Licensed to Misbehave? Leader Decisiveness Given Follower's Competence and Misconduct

Abstract

Based on the idiosyncrasy credit theory, this article empirically tests the idea that leaders are likely to be more (less) lenient toward more (less) competent subordinates for misconduct—employee behavior that should be punished. With a field survey of 103 supervisors and their 582 subordinates (study 1) and an experiment that manipulates subordinates’ competence and leader dependence on subordinates (study 2), the posited effect is found to be indirect through leader–member exchange (LMX) and stronger when the leader dependence on the follower was higher. The findings suggest that given the exact same misconduct, leaders are more likely to mete differential treatment based on perceived subordinates’ competency, and LMX quality works as the underlying mechanism for these effects. Thus, the present work highlights the dark side of LMX by demonstrating when and why leaders are likely to be compromised when it comes to disciplinary decisions and offers practical implications for organizations on how to handle employee misconduct. Theoretically, our work suggests that the quality of relation between credit holders and those responsible for overseeing norms functions as the underlying mechanism for the idiosyncrasy credit theory.

Keywords

employee misconduct LMX employee tolerance employee competence

Scholars and practitioners have focused considerable attention on how the differential relationship that exists between leaders and their followers influence leadership decisions such as resource allocation and follower performance (Chen et al., 2018; Greer et al., 2018; Harrison & Klein, 2007; Lee & Chae, 2017; Mathieu et al., 2019; Mathieu & Gilson, 2012), yet very little is known whether these differences extend to disciplinary decisions. For example, consider an employee who is late for or failed to attend an important meeting, left work earlier than required, or failed to accomplish an important assignment. Would the disciplinary decision be different if one is perceived to be more (vs. less) competent at their job? The leadership literature seems silent on whether the differential relationships that leaders develop with their followers also influence disciplinary decisions as does other leadership decisions such as resource allocation.

This research question is particularly important because procedural justice within the workplace offers employees important cues regarding whether their leaders are consistent when it comes to decisions about procedures, thus influencing employee attitudes and behaviors (Jung et al., 2022; Tse et al., 2018). Indeed, the fairness heuristic theory posits that employees care about organizational fairness because it helps them understand their work environment and manage uncertainty when assessing their leaders’ trustworthiness (Lind, 2001). Such decisions have important consequences for the working environment of employees, many of which inform whether individuals would work in or leave an organization (Cropanzano & Schminke, 2001). Consequently, employees are very curious when it comes to organizational decisions, and thus, the first question they could ask following a decision such as that concerning discipline following misconduct is “Was that fair?” (Colquitt, 2001, p. 368).

Moreover, because leaders are in a unique position to mete out justice, how they make decisions influences how followers characterize their leadership. For instance, ethical leadership has been linked to principled decision-making (Avolio et al., 2004), the use of rewards and punishment to hold followers accountable for their behaviors, and setting ethical standards for followers (Treviño et al., 2003). Thus, a possibility that leaders would ‘let slide’ the misconduct of some followers should affect how employees judge these leaders, attitudes that have adverse effects on the working environment, and consequently on performance (Colquitt & Rodell, 2011; Cropanzano & Schminke, 2001).

In the present study, the idiosyncrasy credit theory (Hollander, 1958) is used to examine the antecedents of leader tolerance toward employee misconduct—behaviors that are against the norm and should be punished by those in authority. The focus is on leaders’ tolerance for employee misconduct as the key dependent variable because employees’ attitudes toward their leaders depend on how the leaders are perceived to handle organizational decisions (Colquitt & Rodell, 2011; Treviño et al., 2003) which may encompass disciplinary actions for misconduct. The conceptual model is presented in Figure 1.

Figure 1.

Path model for the hypothesized relationships among study variables.

By examining how follower competence may influence a leader's disciplinary decision following follower misconduct, we make both theoretical and practical contributions. First, we contribute to idiosyncrasy credit theory—and enhance the understanding of when those charged with the responsibility of overseeing norms may let credit holders behave idiosyncratically—by showing that decision-makers may be influenced by the quality of their relation with the wrongdoers (e.g., the LMX between leaders and their followers). Second, by testing employees’ competence as an antecedent of the leader's tolerance toward employee misconduct, this work highlights the potentially dark side of employee competence. Whereas competence is a desirable employee attribute (Graen & Schiemann, 2013), this work raises a red flag for organizations and managers. Third, by testing the indirect effects (IEs), our research contributes to the developing literature on the potential negative side of high LMX (e.g., Korman et al., 2023; Shapiro et al., 2011). This work challenges the dominant consensus in the literature that high LMX has (only) positive effects (Auh et al., 2019; Jung et al., 2022; Selvarajan et al., 2018; Tse et al., 2018). Fourth, a possible boundary condition for tolerance for employee misconduct—dependence on the employee is examined. Importantly, by testing the conditional IEs of competence on tolerance via LMX quality, this work teases out how leadership decisiveness may vary across individuals as concerns disciplinary decisions.

Literature Review and Hypotheses Development

Are leaders likely to have differential treatment for employees considering disciplinary actions? The idiosyncrasy credit theory (Hollander, 1958) gives guidance in answering this question. The theory posits that when individuals have more as opposed to fewer positive attributes, they are likely to be given latitude to behave idiosyncratically—deviate from norms. The reason behind the latitude is that individuals accumulate idiosyncrasy credits, which Hollander likened to a credit balance and described to be a positive summation of one's desirable attributes. Thus, with these credits, an individual's wrongdoings could be overlooked by those charged with the responsibility of overseeing such norms. Idiosyncrasy credits have been described as “the accumulation of positive impressions of an individual acquired through achievements or past behavior, which are associated with greater ability to deviate from expectations without sanctions” (Phillips et al., 2009, p. 722). A work-related attribute likely to be a source of idiosyncrasy credits for employees is their job competence. While employee competence may take different forms such as alertness to new opportunities, ability to mobilize the capacity of others, and ability to come up with new ideas (e.g., Vila et al., 2014), in the current work the focus is on the general ability—“that group of skills, competencies, and characteristics that allow a party to have influence within some domain” (Mayer & Davis, 1999, p. 124)—of employees to deliver performance at their assigned duties as perceived by their leaders.

