Leader–Member Exchange Theory and Research REVIEW and Future 2006

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2006 2: 295LeadershipWim van Breukelen, Birgit Schyns and Pascale Le Blanc

ChallengesLeader-Member Exchange Theory and Research: Accomplishments and Future

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Leadership

Copyright © 2006 SAGE Publications (London, Thousand Oaks, CA and New Delhi)Vol 2(3): 295–316 DOI: 10.1177/1742715006066023 www.sagepublications.com

Leader–Member Exchange Theory andResearch: Accomplishments and FutureChallengesWim van Breukelen, Birgit Schyns and Pascale Le Blanc, Leiden University,The Netherlands, University of Portsmouth, UK and Utrecht University, TheNetherlands

Abstract In the Leader–Member Exchange (LMX) theory of leadership, the qualityof the exchange relationship between a leader and a particular member of a workunit, team or organization is the basic unit of analysis (dyad). In this article, we tryto answer the question whether research on the various aspects of the exchangeprocesses between leaders and their subordinates is consistent with the theoreticalunderpinnings of LMX theory. Our focus is on the similarities and differencesbetween the theoretical assumptions of LMX theory and the way the core conceptsare elaborated in empirical studies. Although LMX theory has resulted in a numberof useful accomplishments, both theoretical and practical, it still faces a number ofchallenges. The main challenges are to carry out a thorough and consistent refine-ment of the measuring instruments used, and to gain more insight into the mutualbehaviours, attributions, and evaluations which facilitate or inhibit the developmentof high-quality working relationships.

Keywords leader–member exchange; leadership; measuring instruments; socialexchange

IntroductionDuring the past century, leadership has been studied from many different angles andperspectives, leading to the emergence of a wide range of both practical and theoreti-cal approaches to the subject. In this article we focus on the Leader–Member Exchange(LMX) theory (Dansereau et al., 1975; Graen & Cashman, 1975; Graen, Novak &Sommerkamp, 1982).A central characteristic of this theory is its focus on the workingrelationship between a leader and the various members of a work unit, team, depart-ment or organization. More specifically, the quality of the exchange relationshipbetween a leader and a particular member (dyad) is the basic unit of analysis.

In this introduction, we will begin by explaining how this theory relates to someof the more prominent traditional leadership approaches. We will then discuss the



specific features of this theory and try to identify the possible benefits of employ-ing it.

The Leader–Member Exchange theory can be considered a process approach,since it stresses the importance of the dynamic interaction between a leader and hisor her subordinates. LMX theory can also be characterized as a transactionalapproach, because both the leader and the followers are seen as active participants(Hollander, 1980). In these respects, it differs fundamentally from the trait approachin which leader characteristics or qualities are taken as the starting point and areconsidered key factors in determining which persons are effective leaders across situ-ations (Northouse, 2004). The trait approach represents one of the traditional leader-ship approaches and has not received strong empirical support. Few, if any, universaltraits were found to be associated with effective leadership (Stogdill, 1948). Recentstudies on the importance of traits, however, have found moderate but consistentsupport for the notion that traits and skills, such as the leader’s achievement motiva-tion and behavioural flexibility, do matter (House & Aditya, 1997). Another promi-nent approach to leadership is the leader behaviour or leadership style approach(Bass, 1990; Bowers & Seashore, 1966; Hemphill & Coons, 1957; Stogdill, 1974).Between 1950 and 1980, many studies were dedicated to finding out which behav-iours were crucial in explaining and predicting leader or group effectiveness. As withleader traits, this quest did not result in the identification of a list of universallycritical behaviours, although two broad classes of leader behaviour were found to beimportant in many situations. These were task-oriented behaviours and relationship-oriented behaviours (cf. Blake & Mouton, 1964). Recently, a third class of leaderbehaviours was added to this list: change-oriented behaviours, that is, behavioursaimed at improving strategic decisions, adapting to changes in the environment andthus guaranteeing future effectiveness (Van der Vlist, 1991; Yukl, 1999, 2002). Ourdescription of the Leader–Member Exchange theory will show that leader behavioursand, to a lesser extent, leader traits do play a role within this framework. What distin-guishes the LMX theory, however, is that its proponents consider the relationshipdomain as fundamentally different from the leader domain and the follower domain(Graen & Uhl-Bien, 1995). Moreover, they argue that the quality of the leader–member working relationship is more predictive of organizational outcomes thanleader traits or behaviours (cf. House & Aditya, 1997).

The negative findings of the search for universally important traits and behavioursled theorists and practitioners to the understanding that the context or situation arealso crucial in explaining leader effectiveness. This gave rise to the development ofsituational or contingency theories, stating that leaders – in order to be effective –have to adapt their behaviour to situational characteristics (Hunt & Larson, 1974).Situational characteristics include task characteristics such as the nature andcomplexity of the problem at hand, and subordinate characteristics such as knowl-edge, skills and task maturity (e.g. Hersey & Blanchard, 1969, 1996; House, 1971,1996). Interestingly, both the contingency theories and the Leader–Member Exchangetheory introduced new insights with respect to leaders’ behaviours. Situationalleadership theories advised leaders to adapt their behaviour to specific circumstances,including subordinate characteristics, while the LMX theory stressed the possibilitythat leaders actually treat their various subordinates differently (Graen, Dansereauet al., 1973). A major difference, however, is that the contingency theories are

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prescriptive in that they advise certain behaviours to match certain task andsubordinate characteristics, while the LMX theory – at least in this respect – isdescriptive of the way in which leaders operate on a daily basis.

