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Leader-member exchange (LMX) theory of leadership and HRD Development of units of theory and laws

of interaction

Dae-seok Kang College of Business Administration, Inha University, Incheon,

Republic of Korea, and

Jim Stewart Nottingham Business School, Nottingham Trent University, Nottingham, UK

Abstract

Purpose – The purpose of this paper is to examine the relationship between leader-member exchange (LMX) and human resource development (HRD) to gain a better understanding of the LMX-performance relationship through connecting LMX and HRD theory.

Design/methodology/approach – Dubin’s framework is used for the purpose of linking LMX with HRD. Except that the last three steps (empirical indicators of key terms, hypotheses, testing) involved conducting empirical research, the authors employ steps 1 through 5 to build an HRD-based LMX model, i.e. the first step specifies that the units of the theory be identified; the second step involves establishing the laws of interaction applicable to the units of the theory. The third and fourth steps define boundaries for an HRD-based LMX model and suggest propositions for future empirical research. In addition, to lessen the likelihood of some redundancy the system states are included with the laws of interaction.

Findings – LMX and HRD (as represented by identified outcomes) theories are linked by at least three key factors: trust, empowerment, and performance. A theoretical model linking LMX and HRD also describes the contributions of trust, empowerment, and performance to LMX theory of leadership with the help of two specific HRD interventions – trust building and empowerment facilitation.

Research limitations/implications – The confirmation of the theoretical model through empirical research is still required.

Practical implications – In the aspect of relational performance, this paper proposes a basis for designing and implementing strategic HRD activities and recommends the conceptual model as an intervention technique for organizational change.

Originality/value – This paper illuminates the base of LMX leadership theory and seeks to develop new practical insights of the theory. In so doing, it aims to contribute to reducing the tension between leadership theorists and leadership development practitioners, described as validity versus usefulness.

Keywords Trust, Empowerment, Performance management, Human resource development

Paper type Conceptual paper

As a multidisciplinary field that creates its own discipline from a variety of theories (Jacobs, 1990; McGoldrick et al., 2002), one view of human resource development (HRD) is that it is a process that focuses on both personal and organizational outcomes on the basis of learning and performance (Swanson and Holton, 2001). Hence, HRD continuously works for a more enlightened, ethical, and skills-focused change management for both successes of individuals and organizations through a proactive

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Received July 2006 Revised October 2006

Accepted November 2006

Leadership & Organization Development Journal

Vol. 28 No. 6, 2007 pp. 531-551

q Emerald Group Publishing Limited 0143-7739

DOI 10.1108/01437730710780976

and system-wide intervention (Grieves, 2003; Stewart, 2003). In this view, the main focus of HRD is to enhance the knowledge and skills of individuals, both severally and collectively, to enable them to perform current and future goals and optimize individual and organizational growth and effectiveness. While this understanding of HRD is not without controversy or challenge (Elliott and Turnbull, 2005; Rigg et al., 2007b) it reflects a widely held and established conception that influences both research and practice (Harrison, 2005; Sadler-Smith, 2005). In a similar vein, leader-member exchange (LMX) is also an ongoing value-added process aimed at better performance of individuals and organizations through the diagnosis of leader-follower interactions (Green et al., 1996). LMX theory of leadership focuses on the degree of emotional support and exchange of valued resources between the leader and members. Thus, LMX leadership theory’s main focus is to diagnose this relationship so a higher quality can be developed in this relationship, enabling improved performance. These developmental features suggest a linkage between HRD, conceived as performative (Rigg et al., 2007a) and LMX theory. HRD contributes to this linkage through its multi- or interdisciplinary nature, providing a common boundary in pursuing performance.

Unlike traditional theories that seek to explain leadership as a function of leaders’ personal characteristics, features of the situation, or interaction between the two, LMX leadership theory has evolved into a dyadic approach to understanding leader-follower relationships (Howell and Hall-Merenda, 1999). According to the vertical dyad linkage approach (Dansereau et al., 1975), leaders and followers develop dyadic relationships and leaders treat individual followers differently, resulting in two groups of followers: an in-group and an out-group. The in-group consists of a number of trusted followers who are derived from expanded and negotiated role responsibilities with the leader. The out-group includes the remaining followers with whom the relationship of the leader remains more formal. A higher quality relationship results when leaders and followers exchange greater physical resources, information and enjoyable tasks (Liden and Maslyn, 1998). This reflects the assumption that leaders have limited time and energy and associated inability to give equal attention to all followers.

