GROUPRosen

Gómez, ORGANIZATION
/ LEADER-MEMBER
& MANAGEMENT
EXCHANGE

The Leader-Member Exchange

as a Link Between Managerial
Trust and Employee Empowerment

CAROLINA GÓMEZ
Towson University
BENSON ROSEN
University of North Carolina at Chapel Hill

This article examines the relationship between managerial trust and employee empowerment.
Hypotheses derived from leader-member exchange (LMX) theory suggest that the quality of
leader-member relations mediates the linkage between managerial trust and employee em-
powerment. Data from 128 manager-employee dyads from 13 organizations support this model.
Whereas previous research has pointed to the influence of organizational and social structural
variables on empowerment, this research shows the importance of manager-employee relation-
ships on perceived empowerment. Implications for researchers and managers leading empower-
ment initiatives are discussed.

Many organizational change initiatives have centered around the concept of

empowerment. Employee empowerment has emerged as a construct deemed
critical to organizational innovativeness (Spreitzer, 1995) and effectiveness
(Conger & Kanungo, 1988; Kanter, 1989). Whereas some empowerment ini-
tiatives are geared specifically toward changing the role of middle managers
(Spreitzer & Quinn, 1996), the long-term intent is that empowerment trickles
down to each employee in the organization. Accordingly, it is critical to
understand what factors facilitate and inhibit employee empowerment.
Although the construct of empowerment has been defined in many differ-
ent ways (Conger & Kanungo, 1988; Kanter, 1983; Thomas & Velthouse,
1990), until recently it had not been adequately operationalized (Spreitzer,
1995, 1996). Spreitzer (1995) validated a multidimensional measure of psy-
chological empowerment that provides a new framework for research on the
antecedents of empowerment. Initial research has revealed a positive rela-
tionship between certain individual and organizational factors and employee
empowerment (Spreitzer, 1995, 1996). A logical question arises regarding

Group & Organization Management, Vol. 26 No. 1, March 2001 53-69

© 2001 Sage Publications, Inc.
53
54 GROUP ORGANIZATION & MANAGEMENT

the relationship between managerial practices and employee empowerment

(Keller & Dansereau, 1995).
Theories such as the leader-member exchange (LMX) provide a logical
connection between constructs such as managerial actions and employee
empowerment. According to LMX theory, those employees who are consid-
ered part of a manager’s in-group have a high-quality exchange (Dansereau,
Graen, & Haga, 1975). This implies that when managers trust their employ-
ees, they give these employees preferential treatment such as increased infor-
mation and latitude and discretion. The LMX theory builds in the constructs
of managerial trust and subsequent employee empowerment. Although these
constructs may somewhat overlap in both theory and practice, the validation
of measures of these constructs provides researchers the tools to empirically
tease out important relationships.
The purpose of this article is to examine the influence of the interpersonal
and immediate environment at work—the manager-employee relationship—
on empowerment. Specifically, this study investigates the relationship
between managerial trust, a variable seen as critical to organizational coordi-
nation and control (McAllister, 1995), the LMX, and employee empower-
ment. First, the literature on empowerment and trust is reviewed. Second, the
LMX is presented as a variable proposed to mediate the trust-empowerment
relationship. Hypotheses are derived from the literature. Third, the research
design used to test the hypotheses and the results obtained are described.
Finally, the implications for managers leading the change toward empow-
ered organizations are discussed along with directions for future research.

