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PRESENTATIONONLEADERMEMBEREXCHANGE

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LMXDEFINITION

Lmx is an exchange process between a leader and a

follower which is dependent upon the interpersonal

skills, traits, trust, support, rewards and satisfaction with

the leader; furthermore, LMX could be defined as an

exchange process and as leaders approval (Graen &

Scandura, 1987).

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LMXHISTORY

The study of the leader and follower is as old as time, ithas his inception from the vertical dyad linkage model(e.g., Dansereau, Graen, & Haga, 1975). It has changednow into LMX theory of the current era, In the early

years of the examination, the main concern was tofurther improve the theory development of LMX (e.g.,Dienesch & Liden, 1986).

Early LMX work was more related towards thedevelopment of the theory, associates, and results of

LMX were explored (e.g., Gerstner & Day, 1997). Lateron, the researchers have started to address LMXdemarcation (Liden, Erdogan, Wayne, & Sparrowe,2006). 3


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LMXTHEORY

Lmx was initially regarded as a vertical-dyad linkagetheory, and was firstly reported by Dansereau, Cashman,and Graen (1973). Different from the all previoustheories which stated that leader treat all of his followers

in a equal manner, Lmx was totally opposite to them, itasserted that leader has a different way of treating to allthe followers. (Graen & Scandura, 1987).

Lmx is more inclined towards the exchange relationshipbetween a follower and a leader and the quality of the

exchange process which is between the both (Liden &Maslyn, 1998).so the main area of the interest in thistheory is the dyadic relationship between the leader andhis subordinates. (Graen & Uhl-Bien, 1995). 4


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TYPESOFLMX

LMX uses exchange theory to describe the relationship that developsbetween supervisors and each of their subordinates. Two major types ofexchange have been identified and labeled (Dansereau, Graen, & Haga,1975) .

Low quality LMX (or out group relationship) and high quality LMX (orin-group relationship). Low quality LMX is characterized as an

exchange between a supervisor and subordinate limited to that definedby an employment contract. Supervisors, employing formalorganizational position power, provide subordinates with the standardorganizational benefits while subordinates comply with their formallydefined job requirements and follow legitimate supervisor requests(Graen & Cashman, 1975).

In contrast, high quality LMX is characterized as an exchange of bothmaterial and non-material goods beyond those identified in anemployment contract. This relationship usually includes higher levels ofmutual trust and loyalty, comfortable communication, and bi-directionalinfluence (Dienesch & Liden, 1986). This distinction (between out-group and in-group exchanges) parallels that between economic andsocial exchanges described by Blau (1964). 5


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Economic exchanges are more contract-based and requirespecific compensation for performing a task, whereas socialexchanges are based on informal assurances that gestures ofgoodwill and mutual support will be reciprocated at a futuredate (Noorderhaven, 1992).

Researchers have frequently used the terms contractualandextra-contractualto characterize the lowqualityand highqualitypositions on a continuum of LMX relationships (e.g.,Liden et al., 1993). Because there is a negative connotation tothe terms low quality and out-group, it might be moreappropriate to use value-neutral terms that indicate there aresubordinates who have contractual relationships with theirsupervisors and others who have extra-contractualrelationshipswith their supervisors.

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LMXANDSOCIALEXCHANGE

Leader-member exchanges can be seen as resources, rangingfrom the particular to the universal, and from the abstract tothe concrete (Wilson, Sin, & Conlon, 2010). When one partyin a dyad offers a resource, it is suggested that the offer will

be reciprocated with the same kind of resource. When such a

like exchange is impossible (for instance, followers cannotoffer leaders a salary raise), other resources can be offered inexchange (for instance, followers can reciprocate a salaryraise with information from colleagues) (Wilson et al., 2010).Exchanges may include leaders offer of work latitude andinfluence in decision-making, leaders enhancement of

communications, support, confidence, and consideration (i.e.,LMX-7, Scandura & Graen, 1984), and leader-followermutual exchanges of affect, loyalty, contribution, and

professional respect (i.e., LMX-MDM, Liden & Maslyn,1998). 7


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LMXANDWORKOUTCOMES

LMX refers to a work-related exchange relationship between

subordinates and their immediate supervisor. A supervisor

develops a different quality of exchange relationship with

each of his or her subordinates in the same work group (Graen

1976). The quality of LMX is based on mutual trust, respect,and liking (Yukl 2001). The social exchange perspective of

LMX holds that subordinates who have a high-quality

exchange relationship with their supervisor are more likely to

be trusted and respected by the supervisor. As a result, they

enjoy better communication with their supervisor, display ahigher level of organizational commitment, and enjoy greater

emotional support and access to information than their

counterparts in a low-quality LMX (Dienesch and Liden 1986,

Graen and Scandura 1987, Wayne et al. 1997, Lo et al. 2010).8


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Lmx plays an outstanding role in generating positive

work outcomes, those subordinates with high quality lmx

perform more than with low quality LMX; the

subordinates with high quality LMX have less intention

to leave the organization, have more job satisfaction,organization commitment and a high level of

organization citizenship behavior (Yukl 2001).

