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Marginal land, unfertile soil, and an extreme climate are typical of a sandy land area. However, a group of farmers near the Indian Ocean of the Yogyakarta Province in Indonesia has successfully cultivated chili in such an area since 1985 using a new farming system. Two pioneering farmer groups in this sandy land area brought economic change to the farmers in this region by providing the technology of chili farming and collective marketing. This study aims to investigate the differences in the function of leader-member exchange in the farmer groups and its role in sustaining the farmer groups. This study focuses on the role of transformational leadership in functioning leader-member exchange, which is able to promote group satisfaction and commitment in order to improve group member behavior and group performance. We conclude that two different approaches sustain the performance of farmer groups. Farmer groups that have an official regular group meeting and groups that have transformational leadership by means of a leader-member exchange showed affected group performance. Otherwise, the performance of a farmer group that lacks a group meeting is built by members’ individual motives, which are observed as an aggregation of group member behavior. Meanwhile, leader-member exchange affects commitment and becomes an importance aspect that influences group performance in both groups.

A Comparison of the Function of Leader-Member Exchange in Two Neighboring Farmer Groups in a Sandy Land Area in Yogyakarta Province, Indonesia