Since, the early formulation of LMX theory a number of additional studies have established antecedents and outcomes of high quality relationships using survey instruments and measurement scales (Table I). The antecedents of LMX identified by empirical research are mostly leader and follower characteristics that exist prior to the exchange, or their behaviors that occur during the LMX. The outcomes are associated with followers’ work related attitudes and behaviors such as increased commitment, satisfaction, performance and organizational citizenship behavior (OCB). The results of empirical studies of LMX have commonly shown that followers in high quality LMX relations have more positive job attitudes and engage in more positive behaviors than those in low quality relationships.

According to Gerstner and Day’s (1997) meta-analytic review on LMX, however, there is surprisingly little agreement on what LMX is and how it operates in relation to performance. In particular, although the LMX model highlights the importance of the role and type of reciprocity, it does not explain how these concepts interact to build mature partnerships (Dienesch and Linden, 1986; Schriesheim et al., 1999; Sparrowe and Liden, 1997; Yrle et al., 2003). Whether LMX diagnosis can actually improve performance is further questioned, considering that it may support the need for

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development among privileged groups in the workplace (Northouse, 2004). Yu and Liang (2004) even doubted the previously well-accepted positive relationship between high quality LMX and organizational performance found in previous studies. In short, although empirical research has supported the validity of the LMX theory of leadership, explanations of LMX processes are still speculative, brief, and primarily descriptive (Dienesch and Linden, 1986; House and Baetz, 1979; Northouse, 2004). Therefore, this paper seeks to address this theoretical deficiency and to propose a conceptual solution to explain the LMX-performance relationship more effectively, and to suggest better ways to apply LMX in real organizational settings through practical applications of chosen HRD interventions.

Research purpose and research questions The overall purpose of this paper is to examine the relationship between LMX and HRD to gain a better understanding of the LMX-performance relationship through connecting LMX and HRD theory. On the basis of the development attributes of LMX theory, this paper addresses two questions:

RQ1. How is LMX linked with HRD? Are there common units of theory between LMX and HRD which are necessary for theory building?

Antecedents Outcomes

Leader Attitudes Trustworthiness (Brower et al., 2000; Gomez and Rosen, 2001)

Job satisfaction (Graen et al., 1982; Green et al., 1996)

Positive expectation of subordinate (Sparrowe and Liden, 1997)

Job dedication (Michael et al., 2005)

Power (Cogliser and Schriesheim, 2000) Communication satisfaction (Mueller and Lee, 2002)

Transformational leadership (Wang et al., 2005; Howell and Hall-Merenda, 1999)

Organizational commitment (Duchon et al., 1986; Liden et al., 2000)

Rapport management (Campbell et al., 2003) Perceived empowerment (Gomez and Rosen, 2001; Liden et al., 2000)

Follower Behaviors Goal orientation (Janssen and Van Yperen, 2004; Chiaburu, 2005) Performance (Gehani, 2002; Wayne and Ferris, 1990)

Organizational citizenship behavior (Hui and Law, 1999; Scandura et al., 1986)

Effort (Maslyn and Uhl-Bien, 2001)

Subordinate turnover (Bauer and Green, 1996; Liden et al., 1997)

Impression management (Wayne and Liden, 1995) Innovative behaviors (Basu and Green, 1997) Cooperative communication among peers (Lee, 1997)

Interpersonal Liking (Engle and Lord, 1997; Wayne et al., 1997) Similarity (Deluga, 1998; Murphy and Ensher, 1999) Positive expectation (Liden et al., 1993; Wayne et al., 1997) Interactional justice (Masterson et al., 2000; Murphy et al., 2003)

Table I. Antecedents and

outcomes of high quality LMX

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RQ2. If LMX and HRD have common units for theory building, how do their common units of theory operate together to improve the LMX-performance relationship?

