Considerable research has shown that leaders can significantly influence individual, group, and organizational performance (Gerstner & Day, 1997; Judge, Piccolo, & Ilies, 2004; Lowe, Kroeck & Sivasubramaniam, 1996). Different leadership theories articulate a number of mechanisms through which leaders have such influences (Northouse, 1997). An alternative approach to understanding leaders’ influence on individual follower or subordinate effectiveness is through the focus on dyadic relationships between leaders and each of their subordinates (Dansereau et al., 1975).
LMX, originally called vertical dyadic linkage (VDL), was developed approximately 30 years ago by Dansereau et al. (1975) as a response to average leadership style (ALS), which assumed that leaders maintain similar relationships with all of their employees. LMX broke away from this conceptualization by highlighting the way leaders differentiate between their subordinates by creating in- groups and out-groups. In-group members have high quality exchanges characterized by “mutual trust, respect, and obligation” (Graen & Uhl-Bien: 227), whereas out-group members have low quality exchanges that have less trust, respect, and obligation.
LMX is a dyadic theory that has its roots in role theory (Dienesch & Liden, 1986; Kahn, Wolfe, Quinn, Snoek, & Rosenthal, 1964) and social exchange theory (Blau, 1964; Cropanzano & Mitchell, 2005). The basic principle of leader–member exchange (LMX) is that leaders develop different types of exchange relationships with their followers and that the quality of these relationships affects important leader and member attitudes and behaviors (Gerstner & Day, 1997; Liden et al., 1997; Sparrowe & Liden, 1997).
LMX suggests that supervisors choose those they like and / or view as strong performers to fill the more important organizational roles. Conversely, the lesser roles are assigned to those subordinates who are less liked or
References: Graen, George B. and Uhl-Bien, Mary, "Relationship-Based Approach to Leadership: Development of Leader-Member Exchange (LMX) Theory of Leadership over 25 Years: Applying a Multi-Level Multi-Domain Perspective" (1995).Management Department Faculty Publications. Paper 57. James L. Soldner,“Relationships among leader-member exchange, organizational citizenship behavior, organizational commitment, gender, and dyadic duration in a rehabilitation organization” (2009).Dissertation. Kenneth J. Harris, R. B. (2007). Personality, Leader-Member Exchanges, and Work Outcomes. 92-96. Lunenburg, F. C. (2010). Leader-Member Exchange Theory: Another Perspective on the Leadership Process . INTERNATIONAL JOURNAL OF MANAGEMENT, BUSINESS, AND ADMINISTRATION , 1-3. Moates, K. N. (2007). PERSPECTIVE TAKING AND LEADER-MEMBER EXCHANGE. Maslyn, John and Uhl-Bien, Mary, "Leader–Member Exchange and Its Dimensions: Effects of Self-Effort and Other’s Effort on Relationship Quality " (2001). Management Department Faculty Publications. Paper 17. Mayer D.M. (2004). Are you in or out? A group-level examination of the effects of LMX on justice and customer satisfaction. (Doctoral dissertation) University of Maryland. Remus Ilies, J. D. (n.d.). Leader–Member Exchange and Citizenship Behaviors: A Meta-Analysis . journal of applied psychology, 269-271. Terri A.Scandura, E. K. (2009). Trust and Leader Member-Excahnge. Journal of Leadership and organizational studies, 109.