Article Global Business Review 21(3) 1–14 © 2018 IMI SAGE Publications sagepub.in/home.nav DOI: 10.1177/0972150918779276 http://journals.sagepub.com/home/gbr 1 Research Scholar, Amity Business School, Amity University, Noida; Assistant Professor, Banarsidas Chandiwala Institute of Professional Studies, Dwarka, New Delhi, India. 2 Associate Professor, Department of Human Resource, Amity Business School, Amity University, Noida, Uttar Pradesh, India. Corresponding author: Shalini Sahni, Research Scholar, Amity Business School, Amity University, Noida; Assistant Professor, Banarsidas Chandiwala Institute of Professional Studies, Dwarka, New Delhi 110075, India. E-mail: shalinisah75@gmail.com Effect of Fairness on Employee Outcome: An LMX Perspective on Indian Banks Shalini Sahni 1 Chandranshu Sinha 2 Abstract The current study is proposed to test the mediated effect of social exchange mechanism of leader– member exchange (LMX) between organizational justice and employee outcomes in the Indian banking industry. Stratified random sampling was used to collect the data from 346 employees of two Indian public and two Indian private banks listed in the CNX index. Data were analysed using confirmatory factor analysis and path analysis of the proposed model. Findings reveal that LMX partially mediated between all justice dimensions and employee outcomes. However, procedural justice is the strongest predictor of employee outcomes in public sector banks and weakest in private sector banks. This study has implications for both academicians and practitioners and adds to the previous literature by testing the projected model in the Indian settings, thus providing some empirical validity to justice–LMX– employee outcomes relationships. Keywords Organizational justice, employee outcomes, Indian banks, leader–member exchange, social exchange processes Introduction Original approach to study leadership was through the Vertical Dyad Linkage (VDL) theory proposed by Dansereau, Cashman, and Graen (1973) that has been renamed leader–member exchange (LMX) by Graen, Novak, and Sommerkamp in 1982. Since its inception, LMX theory is gaining momentum both in academics and applied research. However, a number of fundamental questions still remain unanswered: