The Curvilinear Effect of LMX Differentiation: How Employees Evaluate and Respond to LMXD Legitimacy

Although substantial research assumes employees’ legitimacy perception of leader-member exchange differentiation (LMXD) as a critical mechanism that influences the relation between LMXD and employees’ behaviors, few studies examine how employees form the legitimacy perception of LMXD. Drawing from LMX theory and legitimacy framework, this paper examines employees’ evaluating process of LMXD legitimacy and their subsequent behavioral responses. Specifically, we use perceived LMXD legitimacy (i.e., employees' perception that team members’ LMXs are matched with their contributions to the team) to capture employees’ legitimacy judgment of LMXD. We theorize that LMXD has an inverted U-shaped relationship with perceived LMXD legitimacy, and this curvilinear relationship is moderated by perceived team political climate. Furthermore, we expect that perceived LMXD legitimacy enhances employees’ in-role performance and interpersonal helping. Using surveys from 207 leaders and 1163 employees, we found support for our predictions. An inverted U-shaped relationship between LMXD and perceived LMXD legitimacy was found, and this curvilinear effect became more pronounced for employees with high levels of team political perception. In addition, perceived LMXD legitimacy was linearly, positively related to employees’ in-role performance and interpersonal helping. Theoretical implications and future research directions are discussed.