Social Media Assignment
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loi-chan-and-lam-2014.pdf
Journal of Occupational and Organizational Psychology (2014), 87, 42–61
© 2013 The British Psychological Society
www.wileyonlinelibrary.com
Leader–member exchange, organizational identification, and job satisfaction: A social identity perspective
Raymond Loi*, Ka W. Chan and Long W. Lam Department of Management and Marketing, University of Macau, Taipa, Macau
This study examines the influence of leader–member exchange (LMX) on employee organizational identification and job satisfaction. Drawing upon the current literature of
social identity theory, we propose a moderated mediation model with organizational
identification as the mediator of the relationship between LMX and job satisfaction, and
with job security as the moderator on such positive indirect link between LMX,
organizational identification, and job satisfaction. We tested our hypotheses using a
two-phase survey data collected from 306 employees of two companies in southern
China. Implications of our findings for research and practice are discussed.
Practitioner points
� Organizations should train managers to maintain high-quality LMX. � Appropriate human resource practices for cultivating LMX and employee organizational identification
should be adopted.
� Supervisors should pay more attention to their LMX quality with those employees having low levels of job security.
In the past decades, there has been extensive research on leader–member exchange (LMX; Dulebohn, Bommer, Liden, Brouer, & Ferris, 2012) and organizational identifica-
tion (Ashforth, Harrison, & Corley, 2008), respectively. The former refers to the quality of
emotional and resource-based exchange relationship in the supervisor–subordinate dyad (Sparrowe & Liden, 1997), whereas the latter refers to the employee’s perception of
oneness with or belongingness to an organization (Mael & Ashforth, 1992). Interestingly,
despite the widespread research interest in studying these two constructs, there have
been few studies (Katrinli, Atabay, Gunay, & Guneri, 2008; Tangirala, Green, & Ramanujam, 2007) linking LMX to organizational identification. Given that supervisor– subordinate dyadic relationship is the basic work unit within the organization (Liden,
Sparrowe, & Wayne, 1997) and employees often view their supervisors as representatives
of the organization (Eisenberger, Stinglhamber, Vandenberghe, Sucharski, & Rhoades,
2002; Eisenberger et al., 2010), the quality of LMX should be crucial for influencing
employees’ identification to their working organization. Therefore, it is important to
know whether LMX is an antecedent of organizational identification.
The first objective of this study was to fill this void. In particular, we build on the existing literature of social identity theory (Tajfel & Turner, 1979, 1986) and employ a
*Correspondence should be addressed to Raymond Loi, Department of Management and Marketing, University of Macau, Av. Padre Tom�as Pereira, Taipa, Macau (e-mail: [email protected]).
DOI:10.1111/joop.12028
42
two-phase survey design to establish the relationship between LMX and organizational
identification. According to social identity theory, self-enhancement and uncertainty
reduction motivate employees to identify with their working organization (Hogg & Terry,
2000). We posit that the quality of LMX provides employees informational cues on fulfilling these two motives. Thus, LMX should be positively related to organizational
identification.
Another objective of this study was to clarify the relationships between LMX,
organizational identification, and job satisfaction. Job satisfaction is an employee attitude
of theoretical and practical importance in the workplace (Organ & Ryan, 1995). In
particular, job satisfaction has a significant impact on employee turnover and
performance (Hom & Griffeth, 1995; Judge, Thoresen, Bono, & Patton, 2001). Although
previous studies have found that LMX and organizational identification can respectively lead to employee job satisfaction (Dulebohn et al., 2012; Gerstner & Day, 1997; Riketta,
2005; Riketta & van Dick, 2005), a theoretical perspective clarifying the relationships
among these constructs is still missing in existing literature. Using social identity theory as
the core theoretical lens, we take a step further to predict that organizational
identification mediates the relationship between LMX and job satisfaction.
In addition to examining the above relationships, this study investigates job security as
the boundary condition of the linkage between LMX and organizational identification as
well as the indirect effect linking LMX, organizational identification, and job satisfaction. We theorize that when employees see the future of their job as being uncertain with a high
degree of insecurity (De Witte, 1999), they tend to rely more on LMX to fulfil their needs
for uncertainty reduction and self-esteem enhancement. Thus, the relationships between
LMX and organizational identification and also the indirect effect between LMX,
organizational identification, and job satisfaction may be stronger among employees
possessing low job security.
The present research contributes to the current literature in two ways. First, by using a
two-phase survey design, it examines the relationship between LMX and organizational identification and the mediating role of the organizational identification in linking LMX
and job satisfaction, which have been widely neglected in existing research. Second, by
exploring the moderating effect of job security, this study enriches our existing
knowledge of the condition when LMX can effectively promote employees’ organiza-
tional identification and in turn their job satisfaction. Our hypotheses were tested with a
data set collected from the employees of two companies located at southern China.
Figure 1 presents the conceptual model of this study. In the next section, we present the
theoretical background of our hypothesized relationships.
LMX Organizational Identification
Job satisfaction
Job security
(+)
(–)
(+)
Figure 1. Conceptual model. LMX = leader–member exchange.
LMX and organizational identification 43
Theory and hypotheses development
Social identity theory and organizational identification
Social identity theory maintains that people tend to classify themselves and others into
various social groups according to the prototypical characteristics ascribed to or
abstracted from the members of the groups (Tajfel & Turner, 1979, 1986). Classification is
relational and comparative, which means the definition of oneself is relative to other
people being classified in other comparable categories (Ashforth & Mael, 1989). For instance, the category of ‘female’ becomes meaningful in relation to the category of ‘male’.
