The leader-member exchange (LMX) theory proposes that the leader implicitly categorizes the follower as belonging to his ingroup or out group after a detailed analysis of his or her performance over a prolonged period of time.

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The theory proposes that early in the history of the interaction between a leader and a given follower, the leader implicitly categorizes the follower as belonging to the ingroup or out-group, and this relationship is relatively stable over time.

The Leader-Member Exchange (LMX) Theory Proposes That the Leader Implicitly