Despite the high level of scholarly interest in LMX theory development, researchers have not yet approached the phenomenon through the lens of HRD interventions such as individual training and development and organization development (OD). We suggest that this is a significant reason that the LMX-performance process in the LMX literature has been descriptive and even vague. Accordingly, through theory building between LMX and HRD, we try to illuminate the base of LMX leadership theory and to develop new practical insights of the theory. In so doing, we aim to contribute to reducing the tension between leadership theorists and leadership development practitioners, described as validity versus usefulness (Stewart, 1999; Van de Ven, 1989).

Review of LMX theory of leadership Understanding of organizational outcomes through leadership research has progressed from consideration of leader attributes to recognition of the importance of the relationships that leaders have within a situation or with subordinates. The former viewpoint would be best exemplified by theories of transformational leadership (Bass, 1985) and the latter approach is the basis of LMX. However, this dichotomy within the study of leadership may be less significant than generally accepted since transformational leadership is conceptually similar to the process of developing a unique LMX (Gerstner and Day, 1997). There is emerging support for the claim that LMX may be transformational leadership at certain times and under certain conditions (Deluga, 1992; Krishnan, 2004; Wang et al., 2005). Thus, a review of two-way, reciprocal exchanges between leader and follower is not only helpful in understanding the essence of organizational leadership but it also provides a foundation for the LMX-HRD linkage model to be proposed later in this paper.

LMX is defined as follows:

Leader-member exchange is (a) a system of components and their relationships (b) involving both members of a dyad (c) involving interdependent patterns of behavior and (d) sharing mutual outcome instrumentalities and (e) producing conceptions of environments, cause maps and value (Scandura et al., 1986, p. 580).

Leaders in high quality LMX relationships rely heavily on followers to act in their stead (Dunegan et al., 1992) and encourage them to undertake more responsible activities (Graen and Uhl-Bien, 1995). Followers in such relationships interact frequently with their leaders and have their leaders’ support, confidence, encouragement, and consideration. Followers take on added duties or expend extra effort to achieve work group goals beyond contractual or transactional expectations (Sparrowe and Liden, 1997; Wayne et al., 1997).

LMX development Dyadic relationship development is theoretically grounded in role theory (Katz and Kahn, 1978) and social exchange theory (Blau, 1964; Emerson, 1962). Both theories help to explain how LMXs form.

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Role theory. Role theory makes a significant contribution to understanding the role of leaders and members. The role expectations of a supervisor and the extent to which the subordinate meets these expectations make up the relational context of the exchange process. Graen and Scandura (1987) suggested a three-phase model of LMX development including role taking, role making, and role routinisation. For example, supervisors test subordinates with various work assignments in a series of role-making episodes. In this process, the degree to which subordinates comply with task demands and demonstrate a worthiness to be trusted influences the type of LMX relationship they form. In turn, the type of LMX determines the extent to which the leader reciprocates with work-related resources such as information, challenging task assignments and autonomy. In this way, leaders and followers develop a role relationship based on mutual dependencies within assigned and accepted roles and followers’ performance in the role plays a major part in this role-making process (Dienesch and Linden, 1986). In addition, it is noteworthy that this role-making process is one in which an individual has role episodes not only with a formally designated leader, but also with an entire role set of others, including other members, who communicate important role information (Sparrowe and Liden, 1997).

Social exchange theory. Rather than focusing on the role of leaders and members, social exchange theory focuses on the exchange between them. Social exchange theory describes how power and influence among leaders and subordinates are conditioned by the availability of alternative exchange partners from whom these leaders and subordinates can obtain valued resources. Based on this perspective, Liden et al. (1997) described leader-member relationship development as a series of steps that begins with the initial interaction between the members of a dyad. This initial interaction is followed by a sequence of exchanges in which individuals test one another to determine whether they can build the relational components of trust, respect and obligation necessary for high quality exchanges to develop (Uhl-Bien et al., 2000). If reception of an exchange behavior is positive and the party initiating the exchange is satisfied with the response, the individuals continue the exchanges. If the response to an exchange is not positive or if the exchange never occurs, opportunities to develop high quality exchanges are limited and relationships will likely remain at lower levels of LMX development (Dienesch and Linden, 1986; Uhl-Bien et al., 2000). That is, LMX development is conditioned by the expectation of the exchange and satisfaction with the exchange behaviors.

