Linking Basis of Leader–Member Exchange Differentiation to Diversity Climate and Idea Generation

ABSTRACT Diversity climate has been recognized as a key factor in preventing negative and fostering positive diversity effects. Despite this, the literature provides limited theory for leaders and organizations on how to create positive diversity climates—and even fewer empirical tests. In this manuscript, we address this shortcoming by utilizing a multistudy, multimethod design (video‐vignette experiment; field study) to examine how the basis of leader–member exchange (LMX) differentiation signals whether diversity is valued. We find that diversity climate is more positive when LMX differentiation is less associated with employee demographics. Additionally, we contribute conceptual clarity to diversity climate research by examining the differential effects of fairness and discrimination and synergy perspectives of diversity climate on unit idea generation, an important creativity outcome. We find support for the notion that synergy—but not fairness and discrimination—is positively related to idea generation. By focusing on the basis of LMX differentiation, we also contribute to the LMX literature and offer a potential explanation for conflicting findings on the effects of differentiation.