INTERNATIONAL JOURNAL OF ORGANIZATION THEORY AND BEHAVIOR, 16 (4), 465-493
WINTER 2013
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS ON
EMPLOYEE ENGAGEMENT AND WORK ROLE PERFORMANCE
Swati Chaurasia and Archana Shukla*
ABSTRACT. The paper aims to establish the relationship between leader
member exchange (LMX) relationship and work role performance through
the dynamic process of employee engagement. The study outlines why and
how leadership is important for employee engagement and effective work
role performance. Adopting a survey based research design, a sample of
198 Indian working managers at different levels including various sectors
has supported our hypotheses that employee engagement mediates the
relations between LMX and work role performance. It provides empirical
insights about how employee engagement process influences the LMX and
work role performance relationships. The results also suggest that high
quality relationship of employees with their leaders is positively related to
employee engagement and their work role performance.
INTRODUCTION
Employee engagement is described as the simultaneous
investment of employees’ physical, emotional and cognitive energies
into their work roles (Kahn, 1990; Rich, Lepine, & Crawford, 2010).
Furthermore, employee engagement has been established in extant
research as a psychological experience and its degree of existence is
explained by the presence of an individual in his/her role (Kahn,
1990; May, Gilson, & Harter, 2004). Employee engagement has been
a focus of research in the past decade because effective engagement
----------------------------* Swati Chaurasia, FPM, and Archana Shukla, Ph. D., are a Doctoral
Student, and a Professor, respectively, Human Resource Management,
Indian Institute of Management, Lucknow, India. Ms. Chaurasia’s research
interests are in work related attitudes, job performance and leadership
behaviors. Dr. Shukla’s research interests are organizational structure and
design, team building and team performance.
Copyright © 2013 by Pracademics Press
466
CHAURASIA & SHUKLA of employees is becoming challenging and demanding in the given
dynamic business environment and uncertain global scenario.
“Gallup Survey” (2012) indicates that only 8% Indians employees are
engaged at work place compare to global figure of 11%, 60-62%
Indian employees are not engaged in their work roles and 32 %
employees are actively disengaged (“Indians Don’t Feel,” 2012). The
Gallup terminology is defined as ‘engaged employees’ work with
passion and feel a profound connection to their company. They drive
innovation and move the organization forward. ‘Not engaged
employees’ are essentially ‘checked out’. They’re sleepwalking
through their workday, putting time – but not energy or passion – into
their work. ‘Actively disengaged’ employees aren’t just unhappy at
work while they’re busy acting out their unhappiness. Moreover, the
figures are not in the favor of emerging economies like India where
employees are the most important asset in any organization (“Indians
Don’t Feel,” 2012).
Although employee engagement resembles with work related
attitudes as job involvement, job satisfaction and organizational
commitment but researches have proved it a unique and distinct yet
related construct (Hallberg & Schaufelli, 2006; Rich, Lepine, &
Crawford, 2010). Employee engagement is influenced by various
personal as well as work related factors (Alderfer, 1972).
Employee-employer relationship is one of the most important
work related factors. The dynamics of employee employer relationship
is changed from the traditional view on management which believe
that ‘the manager in control and employee being controlled’
(Randolph, 1995). Leaders used to influence rather than empowering
their subordinates (Kark, Samir & Chen, 2003). It has become
necessary to move from the traditional, position based leadership to
more open and exchange relationship type of leadership, which
encourage employees to engage in their work roles. Studies have
proven that empowering leader behavior also helps employees to
achieve psychological empowerment, job satisfaction and
organizational commitment (Konczak, Stelly & Trusty, 2000;
Schalkwyk et al., 2010; Mendes & Stander, 2011). However
academic literature has not paid much attention how leaders
influence the engagement level of their subordiates. There is very few
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
467 the extant literature. A high quality relationshipwith leader develops
trust with employee and facilitate them to express better on their
work roles in turn made the followers more engaged and peerform
better, probably because of feeling supported by their leaders in their
capabilities and trusting not to punish them (Macey & Schneider,
2008; de Villiers & Stander, 2011).
The high quality perceived exchange relationships lead to higher
member satisfaction, commitment, better performance and lower
intent to turnover (Gerstner & Day, 1997; Markham et al, 2010).
Engaged employees shows positive behaviors in their work roles and
gives better performance (Bindl & Parker, 2010), shows discretionary
effort (Christian, Garza, & Slaughter, 2011; Bakker & Demerouti,
2008) and also gives competitive advantages to companies
(Lakshmi, Srinivas, & Krishna, 2010; Kumar & Swetha, 2010). The
present study, therefore aims to shed much needed light in this
regard by assessing the linkage among exchange behavior through
LMX, employee engagement and their performance. Moreover, we
extend the role of leader’s behavior in employee engagement and
their performance. In the following sections, we discuss LMX,
employee engagement and their linkage to performance and extend
the tenets of social exchange theory. Subsequently the research
hypotheses are presented.
