Perils of being close to a bad leader in a bad environment: Exploring the combined effects of despotic leadership, leader member exchange, and perceived organizational politics on behaviors

Using social exchange theory, we propose a three-way interaction of despotic leadership, leader member exchange (LMX), and perceived organizational politics (POP) to predict employee job performance, organizational citizenship behaviors (OCBs), and creativity. Using two-source field data (N = 480) with independent measures for predictors (self-reports) and outcomes (peer-reports), we tested our hypotheses using moderated regression analyses. The results indicate that despotic leadership is negatively related to the three employee outcomes, and that the effects are stronger under conditions of high LMX or high POP. A three-way interaction suggests that the negative relationship between despotic leadership and the three dependent variables is strongest when both LMX and POP are high. Our study addresses an important and unexplored area of the dark side of leadership and its interplay with perceived politics and LMX to better predict important outcomes in a new cultural setting.