LITERATURE REVIEW AND HYPOTHESES

EMPLOYEE EMPOWERMENT

Employee empowerment has been reported as a management technique

used by companies to increase organizational effectiveness (Conger &
Kanungo, 1988; Kanter, 1989; Spreitzer, 1995, 1996). As a construct,
empowerment has been defined in many ways. For example, Hollander and
Offermann (1990) referred to empowerment as the sharing of power. Other
researchers have looked at empowerment from the individual’s perspective
and defined it as the process of increasing individual perceptions of control
(Greenberger & Strasser, 1991; Kanter, 1983; Keller & Dansereau, 1995)
as well as a process of strengthening an individual’s self-efficacy belief
(Conger & Kanungo, 1988). Much of this research focused on the behavioral
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 55

component of empowerment, including behaviors such as increased latitude

in decision making, control over work, and increased access to information
and resources.
A more recent stream of research has looked at empowerment from a cog-
nitive perspective, that is, from the perspective of the cognitions of the job
incumbent. Subsequently, researchers defined empowerment as consisting
of four dimensions or individual cognitions (Thomas & Velthouse, 1990)
that have been empirically validated (Spreitzer, 1995). From a cognitive per-
spective, empowerment consists of an individual’s judgment of meaning
(i.e., the value of his or her work), competence (i.e., his or her capability to
perform the work), self-determination (i.e., choice in initiating and regulat-
ing actions), and impact (the ability to effect or influence organizational out-
comes). Together, these four dimensions portray a proactive individual
mind-set (Spreitzer, 1996). Although researchers continue to use the differ-
ent meanings of empowerment, both behavioral and cognitive, the validation
of these four cognitive dimensions allows researchers to accurately examine
manager and employee behaviors that lead employees to feel empowered.
Spreitzer (1995) found a number of antecedents of empowerment. Some
of these antecedents are individual factors, such as an individual’s
self-esteem, whereas others are external to the individual, such as access to
information about the organization’s mission (Spreitzer, 1995). Variables at
the work unit level—such as strong sociopolitical support from subordinates,
work group, peers, and superior; access to information; a work climate
focused on participation; and a work unit with little role ambiguity—also
emerged as antecedents to empowerment (Spreitzer, 1996).
As Spreitzer (1995) suggested, the identification of other antecedents to
empowerment could have important theoretical and managerial implica-
tions. Just as individual and organizational factors have been related to
employee empowerment, research should look at interpersonal factors
related to leadership such as managerial trust and the subsequent quality of
the leader-subordinate relationship. Research has already started to look at
the links between leadership practices and employee empowerment (Keller &
Dansereau, 1995). For example, Keller and Dansereau (1995) looked at the
dyadic LMX as a potential antecedent to empowerment. They found that
when leaders or managers provide support for an employee’s self-worth and
expand negotiating latitude, employees experience empowerment in terms of
decision-making control (Keller & Dansereau, 1995). Within the LMX liter-
ature, managerial trust has been deemed a critical component leading to a
high-quality relationship and empowering leader behaviors.
56 GROUP ORGANIZATION & MANAGEMENT

MANAGERIAL TRUST

For many years, trust has been discussed as a variable that is crucial for
organizational effectiveness. Interpersonal trust is at the heart of organiza-
tional coordination and control (McAllister, 1995). Researchers have identi-
fied trust as a critical prerequisite before managers empower employees
(Mayer, Davis, & Schoorman, 1995; Mishra & Spreitzer, 1994). Previous
models of trust describe a dynamic process whereby trust develops between
two people through a mutually reinforcing process (Zand, 1972). In such a
model, feelings of trust are communicated through the disclosure of accurate
and relevant information, the acceptance of another’s influence, and recogni-
tion of interdependence (Zand, 1972).
Research on interpersonal trust has specifically defined it as an expec-
tancy held by an individual or group that the word or promise of another indi-
vidual or group can be relied on (Rotter, 1971, 1980). Further operationali-
zation of the construct of trust has defined it as a person’s willingness to be
vulnerable to another party whose behavior is not under his or her control
(Hosmer, 1995; Zand, 1972) based on the belief that the other person is com-
petent, open, concerned, and reliable (Mishra & Spreitzer, 1994). Recent
research has also distinguished between cognition-based and affect-based
trust (McAllister, 1995). Whereas cognition-based trust relates to beliefs
about an individual’s reliability, dependability, and competence,
affect-based trust is related more to the emotional bond created by the mutual
caring and concern that exists between individuals (McAllister, 1995).
Between the cognition-based and affect-based trust, the different dimensions
of trust emerge, including competence, openness, concern, and reliability.
Because managers play a critical role in the process of employee em-
powerment, the successful transfer of power and authority to lower organiza-
tional levels may depend in large part on managers’ belief that subordinates
can be trusted (Burke, 1986; Manz & Sims, 1993). According to McAllister
(1995), in high-trust relationships, managers engage in little control-based
monitoring behaviors. Although McAllister’s (1995) research focused on peer
relationships, Gibb (1965) argued that trust is an important element in pre-
dicting the methods management will use with subordinates. Moreover, the
LMX theory incorporates the construct of trust into the manager-subordinate
relationship (Butler, 1991; Dansereau et al., 1975) and the subsequent treat-
ment given by managers. Hence, the LMX theory can be used to derive
hypotheses on the relationship between managerial trust and employee
empowerment.
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 57

