Diversity dimensions as antecedents of the quality of Leader-Member-Exchange

Abstract

The physical borders of countries and nations have become blurred by the high level of globalization caused by travelling, emigration, and the internet, which has made the even the furthest parts of the world closely connected. These changes haves also impacted the business world, and big companies are no longer having homogenous teams in one country, but rather teams full of diversity. The managers and the subordinates are facing the challenges the diversity brings in their working relationships and therefore it is important to explore how diversity impact the quality of leader-member relationships. This master´s thesis is exploring how diversity dimensions such the quality of leader-member working (LMX) relationship via the leader-member exchange theory. This theory distinguished between high quality LMX and low quality LMX. High quality LMX is defined by strong trust between leader and member, good communication, and better work opportunities for the subordinates. The high LMX is linked with high employee satisfaction, high work performance, organizational commitment and low employee turnover. On the other hand, in low quality LMX the trust in weak and the communication is not sufficient. This results in low employee satisfaction, performance, organizational commitment and high employee turnover. The main objectives of this thesis are (1) to provide a theoretical framework, (2) conduct interviews in one organization to better understand the leader-member relationship from members´ perspective, (3) to analyse the interviews to determine whether cultural differences, age and gender are antecedents of the quality of LMX and (4) how it affects the quality of LMX, (5) and to provide a better understanding of the member´s perspective on how their diversity impacts the quality of LMX, so that leaders in the chosen organization can acknowledge the importance of diversity management. The master´s thesis reveals that diversity dimensions are antecedents of the quality of leadermember exchange which is in line with the existing research on this topic. However, the thesis shows that gender as diversity dimension does not impact the quality of LMX, from members´ perspective it is more of the personality traits of the leader than the gender. The thesis contrib utes by deeper insights on how diversity dimensions of culture and age impact the quality of LMX. When it comes to culture, the differences may not only create issues caused for example by different cultural traditions or language difference; but also serve as a benefit for example due to leader´s openness given by the nature of the culture, or lower level of power distance. Secondly, despite the literature review stating that age difference may lead to conflicts and lower quality of LMX, the interviews relieved that the age difference is a positive factor that makes the quality of LMX stronger –due to the possibility to learn from each other. This thesis contributes to the existing research on the quality of LMX and diversity by providing a deeper insight from the member´s perspective in the company of Finnish and Indian culture.