Effect of Leader-Member Exchange Relationship on Occupational Stress in the Energy Sector of Pakistan: A Mediating Role of Job Involvement

Abstract

The relationship between leader-member exchange (LMX) and occupational stress has gained substantial attention in recent years. The objective of this study is two folds: a) to analyze the impact of LMX on occupational stress; and b) to investigate whether job involvement mediates the positive relationship between LMX and occupational stress. A useable sample of 342 responses is drawn from a leading multinational engineering company of the energy sector in Pakistan. LMX is measured by four dimensions i.e. affect, loyalty, perceived contribution and professional respect, whereas three dimensions are used to measure occupational stress i.e. personal resources, personal strain and occupational role. A measurement model is constructed with high validity and reliability. Following a segmentation approach, four hypotheses are tested using latent variable scores (LVS) through a variance-based partial least square structural equation modelling (PLS-SEM) technique. The findings suggest that a) LMX shows a significant but on contrary to our expectation, a positive effect on occupational stress; b) LMX has no statistically significant effect on job involvement; c) job involvement has significant positive effect on occupational stress; however, d) job involvement does not mediate the relationship between LMX and occupational stress. The significant original contribution of this study in the leadership and management literature is that a high-quality LMX relationship can substantially increase the level of occupational stress. This research finding is emerged from the employees working in a large multinational engineering company of a developing country. Findings and managerial implications are discussed.