TRUST AND EMPOWERMENT

IN THE CONTEXT OF THE LMX

The LMX theory developed by Graen and his colleagues proposes that
leaders develop qualitatively different types of relationships with various
employees (Dansereau et al., 1975). Some employees will feel that they
belong to an in-group, whereas others will perceive that they are members of
an out-group. In-group employees have a high-quality exchange with their
managers, whereas out-group employees have a low-quality relationship.
In-group employees receive preferential treatment such as higher amounts of
information, influence, involvement, latitude, confidence, and concern from
the manager (Dansereau et al., 1975; Liden & Graen, 1980).
Trust is believed to play an important role in the quality of relationships
that managers have with their employees (Butler, 1991; Liden & Graen,
1980). LMX research predicts that in-group members are chosen by manag-
ers based on their assessments of (a) employees’ skills, (b) motivation to
assume greater responsibility, and (c) the extent to which they think the
employee can be trusted (Liden & Graen, 1980). Longitudinal research has
confirmed that managerial performance evaluations and levels of delegation
are strongly associated with the quality of an exchange (Bauer & Green,
1996). Although managerial trust is assumed to be an integral component of
this model, research is needed that specifically measures a manager’s trust in
an employee and the employee’s perception of the quality of the exchange
(Bauer & Green, 1996).
The assessments made by managers that are proposed to influence the
quality of the exchange parallel the dimensions of trust: competence, open-
ness, concern, and reliability (Mishra & Spreitzer, 1994). For example, as
noted earlier, measures of trust include an assessment of the degree to which
a person believes that the other person is competent. Such an assessment is
similar to a performance appraisal. Previously, LMX researchers have stud-
ied the relationship between performance and the quality of exchange
between managers and subordinates (Liden & Graen, 1980). In addition,
research has indicated that cognition-based trust (i.e., reliability and compe-
tence) usually develops prior to affect-based trust (i.e., the emotional bond)
(McAllister, 1995). Therefore, in a developed leader-member relationship,
managerial trust should be associated with an employee’s perception of the
quality of the exchange. Because in-group relationships are characterized by
high trust, employees who are trusted by their managers should perceive
themselves as engaged in high-quality relationships. Conversely, out-group
relationships are characterized by low trust (Dienesch & Liden, 1986). The
58 GROUP ORGANIZATION & MANAGEMENT

relationship examined in this study is specifically between a manager’s

assessment of employee trustworthiness and the employee’s perception of
the quality of the exchange. The relationship analyzed is between the man-
ager’s and employee’s perceptions, although the employee’s perception of
the exchange may include an element of whether the employee feels trusted
by the manager. Hence, we predict the following:

Hypothesis 1: Managerial trust will be positively related to employee perceptions

of the quality of the LMX such that the higher the level of managerial trust, the
more likely an employee will assess having a high-quality exchange.