In essence, the LMX theory investigates the quality of exchange relationships, ordyads between formally assigned leaders/supervisors and their subordinates, and theconsequences of different types of exchange relationships in terms of the attitudesand behaviours of subordinates. Thus far, the main contribution of the LMX theoryto the understanding of organizational behaviour lies in the identification of a numberof antecedents of so called high- and low-quality relationships and in the observedconnection between leader–member exchange quality and various organizationaloutcomes. Many studies have addressed these issues.

In addition to member characteristics and leader characteristics as such, a numberof interactional variables, such as communication frequency and communicationpatterns, have turned out to be important for the development of high-quality relation-ships (Baker & Ganster, 1985; Fairhurst & Chandler, 1989; Liden et al., 1997). High-quality leader–member exchange relationships were found in turn to correlate withdesirable outcomes such as job satisfaction, commitment, high performance, inno-vative behaviour and citizenship behaviour on the part of the subordinate (seeGerstner & Day, 1997; Graen & Uhl-Bien, 1995). Less is known about the effects ofhigh LMX quality on leaders, but one could speculate that they would include lowerstress and higher well-being (cf. Deluga & Perry, 1994).

Although the LMX theory has provided descriptions of how high- and low-qualityworking relationships develop and what exactly constitutes a mature, high-qualityworking relationship (Graen & Uhl-Bien, 1995; Liden et al., 1997; Sparrowe &Liden, 1997; Uhl-Bien et al., 2000), relatively few empirical studies have addressedthese issues. Moreover, little research has been carried out to assess the distributionof high-, middle- and low-quality exchange relationships, that is, the prevalence ofdifferentiated relationships, within work units. Other issues deserving closer atten-tion include the question whether exchange relationships are differently defined byleaders than by subordinates, and by different subordinates (e.g., House & Aditya,1997; Northouse, 2004; Schriesheim et al., 1999; Yukl, 1994, 2002). Last but notleast, the definition and content of the exchange itself require closer research attention.

In this article, we try to answer the question of whether research on the variousaspects of leader–member exchange is consistent with the theoretical underpinningsof the LMX theory. Our focus is on the similarities and differences between thetheoretical assumptions of the LMX theory and the way the core concepts areelaborated in empirical studies. On the basis of a critical examination of both theoryand research, we make some recommendations for future research on the LMXtheory and for organizational practice. To this end, we start with a brief overview ofresearch findings on the LMX theory and its precursor, the Vertical Dyad Linkage(VDL) theory.

A brief history of LMX researchThe Vertical Dyad Linkage (VDL) theory of leadership was developed in reaction totheories which assume that leaders adopt one consistent leadership style towards allmembers of their work unit or team (Dansereau et al., 1975; Graen & Cashman,

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1975) According to this ‘average leadership style’ (ALS) approach, deviationsbetween subordinates’ views of a particular leader should be considered to be errorsof perception or of measurement. In contrast, the VDL theory states that leaders donot adopt a single leadership style towards all subordinates in their units. In otherwords, they behave differently towards different members of their work group (Graenet al., 1972; Graen, Orris & Johnson, 1973). It is even possible that they discriminatebetween subordinates (Dansereau, 1995).

An important assumption inherent in the VDL theory is that time and resourceconstraints require leaders to develop a cadre of trusted assistants to help in managingthe work unit (Graen & Uhl-Bien, 1995). In exchange for their support to the leader,these assistants receive special attention, recognition and career support (Le Blanc,1994). High-quality working relationships are characterized by mutual trust, respectand loyalty (Dienesch & Liden, 1986). Most leaders will develop such a ‘high-quality’ exchange relationship with only a few subordinates (Dansereau et al., 1975;Graen, 1976). As a result, work units may separate into an ‘out-group’ consisting ofsubordinates with whom the leader has only superficial contacts and an ‘in-group’consisting of highly valued employees with whom there is intensive cooperation andcommunication.

Although the view that different types of relationships within work units are inevi-table was questioned right from the start by several authors (Campbell, 1977;Cummings, 1975), it seems tenable to assert that most leaders do indeed developdifferentiated relationships with the various members of their work units. One of thefew studies investigating the prevalence of high- and low-quality exchange relation-ships within work units concluded that only about 1 in 10 managers or foremenformed similar relationships (all high, all middle, or all low) with all their directsubordinates (Liden & Graen, 1980). In that study, a total of 41 dyads belonging to12 different organizational units were studied. Eleven of the twelve units includedtwo or more different exchange subgroups, while only one unit was found to be madeup exclusively of members of the same exchange quality category.

We recognize that the emergence of an in-group and an out-group within a workunit is not a given but should, in fact, be seen as an empirical question. There maybe work units in which the various dyads resemble each other quite closely withrespect to the nature and quality of the existing working relationships, in which casethere will be no clear contrast between in-group and out-group members (cf.McClane, 1991). This will depend on a range of factors, including group size, grouphomogeneity with regard to demographic background, attitudes, and contributions(e.g. Kozlowsky & Doherty, 1989; Maslyn & Uhl-Bien, 2005), as well as on the waythe leader responds to these characteristics of group members (e.g. Tsui et al., 1995).

In the early 1980s the VDL ‘in-group–out-group approach’ was renamed the‘Leader–Member Exchange’ (LMX) theory, and was developed into two differentapproaches. Graen and his associates (Graen & Scandura, 1987; Graen et al., 1986;Scandura & Graen, 1984) continued to elaborate the LMX model as a comprehen-sive, alternative view to the traditional ‘average leadership style’ (ALS) approach.Their LMX approach pursues the question of how differentiated dyadic relationshipsdevelop, and combine to form systems of interdependent dyadic relationships ornetwork assemblies (Graen & Uhl-Bien, 1995; Liden et al., 1997; Sparrowe & Liden,1997; Uhl-Bien et al., 2000). This approach also pays attention to the question of


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how people personally construe their formal roles (enactment), and in doing socontribute to organizational effectiveness.