Generally, leaders differentiate among their followers (Yu et al., 2018) and LMX is the quality of the relationship that leaders develop with their followers (Graen & Uhl-Bien, 1995; Uhl-Bien, 2006). Because leaders have limited time and resources (Scott et al., 2009; Scott et al., 2014), high LMX subordinates receive greater socioemotional and tangible resources from their leaders compared to low LMX subordinates (Erdogan & Bauer, 2015; Graen & Uhl-Bien, 1995). LMX has significant task implications for followers, including work autonomy, access to information, leader attention, differences in status, and opportunities for career growth (Liden et al., 2006). The development of such a positive relationship depends on the perception of what the other person contributes to the relationship (e.g., Liden et al., 1993; Maslyn & Uhl-Bien, 2001). Research shows that when leaders perceive their subordinates to be competent, they tend to develop relationships characterized by mutual trust, respect, social exchange, and liking with these employees and offer more challenging tasks and opportunities for career growth (Graen & Schiemann, 2013; Martin et al., 2016). Competence is a desirable feature of subordinates because it is linked to higher performance (Graen & Schiemann, 2013; Martin et al., 2016). Thus, it is expected that employee competence as perceived by leaders will predict high LMX quality with their followers.

Hypothesis 1. Perceived subordinate competence will be positively associated with LMX quality.

Employees who engage in misconduct or behaviors that generally deviate from the organizational norms are usually liable for some form of disciplinary action (Joshi et al., 2007; Lipman-Blumen, 2005). Such behaviors could include, workplace deviance (Robinson & Bennett, 1995; Tepper et al., 2008; Tepper et al., 2009), antisocial behaviors (O’Leary-Kelly et al., 2000; Robinson & Greenberg, 1998; Shapiro et al., 2008), corruption (Lipman-Blumen, 2005; Mayer et al., 2009), and workplace offenses such as being disrespectful of colleagues (Aquino et al., 2001, 2006). Theoretical and empirical work abound on this topic, considering employees in nonsupervisory roles or subordinates (Arvey et al., 1984; Arvey & Ivancevich, 1980; Ball et al., 1994; Litzky et al., 2006; Tepper et al., 2008, 2009; Treviño & Ball, 1992) and leaders as well (Shapiro et al., 2011). While employee misconduct may take different forms, the present work is not focused on a particular form of misconduct. The question under study here is whether given employee misconduct—behaviors that are against the norm and should be punished by those in authority—those in leadership roles who are supposed to render punishment would act differently when the subordinates are perceived to be more (vs. less) competent. Thus, for any given misconduct (e.g., lateness, stealing, socially undermining a coworker, and insulting), the focus is on whether leaders would make differential disciplinary decisions.

For the dyadic relationship between leaders and their subordinates, previous work (e.g., Shapiro et al., 2011) has used LMX quality that directly epitomizes trust, respect, and loyalty between the dyads (Graen & Uhl-Bien, 1995), as an indicator of idiosyncrasy credits. LMX quality reflects the work-related feelings and cognition that leaders have for their followers, with employee competence being a critical antecedent thereof (Giessner et al., 2015). Consequently, based on the idiosyncrasy credit theory (Hollander, 1958), high LMX quality indicates the accumulated credits for the target employees that make leaders overlook the wrongs of such followers. Thus, leader-rated LMX is positioned as the underlying mechanism that makes leaders lenient toward competent employees when they (employees) transgress. Thus, the following posit:

Hypothesis 2. LMX quality will mediate the positive effects of perceived subordinate competence on leader tolerance toward the subordinate's misconduct.

This work has argued that LMX quality is important in explaining why leaders are likely to be lenient on employees perceived to be more competent when these employees make mistakes. Consequently, this implies that LMX quality will be positively associated with leader tolerance toward employee misconduct. However, the likelihood of leaders overlooking the misconduct of followers with higher LMX quality should be higher when the leader's dependence on a subordinate is higher. Leader's dependence on their subordinates occurs “when their desired outcomes are contingent on the actions of the subordinates” (Zhang et al., 2018, p. 669). Whereas leadership research has largely examined subordinate dependence on leaders (e.g., Kark et al., 2003), early research pointed out that leaders, too, can depend on their subordinates especially when the subordinates are highly skilled (Pfeffer, 1981; Tjosvold, 1985). Research has shown that leaders can be highly dependent on subordinates’ performance, loyalty, and knowledge (Chen & Hou, 2016; Shi et al., 2013; Tu & Lu, 2013; Wang & Sung, 2016). When a leader is highly dependent on a subordinate, the leader will have less power over such a subordinate (Zhang et al., 2018). For example, when the leader has a goal (e.g., performance) that he/she can only attain with the help of the subordinate, the leader becomes subject to the subordinate, which may hinder the leader from making a move against the subordinate such as punishment that may jeopardize the goal. It follows that the suggested positive relationship between LMX quality and leader tolerance toward employee misconduct could be stronger when a leader is highly dependent on the transgressing employee than when the leader is not dependent on the subordinate. Taken together, these ideas further suggest the IEs of perceived subordinate competence on leader tolerance toward the subordinate for misconduct will be a function of both the LMX quality and the supervisor's dependence on the subordinate. Specifically, the mediation effects of LMX quality are likely to be a function of the supervisor's dependence on subordinates. We, thus, posit:

Hypothesis 3. The positive relationship between leader-rated LMX and leader tolerance toward employee misconduct will be stronger when the leader's dependence on the subordinate is higher.

