597481

research-article2015
HUM0010.1177/0018726715597481Human RelationsLi et al.

human relations

human relations
1 ­–18
Leader–member exchange © The Author(s) 2015
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DOI: 10.1177/0018726715597481
An investigation of nonlinearity hum.sagepub.com

Yan Li
Tsinghua University, China and Renmin University of China, China

Fengying Fu
Beijing Union University, China

Jian-Min Sun
Renmin University of China, China

Baiyin Yang
Tsinghua University, China

Abstract
Although substantial knowledge regarding the antecedents and outcomes of leader–member
exchange (LMX) differentiation has been accumulated, numerous questions related to this
topic remain underexplored. To enhance the understanding of LMX differentiation and
team-focused outcomes, this study proposed that LMX differentiation has a curvilinear
relationship with team creativity and that team LMX quality (represented by the LMX median
in this study) moderates the association between these two variables. An investigation based
on 59 teams from multiple Chinese companies was conducted. The results indicated that
LMX differentiation has an inverted U-shaped relationship with team creativity, and LMX
median moderates the inverted U-shaped relationship. Specifically, for teams with a low LMX
median, the curvilinear relationship is stronger, whereas for teams with a high LMX median,
the slope of the curve becomes nearly flat, thus losing the inverted-U effect. Theoretical and
practical implications are discussed, and directions for future research are outlined.

Keywords
leader–member exchange, LMX, LMX differentiation, LMX median, team creativity

Corresponding author:
Jian-Min Sun, School of Labor and Human Resources, Renmin University of China, Beijing, 100872, China.
Email: chinajms@126.com
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2 Human Relations 

Introduction
With the advent of the fourth stage of the development of leader–member exchange (LMX)
theory (Graen and Uhl-Bien, 1995), LMX differentiation―the development of differential
relationships between a leader and the followers who report directly to the leader in a work
group (Henderson et al., 2009; Liden et al., 2006)―has received increasing attention
(Harris et al., 2014; Le Blanc and González-Romá, 2012; Liao et al., 2010; Nishii and
Mayer, 2009; Stewart and Johnson, 2009). LMX differentiation represents the degree of
variability in the quality of the exchange relationships (Erdogan and Liden, 2002). High
LMX differentiation within a work group indicates a broad range of overall LMX quality,
whereas low LMX differentiation implies a small range of overall LMX quality within a
work group (Henderson et al., 2009). Much knowledge regarding the antecedents and out-
comes of LMX differentiation has been accumulated (Harris et al., 2014; Ma and Qu, 2010;
van Breukelen et al., 2012), and it has generally been argued that LMX differentiation
affects individual- and team-level outcomes (Henderson et al., 2008; Liden et al., 2006).
Although substantial progress has been made in research on LMX differentiation, cer-
tain questions related to this topic remain underexplored. First, extant research has primar-
ily focused on the effect of LMX differentiation on individual-level outcomes (e.g.
employee performance, organisational citizenship behaviour (OCB) and psychological
fulfillment). Less research has examined the effect of LMX differentiation on team-level
outcomes (Nadioo et al., 2011). Second, the few studies on the role of LMX differentiation
at the team level have yielded inconsistent results (Le Blanc and González-Romá, 2012).
Some researchers propose that LMX differentiation positively affects team performance
because the leader can strategically assign the most challenging tasks to the employees
who are most capable of performing them successfully (Dansereau et al., 1975; Nadioo
et al., 2011). However, emergent evidence suggests that LMX differentiation introduces
relational boundaries, violates the principle of equality and disrupts team coordination,
which will diminish team performance (Li and Liao, 2014). In light of these conflicting
findings, Le Blanc and González-Romá (2012) called for future research to better under-
stand LMX differentiation and its effect.
In response to their call, this study aims to examine the effect of LMX differentiation
on team creativity. We focus on team creativity for two main reasons: (a) creativity is a
widely studied behavior that is essential to organizational viability and success (Zhang
et al., 2011; Zhou et al., 2009), and teams are increasingly valued for their potential to
demonstrate creative performance (Leenders et al., 2003; Tsai et al., 2012); (b) LMX, as
an important social exchange relationship embedded in a work team, may influence the
context within which creativity can occur (Shalley and Gilson, 2004). LMX differentia-
tion is the core element of the LMX model (Graen and Uhl-Bien, 1995; Henderson et al.,
2009). However, it is surprising that existing research on leadership and team creativity
has primarily focused on different leadership styles (e.g. transformational leadership,
ethical leadership or abusive supervision) or the LMX model. Despite its importance,
LMX differentiation has been notably absent from the literature. Given the inconsistent
results regarding LMX differentiation and team-focused outcomes, we intend to use the
too-much-of-a-good-thing (TMGT) metaprinciple (Pierce and Aguinis, 2013) as an over-
arching framework to address the subject. We argue that the relationship between LMX

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Li et al. 3

differentiation and team creativity may reach an inflection point, after which the relation-
ship becomes negative. Furthermore, to answer the call for research exploring the rela-
tionship between LMX differentiation and median LMX quality (an indicator to depict a
team’s score on LMX quality) as joint determinants of team outcomes (Henderson et al.,
2009), we also examine the potential moderating role of the LMX median in the relation-
ship between LMX differentiation and team creativity.
By examining whether LMX differentiation influences team creativity and if so how
this effect occurs, we attempt to make two contributions to the literature. First, we make
a contribution to the LMX differentiation and creativity literature. On the one hand,
examining team creativity from the perspective of LMX differentiation extends current
knowledge on the influence of leadership on team creativity. On the other hand, prior
research has employed a linear framework when examining the effect of LMX differen-
tiation on team-focused outcomes and obtained inconsistent results, which have puzzled
scholars to some extent. The TMGT perspective allows for two possibilities, and consid-
ering an inverted U-shaped relationship between LMX differentiation and team creativ-
ity may help to explain the initially inconsistent effects of LMX differentiation on
team-level outcomes observed in previous research. Second, to deepen the understand-
ing of the potential boundary conditions related to this nonmonotonic association, we
examine the moderating role of the LMX median in the curvilinear LMX differentiation-
team creativity relation. We theorize that the LMX median diminishes the likelihood that
a team will fall prey to the potentially debilitating negative consequences of LMX dif-
ferentiation. This interaction analysis offers important insight into the effect of LMX-
related constructs on team creativity.

Literature review and hypotheses

LMX differentiation and team creativity
Team creativity, as one type of team output, refers to ‘the product of novel and useful
ideas concerning products, services, processes, and procedures by a group of employees
working together’ (Shin and Zhou, 2007). Team output is dependent on individuals, and
team members with greater ability can yield higher team outcomes (Barrick et al., 1998).
Taggar (2002) demonstrated that aggregated peer ratings of group members’ creativity
were predictive of externally rated group creativity. Team creativity is related to task
type, and the ways in which team members contribute to team creativity vary with the
task type. Pirola-Merlo and Mann (2004) distinguished between: (a) team creativity as an
additive type of task, where each member’s creativity adds to that of the team; (b) team
creativity resembling a disjunctive type of task, where the most creative ideas (which
may be produced by a particular individual) are adopted by the team and determine team
creativity; and (c) team creativity lying somewhat between these two types, where each
member makes a contribution but the importance of the contribution to team creativity is
weighted in some way (e.g. the most creative member’s contribution is the most impor-
tant). Irrespective of the types considered, it is uncontroversial that individual creativity,
as a critical premise, provides the raw material for novel and useful ideas. In other words,
team creativity is influenced and to some extent determined by individual creativity.

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4 Human Relations 

Therefore, to enhance team creativity, it is very important for team leaders to encourage
every team member to perform creatively.
LMX has been demonstrated to positively relate to employees’ creativity (Shalley and
Gilson, 2004; Volmer et al., 2012). However, in many situations, owing to limited
resources and time, leaders cannot develop high-quality relationships with every team
member. How these limited resources are allocated among team members to some extent
determines the team’s achievements. Team creative performance is likely to be improved
through effective task allocation, task variety and careful planning, as well as the coordi-
nation of diverse efforts (Brophy, 1998). Team members have different knowledge, skills
and perspectives (Lovelace et al., 2001), and different configurations of members’ attrib-
utes within a team may influence team creativity (Bell, 2007). Different levels of fit
between tasks and personnel will produce different outcomes. Highly creative members
can help the team develop attitudes and behaviors such as persistence or tolerance of
ambiguity in the work environment that are crucial to promoting team creativity (Somech
and Drach-Zahavy, 2013). Apart from creative members, extraverted, conscientious and
agreeable group members are likely to display more intragroup process behavior (i.e.
team creativity-relevant processes, such as stimulating discussion, inspiring group mem-
bers, keeping a team focused on a task and cooperating with other team members: Taggar,
2002). Therefore, when time and resources are restricted, leaders can assign these
employees more challenging or more critical work tasks and give them more trust, more
encouragement, high expectations and strong social emotional support (i.e. forming a
high-quality LMX relationship). With respect to other members (e.g. low-ability or
poorly performing subordinates), leaders may assign such members more menial work
tasks and provide them with a lower level of support (Maslyn and Uhl-Bien, 2001). The
more clearly leaders recognize subordinates’ competency, the better the team works
(Liden et al., 2006), and the higher the subsequent team creativity. Based on these argu-
ments, we propose that leaders can benefit from developing differentiated relationships
with followers according to their different attributes (i.e. forming high- and low-quality
exchanges with subordinates) and facilitate team creativity.
Although individual creativity is important for team creativity, team creativity is not
entirely determined by individual creativity; rather, it emerges synergistically when
members interact in certain ways. Groups perform best when they contain creative group
members and effective team creativity-relevant processes. Taggar (2002) suggested that
team creativity is not the simple sum of individual creativity, and emphasized the impor-
tance of team creativity-relevant process (e.g. inspiring group members to elevate their
goals; providing feedback; organizing and coordinating contributions; and eliciting and
appreciating different ideas, needs and viewpoints). Richter et al. (2012) highlighted the
importance of teams as informational resources (shared ‘knowledge of who knows what’
and functional background diversity) for employee creativity. Differentiation can help
optimize the distribution and utilization of time and related material resources; however,
this does not imply that the higher the differentiation the better. The meta-theoretical
principle of the TMGT effect suggests that an initially beneficial predictor variable
reaches an inflection point after which its relationship with a certain outcome becomes
negative (Pierce and Aguinis, 2013). High LMX differentiation may lead to in-group and
out-group perceptions between group members in similarly high- and low-quality LMX

