When LMX-Differentiation Based on Equity is Less Fair: The Role of Need and Type of Resource

The assumption that a leader's differentiation of resources is effective when based on equity or employees’ performance has received mixed support. Thus, it is critical to increase our understanding of how leaders can differentiate effectively. We do so by investigating the association between leader-member exchange differentiation (LMXD) and interactional justice and whether it depends on the type of resource that is differentiated (socioemotional vs. economic), and whether it is based on equity (i.e., performance or merit) or that of need . Additionally, we investigate whether these relationships are dependent on the employees´ exchange relationship with their leader. Using an experimental vignette study (N 1 = 200) and a cross-lagged field study (N 2 = 219), our findings demonstrate that leaders are perceived as fairer when differentiating socioemotional resources based on employees’ needs rather than equity. For economic resources, leaders are perceived as fairer when they differentiate based on equity rather than need.