Leader-Member Exchange (LMX) Theory

Historical Context

Starting with their early work on learning, psychologists have recognized that rewards and punishments have a strong influence on behavior. At the end of the 19th century, Edward Thorndike at Harvard University published research on learning in cats, done in William James's basement in Cambridge, Massachusetts, which established “the law of effect”the idea that reward stamps behavior in and punishment stamps behavior out, as Thorndike put it.

A great deal has been made of this basic idea that behavior is under the control of outcomes, specifically rewards and punishments, or more generally, benefits and costs. In social psychology, George Homans developed the idea that interpersonal behavior is an exchange where one individual's behavior provides costs or benefits to another person. Influence happens as a result of rewards and costs people can provide for each other.

Related work by John Thibaut and Harold Kelley developed the idea that each person in a relationship derives an outcome level (OL) based on the average degree of rewards minus costs that he or she obtains through the interaction exchanges in the relationship. Furthermore, they argued that the outcome level is evaluated against a comparison level (CL), based on all the outcomes a person knows about through his or her own and other people's relationship histories. The CL provides a baseline, or an expectation, of what level of outcome a person will or should get in a relationship. When the OL exceeds the CL, the relationship is satisfying. If the OL is less than the CL, people are dissatisfied and are likely to leave the relationship, depending on the available alternatives.