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LMX theory of
Leader-member exchange (LMX) leadership and
theory of leadership and HRD HRD
Development of units of theory and laws
of interaction 531
Dae-seok Kang Received July 2006
College of Business Administration, Inha University, Incheon, Revised October 2006
Accepted November 2006
Republic of Korea, and
Jim Stewart
Nottingham Business School, Nottingham Trent University, Nottingham, UK

Abstract
Purpose The purpose of this paper is to examine the relationship between leader-member
exchange (LMX) and human resource development (HRD) to gain a better understanding of the
LMX-performance relationship through connecting LMX and HRD theory.
Design/methodology/approach Dubins framework is used for the purpose of linking LMX with
HRD. Except that the last three steps (empirical indicators of key terms, hypotheses, testing) involved
conducting empirical research, the authors employ steps 1 through 5 to build an HRD-based LMX
model, i.e. the first step specifies that the units of the theory be identified; the second step involves
establishing the laws of interaction applicable to the units of the theory. The third and fourth steps
define boundaries for an HRD-based LMX model and suggest propositions for future empirical
research. In addition, to lessen the likelihood of some redundancy the system states are included with
the laws of interaction.
Findings LMX and HRD (as represented by identified outcomes) theories are linked by at least
three key factors: trust, empowerment, and performance. A theoretical model linking LMX and HRD
also describes the contributions of trust, empowerment, and performance to LMX theory of leadership
with the help of two specific HRD interventions trust building and empowerment facilitation.
Research limitations/implications The confirmation of the theoretical model through empirical
research is still required.
Practical implications In the aspect of relational performance, this paper proposes a basis for
designing and implementing strategic HRD activities and recommends the conceptual model as an
intervention technique for organizational change.
Originality/value This paper illuminates the base of LMX leadership theory and seeks to develop
new practical insights of the theory. In so doing, it aims to contribute to reducing the tension between
leadership theorists and leadership development practitioners, described as validity versus usefulness.
Keywords Trust, Empowerment, Performance management, Human resource development
Paper type Conceptual paper