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Li et al. 5

relationships (Ford and Seers, 2006; Schyns, 2006) and engender interpersonal and emo-
tional conflicts, which may absorb energy and distract team members from performing
their tasks (Hooper and Martin, 2008). Li and Liao (2014) argued that a high level of
LMX differentiation violates the principle of equality, disrupts interpersonal harmony
and destroys team coordination. In such a situation, the presence of highly creative indi-
viduals may not ameliorate the negative effects of a scarcity of inspiration motivation,
organization, coordination or individualized consideration (Taggar, 2002). Team failure
may reside in not only particular members’ lack of ability but also the members’ collec-
tive failure to coordinate and synchronize their individual contributions (Zaccaro et al.,
2001). The negative consequences of an emotional relationship among team members
resulting from high LMX differentiation will harm team creativity-relevant processes,
which will ultimately harm team creativity.
Following this line of inquiry, the present research assumes that the relationship
between LMX differentiation and team creativity is neither positive nor negative. Instead,
it proposes that an inverted U-shaped relationship exists between them. That is, LMX dif-
ferentiation can optimize limited resources, and thus an increase in differentiation can be
beneficial for team creativity, but not beyond a certain level. After the optimum level of
differentiation, or the inflection point reflecting ‘too much of a good thing’ (Pierce and
Aguinis, 2013) is reached, team creativity will begin to decline. Therefore, we propose the
following hypothesis:

Hypothesis 1: LMX differentiation has an inverted U-shaped relationship with team

creativity.

The moderating role of the LMX median

As discussed above, the TMGT metaprinciple explains the curvilinear relationship
between LMX differentiation and team creativity. Whether LMX differentiation has a
positive or negative effect on team creativity depends on the extent of differentiation.
When differentiation is within a certain range, it can lead to better role differentiation,
but if it is too high, relational problems will arise. Here, implicit are the limitation on
resources and the differences in distribution. The limitations on resources highlight the
effect of LMX differentiation. Then, one noticeable question is whether the effect of
differentiation (i.e. enhancing team creativity by providing in-group members with
more resources and support) is salient when resources are rich and when most mem-
bers have high exchange relationships with the leader. Liden et al. (2006) argued that
when most members have high LMXs, they do not pay much attention to the distribu-
tion of resources. In other words, team members will not be particularly concerned
about relationship differentiation. This implies that LMX quality is a contingent condi-
tion for the effect of LMX differentiation. To examine this viewpoint, we add LMX
quality into the differentiation equation and propose that the effect of LMX differentia-
tion on creativity depends on LMX quality. Specifically, we propose that the curvilin-
ear relationship between LMX differentiation and team creativity is stronger for teams
with a low LMX median.

