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Dyadic theory approaches leadership as an exchange relationship which develops between a leader and a follower over time during role-making activities.

VDL theory argues a leader will form different relationships with different followers.

The leader treats followers differently leading to creation of in-groups and out-groups.

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

In-Groups and Out-Groups

The in-group includes followers with strong social ties to their leader in a supportive relationship characterized by high mutual trust, respect, loyalty, and influence.

Leaders influence with expert, referent, and reward power.

The out-group includes followers with few or no social ties to their leader, in a strictly task-centered relationship characterized by low exchange and top-down influence.

Leaders influence with position power.

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Discussion Questions

In your opinion, can a leader maintain a personal friendship with some members of his or her work group or team without creating the perception of in-groups (those in his or her social circle) and out-groups (those outside his or her social circle)?

What should a leader do to dispel any notion or misperception that there are in-groups and out-groups in his or her work unit?

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Leader-member exchange (LMX) is the quality of the exchange relationship between a leader and a follower.

Leaders have LMXs that vary in quality.

This relationship only extends to the formal employment contract.

This relationship results in higher job satisfaction and better performance.

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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High-quality social exchanges

Low-quality LMX relationships

Factors That Influence LMX Relationships

LMX relationships are based on social exchanges,

meaning there is reciprocity.

According to LMX theory, a leader,

varies behavior according to the quality of the interpersonal relationship with each individual.

The leader and the follower both influence the exchange relationship.

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Discussion Question

High-quality LMX relationships create a circle of reciprocity where followers feel like they should go the extra mile for a leader who supports them and the leader feels like he or she should offer the followers more support and benefits to keep their loyalty.

Do you believe this is the case in the real world or is it something different?

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Role of the Leader

LMX relationships develop when leaders move from economic-based exchange to socially based exchange.

Followers with the latter exhibit greater organizational citizenship behavior (OCB).

Organizational citizenship behavior is individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization.