The Leader–Member Exchange Relationship

Drawing on shared reality theory and social exchange processes in leader–member exchange (LMX), we posit that variability in LMX ratings at both the dyadic and group levels act as cross-level moderators of the routinely studied individual-level LMX–performance ratings association. Specifically, we introduce dyadic dispersion LMX as a key dyad-level variable that attenuates the positive individual LMX–performance association. Furthermore, we conceptualize that LMX differentiation, a group-level construct, is dysfunctional for individual outcomes as it violates norms of equality, and we suggest that the positive individual-level LMX–performance ratings association is plausible only in low differentiation workgroups and not high differentiation workgroups. Our analyses invoke new cross-classified and traditional nested models with multisource ratings of performance, and the findings largely support the study hypotheses. Implications for LMX at different levels of analyses as well as future theory and research are discussed.