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6 Human Relations 

Here, one notable issue is the measure of group LMX. The LMX mean and LMX
median are typically considered to depict a team’s score on LMX quality. Certain research-
ers employ the former (e.g. Boies and Howell, 2006; Nishii and Mayer, 2009), whereas
others employ the latter (e.g. Henderson et al., 2009; Le Blanc and González-Romá, 2012;
Liden et al., 2006). Selecting between the two measures should be done with caution.
Although the mean is widely used when calculating group-level variables in the literature,
it is not applicable to all variables. Kozlowski and Klein (2000) argued that certain varia-
bles (e.g. team member abilities and demographic characteristics) can be aggregated to the
group level to represent the overall tendency within the group, but agreement in these
characteristics is not expected. Scholars may use the minimum, maximum, or measures of
dispersion to calculate the aggregation of such characteristics, depending on the theory in
question. Kozlowski and Klein (2000) contended that without a measure of agreement, the
mean might not be an appropriate summary statistic because of its ambiguity and equifinal-
ity. As LMX is a variable for which within-group agreement is not expected and for which
the median is a better measure than the mean or average, we used the median to represent
the central tendency among LMX relationships within teams in the present study.
As discussed above, in teams with a high LMX median, most members receive
resources, confidence and support from the leader, which can enhance their creativity.
Their creativity consequently adds to team creativity. In these teams, members’ satisfac-
tion with their relationships and with the support received from their leader may guaran-
tee high levels of achievement regardless of differentiation (Graen and Uhl-Bien, 1995).
The benefits of LMX differentiation then become marginal. In other words, in such
teams, differentiation by the leader is not likely to elicit any additional effort from team
members (Le Blanc and González-Romá, 2012). Furthermore, in these teams, because
many members are considered the trusted assistants of the leader (Liden et al., 2006),
status differentiation becomes unclear (Stewart and Johnson, 2009), which may mini-
mize the likelihood of in- and out-group formation and reduce the risk of interpersonal
conflicts. Therefore, we argue that the effect of LMX differentiation on team creativity
becomes weaker when a team’s LMX median is high.
By contrast, when the LMX median is low, that is, when leaders do not or are unable
to establish high LMXs with many members, LMX differentiation will have a stronger
effect on team creativity. First, when the LMX median and LMX differentiation are
low, that is, when the leader has low-quality LMX relationships with all followers
(Liden et al., 2006), there is large relational distance between the team leader and the
team members, and the team members will receive little support from the team leader.
Creativity processes are highly unpredictable and replete with uncertainty, paradoxes
and tensions (Baer, 2012; Rosing et al., 2011), and hence, performing creatively at
work requires adequate resources (e.g. time, funding and assistance) from leaders or
organizations to address difficulties and pressures. Positive leader behaviors (i.e. trans-
formational leadership) enhance team creativity by providing support for creativity
(Eisenbeiss et al., 2008). Low LMX differentiation combined with a low LMX median
implies an absence of the resources and support necessary for creativity and, conse-
quently, a low level of team creativity. When LMX differentiation is introduced into a
team with a low LMX median, certain members (e.g. highly creative subordinates or
those with strong needs for growth) can acquire relatively abundant resources, support

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Li et al. 7

and confidence from leaders to perform creatively. As we argued above, team creativ-
ity is determined by individual creativity, to some extent. When certain members’ crea-
tivity is improved through LMX differentiation, their creativity will consequently
contribute to team creativity. However, when LMX differentiation is very high, it has
the potential to generate interpersonal and emotional conflicts (Hooper and Martin,
2008), which may absorb energy and distract team members from performing their
tasks. In an influential review article, Hülsheger et al. (2009) argued that interpersonal
conflicts undermine team functioning to the extent that anger and frustration impede
effective communication within the team and reduce team members’ receptiveness to
one another’s ideas. In other words, the disparity in status between ‘in-group’ and
‘out-group’ members resulting from a low LMX median combined with high LMX
differentiation may place team members in a disadvantageous environment replete
with envy, distrust and suspicion, which will ultimately impair team creativity. In sum-
mary, we propose the following hypothesis:

Hypothesis 2: The LMX median moderates the inverted U-shaped relationship

between LMX differentiation and team creativity, such that the curvilinear relation-
ship is stronger for teams with a low LMX median.

Methods
Data collection
We collected data from nine high-technology companies in China through our social
network. These studied companies were engaged in software development (N = 6) and
network technology (N = 3) in two cities (Beijing and Wuhan). The average age of the
companies was 7.11 years (standard deviation = 3.14). We first obtained the permission
and support of each company’s director to collect the data, and we then met with the
companies’ personnel directors. The personnel directors helped us to contact team super-
visors. Considering that team creativity is the criterion variable of the current study, we
focused on research and development and marketing teams. After agreeing to participate,
each team supervisor received information about the study’s objectives and procedure
and then distributed the questionnaires to team members.
To reduce the potential problem of common method variance (Podsakoff et al., 2003),
we collected data from different sources. Specifically, each subordinate completed a
questionnaire regarding the relationship with his/her leader and his/her personal infor-
mation, whereas supervisors rated team creativity. We used a code on the questionnaire
to identify team membership. In addition, to avoid the problem of social desirability and
to reduce respondents’ apprehension about the evaluation, we included an envelope with
double-sided tape and a cover letter in each questionnaire explaining the purpose of the
research and emphasizing that all responses would be anonymous and confidential.
Furthermore, we noted that all competed questionnaires should be put into the envelope,
which should be sealed.
A total of 73 teams participated in the survey. Considering the importance of the team
level in the present study, we eliminated teams in which the majority of members did not

