What Works for Me Does Not Work for Us: Exploring the Relationships Between LMX Differentiation and Individual and Team Performance

Research has shown that leader-member exchange (LMX) differentiation leads to specific patterns of LMX quality within a team. These patterns are typically assessed through multiple properties that have different consequences for individuals and teams. Although a more comprehensive and nuanced understanding of the consequences of LMX differentiation can be achieved by incorporating these properties in a single framework, studies of this nature have been scarce. Drawing on the social comparison perspective and distributive justice principles, this study proposes a multilevel model to examine the motivational mechanisms through which two distinct properties that arise from the LMX differentiation process - LMX variation and LMX relative position - simultaneously affect individual and team performance. We also examine the cross-level moderating effect of LMX variation. Using a multilevel, multisource, and multiwave research design, we collected data from 1098 healthcare professionals nested in 95 teams in 27 emergency care units and from more than 3000 patients to explore the effects of LMX differentiation on individual and team performance outcomes. The results revealed that, at the individual level, LMX relative position was positively associated with individual performance via employees' psychological empowerment. At the team level, however, LMX variation showed a negative indirect effect on team performance via collective efficacy. Theoretical and practical implications of our findings for teams and organizations are discussed.