Multidimensionality of LMX While the majority of the LMX studies have shown consensus on the nature of the phenomenon as being the quality of exchange relationship between leader and follower, inconsistencies regarding the sub-dimensions continue to exist. Of those sub-dimensions, mutual support, trust, liking, loyalty, and latitude appear to be predominant in the majority of studies (Schriesheim et al., 1999).

Graen and Uhl-Bien (1995) proposed that LMX is comprised of three dimensions: mutual respect of each other’s capabilities; a deepening sense of reciprocal trust; and a strong sense of obligation to one another in the working relationship. These dimensions are focused mostly on the formal job relationship. However, LMX is not based solely on job-related elements; it can also include socially-related currencies (Liden et al., 1997). For example, some people may value professional capability in a

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relationship whereas others value a dyadic partner they can regard as a friend. Liden and Maslyn (1998) proposed four dimensions of LMX relationships, labeled contribution, affect, loyalty, and professional respect. While the contribution dimension belongs to work-related currency, the affect, loyalty, and professional respect dimensions are more social currencies. With a basis of the multidimensional character of roles and exchange materials, they proposed that LMXs are developed and endured in a number of ways, including non-work focused or related interactions.

Since, the multidimensional perspective of LMX assumes variability within exchange types, the different dimensions could be affected by different factors. This complex nature of LMX may be partially responsible for the lack of universal agreement on what leader-member exchange is. However, understanding this multidimensionality could provide insight into the dynamic development and maintenance of LMX relationships that result in differential predictions of outcomes according to the chosen currencies of exchange (Liden and Maslyn, 1998). Along with the developmental attribution of LMX, this multidimensional nature of LMX may be a characteristic that potentially allows an examination of linkage between LMX and HRD. This linkage is built on the performative assumptions of LMX and the performative view of HRD. As indicated earlier, we accept that alternative analyses of HRD exist. However, LMX itself is firmly derived from performative analyses of organization functioning and so the performative analysis of HRD is argued here to be most appropriate for examining potential linkages.

Linkage between LMX and HRD LMX theory may be better understood through the outcomes of effective HRD, for example through interpersonal trust and empowerment. Trust building is a learning process of testing and developing trust in another (Lewicki and Bunker, 1996; McLain and Hackman, 1999; Mayer et al., 1995; Shapiro et al., 1992). As part of HRD, trust is recognized as the most important component for team development and overall performance effectiveness (Stoner and Hartman, 1993; Stewart, 1996). This is because interpersonal trust facilitates informal cooperation and reduces unnecessary monitoring costs (Macauley, 1963; Powell, 1990). In the perspective of HRD, empowerment is also a means of enhancing effectiveness at work (Wall et al., 2002). Empowerment facilitation is a direct attempt to solve various organizational problems in order to improve work performance (Bae and Rowley, 2004; Morrell and Wilkinson, 2002). A core assumption of empowerment facilitation is that it releases motivation, initiative, implicit knowledge, flexibility, involvement, and commitment required from employees to respond to increasingly competitive conditions (Lawler, 1992; Leach et al., 2003; Pfeffer, 1994). These two HRD interventions of trust building and empowerment provide a useful illustration of the HRD-LMX theory link as an explanation of the relationship between LMX theory and performance, and of the potential for more effective application of LMX theory in organizational settings. In this analysis, these two HRD interventions are enablers linking LMX with performance and in a way which guides organization action (Table II).

To develop the LMX-performance linkage, this papert explores the contributions of trust, empowerment, and performance to LMX theory of leadership with the help of two specific HRD interventions – trust building and empowerment facilitation. As shown in Figure 1, relationship boundaries, referred to as in-group, are expanded

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through trust building. A higher level of trust in an expanded in-group increases the likelihood of cooperation, sharing of information, and emotional support in the LMX relationship. These relational obligation behaviors, in turn, result in promoting superior levels of individual and organizational performance through enhanced levels of empowerment. Of course, there are other variables besides these three. For example, job satisfaction and organizational commitment are mediators of the relationship between LMX and extra-role performance (Hackett and Lapierre, 2004), and communication frequency can be a moderator of the relationship between LMX and job performance ratings (Kacmar et al., 2003). However, given the longstanding connection of trust and empowerment to HRD, they have the potential for better explaining the LMX-performance linkage through HRD.