As already noted, the LMX provides a natural link between managerial

trust and the leader behaviors that follow such trust. LMX research shows
that members with a high-quality LMX receive a variety of preferential treat-
ments, such as having greater employee responsibility and autonomy in deci-
sion making (Kozlowski & Doherty, 1989). Interestingly, Bauer and Green’s
(1996) research showed that managers use delegation to determine the qual-
ity of the exchange. Managers delegate to employees early in the develop-
ment of the relationship as a way of assessing the trustworthiness, compe-
tence, and ability of the employee. Bauer and Green (1996) proposed that
delegation is also used as a means of reward later in the development of the
leader-member relationship.
Keller and Dansereau (1995) found that when employees received negoti-
ating latitude and support for self-worth from their superiors, their percep-
tions of control increased. The LMX theory provides a promising link
between these variables. In fact, leader-member research has shown that sub-
ordinates reporting a high-quality relationship not only assume greater job
responsibilities but also express contributing more to their units (Liden &
Graen, 1980). A feeling of contribution is considered one dimension of
empowerment: impact. Similarly, greater job responsibilities should trans-
late to an increased perception of self-determination. Hence, the quality of
the LMX influences levels of delegation, responsibility, and autonomy, and
in turn, employees perceive greater latitude, decision influence, and feelings
of contribution. Therefore, we hypothesize a positive relationship between
high-quality leader-member relationships and employee empowerment.
In addition, because we propose that managerial trust influences the em-
ployee’s perception of the quality of the LMX, we hypothesize that the
employee’s perception of the quality of the LMX will mediate the relation-
ship between a manager’s trust in an employee and employee feelings of
empowerment. Thus:
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 59

Hypothesis 2: The quality of the LMX will be positively related to employee

empowerment.
Hypothesis 3: The quality of the LMX will mediate the relationship between man-
agerial trust and employee empowerment.

METHOD

A cross-sectional research design was used to examine the relationships

between managerial trust, employee perception of the quality of the LMX,
and employee feelings of empowerment. Data were collected through ques-
tionnaires administered at various work sites. Because the study examined
the relationship between managers and their employees, the level of analysis
was the dyad represented by a manager and his or her subordinate. To ensure
variance in perceived empowerment, employees with jobs representing a full
range of responsibility, discretion, and other components of empowerment
were targeted. The design partly avoids common method variance bias
(Podsakoff & Organ, 1986) because measurements of trust were obtained
from managers and measurements of the quality of the LMX and empower-
ment were obtained from employees.
Sixteen organizations associated with a university program were con-
tacted by phone and provided with a description of the research project.
These organizations were considered appropriate because they represented
a diverse group of industries and were at different levels of employee em-
powerment initiatives. The level of employee empowerment initiative was
determined during initial conversations with company representatives. The
representatives were asked whether employee empowerment was a company
initiative and, if so, for how long had it been an initiative. Company represen-
tatives were asked to describe what the company had done in trying to imple-
ment employee empowerment. The companies in our sample represented a
very broad range of stages in the process of implementing empowerment pro-
grams. For example, some representatives noted that their companies were
thinking about such an initiative but had not yet started anything official,
whereas other representatives noted that their companies had officially
implemented an employee empowerment initiative several years ago. Repre-
sentatives also described a variety of company activities as part of the initia-
tive—from “baptism by fire” to lengthy training of managers. Thirteen orga-
nizations expressed interest in the study and were sent written proposals
requesting access to samples of manager-direct report dyads. Most organiza-
tions agreed to provide a minimum of 12 to 25 dyads for the study.
60 GROUP ORGANIZATION & MANAGEMENT

A package with two surveys was distributed directly to participating man-

agers. Instructions requested managers to complete one survey and deliver
the second survey to one of their employees. Half the managers were asked to
think about an employee with whom they had a high-quality relationship,
whereas the other half were asked to think about an employee with whom
they had a low-quality relationship. A total of 284 packages with two surveys
in each package (i.e., 568 surveys) were mailed out. Stamped, self-addressed
envelopes were included to ensure confidentiality of responses. Only surveys
for which we had both the manager’s and the employee’s response were
included in the analyses. A total of 130 dyad responses were received (46%
response rate). Two surveys were unusable, leaving 128 dyads.