Such process of classification provides individuals with a systematic means of defining self
and others, which generates their social identification (i.e., the perception of belonging-
ness) to a particular group category. Within the organization, employees may have
different levels or foci of identification (such as workgroups, leaders, coworkers; Ashforth
et al., 2008; Riketta & van Dick, 2005). In this study, we focus on organizational
identification, which is a specific form of social identification where individuals define
themselves in terms of their membership in a particular organization (Mael & Ashforth, 1992).
According to Hogg and Terry (2000), organizational identification is motivated by two
independent and fundamental human needs: uncertainty reduction and self-enhance-
ment. The uncertainty reduction motive has been cited by researchers (Pratt, 1998;
Weick, 1995) as one of the basic human needs that individuals want to satisfy. It reflects an
individual’s need of order in the social world and addresses how a person constructs his or
her self-concept in order to answer the question ‘Who am I?’ By identifying to a social
category, one becomes more certain in how to behave and what to expect from the physical and social environment within which one finds oneself (Hogg & Terry, 2000). On
the other hand, the self-enhancement motive refers to an individual’s attempt to think of
his or her social identity in a positive manner such that his or her self-esteem can be
ultimately enhanced. Through the process of identification, an individual strives to
promote the perception that he or she is a worthwhile person (Ashforth et al., 2008). This
logic explains why people tend to identify with prestigious or well-performing
organizations (Dutton, Dukerich, & Harquail, 1994).
Given that the uncertainty reduction and self-enhancement motives govern people’s cognitive system, any identity cue within the social context that can draw individuals’
attention to these two motives should facilitate the identification process. Current
literature has suggested that, under the organizational context, identity cues such as
distinctiveness of organizational values, prestige of an organization, opportunities for
career advancement, and salience of interorganizational competition (Ashforth & Mael,
1989; Ashforth et al., 2008; Brown, 1969; Dutton et al., 1994; Mael & Ashforth, 1992) can
facilitate the development of organizational identification. LMX, on the other hand,
signifies the quality of exchange relationship within the supervisor–subordinate dyad. Because employees usually seek information from their immediate supervisor regarding
their organizational membership (Loi, Lai, & Lam, 2012), the quality of LMX should also
deliver important identity cues to the employees.
LMX and organizational identification
Current literature of LMX (Graen & Uhl-Bien, 1995; Loi, Mao, & Ngo, 2009; Sparrowe &
Liden, 2005) contends that supervisor–subordinate relationships exist along a continuum from high- to low-quality LMX. Supervisor–subordinate dyads with high-quality LMX are
44 Raymond Loi et al.
characterized by high degrees of mutual trust, respect, and obligations. Both the
supervisor and the subordinate have mutual liking and respect. In contrast, supervisors
and subordinates under low-quality LMX emphasize only the obligatory compliance with
formal work role requirements. Owing to resource constraint, a supervisor only develops high-quality LMX with a few
subordinates and leaves the remainder of LMX relationships at low quality (Graen &
Uhl-Bien, 1995). This differential treatment creates a distinctive ingroup/outgroup feeling
among employees such that subordinates under high-quality LMX are considered as
ingroup members (labelled as ‘trusted assistants’), while those with low-quality LMX with
their supervisors are treated as outgroup members (labelled as ‘hired hands’; Bolino &
Turnley, 2009; Scandura, 1999).
Although LMX mainly describes the relationship within the supervisor–subordinate dyad, current research has continuously shown that high-quality LMX not only
contributes to work outcomes pertinent to the vertical dyadic members but also to
organizationally relevant attitudes including organizational commitment and turnover
intentions (Gerstner & Day, 1997). Supervisors are usually perceived by employees as
agents representing the organization in managing employment relationships with
employees (Eisenberger et al., 2002). They are members of the organization carrying
the prototypical characteristics of the organization and exerting social influence to the
employees (Hogg & Van Knippenberg, 2003; Hogg et al., 2005; Van Knippenberg & Hogg, 2003). Eisenberger et al. (2010) further referred employees’ perception on the
extent of their supervisor’s shared identity with the organization to supervisor’s
organizational embodiment, and they found that such perception can positively enhance
the influence of LMX on affective commitment. As such, it is logical to expect that the
quality of LMX should also provide important informational cues to employees on their
organizational identity.
The first information cue from the quality of LMX is about the certainty of a
person’s future in the organization. Employees with high-quality LMX gain sponsor- ship from their supervisors and obtain salient organizational resources through
supervisors’ social network (Sparrowe & Liden, 1997). Because supervisors are the
representatives of the organization (Eisenberger et al., 2002, 2010), employees with
high-quality LMX will attribute that the working organization also has ample resources
and is willing to share with them. Thus, they are likely to see the organization as
dependable which addresses their uncertainty reduction motive, and their propensity
to identify with organizations will increase afterwards. Moreover, with high-quality
LMX, employees will see their roles to be more defined and stable in organizations because they are treated as ingroup rather than outgroup members. As such, they are
more willing to identify with the organization.