THEORY AND HYPOTHESES
Leader Member Exchange
The quality of relationship between employee (subordinate) and
an employer (supervisor) can be better understand by leader member
exchange theory which supports that leaders don’t interact with
subordinates uniformly because supervisors have limited resources
and time. Amongst various streams of leadership theory, LMX theory
examines the quality of leader-member relationships and offers
researchers a unique lens to study leadership (Graen & Uhl-Bien,
1995; Liden, Sparrowe, & Wayne, 1997; Schriesheim, Castro, &
Cogliser, 1999; Sparrowe & Liden, 1997). The genesis of LMX theory
is the idea of vertical dyad linkage, defined as the exchange
relationship between leader and subordinate (Dansereau, Graen, &
Haga, 1975; Graen & Cashman, 1975). High quality LMX (in-group)
relationships are characterized by trust, information sharing and
providing resources like desired tasks, training opportunities, two way
468
CHAURASIA & SHUKLA communication and emotional support for employees (Liden &
Maslyn, 1998; Masterson et al., 2000; Wayne, Shore, & Liden, 1997)
while low quality LMX (outgroup) relationships tend to be limited and
contractual type obligations (Dansereau, Graen, & Haga, 1975; Graen
& Scandura, 1987; Graen & Uhl-Bien, 1995).
LMX Relationship with Employee Engagement
‘Employee-employer relationship’ is an important aspect in
organizational life which influences the behavioral outcomes as well
as process of engagement (Rousseau, 1989).The quality of exchange
relationship of employee and employer decides the degree of
engagement of an employee in their work roles. Furthermore, this
variation in the degree of engagement through quality of exchange
behaviors can be better understand by Social exchange theory (Saks,
2004; Andrew & Sofian, 2011) which constitutes that when
individuals receive economic and socioeconomic resources from their
organization; they feel obliged to response in kind and repay the
organization (Emerson, 1976) by their level of engagement
(Cropanzano & Mitchell, 2005). High quality LMX relationship
influences effective subordinate work behaviors through the
intervening process of employee engagement (Walumbwa,
Cropanzano, & Goldman, 2011). Workers are motivated to exert
effort on behalf of their organizations which is based on the highquality exchange relationship between employer and employee
(Walumbwa, Cropanzano, & Goldman, 2011, Cheung & Wu, 2012).
The leader is assumed as the immediate supervisor, employer or
team leader in the projects. Moreover, Leaders have been seen
differently with their one subordinate to others within work units
(Liden, Sparrowe, & Wayne, 1997). Hence, the degree of engagement
of an employee is dependent on the perception of an employee
towards the quality of leader member exchange behaviors. Since
organizations can never force employees to engage while they can
only facilitate by providing a good and trustworthy relationship with
their employers. Therefore, employees with higher quality LMX
relationships (in-group members) are more motivated and less
stressed (Lagace, Castleberry & Ridnour, 1993) and positively related
to job satisfaction (Grestner & Day, 1997; Graen, Novak &
Sommerkamp, 1982). Therefore we hypothesize that
H1: Leader member exchange relationship will be positively related
to employee engagement.
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
469 Relationship of Employee Engagement to Work Role Performance
The driving force behind the popularity of employee engagement
is that it has positive consequences for organizations (Saks, 2006;
Harter, Schmidt, & Hayes, 2002). Engaged employee as the most
important asset leading towards positive outcomes as increased
discretionary efforts in behavior (Saks, 2006; Macey & Schneider,
2008; Markos, 2010; Bakker, 2011; Kelleher, 2011), organizational
citizenship behavior (Whittington & Galpin, 2010; Masson et al,.
2008; Frank, Finnegan, & Taylor, 2004), personal initiatives
(Sonnentag, 2003), proactive behaviors (Salanova et al., 2003),
rational, emotional and intellectual commitments of employee
towards organization (Shaw, 2005; Richman, 2006), task
performance and contextual performance (Christian, Garza, &
Slaughter, 2011), low turnover intentions (Demerouti et al., 2001;
Salanova et al., 2000; Schaufeli & Bakker, 2004), reduced frequency
of sickness absenteeism (Schaufeli et al., 2002; Bakker 2011) as
well as business level outcomes in terms of higher productivity,
increased customer satisfaction and loyalty increased profitability and
shareholder value (Harter, Schmidt, & Hayes, 2002; Heger, 2007)
and hence increased level of financial turnover (Schneider et al.,
2009).