As a multidisciplinary field that creates its own discipline from a variety of theories
(Jacobs, 1990; McGoldrick et al., 2002), one view of human resource development (HRD) Leadership & Organization
is that it is a process that focuses on both personal and organizational outcomes on the Development Journal
Vol. 28 No. 6, 2007
basis of learning and performance (Swanson and Holton, 2001). Hence, HRD pp. 531-551
continuously works for a more enlightened, ethical, and skills-focused change q Emerald Group Publishing Limited
0143-7739
management for both successes of individuals and organizations through a proactive DOI 10.1108/01437730710780976
LODJ and system-wide intervention (Grieves, 2003; Stewart, 2003). In this view, the main
28,6 focus of HRD is to enhance the knowledge and skills of individuals, both severally and
collectively, to enable them to perform current and future goals and optimize individual
and organizational growth and effectiveness. While this understanding of HRD is not
without controversy or challenge (Elliott and Turnbull, 2005; Rigg et al., 2007b) it
reflects a widely held and established conception that influences both research and
532 practice (Harrison, 2005; Sadler-Smith, 2005). In a similar vein, leader-member
exchange (LMX) is also an ongoing value-added process aimed at better performance
of individuals and organizations through the diagnosis of leader-follower interactions
(Green et al., 1996). LMX theory of leadership focuses on the degree of emotional
support and exchange of valued resources between the leader and members. Thus,
LMX leadership theorys main focus is to diagnose this relationship so a higher quality
can be developed in this relationship, enabling improved performance. These
developmental features suggest a linkage between HRD, conceived as performative
(Rigg et al., 2007a) and LMX theory. HRD contributes to this linkage through its
multi- or interdisciplinary nature, providing a common boundary in pursuing
performance.
Unlike traditional theories that seek to explain leadership as a function of leaders
personal characteristics, features of the situation, or interaction between the two, LMX
leadership theory has evolved into a dyadic approach to understanding leader-follower
relationships (Howell and Hall-Merenda, 1999). According to the vertical dyad linkage
approach (Dansereau et al., 1975), leaders and followers develop dyadic relationships
and leaders treat individual followers differently, resulting in two groups of followers:
an in-group and an out-group. The in-group consists of a number of trusted followers
who are derived from expanded and negotiated role responsibilities with the leader.
The out-group includes the remaining followers with whom the relationship of the
leader remains more formal. A higher quality relationship results when leaders and
followers exchange greater physical resources, information and enjoyable tasks (Liden
and Maslyn, 1998). This reflects the assumption that leaders have limited time and
energy and associated inability to give equal attention to all followers.
Since, the early formulation of LMX theory a number of additional studies have
established antecedents and outcomes of high quality relationships using survey
instruments and measurement scales (Table I). The antecedents of LMX identified by
empirical research are mostly leader and follower characteristics that exist prior to the
exchange, or their behaviors that occur during the LMX. The outcomes are associated
with followers work related attitudes and behaviors such as increased commitment,
satisfaction, performance and organizational citizenship behavior (OCB). The results of
empirical studies of LMX have commonly shown that followers in high quality LMX
relations have more positive job attitudes and engage in more positive behaviors than
those in low quality relationships.
According to Gerstner and Days (1997) meta-analytic review on LMX, however,
there is surprisingly little agreement on what LMX is and how it operates in relation to
performance. In particular, although the LMX model highlights the importance of the
role and type of reciprocity, it does not explain how these concepts interact to build
mature partnerships (Dienesch and Linden, 1986; Schriesheim et al., 1999; Sparrowe
and Liden, 1997; Yrle et al., 2003). Whether LMX diagnosis can actually improve
performance is further questioned, considering that it may support the need for
 LMX theory of
Antecedents Outcomes
leadership and
Leader Attitudes HRD
Trustworthiness (Brower et al., 2000; Gomez and Job satisfaction (Graen et al., 1982; Green et al.,
Rosen, 2001) 1996)
Positive expectation of subordinate (Sparrowe and Job dedication (Michael et al., 2005)
Liden, 1997) 533
Power (Cogliser and Schriesheim, 2000) Communication satisfaction (Mueller and Lee,
2002)
Transformational leadership (Wang et al., 2005; Organizational commitment (Duchon et al., 1986;
Howell and Hall-Merenda, 1999) Liden et al., 2000)
Rapport management (Campbell et al., 2003) Perceived empowerment (Gomez and Rosen, 2001;
Liden et al., 2000)
Follower Behaviors
Goal orientation (Janssen and Van Yperen, 2004; Organizational citizenship behavior (Hui and Law,
Chiaburu, 2005) 1999; Scandura et al., 1986)
Performance (Gehani, 2002; Wayne and Ferris, Subordinate turnover (Bauer and Green, 1996;
1990) Liden et al., 1997)
Effort (Maslyn and Uhl-Bien, 2001) Innovative behaviors (Basu and Green, 1997)
Impression management (Wayne and Liden, 1995) Cooperative communication among peers
(Lee, 1997)
Interpersonal
Liking (Engle and Lord, 1997; Wayne et al., 1997)
Similarity (Deluga, 1998; Murphy and Ensher,
1999)
Positive expectation (Liden et al., 1993; Wayne Table I.
et al., 1997) Antecedents and
Interactional justice (Masterson et al., 2000; outcomes of high quality
Murphy et al., 2003) LMX

development among privileged groups in the workplace (Northouse, 2004).

Yu and Liang (2004) even doubted the previously well-accepted positive relationship
between high quality LMX and organizational performance found in previous studies.
In short, although empirical research has supported the validity of the LMX theory of
leadership, explanations of LMX processes are still speculative, brief, and primarily
descriptive (Dienesch and Linden, 1986; House and Baetz, 1979; Northouse, 2004).
Therefore, this paper seeks to address this theoretical deficiency and to propose a
conceptual solution to explain the LMX-performance relationship more effectively, and
to suggest better ways to apply LMX in real organizational settings through practical
applications of chosen HRD interventions.

Research purpose and research questions

The overall purpose of this paper is to examine the relationship between LMX and
HRD to gain a better understanding of the LMX-performance relationship through
connecting LMX and HRD theory. On the basis of the development attributes of LMX
theory, this paper addresses two questions:
RQ1. How is LMX linked with HRD? Are there common units of theory between
LMX and HRD which are necessary for theory building?
LODJ RQ2. If LMX and HRD have common units for theory building, how do their
28,6 common units of theory operate together to improve the LMX-performance
relationship?
Despite the high level of scholarly interest in LMX theory development, researchers
have not yet approached the phenomenon through the lens of HRD interventions such
as individual training and development and organization development (OD). We
534 suggest that this is a significant reason that the LMX-performance process in the LMX
literature has been descriptive and even vague. Accordingly, through theory building
between LMX and HRD, we try to illuminate the base of LMX leadership theory and to
develop new practical insights of the theory. In so doing, we aim to contribute to
reducing the tension between leadership theorists and leadership development
practitioners, described as validity versus usefulness (Stewart, 1999; Van de Ven,
1989).

