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2.4 Leader Member Exchange (LMX) Theory
2.4.1 LMX Defined
Developed by Graen (1975) and colleagues (e.g. Dansereau et al., 1975), Leader-
Member Exchange theory, initially called Vertical Dyad theory, focuses on the
valuable leadership achieved in the relationship between the leaders and the followers
(Martin et al., 2010). The focal notion of LMX is that leadership occurs through an
effective relationship development of individuals (Uhl-Bien, 2006). These
relationships progress through a sequence of social exchanges and are defined as the
value of the relationship between the leader and the subordinate (Schriesheim, Castro,
& Cogliser, 1999). LMX theory states that, within work units, the quality of the leader-
member exchange differs widely along a continuum of low to high quality LMX.
Members in the low quality LMX range receive fewer valued resources than those in
high quality LMX relationships. Graen and Cashman(1975) argue that a contractual
atmosphere is maintained in the exchanges at this level. In contrast, leadership
relationships with high quality LMX are those most favoured by their leader, and the
exchanges often surpass the limitation of a formal employment contract. These
subordinates thus receive influence and support from their managers, thereby
providing the subordinates greater autonomy and responsibility (Dansereau et al.,
1975). This in turn, enhances the subordinates’ work performance (Hogg & Martin,
2003). Sin et al. (2003) state that high level leader member exchange (i.e. LMX) is
characterized by a high degree of trust and obligation, whereas low level LMX implies
a low level of trust. These groups of high quality and low quality LMX relationships
are sometimes mentioned as “in-group” and “out-group” (Graen & Cashman, 1975) or
as “trusted assistants” and “hired hands” (Cogliser et al., 2009).
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