Toward an understanding of the relationship between LMX and performance over time: the role of trust in leader and appraisal satisfaction

Abstract

Purpose: The purpose of this two-wave longitudinal study was to examine the impact of leader–member exchange (LMX) on employee performance through trust in leader and appraisal satisfaction both cross-sectionally and after one year, and the reciprocal effect of employee performance on LMX one year later. Design/methodology/approach: A full panel data design was applied and the sample consisted of 289 employees of a Peruvian insurance organization. Structural equation modeling (SEM) was used to test the research hypotheses. Findings: The results show the relationship between LMX and performance was sequentially mediated by trust in leader and appraisal satisfaction on both occasions. Additionally, employee performance at Time 1 positively influenced LMX at Time 2. Originality/value: This study highlights the dynamic and complex relationship between LMX and employee performance over time while identifying relevant variables that influence it.