The paper tries to explain how engaged employees perform in
their work related roles (Griffin et al., 2007). In the extant literature
performance is measured as whole performance domain from job
specific to non-job specific (Campbell et al., 1993); task performance
and contextual performance (Borman & Motowidlo, 1993); various
work role behavior as job role, career role, innovator role, team role
and organization role behavior (Welbourne, Johnson, & Erez, 1998);
task performance, citizenship behavior and adaptive performance
(Johnson, 2003; Borman et al., 2001) and proactive behavior (Frese
& Fay, 2001; Crant, 2000; Parker, Williams, & Turner, 2006).
Moreover, individual effectiveness depends on his/her involvement in
their work role as a team member and organization member (Murphy
& Jackson, 1999). Taking various work role performances into
consideration, we have explored performance measures which
include the total nine dimensions as individual proficiency, adaptivity
and proactivity, team member proficiency, adaptivity and proactivity
and organization member proficiency, adaptivity and proactivity
(Griffin, Neal, & Parker, 2007). Individual task proficiency describes
470
CHAURASIA & SHUKLA behaviors that can be formalized and are not embedded in a social
context and closely related to concepts “task performance” (Borman
& Motowidlo, 1993; Johnson, 2003) and “job role behavior”
(Welbourne, Johnson, & Erez, 1998). Engaged employees leads to
higher level of job performance, work performance and in role
performance (Rich, Lepine, & Crawford, 2010; Bakker & Demerouti,
2007; Salanova et al., 2005; Whittington & Galpin, 2010; Ho, Wong,
& Lee, 2011). Team member proficiency describes behaviors that can
be formalized and are embedded in a team or group context and
closely related to the concept “personal support” (Borman, Buck,
Hanson, Motowidlo, Stark, & Drasgow, 2001), “helping behavior”
(Podsakoff, MacKenzie, Paine, & Bachrach, 2000) and “team role
behavior” (Welbourne, Johnson, & Erez, 1998). Organization member
proficiency describes behaviors that reflect the degree to which an
individual meets the expectations and requirements of his or her role
as a member of an organization and is similar to the concepts
“organizational support” (Borman et al., 2001; Johnson, 2003),
“organizational loyalty and civic virtue” (Podsakoff et al., 2000) and
“organization role behavior” (Welbourne, Johnson, & Erez, 1998).
Engaged employees show higher level of organizational commitment
and organizational citizenship behavior (Bhatnagar & Biswas, 2010;
Saks, 2006; Rich, Lepine, & Crawford, 2010; Whittington & Galpin,
2010). Individual task adaptivity reflects the degree to which
individuals cope with, respond to, and/or support changes that affect
their roles as individuals. Team member adaptivity reflects the degree
to which individuals cope with, respond to, and/or support changes
that affect their roles as members of a team. Organization member
adaptivity reflects the degree to which individuals cope with, respond
to, and/or support changes that affect their roles as organization
members. Individual task proactivity is the extent to which individuals
engage in self-starting, future oriented behavior to change their
individual work situations, their individual work roles, or themselves.
Team member proactivity reflects the extent to which an individual
engages in self-starting, future-directed behavior to change a team’s
situation or the way the team works. Organization member proactivity
reflects the extent to which an individual engages in self-starting,
future-directed behavior to change her or his organization. Proactive
behavior is an outcome of engaged employees (Salnova & Schaufeli,
2008). Hence our next hypothesis is
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
471 H2(a): Employee engagement will be positively related to Individual
member effectiveness
H2(b): Employee engagement will be positively related to Team
member effectiveness
H2(c): Employee engagement will be positively related to Organization
member effectiveness
Mediating role of Employee Engagement
Leadership behaviors have a strong influence on employee and
organizational outcomes (Chen & Silverthorne, 2005), including work
engagement and turnover intention (Mendes & Stander, 2011). Both
qualitative reviews (Erdogan & Liden, 2002; Liden, Sparrowe, &
Wayn, 1997) and meta-analyses (Gerstner & Day, 1997; Ilies,
Nahrgang & Morgeson, 2007) of research in this area have shown
that LMX is positively related to favorable outcomes for subordinates,
such as job satisfaction and organizational citizenship behavior
(Organ, 1988, 1990). A very few studies explores the indirect effect of
LMX and employee engagement through psychological empowerment
and found positively related (de Villiers & Stander, 2011; Mendes &
Stander, 2011) but researches have not yet explored that how LMX
directly influence employee engagement process.
