INTRODUCTION:

Leader-Member Exchange Theory believes that leaders or supervisors prefer few subordinates as their group members. Subordinates selected as in group members share mutual understanding, resources, information, responsibility with their immediate supervisors. However, subordinates that form out group member status are deprived of benefits like participation in decision making, performing challenging tasks, innovate etc.

Leaders share high quality relationships with their in-group members and low quality relationships with out-group members. LMX has been found having significant impact on employee job attitudes, performance, productivity, and profitability etc. However, least research has been conducted to examine the status of relationship between LMX and service quality in insurance and banking sector, of Kashmir region, of the State of Jammu and Kashmir, India. Therefore, the current study would be an Endeavour to explore the influence of LMX on service qualityin insurance and sectors of service economy of the State of Jammu and Kashmir, the northern most part of India.

REVIEW OF LITERATURE:

Leader Member Exchange Theory (Dansereau et al., 1975; Graen and Cashman, 1975), is based on the principle of reciprocity i.e. leaders and members share mutual understanding and responsibility of each other’s needs and authority (Graen and Cashman, 1975) i.e. both parties exchange favours for each other either simultaneously or expectation of receiving in future. LMX suggests that leaders form different relationships with their subordinates in the form of high and low quality relationships. High quality relationships are characterized by more leader attention, loyalty (Dansereau, et al., 1975), trust, autonomy, resources, respect, etc (Graen and Scandura, 1984)given by leader to his immediate subordinate. Cooperation, compliance etc, is exchanged by subordinate (Sparrowe and Liden, 1997) in return and thus form in-groups. Low quality relationships are controlled by formal contracts and economic exchanges (Sparrowe and Liden, 1997) like routine tasks, role defined, etcand thus form out-groups. In-groups are preferred by leaders by finding personality identification match interms of characteristics like aggression, extroversion, agreeableness, emotional stability etc. Out-groups are being perceived as lacking competence, abilities, skills, responsibility, decision making etc. Also, constraints like time, scarce resources, personality clash etc, limit the scope for forming high quality relationships.

LMX is a multidimensional construct having dimensions like affect, contribution, loyalty and professional respect. Affect represents mutual liking of leader and member based on similar interests, outside work context, thus form more informal than work based relationship. Liden and Maslyn (1998) stressed that this construct impacts attitudinal than behavioural outcomes, such as job satisfaction, organizational commitment and perceived organizational support. Loyalty represents the support for each other by leader and member while defending each other’s point of view in public. Leaders who are loyal to their members feel confident in their abilities and will give them more autonomy, responsibility and personal judgment (Liden and Maslyn, 1998) while handling different projects. Contribution deals with individuals who are seen more capable and are given difficult tasks to complete. They also receive more resources like equipment’s, material, budgetary support etc. Since, dimension is work related; it impacts employee behaviours like job performance and OCB (Ansari, et al., 2008; Liden and Maslyn, 1998). Professional respect represents the repute that an employee or supervisor has about performing his job with excellence. There is a possibility of forming perceptions about such an individual before meeting or seeing him by simply hearing from others about his qualities in an organization. Such candidates may be the right choice for supervisors to form high quality relationships with.

Service Quality.

Service quality refers to meeting of consumers expectations (Lewis and Mitchell, 1990). Service quality also defined as difference between consumer expectations and perceived service. Therefore, service quality tend to be better when perceived service exceed expectations or vice versa better (Parasuraman et al ., 1985). Several researchers in the past, have put various models for measuring service quality. Gronroos developed first model in 1982. Gronroos identified three components of service quality namely, technical (actual outcome), functional (how delivered or process of delivery) and image of organization based on performance of above two attributes. Cronin and Taylor, 1992 developed SERVPERF model that uses performance approach method which measure service quality based on consumer’s overall feeling towards service. Teas in 1993 developed Evaluated Performance model that measures the gap between perceived performance andthe ideal amount of a dimension of service quality rather than consumer expectation. Parasuraman et al., 1985 developed SERVQUAL model that measure service quality along five dimensions like tangibles, reliability, responsiveness, assurance and empathy. Tangibles include (physical facilities, equipments, staff uniforms, buildings, parking, walls, etc), reliability include(ability to perform promised service dependably and accurately), responsiveness (willingness to help consumers and provide prompt service), assurance include (knowledge, competence, credibility, courtesy), empathy (access, communication, understanding consumer).

LMX and Service Quality.

Service Quality, the basic and fundamental tenet that defines the image and creates a favourable perception in the minds of prospected customers, is considered as the core strategy in today’s highly dynamic and competitive service environment. Employees in service sector act as ambassadors of an organization. Employees represent organizational values, service products to external customers of service organization. Employees in service organizations are responsible for creating perception of service quality, repeat purchases, customer satisfaction, retention, loyalty and organizational image. However, employee performance is influenced by factors like relationship with supervisors, co-workers, job attitudes, organizational support, etc.

