Leader–member exchange (LMX) differentiation and work outcomes: Conceptual clarification and critical review

• DOI: http://doi.org/10.1002/job.2202
• Author: Silvia Dello Russo,Geoff Thomas,Robin Martin,Alison Legood
• Date: 01 February 2018
• Published date: 01 February 2018

THE JOB ANNUAL REVIEW

Leader–member exchange (LMX) differentiation and work

outcomes: Conceptual clarification and critical review

Robin Martin

1

|Geoff Thomas

2

|Alison Legood

3

|Silvia Dello Russo

4

1

Alliance Manchester Business School,

University of Manchester, Booth Street West,

Manchester, M15 6PB, U.K.

2

Surrey Business School, University of Surrey,

Guildford, U.K.

3

Aston Business School, Aston University,

Birmingham, B4 7ET, U.K.

4

ISCTE Business School, Avenida das Forças

Armadas, 1649‐026 Lisbon, Portugal

Correspondence

Robin Martin, Alliance Manchester Business

School, University of Manchester, Booth

Street West, Manchester, M15 6PB, U.K.

Email: robin.martin@manchester.ac.uk

Summary

According to leader–member exchange (LMX) theory, leaders develop different quality relation-

ships with followers in their team (termed LMX differentiation). An important theoretical question

concerns how different LMX relationships within a team affect followers' work outcomes. This

paper provides a critical review of the concept of LMX differentiation. We propose that the

LMX differentiation process leads to patterns of LMX relationships that can be captured by 3

properties (central tendency, variation, and relative position). We describe a taxonomy illustrating

the different ways these properties have been conceptualized and measured. We identify 2

approaches to LMX differentiation as being a “perspective of the team”(that are shared percep-

tions amongst team members) or a “perspective of the follower”(subjective perceptions unique to

each follower). These perspectives lead to different types of measures that predict different out-

comes at the individual and team levels. We describe theoretical models employed to explain the

effects of LMX differentiation (justice, social comparison, and social identity theories). Generally,

the lower the within‐team variation in LMX or the more a team member's LMX is higher than the

mean team LMX, the better are the work outcomes, but many moderators condition these

effects. Finally, we identify some key areas for future research.

KEYWORDS

leadership, LMX,LMX differentiation

1|INTRODUCTION

A popular framework to examine workplace leadership is to focus on

the quality of the relationship that exists between the leader and his/

her follower (termed leader–member exchange [LMX] theory;

Yammarino, Dionne, Chun, & Dansereau, 2005). The central tenet of

LMX theory is that, through engaging in different types of social

exchanges, leaders differentiate in the way they treat their followers

leading to different quality relationships between the leader and each

follower (Dansereau, Graen, & Haga, 1975; Graen & Cashman, 1975). This

approach contrasts with the hitherto dominant perspective that leaders

treat all their followers in the same way (termed “average leadership

style”approach). In LMX theory, the leader–follower relationship is the

central unit of analysis rather than leader or follower traits, styles or

behaviors as is the case in other leadership theories. From this perspective,

leadership has been viewed as a two‐way relationship between a leader

and a follower aimed primarily at attaining mutual goals (e.g., Graen

&Uhl‐Bien, 1995; Liden, Sparrowe, & Wayne, 1997). The result is

relationships that can range from low LMX quality, which are limited to

exchanges that relate to the employment contract and are mainly task‐

orientated in nature, to high LMX quality, which are characterized by

high trust, interaction, support, and rewards, resulting in employees and

supervisors being loyal to one another and sharing mutual feelings of

liking and respect (Graen & Uhl‐Bien, 1995; Liden & Graen, 1980).

There has been a considerable amount of research into LMX (see

Bauer & Erdogan, 2015), and this has provided a comprehensive

understanding of the antecedents, the stages of development, the rela-

tionship with work‐related attitudes and behaviors, and factors that

mediate and moderate this process (for reviews, see Anand, Hu, Liden,

& Vidyarthi, 2011; Martin, Epitropaki, Thomas, & Topakas, 2010;

Schriesheim, Castro, & Cogliser, 1999). Meta‐analyses of the literature

show consistent positive relationships between LMX quality and

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This is an open access article under the terms of the Creative Commons Attribution‐NonCommercial‐NoDerivs License, which permits use and distribution in any

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© 2017 The Authors. Journal of Organizational Behavior published by John Wiley & Sons Ltd

Received: 15 October 2015 Revised: 21 April 2017 Accepted: 27 April 2017

DOI: 10.1002/job.2202

J Organ Behav. 2018;39:151–168. wileyonlinelibrary.com/journal/job 151

follower reactions (such as job satisfaction and organizational citizen-

ship behavior; e.g., Dulebohn, Bommer, Liden, Brouer, & Ferris, 2012:

Gerstner & Day, 1997; Ilies, Nahrgang, & Morgeson, 2007) and work

performance (such as task and citizenship, and negative relationship

with counter‐productive performance; e.g., Martin, Guillaume,

Thomas, Lee, & Epitropaki, 2016). In addition, considerable consistency

in findings, across different demographic factors, job types and coun-

tries, showing a positive relation between LMX quality and work out-

comes have been found (Martin et al., 2010).