Applying theory building to the relationship According to Torraco (1997, p. 126) theory-building is, “the process of modeling real-world phenomena.” To identify the existing relationship between the two domains and build a theoretical model we adopted the five components of Dubin’s (1978) eight-step, theory-building method which directly contribute to building theoretical models. According to this method of theory building, the completion of steps 1 through

OD techniques TD focuses

Trust building Team building: a collaborative exercise designed to help work groups improve the way employees accomplish tasks by enhancing the interpersonal and problem solving skills of team members (Porras and Robertson, 1992; Svyantek et al., 1999)

Role definition and accountability (Kirkman et al., 2000) Communication skill (Coyle, 1993; Herzog, 2001)

Teamwork (Jones and George, 1998) Risk taking (Cook et al., 2005; McLain and Hackman, 1999)

Process consultation: a set of activities on the part of the consultant ensuring individuals own problems and gain the skills and expertise to diagnose and solve them themselves (Schein, 1987). Its main focus is diagnosing and understanding process events

Conflict resolution (Bunker et al., 2004; Driscoll, 1996)

Value and Goal congruence (Iyer, 2002; Nelson et al., 2001)

Empowerment facilitation

HPT (human performance technology) intervention: a set of methods and processes for solving problems – or realizing opportunities – related to the performance of people (Stolovitch and Keeps, 1992)

Self-appraisal and self-development (Cook and Macaulay, 1993; London and Smither, 1999) Creating a vision (Nixon, 1995; Shandler and Egan, 1994)

KM(knowledge management) activity: any process or practice of creating, acquiring, capturing, sharing, and using knowledge . . . to enhance learning and performance in organizations (Scarborough et al., 1999)

Problem solving (Mallak and Kurstedt, 1996; Siu et al., 2005)

Decision making (Esquivel and Kleiner, 1996; Hill and Huq, 2004) Performance monitoring and feedback (Guinn, 1995; London et al., 1999) Fault tolerance (Russ, 2000)

Table II. The selected OD

techniques and TD focuses for trust building

and empowerment facilitation in the LMX

process

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5 (units, laws of interaction, boundaries, system states, propositions) result in a theoretical model and the remaining steps (empirical indicators of key terms, hypotheses, testing) involve conducting empirical research. We employed steps 1 through 5 to build a HRD-based LMX model. However, we did not stipulate the system states in a specific section but included this with the laws of interaction instead. The reason for this is that the system states are often designated by examining the laws of interaction and therefore are likely to bring about some redundancy.

The following sections describe our application of Dubin’s framework to our purpose of linking LMX with HRD. The first step specifies that the units of the theory be identified. The second step involves establishing the laws of interaction applicable to the units of the theory. The third and fourth steps define boundaries for a HRD-based LMX model and suggest propositions for future empirical research.

Units of the theoretical model The units in theory building are concepts and the building blocks on which the theory is constructed (Lynham, 2002). The link between HRD and LMX theory necessitates three basic units of the theory: trust as the central component of quality of the relationship, empowerment as a motivation factor and individual, group, and organizational performance as the outcomes.

Trust as the quality of relationship. Trust is a critical element in improving organizational relationships (Bunker et al., 2004). In fact, the development of LMX relationships can be viewed as a trust-building process (Bauer and Green, 1996; Brower et al., 2000). Recent models of trust have moved away from definitions that examine