On the other hand, Dansereau and colleagues (Dansereau et al., 1982, 1984, 1995)developed an alternative approach: the ‘individualized leadership’ (IL) approach,which regards leadership as a dyadic interpersonal process in which the dyads areconsidered to be independent. It is assumed that leaders react to each subordinate asa unique individual, independent of any other subordinate or dyad. Here, the focusis on the way formally assigned superiors succeed in securing satisfying perform-ance from a particular subordinate, thus becoming a ‘leader’ in the eyes of thissubordinate.

It is apparent that LMX theory has attracted a lot of attention, ever since it wasfirst posited in the 1970s. Research on LMX theory is still being undertaken withgreat enthusiasm and perseverance, both by the original authors and by a numberof other researchers (see for example Graen, 2004; Graen & Graen, 2005). Despitethis attention, a number of issues still need further clarification. An increasinglyimportant issue is that of the level of analysis: whether the assumptions of LMXtheory are tested on the individual level, the dyadic level, the group level or theorganizational level. While there seems to be consensus that the dyad is the appro-priate unit of analysis, it makes a fundamental difference whether dyads are treatedas independent elements or as interdependent units (Dansereau et al., 1984; Klein etal., 1994). While the VDL theory focused on differentiated dyads within groups, thisgroup or organizational context is considered irrelevant in the individualized leader-ship (IL) approach developed by Dansereau et al. (1995). On the other hand, the LMXapproach elaborated in the work of Graen and Uhl-Bien (1995) claims to be relevantfor all levels, without specifying how to test this (cf. Coleman, 1998; Schriesheim etal., 1999). We will return to this issue later.

Critique of the Leader–Member Exchange approachIn this section, we will present a critical analysis of the LMX approach as it has beenemployed in theory and research to date. We will focus in turn on the definition anddevelopment of LMX, the nature, content and value of the exchange, and the questionof which elements to categorize as dimensions, antecedents, correlates, or conse-quences of LMX. Lastly, we will discuss the various instruments employed tomeasure LMX quality.

The definition and development of LMX

To begin with, the operational definition of LMX is not very clear. As Gerstner andDay (1997: 828) note, ‘there is surprisingly little agreement on what LMX is’. Yukland Van Fleet (1992: 163) also call for a refinement of the measurement of LMX,stating that ‘it is important to make a clearer separation between measures of thequality of the relationship (e.g., perception of mutual trust, loyalty, and respect),measures of specific types of leader behaviours (delegating, consulting, and mentor-ing) which stimulate or foster high-quality relationships, and measures of outcomes(e.g., effort, commitment, and performance)’.

Part of the lack of clarity regarding the exact meaning of the LMX concept itself


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may be due to the fact that most research on the VDL and LMX model has concen-trated on the result of the social exchange process, that is, an effective or ineffectiveworking relationship between leader and member (Gerstner & Day, 1997). Much lessattention has been devoted to examining the nature and content of the exchangeprocesses itself, that is, leadership behaviour and differential treatment by the leader,differential reactions by the various members and differential interaction patterns(e.g. Fairhurst & Chandler, 1989; Graen, 1990; Graen & Cashman, 1975; Waldron,1991) – in other words, the way effective or ineffective working relationships develop(e.g. Dienesch & Liden, 1986; Dockery & Steiner, 1990; Liden et al., 1993). Ignoringthe process by which low- or high-quality exchange relationships develop leaves itunclear what the various elements – such as behaviours, attributions, and evaluations– contribute to this process.

In a speculative fashion, Graen and Uhl-Bien (1995) described the phases of what,borrowing from Hersey and Blanchard (1969), they called a life cycle of leadershiprelationship maturity. They posited three phases: a ‘stranger’ phase, an ‘acquain-tance’ phase, and a ‘mature partnership’ phase. Some dyads develop to a matureworking relationship while others may not advance much beyond the first stage. Ingeneral, in the first phase, the leader assesses the new team member’s competenceand performance through several try-outs (e.g. Graen, 1976). Low- or high-qualityexchange relationships will then develop over time, with the quality depending onthe level of the member’s performance. Some studies, however, have raised doubtsabout the assumption that performance is the cause or initiator of relationship quality.Duarte et al. (1993) discovered that poorly performing ‘in-group’ members weregiven high performance ratings, regardless of their actual performance. By contrast,leaders’ ratings of ‘out-group’ members were consistent with their performance.Apparently, performance is not the only relevant factor in the development of low-or high-quality leader–member exchange relationships. Similarity between leaderand member, in terms of demographic characteristics such as age, education andgender, was found to be only weakly related to the quality of the exchange relation-ship (Bauer & Green, 1994; Green et al., 1996; Tsui et al., 1995). Similarity in termsof attitudes and values appears to be more important (see Hiller & Day (2003) for adiscussion on deep-level and surface-level similarity in the context of LMX). Valueswith respect to career strategies, education, and goals in life were significantly relatedto LMX quality in a study by Phillips and Bedeian (1994). Murphy and Ensher (1999)found that perceptions of similarity between supervisor and subordinate were moreimportant to LMX quality than actual demographic similarity. However, Ashkanasyand O’Connor (1997) concluded that it would be too simplistic to claim that attitudeand value congruity between leader and member as such leads to higher-qualityrelationships, because this depends on the specific content of the values in question.According to these authors, among the critical values in the development of high- orlow-quality leader–member relationships are values related to autonomy, authorityand achievement. These values determine whether the leader recognizes themember’s independence, whether the member accepts the leader’s authority andwhether leader and member strive for optimal task accomplishment.