Supportive communication being an important aspect of LMX has been described as discourse that builds relationships (Bass, 1990; Whettonand Cameron, 1995) and demonstrates sensitivity to others. SSC includes activities like praising employees for their job performance, providing encouragement for their work efforts, listening to their concerns, making efforts for their growth and development, understanding and assessing their needs, solving their problems, etc. SSC, infact represents a vehicle through which supervisors may not only communicate their supportiveness for their subordinates but may also let employees form perceptions about the same, so as to inculcate among them the behaviour of reciprocation to achieve group as well as organizational objectives.

Another aspect of LMX that is psychological empowerment was given by Thomas and Velthouse (1990) and comprises of four dimensions namely, meaning, self-efficacy or competence, self-determination and impact. Supervisory support has been found to enhance employee levels of empowerment (Keller and Dansereau, 1995). Aryeeand Chen, (2006) also found positive correlation between LMX and psychological empowerment. Many studies have shown that high quality LMX relationships enable subordinates to sense more empowerment (Liden, 2000; Aryee and Chen, 2006). Positive relationship between LMX and self-efficacy has been confirmed in a longitudinal study by Murphy and Ensher (1999) and in studies of German workers by Schynsand Von Collani (2002) and Schyns et al., (2005), a positive correlation between LMX and self-efficacy was also found.

Innovative behaviour yet, another outcome of effective LMX and essential for efficient delivery of services refers to bringing of new problem solving ideas into use, so as to enhance a product, service or process. Innovations are communicated through a social system linked by a network. Social Exchange Theory is of the opinion that innovation is not possible without organizational and supervisor support (Yukl, 2002) have argued that LMX is necessary for creativity and innovation.Since, LMX or supervisory support and communication have been associated with better employee performance, psychological empowerment, innovative behavior, mutual respect, confidence, trust, etc which are essential factors for achieving better physical appearance in service settings, effective service delivery and superior performance or meeting all five dimensional requirement of service quality. We therefore, hypothesize that LMX is positively related to service quality Thus, our hypothesis would be as under:

H1: LMX is positively related to customer’s perceived quality about tangibility.

H2: LMX is positively related to customer’s perceived quality about reliability.

H3: LMX is positively related to customer’s perceived quality about responsiveness.

H4: LMX is positively related to customer’s perceived quality about assurance.

H5: LMX is positively related to customer’s perceived quality about` empathy.

METHODOLOGY:

The methodology includes exploring the causal relationship between LMX and service quality The details of methods followed are as under:

Data Collection Method and Sample Size.

Structured questionnaires are hand distributed among middle management,front line employees and customers while conducting the survey. Perception of LMX quality between supervisors and subordinates are recorded by averaging out the scores of supervisor and subordinate responses. Supervisors are asked to evaluate their relationship quality with their immediate subordinates and vice versa. Further, each subordinate or frontline employeeis handed over three questionnaires to distribute these among consumers who have been associated with the organization. Each consumer is asked to evaluate the service performance of the given front line employee and the score related to perception of each service quality dimension is then averaged out from the responses of these three consumers. Supervisors, frontline employee and each consumer are linked through a common code to facilitate convenient and hassle free linking process for establishing causal relationship. Mean scores averaged out from employee perception of LMX quality is then associated with the mean scores averaged out from consumer perception of service quality to identify any correlation or causal relationship. A sample size consist of 500 respondents with 100 supervisors or leaders, 100 sub-ordinates or frontline employees and 300 customers from Life Insurance Corporation (LIC) and State Bank of India (SBI).However, a total of 350 questionnaires comprising of 70 questionnaires from supervisors, 70 from subordinates or frontline employees and 210 questionnaires from customers were received, thereby, making response rate of 70 % possible. Several techniques like factor analysis, correlation and multiple regression analysis are used to validate the causality between LMX and service quality dimensions. The survey is conducted in the state of Jammu and Kashmir.

The Questionnaire and their Purification.

Graen et al. (1982) 7-item LMX measure was used to assess LMX relationship. Graen and Uhl-Bein (1995) recommended the use of LMX-7 over other measures after conducting review of LMX development over last twenty-five years. Cronbach alpha for the current study is estimated at .69. Service quality is measured using SERVQUAL instrument by (Parasuraman, et al., 1988). SERVQUAL instrument consist of 22 statements measuring five dimensions like tangibles, reliability, responsiveness, assurance and empathy. Overall,Cronbach for all five dimensions in the current study is estimated at .67.