The second identity cue from the quality of LMX is related to a person’s self-esteem in
the organization. In addition to providing better support and resources, leaders also regard
high-LMX members as trusted assistants and assign them important duties and
responsibilities. Such treatment is likely to lead these employees to believe that their
employing organization is a good place to realize their self-esteem. Furthermore, as valued
members of the organization, employees with high LMX also have better career development within the organization (Tangirala et al., 2007). The sense of being valued
members of the organization derived from high-quality LMX hints that employees are
likely to experience greater perception of oneness with the organization. Consequently,
according to the self-enhancement motive, they will incorporate organizational attributes
into their own self-concept and develop strong organizational identification. In addition,
LMX and organizational identification 45
research has found that the supervisor’s organizational identification may transfer to the
subordinates through behavioural, emotional, and cognitive influences (Van Dick, Hirst,
Grojean, & Wieseke, 2007; Wieseke, Ahearne, Lam, & van Dick, 2009). We also expect
that such transfer of organizational identification will be facilitated with the frequent interactions and high level of trust inherited in high-quality LMX.
On the contrary, employees having low-quality LMX receive less supervisory support
and fewer advancement opportunities within the organization. Comparing with those
having high-quality LMX, they feel disenfranchised (Sparrowe & Liden, 1997) and have
less expectation to satisfy their need for uncertainty reduction through identifying with
the organization. The differentiated LMX treatment also generates their feelings of relative
deprivation (Bolino & Turnley, 2009) such that they can barely fulfil the self-enhancement
motive. As a result, they are less likely to identify with the working organization. Therefore, we propose the following hypothesis:
Hypothesis 1: LMX is positively related to organizational identification.
The mediating role of organizational identification
While extant research has shown the positive relationship between LMX and job
satisfaction, explanations for such relationship are quite diverse and inconsistent
(Epitropaki & Martin, 2005; Erdogan & Enders, 2007; Harris, Wheeler, & Kacmar, 2011; Ozer, 2008; Volmer, Niessen, Spurk, Linz, & Abele, 2011). Job satisfaction is defined as the
‘pleasurable or positive emotional state resulting from the appraisal of one’s job or job
experiences’ (Locke, 1976, p. 1300), and such appraisal includes an individual’s cognitive
and affective responses to the job (Hulin & Judge, 2003). Drawing on this definition and
the social identity perspective, we suggest that organizational identification, which is
generated by the quality of LMX as previously discussed, can cognitively and affectively
induce employees’ positive appraisal about their jobs. In other words, organizational
identification can be the underlying mechanism explaining the relationship between LMX and job satisfaction.
Dutton et al. (1994) postulated that employees’ identification with the organization
determines the strength of an individual’s cognitive attachment to the organization.
Organizational identification helps people make sense of their experiences, organize
their thoughts, achieve decisions, and anchor the self (Ashforth et al., 2008). It is a
mean by which members can be motivated to coordinate their efforts to achieve
organizational goals (Brewer & Kramer, 1986). Individuals with strong organizational
identification are more likely to adopt organizational goals as their own personal goals. When working towards those goals, employees are cognitively engaged in their jobs
and gain intrinsic satisfaction (Barker & Tompkins, 1994; Hall & Schneider, 1972).
Thus, identified employees are less likely to perceive negative conditions as detrimental
because they take these conditions as necessary to achieve organizational goals (Van
Dick et al., 2004).
In addition, organizational identification includes employees’ emotional significance
attached to their organizational membership (Tajfel, 1978). Due to the self-enhancement
motive, individuals with strong organizational identity tend to take pride in the organizational membership. Such sense of emotional involvement in the organization
should predispose employees to evaluate their jobs in a positive manner (Boros�, Curs�eu, & Miclea, 2011). Van Knippenberg and Van Schie (2000) further suggested that
organizational identification should be positively related to job satisfaction because
46 Raymond Loi et al.
people tend to think positively about things associated with the self. Similarly, Van Dick
et al. (2004) also proposed that organizational identification influences job satisfaction
because identified employees perceive their job as a proof of their membership and a
positive evaluation of their job is consistent with their organizational identity. As an employee’s self-concept contains the same attributes as those in the perceived
organizational identity, acting on behalf of the organization should bring with them
emotional enjoyment in their jobs.
In sum, high-quality LMX enhances employees’ organizational identification, which
subsequently leads to employees’ higher level of job satisfaction. Thus, the following
hypothesis is proposed:
Hypothesis 2: Organizational identification mediates the positive relationship between
LMX and job satisfaction.
The moderating role of job security
Probst (2003, p. 452) defined job security as ‘the perceived stability and continuance of
one’s job as one knows it’. It reflects an employee’s perceptions on whether he or she can
continue to keep the job and whether the desired features of his or her job are stable.Thus,
job-secure employees will perceive to have the similar job features in the foreseeable
future, whereas employees perceiving low levels of job security (i.e., job insecurity) feel uncertainty in their future employment as well as the work environment (Lee & Peccei,
2007). When the perceived job insecurity is prolonged, it will be harmful to the
employees’ physical health and mental health (Sverke, Hellgren, & N€aswall, 2002). Current literature generally consider job insecurity as a work stressor (Cheng & Chan,
2008; Sverke et al., 2002). It is associated with two aspects of uncertainty: unpredict-
ability and uncontrollability (De Witte, 1999; Loi, Lam, & Chan, 2012). Unpredictability
refers to the employees’ lack of clarity about their future and about the expectation and
behaviour that they should adopt (De Witte, 1999), and uncontrollability is the employees’ sense of powerlessness to control the threat of future job loss (Greenhalgh
& Rosenblatt, 1984). Employees experiencing job insecurity may find themselves difficult
to predict what will happen in future and to choose the appropriate reaction within the
organization. In other words, they encounter uncertainty in how to behave and what to
expect in their work environment, and possess strong motivation to regain the social
order that is originally expected in the organization. On the contrary, job-secure
employees feel certain about their job future as well as organizational membership. They
consider that the organization has fulfilled the core obligation under the psychological contract (Coyle-Shapiro, 2002), and they are more likely to develop loyalty to the
organization (King, 2000). Comparing with employees experiencing job insecurity, they
have less need for reducing uncertainty within the organization.
