Leader Member Exchange Flashcards, test questions and answers

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What is Leader Member Exchange?

Leader Member Exchange Theory (LMX) is an important theory in the field of leadership, and it has been used successfully to explain how effective leaders create relationships with their subordinates. The theory was first introduced by F.J. Dansereau, G. Graen, and W Haga in 1975, and since then it has become one of the most studied theories in the field of organizational behavior and leadership. LMX states that effective leaders develop different types of relationships with their subordinates based on a variety of factors such as trust, respect for differences, mutual understanding and communication.The fundamental idea behind the LMX theory is that successful leaders establish two distinct types of relationships with their followers – an In-Group relationship and an Out-Group relationship. The In-Group relationship is characterized by trust, mutual understanding and respect for differences while the Out-Group relationship lacks these qualities due to lack of knowledge or understanding about each other’s perspectives or roles within the organization. According to this theory, effective leaders are those who are able to build strong In-Group relationships with their followers through good communication skills and a strong sense of empathy towards them; whereas ineffective leaders tend to focus only on establishing strong Out-Group relationships which can have detrimental effects on organizational performance over time.