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8 Human Relations 

respond and included teams in which two out of three members responded; teams with
fewer than three members were excluded from the analysis. The average response rate
within the teams was 75.0 percent. As a result of these criteria, the number of teams that
were eligible for inclusion in the study was 59, consisting of 276 employees. Actual team
sizes ranged between 4 and 12, with a mean of 6.36. Among the final sample, the team
supervisors were primarily men (66.1%) with an average age of 35.22 years. On average,
each team supervisor had worked for the company for 6.13 years, and the range of tenure
spanned from one to 14 years. Team supervisors were embedded within their teams as
direct leaders of and active participants in their respective teams. Team members had
worked with their teams for an average of 2.41 years, with the range of tenure spanning
from 0.5 to nine years, and they were between 22 and 45 years old, with an average age of
29.41 years. Most team members had a college education. The average employee–supervi-
sor relationship length was 2.38 years. Finally, 61.2 percent of team members were men.

Measures
All the scales we used in the survey were originally written in English and were trans-
lated into Chinese. To ensure equivalence of the measures written in Chinese and English,
we used a standard translation and back-translation procedure (Brislin, 1970). Unless
otherwise indicated, the response options for all the measures were the same, ranging
from 1, ‘strongly disagree’, to 6, ‘strongly agree’.

Team LMX quality. We measured LMX quality by using an adapted version of the LMX-7
scale (Scandura and Graen, 1984), which is widely used in the LMX literature (Dulebohn
et al., 2012; Nishii and Mayer, 2009). Sample items are ‘My supervisor understands my prob-
lems and needs’ and ‘I feel that my supervisor recognizes my potential’. Cronbach’s alpha for
this scale was .89. As discussed above, LMX is a variable for which within-group agreement
is not expected, and the median is a better measure than the mean or average. Thus, we used
the median to represent the central tendency among LMX relationships within teams.

LMX differentiation. Consistent with previous research, we calculated LMX differentia-

tion by using the within-group standard deviation (Erdogan and Bauer, 2010; Harris
et al., 2014; Henderson et al., 2008). A higher within-team standard deviation indicates
higher differentiation.

Team creativity. Consistent with previous studies on team creativity (e.g. Gilson and
Shalley, 2004; Tu, 2009), we adapted the following three items from Zhou and George’s
(2001) measure of individual creativity to the team level: ‘Team comes up with new and
practical ideas in solving problems’, ‘Our team easily develops new ways and proce-
dures related to the task’, and ‘Confronting problems, our team generates creative solu-
tions’. Cronbach’s alpha was .91. Team creativity was reported by team leaders, who are
viewed as reliable sources of team information (Akgün et al., 2008; De Dreu and West,
2001; Pirola-Merlo and Mann, 2004).

Control variables. Considering that larger teams have been shown to be more likely to
obtain resources for creativity (Stewart, 2006), we controlled for team size (i.e. total

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Li et al. 9

Table 1.  Team-level descriptive statistics, reliabilities and correlations among measures.

Variable Mean SD 1 2 3 4 5 6 7
1.  Team size 6.36 1.75  
2.  Education heterogeneity .38 .16 −.01  
3. Team tenure .37 .19 −.09 −.38  
heterogeneity
4.  Organizational function .46 .50 −.10 −.12 .16  
5.  LMX differentiation .62 .34 .01 .05 .06 .18  
6.  LMX median 4.42 .65 .13 −.02 −.27* .27 −.06  
7.  Team creativity 4.45 1.08 .06 −.04 −.11 .07 −.08 .45* (.91)

N = 59 at team level. Reliabilities of the scales are noted in the diagonals. LMX = leader–member exchange;
SD = standard deviation. *p < .05; two-tailed tests.

number of team members reported by leaders). In addition, because team diversity or

heterogeneity may influence team creativity (e.g. Harrison et al., 2002; Shin and Zhou,
2007; Van der Vegt and Janssen, 2003), we controlled for teams’ demographic heteroge-
neity (e.g. education, tenure). Heterogeneity in tenure was calculated by using the coef-
ficient of variation (standard deviation divided by the mean), and heterogeneity in
education was computed by using Blau’s (1977) heterogeneity index, which is widely
used in the heterogeneity literature (e.g. Baer et al., 2008; Polzer et al., 2002; Van der
Vegt and Bunderson, 2005). Finally, organizational function was also controlled for
(research and development = 0, marketing = 1).