LMX exerts its benefits by creating social exchange relationships
between leader as the immediate supervisor and employee as
subordinate (Wayne, Shore, & Liden, 1997; Liden & Maslyn, 1998;
Masterson et al., 2000; Wilson, Sin, & Conlon, 2010). The quality of
supervisor and subordinate relationship (LMX) not only decides the
level of engagement but also helps to improve the performance,
organizational commitment and organizational citizenship behavior
and reduces the turnover intention (Walumbwa, Cropanzano, &
Goldman, 2011; Truckenbrodt, 2000; Hui and Law, 1999; Cheung &
Wu, 2012). Since, LMX and employee engagement will be positively
related to performance and high quality LMX also positively related to
engagement process then there is a possibility that employee
engagement mediates the relationship between LMX relationship and
work role performance. Thus our next hypotheses are
H3: Leader member exchange relationship will be positively related to
work role performance.
472
CHAURASIA & SHUKLA H4: Employee engagement mediates the relationship between leader
member exchange relationship and work role performance
Figure 1 shows the hypothesized model with all the dimensions of
employee engagement and work role performance. Also it
summarizes all the above hypotheses.
FIGURE 1
Hypothesized Model
H3
Leader
membe
PE
H2
Employee
Engagement
H1
EE
CE
Work Role
H2
Performanc
e
OE
IME
OME
TME
Legends: PE= Physical Engagement; EE= Emotional Engagement; CE=
Cognitive Engagement; OE= Organization Engagement; IME=
Individual member effectiveness; TME= Team member
effectiveness; OME= Organization member effectiveness.
METHOD
Research Setting and Participants
The population for this study consisted of individuals from a
heterogeneous sampling of organizations from various industries
including manufacturing and service industries. The sample has
covered IT industries, automobile sectors, textile industry, banking
sector and pharmaceutical industry. The inclusion of many types of
organizations has increased the external validity and generalizability
of our research findings. The survey participants have an average age
of 34 years and organizational tenure of 11 years. The sample
includes 78% male and 22% female participants, representing
different levels of management: 50% middle-management, 35%
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
473 junior-management and 15% senior-managers. 46% of the
respondents had an under-graduate degree, and 54% had graduate
qualifications.
Measures
The following section details each of the survey battery
instruments used in measuring each variable. Each scale is scored by
aggregating the total scores for each item on a given measure and
reporting the total score as the composite score for the measure.
Both composite and individual scores from each item on a given
measure are examined for significance. Instruments is scored and
reported separately. Unless otherwise indicated, all the variables are
measured by participant responses on a five-point Likert-type scale
ranging from “strongly disagree” to “strongly agree.” The specific
measures are described below, along with the results of calculation of
Cronbach alpha coefficients for the various measures. When a
measure is described as having dimensions, the dimensions (items
averaged) are used as indicators for their construct in structural
equation modeling. Otherwise, items are averaged into an overall
scale score. Measures are completed by employees.
Leader/Member Exchange Relationship
The Leader-Member Exchange (LMX) scale (Graen & Uhl-Bien,
1995) is employed to measure the quality of exchange between
supervisors and subordinates. This earlier version of the same scale
is used in various studies including the studies of leader member
exchange status (Liden & Graen, 1980; Scandura & Graen, 1984).
This scale is composed of 7 items. Sample item to measure leader
member exchange relationship included “how well do you feel that
your immediate supervisor understands your problems and needs?”
The responses were measured using a 4-point Likert scale ranging
from “Not at all – (1)” to “Completely – (4)” by the employees.
Employee Engagement
Employee engagement is measured by Rich, Lepine, and
Crawford (2010) job engagement including physical engagement,
emotional engagement and cognitive engagement. To make a better
measure of employee engagement we have added the organization
engagement dimension given by Saks (2006). Sample item to
474
CHAURASIA & SHUKLA measure job engagement included, “Sometimes I am so into my job
that I lose track of time” and organization engagement included, “One
of the most exciting things for me is getting involved with things
happening in this organization.” The responses were measured using
a five-point Likert scale ranging from (1) strongly disagree to (5)
strongly agree.
Work Role Performance
Work role performance is measured by Griffin, Neal and Parker’
scale (2007) which includes three sub-dimensions of work role
performance. The work role behavior contributes to effectiveness at
individual, team and organization level in three different forms of
behavior –proficiency, adaptivity and proactivity. Individual task
behavior measures individual task proficiency, individual task
adaptivity and individual task proactivity. The other two levels also
measure three different behaviors. The scale includes 27 items to
measure 9 sub dimensions of performance. This scale (Griffin, Neal,
& Parker, 2007) was validated by three different samples including
supervisors (n=491) and self-rated of employees (n1=1228, n2=927)
and it is found that correlations among sub-dimensions tended to be
higher in the supervisor sample than in the employee samples but
there is no significant difference in all three samples of the study.