In addition, predictability and controllability inherited in job security may also
influence employees’ self-enhancement motive. Pierce and Gardner (2004) expressed
that when people feel control in their work environment, they will come to see
themselves as capable of independent action and thereby develop their sense of
self-worth. Empirical research (Lee, 2003) also found a positive relationship between job security and employee organization-based self-esteem. Accordingly, job-secure employ-
ees should feel a higher sense of self-worth, whereas employees perceiving job insecurity
may have a lower sense of significance within the organization because they cannot
control their job future in their own hands and they feel difficult to take appropriate
LMX and organizational identification 47
actions to lower possible threat. Thus, employees perceiving low job security tend to have
stronger motivation to seek other sources within the organization to enhance their
self-worth.
Due to the different extent of needs for uncertainty reduction and self-enhancement, we propose that the strength of the relationship between LMX and organizational
identification may vary among employees possessing different levels of job security.
Relative to job-secure employees, employees experiencing lower levels of job security
have a stronger motivation for uncertainty reduction and self-enhancement. To them, the
quality of LMX relationship provides them crucial information regarding their job future
and their organizational membership, which helps to alleviate uncertainty. The emotional
support and autonomy obtained through LMX can also help enhance their self-esteem.
Therefore, they tend to rely more on LMX to develop their organizational identity. On the other hand, the effect of LMX on organizational identification may be less influential
among job-secure employees because, with a more predictable job future and controllable
job environment, they are less likely to rely on the quality of LMX as an identity cue to
satisfy the uncertainty reduction and self-enhancement motives. Thus, the following
hypothesis is proposed:
Hypothesis 3: Job security moderates the relationship between LMX and organizational
identification such that the relationship is stronger among employees
possessing low, rather than high, levels of job security.
We propose above that organizational identification mediates the positive relationship
between LMX and job satisfaction, and LMX and job security may have an interactive effect
on organizational identification. Taken these two together, it is logical to further predict
that the indirect effect of LMX on job satisfaction through organizational identification
may depend on the level of job security possessed by the employees. When employees’
job security is low, they would be more responsive to the information cue obtained from
their quality of LMX for developing organizational identification and subsequently their
job satisfaction. Thus, such positive indirect effect is stronger. On the contrary, job-secure employees who possess more certainty and controllability in their job would place less
reliance on the information cue from LMX to evaluate their job through the mediating
mechanism of organizational identification. Thus, the following moderated mediation
hypothesis is put forward:
Hypothesis 4: The indirect effect of LMX on job satisfaction through organizational
identification is moderated by job security such that the indirect effect is
more positive when job security is low than when it is high.
Method
Sample and procedure
In 2010, we collected two-phase survey data from the employees of two garment
manufacturing companies in the southern part of China, one in Macau and the other one in
Zhuhai. The two companies are located nearby and owned and led by the same entity.
With the assistance of the human resource department of the two companies, in May 2010
(Time-1), we distributed questionnaires to 196 employees at the Macau site and 283 at the
Zhuhai site. On the cover page of the questionnaire, we assured the respondents of anonymity and the voluntary nature of the study. The respondents provided ratings on
items measuring LMX, organizational identification, job security, and job satisfaction. In
48 Raymond Loi et al.
total, we received 381 completed and usable questionnaires, 149 of which were from
Macau and 232 from Zhuhai, yielding response rates of 76% and 82%, respectively.
In October 2010 (Time-2), we conducted the second-phase survey with those 381
employees who have responded to our Time-1 survey. Due to voluntary turnover and staff absence, we distributed 140 questionnaires at the Macau site and 177 at the Zhuhai site.
Respondents provided ratings on their organizational identification and job satisfaction.
Finally, we received 306 completed and usable surveys, 137 of which were from Macau
and 169 from Zhuhai, yielding response rates of 98% and 95%, respectively. Of the 306
respondents, 76.1% were women and 46.6% were aged 31–40 years. Their average organizational tenure was 5.33 years. In checking for possible non-response bias, we
compared the demographic attributes between the final sample (n = 306) and the target sample (n = 381) and found no significant difference.
Measures
The respondents rated items of the following measures, except for the control variables,
on a 6-point Likert-type scale (1 = strongly disagree; 6 = strongly agree).
Leader–member exchange We used the Chinese version of the 7-item scale used by Hui, Lee, and Rousseau (2004),
which was adapted from Scandura and Graen (1984). Sample item includes ‘My direct
supervisor understands my job problems and needs very well’. Cronbach’s alpha for this
scale was .80.
Organizational identification
We measured the respondents’ levels of organizational identification in both phases using the 6-item scale developed by Mael and Ashforth (1992). One sample question is ‘When
someone praises my organization, it feels like a personal compliment’. Scale reliabilities
were recorded at .75 in both Time-1 and Time-2.
Job security
We used a shorter version of five items selected from the job security scale used by
Kraimer, Wayne, Liden, and Sparrowe (2005). A sample item is ‘I am confident that I will be able to work for my organization as long as I wish’. In this study, the scale’s coefficient
alpha was .79.
Job satisfaction
This variable was measured by three items used by Price and Mueller (1981). A sample
item reads, ‘I feel well satisfied with my job’. Scale reliabilities were recorded at .80 in
Time-1 and .77 in Time-2.