ANALYSIS AND RESULTS:

Using, varimax rotation, the principal component factor analysis was administered for reduction of the data. The KMO value of 0.69 and significance of Bartlett’s test was at 0.00 level indicating the sampling adequacy for conducting factor analysis Items those indicated low factor loadings (<0.40), high cross-loadings (>0.40), or low communalities (<0.30) were eliminated for further analysis. All factors exhibited satisfactory alpha reliability coefficients, ranging between0.56 and 0.88.

Table 1: Factor Extraction Results.

S.No.

Variable.

Items.

Factor Loadings.

% Age of Variance.

LMX.

Do you know where you stand with your supervisor…do you usually know how satisfied your leader is with what you do?

0.66

0.58

0.67

0.49

0.46

0.61

0.69

0.69

0.26

0.19

0.27

0.24

0.18

0.27

0.21

How well does your supervisor understand your job problems and needs?

How well does your supervisor recognize your potential?

Regardless of how much formal authority he/she has built into his/her position, what are the chances that your supervisor would use his/her power to help you solve problems at work.

Again, regardless of the amount of formal authority your supervisor has, what are the chances that he/she would “bail you out,” at his/her expense?

I have enough confidence in my supervisor that I would defend and justify his/her decision if he/she were not present to do so?

How would you characterize your working relationship with your supervisor?

Cronbach alpha

Note: LMX- Leader Member Exchange; Source: Data collected by Scholars for the study

Table 2: Factor Extraction Results.

S.No.	Variable.	Items.	Factor Loadings.	% Age of Variance.
1.	TS	Organization have up to date Equipments	0.65 0.61 0.65 *0.67*	0.27 0.23 0.25
		Physical facilities are virtually appealing
		Employees are well dressed and appear neat
		Physical environment of the organization is clean *Cronbach alpha*

Note: TS- Tangibles; Source: Data collected by Scholars for the study.

Table 3: Factor Extraction Results.

S.No.	Variable.	Items.	Factor Loadings.	% Age of Variance.
1.	RL	When employees promise to do some thing, by a certain time, they do it	0.66 0.62 0.65 0.54 0.46 *0.68*	0.26 0.24 0.25 0.23 0.17
		When customers have problem, they show sincere interest in solving that
		Organization perform the service right the first time
		They provide service at the promised time They keep their records accurate *Cronbach alpha*

Note: RL: Reliability; Source: Data collected by Scholars for the study.

Table 4: Factor Extraction Results.

S.No.	Variable.	Items.	Factor Loadings.	% Age of Variance.
1.	RN	Employees make information easily obtainable by consumers	0.63 0.61 0.64 0.57 *0.66*	0.21 0.23 0.24 0.23
		Employees give prompt service to consumers
		Employees are always willing to help consumers
		Employees are never too busy to respond to consumer requests *Cronbach alpha*

Note: RN: Responsiveness; Source: Data collected by Scholars for the study.

Table 5: Factor Extraction Results.

S.No.	Variable.	Items.	Factor Loadings.	% Age of Variance.
1.	AS	The behavior of employees instill confidence in consumers	0.61 0.63 0.68 0.59 *0.65*	0.18 0.23 0.29 0.22
		Consumers feel safe in their transactions with employees
		Employees are polite to consumers
		Employees have knowledge to answer consumer questions. *Cronbach alpha*

Note: AS-Assurance; Source: Data collected by Scholars for the study.

Table 6: Factor Extraction Results.

S.No.	Variable.	Items.	Factor Loadings.	% Age of Variance.
1.	EM	Organization gives consumer individual attention	0.61 0.63 0.68 0.59 0.61 *0.65*	0.18 0.23 0.29 0.22 .18
		Operating hours are convenient to consumers
		Employees give personal service to consumers
		Organization have consumer interest at heart Employees understand the specific needs of consumers *Cronbach alpha*

Note: EM-Empathy; Source: Data collected by Scholars for the study.

Table 7:Descriptive Statistics (mean standard deviation and Pearson’s correlation coefficients and alpha values of the constructs).

S.No.	Variables.	Mean.	Standard Deviation.	1	2	3	4	5	6	Cronbach Alpha
1.	LMX.	3.10	0.71	1						0.69
2.	Tangibility	3.21	0.68	0.31	1					0.67
3.	Reliability	3.24	0.59	0.33	0.32	1				0.65
4	Responsiveness	3.27	0.61	0.39	0.31	0.29	1			0.66
5	Assurance	3.19	0.64	0.37	0.23	0.31	0.26	1		0.63
6	Empathy	3.18	0.57	0.31	0.25	0.24	0.28	0.33	1	0.64

*All Significant from < .01 to < .05; Source: Data collected by Scholars for the study.

Note: LMX- Leader Member Exchange.