Therefore, we have also considered self-ratings of performance
measures of employees and also these items are likely to be based
on greater familiarity with the full range of behaviors in a given work
role (Lance, Teachout, & Donnelly, 1992).
Control Variables
Age, gender, education, organizational tenure, level of
management and organization size are measured and included in
subsequent analyses to control for their potentially spurious effects.
Gender is taken as a control variable and assigned nominal scale
(Female=0; Male=1); age is measured in an ordinal scale and
assigned five categories of age in increasing order; organizational
tenure is measured as a continuous scale measured in years;
education is measured in nominal scale (Graduate=1; Post
graduate=2; Doctoral degree=3); the level of management is taken in
nominal scale (Junior level=1; Middle level=2 and Senior level=3); no.
of employees is taken as a proxy for organization size. Organization
size is measured in four categories based on no. of employees as
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
475 small (less than 100), medium (100-1000), large (1000-10,000) and
giant group (more than 10,000). Structural ownership of organization
(public, private, MNC or family owned) also plays a significant role in
engaging employees. Hence we have tried to cover these differences
in various sectors through structural ownership and measured in
nominal scale (Public sector=1; Private sector=2; MNC=3; Family
owned= 4).
DATA ANALYSIS AND RESULTS
Separate Confirmatory Factor Analysis:
To assess the direct and indirect relationship among LMX, employee
engagement and work role performance, we followed two step
approach using confirmatory factor analysis and structural equation
modeling based on LISREL 8.52 (Anderson & Gerbing, 1988;
Jöreskog & Sörbom, 1993). We have conducted the separate
confirmatory factor analysis for employee engagement and work role
performance items, creating scale scores to indicate each of the four
and three dimensions of engagement and performance. This
confirmatory factor analysis for each construct, not only gives the
separate dimensions but also convergent and discriminant validity of
various dimensions of engagement and performance. For each of the
confirmatory factor analysis reported we used the root mean square
error of estimation (RMSEA) to assess whether the factor structure
adequately fits the data. Table 1 shows the confirmatory factor
analysis for LMX scale and suggests good support for the used scale
as RMSEA=.058. We have reported the standardized weights or
loadings (lamda). The unstandardized weights are highly sensitive to
model constraints, whereas the standardized regression weights
provide more intuitive information about the loadings. Standardized
solutions are not printed by default in the output but can be
recovered from the path diagram. Table 2 shows the confirmatory
analyses for engagement and supports for four factors model of
employee engagement. The RMSEA value reported was .056. Table 3
reports the confirmatory factor analysis for work role performance
scale; 17 items indicating three factors were found to fit data, a
pattern consistent with the scale theoretical underpinnings. The
RMSEA value reported was .057.
476
CHAURASIA & SHUKLA TABLE 1
Results of Confirmatory Factor Analysis for the LMX Scale
Items
Lamdas
How well do you feel that your immediate supervisor
0.8
understands your problems and needs?
How well do you feel that your immediate supervisor
0.71
recognizes your potential?
Regardless of how much formal authority your immediate
supervisor has built into his or her position, what are the
0.56
chances that he or she would be personally inclined to use
power to help you solve problems in your work?
Again, regardless of the amount of formal authority your
immediate supervisor has, to what extent can you count on
0.56
him or her to "bail you out" at his or her expense when you
really need it?
I have enough confidence in my immediate supervisor that I
would defend and justify his or her decisions if he or she
0.70
were not present to do so
How would you characterize your working relationship with
0.81
your immediate supervisor?
Notes: The lamdas reported are from the standardized solution. X²
(chi Square)=13.25, (df=8), p<.001. RMSEA= .058. Calculated
from null of 2474.992 with 8 df.
TABLE 2
Results of Confirmatory Factor Analysis for the Employee Engagement
Scale
Items
Physical Engagement
I exert my full effort to my job.
I devote a lot of energy to my job.
I try my hardest to perform well on my job.
I strive as hard as I can to complete my job.
I exert a lot of energy on my job
Emotional Engagement
I feel energetic at my job.
I am interested in my job
Lamdas
0.91
0.95
.84
.80
.83
0.61
0.87
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
477 TABLE 2 (Continued)
Items
I am proud of my job
I feel positive about my job.
I am excited about my job.
Cognitive Engagement
At work, I pay a lot of attention to my job.
At work, I am absorbed by my job.
At work, I concentrate on my job.
At work, I devote a lot of attention to my job.
Organizational Engagement
Being a member of this organization is very captivating.