Hypothesis 4. Supervisor dependence on subordinates will strengthen the IEs of perceived subordinates’ competence on supervisor tolerances toward the subordinates’ misconduct via LMX quality.

Method

Sample

Participants in the present study were drawn from a population of 1218 employees (of whom 126 had supervisory roles) of a tea firm in Kenya. The duty of employees with no supervisory roles is manual and includes plucking tea, the general maintenance of the tea plantations (e.g., weeding, application of fertilizers, and trimming), and the packaging and storage of the plucked tea. The employees are paid based on the accumulated work accomplished each month. For instance, the daily quantity of plucked tea for each employee is recorded, a figure that constitutes the monthly wage. Consequently, the higher the accumulated figure, the higher the pay. It is, therefore, misconduct for employees to engage in behaviors such as plucking bad tea to inflate the quantity, plucking tea without plant-leveling, and skipping some plants while application of fertilizers to increase the coverage. Employees with a supervisory role majorly ensure that the subordinates adhere to the guidelines of tea plucking and maintenance, such that those found transgressing are faced with heavy penalties like a dismissal. Participation being voluntary and with assurances that the study is solely for academic purposes and that no individual data will be shared anywhere, 103 (45 female) employees with leadership roles (i.e., supervisors) voluntarily agreed to participate, yielding an 81.7% response rate. Each supervisor had to complete surveys for each of the subordinates selected for this study (see the procedure for details). The surveys were completed in two phases, a month apart. To encourage participation, the employees were informed that those who would complete both time 1 and 2 surveys would each receive Kshs. 100 as compensation.

Procedure

With the approval of the firm's management, the researcher approached supervisors to participate in the study. After a brief introduction by the research team on the goal of the study, the employees were invited to pick a survey on gender, position, and surface acting self-efficacy and informed that those willing to volunteer for the study to complete and return the survey to the research team. Of the 126 supervisors who attended the briefing session, 103 returned complete surveys, indicating their willingness to participate. Because participants with nonsupervisory roles were needed that the supervisors would rate, the research team approached the human resource personnel of the firm to provide the list of subordinates for each participating supervisor. Since supervisors were of different levels (senior-level, middle-level, and lower-level managers), with the guidance of the human resource personnel, only subordinates with no supervisory roles were considered. After sorting the names, each participating supervisor had between four and 10 subordinates¹ with no supervisor roles. The research team then provided the supervisors with a survey on the perceived competence of the subordinate, the LMX quality with each subordinate, and the dependence on the subordinate. These leaders were then thanked and informed of another survey to be scheduled at a later date, and were not made aware of the content of the second survey. This approach was used to minimize response bias.

Based on the sorted list of subordinates (totaling 618), the research team held a brief session with these employees with no supervisory roles to provide them with the research agenda. Importantly, these employees were informed that although they were selected by the research team, participation was voluntary, and were assured of the confidentiality of individual responses such that no individual data would be shared with anyone. Participants were then handed a survey on gender, age, supervisor tenure, social desirability, and power distance. These employees were informed that those willing to participate should complete the survey and hand it to the research team. In all, 582 complete surveys were collected.

Four weeks after the first phase of the survey, the study participants² were approached for the final survey. The data collection gap was used to minimize common method bias (Podsakoff et al., 2012) and to attenuate the issues of causality. To capture the actual supervisor tolerance of subordinate misconduct, each subordinate's supervisor was first asked, “During your supervision, are you aware of any misconduct committed by this employee? (Yes/No).” While the idea was that leaders would only then rate subordinates they answer in the affirmative, they answered in the affirmative for all of their followers. Thus, each leader was surveyed on their past tolerance behavior toward their followers. It is important to note that supervisors were not made aware of the content of the follower survey, and vice versa.

Measures

English is the official language of communication at the target firm for employees with supervisory roles. Thus, the survey for leaders was administered in English. Scholars have used English surveys in similar work contexts (e.g., Sungu et al., 2019). However, employees with no supervisory roles need not understand English, but Swahili, which is the second national language in the country. Thus, two bilingual experts were used to translate the subordinate survey into Swahili. Unless stated otherwise, all predictor and dependent variables were measured on a five-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree).

Perceived Subordinate Competence

Supervisors assessed the competence of their subordinates using the six-item ability-related subscale of trust measure developed by Mayer and Davis (1999). The measure was adapted to reflect the supervisors’ perceptions of their subordinates. Thus, the “leader” in each statement was replaced by “employee.” For instance, the item “This leader is well qualified” was adapted to “This employee is well qualified.” The supervisors, then, indicated how strongly they agreed with each statement.

Leader–Member Exchange

The seven-item measure of the quality of the relationship between a leader and their follower (LMX-7 scale) was used (Maslyn & Uhl-Bien, 2001). Sample items include “How well does this subordinate understand your job problems and needs? (1 = not a bit, 5 = a great deal)” “Regardless of the amount of formal authority your employee has, what are the chances that he/she would ‘bail you out’ at his/her expense? (1 = none, 5 = very high)” and “What are the chances this subordinate would use his/her power to help you solve problems in your work? (1 = none, 5 = very high).”

Leader Dependence on Subordinates

Similar to other scholars (e.g., Shi et al., 2013; Zhang et al., 2018), this work used the four-item measure developed by Deshpande et al. (2008) and Bartol and Martin (1989). The items are “I have high expectations of this subordinate” “It would be very difficult for me to find a replacement for this subordinate if she/he were to leave” “Overall, this subordinate has good expertise or overall qualities” and “When I complete tasks, I am dependent on the support of this subordinate.” Supervisors indicated how strongly they agreed with each statement.

Tolerance Toward Employee Misconduct

Leaders assessed previous tolerance towards subordinates’ misconduct by completing the adapted three-item measure of self-report forgiveness (Santelli et al., 2009). The items are, “I have previously tolerated this employee for misconduct” (1 = not at all true, 5 =very true), “I have been motivated to tolerate this employee's misconduct” (1 = not at all motivated, 5 = very motivated), and “I often tolerate this employee” (1 = not at all, 5 = very much so).

