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Leader-Member Exchange Theory - LMX

Technical Details

Name: Leader-member Exchange (LMX)
Author: Dansereau, Graen, and Haga
Classification: Transactional Theories
Year: 1975

Leader-member Exchange (LMX) flows from literature on transformational leadership, extant in the 1970s. A number of fundamental concepts are quite old, such as rewards for supporting leadership being as old as political philosophies from Classical Greek days. The formalization of LMX stems from the term "Vertical Dyad Linkage (VDL), a concept developed by Dansereau, Graen, and Haga in 1975, with their paper, "A Vertical Dyad approach to leadership within formal organizations".


  • LMX is intuitive. It is what can be expected from a leader-group structure.
  • The theory points to what people could do to strengthen or weaken the leadership dynamics.
  • The theory explains the dynamic of age-old problems of cronyism, the mechanics of loyalty to a leader and corruption and provides a structure for not only modeling specific situations but solutions to problems.


  • The LMX theory does not account for leadership personalities very well.
  • LMX is so intuitive that it appears to be obvious. One asks, "What really is new and what is left out?" It leaves the reader with a sense of emptiness.
  • How values affect the group dynamics is left out.


How a leader maintains leadership through working with her or his supporters, those entrusted with responsibility and advisers defines the Leader-member Exchange theory as a method for exerting and maintaining leadership.


Leaders must garner and maintain their leadership position and the Leader-member Exchange theory states that such persons work with associates, supporters, trusted persons with responsibility, advisers and other "inner circle" to maintain her or his position. Another name for the theory is the "Vertical Dyad Linkage Theory". The word "dyad" means "two", and the two refers to the leader and the others with whom she or he works. "Linkage" defines the type of relationship; it is a connection that is maintained in the dyad. Leaders assume their role by getting adherents. "VDL" refers specifically to a leader regarding followers differently according to the degree of support they give. The more support a person gives to a leader, the more she or he will become part of the leader's "inner circle". These adherents, of course, support the leader, and it is this loyalty that the leader seeks to cultivate further. To reward this support, the leader dispenses favors in the form of jobs, recognition, money, and access to opportunities.

Over time, roles may become formalized and the supporter may be brought into a formal role with more power. However, the leader-subordinate relationship is preserved. At some point, there may be a conflict of power, if the subordinate reaches a level of equal power. There may be conflicts concerning power distribution and philosophies of leadership that can lead to a challenge to the leader. If there is disaffection with the leader, often the subordinate is relegated to a lower status and in extreme cases is ousted from the leadership circle. The strength of the relationship between the leader and members of the "inner circle" varies with the nature of tasks faced, qualities of the members, integrity of the organization, support for the organization, and so forth. The more those of the leadership circle work to support the leader, often the more support, rank and responsibility they get. Each case has to be evaluated on its own merit.

The range of leaders can be from a person leading a small discussion group or a supervisor of a work crew, to heads of countries or empires. The more complex the task and organization, the more factors enter into the organizational dynamics.

3 Stages of Development

Formally, one can identify at least three stages of development in the Leader-member Exchange relationship. First, there is the organizational stage, where a person rises from a group for various reasons. There usually is a task that needs to be performed and the approaches of doing it range from anarchy to a single person directing everything. This person rising from the rest of the crowd may have charisma, intelligence or some quality that others recognize and see as desirable or essential for accomplishing the task. There may be, of course, situations where there is no real task but persons are attracted to another and are desirous to follow. In this case, the will to socialize for a sense of belonging or companionship are prime motivators. Whatever the case, the leader-rest of the group forms.

A second stage of LMX occurs with role development. There are many origins, depending upon why the group was formed. Group members may simply be mimicking other groups. Tasks usually define the types of roles. Roles can be invented as rewards for favors done for the leader. The need for a division of labor creates the need for roles, as a leader cannot do every aspect of a task. Here, a balance has to be achieved between a leader's direct involvement in decision making and delegating work to others. An excess in either direction can result in the micro management or dispersal of authority to the extent that a leader can lose his or her leadership role. For the former, group members will chafe at being told what to do in the minutiae of everyday life. If authority is delegated too much in quantity or too widely, challenges to authority will arise, leadership will be diluted, and authority vaporizes.

Once a leader-led relationship is established, it becomes settled, and this is deemed the third stage of development of the LMX. A number of factors can affix this relationship, as the expression "good old boy network" adequately describes. Culture, social mores, economy, charisma, enormity of tasks an average individual cannot handle are just some of the factors that can solidify leader-led relationship and maintain them over time. Familiarity breeds contempt, and the more egregious routinized systems get challenged. In extreme situations at the nation-state level, there are revolutions.


Absent from the Leader-member Exchange theory is a consideration of leadership personalities. We are entreated with a general list of qualities that are helpful in maintaining a relationship with the group, such as trust, integrity, and willingness to delegate power, openness, and so forth. Would LMX break down, let's say, if a particularly charismatic leader were to assume power? How would this affect delegation of authority and attendant loyalty? Another fault with LMX theory is values clarification. How do values affect the relationship between the leader and group? What of conflicting values or a change of values as roles are assumed? How does the philosophy of leadership influence various situations? What philosophies shape what relationships? LMX seems to describe what nature occurs between a leader and a group, and one must ask what really is new about the theory. Have not the contents of the theory been known for a long time?

Future of theory

Game theory, such as that of John von Neumann can be coupled with Leader-member Exchange theory. What is the optimum way of achieving objectives? Cooperation has been found to be the most efficacious way of obtaining an objective. Various political philosophies can be coupled with LMX theory. First, however, there needs to be studies that correlate those philosophies with results. For example, does a philosophy that is more democratically-oriented and entrusting that people are good and competent result in a stronger leader-led bond? Further work might address systems analysis models, such as those presented by David Easton (A Systems Analysis of Political Life) and Walter Buckley. It is not farfetched to think of research in the field modeling and simulation that addresses Leader-member Exchange theory. However, the concepts in the theory would have to be quantified.

While there are three stages of the LMX theory, one can perceive of others. In the routinization stage, what if the relationships become so ossified and non-responsive to a population. One of the necessary factors for a participatory society to survive is participation. In reputed democracies, power relationships are routine, but in many cases people have not participated to the extent that there are good old boy networks, corruption sets in, and authority becomes oppressive. Here, we can point to a terminal stage in some cases, where is challenge to the routine. In systems theory, either a system adapts or it can fail, and for a theory to be more complete, it should at least acknowledge that Leader-member Exchange theory can transform, if not end.

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