Trouble at the next level: Effects of differential leader–member exchange on group-level processes and justice climate

Leaders develop different exchange relationships with their followers ranging from higher to lower quality. As these exchange relationships increase in quality a number of beneficial outcomes often accrue to both the leader and the follower when examined at the individual level of analysis. At the work unit level, however, differential leader–member exchange (LMXD) can lead to structural schisms between subordinates receiving higher- and lower-quality exchange that can interfere with productive group processes and the benefits of a favorable work climate. This article examines the incremental effects of group-level LMXD over average group levels of LMX on three group processes (co-worker communications, relationship conflict and team-member exchange) and three justice climates (interactional, procedural and distributive). Results from 87 intact teams indicate that LMXD has a sizable and negative impact on all group-level processes. LMXD also substantially decreases the strength of interactional, procedural and distributive justice climates. The incremental effects for LMXD on justice climate levels were negative for interactional justice and surprisingly positive for distributive justice. Post hoc analyses indicate an additional positive moderating effect of LMXD for relationship conflict and interactional justice climate level.