Charting the evolution: A dynamic model of leader-member exchange trajectories and newcomer socialization

Integrating prospect theory and regulatory focus theory, we study newcomer LMX trajectories during organizational entry and develop a reference-dependent self-regulation framework that links LMX change to newcomer socialization. We propose that the positive relationship between LMX change and socialization outcomes (role clarity, task performance, and perceived organizational insider status) is mediated by promotion focus and prevention focus. In addition, drawing on the value function of prospect theory, we argue that negative LMX change will have a stronger influence on the relationship between LMX change magnitude and regulatory focus, yielding a first-stage moderated mediation model. We tested the model in a four-wave longitudinal study of recent bachelor’s graduates in China (all employed with an assigned immediate supervisor; N = 126). Empirical evidence from SEM tests finds two mediation pathways where promotion focus mediated the positive relationships between LMX change and newcomer role clarity and task performance, whereas prevention focus mediated the positive relationships between LMX change and newcomer task performance and perceived organizational insider status. In both pathways, the first-stage relationship was stronger when LMX change direction was negative. These findings enrich a nuanced understanding of when and how dynamic LMX trajectories are translated into newcomer adjustment strategies and demonstrate how reference dependence and loss–gain asymmetry from the value function of prospect theory can be employed in human resource management research.