Revisiting the mediating role of leader-member exchange in transformational leadership: the differential impact model

Transformational leadership (TFL) has been proposed as an essential antecedent of leader-member exchange (LMX), which in turn affects outcomes in organizations. We extend this mediation hypothesis in two ways by proposing a differential impact model, which we test on three organizational outcomes: employee job satisfaction, employee organizational commitment, and leader effectiveness. First, we extend LMX's mediational impactwhich has previously only been tested for employee outcomesto leader effectiveness. Second, we argue that this mediation will be stronger for outcomes that are more proximal rather than distal to dyadic relations between leader and followers (high proximity: job satisfaction; medium proximity: organizational commitment; low proximity: leader effectiveness). Meta-analytic structural equation modelling based on 132 studies revealed that LMX mediates TFL's relationships with employee outcomes (more strongly for job satisfaction than for commitment), but not with leader effectiveness, whereas TFL showed a stronger direct link to leader effectiveness. The findings suggest that TLF and LMX contribute differentially to organizational outcomes depending on their proximity to dyadic relations between leaders and followers. The differential impact model uncovers leadership effectiveness processes, integrates influential leadership theories, and highlights the importance of distinguishing between different outcome measures and the processes facilitating them.