Chapter 7 – Leader–Member Exchange (LMX) Theory Quality of relationships
LMX theory argues that leaders form distinct in-group and out-group relationships with followers. High-quality exchanges are characterized by trust, respect, mutual influence and support, while low-quality exchanges are more formal and transactional.
High LMX quality is associated with outcomes such as higher performance, commitment and satisfaction. However, strong in-groups can also create perceptions of favoritism and unfairness if not managed carefully, especially in diverse or multicultural teams.
1. Discuss how high-quality LMX relationships contribute to individual and organizational outcomes. What are the potential risks of emphasizing these dyads too strongly?
High-quality LMX relationships provide followers with more information, support, autonomy and opportunities. This often leads to better performance, stronger commitment and more citizenship behaviors. At the organizational level, this can improve productivity and innovation. The risk is that if high-quality dyads are emphasized too strongly, other members may feel excluded, perceive favoritism and reduce their engagement, harming overall cohesion and fairness perceptions.
2. What strategies can leaders use to avoid the unintentional creation of “out-groups”? Why is this important?
Leaders can: (1) be aware of their own biases; (2) offer developmental assignments and feedback to all followers; (3) communicate transparently and share information widely; (4) rotate opportunities; and (5) invite input from quieter members. This is important because persistent out-groups experience lower trust and fewer opportunities, which can damage morale, increase turnover and reduce perceptions of procedural justice.
3. How does LMX theory challenge traditional leadership views that emphasize uniform treatment of followers?
Traditional views often assume leaders should treat all followers the same. LMX theory instead highlights that leaders inevitably form differentiated relationships with each follower and that these differences can be a source of effectiveness—if high-quality exchanges are developed broadly. It shifts the focus from a single “leadership style” to multiple dyads and suggests leaders should consciously expand high-quality exchanges rather than pretending everyone is treated identically.
4. Imagine you are a leader in a multicultural team. How might cultural differences shape the development and perception of LMX relationships?
Cultural norms influence how followers interpret closeness, feedback, and power distance. In high power-distance cultures, a very informal high-LMX relationship may feel uncomfortable or inappropriate; in low power-distance cultures, distant relationships may be seen as cold or unfair. Communication styles (direct vs. indirect), views of collectivism vs. individualism and expectations about hierarchy will all shape how LMX behaviors are perceived. Leaders must adapt their approach to respect cultural differences while still aiming to build high-quality relationships with everyone.