MEASUREMENT INSTRUMENTS

Trust. Trust rests on the belief that a person is competent, open, con-
cerned, and reliable (Butler, 1991; Hosmer, 1995; Mishra, 1993; Mishra &
Spreitzer, 1994). Trust was measured using a 14-item Likert-type scale.
Eight items were taken from Butler’s (1991) Conditions of Trust scale to
measure competence, openness, and consistency. Six items were taken from
Mishra’s (1993) trust scale to measure caring and competence. Competence
can be considered in terms of technical, general business, and interpersonal
skills (Gabarro, 1987). Whereas Butler’s (1991) competence refers to techni-
cal skills to perform a job, Mishra’s (1993) competence refers to general
business knowledge. Between both Butler’s (1991) and Mishra’s (1993)
scales, all four components of trust were measured. Managers responded on a
5-point scale ranging from 1 (strongly disagree) to 5 (strongly agree).

Empowerment. Psychological empowerment was assessed using

Spreitzer’s (1996) 12-item Individual Empowerment Measure. Spreitzer’s
questionnaire assesses four dimensions of empowerment—competence,
impact, meaning, and self-determination. Each scale consists of three items.
Direct reports responded on 5-point Likert-type scales ranging from 1 (strongly
disagree) to 5 (strongly agree).

LMX. The quality of the LMX was measured using the LMX question-
naire that has been labeled as the Information Exchange Measure (Kozlowski
& Doherty, 1989). The Information Exchange Measure consists of eight
items measured on a 5-point scale, ranging from 1 (not at all) to 5 (to a very
great extent). Employees completed the Information Exchange Measure.
Based on this measure, high scores indicate in-group membership.
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 61

RESULTS

The managers and employees who participated in this study came from
organizations from diverse industries ranging from manufacturing to service
companies. Specifically, the manufacturing industries included industrial
manufacturers such as producers of aircraft engines, plastics, packaging
materials, and power systems to consumer products such as appliances and
cars. The service industries also included services provided to companies
such as information services as well as services for consumers such as utili-
ties and financial products. The participating managers confirmed the differ-
ing levels of employee empowerment initiatives represented by the compa-
nies and originally reported by company representatives. Specifically, 26%
of the managers noted that employee empowerment had been a major initia-
tive for 1 year or less, 30% reported that employee empowerment had been a
major initiative for 1 to 2 years, and 44% said it had been a major initiative for
more than 2 years.
Demographics of the managers showed that 83% of the managers partici-
pating in the study were male and 17% were female. The average manager
had 10 years of experience. Most managers (67%) had been working with the
specific employee participating in the study from 1 to 5 years. Employee
demographics showed that 65% of the employees participating in this survey
were male and 35% were female. The typical employee participating in this
study had 1 to 5 years in his or her position and more than 10 years with the
company.
Table 1 shows the means, standard deviations, reliabilities, and correla-
tions of the variables of interest. The measures of trust and the quality of the
LMX and employee empowerment were measured reliably with scale alphas
of .93, .90, and .89, respectively (see Table 1).
To test the hypotheses, we used hierarchical moderated regression analy-
sis in which we initially entered factors such as the length of the relationship
between the manager and the employee and the years of experience in the
position of the employee as controls. These factors were chosen because it
could be argued that trust is built through interactions that occur over time.
Hence, over time, episodes of successful delegation might occur that lead a
manager to trust an employee (Bauer & Green, 1996). Therefore, it could be
argued that the longer two people have worked together, the greater the
opportunity for such episodes and events to occur and thus the greater the
opportunity to develop a trusting relationship. Similarly, we could argue that
high-quality relationships between managers and employees would be more
probable with the employees that have been in the position the longest. Our
62 GROUP ORGANIZATION & MANAGEMENT

TABLE 1
a
Descriptive Statistics and Correlation Matrix (N =128)