Review of LMX theory of leadership

Understanding of organizational outcomes through leadership research has progressed
from consideration of leader attributes to recognition of the importance of the
relationships that leaders have within a situation or with subordinates. The former
viewpoint would be best exemplified by theories of transformational leadership (Bass,
1985) and the latter approach is the basis of LMX. However, this dichotomy within the
study of leadership may be less significant than generally accepted since
transformational leadership is conceptually similar to the process of developing a
unique LMX (Gerstner and Day, 1997). There is emerging support for the claim that
LMX may be transformational leadership at certain times and under certain conditions
(Deluga, 1992; Krishnan, 2004; Wang et al., 2005). Thus, a review of two-way, reciprocal
exchanges between leader and follower is not only helpful in understanding the
essence of organizational leadership but it also provides a foundation for the
LMX-HRD linkage model to be proposed later in this paper.
LMX is defined as follows:
Leader-member exchange is (a) a system of components and their relationships (b) involving
both members of a dyad (c) involving interdependent patterns of behavior and (d) sharing
mutual outcome instrumentalities and (e) producing conceptions of environments, cause
maps and value (Scandura et al., 1986, p. 580).
Leaders in high quality LMX relationships rely heavily on followers to act in their
stead (Dunegan et al., 1992) and encourage them to undertake more responsible
activities (Graen and Uhl-Bien, 1995). Followers in such relationships interact
frequently with their leaders and have their leaders support, confidence,
encouragement, and consideration. Followers take on added duties or expend extra
effort to achieve work group goals beyond contractual or transactional expectations
(Sparrowe and Liden, 1997; Wayne et al., 1997).

LMX development
Dyadic relationship development is theoretically grounded in role theory (Katz and
Kahn, 1978) and social exchange theory (Blau, 1964; Emerson, 1962). Both theories help
to explain how LMXs form.
 Role theory. Role theory makes a significant contribution to understanding the role LMX theory of
of leaders and members. The role expectations of a supervisor and the extent to which leadership and
the subordinate meets these expectations make up the relational context of the
exchange process. Graen and Scandura (1987) suggested a three-phase model of LMX HRD
development including role taking, role making, and role routinisation. For example,
supervisors test subordinates with various work assignments in a series of
role-making episodes. In this process, the degree to which subordinates comply with 535
task demands and demonstrate a worthiness to be trusted influences the type of LMX
relationship they form. In turn, the type of LMX determines the extent to which the
leader reciprocates with work-related resources such as information, challenging task
assignments and autonomy. In this way, leaders and followers develop a role
relationship based on mutual dependencies within assigned and accepted roles and
followers performance in the role plays a major part in this role-making process
(Dienesch and Linden, 1986). In addition, it is noteworthy that this role-making process
is one in which an individual has role episodes not only with a formally designated
leader, but also with an entire role set of others, including other members, who
communicate important role information (Sparrowe and Liden, 1997).
Social exchange theory. Rather than focusing on the role of leaders and members,
social exchange theory focuses on the exchange between them. Social exchange theory
describes how power and influence among leaders and subordinates are conditioned by
the availability of alternative exchange partners from whom these leaders and
subordinates can obtain valued resources. Based on this perspective, Liden et al. (1997)
described leader-member relationship development as a series of steps that begins with
the initial interaction between the members of a dyad. This initial interaction is
followed by a sequence of exchanges in which individuals test one another to
determine whether they can build the relational components of trust, respect and
obligation necessary for high quality exchanges to develop (Uhl-Bien et al., 2000). If
reception of an exchange behavior is positive and the party initiating the exchange is
satisfied with the response, the individuals continue the exchanges. If the response to
an exchange is not positive or if the exchange never occurs, opportunities to develop
high quality exchanges are limited and relationships will likely remain at lower levels
of LMX development (Dienesch and Linden, 1986; Uhl-Bien et al., 2000). That is, LMX
development is conditioned by the expectation of the exchange and satisfaction with
the exchange behaviors.

