Research and theory about the development of teamwork lag research and theory about many other aspects of leadership. Nevertheless, the leader–member exchange model helps explain why one subgroup in a unit is part of a cohesive team but another group is excluded. The theory deals with the relationship between a leader and a team member. However, the same theory tells us a lot about teamwork.

The leader–member exchange (LMX) model proposes that leaders develop unique working relationships with group members. One subset of employees, the in-group, is given additional rewards, responsibility, and trust in exchange for their loyalty and performance. The in-group becomes part of a smoothly functioning team headed by the formal leader. In contrast, the out-group employees are treated in accordance with a more formal understanding of leader–group member relations. Out-group members are less likely to experience good teamwork.