Analytical strategy
Because the data pertained to the team level, we applied hierarchical multiple regression
analyses to detect the main and interaction effects of LMX differentiation and the LMX
median on team creativity. In the first step, all the control variables and LMX differentia-
tion were entered into the equation. To assess the curvilinearity of the relationship, we
added quadratic LMX differentiation into the model in the second step. Finally, to evaluate
the moderating role of the LMX median on the relationship, we included the LMX median
and its interaction with quadratic LMX differentiation into the model in the third step.

Results
Table 1 shows the descriptive statistics, reliabilities and correlations for the variables.

Curvilinear relationship between LMX differentiation and team creativity

Hypothesis 1 predicts that LMX differentiation has a curvilinear relationship with team
creativity. As shown for Model 2 in Table 2, LMX differentiation is not significantly related
to team creativity (β = .18, not significant), whereas quadratic LMX differentiation has
a negative effect on team creativity (β = –.39, p < .05). This pattern of results (a

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10 Human Relations 

Table 2.  Hierarchical regression results: The main and interactive effects of LMX
differentiation and LMX median on team creativity.

Variables Team creativity

  Model 1 Model 2 Model 3

1. Intercept 4.65** 4.76** 4.47**
2. Control and independent  
  Team size .05 .04 .08
  Education heterogeneity −.08 −.06 −.02
  Team tenure heterogeneity −.15 −.13 −.05
  Organizational function .10 .14 .01
  LMX differentiation −.09 .18 .25
  LMX differentiation2 −.39* −.33*
  LMX median .20
  LMX differentiation × LMX median −.17
  LMX differentiation2 × LMX median .41*
 Overall R2 .04 .11 .36
 ∆R2 .01 .07* .25*

N = 59 at team level. LMX = leader–member exchange. **p < .01; *p. < .05; two-tailed tests.

4.9
Team creativity

4.7

4.5

4.3
Low LMX differentiation High LMX differentiation

Figure 1.  The curvilinear relationship between LMX differentiation and team creativity.
LMX = leader–member exchange.

nonsignificant linear effect in the presence of a negative and significant curvilinear effect
for centered explanatory variables) indicates that an inverted U-shaped relationship exists
between LMX differentiation and team creativity (see Aiken and West, 1991), which lends
support to Hypothesis 1 (see Figure 1). That is, the relationship between LMX differentia-
tion and team creativity shows a positive, or upward, trend at lower levels of LMX differ-
entiation and a negative, or downward, trend at higher levels of LMX differentiation.

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Li et al. 11

4.8 Low LMX median

High LMX median
4.6

Team creativity
4.4

4.2

3.8

3.6
Low LMX High LMX
differentiation differentiation

Figure 2.  The interactive effect of LMX differentiation and LMX median on team creativity.
LMX = leader–member exchange.

The contingent effect of the LMX median. Hypothesis 2 predicts that the LMX median
moderates the curvilinear relationship between LMX differentiation and team creativity.
To test this hypothesis, we introduced the LMX median as a moderator in the regression
equation in Model 3 in Table 2. The results indicate that the LMX median significantly
interacts with quadratic LMX differentiation (β = .41, p < .05). As the interaction plot in
Figure 2 shows, the relation between LMX differentiation and team creativity follows an
inverted U-shaped function for teams with a low LMX median, but becomes almost flat,
indicating the lack of an inverted-U effect, for teams with a high LMX median. Overall,
these results provide support for Hypothesis 2.
To further analyze this quadratic interaction effect, we tested simple slopes of the
regression curves. As suggested by Aiken and West (1991), we estimated simple slopes
at three levels of LMX differentiation: low (one standard deviation below the maximum
of the regression curve), intermediate (maximum of the regression curve), and high (one
standard deviation above the maximum of the regression curve). The results indicate
that when the LMX median is low the simple slope of the regression curve: has a posi-
tive, significant value for low differentiation (β = .76, p < .05); does not significantly
differ from zero for intermediate differentiation (β = .37, p > .05); and has a significant
negative value for high differentiation (β = –.03, p < .05). When the LMX median is
high, the simple slopes of the regression line do not significantly differ from zero (ps
>.05) at low, intermediate, or high levels of differentiation. Overall, these results pro-
vide support for Hypothesis 2.

Discussion
The purpose of this study was to examine the relationship between LMX differentiation
and team creativity. Specifically, we examined whether the relationship between LMX
differentiation and team creativity could be characterized by an inverted U-shape

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12 Human Relations 

function and whether the LMX median moderates this relationship. Our results suggest
that the relationship between LMX differentiation and team creativity is nonmonotonic
and that an inflection point indeed exists. Furthermore, in accordance with our hypoth-
esis, we found that the LMX median moderates the squared LMX differentiation term for
team creativity, with LMX differentiation exerting a stronger effect on team creativity in
teams with a low LMX median. By contrast, for teams with a high LMX median, the
slope of the curve became nearly flat, thus indicating the lack of inverted-U effect. The
findings of this research have some interesting theoretical and practical implications.

