Leader--member exchange, differentiation, and psychological contract fulfillment: a multilevel examination.

Prior integrations of the leader-member exchange (LMX) and psychological contract literatures have not clarified how within-group LMX differentiation influences employees' attitudes and behaviors in the employment relationship. Therefore, using a sample of 278 members and managers of 31 intact work groups at 4 manufacturing plants, the authors examined how LMX operating at the within-group level (relative LMX, or RLMX) and the group level influenced perceptions of psychological contract fulfillment and employee-level outcomes. Controlling for individual-level perceptions of LMX quality, results indicated a positive relationship between RLMX and fulfillment, which was strengthened as group-level variability in LMX quality increased. Perceptions of fulfillment mediated the relationship between RLMX and performance and sportsmanship behaviors. The importance of conceptualizing LMX as simultaneously operating at multiple levels is highlighted.