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The purpose of this paper is to investigate the relationships among leader-member exchange (LMX) quality, social interaction, and the effectiveness of knowledge transfer.

This study used a paired questionnaire to collect 209 valid sets of paired data, consisting of responses from 37 Taiwanese supervisors and their 209 Chinese subordinates at 35 Taiwanese manufacturing firms located in Mainland China. The proposed hypotheses were tested with the application of a two-step approach of PLS-SEM analysis.

The results of this study showed that LMX quality and social interaction are positively associated with effective knowledge transfer, and most importantly, it found that social interaction between Taiwanese managers and their subordinates has a full mediating effect on this relationship.

The data were collected from a dyad supervisor-subordinate relationship; thus, future research is encouraged to collect data from peer co-worker relationships. The findings, however, suggested that organizations should provide a supportive environment where a good supervisor-subordinate relationship can be created for the enhancement of knowledge transfer.

The study suggested that managers should work to develop high-quality LMX relationships with their subordinates, as this can enhance social interaction among employees and facilitate more effective knowledge transfer.

The paper applied a four-level training evaluation model to assess the effectiveness of knowledge transfer which has never been done before, and found that both LMX quality and social interaction affect how well individuals can acquire knowledge.