Control Variables

To minimize the likelihood that tolerance toward transgressing employees could be explained by variables extraneous to the current model, the effects of other variables that are likely to have an influence were assessed and statistically controlled for. Prior research has long shown that employee characteristics (e.g., gender, age, and power-distance congruence) influence leaders’ decisiveness (e.g., Cole et al., 2013; Klenke, 2003; Rowold, 2011). Thus in the current study, we considered supervisor and subordinate gender (coded as 1 for male and 2 for female), subordinate's age (in years), leader's position in the organization (coded as 1 for lower-level management, 2 for middle-level management, and 3 for senior-level management), subordinate's power distance (using the six-item measure developed by Dorfman & Howell, 1988), and subordinate's social desirability (using the shortened version of the Marlow–Crowne Social Desirability Scale used by Strahan & Gerbasi, 1972). However, the analysis with the control variables had similar results as those without the control variables.³ In the interest of power and parsimony, these variables are excluded from the study findings, as advised by Becker (2005).

Marker variable

Surface-acting self-efficacy was examined and used as a marker variable. To assess participants’ surface-acting self-efficacy, Pugh et al.'s (2011) measure was used. Based on the premise “When doing my job….,” supervisors provided their response to the three items, “I can actually fake a good mood when interacting with others,” “I can pretend to have the emotions I need to display,” and “I can put on a ‘show’ or ‘performance’ when interacting with others.” Respondents rated their degree of confidence on a scale that ranged from 1 (Not at all confident) to 5 (Very confident).

Test of Mean Differences in Study Outcomes

Of the 618 employees with no supervisory roles that attended the brief and supervisors had provided assessments for perceived subordinate competence and LMX, 36 opted not to participate in the study since participation was voluntary. Thus, it was important to investigate whether those who opted out were significantly different from those who participated. The analyses of variance (ANOVAs) were conducted and as the results in Table 1 reveal, the main effects were not significant across the sample groups.

Table 1.

ANOVA Results for Testing the Mean Difference Across Employee Groups.

Variables		Mean	SD	df	F	Sig.
Comparison between participants and nonparticipants
Leader gender	A	1.43	0.496	1, 616	0.018	0.893
	B	1.44	0.504	1, 616	0.018	0.893
Employee gender	A	1.50	0.500	1, 616	0.864	0.353
	B	1.58	0.500	1, 616	0.864	0.353
Perceived subordinate competence	A	3.35	1.096	1, 616	0.546	0.460
	B	3.21	1.201	1, 616	0.546	0.460
Leader-rated LMX	A	2.80	0.779	1, 616	0.381	0.537
	B	2.72	0.880	1, 616	0.381	0.537

Note: N (study participants [A] = 582; opted out [B]= 36). Gender (1 = male; 2 = female); ANOVA is the analysis of variance; SD is standard deviation.

Discriminant Validity

The measure of subordinate competence could be said to relate closely with that of supervisor dependence on subordinates because employee competence is one significant contributor to the dependence. Besides, since the majority of the variables were assessed by the supervisor at the same time, there was a need to demonstrate scale dimensionality and discriminant validity. To this end, AMOS 21 was used to conduct a series of confirmatory factor analyses (CFA) testing possible combinations of the variables (Jöreskog, 1969). In total, three models were tested as shown in Table 2. Among the models, the baseline (model 1) where factors of each variable were allowed to (only) load on individual variables had a better χ² fit, demonstrating discriminant validity among its factors (MacCallum et al., 1996).

Table 2.

Confirmatory Factor Analysis of Study Factors.

Model	df	x²	GFI	AGFI	TLI	CFI	RMSEA	RMSEA confidence interval
Study 1
1. Hypothesized four-factor model	164	383.324	0.939	0.922	0.954	0.960	0.048	0.042, 0.054
2. Combining LMX with supervisor dependence	167	1246.516	0.745	0.679	0.776	0.803	0.105	0.100, 0.111
3. Combining competence with supervisor dependence	167	1491.416	0.709	0.634	0.725	0.759	0.117	0.111, 0.122
Study 2
1. Hypothesized two-factor model	13	22.661	0.969	0.934	0.976	0.985	0.060	0.008, 0.100
2. Combining LMX with supervisor dependence	14	190.852	0.765	0.531	0.600	0.733	0.248	0.217, 0.279

Note: N (study 1: 582; study 2: 207); LMX = leader-rated LMX quality; supervisor dependence = supervisors’ dependence on subordinates; Competence = supervisor's perception of subordinate's competence.

Common Method Variance Test

The cross-sectional methodology raises concerns about common method variance (CMV) (Podsakoff et al., 2012). The variables were single-sourced and a majority was collected at the same time. Thus, the presence of bias was tested using the CMV CFA marker variable method (Shuck et al., 2017; Williams et al., 2010). Following the Simmering et al. (2015) recommendations that a marker variable should be unrelated to the main variables, a variable from the emotional labor literature—surface-acting self-efficacy was borrowed. With the marker variable, six models were separately tested for the supervisors’ data. The test results are shown in Table 3 and indicate that Method-C did not fit statistically better compared to the baseline model, signifying that there was no evidence of shared CMV between the indicators of the substantive variables and the latent marker variable; whereas Method-U did fit statistically better compared to Method-C, importantly, Method-R was not statistically different compared to Method-C or Method-U, a result that signifies CMV did not skew the relationships among the substantive variables. Thus, these results provide confidence that CMV was not an issue of concern (Richardson et al., 2009).

Table 3.

Model Fit Indices and Model Comparisons for CFA Models With Marker Variable.

