The Moderating Effect of LMX between Salesperson Competencies

and Work Performance: A Case of Taiwanese Department Store

Yi-Chang Chen

Department of Business Administration, Kun Shan University, Tainan, Taiwan

Keywords: Salesperson Competency, Work Performance, LMX.

Abstract: The positive relationship between competency and performance has been supported by many studies.

However, some managerial factors might moderate the relationship. Therefore, this study aimed to explore

the moderating effect of LMX between salesperson competencies and work performance. The survey was

conducted, and 289 valid questionnaires were collected from the salespersons who work in a Taiwanese

department store. The results pointed out: (1) Flexibility, self-confidence and self-control were positively

related to task performance, (2) Self-confidence and self-control were positively related to contextual

performance, (3) LMX was positively related to task and contextual performances, (4) The interaction of

self-confidence and LMX had negative moderating effect in the relationship between competency and task

performance. Furthermore, some managerial suggestions were proposed as well.

1 INTRODUCTION

Competence management is an important research

issue in the more general area of knowledge

management and learning management systems

(Draganidis and Mentzas, 2006). One of the hot

object with competency idea is to investigate the

relationship between competency and performance.

At organizational level, the distinctive competencies

of any firm are likely to get from two sources: its

resources (such as machine, materials, land, methods)

and capabilities. These competencies allow a firm to

attain competitive advantages (Li, 2000). At

individual level, if the employee competency rate

has an impact on employee performance, it is

valuable to invest on employee competency

improvement (Bucur, 2013). Furthermore, a

company can achieve a high level of performance.

Even though many studies supported the positive

connection between competencies and performance,

some moderating variables should be considered

because of the variety of business operational

conditions. The idea of leadership is commonly used

as a contingent variable in organizational behaviour

studies. Consequently, this study is going to

investigate the moderating effect of Leader-Member

Exchange (LMX) between competencies and work

performance.

2 LITERATURE REVIEW

The literature review majorly focuses on the idea of

competency and LMX, as well as the influence of

competency and LMX on work performance.

2.1 Concept of Competency

In 1973, McClelland argued that the best predictors

of outstanding on the job performance were

underlying, enduring personal characteristics that he

called “competencies” (McClelland, 1973). Since

then, the idea of competency was wildly discussed in

different research areas, such as strategic

management (Prahaland and Hamel, 1990)、human

resource management (Elkjaer, 2000) and

knowledge management (Michellone and Zollo,

2000). Based on Leanne, Helena and Keith’s study

(2005), different definitions of competency can be

grouped into three distinct approaches: educational

approach, psychological approach, and business

approach.

From educational approach, competencies were

based on functional role analysis and described

either role outcomes, or KSA (knowledge, skills and

attitudes), or both, which are required for role

performance, and assessed by a criterion, usually a

behavioural standard. Therefore, a competence was

defined as an action, behaviour or outcome to be

244

Chen, Y.

The Moderating Effect of LMX between Salesperson Competencies and Work Performance: A Case of Taiwanese Department Store.

DOI: 10.5220/0008491302440249

In Proceedings of the 7th International Conference on Entrepreneurship and Business Management (ICEBM Untar 2018), pages 244-249

ISBN: 978-989-758-363-6

demonstrated, or a minimum standard, with different

levels of mastery defined by different statements

(Bourke et al., 1975, Fletcher, 1992).

From psychological approach, one interest was

the idea that the factors which associated with

individual success could be identified, and then

taught to others. McClelland and Boyatzis (1980)

tried to identify competencies, based on the skilled

behavioural repertoires of recognised better

performers within particular organisations.

Consequently, competencies as a generic body of

knowledge, motives, traits, self images and social

roles and skills are causally related to superior or

effective performance in the job.

From business approach, Hamel and Prahalad

(1989) advanced the idea of core competencies and

capabilities. Their definition of core competencies as

the collective learning of the organisation has been

much cited, and contributes to the current interest in

competencies (Shipmann et al., 2000). This

approach mainly focused on organisational

competencies for competitive advantage (Sparrow,

1995).

Based on the previous studies, the concept of

competency could include at least five terms

(Spencer and Spencer, 1993).

1. Knowledge- This refers to information and

learning resting in a person.

2. Skill- This refers to a person’s ability to perform

a certain task.

3. Self-Concepts and Values- This refers to a

person’s attitudes, values and self-image.

4. Traits- Traits refers to physical characteristics

and consistent responses to situations or

information.