Figure 1. A theoretical model linking LMX and HRD

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trust for generalized others (Rotter, 1967) to a definition of trust as characteristic of dyadic relationships (Mayer et al., 1995). Rousseau et al. (1998, p. 395) defined trust as “a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another.” In common with the LMX development process, Kramer and Tyler (1996) described the development of trust as a social exchange process. Brower et al. (2000) also compared the relational construct between LMX and trust. They argued that reciprocity is central to both LMX and trust, although trust is different from LMX in that trust does not assert that reciprocity will be mutual or balanced (Mayer et al., 1995). A high LMX relationship characterized by mutual trust, loyalty, and behaviors that extend outside the employment contract may reflect the state of identification-based trust (Lewicki and Wiethff, 2000; Shapiro et al., 1992). This form of trust is based on empathy with the other party’s desires and intentions. That is, trust exists because each party effectively understands, agrees with, emphasizes, and takes on the other’s values because of the emotional connection between them; thus the parties act for each other (Kramer and Tyler, 1996). To establish this relational trust that is fundamental for LMX and organizational performance, effective HRD interventions are helpful and powerful facilitators, if not essential. In developing LMX quality, interpersonal trust building can be more effectively created through various techniques grounded in HRD theory. Examples of specific HRD interventions can be found in OD programs such as those described in McLean (2006).

Empowerment as motivation. Empowerment is an important construct in the LMX process because it offers the potential to positively influence outcomes that benefit both individuals and organizations (Liden and Tewksbury, 1995). Psychological empowerment has been defined as “the increased intrinsic task motivation manifested in cognitions that reflect an individual’s active orientation to his or her work role” (Spreitzer, 1995, p. 1443). That is, empowerment comprises individual cognition and perceptions that constitute feelings of behavioral and psychological investment in work (Conger and Kanungo, 1988; Zimmerman, 1990). Accordingly, the feeling of empowerment that both leaders and members experience is influenced by their exchange quality based on interpersonal trust (Keller and Dansereau, 1995) that, in turn, influences their role performance at various levels of the organization (Liden et al., 2000). Thomas and Velthouse (1990) conceptualized the empowerment experience as a multifaceted set of four cognitive dimensions that reflect a proactive individual mindset toward work role: impact (the degree to which behavior is seen as making a difference in terms of accomplishing the purpose of the task), competence (the degree to which a person can perform task activities skillfully when he or she tries), meaningfulness (the individual’s intrinsic caring about a given task), and choice (causal responsibility for a person’s actions). As with the trust construct in the LMX relationship, these cognitive dimensions related to work role have potential for development through HRD interventions. In this regard, empowerment facilitation is essential for both LMX performance and associated organizational performance and thus calls for effective HRD interventions (McGoldrick and Stewart, 1996).

Individual, group, and organization performance. With a shift in paradigm of HR activities from control to autonomy, trust and empowerment in management have become increasingly important elements in determining employee performance (Laschinger et al., 2001). According to Swanson and Holton (2001), performance is the

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valued productive output of a system. The perception of built trust and enhanced empowerment in the LMX process through effective HRD interventions is expected to influence both the amount and quality of the product or service that an individual, group and organization produce. In particular, performance at various levels of the organization needs to be considered from the perspective of process level performance (Rummler and Brache, 1995; Swanson, 1994) in that both LMX and HRD are ongoing development processes. For example, there may be the two performance types: the performance in the process of LMX and the performance resulting from LMX. These two performances may be sequential and inter-connected with each other for higher level performance. As a systemic value chain, an LMX process that consists of a higher level of trust, empowerment, and performance can produce a strong performance-oriented culture (Wiener, 1988) under the umbrella of effective HRD. In other words, this HRD-based LMX performance process can be an exemplary performance model that creates an organization’s positive values and traditions that are intensely held and widely shared through learning and internalization.

Law of interaction in the theoretical model The law of interaction specifies how the units interact and relate to one another (Lynham, 2002). In this step, the categorical and sequential laws of interaction, among the three units of theory, identify the connection between LMX and HRD.

Figure 2 shows the relationships among categorical dimensions for conceptualization of the interaction of the three units. The chosen HRD interventions; trust building and empowerment facilitation are immanent in each unit category. Interpersonal trust and empowerment enhanced by these HRD interventions contribute to the improvement of the quality of reciprocity and the level of collective- and self-efficacy between leaders and members and, at the same time, these HRD interventions, when applied effectively, have an influence on current or future performance of the individual, group, and organization. Specifically, a higher level of trust, which is a core construct determining the quality of LMX relationships, produces positive effects on each individual’s work-related attitudes and behaviors (Dirks and Ferrin, 2001) and on their group problem solving and decision making (Pillai et al., 1999). Empowered leaders and members come to view themselves as more effective in their work (Quinn and Spreitzer, 1997), and the empowered LMX relationships in dyads or groups contribute a higher level of commitment and greater productivity (Kirkman and Rosen, 1999).