Model	χ² (df)	CFI	RMSEA (90%CI)	LR of Δ χ²	Model comparison
CFA with marker variable	437.87 (220)	0.965	0.041 (0.036, 0.047)
Baseline	451.13 (230)	0.965	0.041 (0.035, 0.046)
Method-C	450.21 (229)	0.965	0.041 (0.035, 0.046)	0.92, df = 1, p = .338	vs. Baseline
Method-U	413.77 (210)	0.967	0.041 (0.035, 0.047)	36.44, df = 19, p = .009	vs. Method-C
Method-R (based on Method-C)	450.22 (235)	0.966	0.040 (0.034, 0.045)	0.01, df = 6, p = 1	vs. Method-C
Method-R (based on Method-U)	413.91 (216)	0.968	0.040 (0.034, 0.045)	0.14, df = 6, p = 1	vs. Method-U

Note: CFA = confirmatory factor analysis; CFI = comparative fit index; RMSEA = root mean square error of approximation; LR = likelihood ratio test; C = constrained; U = Unconstrained; R = restricted.

Results

Descriptive Statistics

Table 4 displays the means, standard deviations, and correlations among the study variables. The associations are consistent with theory and literature. For instance, employee competence is positively correlated with LMX quality (r = .500, p < .01) and supervisor dependence on subordinates (r = .28, p < .01).

Table 4.

Descriptive Statistics and Correlations Among Study Variables.

Variable	Mean	SD	1	2	3	4	5	6	7	9	10	11	12
1. Employee gender	1.50	0.50
2. Employee age	33.27	9.37	−.11**
3. Supervisor tenure	1.67	0.84	.10*	.21**
4. Social desirability	2.99	0.94	.03	−.09*	0.10*	.86
5. Power distance	1.46	0.62	−.01	−.10*	−.06	.01	.79
6. Leader gender	1.43	0.50	.00	−.01	.04	−.02	.02
7. Leader position	1.60	0.66	−.04	−.00	.00	−.00	−.00	−.06
9. Perceived subordinate competence	3.35	1.10	−.07	−.01	−.03	−.01	−.07	−.04	.02	.84	.70**	.00	.37**
10. Leader-rated LMX quality	2.80	0.78	−.02	−.10*	−.07	−.04	−.01	−.08*	.10*	.50**	.82	.27**	.46**
11. Dependence on subordinate	2.45	1.13	.00	−.09*	−.01	.02	−.09*	−.12**	.35**	.28**	.42**	.91	.60**
12. Tolerance for misconduct	2.07	1.09	−.04	−.06	−.08*	−.01	−.03	−.06	.18**	.32**	.51**	.57**	.86

Note: Below the diagonal are correlations for study 1; above the diagonal are correlations for study 2. N (study 1: 582; study 2: 207). SD = standard deviation; gender (male = 1; female = 2); tenure (1 = less than 1 year; 2 = at least a year but less than 2 years; 3 = 2 years and above). The Cronbach alphas for study 1 are indicated along the diagonal in bold. Perceived subordinate competence and dependence on subordinate for study 2 are manipulated (low = 0; high = 1).

*p < .05.

**p < .01.

Analysis

The data was such that for each of their subordinates, the supervisors assessed perceived competence, LMX quality, dependence on subordinates, and tolerance toward subordinate misconduct. Since supervisors reported on each subordinate separately, the data is not multi-level where all level 1 units share the level 2 characteristic. However, null models were estimated to examine variance statistics at the within- and between-person levels of analyses and found that, indeed, a substantial amount of variance in the variables was within-person: 81.35% of the variance in perceived subordinate competence; 85.74% of the variance in LMX quality; 75.3% of the variance in dependence on subordinates; and 59.73% of the variance in subordinate tolerance. However, nesting cannot be ruled out, and thus, for data analysis, Mplus Version 8 (Muth´en & Muth´en, 2017) with robust maximum-likelihood estimation was used (Enders, 2001) because it allows for testing complex data (TYPE = COMPLEX) to control for nesting/rater effects and for the hypotheses to be estimated simultaneously.

Hypothesis Testing

In Hypothesis 1, the prediction was that subordinate competence would have a positive association with LMX quality. The regression results in Table 5 show that the direct association of perceived subordinate competence with LMX quality was, indeed, positive and significant (b = 0.355, SE = 0.037, p < .001). Hypothesis 1 was supported.

Table 5.

Mplus Regression Results for the Path Model.

	Leader-rated LMX Quality			Tolerances for Employee Misconduct
Predictor	b	SE	t	b	SE	t
Study 1 (field survey)
Perceived subordinate competence	0.355	0.037	9.606***	0.041	0.043	0.943
LMX quality				0.194	0.094	2.073*
Dependence on subordinate				0.157	0.087	1.806⁺
Interactions
LMX×dependence				0.090	0.028	3.189**
Residual variance	0.750***	0.619***
R ²	0.250***	0.381***
Study 2 (experiment)
Perceived subordinate competence	1.659	0.122	13.601***	0.513	0.140	3.663***
LMX quality				−0.057	0.074	−0.771
Dependence on subordinate				0.515	0.184	2.803**
Interactions
LMX×dependence				0.180	0.061	2.944**
Residual variance	0.509***			0.465***
R ²	0.491***			0.535***

Notes: N (study 1 = 582; study 2 = 207).

*p < .05.

**p < .01.

***p < .001.

In Hypothesis 2, LMX quality was predicted to mediate the positive effects of perceived subordinate competence on supervisor tolerance toward subordinate misconduct. As already shown in Hypothesis 1, subordinate competence had a positive and significant association with LMX quality. The regression results in Table 5 also show that LMX quality had a positive and significant relationship with supervisor tolerances toward subordinate misconduct (b = 0.194, SE = 0.094, p = .038). However, controlling for the mediator, the direct relationship of subordinate competence with supervisor tolerances toward subordinate misconduct was not significant (b = 0.041, SE = 0.043, p = .346). Table 6 results for indirect and total effects show that, indeed, the IEs of perceived subordinate competence on supervisor tolerances toward subordinate misconduct via LMX quality were positive and significant (IE = 0.069, 95% CI [0.005, 0.133]) suggesting full mediation effects. Hypothesis 2 was supported.

