Document Summary

A theory of leadership that focuses on the relationship that develops between a leader and an employee. It is a social exchange relationship-based approach to leadership. Effective leadership processes result when leaders and employees develop and maintain high-quality social exchange relationships. The basis for the effects of lmx is social exchange theory and the norm of reciprocity. High lmx involves a high degree of mutual influence and obligation as well as trust, loyalty, open communication, and respect between a leader and an employee. In high-quality relationships, employees perform tasks beyond their job descriptions. Low lmx is characterized by low trust, respect, obligation, and mutual support. Employees do only what their job descriptions and formal role requirements demand. In low-quality relationships, the leader provides less attention and latitude to employees. Individuals who are treated favourably by others feel obliged to reciprocate by responding positively and returning that favourable treatment in some manner.

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