Leader-Member Exchange (LMX) Theory and Its Impact on Team Dynamics

Differentiated Management and Team Dynamics

It may not always be appropriate for a manager to handle everyone on the team in the same way. A manager, for example, may have team members who have faith because they work hard and appear indispensable. On the other hand, some members may not have as ambitious professional objectives, be less skilled, or be less trusted. As a result, it is essential to investigate how managers’ perceptions of unreliability influence their interactions with them.

Overview of Leader-Member Exchange (LMX) Theory and Its Stages

The Leader-Member Exchange (LMX) theory is centered around this situation. This theory examines how leaders and managers form relationships with team members and discusses how such ties may help or hinder progress. The LMX theory examines the interaction that develops between managers and team members.

Role-Taking

According to the concept, all interactions between managers and their subordinates go through three stages. When team members initially join the group, they assume roles. Managers utilize this period to examine the skills and talents of recruits (Almazrouei et al., 2020). Following that, new team members begin working on projects and responsibilities as part of the team.

Role-Making

Managers often expect new team members to work hard, be loyal, and prove trustworthy as they adjust to their new job. If team members demonstrate loyalty, trustworthiness, and skill, they are promoted to the In-Group (Almazrouei et al., 2020). If team members breach the manager’s trust or establish that they are uninspired or inept, they are sent to the Out-Group.

Routine

Finally, routines between coworkers and supervisors are developed throughout the last phase. Once team members are categorized as In-Group or Out-Group, that categorization influences how their supervisors respond to them in the future, making it a self-fulfilling prophecy.

Impact of In-Group and Out-Group Categorization on Team Performance

Team members’ relationships with their managers often progress through three stages. During the role-making phase, members are often divided into an in-group and an out-group. Managers often provide in-group team members with greater attention, assistance, and additional opportunities. Members of the out-group have minimal face time and limited opportunities. One can utilize the LMS theory to identify and evaluate any biases they may have against their team members.

Reference

Almazrouei, H. S., Zacca, R., & Alfayez, N. (2020). The impact of team potency and leadership member exchange on expatriate creative work involvement. Journal of Global Mobility: The Home of Expatriate Management Research, 8(3/4), 309–323. Web.

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StudyCorgi. "Leader-Member Exchange (LMX) Theory and Its Impact on Team Dynamics." January 17, 2026. https://studycorgi.com/leader-member-exchange-lmx-theory-and-its-impact-on-team-dynamics/.

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StudyCorgi. 2026. "Leader-Member Exchange (LMX) Theory and Its Impact on Team Dynamics." January 17, 2026. https://studycorgi.com/leader-member-exchange-lmx-theory-and-its-impact-on-team-dynamics/.

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