Theoretical implications
The study has significant implications for the LMX and creativity literature. First, and
perhaps most importantly, our research demonstrates that LMX differentiation, as a
team-level construct, has a curvilinear relationship with team creativity. Past work exam-
ining the influence of leadership on team creativity has primarily concentrated on differ-
ent leadership styles or the LMX model, and little is known about how leaders’
differentiated treatment of subordinates affects team creativity. Van Breukelen et al.
(2012) argued that attention should not focus exclusively on the general leadership style
of the leader toward the team as a whole but that leaders’ specific behaviors toward vari-
ous followers should also be considered. Furthermore, previous research has assumed a
linear relationship between LMX differentiation and team-focused outcomes (e.g. Liden
et al., 2006; Naidoo et al., 2011) but has failed to find a direct positive or negative rela-
tionship between LMX differentiation and team outcomes (Boies and Howell, 2006;
Liden et al., 2006). We explicitly proposed and empirically tested the TMGT framework
to explain the relationship between LMX differentiation and team creativity. Our results
demonstrate that the relationship between LMX differentiation and team creativity is
curvilinear and that teams are likely to exhibit the highest creativity at intermediate lev-
els of differentiation. This finding contrasts with previous studies that contend that LMX
differentiation has no main effect on team outcomes (Boies and Howell, 2006; Liden
et al., 2006). Our findings suggest that focusing on a linear relationship will not capture
the essence of LMX differentiation; instead, a more complex understanding of how
LMX differentiation influences team-level outcomes should be developed. Therefore,
our findings advance the understanding of the influence of leadership on creativity and
enrich the literature on the construct of LMX differentiation.
Second, in an effort to derive a contingent condition of the curvilinear relationship,
we examined the moderating effect of the LMX median on this relationship. In support
of our argument, we found that the LMX median moderates the curvilinear relationship
between LMX differentiation and team creativity. Furthermore, consistent with prior
findings, we found that LMX differentiation has a stronger effect on team creativity in
teams with a low LMX median. The difference between our results and those of prior
studies is that we found that the association between LMX differentiation and team crea-
tivity can be described by an inverted-U shape. We further found that in teams with a
high LMX median, the slope of the curve became nearly flat, thus losing the inverted-U
effect. An explanation for this result may lie in the buffering effect of the LMX median.
In teams with a high LMX median, as most members are treated as trusted assistants,

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Li et al. 13

they are not sensitive to differentiation. In addition, high LMX quality reduces the risk
of interpersonal conflicts, and thus teams devote their energy to performing tasks. This
suggests that LMX differentiation is not necessarily a concern if LMX quality is high.
LMX differentiation combined with the LMX median creates an important team-level
context (Henderson et al., 2009) that may shape team outcomes (Le Blanc and González-
Romá, 2012). Although scholars have begun to examine such interaction effects, the
conflicting findings obtained thus far have been puzzling. The analysis of the quadratic
term interaction offers important insight into the effect of LMX-related constructs on
team creativity and takes a step toward resolving the disputes concerning the interaction
effect of LMX differentiation and team LMX quality.

Practical implications
Our findings have important implications for organizations and managers. First, the cur-
vilinear effect of LMX differentiation suggests that LMX differentiation may be a dou-
ble-edged sword, which must be handled with care. Most leaders develop differentiated
relationships with different members in modern organizations (van Breukelen et al.,
2006). Such differentiation can help leaders to enhance team creativity. However, accord-
ing to our findings, LMX differentiation and team creativity are related in a curvilinear
fashion, and thus managers should be cautious of creating high differentiation within
work groups. As the proverbs state, ‘too much can be worse than too little’ and ‘every-
thing in moderation; nothing in excess’. High differentiation will run the risk of stimulat-
ing intragroup interpersonal conflicts, which will in turn harm group cohesion, group
cooperation, and ultimately efforts to increase team creativity.
Second, by examining the boundary conditions and contextual effects underlying the
negative consequences of otherwise beneficial states such as LMX differentiation, our
study can inform and help practitioners understand how to mitigate the negative conse-
quences of LMX differentiation. The current research suggests that the LMX median has
a moderating effect on the LMX differentiation-team creativity association. Thus, lead-
ers should establish relative good relationships with most team members and strive for a
balanced state of differentiation to enhance team creativity.