Multidimensionality of LMX
While the majority of the LMX studies have shown consensus on the nature of the
phenomenon as being the quality of exchange relationship between leader and
follower, inconsistencies regarding the sub-dimensions continue to exist. Of those
sub-dimensions, mutual support, trust, liking, loyalty, and latitude appear to be
predominant in the majority of studies (Schriesheim et al., 1999).
Graen and Uhl-Bien (1995) proposed that LMX is comprised of three dimensions:
mutual respect of each others capabilities; a deepening sense of reciprocal trust; and a
strong sense of obligation to one another in the working relationship. These
dimensions are focused mostly on the formal job relationship. However, LMX is not
based solely on job-related elements; it can also include socially-related currencies
(Liden et al., 1997). For example, some people may value professional capability in a
LODJ relationship whereas others value a dyadic partner they can regard as a friend. Liden
28,6 and Maslyn (1998) proposed four dimensions of LMX relationships, labeled
contribution, affect, loyalty, and professional respect. While the contribution
dimension belongs to work-related currency, the affect, loyalty, and professional
respect dimensions are more social currencies. With a basis of the multidimensional
character of roles and exchange materials, they proposed that LMXs are developed and
536 endured in a number of ways, including non-work focused or related interactions.
Since, the multidimensional perspective of LMX assumes variability within
exchange types, the different dimensions could be affected by different factors. This
complex nature of LMX may be partially responsible for the lack of universal
agreement on what leader-member exchange is. However, understanding this
multidimensionality could provide insight into the dynamic development and
maintenance of LMX relationships that result in differential predictions of outcomes
according to the chosen currencies of exchange (Liden and Maslyn, 1998). Along with
the developmental attribution of LMX, this multidimensional nature of LMX may be a
characteristic that potentially allows an examination of linkage between LMX and
HRD. This linkage is built on the performative assumptions of LMX and the
performative view of HRD. As indicated earlier, we accept that alternative analyses of
HRD exist. However, LMX itself is firmly derived from performative analyses of
organization functioning and so the performative analysis of HRD is argued here to be
most appropriate for examining potential linkages.

Linkage between LMX and HRD

LMX theory may be better understood through the outcomes of effective HRD, for
example through interpersonal trust and empowerment. Trust building is a learning
process of testing and developing trust in another (Lewicki and Bunker, 1996; McLain
and Hackman, 1999; Mayer et al., 1995; Shapiro et al., 1992). As part of HRD, trust is
recognized as the most important component for team development and overall
performance effectiveness (Stoner and Hartman, 1993; Stewart, 1996). This is because
interpersonal trust facilitates informal cooperation and reduces unnecessary
monitoring costs (Macauley, 1963; Powell, 1990). In the perspective of HRD,
empowerment is also a means of enhancing effectiveness at work (Wall et al., 2002).
Empowerment facilitation is a direct attempt to solve various organizational problems
in order to improve work performance (Bae and Rowley, 2004; Morrell and Wilkinson,
2002). A core assumption of empowerment facilitation is that it releases motivation,
initiative, implicit knowledge, flexibility, involvement, and commitment required from
employees to respond to increasingly competitive conditions (Lawler, 1992; Leach et al.,
2003; Pfeffer, 1994). These two HRD interventions of trust building and empowerment
provide a useful illustration of the HRD-LMX theory link as an explanation of the
relationship between LMX theory and performance, and of the potential for more
effective application of LMX theory in organizational settings. In this analysis, these
two HRD interventions are enablers linking LMX with performance and in a way
which guides organization action (Table II).
To develop the LMX-performance linkage, this papert explores the contributions of
trust, empowerment, and performance to LMX theory of leadership with the help of
two specific HRD interventions trust building and empowerment facilitation.
As shown in Figure 1, relationship boundaries, referred to as in-group, are expanded