Control variables
We controlled several demographic characteristics of the respondents in our analysis,
measured at Time-1. Gender was coded with 0 signifying male and 1 signifying female.
LMX and organizational identification 49
Organizational tenure was measured by the number of years that the respondents have
worked for the company. Age was measured in years using six categories (1 = 20 or below, 2 = 21–30, 3 = 31–40, 4 = 41–50, 5 = 51–60, and 6 = 61 or above). Because we collected data from two companies, we controlled firm (0 = Macau employees, 1 = Zhuhai employees) when conducting our analysis. In addition, to examine whether the mediating effect of organizational identification occurs in the presence of a social
exchange mediator, we controlled the respondents’ levels of affective commitment
(measured at Time-2) in our analysis. 1 This variable was measured by a 3-item short version
of Allen and Meyer’s (1990) affective commitment scale (scale reliabilities at .67). To
establish the possible direction of causality, we also controlled for the lagged dependent
variables when assessing the effect of LMX on organizational identification and job
satisfaction.
Analytical strategy
We performed a series of hierarchical regression analyses to test our hypotheses.
Following suggestions by Preacher and Hayes (2008), we used two analytical approaches
toanalyse the mediation effect. First, we employed the standard Baron and Kenny’s (1986)
procedures. The hypothesized X ? M ? Y model is considered to be supported if X (independent variable) has significant effects on M (mediator) and Y (dependent variable) and M has a significant effect on Y after accounting for X. The mediating effect is
considered to be supported when the impact of X on Y is reduced with both X and M
included in the same regression equation predicting Y. Second, we evaluated the indirect
effect of X on Y through M by determining the statistical significance of the product term
‘a 9 b’ in which ‘a’ represents the path of X ? M and ‘b’ represents the path of M ? Y. As the product term (a 9 b) does not often follow normal distribution (MacKinnon,
Lockwood, & Williams, 2004; Preacher & Hayes, 2008; Shrout & Bolger, 2002), we used
bootstrapping instead of the standard Sobel’s test in evaluating its statistical significance. In bootstrapping, confidence interval of the product term (a 9 b) is generated by
repeated sampling and statistical significance is established when the confidence interval
does not contain zero (Edwards & Lambert, 2007). When comparing with other
bootstrapping methods of constructing confidence intervals, Preacher and Selig (2012)
found that the Monte Carlo method leads to narrower confidence intervals with more
statistical precision. Therefore, following Bauer, Preacher, and Gil (2006) and George,
Chattopadhyay, and Zhang (2012), we used the estimates of the regression models to
perform 1,000 repeated sampling to construct Monte Carlo confidence intervals to assess the significance of the indirect effect of LMX on job satisfaction through organizational
identification.
Moderated regression analysis is then adopted to test the moderating effect of job
security (i.e., Hypothesis 3). In order to avoid the problem of multicollinearity, we
mean-centred the independent variable (i.e., LMX) and the moderator (i.e., job security)
before computing the interaction term (Aiken & West, 1991). In the first step, we enter
LMX. In the second step, we enter job security, and in the final step, we enter the
interaction term (i.e., LMX with job security). Moderating effect is evidenced if the beta coefficient of the interaction term in the final step is significant.
1 We thank the Associate Editor, Sharon Clarke, and an anonymousreviewer for suggestingto control affective commitment in the
analysis.
50 Raymond Loi et al.
In evaluating Hypothesis 4, we used a moderated mediation approach to test whether
the indirect effect of LMX on job satisfaction through organizational identification is more
positive at low job security (Edwards & Lambert, 2007; Preacher, Rucker, & Hayes, 2007).
Our hypothesized model fits into the first-stage moderated mediation model (i.e., X 9 Z ? M ? Y) discussed by Edwards and Lambert (2007). Following their approach, our moderated mediation analysis involves two regressions. The first regression is to obtain
moderated beta coefficients of LMX on organizational identification conditional on job
security. The second regression is to obtain beta coefficient of organizational identification
onjob satisfactionafter controlling forLMX.Using these regression estimates,together with
high and low values (�1 SD) of the moderator Z (i.e., job security), we calculated the indirect effects of LMX on job satisfaction through organizational identification at low and
high levels of job security. Similar to the analysis of Hypothesis 2, significance of the moderated indirect effects was assessed using bootstrapping with 1,000 repeated samples
to construct Monte Carlo confidence intervals.
Results
Before testing the hypotheses, we conducted a series of confirmatory factor analyses (CFAs) to confirm the distinctiveness of the study constructs. Overall model fit was
assessed by goodness-of-fit indices including the comparative fit index (CFI), incremental
fit index (IFI), and standardized root mean square residual (SRMR). A reasonable model
fit is indicated when the CFI and IFI are above .90 and the SRMR is below .08. The
four-factor measurement model (i.e., LMX and job security measured at Time-1,
organizational identification and job satisfaction measured at Time-2) had a model
chi-square of 502.15 (p < .01) with 183 degrees of freedom. The CFI was .92, the IFI was .92, and the SRMR was .073, showing a reasonable model fit. Factor loadings of this measurement model were all statistically significant, ranging from .35 to .82. We also
estimated several alternative measurement models and compared them with this
Table 1. Results of confirmatory factor analysis of the measurement models
Measurement models v2 (df) Dv2 (Ddf) SRMR CFI IFI
(1) 4-Factor model (i.e., LMX, job security,
organizational identification, and job
satisfaction)
502.15 (183)** .073 .92 .92
(2) 3-Factor model 1 (combined organizational
identification and job satisfaction into
one factor)
626.72 (186)** 124.57 (3)** .079 .89 .89
(3) 3-Factor model 2 (combined LMX and
organizational identification into one factor)
774.41 (186)** 272.26 (3)** .097 .85 .85
(4) 3-Factor model 3 (combined LMX and job
security into one factor)
768.93 (186)** 266.78 (3)** .093 .85 .85
(5) 1-Factor model (combined all items into
one factor)
1122.02 (189)** 619.87 (6)** .11 .77 .77
Note. CFI = comparative fit index; IFI = incremental fit index; SRMR = standardized root mean square residual; LMX = leader–member exchange. LMX and job security were measured at Time-1; organizational identification and job satisfaction were measured at Time-2. All alternative models were
compared with the 4-factor model.
