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PRESENTATION ON

LEADER-MEMBER
EXCHANGE

LMX

DEFINITION

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).

LMX

HISTORY

The study of the leader and follower is as old as time, it has his inception from the vertical dyad linkage model (e.g., Dansereau, Graen, & Haga, 1975). It has changed now into LMX theory of the current era, In the early years of the examination, the main concern was to further improve the theory development of LMX (e.g., Dienesch & Liden, 1986). Early LMX work was more related towards the development of the theory, associates, and results of LMX were explored (e.g., Gerstner & Day, 1997). Later on, the researchers have started to address LMX demarcation (Liden, Erdogan, Wayne, & Sparrowe, 2006).

LMX

THEORY

Lmx was initially regarded as a vertical-dyad linkage theory, and was firstly reported by Dansereau, Cashman, and Graen (1973). Different from the all previous theories which stated that leader treat all of his followers in a equal manner, Lmx was totally opposite to them, it asserted that leader has a different way of treating to all the followers. (Graen & Scandura, 1987). Lmx is more inclined towards the exchange relationship between 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 this theory is the dyadic relationship between the leader and his subordinates. (Graen & Uhl-Bien, 1995).

TYPES

OF LMX

LMX uses exchange theory to describe the relationship that develops between supervisors and each of their subordinates. Two major types of exchange have been identified and labeled (Dansereau, Graen, & Haga, 1975) . Low quality LMX (or out group relationship) and high quality LMX (or in-group relationship). Low quality LMX is characterized as an exchange between a supervisor and subordinate limited to that defined by an employment contract. Supervisors, employing formal organizational position power, provide subordinates with the standard organizational benefits while subordinates comply with their formally defined job requirements and follow legitimate supervisor requests (Graen & Cashman, 1975). In contrast, high quality LMX is characterized as an exchange of both material and non-material goods beyond those identified in an employment contract. This relationship usually includes higher levels of mutual trust and loyalty, comfortable communication, and bi-directional influence (Dienesch & Liden, 1986). This distinction (between outgroup and in-group exchanges) parallels that between economic and social exchanges described by Blau (1964).

Economic exchanges are more contract-based and require specific compensation for performing a task, whereas social exchanges are based on informal assurances that gestures of goodwill and mutual support will be reciprocated at a future date (Noorderhaven, 1992).

Researchers have frequently used the terms contractual and extra-contractual to characterize the low quality and high quality positions on a continuum of LMX relationships (e.g., Liden et al., 1993). Because there is a negative connotation to the terms low quality and out-group, it might be more appropriate to use value-neutral terms that indicate there are subordinates who have contractual relationships with their supervisors and others who have extra-contractual relationships with their supervisors.

LMX

AND SOCIAL EXCHANGE

Leader-member exchanges can be seen as resources, ranging from the particular to the universal, and from the abstract to the concrete (Wilson, Sin, & Conlon, 2010). When one party in 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 cannot offer leaders a salary raise), other resources can be offered in exchange (for instance, followers can reciprocate a salary raise with information from colleagues) (Wilson et al., 2010). Exchanges may include leaders offer of work latitude and influence in decision-making, leaders enhancement of communications, support, confidence, and consideration (i.e., LMX-7, Scandura & Graen, 1984), and leader-follower mutual exchanges of affect, loyalty, contribution, and professional respect (i.e., LMX-MDM, Liden & Maslyn, 1998).

LMX

AND WORK OUTCOMES

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 a higher 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).

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).

LMX

AND OCB

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 assisting supervisors 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).

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(Organ 1988) believe citizenship behaviors, although discretionary, are necessary for they promote effective functioning of the organization. In a study of 218 people working in a Northeast paper mill, (Podsakoff et al 1994) find a positive correlation between citizenship behavior and the organizations output. Citizenship behavior improves the effectiveness of the organization by the high degree of work group performance in terms of quantity and quality of work. (Settoon, Bennett, and Liden 1996) postulate that in-group members receive formal and informal rewards from their subordinates. In exchange, the members seek out extra-role situations in the form of providing citizenship behavior to the supervisors who, in turn, give more reciprocal support and opportunities to the members. This cycle of helping behavior for mutual attainment of goals helps further intensify the quality of the supervisor-subordinate exchange (Scandura and Graen 1984).

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LMX

AND INNOVATIVE BEHAVIOR

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: the development 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 a group or organization in order to benefit performance is crucial for the longtime 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 employees satisfaction 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 that employees who perceive a fair balance between supervisors inducements relative to their work efforts will respond with more innovative behavior.

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LMX

AND JOB SATISFACTION

Job satisfaction has been defined as a pleasurable or positive emotional state resulting from the appraisal of ones job or job experiences (Locke, 1976, p. 1304). Building on this definition, recent theorizing (Fisher, 2000; Weiss, 2000) describes job satisfaction as an attitude (Eagly & Chaiken, 1993) with both an affective component (mood, emotions) and a cognitive component (belief, judgment, comparison). Gertsner and Day (1997) conducted a meta-analysis of 25 years of empirical research on LMX theory in which they evaluated relationships between LMX and correlates as well as LMX construct and leader-member agreement (p. 827). They analyzed 164 studies, resulting in 79 studies with 85 independent samples. Their study supported prior research that showed the LMX is positively correlated to greater job satisfaction in subordinates.

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Prior research has conceptually stated and empirically shown positive

relationships between LMX and employee work outcomes that are important to
individuals workplace 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.
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THANKS

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