OD techniques
Trust building Team building: a collaborative exercise
designed to help work groups improve
the way employees accomplish tasks
by enhancing the interpersonal and
problem solving skills of team
members (Porras and Robertson, 1992;
Svyantek et al., 1999)
Process consultation: a set of activities
on the part of the consultant ensuring
individuals own problems and gain the
skills and expertise to diagnose and
solve them themselves (Schein, 1987).
Its main focus is diagnosing and
understanding process events
Empowerment HPT (human performance technology)
facilitation intervention: a set of methods and
processes for solving problems or
realizing opportunities related to the
performance of people (Stolovitch and
Keeps, 1992)
KM(knowledge management) activity:
any process or practice of creating,
acquiring, capturing, sharing, and
using knowledge . . . to enhance
learning and performance in
organizations (Scarborough et al., 1999)
LMX theory of
TD focuses
leadership and
Role definition and accountability HRD
(Kirkman et al., 2000)
Communication skill (Coyle, 1993;
Herzog, 2001)
Teamwork (Jones and George, 1998) 537
Risk taking (Cook et al., 2005; McLain
and Hackman, 1999)
Conflict resolution (Bunker et al., 2004;
Driscoll, 1996)
Value and Goal congruence (Iyer, 2002;
Nelson et al., 2001)
Self-appraisal and self-development
(Cook and Macaulay, 1993; London and
Smither, 1999)
Creating a vision (Nixon, 1995;
Shandler and Egan, 1994)
Problem solving (Mallak and Kurstedt, Table II.
1996; Siu et al., 2005) The selected OD
Decision making (Esquivel and Kleiner, techniques and TD
1996; Hill and Huq, 2004) focuses for trust building
Performance monitoring and feedback and empowerment
(Guinn, 1995; London et al., 1999) facilitation in the LMX
Fault tolerance (Russ, 2000) process

through trust building. A higher level of trust in an expanded in-group increases the
likelihood of cooperation, sharing of information, and emotional support in the LMX
relationship. These relational obligation behaviors, in turn, result in promoting
superior levels of individual and organizational performance through enhanced levels
of empowerment. Of course, there are other variables besides these three. For example,
job satisfaction and organizational commitment are mediators of the relationship
between LMX and extra-role performance (Hackett and Lapierre, 2004), and
communication frequency can be a moderator of the relationship between LMX and
job performance ratings (Kacmar et al., 2003). However, given the longstanding
connection of trust and empowerment to HRD, they have the potential for better
explaining the LMX-performance linkage through HRD.

Applying theory building to the relationship

According to Torraco (1997, p. 126) theory-building is, the process of modeling
real-world phenomena. To identify the existing relationship between the two domains
and build a theoretical model we adopted the five components of Dubins (1978)
eight-step, theory-building method which directly contribute to building theoretical
models. According to this method of theory building, the completion of steps 1 through
LODJ
28,6

538

Figure 1.
A theoretical model
linking LMX and HRD

5 (units, laws of interaction, boundaries, system states, propositions) result in a

theoretical model and the remaining steps (empirical indicators of key terms,
hypotheses, testing) involve conducting empirical research. We employed steps 1
through 5 to build a HRD-based LMX model. However, we did not stipulate the system
states in a specific section but included this with the laws of interaction instead. The
reason for this is that the system states are often designated by examining the laws of
interaction and therefore are likely to bring about some redundancy.
The following sections describe our application of Dubins framework to our
purpose of linking LMX with HRD. The first step specifies that the units of the theory
be identified. The second step involves establishing the laws of interaction applicable
to the units of the theory. The third and fourth steps define boundaries for a
HRD-based LMX model and suggest propositions for future empirical research.

