low-quality LMX relationships are typically based more on management than leadership (i.e., a stranger relationship). Moderate-quality relationships experience increased social exchange and sharing of information and resources compared with low-quality relationships (i.e., an acquaintance relationship). High-quality LMX is described as a mature partnership in which dyad members count on one another for loyalty and support. As one moves from low to high relationship quality, the nature of the relationship progresses from contractual-based exchanges, limited trust, lack of mutual under-standing, and more formal communications at the low end to partnership exchanges, a high level of trust, shared respect and high understanding, and strong commitment and loyalty to one another at the high end.

Leader-member exchange theory also describes the underlying dimensions of these exchanges. Some researchers have identified the key dimensions, or currencies of exchange, as trust, respect, and obligation, whereas other researchers have identified them as affect, contribution, loyalty, and professional respect. The quality of LMX is assessed using one of two measures: a one-dimensional measure, the LMX-7, and a multidimensional measure, the LMX-MDM, which assesses the dimensions of affect, contribution, loyalty, and professional respect.

Antecedents and Consequences

The focus on LMX relationships is important because of the positive association between LMX and work outcomes. The quality of LMX has been positively associated with performance, job satisfaction, organizational citizenship behavior, organizational commitment, and perceived organizational support. Research has also examined the relationship between LMX and decision influence and found that high-LMX subordinates are allowed more latitude and more involvement with the supervisor in decision making. High-quality LMX is associated with less turnover and fewer retaliatory behaviors on the part of subordinates. Lower-quality relationships, on the other hand, may cause loss of motivation, less effective communication, and reduced training and development opportunities for subordinates.

One of the more important consequences of LMX is that when relationship building is successful in forming high-quality LMX, leadership is generated in the form of incremental influence that individuals have with one another. This incremental influence motivates individuals to go above and beyond—to do more than they have to do (i.e., extrarole behavior). Hence, LMX can help unleash more capability in the workplace by generating more positive work attitudes combined with more willingness to contribute to workplace functioning.

Research on antecedents of LMX relationships address the question, what factors contribute to higher- or lower-quality relationship development? Empirical work has examined the relationship of LMX to characteristics of the member (e.g., personality, influence tactics, competence), characteristics of the leader (e.g., ability), relational characteristics (e.g., leader-member similarity), and the work environment (e.g., physical distance, time pressures). Research has also demonstrated that the effort put into relationship development is related to LMX, but only the other person’s effort—that is, individuals who reported higher LMX also reported that the other dyad member contributed effort into relationship development.

LMX Relationship Development

At the heart of LMX theory is how high-quality LMX relationships develop. Relationships that are higher in quality are said to result from role making. Managers and subordinates engage in role making when they actively negotiate how their roles in the relationship and organization will be defined. Lower-quality relationships result from role taking. Role taking involves no negotiation but rather the acceptance of formally defined roles as the basis of the relationship.

Role making is a process of reciprocity and social exchange. The core of role making is testing, which determines how relationships progress through the different stages of development. In the early stages, when individuals are assessing and evaluating one another to determine the type of relationship that will develop, the testing processes may be considered developmental testing. In developmental testing, parties evaluate each other and each person keeps track of what he or she has done for the other and how it was reciprocated (i.e., scorekeeping). Once a relationship is established, testing changes from scorekeeping to maintenance evaluation. In this situation, testing is a boundary assessment in which individuals revert to active testing only when a boundary of the relationship is violated.

The concepts of LMX relationship building were formalized in the leadership-making model, which describes the reciprocity and social exchange foundations of LMX theory. Support for leadership-making predictions about reciprocity is offered by empirical work showing that lower-quality LMX relationships have higher immediacy of returns, higher equivalence of exchange, and more self-interest, whereas higher-quality relationships have lower immediacy of returns, lower equivalence of exchange, and mutual interest.

With the introduction of the leadership-making model, LMX theory abandoned its differentiation roots, suggesting that leadership comes from high-quality relationships and that in order to have more leadership, more high-quality relationships are needed. The leadership-making model moved the theory from a descriptive model (of work unit differentiation) to a more prescriptive model (of leadership making). This movement away from differentiation, in-groups, and out-groups allowed the theory to become a broader relational leadership theory grounded in social exchange rather than a supervisory leadership model. The theory now also considers other types of relationships that could generate leadership, including coworker exchange, team member exchange, and member-member exchange.

The Future of LMX Theory

Leader-member exchange theory continues to generate a significant body of research across many disciplines and fields of study. It has been shown to be a powerful construct in assessing dyadic interpersonal and relational aspects of the work environment; higher LMX is a strong predictor of positive attitudes and feelings about the workplace. Although LMX theory is rich in its description of relationship development, however, a critical area that requires empirical investigation is how effective work relationships are generated and how these relationships operate within the larger contexts and networks of exchange in organizations. Moreover, though early research on LMX used a variety of strong methodological approaches (field experiments, qualitative data, and longitudinal designs), more recent research has relied heavily on cross-sectional survey data. Researchers must continue to push the theorizing and strong methodologies that characterized LMX in its early development into relational leadership to achieve the full promise of LMX theory.


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