The destructive effect of laissez-faire leadership on job performance: A social exchange perspective

Abstract

Laissez-faire leadership is a form of non-leadership which has negative influences on employees’ psychological states. Surprisingly, direct empirical evidence regarding the effect of laissez-faire leadership on employee job performance is lacking. Theoretical understanding of the mechanisms underlying this effect is also limited. Drawing on social exchange theory, we predicted that leader-member exchange (LMX) explains the negative influence of laissez-faire leadership on employee performance. In addition, the relationship between laissez-faire leadership and LMX is moderated by individual power distance and collectivism orientation as well as team power distance and collectivism composition. We collected data from 339 full-time employees and 88 supervisors from multiple automobile manufacturing and pharmaceutical companies. Results of multi-level first-stage moderated mediation generally support our hypotheses. LMX explains the negative associations between laissez-faire leadership and supervisor-rated employee performance (i.e., task performance, organizational citizenship behavior, and counterproductive behavior). The mitigating roles of individual power distance orientation and team collectivism, as well as the exacerbating role of individual collectivism orientation were all supported. The exacerbating role of team power distance was not supported. The contrasting effects of power distance and collectivism at two levels are intriguing. We contribute to leadership literature by developing a comprehensive theoretical framework that explains the influence of laissez-faire leadership on employee performance.