Other factors strongly affecting working relationships include the way in whichleader and members worked together in former contexts, and the influence exertedby the leader in selecting and appointing new members. Allegro and Van Breukelen


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(2000) found that newly hired workers who were selected by the leader usually hada higher-quality working relationship with their leader, compared to workers whohad already been in the work unit for a long time. This finding was largely to do withthe fact that the newly appointed employees had already proved their competencewhen working as contingent workers in the same organization. It is possible that inother situations the quality of newly formed working relationships is determined byother variables, such as common acquaintances (networks) or common workingexperiences.

Although much still needs to be learned about the influence that both the personaland the work-related characteristics of leader and member may have on the develop-ment of LMX relationships, there is evidence that relationships form rather quickly,often within a few weeks of the first encounter. Studies performed by Dockery andSteiner (1990), Liden et al. (1993), and Wayne et al. (1994) stress the importance offirst impressions and first experiences in developing low- and high-quality exchangerelationships. In these studies, it was found that mutual expectations and evaluationsassessed in the first days in the life of a dyad predicted how the LMX relationshipwould develop in the near future.

The exchange: content and value

As one of the transactional approaches to leadership, the LMX theory considersleader and subordinates as active participants in an ongoing process of transaction(Hollander, 1980). By using the term transaction instead of interaction, Hollanderemphasized the potential for counterinfluence on the part of the subordinate. This isa core assumption in LMX theory: it is not only the leader’s influence that is takeninto account, but also the influence subordinates exert on their leader, especially inthe case of a high-quality relationship (cf. Graen, 1976).

LMX theory proposes that both leader and member contribute to the exchange inorder to develop a high-quality working relationship. With respect to the nature ofthe exchange, Rousseau (1998) criticized the way LMX research ignores theexchange itself, especially existing interdependencies between leaders and members.She argued that in LMX research, thus far, the exchange between leader and memberis treated as a black box.

Several studies reported in Dansereau et al. (1995) give more detailed ideas aboutthe exchange and explicitly indicate that leader and member contribute differently tothe exchange, meaning that they contribute different ‘goods’ or ‘commodities’ to theexchange. In high-quality relationships, members contribute ‘satisfying perform-ance’ and leaders contribute ‘support for self-worth’ (cf. Dansereau, 1995). This termrefers to the extent to which leaders show confidence in a member’s integrity, ability,and motivation, pay attention to a member’s feelings and needs, and support amember’s ideas and actions. Support for self-worth is supposed to empower sub-ordinates by increasing their perceptions of control (Keller & Dansereau, 1995).

In addition, in a recent study on reciprocity in manager–subordinate relationships,Uhl-Bien and Maslyn (2003) found that low-quality exchange relationships werecharacterized by high immediacy (a narrow time frame in which favours have to bereturned), high equivalence (an emphasis on equal value of exchanged commodities)and high self-interest (a focus on personal interests in the exchange process). On the


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other hand, in high-quality exchanges the time frame of the exchange was broader,the exact value of exchanged goods was less relevant and the focus in reciprocationwas on mutual interest. Thus, high-quality relationships have more in common witha transformational kind of relationship than with a purely transactional one (Gerstner& Day, 1997).

Although these studies constitute a step in the right direction, the specific meansof exchange are still quite vague. Self-worth and good performance refer to global,general outcomes; they do not refer to concrete and tactile exchanges of goods anddo not point to narrowly defined behaviours. So the question remains: what preciselycould the exchange consist of? Analyses by Graen, Dansereau et al. (1973) and Graenand Scandura (1987) suggest that leaders may offer the following: discretion latitude,amount and precision of information, influence on decisions, formal and informalsupport, formal and informal attention, feedback, respect, recognition and rewards,attractive work assignments, and career opportunities. Subordinates can offer only alimited number of the aforementioned exchange goods, but, in addition, they mayshow loyalty, commitment, and they may exert effort, both for the leader personallyand for the work unit and the organization as a whole. Hollander (1980: 103) stressedthe fact that followers also receive the benefits of the leader’s efforts, if successful,in the form of favourable group results.

In order to establish a high-quality relationship, it is not only important that bothparties contribute to the relationship but also that they acknowledge and value theother party’s contribution. Tekleab and Taylor (2003) argued that managers andemployees need to know about their respective obligations in order to be able to meetthese obligations. Whereas this might seem obvious, it is easy to imagine that inpractice there is often disagreement or incongruence between two parties in theperception of mutual obligations (Coyle-Shapiro & Kessler, 2000). The amount ofmutual communication between manager and employee, and the associated LMXquality, may be crucial factors in determining the perceived agreement (or disagree-ment) with respect to mutual obligations. The resulting agreement or disagreementmay play an important role in the exchange process, as one party may believe thathe/she contributes adequately and meets his/her obligations, whereas the other partyhas different ideas about these obligations and, thus, does not value the contributionof his or her ‘partner’ in the exchange relationship. Rousseau (1998) suggested thepossibility that high-quality relationships may develop even when only a few well-specified and important resources are exchanged, such as hard work for high pay.

A further complication to this discussion on the content and value of exchangecommodities is that persons often value their own contributions more highly than theother’s (Tekleab & Taylor, 2003). Taking this as a general principle, problems arelikely to occur in virtually all LMX relationships. Perhaps persons engaged in high-quality relationships are generally less inclined to overrate their own contributions,because mutual communication and information sharing is more intensive. On theother hand, subordinates with a low-quality exchange relationship with their super-visor are only expected to perform their jobs in accordance with their employmentcontract (Van der Vlist, 1991; Yukl, 1989). Here, work-related expectations aredescribed rather precisely, while reciprocity is characterized by immediacy andequivalence (cf. Uhl-Bien & Maslyn, 2003). In high-quality relationships, thesubordinate is expected to work harder, and to go beyond formal role requirements,


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showing extra-role behaviours. Additional obligations, which may be unexpected andpervasive, are assigned to the in-group of trusted assistants. This line of reasoningwould imply that leaders’ expectations with respect to their in-group members tendto be particularly broadly, that is to say, vaguely, defined (cf. Dansereau et al., 1975).These comparisons raise the question of whether the currency of the exchange isstable over time and different situations. As the circumstances of the relationshipchange, or as the relationship unfolds, the currency of exchange may change as well.