**p < .01.
LMX and organizational identification 51
four-factor model. The CFA results, as presented in Table 1, suggest that the four-factor
model fit the data better, indicating that the respondents can distinguish clearly the
constructs under study.
Means, standard deviations, and intercorrelations between all variables are presented in Table 2. Consistent with our expectation, LMX is significantly correlated with Time-2
organizational identification (r = .30, p < .01) and Time-2 job satisfaction (r = .33, p < .01). In addition, organizational identification and job satisfaction measured at Time-2 are also positively correlated (r = .42, p < .01).
The regression results for testing our hypotheses are reported in Tables 3 and 4. Model
2 of Table 3 shows the positive relationship between LMX and Time-2 organizational
identification (b = .13, p < .05), after controlling for the effect of Time-1 organizational identification. Thus, our Hypothesis 1 was supported. Model 6 of Table 4 also shows that LMX had a positive relationship with Time-2 job satisfaction (b = .16, p < .01), after controlling for the effect of Time-1 job satisfaction. In Model 7 of Table 4, we regressed job
satisfaction (Time-2) on both LMX and Time-2 organizational identification with the effect
of affective commitment controlled. The results supported our Hypothesis 2 because the
positive effect of LMX on Time-2 job satisfaction has become non-significant (b = .05, ns) after controlling for the effects of Time-2 organizational identification (b = .17, p < .01).2
We then used these regression estimates to construct the Monte Carlo confidence
intervals of the indirect effect of LMX on job satisfaction through organizational identification. Because the 95% confidence interval (0.004 and 0.056) did not contain
zero, this result indicated that the indirect effect was statistically significant (indirect
effect = .02, p < .05), supporting our Hypothesis 2. Model 4 of Table 3 tests whether job security moderates the positive relationship
between LMX and organizational identification. The interaction term was significant
(b = �.14, p < .01) and explained an additional 2% of the variance in Time-2 organizational identification. To demonstrate the pattern of interaction, we followed
the procedures of Aiken and West (1991) and plotted the significant interaction effect. As shown in Figure 2, for employees with low job security (i.e., one standard
deviation below the mean level of job security), the positive relationship between
LMX and Time-2 organizational identification is relatively stronger. Simple slope test
further showed that, at low level of job security, LMX positively predicted
organizational identification (b = .24, p < .01), whereas such positive relationship was not significant (b = .03, ns) at high level of job security. Thus, our Hypothesis 3 was supported.
In testing Hypothesis 4, we used the Monte Carlo method to evaluate the indirect effects of LMX on job satisfaction through organizational identification at high and low
levels of job security. The 95% confidence interval (�0.02 and 0.03) showed that the indirect effect was not significant at high level of job security (indirect
effect = .03 9 .17 = .005, ns). On the other hand, at low job security, result of the 99% confidence interval (0.001 and 0.11) indicates that the indirect effect was positive
and significant (indirect effect = .24 9 .17 = .04, p < .01). Therefore, we have evidence to support Hypothesis 4.
2 As suggested by one anonymous reviewer, we conducted an independent cross-lagged analysis to test whether Time-1
organizational identification predicts Time-2 job satisfaction with the temporal stabilities of organizational identification and job satisfaction controlled. We found that Time-1 organizational identification significantly predicted Time-2 job satisfaction (c = .31, p < 0.01), whereas Time-1 job satisfaction did not significantly predict Time-2 organizational identification (c = .06, ns). The results provide additional support to our Hypothesis 2. We thank this reviewer for the suggestion.