Table 6.

Mplus Regression Results of Indirect, Conditional Indirect, and Total Effects of Subordinate Competence on Leader Tolerances for Misconduct.

			Study 1 (field survey)			Study 2 (experiment)
Predictor	Mediator	Moderator	Leader tolerances for subordinate misconduct			Leader tolerances for subordinate misconduct
		Leader dependence on subordinate	Effect	LLCI	ULCI	Effect	LLCI	ULCI
Indirect effect
Perceived subordinate competence	LMX Quality		0.069*	0.005	0.133	−0.095	−0.335	0.145
Total effect
Perceived subordinate competence	LMX Quality		0.110*	0.015	0.204	0.418***	0.229	0.586
Conditional indirect effect
Perceived subordinate competence	LMX Quality	High	0.184***	0.117	0.250	0.206*	0.035	0.419
Perceived subordinate competence		Mean	0.147***	0.093	0.201	0.057	−0.121	0.257
		Low	0.111***	0.059	0.163	−0.092	−0.329	0.146
Conditional total effect
Perceived subordinate competence	LMX Quality	High	0.224***	0.124	0.324	0.719***	0.523	0.898
Perceived subordinate competence		Mean	0.188***	0.097	0.279	0.570***	0.419	0.718
		Low	0.152**	0.064	0.240	0.421***	0.234	0.586

Note: N (study 1 = 582; study 2 = 207). LMX—leader-member exchange. LLCI = lower level of the 95% confidence interval; ULCI = upper level of the 95% confidence interval.

*p < .05.

**p < .01.

*** p < .001.

In Hypothesis 3, the prediction was that the positive relationship between LMX quality and supervisor tolerances toward subordinate misconduct would be stronger when supervisor dependence on the subordinate is higher. The regression results in Table 5 show that the direct relationship of LMX quality with supervisor tolerances toward subordinate misconduct is positive and significant (b = 0.194, SE = 0.094, p = .038). Importantly, the results also show that the interaction between LMX quality and supervisor dependence on the subordinate was a significant predictor of supervisor tolerance toward the subordinate misconduct (b = 0.090, SE = 0.028, p = .001). Plots of simple slopes show the positive relationship between LMX and tolerances toward subordinate misconduct was stronger when dependence on the subordinate was higher (b = 0.517, SE = 0.069, p < .001) compared to when it was lower (b = 0.313, SE = 0.070, p < .001), and the difference between these slopes was also significant (β_diff= 0.203, bias-corrected 95% CI [0.078, 0.329]) as depicted in Figure 2a. Hypothesis 3 was supported.

Figure 2.

Moderation effects of supervisor dependence on subordinates.

In Hypothesis 4, supervisor dependence on subordinates was posited to strengthen the IEs of subordinate competence on supervisor tolerances toward subordinate misconduct via LMX quality. Table 6 results show that, indeed, dependence on subordinates strengthened the IEs of subordinate competence on supervisor tolerances toward the subordinate misconduct: the IEs are stronger when supervisor dependence is higher (IE = 0.184, bias-corrected 95% CI [0.117, 0.250]) compared to when supervisor dependence is lower (IE = 0.111, bias-corrected 95% CI [0.059, 0.163]). Importantly for indirect associations (Muller et al., 2005), the difference in the IEs is significant (β_diff= 0.072, bias-corrected 95% CI = [0.021, 0.124], excluding zero). Hypothesis 4 was supported.

Study 1 Discussion

These results support the idea that employee competence predicts supervisors’ tendency to tolerate subordinates’ misconduct via perceptions of LMX quality, especially when supervisor dependence on the subordinate is higher. However, conclusions concerning the conceptual model are limited owing to the cross-sectional nature of the study. Besides a lack of internal validity, a reviewer pointed out that causality is a concern as it could easily be argued that leader assessment of follower ability could be predicted by LMX quality rather than vice versa. Thus, an experiment was conducted to address these issues.

Study 2 Method

Participants and Procedure

Participants were MBA part-time students in a University in Eastern China with supervisory roles at their workplace or with leadership experience. Participation being voluntary, 211 met the selection criteria and completed the surveys. However, 4 participants failed the attention check “please respond agree to this question” (Kundro et al., 2022; Meade & Craig, 2012) and thus, excluded. The final sample was 207 (M_age= 25.71 years; SD = 2.19) where 94 identified as male, 113 as female, and none identified with the other gender categories. Most participants were working (87.4%), a majority in full-time employment (70.5%), and while all had some supervisory experience, 68.1% were currently in leadership roles. Students received a credit for participation.

Participants were randomly assigned to a condition based on a 2 (high vs. low competence) × 2 (high vs. low dependence) factorial design. Following best practices (Aguinis & Bradley, 2014), realistic scenarios were designed for the experimental vignettes. Participants were informed that researchers were interested in leader–subordinate relationships, took the perspective of a company supervisor for a sales team, read the transcripts about a subordinate named Holm, and responded to surveys.