5. Motives- Motives are emotions, desires,

physiological needs or similar impulses, that

prompt action.

Competencies are best described as an iceberg with

a person’s knowledge and skills representing the

visible tip of the iceberg, while the underlying and

enduring personal characteristics or self- concepts,

traits and motives which represent the larger portion

of the iceberg, hidden below the waterline (Spencer

and Spencer, 1993).

Since the concept of competency was related to

organizational and individual performance, and was

linked to job requirement, competency mapping is a

process of identifying key competencies for a

company or institution and the jobs and functions

within it. Competency mapping is a process a HR

expert uses to identify and describe competencies

that are most crucial to success in a work situation

(Chouhan and Srivastava, 2014). Therefore, the

positive influence of competencies on individual

work performance was supported by different

studies (Langdon and Marrelli, 2002; Moradi et al.,

2015; Spencer and Spencer, 1993; Vathanophas and

Thai-ngam, 2007). Meanwhile, the Spencer and

Spencer’s (1993) iceberg model argued that

competency may be composed of three key aspects:

motive and traits (including impact and influencing,

achievement orientation, analytical thinking,

problem-solving), self-concept (including flexibility,

self-confidence, self-control), and knowledge and

skills. This study concentrated on the influences of

potential competencies. Therefore, the following

hypothesis was proposed:

H1: The level of salesperson competency will be

positively related to work performance.

2.2 Concept of LMX

LMX theory was deemed to be relationship-based

approach to leadership which is leader-follower

dyadic relationship focus (Graen and Uhl-Bien, 1995;

Sparrowe and Liden, 1997; Wayne et al., 2002). The

main focus was on the antecedents and outcomes

that came from different levels of individual LMX

(Dulebohn et al., 2012). In Dunegan and his

colleague’s research (2002), they summarized

various relationships between LMX and work

performance. However, a meta-analysis by Martin,

Guillaume, Thomas, Lee, and Epitropaki (2015)

mainly showed a positive relationship between LMX

and follower task performance. Therefore, this study

proposed hypothesis:

H2: The quality of LMX will be positively related

to work performance.

In previous research on salespersons, the dyad LMX

relationship has been explored to explain the factors

that support the socialization of salespersons

(Dubinsky et al., 1986). The role of LMX in

explaining the leadership for salespersons was

investigated. For example, DelVecchio (1998)

examined the relationship between sales

performance and LMX and between LMX and

competency of salesperson. In addition, Weitz (1981)

used the quality of relationship between a customer

and a salesperson as a moderating factor in the

relationship between sales performance and

resources of the salesperson. He set up a conceptual

hypothesis suggesting that relationship between a

customer and a salesperson will act as a moderating

factor. It is likely that LMX will influence the

relationship between competency and performance.

The Moderating Effect of LMX between Salesperson Competencies and Work Performance: A Case of Taiwanese Department Store

245

Consequently, this research tried to investigate the

moderating effect of quality of LMX in the

relationship between the competency and

performance. The following hypothesis was

proposed:

H3: The quality of LMX will positively moderate

the relationship between salesperson

competency and work performance.

The operational hypotheses developed by each

research constructs were not displayed here because

of page limitation.

3 RESEARCH METHOD

3.1 Research Framework

The research framework of the present study mainly

involved competencies, LMX, and work

performance. Competencies included impact and

influencing, achievement orientation, analytical

thinking, problem-solving, flexibility, self-

confidence and self- control (Spencer & Spencer,

1993). Work performance included task

performance and contextual performance (Borman

and Motowidlo, 1993).

Figure 1: Research framework.

3.2 Samples and Respondents

The participants of present study were the

salespersons who worked in the Taiwanese-owned

department store. The present study used a

questionnaire survey method. Since the total number

of salespersons is about 400 and some rejected to

answer questionnaire immediately, questionnaires

were delivered, and the recovered questionnaires

were 310 and 289, respectively. The recovery rate

was 93.2%.

3.3 Questionnaire Design

The questionnaire included four parts: demographic

variables, salesperson competencies, the quality of

LMX, and work performance. The responses to the

items were coded on 6-point Likert scales from

“strongly disagree” (1) to “strongly agree” (6).