Limitations and future research

The current study has several limitations that indicate directions for future research. First,
the study used a cross-sectional design, and thus we cannot draw strong causal inferences.
Future research might employ longitudinal designs, whereby measures of LMX and team
creativity are collected over several periods to permit an examination of the causal rela-
tionship between LMX differentiation and team creativity. In addition, our sample con-
tained 59 teams. This small sample size provided low statistical power for hypothesis
testing; however, the results we obtained supported all of the study’s hypotheses. Future
research may expand the range of the sample and enhance the statistical power of results.
Second, our research builds on emerging theoretical and empirical evidence, suggest-
ing that LMX differentiation has a curvilinear effect on team creativity. This perspective
substantially differs from previous linear research. Future research may continue to build

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14 Human Relations 

on these findings and examine whether the nonlinear effects we uncovered extend to
other team outcomes (e.g. team performance). This different perspective may enrich the
understanding of LMX differentiation and add to the burgeoning literature examining the
effect of LMX differentiation on team-level outcomes.
Third, we propose that the observed decreases in team creativity may have resulted
from interpersonal conflicts. However, we do not empirically evaluate such conflicts as
a mediator. It will be important for future researchers to explore the mechanisms under-
lying the reduced creativity of highly differentiated teams. In addition to potential media-
tors, it is plausible that other moderators may also influence the point at which the
benefits of LMX differentiation diminish. To gain a deeper understanding of the effect of
LMX differentiation on team creativity or other team-focused outcomes, future research
should explore such potential moderators.
Fourth, we considered a Chinese sample, which might limit the generalizability of our
findings to other cultural contexts. China is a country with unique social, economic and
cultural characteristics (Tsui and Lau, 2002), and our findings may, to some extent, be
culturally specific. For example, high power distance and collectivism (Hofstede, 2001)
may influence the development and outcomes of LMX (Ma and Qu, 2010). Thus, it
would be worthwhile to replicate the investigation of this study in different cultures.
Finally, we have demonstrated that a moderate level of LMX differentiation is opti-
mal for team creativity. Unfortunately, beyond describing such a level as moderate, nei-
ther we nor our predecessors in LMX research have been able to clearly define a moderate
level of differentiation. To provide more useful guidelines for practitioners, future
research may devote effort to exploring the point at which differentiation is beneficial
and the point at which it is not.

Conclusion
In response to recent calls in the LMX literature for research on group-level issues related
to LMX (Hogg et al., 2003; Yukl, 2002), this study examined the relationship between
LMX differentiation and team creativity. Drawing on the TMGT metaprinciple, we con-
ducted an analysis of how differentiation influences team creativity. The findings reveal
that: (a) LMX differentiation has an inverted U-shaped effect on team creativity; and (b)
the LMX median moderates the association between LMX differentiation and team crea-
tivity. These results suggest that the relationship between LMX differentiation and team
outcomes is more complex than previous research has suggested, and highlight the impor-
tance of adopting a nonlinear perspective for elucidating these complex problems.

Acknowledgements
The authors are indebted to the associate editor Samuel Aryee and three anonymous reviewers for
their valuable comments that have greatly improved this article. Special thanks are also given to
the nine companies in China for their help in data collection.

Funding
This work was supported by grants from the National Natural Science Foundation of China (nos.
71272158, 71172009 and 71421061)

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Li et al. 15

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Yan Li is a researcher at School of Economics and Management, Tsinghua University, China. She
received her PhD in Human Resource Development from Renmin University of China. Her
research interest includes leadership, team creativity and organization innovation. Her research has
been published in journals such as The Leadership Quarterly and Advances in Psychological
Science. [Email: chilli666@163.com]
Fengying Fu is an associate professor at College of Applied Arts and Science of Beijing Union
University, China. She received her PhD in Philosophy from Renmin University of China. Her
research interests include management philosophy and cross-cultural studies. [Email: ffy2003@
sina.com]
Jian-Min Sun is a professor at School of Labor and Human Resources, Renmin University of China.
He received his PhD in Psychology from Beijing Normal University, China. His research interests
include leadership, creativity and human resource management. His research has been published in
journals such as The Leadership Quarterly, Journal of Experimental Social Psychology and
International Journal of Human Resource Management. [Email: chinajms@126.com]
Baiyin Yang received his PhD in Human Resource Development from the University of Georgia,
USA. He is COSCO Chair Professor and Chair of Department of Leadership and Organization
Management, Tsinghua University, China. He also holds the Cheung Kong Scholar Professorship
awarded by the Ministry of Education, People’s Republic of China. His research interests include
adult and organizational learning, employee creativity and organization innovation, leadership and
organization development. His research has been published in journals such as Human Resource
Management Review, International Journal of Human Resource Management and Journal of
Business Research. [Email: yangby@sem.tsinghua.edu.cn]

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