Linking leader-member exchange differentiation to work team performance

Purpose – The purpose of this paper is to propose a conceptual model that delineates the psychological process and boundary condition of how leader-member exchange (LMX) differentiation influences team performance. Design/methodology/approach – Based on theories of LMX and social information processing, it is argued that several important mechanisms underpin the relationship between LMX differentiation and team performance. The role of these variables in the relationship is discussed. Findings – The team mechanisms such as affective climate and team-member exchange (TMX) serve as a boundary condition and psychological process to influence the LMX differentiation-team performance relationship. Their conceptual significance and how they affect the relationship are discussed. Research limitations/implications – This study focusses on theorizing TMX and affective climate as key variables in the LMX differentiation-team performance relationship. Future research considers examining the relative importance of other variables such as team potency or team cohesion to advance the understanding of the precise mechanisms that explain the relationship. Practical implications – The proposed model increases the understanding of the role of affective climate in the relationships between LMX differentiation, TMX and team performance. It helps minimize the negative effect of LMX differentiation, and may ultimately lead to better team performance. Originality/value – Although the implication of LMX differentiation has been discussed extensively, the research has not yet led to a firm conclusion as to its relationship with team outcomes. This study is one of the first to theorize affective climate and TMX as an important psychological mechanism and boundary condition to simultaneously influence the LMX differentiation – team performance relationship.