Leader-Member Exchange, Transformational Leadership, and Value System

Abstract

This study looked at the relationship between leader-member exchange (LMX), transformational leadership, and terminal and instrumental value system congruence between leader and follower, and their relative impact on four outcomes, using a sample of 100 pairs of managers and subordinates from a non-profit organization in the United States. The four outcomes studied are perceived effectiveness of leader and work unit, follower satisfaction with leader, follower’s motivation to put in extra effort, and follower’s intention to quit the organization. Results of correlation analyses indicate that LMX is positively related to transformational leadership, which in turn is positively related to terminal value system congruence. Results of regression analyses using the forward option show that transformational leadership is a stronger predictor of effectiveness, satisfaction, and extra effort than LMX and terminal value system congruence. LMX explains significant additional variance in satisfaction and extra effort than what is already explained by transformational leadership. LMX is a stronger predictor of follower’s intention to quit than transformational leadership and terminal value system congruence. LMX also mediates the relationship between transformational leadership and intention to quit. Instrumental value system congruence between leader and follower is not significantly related to any of the variables.