LMX differentiation is good for some and bad for others: A multilevel analysis of effects of LMX differentiation in innovation teams

Based on economizing resources (e.g., time, energy), leaders tend to develop different quality dyadic relationships (i.e., LMX, leader-member exchange differentiation) with different team members, which has several divergent consequences for team effectiveness and team performance. While initial findings indicate that LMX differentiation divides the team, where the high-quality relationship group (in-group) benefits from receiving the resources of the leader while the lower-quality relationship group (out-group) suffers from the resource constraints, this study focuses on how LMX differentiation is related to personal initiative, helpfulness, and proactive meeting interaction depending on group membership. According to a sample of 50 videotaped innovation team meetings (273 members, 50 leaders), the multilevel results supported the moderating role of group membership on the relationship between LMX differentiation and proactive behavior—whereas this relationship is negative for the out-group (apart from personal initiative, which was non-significantly related to LMX differentiation for the out-group), in-groups’ proactive behavior increases as LMX differentiation increases.