Although LMX theory is essentially dyadic in nature (i.e., leader–

follower dyads), there has been a refocusing of research to address

group‐level phenomena (Graen & Uhl‐Bien, 1995; Thomas, Martin,

Epitropaki, Guillaume, & Lee, 2013a; Thomas, Martin, & Riggio,

2013b; Tse & Ashkanasy, 2015). This acknowledges that leaders man-

age many followers and that each leader–follower dyadic relationship

occurs within the context of multiple LMX relationships. Given that

leaders reliably differentiate between team members, this makes this

concept a concern for both practical and theoretical reasons. If leaders

have different LMX relationships with team members, then the relation

between LMX on work outcomes might be based not only on the qual-

ity of the relationship with the manager but also on the quality of the

relationships the manager has with other members of the work team.

The way in which managers develop different LMX relationships with

team members has been referred to as the LMX differentiation process,

and this results in specific patterns of LMX within the team (e.g., from

being all the same quality to being different in quality).

The examination of LMX differentiation is currently a major focus

of LMX research, and our search of the literature shows that the num-

ber of papers dedicated to this topic is growing rapidly. In this review,

we are less concerned with why LMX differentiation occurs (see

Henderson, Liden, Glibkowski, & Chaudhry, 2009) but with the conse-

quences of this process to team members. With respect to this,we find

the literature to be often inconclusive with regard to some key findings

and somewhat disjointed. For example, some studies show the extent

that there are different levels of LMX in the team explains additional

variance in outcomes (such as turnover intentions) above that of

LMX alone (e.g., Harris, Li, & Kirkman, 2014), but other studies do

not find this (e.g., on organizational commitment and satisfaction with

coworkers; Erdogan & Bauer, 2010). In addition, although LMX varia-

tion often has a negative impact on work outcomes (e.g., Cobb &

Lau, 2015), other studies show that it has no impact (e.g., Chen, Yu,

& Son, 2014) while others found a positive relationship (e.g., on helping

behaviors; Erdogan & Bauer, 2010). Such inconsistent findings might

indicate that there are moderators that might explain when LMX vari-

ation has an impact upon outcomes.

Although recent research elucidates some of the mechanisms and

boundary conditions of these inconsistent effects, gaps still prevail.

We attribute some of these inconsistencies to issues that are both the-

oretical and methodological in nature. Specifically, there exists a ten-

dency for authors to conceptualize LMX differentiation from

alternative perspectives resulting in the use of a variety of different

measures that aim to capture similar constructs. As such, the LMX dif-

ferentiation literature currently lacks structure and clarity. Further,

there is not a direct measure of the LMX differentiation process itself

(i.e., the way the leader develops different quality relationships),

instead, studies capture the outcome of the process referred to as dif-

ferent “properties”in this review.

Given the theoretical importance of LMX differentiation to LMX

theory andthe significant increase in focuson this topic, we believe that

a critical review of the area is warranted. There are many important

theoretical implications of research into LMX differentiation, and the

interplay between the individual (LMX) and team (LMX differentiation)

levels potentially provides a more complete explanation of outcomes

than focusing on one level alone (Liden, Erdogan, Wayne, & Sparrowe,

2006). Our aim is to provide a cri tical analysis of the concept in terms

of conceptualization, measurement, and theoretical understanding and

not a systematic review of the literature (for this, see Anand, Vidyarthi,

& Park, 2015) nor why and how differentiation occurs. The intention

of this review is to offer a number of contributions to the literature,

andwehaveorganizedtheseintofoursections.Inthefirstsection,we

define and explain LMX differentiation as a process and delineate the

main properties of this process.For the first time, wedescribe and define

the main properties of the LMX differentiation process and in so doing

identifynew propertiesthat have receivedvirtuallyno research attention.

We report a taxonomy to categorize the different measures of LMX

differentiation to offer some clarity regarding the differing perspectives

currently adopted in the literature and how they configure together.

The secondsection describesthe main theoreticalapproaches to explain

how the properties of LMX differentiation predict outcomes. In doing

this, we review the main findings linking propertiesof the LMX differen-

tiation process to work‐related variables. The third section identifies

some key areas for future research in terms of methodological refine-

ments and advancing theoretical understanding of the LMX differentia-

tion process. Finally,we summarize the main contributions of the paper.

2|LMX DIFFERENTIATION: DEFINITION,

PROPERTIES, AND MEASUREMENT

This section defines the LMX differentiation process, describes the

most salient properties of the outcome of the differentiation process

and reviews, and evaluates measurement techniques.

2.1 |LMX differentiation definition

The way that leaders develop different quality relationships with mem-

bers of their team has been referred to as the LMX differentiation pro-

cess. LMX differentiation is defined as

…a processby which a leader, through engagingin differing

types of exchange patterns with subordinates, forms

different quality exchange relationships (ranging from low

to high) with them. As such, LMX differentiation refers to

a set and outcome of dynamic and interactive exchanges

that occur between leaders and members, the nature of

which …may differ across dyads within a work group

(Henderson et al., 2009; p. 519).

LMX differentiation does not refer to the mean LMX quality in the

team, but to the extent that there are differences in LMX quality within

the team (for a review, see Anand et al., 2015).

152 MARTIN ET AL.