LMX differentiation, diversity, and group performance : Evidence for curvilinear and interaction effects

Purpose The impact of leader-member exchange (LMX) differentiation on group performance has been considered ambiguous. The purpose of this paper is to resolve this ambiguity by theorizing and examining a curvilinear relationship between LMX differentiation and group performance, and the moderating effects of group diversity on this relationship. Design/methodology/approach Data were drawn from 63 work groups (consisting of 322 members and 63 group leaders) selected from 27 technology service companies in South Korea. Group members rated their perceived LMX quality, while the human resource (HR) directors of each company assessed group performance. Findings The results showed that LMX differentiation had an inverted U-shaped relationship with group performance and that gender diversity and age diversity negatively moderated that relationship. However, the interaction between LMX differentiation and education-level diversity was not significant. Originality/value This study extends extant research by addressing the inconsistency among theoretical perspectives on the effects of LMX differentiation. This study transcends earlier research by considering the complex process of LMX differentiation, such as the curvilinear relationship between LMX differentiation and group performance, and the moderating effects of group diversity on that relationship.