Units of the theoretical model

The units in theory building are concepts and the building blocks on which the theory
is constructed (Lynham, 2002). The link between HRD and LMX theory necessitates
three basic units of the theory: trust as the central component of quality of the
relationship, empowerment as a motivation factor and individual, group, and
organizational performance as the outcomes.
Trust as the quality of relationship. Trust is a critical element in improving
organizational relationships (Bunker et al., 2004). In fact, the development of LMX
relationships can be viewed as a trust-building process (Bauer and Green, 1996; Brower
et al., 2000). Recent models of trust have moved away from definitions that examine
trust for generalized others (Rotter, 1967) to a definition of trust as characteristic of LMX theory of
dyadic relationships (Mayer et al., 1995). Rousseau et al. (1998, p. 395) defined trust as leadership and
a psychological state comprising the intention to accept vulnerability based upon
positive expectations of the intentions or behavior of another. In common with the HRD
LMX development process, Kramer and Tyler (1996) described the development of
trust as a social exchange process. Brower et al. (2000) also compared the relational
construct between LMX and trust. They argued that reciprocity is central to both LMX 539
and trust, although trust is different from LMX in that trust does not assert that
reciprocity will be mutual or balanced (Mayer et al., 1995). A high LMX relationship
characterized by mutual trust, loyalty, and behaviors that extend outside the
employment contract may reflect the state of identification-based trust (Lewicki and
Wiethff, 2000; Shapiro et al., 1992). This form of trust is based on empathy with the
other partys desires and intentions. That is, trust exists because each party effectively
understands, agrees with, emphasizes, and takes on the others values because of the
emotional connection between them; thus the parties act for each other (Kramer and
Tyler, 1996). To establish this relational trust that is fundamental for LMX and
organizational performance, effective HRD interventions are helpful and powerful
facilitators, if not essential. In developing LMX quality, interpersonal trust building
can be more effectively created through various techniques grounded in HRD theory.
Examples of specific HRD interventions can be found in OD programs such as those
described in McLean (2006).
Empowerment as motivation. Empowerment is an important construct in the LMX
process because it offers the potential to positively influence outcomes that benefit both
individuals and organizations (Liden and Tewksbury, 1995). Psychological
empowerment has been defined as the increased intrinsic task motivation
manifested in cognitions that reflect an individuals active orientation to his or her
work role (Spreitzer, 1995, p. 1443). That is, empowerment comprises individual
cognition and perceptions that constitute feelings of behavioral and psychological
investment in work (Conger and Kanungo, 1988; Zimmerman, 1990). Accordingly, the
feeling of empowerment that both leaders and members experience is influenced by
their exchange quality based on interpersonal trust (Keller and Dansereau, 1995) that,
in turn, influences their role performance at various levels of the organization (Liden
et al., 2000). Thomas and Velthouse (1990) conceptualized the empowerment experience
as a multifaceted set of four cognitive dimensions that reflect a proactive individual
mindset toward work role: impact (the degree to which behavior is seen as making a
difference in terms of accomplishing the purpose of the task), competence (the degree to
which a person can perform task activities skillfully when he or she tries),
meaningfulness (the individuals intrinsic caring about a given task), and choice
(causal responsibility for a persons actions). As with the trust construct in the LMX
relationship, these cognitive dimensions related to work role have potential for
development through HRD interventions. In this regard, empowerment facilitation is
essential for both LMX performance and associated organizational performance and
thus calls for effective HRD interventions (McGoldrick and Stewart, 1996).
Individual, group, and organization performance. With a shift in paradigm of HR
activities from control to autonomy, trust and empowerment in management have
become increasingly important elements in determining employee performance
(Laschinger et al., 2001). According to Swanson and Holton (2001), performance is the
LODJ valued productive output of a system. The perception of built trust and enhanced
28,6 empowerment in the LMX process through effective HRD interventions is expected to
influence both the amount and quality of the product or service that an individual,
group and organization produce. In particular, performance at various levels of the
organization needs to be considered from the perspective of process level performance
(Rummler and Brache, 1995; Swanson, 1994) in that both LMX and HRD are ongoing
540 development processes. For example, there may be the two performance types: the
performance in the process of LMX and the performance resulting from LMX. These
two performances may be sequential and inter-connected with each other for
higher level performance. As a systemic value chain, an LMX process that consists
of a higher level of trust, empowerment, and performance can produce a strong
performance-oriented culture (Wiener, 1988) under the umbrella of effective HRD. In
other words, this HRD-based LMX performance process can be an exemplary
performance model that creates an organizations positive values and traditions that
are intensely held and widely shared through learning and internalization.

Law of interaction in the theoretical model

The law of interaction specifies how the units interact and relate to one another
(Lynham, 2002). In this step, the categorical and sequential laws of interaction, among
the three units of theory, identify the connection between LMX and HRD.
Figure 2 shows the relationships among categorical dimensions for
conceptualization of the interaction of the three units. The chosen HRD interventions;
trust building and empowerment facilitation are immanent in each unit category.
Interpersonal trust and empowerment enhanced by these HRD interventions contribute
to the improvement of the quality of reciprocity and the level of collective- and
self-efficacy between leaders and members and, at the same time, these HRD
interventions, when applied effectively, have an influence on current or future
performance of the individual, group, and organization. Specifically, a higher level of
trust, which is a core construct determining the quality of LMX relationships, produces
positive effects on each individuals work-related attitudes and behaviors (Dirks and
Ferrin, 2001) and on their group problem solving and decision making (Pillai et al.,
1999). Empowered leaders and members come to view themselves as more effective in
their work (Quinn and Spreitzer, 1997), and the empowered LMX relationships in dyads
or groups contribute a higher level of commitment and greater productivity (Kirkman
and Rosen, 1999).