Variable Mean SD 1 2 3 4 5
b
1. Employee experience in position 0.13 .34
2. Length of relationship between
b
employee and manager 0.09 .29 .11
3. Quality of leader-member exchange 3.65 .78 .04 .14 (.90)
4. Trust 4.19 .61 .14 .05 .47***(.93)
5. Empowerment 4.30 .54 .20** .08 .39*** .20**(.89)

a. Reliabilities for each scale are listed on the diagonal.

b. 0 = 1 to 5 years; 1 = more than 6 years.
**p < .05. ***p < .01.

first hypothesis predicted a positive association between managerial trust

toward an employee and the employee’s assessment of the quality of the
LMX (i.e., being part of the in-group). As shown in Table 2, managerial trust
was significantly related to employee perceptions of the quality of the LMX
(β = .46, p < .001). Therefore, the hypothesized association between manage-
rial trust and the quality of the dyadic exchange was supported.
Hypothesis 2 predicted that the quality of the LMX would be positively
associated with employee empowerment. The results of the regression,
shown in Table 3 (Regression 1), indicate that the quality of the exchange was
significantly related to employee empowerment (β = .39, p < .001). Interest-
ingly, the employees’ experience in the position was also related to empow-
erment (β = .18, p < .05).
The third hypothesis predicts that the quality of the LMX mediates the
relationship between managerial trust and employee experiences of psycho-
logical empowerment. To provide support for such a mediating effect, (a)
variation in the predictor variable should significantly account for variation
in the mediating variable, (b) variation in the mediating variable should sig-
nificantly account for variation in the dependent variable, and (c) when the
mediator is controlled for, the relationship between the predictor and the
dependent variables should no longer be significant (Baron & Kenny, 1986).
Hence, managerial trust must be related to the quality of the LMX as well as
to employee empowerment. In turn, the quality of the LMX must be related to
employee empowerment, but when the quality of the LMX is controlled for,
the relationship between managerial trust and the employee psychological
experiences of empowerment should no longer be significant.
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 63

TABLE 2
Hierarchical Moderated Regression Analysis for Variables
Predicting the Quality of Leader-Member Exchange (LMX)

LMX
Variable Step 1 Step 2

Employee experience in current position .03 –.04

Length of relationship with current manager .13 .12
Trust .46***
2
R .02 .23
2
Adjusted R .00 .21***
2
∆ Adjusted R .21

***p < .01.

The test of Hypothesis 1 shows that managerial trust is related to

employee perceptions of the quality of the LMX. The test of Hypothesis 2
shows that the LMX is related to employee empowerment. Table 3 (Regres-
sion 2) shows that managerial trust is also related to employee empowerment
(β = .17, p < .05). Table 3 (Regression 3) shows that when the employee per-
ception of the quality of the LMX is controlled for in a simultaneous regres-
sion analysis, the direct effect between managerial trust and employee
empowerment is not significant (β = –.01, ns), whereas the effect of the qual-
ity of the LMX remains significant (β = .39, p < .001). Therefore, a mediating
effect is found for the quality of the LMX. Once again, the employee’s expe-
rience in the position was significantly related with empowerment (β = .18, p
< .05).

DISCUSSION

Both academics and practitioners believe that managerial trust is a neces-

sary prerequisite for employee empowerment (Byham, 1990; Mishra &
Spreitzer, 1994). In addition, research in the vertical dyad linkage model has
indicated that managers have different relationships with employees who are
trusted compared with employees who are not trusted (Dansereau et al.,
1975). This study links these two areas of research and uses the quality of the
LMX as a framework to explain the relationship between managerial trust
and employee empowerment.
64 GROUP ORGANIZATION & MANAGEMENT

TABLE 3
Hierarchical Moderated Regression Analyses
for Variables Predicting Employee Empowerment

Regression 1 Regression 2 Regression 3

Variable Step 1 Step 2 Step 1 Step 2 Step 1 Step 2

Employee experience in
current position .19 .18** .19 .17* .19 .18**
Length of relationship with
current manager .06 .01 .06 .05 .06 .01
Quality of leader-member
exchange .39*** .39***
Trust .17** –.01
2
R .04 .19 .04 .07 .04 .19
2
Adjusted R .03 .17*** .03 .05** .03 .16***
2
∆ Adjusted R .14 .02 .13

*p < .10. **p < .05. ***p < .01.

