How leader-member exchange affects work outcomes in small-and-medium enterprises?

Abstract

Orientation: Employees with a collectivistic culture want the closeness and support of their leaders. How leader-member exchange (LMX), perceived organisational support (POS), job satisfaction (JS) and organisational commitment (OC) influence each other still requires in-depth research because there are differences between the results of previous studies. Research purpose: This study examined the relationship model of LMX and POS as antecedent, mediator and moderator variables on work outcomes such as JS and OC in small-and medium enterprises (SMEs) with a collectivistic culture and high-power distance. Motivation for the study: Leadership in SMEs gets less attention because of its role in managing and carrying out operational activities. Research approach/design and method: Data were collected from 427 employees using questionnaires with purposive sampling, which was tested for validity and reliability. Structural equation modelling (SEM) and multi-group SEM were used to test the relationship model. Main findings: The results of testing four relationship models proved that the LMX relationship did not directly affect JS and OC but was mediated by POS. LMX can also be a mediator and moderator of the relationship model. Practical/managerial implications: This study emphasises the need to minimise the differences between in-group and out-group in the leaders-followers relationship to improve employee performance. Leaders must expand the range of their relationships with followers to improve work outcomes. Contribution/value-add: This study examined LMX as an important predictor of work outcomes with clearer mechanisms. LMX cannot be a predictor if employees do not feel the leader’s support as a representative of the organisation.