Academic journal article Journal of Business Economics and Management

Diagnosing the Effects of Leader-Member Exchange Quality on Performance in the Context of Organizational Culture: A Case from Turkish Family-Owned Businesses

Academic journal article Journal of Business Economics and Management

Diagnosing the Effects of Leader-Member Exchange Quality on Performance in the Context of Organizational Culture: A Case from Turkish Family-Owned Businesses

Article excerpt

Introduction

The aim of this paper is to find out the foreseen effects of LMX quality on both firm performance and subordinate performance by taking the effect of organizational culture into consideration. There are several studies exploring the effects of LMX quality on organizational dynamics in Turkish organizations (e.g. Erdogan et al. 2004, 2006; Cevrioglu 2007; Ozutku et al. 2007; Pellegrini, Scandura 2006; Erdogan, Liden 2006; Karcioglu, Kahya 2011; Sahin 2011; Cetin et al. 2012). Some of these studies were held only at one organization and the effect of organizational culture has not been taken into consideration. Besides, both in Turkey and existing literature the importance of dyads as a unit of analysis is also not taken into account. In literature, exchange quality has been generally evaluated by taking only one side's (only the leader's or the member's) view into consideration. This is against the nature of exchange, which is a process involving both leaders and members. Besides, when only one side's ideas are considered, the differences between the perceptions of leaders and members are neglected. In this context, the effects of perceptional differences on organizational results cannot be evaluated. The number of studies considering both sides' perceptions are very limited (e.g. Erdogan et al. 2006; Maslyn, Uhl-Bien 2001).

Thus, we consider both leaders' and members' perspectives in order to find out the extent of fit between two parties' perceptions. Besides, the subordinate's performance was evaluated both by the subordinate and his/her leader to eliminate biases regarding perceptional differences.

1. Leader-member exchange theory

Leadership is the ability to influence, motivate and enable others to contribute to the effectiveness of their organizations (House, Javidan 2004). Graen and Uhl-Bien (1995) highlights that leadership has three main dimensions "leaders, members and the relationship between them". In this context leadership should not be considered as only related with "leaders" or only related with "members". The relationship between the leaders and the members should be also explored in order to understand the leadership process.

Leader-Member Exchange Theory proposed by Graen and his colleagues (Graen, Cashman 1975; Graen 1976; Graen, Scandura 1987) attempts to explain the relationship that develops between supervisors and subordinates as a result of their work place interaction. This theory is concerned with the hierarchical relationship between a supervisor and his/her subordinates (Varma, Stroh 2001) and each leader-member pair is called as "dyad."

Leader-Member Exchange Theory suggests that leaders do not use the same style in dealing with all subordinates, but rather develop a different type of relationship or exchange with each subordinate (Dansereau et al. 1975; Graen, Cashman 1975; Liden, Graen 1980; Graen et al. 1982; Graen, Scandura 1987). These relationships range from those that are based strictly on employment contracts (i.e., low LMX, or "out-group") to those that are characterized by mutual trust, respect, liking and reciprocal influence (i.e. high LMX or "in-group"; Dansereau et al. 1975; Liden, Maslyn 1998). In Figure 1, the in-group and out-group interactions, which are formed regarding the relationship types, can be seen.

1.1. Dimensions of leader-member exchange quality

According to us, LMX should be considered as a multidimensional concept. In this context, it becomes important to identify the dimensions, which the LMX relationship can be categorized. In the existing literature, LMX has been characterized in terms of (a) degree of trust between leader and member (Liden, Graen 1980); (b) subordinate competence (Liden, Graen 1980); (c) degree of loyalty between leader and member (Dansereau et al. 1975); (d) degree of perceived equity of exchange in the relationship by both leader and member (Hollander 1980; Jacobs 1970); (e) degree of mutual influence (Yukl 1981); and (f) amount of interpersonal attraction (or affect) between leader and member (e. …

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