Leader-Member Exchange and Resource Accessibility of Subordinates: Perception Towards MNC Global Integration Strategy

Abstract

Purpose: The purpose of this paper is to develop a framework for leader-member exchange (LMX) in the context of global integration strategy of multinational corporations (MNC). Further, interaction effects of leader’s network centrality and leader’s alignment with MNC policies on leader-member exchange and resource accessibility relationship are proposed.

Design/methodology/approach: The paper begins with the notion that different units in a subsidiary of an MNC are likely to have different requirements for integration within the MNC network. This paper extends the literature by suggesting that employees working in the same unit of a subsidiary of an MNC are likely to have different perception of the degree of integration of their subsidiary with other nodes in the MNC network.

Findings: We posit that employees forming the ‘in-group’ of a well-aligned unit leader are more likely to (i) perceive their subsidiary as more integrated than the ‘out-group’ employees; (ii) contribute more by way of knowledge transfer than the ‘out-group’ employees; and (iii) perform better than the ‘out-group’ employees.

Research implications: The research has implications for the role of subsidiary leaders in shaping the perceptions of their subordinates towards the global integration strategy of an MNC.

Originality/value: The study fills a gap by integrating the LMX and MNC global integration strategy literatures and proposing the existence of perceptual differences, even at subordinate level.

Keywords: Leader-member exchange (LMX), leader’s network centrality, resource accessibility, knowledge transfer, performance, global integration, subordinate perception