Figure 2.
Relationships among
conceptual dimensions in
building a theoretical
model
Indeed, the process of LMX-performance and all of its interacting units would be a LMX theory of
system, a collection of interdependent, organized parts (McLagan, 1989). The leadership and
overlapping circles on the LMX-performance process in Figure 2 portray potential
system states among the interacting units. In these system states trust, empowerment, HRD
and performance interact with each other to contribute to the system as a whole.
Effective HRD interventions further provoke their goal orientation and achievement.
Therefore, this systemic linking of LMX and HRD leads a progression from the 541
leader-member exchange process to performance.
In this analysis, the key premise of the LMX theory of leadership is that leaders
develop a different type of relationship or exchange with each subordinate according to
the extent of their interpersonal trust (Brower et al., 2000). In addition, a major premise
of empowerment is that empowered individuals perform better than those who are
relatively less empowered (Conger, 2000). In this regard, a sequence can also be
considered among the three constructs of interpersonal trust, empowerment, and
performance.
Figure 3 shows the suggested sequential relationship among the three key units.
As shown in Figure 3, the LMX process is developed through the three sequential
stages (Graen and Scandura, 1987; Graen and Uhl-Bien, 1995): role taking (stranger),
role making (acquaintance), and role routinisation (partner). In the role taking
(stranger)-role making (acquaintance) phase, leaders offer role responsibilities and
assess whether followers successfully fulfill them. In the transition to the advanced role
stage greater responsibilities, discretion, and benefits are given as the follower meets
the role responsibilities. Thus, in the initial phase the main focus of interpersonal trust
would be the followers ability, benevolence, and integrity (Mayer et al., 1995).
However, the leaders role attitude and competence are still important to move to a
higher quality LMX because followers are not passive role recipients (Deluga, 1994).
They may reject, embrace or renegotiate roles prescribed by their leaders. As trust
building is in the domain of HRD, effective HRD can boost not only those cognitive
foundations of follower trust but also leaders attitude and competence of their task role
and then it can transform into higher-level affective trust characterized by emotional
bonds between partners (McAllister, 1995).

Figure 3.
Suggested sequential
relationships among the
three key units
LODJ As the level of LMX quality is improved to affect-based trust, the perception of
28,6 empowerment of both leader and member may also increase, particularly in the phases
of role routinisation (partner). According to Conger and Kanungo (1988), empowerment
is a process of enhancing feelings of self-efficacy among organizational members and
the effect of empowerment is initiation and persistence of behavior by empowered
employees to accomplish task objectives. In this regard, empowered individuals not
542 only view themselves as more effective in their work but also evaluate each other as
more effective, and leaders and followers in this psychological state seek cooperation to
achieve common goals and recognize how to use their abilities for the benefit of
themselves, the LMX group and the organization. In these phases the aspect of
leadership behaviors fostering the formation of high quality relationships through
instillation of a sense of a common fate with their followers, would be more critical than
followers behavior (Wang et al., 2005). Thus, empowering by means of HRD needs to
focus more on the leaders behaviors and through that can increase the likelihood of
improved organizational performance through LMX performance. This process, in
turn, becomes central in shaping pathways between LMX and performance through
the application of HRD. This role and function of trust building and psychological
empowerment can be further enhanced when effective HRD is applied and conducted
appropriately.

Boundaries of the theoretical model

According to Dubin (1978), a model has to have boundaries corresponding to the
empirical system. This is because boundaries establish the real world limits of theory.
Two boundaries were identified for this theoretical model (the two circles in Figure 1
shows these boundaries). The first boundary is the relationship between the leader and
a member or group members. As a one-on-one dyad develops, interpersonal trust and
individual self-efficacy through HRD interventions become associated with individual
performance. As a new expanded in-group, moreover, an increase in group trust level
and collective efficacy is associated with group performance. This boundary provides a
potential to be developed through HRD interventions, and thus it becomes a starting
point in the LMX-performance relationship.
The second boundary exists between the assembly of dyads or expanded in-group
and organization. Within a system of interdependent dyadic relationships and their
network assemblies at various level of organization, a trust-based and empowering
culture is created through HRD interventions and is associated with organizational
performance or competitive advantage. This LMX system is not limited to formal
superior-subordinate relationships but includes leadership relationships among peers,
teammates and across group and organizational levels. As a result, it is helpful in
explaining how dyads that are differentiated as in-group lead to high functioning
organizations.

