How might your knowledge of LMX theory help you to become a better leader?

How might your knowledge of LMX theory help you to become a better leader?

lecture notes
Path-Goal and Leader-Member Exchange Theories


This section turns to a discussion on how leaders motivate their subordinates either through matching leadership style to subordinate and task characteristics (path-goal theory) or by leveraging the dyadic interactions and linkages between leaders and their in-groups (Leader member exchange theory).

Developed by Robert House, path-goal is a contingency model of leadership that takes its key element from expectancy theory. Expectancy theory suggests that followers will be motivated to complete tasks if the leader’s behavior is motivational and if the leader provides coaching, guidance, support, and necessary rewards for effective performance. In path-goal theory; therefore, it is the leader’s job to provide assistance or support so followers can complete tasks or attain goals successfully. Path-goal theory is derived from the belief that, by decreasing obstacles along the path, effective leaders clarify that path to help followers move from where they are to where they need to be in their work goals.

Path-Goal Theory: Four Leadership Behaviors

The challenge for leaders is to use the best style that motivates followers. Four leadership behaviors are applicable here: directive leader, supportive leader, participative leader, and achievement-oriented leader (Coulter & Robbins, 2003). In contrast to Fiedler’s model, path-goal theory suggests that the leader’s style can be flexible and can change to fit the situation (House, 1971).

• Directive: Leader provides specific advice and structure. Followers know exactly what the leader’s expectations are for accomplishing goals.

• Supportive: Leader and follower relationships are developed.

• Participative: Leader shares information with followers; decision making involves suggestions made by followers.

• Achievement-oriented:Leader expects followers to perform at the highest level and sets challenging goals.

Two Contingency Variables

Environment consists of those variables that are external to or outside the control of the follower, such as structure of tasks, authority system, and the work team. Follower contingency variables are personal characteristics, such as internal locus of control, experience, and ability to do the job. The environmental variables determine the leader behavior needed for followers’ satisfaction to be increased. The personal characteristics help determine how the environment and leader’s behaviors are perceived or interpreted by followers (Coulter & Robbins, 2003).

Source: Northouse. P. G. (2010). Leadership theory and practice (5th ed. p. 127). Thousand Oaks, CA: Sage.

Path-goal theory (Northouse, 2003) hypothesizes the following:

• Directive leadership will lead to greater satisfaction when the tasks are ambiguous than when there is no formalized structure to the tasks.

• Supportive leadership is needed when followers are performing structured tasks.

• Followers with high internal locus of control are more satisfied with a leader who uses a participative style.

• Followers with high external locus of control are more satisfied with a leader who uses a directive style.

Leader-Member Exchange Theory

Leader-member exchange theory, also called LMX or Vertical Dyad Linkage theory, is based on negotiated agreements. The leader is able to maintain his/her position in the team because of the agreements, relationships, or linkages with members or followers (Northouse, 2003).

The linkages are further characterized in the in-group and out-group. The in-group is more loyal and committed, takes on administrative duties, and is more committed to the completion of tasks. The out-group has less influence and is given a lower level of choice. The out-group comes to work, does the job at hand, and then goes home. There are three stages or levels in which these roles become defined, and it happens as soon as an individual joins the group (Northouse, 2003).

Source: Schermerhorn, J. R. (2010). Management (10th ed.). Hoboken, NJ: John Wiley and Sons, Inc.

In role-taking, the leader offers opportunities for the members to show capabilities for completing tasks. In role-making, the building of trust and respect is important, and betrayal can mean being moved to the out-group. Members who are similar to the leader are more likely to succeed. Cultural and racial differences as well as mixed gender can be stumbling blocks in this phase. In routinization, the pattern of social exchange or linkage is established between leader and member (Northouse, 2003).

The dyadic relationship formed between leader and member is very important. The relationship can have a transformational effect that allows leader and follower to move beyond self interests to the accomplishment of group and organizational goals. When practiced by leaders, LMX theory leads to positive outcomes in followers, such as those related to performance, commitment, and loyalty, as well as creativity, innovation, and career enhancement.

LMX theory proposes; however, that relationships of mixed gender and those with characteristics different from the leader may not be successful. One criticism of LMX theory is that members culturally or racially different can be discriminated against, leading to unfair and discriminatory practices in the workplace (Northouse, 2003).


A general conclusion from leadership research has been that a leader’s style needs to be flexible and adjusted to reflect the situation. The leader’s style is also tied to the team’s work performance, job satisfaction, and how the leader’s style is perceived by the members. By using different styles and behaviors, a leader can positively influence the group, and satisfactory group outcomes can be achieved.


Coulter, M., & Robbins, S. P. ( 2003). Management 2003 update (7th ed.). Upper Saddle River, NJ: Prentice Hall.

House, R. J. (1971). A path-goal theory of leader effectiveness. Administrative Science Leadership Review, 16, 321-339.

Northouse, P. G. (2003). Leadership theory and practice (3rd ed.). Thousand Oaks, CA: Sage.

Schermerhorn, J. R. (2010). Management (10th ed.). Hoboken, NJ: John Wiley and Sons, Inc.

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