52 Raymond Loi et al.
T a b le
2 . M e a n s, st a n d a rd
d e v ia ti o n s, re li a b il it ie s, a n d in te rc o rr e la ti o n s fo r th e st u d y v a ri a b le s
V a ri a b le s
M e a n
S D
1 2
3 4
5 6
7 8
9 1 0
1 1
G e n d e r (F e m a le = 1 )
0 .7 6
0 .4 3
– F ir m
(Z h u h a i = 1 )
0 .5 5
0 .5 0
�. 0 8
– O rg a n iz a ti o n a l te n u re
(y e a rs )
5 .3 3
6 .5 9
�. 1 1
�. 5 7 **
– A g e
3 .0 8
0 .9 8
.0 3
�. 4 5 **
.6 3 **
– L M X (T im e -1 )
3 .6 8
0 .5 7
�. 0 4
�. 1 0
.0 8
.1 2 *
(. 8 0 )
O rg a n iz a ti o n a l id e n ti fi c a ti o n (T im e -1 )
3 .8 5
0 .6 7
�. 0 2
.1 2 **
�. 0 6
�. 0 3
.3 9 **
(. 7 5 )
Jo b se c u ri ty
(T im e -1 )
3 .7 8
0 .6 8
�. 0 2
.0 8
.0 8
.0 9
.3 0 **
.3 1 **
(. 7 9 )
Jo b sa ti sf a c ti o n (T im e -1 )
4 .1 5
0 .7 5
�. 0 6
�. 0 4
.1 2 *
.0 8
.3 5 **
.3 6 **
.4 8 **
(. 8 0 )
A ff e c ti v e c o m m it m e n t (T im e -2 )
3 .5 1
0 .7 0
�. 0 1
�. 0 4
.1 5 **
.3 0 **
.3 9 **
.3 8 **
.3 4 **
.4 2 **
(. 6 7 )
O rg a n iz a ti o n a l id e n ti fi c a ti o n (T im e -2 )
3 .6 7
0 .5 5
�. 0 4
.0 7
�. 0 3
.0 1
.3 0 **
.4 7 **
.2 4 **
.3 0 **
.5 3 **
(. 7 5 )
Jo b sa ti sf a c ti o n (T im e -2 )
4 .0 0
0 .6 7
�. 0 5
�. 1 2 *
.1 5 **
.2 1 **
.3 3 **
.3 3 **
.2 8 **
.4 9 **
.5 4 **
.4 2 **
(. 7 7 )
N o te . L M X
= le a d e r– m e m b e r e x c h a n g e . A g e w a s m e a su re d in
y e a rs
u si n g si x c a te g o ri e s (1
= 2 0 o r b e lo w , 2 = 2 1 – 3 0 , 3 = 3 1 – 4 0 , 4 = 4 1 – 5 0 , 5 = 5 1 – 6 0 , a n d
6 = 6 1 o r a b o v e ). C ro n b a c h ’s a lp h a s a re
re p o rt e d o n th e d ia g o n a l in p a re n th e se s. N ra n g e d fr o m
3 0 0 to
3 0 6 .
* p < .0 5 ; * * p < .0 1 .
LMX and organizational identification 53
Discussion
Building on the social identity perspective, this study examines the effects of LMX on
organizational identification and job satisfaction. As predicted, we found that the quality
Table 4. Regression results for testing Hypothesis 2
Variables Job satisfaction (Time-2)
Models 5 6 7
Gender (Female = 1) �.03 �.03 �.03 Firm (Zhuhai = 1) �.07 �.06 �.11 Organizational tenure �.07 �.06 �.04 Age .20** .18** .08
Job satisfaction (Time-1) .45** .40** .29**
LMX (Time-1) .16** .05
Organizational identification (Time-2) .17**
Affective commitment (Time-2) .27**
R 2
.25 .27 .37
F-statistic 20.61** 19.07** 22.70**
DR2 .02 .10 DF-statistic 8.67** 24.39**
Note. LMX = leader–member exchange. Age was measured in years using six categories (1 = 20 or below, 2 = 21–30, 3 = 31–40, 4 = 41–50, 5 = 51–60, and 6 = 61 or above). N = 298. All regression results are standardized coefficients.
*p < .05; **p < .01.
Table 3. Regression results for testing Hypotheses 1 and 3
Variables Organizational identification (Time-2)
Models 1 2 3 4
Gender (Female = 1) �.05 �.04 �.04 �.05 Firm (Zhuhai = 1) .02 .03 .02 .00 Organizational tenure �.04 �.03 �.04 �.03 Age .06 .05 .04 .05
Organizational identification (Time-1) .46** .41** .40** .42**
LMX (Time-1) .13* .12* .13*
Job security (Time-1) .07 .05
LMX 9 job security �.14** R 2
.20 .22 .22 .24
F-statistic 16.23** 14.61** 12.71** 12.27**
DR2 .02 .00 .02 DF-statistic 5.32* 1.27 7.24**
Note. LMX = leader–member exchange. Age was measured in years using six categories (1 = 20 or below, 2 = 21–30, 3 = 31–40, 4 = 41–50, 5 = 51–60, and 6 = 61 or above). N = 298. All regression results are standardized coefficients.
*p < .05; **p < .01.
54 Raymond Loi et al.
of LMX had a positive relationship with employee organizational identification, and
organizational identification acted as the mediator between LMX and job satisfaction.
Furthermore, both the positive relationship between LMX and organizational identifica-
tion and the indirect effect of LMX on job satisfaction through organizational identification were found to be strong and significant when employees possessed low levels of job
security. Our findings provide important implications to both theory and managerial
practices.
Theoretical and practical implications
LMX and organizational identification are two OB constructs that have been extensively
investigated in current research, but little has been known about the relationship between the two. The results of this study contribute to the existing literature by highlighting the
linkage between LMX and organizational identification. Hogg and colleagues (Hogg & Van
Knippenberg, 2003; Hogg et al., 2005; Van Knippenberg & Hogg, 2003) have discussed
LMX theory and social identity theory in relation to leadership effectiveness. They put
their focuses on the roles of the saliency of groups and the comparisons between groups.
Our study makes a supplement to this theoretical discussion by focusing on the
within-group dyadic relationship differences. Results of this research highlight the
importance of developing organizational identification from the quality of leader– follower dyadic relationship. By judging the quality of LMX, employees expect that their
needs of uncertainty reduction and self-enhancement can be fulfilled and thus generate
their identification to the organization. The study of Jackson and Johnson (2012) found
that leader’s and follower’s self-definitions in terms of relational identity and collective
identity, as well as the leader–follower similarity of these self-definitions, can enhance the quality of LMX. Our study further complements and extends their work by showing that
the quality of leader–follower relationship is crucial to reinforce employee’s identification to the organization. Taking the findings of our study and Jackson and Johnson’s (2012) work together, in order to develop high organizational identification among employees,
organization should pay much attention to the fit between self-definitions of the leader
and the follower, as well as the quality of LMX resulted from such fit.