The exchange between leader and followers does not stand alone. One of theleader’s primary tasks is to achieve group goals and to fulfil followers’ expectations(Yukl, 1998). An important set of expectations is related to issues of equity, fairnessand justice (Hollander, 1980). When a leader’s actions do not result in favourableoutcomes for individual followers or for the group as a whole, his/her legitimacy andcredibility are at stake. This implies that followers’contributions to the exchange maychange over time, depending on the leader’s effectiveness and fairness. Despiteseveral recent studies (e.g. Lamertz, 2002; Lee, 2001; Masterson et al., 2000;Scandura, 1999; Sias & Jablin, 1995), these issues have not received much researchattention to date.

LMX quality: dimensions, antecedents, correlates, and consequences

There is a lack of clarity on what constitutes the dimensions or components of theleader–member working relationship itself, what are the antecedents or correlates ofa low- or high-quality relationship, and, finally, what are its consequences.

In the first comprehensive review article on LMX research, Dienesch and Liden(1986) defined LMX quality in terms of loyalty, affect, and contributions. Graen andUhl-Bien (1995) referred to mutual trust, respect, and obligation. Schriesheim et al.(1999) argued that six dimensions are present in the LMX research to date: trust,liking, latitude, attention, support, and loyalty. Finally, Brower et al. (2000) assertedthat the LMX relationship is built through exchanges during which the ability,benevolence, and integrity of the ‘partner’ in the exchange relationship are evaluated.In the literature on interpersonal trust these three elements are viewed as antecedentsof trust (Mayer et al., 1995).

Some of these exchange commodities are relatively concrete (attention, latitude,support), while others are more abstract (trust, respect). Moreover, some elementscan be regarded as both a dimension or component and an antecedent of a high-quality relationship. For example, whereas trust is seen as a dimension of LMX(Graen & Uhl-Bien, 1995; Wayne et al., 1994), it has also been regarded as a cor-relate of LMX (Gómez & Rosen, 2001), and it could equally be seen as an antecedentof LMX, and indeed as a consequence of a high-quality relationship. With respect toperformance, or contributions, in LMX parlance, Dienesch and Liden (1986) hint atthe fact that performance is reflected on as both an antecedent and an outcome ofLMX. In Dienesch and Liden’s (1986) own conceptualization, and in Liden andMaslyn’s (1998) operationalization, ‘contributions’ are regarded as a dimension ofLMX quality, in addition to loyalty, affect, and professional respect. Recently,Sullivan et al. (2003) elaborated on these dimensions with reference to diversity andculture issues.

While some organizational outcomes such as trust and performance, can be


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considered as both antecedents, or dimensions, and consequences of LMX, otheroutcomes are more unequivocally described as consequences. The proponents of theLMX theory maintain that there is a positive relationship between LMX quality andjob satisfaction, organizational commitment, and intentions to stay in the organiz-ation (e.g., Gerstner & Day, 1997; Graen & Uhl-Bien, 1995; Scandura & Graen,1984; Scandura et al., 1986; Settoon et al., 1996; Vecchio & Gobdel, 1984). Others,however, are less optimistic in their evaluation of LMX theory. House and Aditya(1997) questioned the robustness of the relationship between LMX quality andseveral positive outcomes, after having examined a number of studies in detail.Their conclusion is that both LMX quality and certain outcomes, for example jobperformance and citizenship behaviour, are affected by biases like a commonmethod/common source bias. In a similar vein, Yukl (2002) concluded that there hasbeen too much reliance on static field studies with questionnaires. Indeed, one of themore serious drawbacks of LMX research is that most studies supporting theconclusions about positive relationships between LMX quality and organizationaloutcomes are correlational studies and use self-reported behaviours as criterion vari-ables, thus introducing common method variance (cf. Dionne et al., 2002). Thiscritique is not exclusively restricted to LMX research but is applicable to organiz-ational studies on other topics as well.

LMX instruments and perspectives

In the first instrument designed to measure the effects of differences between ‘leader-ship’ (influence without authority) and ‘supervision’ (influence based upon authorityonly), Dansereau et al. (1975) employed negotiating latitude as the core element.Negotiating latitude was defined as ‘the extent to which a superior is willing toconsider requests from a member concerning role development’ (p. 51).

Later on, LMX instruments were expanded, with regard to both the number andthe content of items. Liden and Graen (1980) included items on the degree of supportgiven by the leader and the number of suggestions made by the subordinate. Graen,Liden and Hoel (1982) were the first to use an item measuring the quality of theworking relationship. Graen and Uhl-Bien (1995: 236) called this item (‘How wouldyou characterize your working relationship with your leader?’) the ‘centroid item’,as it focused on the LMX quality and was included in nearly all later versions ofLMX scales.

In most current research, LMX quality is assessed using the LMX-7 instrumentas recommended by Graen and Uhl-Bien (1995). This instrument can be considereda new, slightly adapted version of the scale published by Scandura and Graen (1984).Whereas some items focus on the member’s assessment of how his/her leader eval-uates him/her, others refer to the member’s own impression of the leader and theirrelationship (see also Schyns & Paul (2005) on this topic). In addition, one item inthe LMX-7 reflects the member’s willingness to defend the leader’s decisions inhis/her absence. Thus, this instrument comprises items which focus on differentperspectives (Brower et al., 2000).

