Leader-member exchange is when a relationship is created between task behavior and relationship behavior (Graeff, 1997). Leader-member exchange originates from research and literature on transformational leadership. The formalization of the Leader-member Exchange theory stems from “Vertical Dyad Linkage (VDL), a notion developed by Dansereau, Graen, and Haga in 1975, with their paper, “A Vertical Dyad approach to leadership within formal organizations” (Avolio, Walumbwa, & Weber, 2009). Leader-member exchange theory asserts that relationships between leader and follower will likely motivate followers to commit to organizations and leaders’ goals. This type of leadership is said to potentially elevate knowledge sharing between leader and follower. Leader-member exchange and knowledge sharing are considered to be positively linked with creative work involvement. In business, employees tend to enjoy a leader-member exchange relationship with high-quality. This type of leadership allows employees to engage in open and creative work processes and encourages climate perceptions (Hassanzadeh, 2014). A leader-member exchange relationship requires both leader and follower to agree and accept shared goals that will fulfill mutual interest (Graen, & Uhl-Bien, 1995; Hassanzadeh, 2014).
Leader-member exchange theory focuses on the relationship between the leader and follower (Northouse, 2013). The theory is that followers and leaders develop exchange relationships that positively alter the impact of organizational outcomes. A leader-member exchange occurs when leaders and followers develop a relationship that results in mutual interest being satisfied (Avolio, Walumbwa, & Weber, 2009). Within organizations, there are considered hierarchy’s labeled as in-group and out-groups. The groups are determined by how well the leader and follower work together. Followers that are favored by the leader are placed into the in-group, and followers that are not favored by the leader our placed within the out-group. To become favored, the follower must express their organizational dedication to the leader by exchanging activities that go beyond the normal job description (Northouse, 2013, p. 163). A leader-member exchange relationship is not designed to intentionally create inequalities. However, the style and favor system has created a questionable situation. (Northouse, 2013, p. 171)
Dr. Elijah Clark (December 3, 2014). Leader-Member Exchange [Web log post]. Retrieved from http://elijahclark.com/leader-member-exchange/