Our first major finding was that employees who were more strongly
trusted by their managers expressed experiencing a better quality exchange
with their managers. A manager’s trust in an employee was positively and
significantly associated with the employee’s perceptions of being part of the
in-group. This finding provides strong support for the hypothesized relation-
ship between trust and quality of the exchange posited by the LMX theory
(Liden & Graen, 1980).
In addition, we also found that perceptions of a high-quality relationship
were significantly associated with an employee’s experience of psychologi-
cal empowerment (Spreitzer, 1995). Those employees who assessed having
a high-quality relationship with their manager experienced higher levels of
meaning, competence, self-determination, and impact. In other words,
in-group employees felt higher levels of empowerment. Bauer and Green
(1996) proposed that after delegation is used to assess the employee’s abili-
ties and trustworthiness, managers may continue to use delegation as a form
of reward. Because the majority of dyads in this study had been working
together for at least a year, it appears that employees do perceive the prefer-
ential treatment, such as manager delegation, as a reward rather than a test.
Perhaps the most important contribution of the findings of this research is
that the relationship between managerial trust and psychological experiences
of empowerment is mediated by the quality of the LMX. This study empiri-
cally tested and validated the relationship between these constructs that has
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 65

been hypothesized in both theory and practice. Managerial trust influences

employee perceptions of empowerment through the manager-employee rela-
tionship. Organizations can redesign jobs and ensure that many social struc-
tural variables support empowerment initiatives (Spreitzer, 1996). Nonethe-
less, this study points to the importance of the immediate interpersonal
relationships between managers and employees. As noted by LMX theory,
managers delegate more responsibility and possibly provide more support
and rewards to in-group members, which is experienced as empowerment.
Our findings, consistent with LMX theory, confirm the growing significance
of the interpersonal factor at work.
The finding that employees who perceive themselves to be in-group mem-
bers feel more empowered is somewhat of a mixed blessing for executives
charged with implementing empowerment initiatives. It is reassuring to note
that in-group employees experience high levels of empowerment. However,
it is also a matter of some concern that out-group members may experience
far less empowerment. Evidence suggests that demographic characteristics
are predictive of in-group/out-group status (Duchon, Green, & Taber, 1986).
As the workforce becomes increasingly more diverse, this tendency could
become a major obstacle to employee empowerment in organizations. To the
extent that women and minorities, for example, experience out-group status,
they may also experience lower levels of empowerment.
Similarly, Bauer and Green (1996) found that initial personality similari-
ties appear to be related to performance evaluations or judgments made by
managers. Managers need to be made aware of the potential drawbacks of
initially assigning employees to an out-group status based on non-job-related
factors. There is a real possibility that a self-fulfilling prophecy can be cre-
ated that deprives out-group employees of opportunities to experience
empowerment early in the manager-employee relationship.
Fortunately, Bauer and Green (1996) also found that over time, employee
performance and previous successful delegation by managers displaced per-
sonality similarity in predicting LMX. From an employee’s perspective,
identifying and engaging in actions that engender managerial trust may be
one important strategy for expanding personal control. In the past, organiza-
tional training efforts have focused on preparing managers for operating in
high-empowerment environments (Spreitzer & Quinn, 1996). We suggest
that such training include information on the importance of fair treatment to
all employees. In addition, our findings imply that parallel training for
employees on the building and maintenance of trusting manager-employee
relationships might also facilitate the transition to empowered organizations.
Research on determinants of trust such as availability, consistency, compe-
tence, loyalty, and so on (Butler, 1991) could provide a template for such
66 GROUP ORGANIZATION & MANAGEMENT

