Equality Does Not Make You Happy: Effects of Differentiated Leader-Member Exchange and Team-Member Exchange on Developer Satisfaction in Agile Development Teams

Prior work on leadership in information systems development (ISD) teams has assumed that all developers are treated equally by their team leader and ignored the possibility that differentiated leader-member exchange (LMX) may be an important instrument for team leaders to influence self-organizing, agile ISD teams. We conducted a concurrent mixed methods inquiry to understand how LMX differentiation is associated with developer satisfaction in agile ISD teams and through which team processes agile ISD teams address LMX differentiation. We ran a multilevel, multistage survey of 1,894 software developers in 217 teams and an embedded case study of five ISD teams drawing on qualitative data from 40 interviews of developers and team leaders. Two focus groups (one with 10 developers and one with 10 team leaders) helped to substantiate the meta-inferences from the quantitative and qualitative studies. The results showed that LMX differentiation was positively associated with developer satisfaction, especially in teams with high-quality team-member exchange (TMX). We identify three team processes (i.e., collectivization of resources, visible appreciation of privileges, and freeing up leader capacities) that are enacted through agile ISD practices and allow ISD teams to leverage benefits from LMX differentiation for all their members.