The part of salesperson competencies mainly

based on Spencer & Spencer’s study (1993) and the

discussion results with 2 managers of the department

store. 7 salesperson competencies were identified as

Impact and Influencing (II) (4 items, KMO=.750,

EV=2.295, α=.744), Achievement Orientation (AO)

(4 items, KMO=.733, EV=2.439, α=.768),

Analytical Thinking (AT) (3 items, KMO=.680,

EV=1.989, α=.744), Problem-solving (PS) (3 items,

KMO=.651, EV=1.823, α=.677), Flexibility (FL) (3

items, KMO=.665, EV=2.250, α=.832), Self-

confidence (SCF) (3 items, KMO=.681, EV=2.087,

α=.768) and Self-control (SCT) (3 items,

KMO=.692, EV=2.037, α=.758).

The measurement of LMX was referred to LMX

7 Scale proposed by Graen & Uhl-Bien (1995).

After factor analysis (KMO=.829), one factor

(α=.844, 5 items) was extracted. The measurement

of work performance was based on Borman &

Motowidlo’s work (1993). It included task

performance (TP) (3 items, KMO=.723, EV=2.273,

α=.836) and contextual performance (CP) (3 items,

KMO=.717, EV=2.311, α=.836).

4 RESULTS OF ANALYSIS

4.1 Information of Demographic

Variables

Table 1 presented the information of demographic

variables. Demographic variables included gender,

age, department, education level, marital, and

seniority.

Table 1: Demographic variables of participants (n=289).

Variable Item Valid %

Gender

Female 96.8

Male 3.2

Age

30 and Below 27.2

31-40 39.9

41 and Above 32.9

Education

Senior High and Below 56.8

College 25.2

University and Above 18.0

ICEBM Untar 2018 - International Conference on Entrepreneurship and Business Management (ICEBM) Untar

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Table 1: Demographic variables of participants (n=289).

(cont.)

Variable Item Valid %

Marital

Single 49.1

Married 50.9

Seniority

1 Year and Less 24.5

1-3 Years 34.3

4 Years and More 41.2

4.2 Descriptive Statistics

Table 2 revealed the descriptive statistics of the

research constructs. With regard to work

performance, the mean of task performance is higher

than contextual performance. In other words, the

respondents might concentrate on task performance

more. Regarding salesperson competencies, the level

of flexibility was the highest competency, and the

lowest competency is impact and influencing. For

LMX, the mean value is at middle-high level.

Table 2: The Descriptive Statistics of Research Constructs.

Research Constructs Mean SD

Work Performance

Task Performance 5.039 0.581

Contextual Performance 4.768 0.666

Competency

Impact and Influencing 4.722 0.530

Achievement Orientation 5.012 0.578

Analytical Thinking 4.789 0.578

Problem - Solving 4.863 0.544

Flexibility 5.215 0.561

Self-Confidence 4.758 0.644

Self-Control 5.024 0.575

LMX 4.137 0.914

4.3 Regression Analysis

In the following regression analysis, the study took

age, education and marital status as control variables

because they have significant influence on research

constructs based on the results of t-test and ANOVA.

Meanwhile, age (Age1= 31-40, Age2=41 and more)

and education level (Education1=senior high school

and below, Education2= college) were transformed

into dummy variables. Except for equation EC1, the

F value of each regression equation is significant

(p<.05). Hierarchical regression analysis was used to

investigate the main effect of competencies

(referring to ET2 and EC2) and LMX (referring to

ET3 and EC3) and the moderating effect of

interaction variables (referring to ET4 and EC4).

The following table presented the regression

results of task performance as dependent variable.

The results pointed out that flexibility (β=.173), self-

confidence (β=.354), self-control (β=.248), and

LMX (β=.270) were significantly (p<.05) and

positively related to task performance. Meanwhile,

the interaction of self-confidence and LMX (β=-

1.570) has negative influence on the relationship

between competencies and task performance

Table 3: The Regression Result (DV=Task Performance).

Variable ET1 ET2 ET3 ET4

Age1 .219 .063 .229** .035

Age2 .235 .070 .260** .050

Education1 .059 -.013 .011 -.008

Education2 .096 -.046 .077 -.030

Marriage .015 .019 .016 .023

II -.115

.044

AO .025

-.128

AT .112

.232

PS .147

-.068

FL .173*

.277

SCF .354***

1.137***

SCT .248***

-.246

LMX .270*** .446

II*LMX

-.352

AO*LMX

.323

AT*LMX

-.411

PS*LMX

.492

FL*LMX

-.220

SCF*LMX

-1.570**

SCT*LMX

1.214

F Value 3.343** 38.244*** 6.567*** 24.884***

.065 .663 .136 .689

Adj.