training. Because research has already determined that cognition-based trust

components such as competence and reliability occur before affect-based
trust (McAllister, 1995), employees should focus on visibly demonstrating
their ability to do their jobs well. Moreover, because research has also shown
that managers use delegation as a way to assess an employee’s competence
(Bauer & Green, 1996), employees can be coached to seek out special assign-
ments. Further research on actions by employees to strengthen the
leader-member relationship is clearly warranted.
The quality of the LMX accounts for significant but certainly not all of the
variance in the experience of psychological empowerment. Many other vari-
ables also contribute to the level of experienced empowerment. In this study
alone, the employee’s experience on the job was also related to feelings of
empowerment. Spreitzer (1996) found that structural variables such as lack
of sociopolitical support or poor access to information may detract from the
experience of empowerment. A variety of organizational constraints may
keep even the most highly trusted employees from fully experiencing psy-
chological empowerment. Therefore, from an organizational change per-
spective, organizations need to take a systemic approach that looks at organi-
zational and interpersonal factors when implementing empowerment
initiatives. The organization must support the empowered employees by pro-
viding them with the needed resources and information along with the ade-
quate responsibility and power.
In addition, this study supports the belief that the successful implementa-
tion of empowerment efforts depends on managers’ willingness to relinquish
control and share power. Managerial mistrust of employees will likely
impede employee empowerment. On the other hand, when trusting relation-
ships are established (as reflected in a high-quality exchange), a manager’s
time can be allocated to more strategic initiatives rather than close monitor-
ing of employees (McAllister, 1995). Therefore, building a climate of trust
and high-quality relationships between managers and their employees may
prove to be an important prerequisite to the roll-out of empowerment
programs.
A methodological limitation of the present study is the use of a cross-
sectional research design that prohibits the definitive establishment of
cause-and-effect relationships. However, the regression analyses showing
the mediating LMX effect provide some important insights about the under-
lying relationship among the variables of interest. In addition, Bauer and
Green’s (1996) longitudinal study provided insight into the expected trends
and dynamics of the leader-member development. According to that
research, after an initial assessment, managers delegate to the employees
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 67

they consider good performers, and the quality of the exchange is subse-
quently related to both employee performance and delegation. Bauer and
Green noted the need for studies, such as this one, that actually measure trust
rather than just the behavioral implications such as delegation. This study
also used recently developed and validated measures of trust and empower-
ment that had high reliabilities. One final limitation is the dependence on
self-report data for the assessment of two of the three variables of interest.
Nonetheless, on both these variables, it was the employees’ perceptions we
were after.
The purpose of this study was to test the relationship between managerial
trust and empowerment. We hypothesized and found that a manager’s
assessment of employee trustworthiness influences the quality of the LMX
and that the quality of the LMX mediates the relationship between trust and
an employee’s experience of empowerment. Our study extends the research
on the antecedents of empowerment. Our findings have interesting implica-
tions for both managers and employees. Both parties need to contribute to the
development of a trusting relationship. Higher levels of managerial trust will
enhance employee perceptions of empowerment.

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Carolina Gómez is an assistant professor of management at Towson University. She

received her Ph.D. from the University of North Carolina at Chapel Hill. Her research
interests focus on organizational behavior theories such as empowerment, justice, and
goal setting, with particular interests in the generalizability of such theories to other cul-
tures with different values and institutions.
 Gómez, Rosen / LEADER-MEMBER EXCHANGE 69

Dr. Benson Rosen is Hanes Professor of Management at the Kenan-Flagler Business

School at the University of North Carolina at Chapel Hill. He teaches organizational
behavior, management, and human resource management courses in the undergradu-
ate, MBA, and doctoral programs and in a variety of executive development programs.
He holds a Ph.D. in social and industrial psychology from Wayne State University. He is
a fellow of the American Psychological Association and member of the Academy of Man-
agement and the Society for Human Resources Management. Dr. Rosen serves on the
editorial review board of the Academy of Management Executive and the Human
Resource Management Journal.