One of the most exciting things for me is getting involved
with things happening in this organization
Being a member of this organization make me come
“alive.”
Being a member of this organization is exhilarating for me.
I am highly engaged in this organization
Lamdas
0.87
1.05
0.87
0.89
0.81
0.92
0.87
0.83
0.83
0.84
0.74
0.41
Notes: The lamdas reported are from the standardized solution. X²
(chi Square) = 215.0; (df = 134); p<.001; RMSEA = .056.
Calculated from null model of 5319.219 with 134 df.
TABLE 3
Results of Confirmatory Factor Analysis for the Work Role
Performance
Items
Individual task Behavior
Carried out the core parts of your job well.
Completed your core tasks well using the standard
procedures.
Ensured your tasks were completed properly
Adapted well to changes in core tasks
Team Member Behaviors
Coordinated your work with coworkers.
Communicated effectively with your coworkers.
Provided help to coworkers when asked, or needed
Lamdas
0.83
0.7
0.89
0.81
0.59
0.7
0.76
0.8
478
CHAURASIA & SHUKLA TABLE 3 (Continued)
Items
Dealt effectively with changes affecting your work unit
(e.g., new members)
Learnt new skills or taken on new roles to cope with
changes in the way your unit works.
Responded constructively to changes in the way your team
works
Suggested ways to make your work unit more effective.
Developed new and improved methods to help your work
unit perform better
Organization Member Behaviors
Improved the way your work unit does things
Presented a positive image of the organization to other
people (e.g., clients)
Defended the organization if others criticized it.
Talked about the organization in positive ways
Lamdas
0.8
0.83
0.86
0.82
0.79
0.9
0.71
0.77
0.69
Note: The lamdas reported are from the standardized solution. X² (chi
Square)=169.67 (df=103 ) p<.001, RMSEA= .057. Calculated
from null of 4057.277 with 103 df.
Correlations and Reliabilities
Table 4 reports the scale means, standard deviations, reliabilities
and correlations among all study variables. As shown in the table, the
study variables all possess an acceptable degree of internal
consistency at or above .70 as recommended by Nunnally (1978).
The regression equations and correlation matrix shows that that
employee engagement is positively related to LMX and explains 18 %
of variance (R²) in EE. Thus, Hypothesis 1 was supported. Also, work
role performance is positively related to employee engagement and
LMX and explains 82% & 15% variance (R²) in work role performance
respectively. The findings provide good support for hypothesis 2a, 2b,
2c and 3. The explained variance (R² =18%) of LMX in employee
engagement is very low because there are certainly other important
variables which also influence the engagement of an employee in
their work. But the explained variance (R² = 82%) in work role
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
479 TABLE 4
Means, Standard Deviations, and Correlations among the Study
Variables (n =198)
Mean
S.D.
Age
34
0.7
PE
PE
4.03
.727
(0.947)
EE
CE
OE
EE
3.96
.779
.680**
CE
3.98
.734
.773** .675** (0.947)
OE
3.62
.749
.570** .684** .630**
IME
4.09
.602
.619** .569** .665** .509**
IME
TME
OME
LMX
(.948)
(.911)
(.922)
TME 4.097
.563
.698** .623** .729** .569** .769**
OME
4.05
.647
.589** .658** .684** .670** .653** .711**
(.962)
LMX
3.97
.576
.782** .848** .870** .819** .807** .854** .861** (.851)
(.891)
Notes: **. Correlation is significant at the 0.01 level; *. Correlation is significant at the 0.05
level. Coefficient alpha reliabilities are on the diagonal in parentheses.
performance of employee engagement is quite high which assures
that employee engagement plays an important role in the
performance. Also LMX explains only 15% variance in work role
performance, which suggests the need to focus on the other
important variables for performance.
Structure Equations Analysis
We chose to analyze the data using nested model analysis to
strengthen our hypotheses examining the relationship among LMX,
employee engagement and work role performance. Table 5 reports
the results for nested model analysis. The nested model analysis
controls for potential multicollinearity between the dimensions of the
constructs. The table includes six models in total. The three
alternative models indices (CFI-Comparative fit index; GFI- Goodness
of fit index; SRMR- Standardized root mean square residual; RMSEARoot mean square error of approximation) are compared with the
hypothesized model and shows good degree of fitness. The chi
square reported is not significant in all the models except Model 2
which means that the proposed model and calculated model are not
significantly different. The hypothesized model fits the data well the
data well. The χ2 (model chi square) measure of model fit is 28.88
480
CHAURASIA & SHUKLA TABLE 5
Nested Model Analysis Comparisons Model
χ2
df ∆χ2 CFI
Independence Model 1899.5 28
Measurement Model
48.72 17
0.97
Hypothesized Model
28.88 16 19.84 0.98
Model1:LMX→WRP
5.49
2 43.23 0.98
Model2:LMX→EE
9.5*
4 39.22 0.98
Model3:EE→WRP
18.57 11 30.15 0.98
GFI
SRMR
0.94
0.96
0.98
0.97
0.97
RMSEA
0.041
0.034
0.029
0.034
0.026
0.098
0.064
0.094
0.084
0.059
Note: X²(Model chi Square) values for the measurement and alternative
Model 2 is significant at p<.05. Difference scores were calculated from
measurement model 48.72 chi square with df of 17.