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LMXANDOCB

Smith, Organ, and Near (1983) report a two-dimensional

model of OCB: altruism and general compliance (also known

as conscientiousness). Altruism is an individuals personal

behaviorfor example, being cooperative, helpful, and other

instances of extra-role behavior (Smith, Organ, and Near,1983). It is a behavior performed in helping a specific

coworker, a customer or a supervisor, not normally expected

of the employee since it is not part of the employment

contract. Examples are being accommodating to new

employees, sitting in for a sick coworker, or assistingsupervisors and others. Compliance is another behavior

employees are expected to exhibit (e.g., arriving to work on

time, not taking too many coffee breaks, taking only the

required lunch time, or not leaving early).10


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(Organ 1988) believe citizenship behaviors, althoughdiscretionary, are necessary for they promote effectivefunctioning of the organization. In a study of 218 peopleworking in a Northeast paper mill, (Podsakoff et al 1994) finda positive correlation between citizenship behavior and the

organizations output. Citizenship behavior improves theeffectiveness of the organization by the high degree of workgroup performance in terms of quantity and quality of work.(Settoon, Bennett, and Liden 1996) postulate that in-groupmembers receive formal and informal rewards from theirsubordinates. In exchange, the members seek out extra-role

situations in the form of providing citizenship behavior to thesupervisors who, in turn, give more reciprocal support andopportunities to the members. This cycle of helping

behavior for mutual attainment of goals helps further intensifythe quality of the supervisor-subordinate exchange (Scanduraand Graen 1984). 11


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LMXANDINNOVATIVEBEHAVIOR

For contemporary organizations, the financial attractiveness of their

products and/or services is mostly not enough to guarantee sustainable

survive: goods also have to be of high-quality and preferably unique.

Uniqueness refers to innovation: thedevelopment and implementation of

new ideas by people. It is claimed that innovative behavior of employees

defined as the creation, introduction and application of new ideas within agroup or organization in order to benefit performance is crucial for the long-

time survival of organizations.

Given the importance of innovation, there is a growing interest among

scholars trying to answer the question why and under which circumstances

employees express innovative behavior. To gain such critical employee

contributions, scholars argue that the Human Re-source Management(HRM) is vital. When including employeessatisfaction with HR practices,

the role of the direct supervisor can not be underestimated. Many companies

delegate operational HRM to those who lead employees directly and as a

result several key HR administrative taskshiring, performance

management and compensationhave been devolved to line managers.

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Researchers found the LMX is related to innovative job

performance. (Janssen 1994) found evidence that

employees responded more innovatively to higher levels

of job demands when they perceived that their efforts

were fairly rewarded by their leader. This means thatemployees who perceive a fair balance between

supervisors inducements relative to their work efforts

will respond with more innovative behavior.

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LMXANDJOBSATISFACTION

Job satisfaction has been defined as a pleasurableor positiveemotional state resulting from the appraisal of onesjob or jobexperiences (Locke, 1976, p. 1304). Building on thisdefinition, recent theorizing (Fisher, 2000; Weiss, 2000)describes job satisfaction as an attitude (Eagly & Chaiken,

1993) with both an affective component (mood, emotions) anda cognitive component (belief, judgment, comparison).

Gertsner and Day (1997) conducted a meta-analysis of 25years of empirical research on LMX theory in which theyevaluated relationships between LMX and correlates as

well as LMX construct and leader-member agreement (p.827). They analyzed 164 studies, resulting in 79 studies with85 independent samples. Their study supported prior researchthat showed the LMX is positively correlated to greater jobsatisfaction in subordinates. 14


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Prior research has conceptually stated and empirically shown positive

relationships between LMX and employee work outcomes that are important to

individualsworkplace success (e.g., job satisfaction, affective commitment, and

job performance). Affective commitment refers to the extent to which employees

identify with, are involved in, and are emotionally attached to an organization so

that they want to remain in it (Meyer & Allen, 1997). According to LMX theory

(Graen & Uhl-Bien, 1995), because of the expanded resources and strong

support available to a follower in a high-quality LMX relationship, such a

relationship can result in more positive attitudes toward the job and the

organization as well as higher job performance for the follower. In fact, Gerstner

and Day (1997) found strong support for positive links between LMX and

overall job satisfaction organizational commitment and job performance.15


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THANKS

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