Table 8: Regression Coefficients from Multiple Regressions between LMX and Tangibility.

S.No.	Independent Variable.	Dependent Variable.
S.No.	LMX (Subordinate Version Items).	Tangibility
1.	Do you know where you stand with your supervisor…do you usually know how satisfied your leader is with what you do?	0.28*.
2.	How well does your supervisor understand your job problems and needs?	0.29 *.
3.	How well does your supervisor recognize your potential?	0.36*.
4.	Regardless of how much formal authority he/she has built into his/her position, what are the chances that your supervisor would use his/her power to help you solve problems at work.	0.33*.
5.	Again, regardless of the amount of formal authority your supervisor has, what are the chances that he/she would “bail you out,” at his/her expense?	0.38*.
6.	I have enough confidence in my supervisor that I would defend and justify his/her decision if he/she were not present to do so?	0.36*.
7.	How would you characterize your working relationship with your supervisor?	0.37*.
	R²	*0.36*

Note: LMX- Leader Member Exchange...

*All Significant at < .05; Source: Data collected by Scholars for the study.

Table 12: Regression Coefficients from Multiple Regressions between LMX and Empathy.

S.NO.	Independent Variable.	Dependent Variable.
S.NO.	LMX.	Empathy.
1.	Do you know where you stand with your supervisor…do you usually know how satisfied your leader is with what you do?	0.34*.
2.	How well does your supervisor understand your job problems and needs?	0.35 *.
3.	How well does your supervisor recognize your potential?	0.33*.
4.	Regardless of how much formal authority he/she has built into his/her position, what are the chances that your supervisor would use his/her power to help you solve problems at work	0.34*.
5.	Again, regardless of the amount of formal authority your supervisor has, what are the chances that he/she would “bail you out,” at his/her expense?	0.29*.
6.	I have enough confidence in my supervisor that I would defend and justify his/her decision if he/she were not present to do so?	0.33*.
7.	How would you characterize your working relationship with your supervisor?	0.32*.
	R²	0.34

Note: LMX- Leader Member Exchange.

*All Significant at < .05; Source: Data collected by Scholars for the study.

LMX can be enhanced by increasing the frequency of supervisory support communications like recognition, need analysis, problem solving etc to boast self-esteem and trigger favourable work attitudes among subordinates. Feedback can improve existing high quality relationships, While, minimizing low quality relationships at the same time. Leader member personality fit must be ensured while allocating or creating leader member teams. Empowerment of subordinates like sharing information, resources, responsibility etc, could improve LMX quality. Support from management, supervisors and co-workers, increases engagement of employees. Factors like reasonable working hours, flexible working schedule, sufficient rest time, moderate supervision, etc at work, enhances engagement of employees. Service organizations should ensure that they are equipped with highly dynamic, skilled, cordial and adequate human resource. Advanced technology should be set in place for employees to perform real time transactions for their time conscious customers. Employees must be taught technical as well as soft skills, as part of their regular trainings programme at least once a year. Flexibility in place as well as time of service delivery must be taken care of, to ensure convenience, access, availability, customer acceptance and satisfaction.

LIMITATIONS AND FUTURE RESEARCH:

The present study, represent participation of organizations on regional basis. Participation from national or international participation organizations can bring different insights in to the study. Organizations that participated were from insurance and banking sectors only. Organizations from other sectors like health, education, tourism, etc., can enhance the generalizability of results and implications. The present study explored LM X and service quality only. The relationship of these construct along with demographic factors like ethnicity, gender, age, would have allowed exploring different inferences and patterns. That would have been a different contribution towards LMX theory.

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Received on 28.01.2016 Modified on 06.02.2016

Int. J. Rev. and Res. Social Sci. 4(1): Jan. - Mar., 2016; Page 05-14

DOI: 10.5958/2454-2687.2016.00002.2

S.NO.	Independent Variable.	Dependent Variable. Responsiveness.
S.NO.	LMX.	Dependent Variable. Responsiveness.
1.	Do you know where you stand with your supervisor…do you usually know how satisfied your leader is with what you do?	0.37*.
2.	How well does your supervisor understand your job problems and needs?	0.35 *.
3.	How well does your supervisor recognize your potential?	0.35*.
4.	Regardless of how much formal authority he/she has built into his/her position, what are the chances that your supervisor would use his/her power to help you solve problems at work	0.39*.
5.	Again, regardless of the amount of formal authority your supervisor has, what are the chances that he/she would “bail you out,” at his/her expense?	0.34*.
6.	I have enough confidence in my supervisor that I would defend and justify his/her decision if he/she were not present to do so?	0.29*.
7.	How would you characterize your working relationship with your supervisor?	0.33*.
	R²	0.37