Many empirical studies have used this version, or nearly identical versions (e.g.Deluga & Perry, 1991; Duarte et al., 1993; Duchon et al., 1986; Dunegan et al., 1992;Kinicki & Vecchio, 1994; Wayne & Ferris, 1990). All these versions of LMX-7 are


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characterized by a combination of dimensions, as noted earlier, and by a combinationof perspectives. Keller and Dansereau (2001) pointed to the fact that results basedupon earlier versions of the LMX measuring instrument differ from studies in whichsubsequent scales were used where items were added. They plead for more attentionto be paid to validity as well as to reliability issues when adding new items to scales.

Despite the fact that the LMX-7 combines different perspectives (i.e. leader andmember) and different sub-dimensions (e.g. trust, support, contributions), Graen andUhl-Bien (1995) claim that the various sub-dimensions are so strongly intercor-related that this measure can be considered one-dimensional. However, studies inwhich the LMX-7 scale was slightly modified, or where items were added, haveyielded more dimensions. For example, Le Blanc et al. (1993), using a 12-itemversion and extension of the original LMX-7, found that a two-factor solutionrepresented their data best. The two resulting dimensions were related to the leaderand member perspective on the items. Liden and Maslyn (1998) developed a 13-iteminstrument, in which they postulated professional respect (on the part of the membertowards his/her leader) as a fourth dimension, in addition to the dimensions of loyalty,affect, and contributions. They refer to their dimensions as related but factor-analytically separable. In a comparison of different instruments for the assessmentof dyadic relationships, Schyns and Paul (2005) found that the different instrumentsand dimensions of LMX were separable to a certain extent but that the items ofloyalty and the items of Graen and Uhl-Bien’s (1995) one-dimensional assessmentformed one common factor.

The above discussion clearly demonstrates that the instruments used so far do notdistinguish between relationship quality and exchange commodities: they containitems referring to both concepts. In our opinion, a distinction between the measure-ment of these two concepts is necessary in order to gain more insight into thequestion: what exactly is the association or causal relation between different kindsof exchange processes and different kinds of working relationships?

While LMX-quality can be assessed both from the member’s and from the leader’spoints of view, in the majority of studies, either only subordinates or only leaderswere asked to fill out the questionnaire. Using meta-analysis on studies in which bothparties were asked to rate their exchange relationship, Gerstner and Day (1997) founda correlation between the two ratings of r = .29. Corrected for measurement error,the estimated correlation was r = .37. In several recent studies the correlation betweenthe two ratings was in about the same league: r = .19 in a study by Paglis and Green(2002), r = .23 in a study by Tekleab and Taylor (2003), and r = .44 in a study byUhl-Bien and Maslyn (2003).

In addition, the Tekleab and Taylor (2003) study showed that managers reporteda higher mean quality of LMX than employees did, while the Paglis and Green (2002)study showed no differences between the means, but a higher standard deviation forthe members’ scores. In the Uhl-Bien and Maslyn (2003) study there were no differ-ences in means or standard deviations between subordinates and managers.

Apparently, in some situations leaders and members assess their mutual workingrelationship differently, while in other situations they do not. The question, of course,is when and why differences in LMX quality are reported. One plausible explanationcould be that employees and managers can have decidedly non-mutual perceptionsof the nature of their relations, the exchanges made, and their obligations to each


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other (cf. Rousseau, 1998). Another possible explanation may be that the quality ofthe exchange relationship itself partially determines the correspondence between theleader’s and the member’s assessment of their LMX quality. We speculate that agree-ment will be strongest when exchange quality is very high or very low in objectiveterms. It is conceivable, however, that social desirability biases may influence thecorrelations, too. A different kind of explanation comes from Yukl (2002: 120), whosuggested that ‘the scales may measure biased individual perceptions that are highlyconfounded with other variables’. Although he did not specify which other variablesmay play a confounding role, his remark reminds us that dyads should be the unit ofanalysis and not individual perceptions of dyads. Coleman (1998) also stressed theimportance of the dyad as the unit of analysis when he stated that only high cor-relations between superior and subordinate reports of LMX quality would suggestinterdependence between the two parties in the form of a dyad. Obviously, furtherresearch is needed on the differences in the perception of the quality of the mutualworking relationship between leaders and subordinates and on the underlyingdimensionality of relationship quality.

Unanswered questions and some recommendationsNine years ago, House and Aditya (1997: 431) stated that LMX theory was ‘still inthe making’. In our opinion, this verdict still holds. While the LMX model continuesto draw attention, in current work empirical support lags behind theoretical specu-lation. In the last section of this article, we will highlight several of the mostimportant issues and give some suggestions for future research efforts.