Figure 2. Relationships among conceptual dimensions in building a theoretical model

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Indeed, the process of LMX-performance and all of its interacting units would be a system, a collection of interdependent, organized parts (McLagan, 1989). The overlapping circles on the LMX-performance process in Figure 2 portray potential system states among the interacting units. In these system states trust, empowerment, and performance interact with each other to contribute to the system as a whole. Effective HRD interventions further provoke their goal orientation and achievement. Therefore, this systemic linking of LMX and HRD leads a progression from the leader-member exchange process to performance.

In this analysis, the key premise of the LMX theory of leadership is that leaders develop a different type of relationship or exchange with each subordinate according to the extent of their interpersonal trust (Brower et al., 2000). In addition, a major premise of empowerment is that empowered individuals perform better than those who are relatively less empowered (Conger, 2000). In this regard, a sequence can also be considered among the three constructs of interpersonal trust, empowerment, and performance.

Figure 3 shows the suggested sequential relationship among the three key units. As shown in Figure 3, the LMX process is developed through the three sequential stages (Graen and Scandura, 1987; Graen and Uhl-Bien, 1995): role taking (stranger), role making (acquaintance), and role routinisation (partner). In the role taking (stranger)-role making (acquaintance) phase, leaders offer role responsibilities and assess whether followers successfully fulfill them. In the transition to the advanced role stage greater responsibilities, discretion, and benefits are given as the follower meets the role responsibilities. Thus, in the initial phase the main focus of interpersonal trust would be the follower’s ability, benevolence, and integrity (Mayer et al., 1995). However, the leader’s role attitude and competence are still important to move to a higher quality LMX because followers are not passive role recipients (Deluga, 1994). They may reject, embrace or renegotiate roles prescribed by their leaders. As trust building is in the domain of HRD, effective HRD can boost not only those cognitive foundations of follower trust but also leaders’ attitude and competence of their task role and then it can transform into higher-level affective trust characterized by emotional bonds between partners (McAllister, 1995).

Figure 3. Suggested sequential

relationships among the three key units

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As the level of LMX quality is improved to affect-based trust, the perception of empowerment of both leader and member may also increase, particularly in the phases of role routinisation (partner). According to Conger and Kanungo (1988), empowerment is a process of enhancing feelings of self-efficacy among organizational members and the effect of empowerment is initiation and persistence of behavior by empowered employees to accomplish task objectives. In this regard, empowered individuals not only view themselves as more effective in their work but also evaluate each other as more effective, and leaders and followers in this psychological state seek cooperation to achieve common goals and recognize how to use their abilities for the benefit of themselves, the LMX group and the organization. In these phases the aspect of leadership behaviors fostering the formation of high quality relationships through instillation of a sense of a common fate with their followers, would be more critical than followers’ behavior (Wang et al., 2005). Thus, empowering by means of HRD needs to focus more on the leaders’ behaviors and through that can increase the likelihood of improved organizational performance through LMX performance. This process, in turn, becomes central in shaping pathways between LMX and performance through the application of HRD. This role and function of trust building and psychological empowerment can be further enhanced when effective HRD is applied and conducted appropriately.

Boundaries of the theoretical model According to Dubin (1978), a model has to have boundaries corresponding to the empirical system. This is because boundaries establish the real world limits of theory. Two boundaries were identified for this theoretical model (the two circles in Figure 1 shows these boundaries). The first boundary is the relationship between the leader and a member or group members. As a one-on-one dyad develops, interpersonal trust and individual self-efficacy through HRD interventions become associated with individual performance. As a new expanded in-group, moreover, an increase in group trust level and collective efficacy is associated with group performance. This boundary provides a potential to be developed through HRD interventions, and thus it becomes a starting point in the LMX-performance relationship.

The second boundary exists between the assembly of dyads or expanded in-group and organization. Within a system of interdependent dyadic relationships and their network assemblies at various level of organization, a trust-based and empowering culture is created through HRD interventions and is associated with organizational performance or competitive advantage. This LMX system is not limited to formal superior-subordinate relationships but includes leadership relationships among peers, teammates and across group and organizational levels. As a result, it is helpful in explaining how dyads that are differentiated as in-group lead to high functioning organizations.

