Chapter 7: The New Conduct of Business: How LMX Can Help Capitalize on Cultural Diversity

The growing number of culturally diverse organizations has spawned an interest in cross cultural research. In this chapter, we examine this new conduct of business by incorporating leadership and cultural diversity. Specifically, we view how leader-member exchange (LMX), as explained through social exchange theory, is coupled with Hofstede’s (1980a) four main cultural dimensions (uncertainty avoidance, power distance, individualism, and masculinity). We propose that these cultural dimensions hold many similarities to the processes of exchange in terms of reciprocity (e.g., equivalence, immediacy, and interest) and the currencies of exchange in LMX (e.g., contribution, professional respect, loyalty, and affect). Within this framework, we discuss how these ideas can be used to develop an agenda for future research that explores issues of leadership diversity and cross-cultural relationship development.