The context of exchange relationships

Original theorizing about differentiated exchange relationships within work units andabout differential treatment by the designated superior of the various subordinatesresulted in the formulation of the Vertical Dyad Linkage theory (Dansereau et al.,1975; Graen et al., 1973). It stressed the possibility that for a few subordinates thesupervisor acted as a ‘leader’, while for other subordinates he or she remained onlytheir formal ‘supervisor’. This assumption opened the door to the study of groupdynamic processes between ‘in-groups’ and ‘out-groups’ within work units. Theresults of these studies were disappointing, however, because of weak data-analyticprocedures and the use of different and invalid measurement instruments (Dansereau,1995; Keller & Dansereau, 2001; Schriesheim et al., 1999)

Currently, neither of the two offshoots of the VDL theory is paying much atten-tion to this basic assumption. In the first – the individualized leadership (IL) theorydeveloped by Dansereau and colleagues (1995) – there is a tendency to concentrateon individual LMX relationships and to ignore the group dynamic context. In thesecond – the LMX approach by Graen and colleagues (e.g. Graen & Uhl-Bien, 1995)– levels of analysis are not specified exactly. We suggest that all three approaches –VDL, IL and LMX – may have their merits, depending upon the aim of the studyand the specific organizational context in which leader–member exchange relation-ships are being studied. In an increasing number of organizational contexts, thevarious dyads develop in relative isolation from each other, while specific leader and


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member attitudes and behaviours are relatively invisible for other persons. Thisapplies to the kinds of ‘modern’ organizational structures like virtual organizationsand organizations with many contingent workers. In these contexts, specific dyadsmay flourish or deteriorate in isolation, and will be compared less frequently and lessobviously with other dyads, both by the persons involved and by colleagues. Despitethis ‘individualization’ of leader–member dyads in these organizations, issues offairness, equity and justice maintain their importance, because sooner or later particu-lar subordinates will find out how their colleagues have been treated by supervisorsand managers (e.g. Brockner & Grover, 1988). Even in relatively isolated positions,people will try to compare themselves with colleagues and evaluate how superiorsand colleagues react to them, in order to know where they personally stand (Lamertz,2002; Masterson et al., 2000).

In many contexts, group dynamics will continue to be an essential determinant ofeffectiveness in the work unit, group, team or organization. In many work units, thequality of the various LMX relationships is highly visible. In addition, the leader’sbehaviours towards the various group members are evident and transparent to theremaining members. In these settings, differential treatment on the part of the leaderis clearly observed by others and acts as input for sense-making discussions amongwork unit members (Weick, 1995). The results of these sense-making processes mayaffect members’ own LMX quality and outcomes like co-worker communication,cooperation, commitment and effort (Maslyn & Uhl-Bien, 2005; Sias & Jablin, 1995;Van Breukelen et al., 2002). The lack of attention to group dynamic issues in currentLMX research has been criticized by others as well (e.g. Dansereau & Markham,1987; Hogg et al., 2003; Schriesheim et al., 1999; Yukl, 2002). We think that thepromise which the VDL theory holds in this respect deserves closer research atten-tion. This calls for analyses in which the individual is considered within the group.A recent study by Cogliser and Schriesheim (2000), who used the within- andbetween-entities analytical technique (WABA) of Dansereau et al. (1984), is a goodexample of this approach. Other multi-level techniques like hierarchical linearmodeling (Kreft & De Leeuw, 1998) are also viable options.

Measurement of LMX quality and associated relevant variables

From the overview we presented in the preceding paragraphs, it can be concludedthat empirical research on LMX theory is characterized by a proliferation of differ-ent instruments. Moreover, the various instruments do not clearly distinguishrelationship quality from exchange commodities and processes. In our view, it is veryimportant that a universal instrument be developed, designed to measure the qualityof the working relationship between a leader and a particular member as such. Wesuggest a semantic differential type of measurement, based upon the work ofOsgood et al. (1957; see also Osgood, 1962). A semantic differential consists of anumber of scales, that is, 7-point bipolar adjective pairs, describing a particularconcept, in this case the leader–member working relationship. Starting from thethree-dimensional nature of the semantic differential, activity, potency and evalu-ation, such an instrument would make it possible to assess relationship quality morerigorously. Meaningful bipolar adjectives could be: effective/ineffective, good/bad,pleasant/unpleasant, close/distant, warm/cold, flexible/inflexible, strong/weak,


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profound/superficial, cooperative/uncooperative, fair/unfair, productive/unproduc-tive, stable/changeable, dynamic/static, harmonious/argumentative, and equal/unequal (e.g. Pierce et al., 2003; Schneider, 2004).

In order to study exchange processes more systematically, it is imperative toconduct longitudinal studies in which newly formed relationships are investigated(cf. Liden et al., 1993). By using methods other than questionnaires, such as obser-vation, diaries and interviews, it may be possible to record the pattern of interactionsand exchanges over time in more detail. This will lead to a deeper insight into thecontribution of leader and member characteristics to the development of the relation-ship, as opposed to the quality of the relationship itself (cf. Fairhurst & Chandler,1989). It would also confirm the added value of LMX theory as a relational andprocess approach, vis-à-vis other leadership theories.

One strong candidate for more research attention is the subject of specific leaderbehaviours which may foster or preclude the development of high-quality exchangerelationships. Only recently have a number of studies started to focus on the contentof differential treatment by the leader and the way differences in the leader’s treat-ment of the various members of a work unit are perceived and interpreted in termsof fairness and justice by these members and their colleagues (Meindl, 1989; Sias &Jablin, 1995; Van Breukelen et al., 2002). From a social identity perspective, Hogget al. (2005) suggested that the effect of differential treatment by the leader dependsupon the salience of group membership for subordinates. They argue that especiallyin cohesive groups (with high group salience), leaders have to refrain from a person-alized leadership style, because in these groups leaders are judged on the basis oftheir group prototypicality, which means that they should not differentiate betweenmembers. Although this is an interesting idea, it is important to keep in mind thatthere is a fundamental difference between differential treatment and LMX quality.People may develop a high-quality exchange relationship with their supervisor evenwhen they perceive many incidents of differential treatment on his or her part. In suchcases, it is highly likely that their evaluation of the differential treatment incidents isguided by the associated perception of fairness and justice. Once more, this remindsus that it is important to distinguish between the leader–member relationship as such(the relationship domain), leader or member behaviours (the leader and memberdomains), and group dynamics (the group level).

