“At its core, social exchange theory is a theory of motivation that relies on non-monetary reinforcement principles among dyadic pairs of individuals seeking need fulfillment tied to their own rational self-interests (Homans, 1961).”
In a workplace, individuals have needs related to autonomy, competence, and relatedness…
According to MSU author John Hollenbeck, “It seems highly plausible that both leaders and team members serve as alternative reciprocation partners for need fulfillment in interdependent team contexts (273).” In a sample of surveys from 439 employees on 61 teams at a large textile enterprise in China, Hollenbeck measured both leader-member exchange (LMX) and team-member exchange (TMX), as well as motivation and performance. Matching pairs of leaders and “followers”, Hollenbeck’s study examined the degree to which commodities (services, advice, or information), in contemporary team-based environments, “may reside outside the strict leader-follower dyad.”
Examining LMX and TMX, Hollenbeck's research, published (2019) in Personnel Psychology, offers the following:
What are the implications for leaders?
LMX—approach to Leadership (considered a vertical)
- When a team is low in authority differentiation and high in skill differentiation, subordinates may want to cover all bases and not just focus exclusively on resource exchanges directed at the leader.
- When a team is high in authority differentiation, exchanges with the leader have a powerful influence that cannot be discounted. Low LMX quality employees in teams that were high in authority differentiation were far and away the lowest performers.
- High levels of skill differentiation weakened the otherwise positive effects of LMX on employee outcomes.
TMX—approach to Leadership (considered a horizontal)
- Subordinates in high TMX environments seem to find that the team as a whole was a viable social exchange partner when it came to motivating them and contributing to their performance.
- There may not be any other source that can replace a high LMX leader quite as well as a high TMX relationship with one's team.
What are the implications for employees?
- Focus on cultivating relationships with either your leader/supervisor or your team(s), as one of these paths must be available to achieve positive outcomes.
- Where authority differentiation is high and skill differentiation is low, research indicates that you ought to be highly focused on the relationship with your leader.
- In contexts where the team is low in authority differentiation and high in skill differentiation, you may want to cover all your bases and not just focus exclusively on resource exchanges with your leader.
Hollenbeck's research maintains that team-member exchanges can effectively replace a low LMX leader on outcomes related to satisfaction and performance. "Recognizing these boundary conditions is practically important to contemporary leaders whose role may increasingly involve creating strong dyadic linkages horizontally between team members, not just strong dyadic relationships between themselves and each individual team member (272)."
John R. Hollenbeck is University Distinguished Professor at Michigan State University and Eli Broad University Professor of Business at the Eli Broad College of Business. His research focuses on team decision-making, self-regulation theories of work motivation, and employee separation and acquisition processes.
Wang, L. C., & Hollenbeck, J. R. (2019). LMX in team‐based contexts: TMX, authority differentiation, and skill differentiation as boundary conditions for leader reciprocation. Personnel Psychology, 72(2), 271-290.