Manipulation of Subordinate's Competence

In the first part, participants read a brief about a subordinate: reflecting on your personal experience with subordinates, imagine that you are a supervisor at a sales and marketing company and according to your assessment, one of your subordinates called Holm (a) is well [less] qualified, (b) has [less] specialized capabilities that can increase performance, (c) has [less] knowledge about the work that needs to be done, (d) is known to be [less] successful at the things he/she tries to do, and (d) is [less] capable of performing his/her job [in brackets is for low competence condition]. Participants rated (1 = strongly disagree, 5 = strongly agree) the item, “This employee is very competent.” The manipulation was a success (M_high= 3.43, SD = 1.06; M_low= 2.1, SD = 0.82; F[1, 205] = 102.08, p < .001). Then, participants were asked to rate the relationship quality (LMX) they would expect to experience with this subordinate if they worked together at this fictitious workplace (a) How would you characterize your working relationship with Holm? (1 = extremely ineffective, 5 = extremely effective), (b) I am very confident that I would defend and justify Holm's decisions if he/she were not present to do so (1 = strongly disagree, 5 = strongly agree), (c) Chances are that I would “bail out” Holm at my expense (1 = none, 5 = very high), and (d) Chances are that I would use my power to help Holm solve work-related problems (1 = none, 5 = very high). Only four of the seven items were used (Maslyn & Uhl-Bien, 2001) because the other items (e.g., Does your member usually know where you stand with them) were a bit difficult to adapt to the experimental study (α = 0.855).

Manipulation of Supervisor Dependence on Subordinate

In the second part, participants read: Now imagine that as a supervisor (a) you depend more (less) on the support of your subordinates to complete your tasks and (b) if your subordinates leave their jobs, it would be very (less) difficult to find people to replace them. Participants rated (1 = not at all true, 5 = very true) the item, “In this work context, subordinates’ performance contributes a great deal to the overall performance of the supervisor.” The manipulation was a success (M_high= 3.29, SD = 1.28; M_low= 2.1, SD = 1.29; F[1, 205] = 43.95, p < .001). Then participants read the final part: “Imagine you find out that during the month, Holm has on several occasions left work before the official time of 5 pm.” Then participants rated, “I am likely to tolerate this employee for the misconduct” (1 = not at all true, 5 = very true), “I would be motivated to tolerate this employee's behavior” (1 = not at all motivated; 5 = very motivated), and “Chances are that I would likely often forgive this employee for such misconduct” (1 = not at all, 5 = very much so; α = 0.869).

Analyses

A CFA on the seven self-reported items from the two measures—LMX quality and tolerance—confirmed that the two-factor model demonstrated a better fit to the data compared to a one-factor model (see Table 2). Then, a 2 × 2 ANOVA was conducted where the means were compared by conditions and finally, examined the indirect and conditional IEs of competence on tolerance through LMX quality given levels of dependence using a path analysis model in Mplus with 5,000 bootstrapped confidence intervals to test the effects of moderation and conditional mediation (Edwards & Lambert, 2007; Hayes, 2015).

Study 2 Results

The correlations among the study variables are shown in Table 4 (above the diagonal), the path analysis results are shown in Table 5, and the indirect and conditional IEs are shown in Table 6. As for the demographics, there was no significant difference between high and low competence conditions (gender, F[1, 205] = 1.45, p = .230; age, F[1, 205] = 0.40, p = .529) as well as between high and low dependence (gender, F[1, 205] = 0.13, p = .714; age, F[1, 205] = 0.07, p = .797). To test hypothesis 1, the effect of competence on LMX quality was examined. The predicted interaction was significant, F(1, 205) = 198.01, p < .001. To be more specific, high (vs. low) competence evoked higher LMX quality (M_high= 3.39, SD = 0.90; M_low= 1.74, SD = 0.80; t[1, 205] = 14.07, p < .001, η²= 0.491), supporting Hypothesis 1.

Hypothesis 2 focused on the mediating role of LMX quality. The results in Table 5 show that subordinate competence had a positive and significant effect on LMX quality (b = 1.659, SE = 0.122, p < .001) and LMX quality was not a direct predictor of supervisor tolerance (b = −0.057, SE = 0.074, p = .441). Consequently, Table 6 results indicate that the IE of subordinate competence on supervisor tolerance through LMX quality was not significant (IE = −0.095, 95% CI [−0.335, 0.145]). Therefore, Hypothesis 2 was not supported.

Hypothesis 3 focused on the moderation effects of supervisor dependence. As can be seen in Table 5, the interaction of LMX quality and dependence was a significant predictor of tolerance behaviors (b = 0.180, SE = 0.061, p = .003) as depicted in Figure 2b. The simple slopes show the association of LMX quality with supervisor tolerances was positive when supervisor dependence was higher (b = 0.124, SE = 0.057, p = .029) compared to lower (b = −0.055, SE = 0.074, p = .453), and the difference between the slopes was also significant (β_diff= 0.180, SE = 0.061, 95% CI [0.076, 0.315]), supporting Hypothesis 3.

Hypothesis 4 concerned the conditional indirect effects. Table 6 results show the IEs of subordinate competence on supervisor tolerance through LMX quality were positive and significant when dependence was higher (IE = 0.206, SE = 0.098, 95% CI [0.035, 0.419]) compared to when was lower (IE = −0.092, SE = 0.122, 95% CI [−0.329, 0.146]). More importantly for moderated-mediation effects (Muller et al., 2005), the difference between these IEs was significant (β_diff= 0.298, SE = 0.105, 95% CI [0.122, 0.523]). Hypothesis 4 was supported.

Study 2 Discussion

To sum up, it was found that the ability of employee competence to positively predict supervisor tolerance of subordinate misconduct through LMX quality is a function of supervisor dependence on the subordinate. While these results are ideal such that the mediating role of LMX quality is conditional on dependence, the findings are as a result of using a controlled experiment. Nevertheless, the results provide the internal validity of the model and enhance the causality inferences. Besides, study 2 findings were found in a different national context from those of study 1, supporting generalizability.

General Discussion

This study investigated whether, why, and when leaders are likely to ‘let slide’ the misconduct of some employees. A field survey with staggered data and an experimental study supported the predictions. Specifically, results demonstrate that supervisors tend to be lenient on transgressing subordinates when the subordinates are perceived to be highly skilled. More importantly, LMX quality explains the effects of employee competence on leader tolerance of employee misconduct. Furthermore, we found leader dependence on subordinates strengthened both the direct effect of LMX and the indirect effect of employee competence on leader tolerance of employee misconduct. These findings have several implications as discussed below.