(df=16), which is too small to reject the null of a good fit (p=.38).
Additionally the RMSEA has declined to .064, which is small enough
to indicate a good fit. Also the ∆χ2 for hypothesized model is
minimum as compared to other models. 0
The individual path coefficient given in Figure 2 are the significant
standardized path coefficient at p <.05. All the path coefficients are
above the acceptable limit. Also the dimensions of employee
FIGURE 2
Structural Equation Modeling
OME
EE
PE
.85
.80
.78
.26
LMX
Employee
Engagemen
.58
LMX
.89
CE
Work Role
Performanc
e
.72
.70
.83
OE
IME
.90
TME
Note: *Path weights are completely standardized path coefficient at
p<.05.
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
481 engagement and work role performance are significantly representing
their latent variables.
Mediation Analysis
To test for mediating variables, the commonly applied method
requires estimating three regression equations using ordinary least
square (OLS) (Baron & Kenny, 1986). We are using SPSS and
applying the specific test for mediation known as Sobel test. Although
structural equation algorithms (e.g. LISREL) has the potential and
also used in various papers but still susceptible to underlying concern
(Shaver, 2005).
Tables 6 and 7 report the mediation analysis results includes Sobel
coefficient, direct effect, indirect effect, total effect and mediation
percentage. The Sobel value is 5.577 (>1.96, acceptable) and shows
full mediation with 83.7%. The direct effect (a*b) .242, indirect effect
(c’) .048 and total effect (c) .291 are significant at p=.001 level.
Table 3 presents the mediation analysis with all possible
combinations of variables and reports the correlations through Model
1 including LMX as IV (independent variable) and EE (employee
engagement) as DV (dependent variable), Model 2 including LMX as
IV and WRP (work role performance) as DV and Model 3 including
LMX and EE as IV and WRP as DV. The findings supports that when
we control EE and test Model 3, the indirect effect becomes
insignificant and the value is reduced from .291** (significant at
p=.001) to .048 (insignificant), hence proves the full mediation.
TABLE 6
Ratio of indirect
to direct effect
LMX-- Work
role
5.577 0
performance
% of total effect
that is mediated
P value
Sobel value
Mediating Effect (Sobel Test)
83.7
0.198 0.291* 0.388* .626* 0.048
c
a
Note: * Regression coefficients are significant at the 0.01 level.
b
c'
482
CHAURASIA & SHUKLA TABLE 7
Mediating Effect of Employee Engagement on the Relationship
between LMX and Work Role Performance
Dependent Variable
Employee Engagement
(EE)
Work Role Performance
Model1
Predictors
Intercept
LMX
B
S.E.
2.706* 0.189
Model2
Beta
B
S.E.
3.258* 0.158
Model3
Beta
B
S.E.
Beta
1.563*
0.388* 0.065 0.391 .291* 0.055 0.356 0.048 0.039 0.058
EE
.626*
0.04
0.76
* Regression coefficients are significant at the 0.01 level.
DISCUSSION
Overall the results provide partial support for the expected
compensatory model of relationships among the LMX, employee
engagement and work role performance. The present study makes
multiple contributions to LMX, employee engagement and work role
performance literature. The study builds and tests a conceptual
model that uniquely integrates leadership exchange relationship with
important work role performance as personal effectiveness at
individual, team and organization level through employee
engagement. Our results demonstrate that the effect of high quality
LMX on work role performance is mediated by employee engagement.
Although few studies have investigated relationships between
leadership potential and empowering behavior but a comprehensive
test of specific leader member exchange behaviors and their impact
on employee engagement and personal effectiveness has been
surprisingly absent from consideration. The results provide good
support for latent variable employee engagement and its manifest
variables as physical engagement, emotional engagement, cognitive
engagement and organization engagement. Hence employee
engagement is a broader concept than only job engagement or work
engagement in the extant literature. We have measured job
engagement through three sub dimensions as physical engagement,
emotional engagement and cognitive engagement and organization
engagement as a separate manifest variable. Also, work role
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
483 performance shows only three major dimensions rather than nine
sub-dimensions in Indian context. All the nine dimensions converged
into three major dimensions with the help of factor analysis as
individual member effectiveness, team member effectiveness and
organization member effectiveness.
