Purpose: Leader–Member Exchange (LMX) theory posits that effective leaders form dyadic relationships with followers that differ in quality, and that differentiation positively affects team performance. The purpose of this study was to test the notion that leader differentiation positively impacts team performance, and to investigate whether such effects differ at different points in the team’s lifecycle. Design/methodology/approach: Longitudinal data from three studies of a total of 125 small project teams were used. LMX was assessed at three points during the teams’ lifecycle, and used to predict independent expert ratings of team performance and team members’ ratings of team development assessed at the end of the team’s lifecycle. The effects of leader and follower ability were also examined. Findings: Results of latent growth curve analysis indicated a positive effect for LMX differentiation on team performance, but only for LMX differentiation near the end of the team’s lifecycle. Differentiation was unrelated to team development. Implications: The findings suggest that managers of work teams who differentiate among their employees in terms of their dyadic LMX relationships may elicit higher levels of team performance, provided that such differentiation occurs later rather than earlier in the team’s lifecycle. Originality/value: To our knowledge, this is the first study to show that the effects for LMX differentiation on team performance differ depending on at what point in the team’s lifecycle LMX is assessed, and that such effects are distinct from those on team development.
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