.046 .646 .115 .661

Table 4 show the regression results of contextual

performance as dependent variable. The results

indicated that self-confidence (β=.202), self-control

(β=.473), and LMX (β=.308) were significantly

(p<.05) and positively related to contextual

performance. Meanwhile, no interaction of

competencies and LMX (p>.05) has significant

influence on the relationship between competencies

and contextual performance.

Table 4: The Regression Result (DV=Contextual

Performance).

Variable EC1 EC2 EC3 EC4

Age1 .073 -.085 .080 -.097

Age2 .044 -.136 .085 -.133

Education1 .098 .049 .071 .048

Education2 .119 -.001 .114 .014

The Moderating Effect of LMX between Salesperson Competencies and Work Performance: A Case of Taiwanese Department Store

247

Table 4: The Regression Result (DV=Contextual

Performance). (cont.)

Variable EC1 EC2 EC3 EC4

Marriage -.005 .030 -.027 .040

II .042 .221

.120

-.111

.031

-.616

.095

.156

-.095

-.014

SCF

.202**

.514

SCT

.473***

.289

LMX

.308*** -.687

II*LMX

-.507

AO*LMX

.582

AT*LMX

1.504

PS*LMX

-.182

FL*LMX

-.182

SCF*LMX

-.596

SCT*LMX .353

F Value .783 21.937*** 5.017*** 13.976***

.016 .534 .108 .557

Adj.

.005 .509 .086 .517

5 CONCLUSION AND

DISCUSSION

5.1 Conclusion

According to the results of Table 3 and 4, hypothesis

1 was partially supported. Hypothesis 2 was fully

supported. However, hypothesis 3 was rejected since

only the interaction of self-confidence and LMX had

negative moderating effect. Based on Spencer and

Spencer’s iceberg model, self-concepts (including

flexibility, self-confidence and self-control)

compared to motives and traits, were more likely to

have positive relation to work performance. In detail,

self-confidence is the most powerful factor to task

performance, whereas self-control is the most

influential predictor to contextual performance. The

results also hinted that a salesperson might achieve

level of sales goal and task requirements if they

could keep positive thoughts to their work and

positively recognize their past work performance.

Meanwhile, if they could usually focus on time

management, emotional control, and expertise

improvement, a salesperson might have more spare

energy to help colleagues, to increase morale, and to

provide useful ideas for other’s work.

With regard to the quality of LMX, it had certain

influences on task and contextual performance in

this study. This finding was similar to the results of

other studies. However, the quality of LMX had a

little higher influence on contextual performance,

compared to task performance. It is reasonable

because the contents of contextual performance

involved relationship improvement in this study, and

LMX basically referred to a dyad relationship.

Regrading the moderating effect, it was

interesting that the interaction of self-confidence and

LMX had negative moderating effect in the

relationship between competencies and task

performance in this study. The result was different

from other research. This study suggested that the

quality of LMX might be the booster of dependency.

In detail, if employees have a better relationship

with their manager, they might have a little intention

to count on the assistance of a manager for task

achievement or performance evaluation.

Furthermore, the influence of self-confidence might

be reduced.

5.2 Managerial Suggestions

Since self-concepts had more influential effects on

work performance than motivation and traits, the

recruitment and selection practices could pay more

attention on this competency test. Meanwhile, the

training program could concentrate on the

establishment and improvement of self-concepts.

Secondly, comparing the

values of ET2-EC2

and ET3-EC3, this study suggests that company

could focus on competency improvement of self-

concepts if the increase of task performance is

anticipated. On the other hand, if company will

focus on contextual performance, the increase of

LMX could be the vital goal.

Thirdly, since the quality of LMX might

negatively moderate the effect of self-confidence in

task performance, managers need to investigate

employee’s self-confidence level during the process

of LMX establishment and maintenance. If

employee is full of self-confidence and have enough

ability and intention to achieve task independently,

increasing the level of LMX might be not the first

priority.

5.3 Limitation

Firstly, the research framework focused on the

interaction of competencies and LMX. Even though

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248

hierarchical regression analysis may be used,

advanced technique could be adopted. Secondly, this

study used the employees of a single department

store as samples. It is better to include samples in

different department stores with different owners in

order to increase the validity of argument

generalization. Thirdly, the construct validility of

salesperson competencies could be improved by

conducting more behaviour event interview (BEI)

and confirmative factor analysis simultaneously.

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