The results support the hypothesis 1 as high quality LMX
characterized by trust, two way communications and sharing of ideas
will influence positively shown in correlation as well as structural
model in Figure 2. LMX is positively related to work role performance
which shows that healthy and trustworthy relations between
employee and employer facilitate to employee in their performance
as an individual, team member and organization member. The
mediation analysis shows that employee engagement is a process
variable and mediates LMX and work role performance and also
positively related to work role performance. Apart from testing the
role of LMX, employee engagement and work role performance
separately, the study tested the effect of these variables together by
incorporating them into the structural model. By testing the mediating
influence of the employee engagement simultaneously and allowing
for the interrelationships between them, it could be possible for us to
delineate the unique effect of LMX and EE on work role performance.
Also, by doing this we can better understand how leader member
exchange relationship impacts employee engagement and personal
effectiveness. The conceptual framework provides us greater
confidence about the causality of the tested relationships.
Implications for Academicians:
We have explored the Kahn’s (1990) theory of employee
engagement by considering the degree to which engagement serves
a mechanism through which leader member exchange behavior
affects the work role performance. The extant literature considers
mainly the job related work role and the engagement is called as job
engagement, personal engagement or work engagement (Kahn,
1990; Schaufelli et al., 2002; Rich, Lepine, & Crawford, 2010) while
this paper explores the job as well as organization related work roles
which explains employee engagement in better a way. There are
some evidences in literature which explains that psychological
presence of an individual at work role is job engagement while in
organization member role is organization engagement (Saks, 2006;
Andrew & Sofian, 2011). This paper has explored the holistic and
484
CHAURASIA & SHUKLA integrated approach and included job engagement in terms of
physical, emotional and cognitive energies and organization
engagement as the components of employee engagement. The
outcomes of employee engagement is measured through personal
effectiveness at three levels which covers the integrated set of all
behaviors including in role and extra role behaviors. The researches
have not reached on consensus about performance measures but
the complete range of behaviors seems to be a better choice based
on the literature review (Griffin, Neal & Parker, 2007). This personal
effectiveness measure includes various behaviors at three levels
including three sub dimensions in each category. The individual level
includes individual task proficiency, individual task adaptivity and
individual task proactivity, team level includes team member
proficiency, team member adaptivity and team member proactivity
and organization level includes organization member proficiency,
organization member adaptivity and organization member proactivity.
The factor analysis in the present study shows the three prominent
factors of personal effectiveness as individual, team and organization
level performance in Indian context instead of nine dimensions
suggested by Griffin, Neal, and Parker (2007). The possible
explanation of our findings is that employees in India do not
differentiate too much in various demands in their work role
performance and considers a collective measure of performance
mostly based on overall effectiveness.
Implications for Practitioners:
The study has significant implications for practitioners. First, the
study found that leader member exchange relationship plays an
important role in encouraging employee engagement and hence
personal effectiveness. Specifically, study results suggest that
organizations should try to promote high quality leader member
exchange behavior which includes trust and open communication (in
group) rather than contractual relationship (out group). High quality
LMX impacts the engagement process of employees and leads to
better work role performance. Thus, organizations should encourage
the healthy and transparent relationship between leader or
supervisor and member as employees.
THE INFLUENCE OF LEADER-MEMBER EXCHANGE RELATIONS
485 Limitations and Directions for Future Research
The study has some limitations in terms of measurement as all
the indicators are self-rated so there may be possibility of social
desirability issue in rating their performance as well as other
variables. Another limitation related to the data is that they were all
collected from a single source at a single point in time. We have
attempted to minimize concerns of sampling bias and common
method variance. In designing the survey, we were careful to adhere
to the recommendations of Podsakoff et al. (2003), in that we
separated questions used in the study from each other to minimize
this problem. Although we checked for the common method variance
through procedural control (assuring respondents of anonymity of
their responses) and statistical control (confirmatory factor analysis)
(Podsakoff et al., 2003), the possibility of this error cannot be all
together discounted. This study is cross-sectional, and so any
inferences regarding causality are limited longitudinal study can be
done in future to strengthen the causality among variables. Future
research can also take objective measures of organizational
performance like productivity, efficiency or turnover rate with the
combination of subjective measures. In the developing nations like
India the similar study variables and their relationships can be tested
in informal sectors in future researches. Since informal economy
plays a significant role in the economy.
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