Why group size makes a difference for leader-member exchange quality

Previous studies have shown the positive effect of high-quality leader-member exchange (LMX) on members' task performance, but further research is needed to establish if this effect varies according to boundary conditions. In this study we examined the effect of group size on the LMX process by constructing a framework integrating social exchange and social comparison theories. We predicted that decreasing group size would enhance the relationship between LMX and members' task performance. Specifically, we anticipated that the positive relationship between LMX and task performance would be strongest for members working in small groups with high LMX differentiation. By analyzing data collected from 368 supervisor-subordinate dyads employed at 39 bank branches in southeast China, we found that the positive relationship between LMX and task performance was stronger for employees working in smaller groups than for those working in large groups. However, the three-way interaction term was not significant. The findings enhance understanding of the role played by group structure factors in the process of how LMX influences members' task performance.