The descriptive and the prescriptive aspects of LMX theory

The LMX theory has been criticized for potentially legitimizing inequalities betweenin-group and out-group members (Northouse, 2004). We do not think this critique isappropriate. While the LMX theory, and particularly its precursor, the Vertical DyadLinkage theory, indeed raised the possibility and the probability that leaders differ-entiate between their subordinates, these theories neither legitimized nor advisedmaking such a distinction. They merely described the way many supervisors act ona daily basis, partly driven by time and resource constraints and partly by personalimpressions of and preoccupations about their subordinates (cf. Dansereau, 1995).In this respect, both the VDL and the LMX theory are descriptive theories. Thiscriticism is somewhat surprising in the light of the advice given by situational leader-ship theories that leaders should adapt their behaviour to specific circumstances (e.g.


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Hersey & Blanchard, 1969; House, 1971). It is quite likely that this advice also resultsin differential treatment of subordinates. The important question is whether differen-tiation is perceived as fair and functional or as unfair and dysfunctional.

In addition to the descriptive element, the LMX theory also has a prescriptiveelement. The LMX theory strongly suggests that it is important that leaders try todevelop high-quality relationships with all, or most, of their subordinates (Graen &Uhl-Bien, 1995). The exact nature of these exchange relationships can of course vary,but leaders should strive for a situation in which every subordinate is respected as avalued member of the work unit (Sparrowe & Liden, 1997). Training in developingas many high-quality relationships as possible, and in sensitizing leaders to theirpreoccupations, has proven to be effective (Graen, Liden & Hoel, 1982; Graen et al.,1986). As part of this training, managers explicitly stated to their subordinates thatthey desired to have high-quality working relationships. Subordinates who welcomedsuch gestures showed significant improvements in satisfaction and performance (seealso Graen & Uhl-Bien, 1995).

Subordinates should be given equal opportunities to contribute to common workgoals, with their skills being evaluated objectively and not through biased favouritism(cf. Dabos & Rousseau, 2004). From existing LMX research it can be concluded thathigh- and low-quality exchange relationships develop and form rather quickly. Firstimpressions and experiences with ‘try-outs’ determine for a large part which kind ofexchange relationship (i.e. high- or low-quality) will subsequently result (Liden etal., 1993). Whereas it is nearly impossible to evaluate subordinates’ job performancein entirely objective terms, leaders should realize that subjective performance ratingsare potentially affected by biasing factors such as familiarity, liking and prior repu-tation. LMX theory further advises supervisors, managers and HRM specialists to beaware of the potential biasing processes associated with high-quality LMX relation-ships. It is imperative that they apply ‘procedural checks’ to minimize the effects suchbiases may have on performance appraisals and career opportunities (cf. House &Aditya, 1997).

The advice to develop as many high-quality relationships as possible seems,however, a little naïve. First of all, the observation that leaders develop only a fewhigh-quality relationships because of time and resource constraints, was one of thestarting points in early LMX theorizing. Moreover, high-quality LMX relationshipsnot only bring privileges to subordinates but also carry obligations. Harris andKacmar (2006), for instance, found that high-quality LMX was associated withhigher stress among subordinates. Moreover, rapid changes in organizations, becauseof lay-offs and mergers, have become commonplace. This means that manyleader–member exchange relationships are not long-standing but time-bound (cf.Rousseau, 1998). It is conceivable that employees who have experienced many re-organizations act more cautiously and lower their expectations toward new superiors.Mutual expectations may also be quite different in the case of employees likecontingent workers, who differ from the traditional type of core employee. Becauseof its developmental and dynamic character, LMX theory may be a valuable contri-bution even in these situations, assuming that the obstacles we have highlighted areremoved. The work by Martinko and Gardner (1987) and Green and Mitchell (1979)on attributional processes in leader–member interaction may be helpful in thiscontext.


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In summary, we think that the first major challenge facing LMX theory is todevelop clear definitions and measurements of the concepts ‘relationship quality’ and‘exchange processes and commodities’. Second, the relationship domain as suchneeds to be related to leader and member behaviours and attributions, especiallydifferential treatment on the part of the leader and perceptions of fairness and justiceby followers. Third, in testing the three versions of LMX theory, levels of analysesshould be adequately specified and employed accordingly.

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Wim van Breukelen received his PhD from Leiden University, The Netherlands, in1991. His dissertation focused on the prediction and explanation of voluntaryemployee turnover. Since then, he has been Assistant Professor of Social andOrganizational Psychology at Leiden University. His research interests includeemployee turnover, mobility, leadership, organizational commitment, and methodo-logical issues. Currently, his main topic of interest is studying the application ofinsights from the Leader–Member Exchange Theory to diverse organizationalcontexts, including sports. [email: [email protected]]

Birgit Schyns received her PhD in psychology from the University of Leipzig,Germany, in 2001. Her PhD focused on preparation for change, including LMX and


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occupational self-efficacy as antecedents. She has been working as AssistantProfessor in the Department of Human Resource Studies at Tilburg University, TheNetherlands. Recently, she moved to the Portsmouth Business School, University ofPortsmouth, UK. Her research topics comprise leadership and career development.She has done research on antecedents and consequences of LMX in Germany andThe Netherlands, as well as on biases in followers’ perception of leadership (e.g.mood, personality, implicit leadership theories).

Pascale Le Blanc obtained her PhD in 1994 with a study on the Leader–MemberExchange Theory among general hospital nurses. Currently, she is AssistantProfessor in Occupational Health Psychology at Utrecht University, The Nether-lands, and Deputy Director of the inter-university Research Institute for Psychologyand Health. Her research interests include job stress, worksite stress managementinterventions, leadership, and teamwork.


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Leader–Member Exchange Theory and Research REVIEW and Future 2006

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