Licensed to Misbehave? Leader Decisiveness Given Follower's Competence and Misconduct

Based on the idiosyncrasy credit theory, this article empirically tests the idea that leaders are likely to be more (less) lenient toward more (less) competent subordinates for misconduct—employee behavior that should be punished. With a field survey of 103 supervisors and their 582 subordinates (study 1) and an experiment that manipulates subordinates’ competence and leader dependence on subordinates (study 2), the posited effect is found to be indirect through leader–member exchange (LMX) and stronger when the leader dependence on the follower was higher. The findings suggest that given the exact same misconduct, leaders are more likely to mete differential treatment based on perceived subordinates’ competency, and LMX quality works as the underlying mechanism for these effects. Thus, the present work highlights the dark side of LMX by demonstrating when and why leaders are likely to be compromised when it comes to disciplinary decisions and offers practical implications for organizations on how to handle employee misconduct. Theoretically, our work suggests that the quality of relation between credit holders and those responsible for overseeing norms functions as the underlying mechanism for the idiosyncrasy credit theory.