First, our work contributes to the idiosyncrasy credit theory (Hollander, 1958) which argues that accumulated credits (i.e., positive impressions) that individuals have acquired are associated with a greater ability to deviate from expectations without sanctions (Phillips et al., 2009). We extend this theorization by introducing LMX quality as the underlying mechanism for the relationship between credit accumulation and the latitude to behave idiosyncratically. In doing so, we show that the idiosyncrasy credit theory may be a function of the personal relationship between those with accumulated credits and those charged with the responsibility of overseeing such norms. Moreover, our work demonstrates that it is not only leaders who may be given the latitude to deviate from norms when they have more positive attributes (Shapiro et al., 2011), but subordinates as well.

Second, our work contributes to the LMX literature by showing that high LMX quality with followers may cause leaders to make unfair decisions. A majority of LMX research has predominantly focused on the positive consequences of high LMX (e.g., Auh et al., 2019; Jung et al., 2022; Selvarajan et al., 2018; Walumbwa et al., 2009) and recently, on the negative work behaviors as a consequence of downward social comparisons of LMX (Korman et al., 2023). Whereas Shapiro et al. (2011) called for research on whether leaders with higher LMX with their followers are less punitively evaluated for transgressions, this study extended this line of research and found negative consequences of LMX as concerns leader behavior. Practically, leaders found to tolerate transgressing employees should be disciplined. This is important for at least two reasons: first, when some transgressing employees are not disciplined, an unethical working climate is likely to be promoted that affects the overall organizational functioning (e.g., Mayer et al., 2009); second, the literature suggests that when management supports negative actions of managers, then corruption tend to be normalized (e.g., Treviño & Ball, 1992).

Third, another important finding is that when employees transgress, their leaders may tend to ‘look the other way’ when these employees are perceived to be more competent. Whereas employee positive attributes such as competence are key to organizational success as they are related to high performance (Graen & Schiemann, 2013; Graen & Uhl-Bien, 1995; Maslyn & Uhl-Bien, 2001), this work highlights a potentially negative consequence of the attribute—a tendency to escape punishment for misconduct. This work calls for further research on this phenomenon and if the current findings can be replicated, then there will be a need to revisit employee competence findings and theorizations. Practically, those entrusted with leadership roles should be individuals who believe in zero tolerance for misconduct, no matter who is involved. Future research would also help to understand how working standards such as disciplinary actions can be applied unfavorably to employees, especially when some employees have attributes that make them indispensable.

Fourth, it was found that the positive relationship between leaders’ LMX (with subordinates) and leniency toward misconduct of these subordinates is strengthened when these leaders have a high dependence on such subordinates. Given that leaders need subordinates they can rely on for performance, this conclusion poses a theoretical question on the mechanisms that could explain why leaders who depend on subordinates tend to be lenient on such subordinates when they transgress. For practice, whereas employees with leadership roles could be trained on decisive leadership that has zero tolerance for employee misconduct, it could also be of value to separate organizational functions such that employee discipline is alienated from the docket of a direct supervisor. Such practice would alleviate the burden on leaders of having to balance between focusing on employee performance as well as their discipline.

Limitations

First, the use of employee self-reports to assess variables has the risk of common method bias (Podsakoff et al., 2003). However, confidence in the model is enhanced by the following measures undertaken to mitigate this risk: the temporal separation of surveys; the control of variables such as leaders’ position in the organization and subordinates’ social desirability; the use of marker variable and finding that CMV was not an issue of concern. Moreover, results with and without control variables were similar. However, future research could use objective measures such as employee qualifications to replicate the results.

A second limitation concerns causality because of the cross-sectional nature of the methodology (e.g., Antonakis, 2017). However, the study design of multi-wave allowed for testing the mediation, moderation, and moderated mediation models, minimizing alternative explanations for the study findings (Bettis et al., 2014). Moreover, an experiment was used to support some of the causal inferences. Future research could, nevertheless, replicate the current results with the use of better designs such as longitudinal and daily diary studies that have a higher potential to demonstrate causality (e.g., Antonakis et al., 2014).

A third limitation concerns the generalizability of the findings. As noted by a blind reviewer, this work is focused on the relationship between people who pick tea leaves and those who oversee them. This is a unique work context and the relationships reported may not be found in other (e.g., white-collar) work contexts. Therefore, future research could benefit by replicating the model in other workplace contexts.

Also, while experimental methods provide a better understanding of the causal nature of the findings and vignette/scenario designs have been widely used (e.g., Aguinis & Bradley, 2014; Antonakis, 2017; Blascovich et al., 2002; Harrison et al., 2011), several threats can undermine the internal validity of experimental findings. For example, the use of hypothetical scenarios that do not elicit actual behaviors is particularly prone to demand effects or socially desirable responses (Antonakis, 2017; Lonati et al., 2018). In the present study, however, effort was made to make the scenarios as practical as possible and participants had supervisory experience. Still, future research could benefit by considering more powerful designs that account for causality such as longitudinal studies.

Conclusion

Considering the important role that leaders play in organizations, the idea that their disciplinary decisions may be influenced by employee competence has significant implications. The results demonstrate that even for the exact same misconduct, employees perceived to be more competent are more likely to be tolerated. The findings in the study call on scholars and practitioners to appreciate the need to censoriously assess how leaders address employee misconduct given the employees’ competence and existing relationships that leaders have with their followers. It may be okay for resource allocation to be based on one's abilities and or idiosyncrasy credits, or LMX quality, but the issue of employee discipline is a different matter altogether. Emboldening leader impartiality when it comes to followers’ ethical conduct no matter the subordinate's competency and the leader's dependence on the subordinates would minimize not only employee misconduct but also the deleterious consequences of unfair perceptions of followers toward their leaders.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the Natural Science Foundation of China (71910107003).

ORCID iD

Lincoln Jisuvei Sungu

Notes

Appendix

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