Propositions of a HRD based LMX theory As logical statements about the theoretical system, propositions enable the researcher-theorist to make predictions from the theoretical framework about the values of the units of the theoretical framework in the real world (Lynham, 2002). On the basis of the theoretical relationships discussed in the preceding steps, this paper suggests six such propositions:

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P1. Greater interpersonal trust leads to greater empowerment that, in turn, leads to improved individual, group, and organizational performance.

P2. Developed interpersonal trust will improve leader and member quality of LMX.

P3. HRD-based empowerment experiences and interventions will facilitate the development of the relationship between higher quality LMX and individual, group, and organizational performance.

P4. As interpersonal trust levels increase through trust building and empowerment facilitation and interventions, LMX will increase and out-group members will move to the in-group.

P5. As interpersonal trust levels increase through trust building and empowerment facilitation and interventions, LMX will increase and expand the boundary to include more individual within groups.

P6. Expanded boundaries between in- and out groups will increase performance at the individual, group, and organizational levels.

While there is some existing evidence in the LMX empirical studies cited throughout this paper to support elements of the relationships and propositions offered in this analysis, as with all good theory building it is now important to create the empirical studies, proposition by proposition, to test the model. If empirical evidence continues to support the suggested relationships, both HRD and LMX theories will be strengthened and be more useful for application in practice.

Conclusions This paper has described the relationship between LMX theory of leadership and HRD through the perspective of theory building. This approach suggests that the concepts most centrally underlying LMX and HRD are the common notion of learning and development processes. As a result, the linkage of HRD and LMX theory that is established on the three key units of trust, empowerment, and performance suggests potential for each domain to play a role in realizing goals in and improving each domain. That is, HRD can be a solution to improving LMX as an ongoing value-added process for better performance of individuals, groups, and the organization, while LMX can be a useful approach to promoting two goals of HRD – personal and organizational development. The more the quality of relationships within LMX is seen as a HRD process and developed through HRD in organizational contexts, rather than seeing it as an individualized leadership theory, the more the LMX theory of leadership becomes a useful implement of both individual and OD for performance.

According to the Dubin’s (1978) quantitative theory-building approach, however, the confirmation of the theoretical model through empirical research is still required. With this in mind, future research first needs to carefully investigate the conceptual framework with a notion that leader and follower LMX are separate constructs (Gerstner and Day, 1997). This attention could be particularly important when researchers identify empirical indicators to specify hypotheses and HRD interventions are selected for a better LMX-performance progression in the conceptual model. Second, arising from the conceptual framework, future research needs to employ

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further possible theoretical units and develop their potential system states allowing for the multidimensional nature of LMX sub-dimensions (Schriesheim et al., 1999). Under the system approach, focusing on the diverse units and their dynamic interactions will not only be critical to advancing of existing knowledge of LMX but also to facilitating the practical application of the framework. Third, future research needs to deal with specific HRD interventions affecting each phase of the conceptual framework to improve the framework’s utility in dealing with real organizational phenomenon. Along with various units and their extended system states, if each HRD intervention relevant to specific phases could be further elaborated then the HRD-based LMX model would be a more relevant prescriptive solution for organization or leadership development as well as higher quality relationships.

According to Burns and Otte (1999), organizational leadership theory can be useful to HRD practitioners in designing leadership development, management, and supervisory development, succession planning and managerial coaching or attempting to solve performance issues in a work group. That being the case, the conceptual framework specifying LMX-HRD linkages suggested here has potential benefits for HRD practitioners conducting broader activities which involve leadership or OD. Thus, the framework can be said to have use value. However, the validity of the framework will only be established through the empirical studies detailed in the propositions.

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About the authors Dae-seok Kang is an Assistant Professor of organization/human resource management at the Inha University in Incheon, Korea. He received his PhD from the University of Minnesota – Twin cities, USA. His research interest includes organizational leadership, training and development, and employee empowerment. E-mail: [email protected]

Jim Stewart is Joint Course Leader of the Nottingham Business School DBA program and Chair of UFHRD. Jim Stewart is the corresponding author and can be contacted at: [email protected]

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