Propositions of a HRD based LMX theory

As logical statements about the theoretical system, propositions enable the
researcher-theorist to make predictions from the theoretical framework about the
values of the units of the theoretical framework in the real world (Lynham, 2002). On
the basis of the theoretical relationships discussed in the preceding steps, this paper
suggests six such propositions:
 P1. Greater interpersonal trust leads to greater empowerment that, in turn, leads LMX theory of
to improved individual, group, and organizational performance. leadership and
P2. Developed interpersonal trust will improve leader and member quality HRD
of LMX.
P3. HRD-based empowerment experiences and interventions will facilitate the
development of the relationship between higher quality LMX and individual, 543
group, and organizational performance.
P4. As interpersonal trust levels increase through trust building and
empowerment facilitation and interventions, LMX will increase and
out-group members will move to the in-group.
P5. As interpersonal trust levels increase through trust building and
empowerment facilitation and interventions, LMX will increase and expand
the boundary to include more individual within groups.
P6. Expanded boundaries between in- and out groups will increase performance
at the individual, group, and organizational levels.
While there is some existing evidence in the LMX empirical studies cited throughout
this paper to support elements of the relationships and propositions offered in this
analysis, as with all good theory building it is now important to create the empirical
studies, proposition by proposition, to test the model. If empirical evidence continues to
support the suggested relationships, both HRD and LMX theories will be strengthened
and be more useful for application in practice.

Conclusions
This paper has described the relationship between LMX theory of leadership and HRD
through the perspective of theory building. This approach suggests that the concepts
most centrally underlying LMX and HRD are the common notion of learning and
development processes. As a result, the linkage of HRD and LMX theory that is
established on the three key units of trust, empowerment, and performance suggests
potential for each domain to play a role in realizing goals in and improving each
domain. That is, HRD can be a solution to improving LMX as an ongoing value-added
process for better performance of individuals, groups, and the organization, while LMX
can be a useful approach to promoting two goals of HRD personal and organizational
development. The more the quality of relationships within LMX is seen as a HRD
process and developed through HRD in organizational contexts, rather than seeing it as
an individualized leadership theory, the more the LMX theory of leadership becomes a
useful implement of both individual and OD for performance.
According to the Dubins (1978) quantitative theory-building approach, however,
the confirmation of the theoretical model through empirical research is still required.
With this in mind, future research first needs to carefully investigate the conceptual
framework with a notion that leader and follower LMX are separate constructs
(Gerstner and Day, 1997). This attention could be particularly important when
researchers identify empirical indicators to specify hypotheses and HRD interventions
are selected for a better LMX-performance progression in the conceptual model.
Second, arising from the conceptual framework, future research needs to employ
LODJ further possible theoretical units and develop their potential system states allowing for
28,6 the multidimensional nature of LMX sub-dimensions (Schriesheim et al., 1999). Under
the system approach, focusing on the diverse units and their dynamic interactions will
not only be critical to advancing of existing knowledge of LMX but also to facilitating
the practical application of the framework. Third, future research needs to deal with
specific HRD interventions affecting each phase of the conceptual framework to
544 improve the frameworks utility in dealing with real organizational phenomenon.
Along with various units and their extended system states, if each HRD intervention
relevant to specific phases could be further elaborated then the HRD-based LMX model
would be a more relevant prescriptive solution for organization or leadership
development as well as higher quality relationships.
According to Burns and Otte (1999), organizational leadership theory can be useful
to HRD practitioners in designing leadership development, management, and
supervisory development, succession planning and managerial coaching or attempting
to solve performance issues in a work group. That being the case, the conceptual
framework specifying LMX-HRD linkages suggested here has potential benefits for
HRD practitioners conducting broader activities which involve leadership or OD.
Thus, the framework can be said to have use value. However, the validity of the
framework will only be established through the empirical studies detailed in the
propositions.

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About the authors

Dae-seok Kang is an Assistant Professor of organization/human resource management at the
Inha University in Incheon, Korea. He received his PhD from the University of Minnesota
Twin cities, USA. His research interest includes organizational leadership, training and
development, and employee empowerment. E-mail: kang0180@inha.ac.kr
Jim Stewart is Joint Course Leader of the Nottingham Business School DBA program
and Chair of UFHRD. Jim Stewart is the corresponding author and can be contacted at:
jim.stewart@ntu.ac.uk

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