Idiosyncratic deals and individual effectiveness: The moderating role of leader-member exchange differentiation

Extending prior research on idiosyncratic deals (i-deals), in the current study we examine the functioning of i-deals in the context of leader-member exchange (LMX) differentiation. To that end, we integrate justice, social exchange, and social comparison theories and hypothesize that employee perceptions of their managers' procedural fairness and LMX quality partially mediate (in sequence) the positive relationship between i-deals and individual effectiveness, including job satisfaction, in-role performance, and helping behavior. Furthermore, we propose that LMX differentiation moderates this mediated relationship, such that the mediation effect becomes stronger when LMX differentiation within the group is greater. Data from a U.S. sample of 961 employees and their managers in 71 restaurants supported our hypothesized model. Results shed light on managerial practices regarding how to gain positive effects from i-deals by considering the influence of LMX differentiation.