2
3
4
Low LMX High LMX
O rg
an iz
at io
na l
id en
tif ic
at io
n (T
im e-
2)
Low job security
High job security
Figure 2. The moderating effect of job security on the relationship between leader–member exchange
(LMX) and organizational identification.
LMX and organizational identification 55
The results of this study also add to our existing knowledge on the relationship
between LMX and job satisfaction (Harris et al., 2011; Ozer, 2008; Volmer et al., 2011).
Building on the social identity perspective, our findings evidenced that organizational
identification is an underlying mechanism linking LMX and job satisfaction. Despite the conventional view of LMX theory that high-LMX employees should feel more
job-satisfied because of the possession of numerous resources and support from the
supervisor (Epitropaki & Martin, 2005; Erdogan & Enders, 2007), this research
establishes the importance of the social identification process triggered by LMX.
High-LMX members would have higher levels of job satisfaction because the organiza-
tional identification process generates cognitive and affective contentment about their
jobs. The results of this study further show that employees’ attitude towards their job is
not solely derived from either their relationship with the leader or their relationship with the organization. The underlying mechanism is more complex and these relationships
are indeed inter-related. Future research should continue to investigate other employee
outcomes developed through this identification mechanism.
Another contribution of our study rests on the investigation of the moderating effect of
job security in the LMX–organizational identification–job satisfaction link. Drawing upon the uncertainty reduction and the self-enhancement hypotheses of social identity
perspective (Hogg & Terry, 2000), we proposed and found empirical support that job
security attenuated the positive effect of LMX on organizational identification and in turn job satisfaction. Results of our simple slope test further hint that job-secure employees pay
not much attention to LMX. On the contrary, when employees perceive that their jobs are
insecure, they are more sensitive to their quality of LMX in order to reduce uncertainty and
enhance their self-esteem. Given that job insecurity is becoming a common organizational
phenomenon due to the rapidly changing economic environment (Lee, Bobko, & Chen,
2006), it would be fruitful for organization to cultivate high-quality LMX in such context.
The findings of this study also provide implications for management practitioners. As
LMX has a direct effect on organizational identification and an indirect effect on job satisfaction, high-quality supervisor–subordinate relationship is the crucial success factor for cultivating employees’ strong identification to the organization and positive feelings
about their jobs. Past studies have evidenced that LMX is associated with leaders’
behaviours (transformational leadership and contingent rewarding behaviours) and
personality (extraversion and agreeableness; Dulebohn et al., 2012). In developing
high-quality LMX, appropriate selection and trainings of managers are especially
important. Organizations should select supervisors based on these personality traits
and train their managers to reinforce quality supervisor–subordinate relationships. Appropriate selection and trainings are especially important for organizations that face
fast-changing business environment because their employees are more likely to perceive
low levels of job security.
Limitations and conclusion
The present research has several limitations. First, although we designed this research in a
two-phase design and the respondents’ organizational identification measured at Time-1 was also controlled in our statistical analysis, we cannot completely rule out the possibility
that organizational identification may cause LMX because we have not measured LMX at
Time-2. Future research should do a more sophisticated test to determine the direction of
causality. Second, because LMX and job security were obtained by self-report ratings
measured at Time-1, the results of this study may raise concern on common method
56 Raymond Loi et al.
variance. However, past literature has suggested that interaction effect is less likely to be
inflated by common method bias (Evans, 1985). Moreover, the two-phase survey design
should minimize the potential threat of method bias. Third, although we theorize the
relationship between LMX and organizational identification based on the uncertainty reduction and self-enhancement motives as stipulated by social identity theory, we have
not empirically tested these two underlying mechanisms in this study. Future studies
therefore can examine the empirical evidence of these two explanatory mechanisms and
their differential mediating roles in the LMX–organizational identification link. Another promising future direction is to explore other possible mediating mechanisms, such as
identification with leader and the dyadic members’ relational identity (Chang & Johnson,
2010; Jackson & Johnson, 2012; Lord & Brown, 2004), in between this link. Fourth, we
followed the majority of LMX studies (Dulebohn et al., 2012) to measure LMX rated solely by subordinates. Recent research has highlighted the possible disagreement of LMX rated
by the subordinate and the supervisor (Sin, Nahrgang, & Morgeson, 2009), and this study
has not included supervisor-rated LMX in the analyses. We encourage future research to
examine supervisors’ perceptions of LMX or include leader–member agreement on LMX in examining the possible influence of LMX. Finally, generalizability of our findings may be
limited by our sample that consisted of respondents coming from the same industry and
being managed by the same management team. Future research should explore whether
the results of this study can be obtained from data collected in other industries as well as in a cross-cultural context.
To conclude, this study adds to our current understanding of LMX as an antecedent of
organizational identification and its underlying mechanism leading to job satisfaction. It
also highlights the importance of identifying job security as the boundary condition of the
impact of LMX. Extending the results of this study to other organizational and cultural
contexts is therefore encouraged.
Acknowledgement
This study was fully supported by a research grant from the University of Macau (RG010/
09-10S/LCH/FBA).
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Received 29 June 2012; revised version received 23 April 2013
LMX and organizational identification 61
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