Performance appraisal is a critical practice in organizations, due to it being the basis for many other HR practices (e.g., career planning, reward management). Yet, the accuracy of the process has been questioned, and this has often to do with the perceived motives of the supervisor-rater. One such motive relates to the manager’s attempt to pursue a hidden agenda through the appraisals, which reveals the presence of politics. In this study we aimed to investigate: (i) whether leader can affect the perceived organizational politics in performance appraisal (OPPA), exploring the impact of LMX differentiation within a team (LMXD); (ii) whether LMXD based on different reasons has a different impact on perceived OPPA; (iii) whether perceived OPPA mediates the effects of LMXD on impression management behaviours; and (iv) whether an individual trait (equity sensitivity) moderates the extent to which perceived OPPA drives impression management behaviours. We conducted two experimental scenario-based studies (N1=117; N2=298) in which we manipulated individual LMX quality and LMXD within the team. Linear regression and moderated mediation models supported most of our hypotheses. LMXD leads to more perceptions of OPPA but only when it is based on personal liking and not when it is based on performance. As a result, perceived OPPA mediates the influence of LMXD based on personal liking on self-promotion and ingratiation. Finally, merit principle moderates the relationship between OPPA and self-promotion but not ingratiation. Implications for theory and practice are discussed.

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