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We examined whether participative leadership behavior is associated with improved work performance through a motivational process or an exchange‐based process. Based on data collected from 527 employees from a Fortune 500 company, we found that the link between superiors' participative leadership behaviors and subordinates' task performance and organizational citizenship behavior toward organizations (OCBO) was mediated by psychological empowerment (motivational mediator) for managerial subordinates. Yet, for non‐managerial subordinates such as supporting and front‐line employees, the impact of participative leadership on task performance and OCBO was mediated by trust‐in‐supervisor (exchange‐based mediator). Implications for theories and practices are discussed. Copyright © 2009 John Wiley & Sons, Ltd.