The purpose of this phenomenological study was to find out the causes of in-group and out-group formation in organizations as described by employees living at Ruaka Township in the context of LMX Theory. Why would some members of an organization feel more appreciated and accepted than others? Research suggests that the relationship between leaders and their followers differs, with some followers being closer (in-group) than others (out-group). The literature reveals a variety of factors causing the formation of in-groups and out-groups, although most of the studies on this subject have been conducted in the western contexts, leaving a gap in the context of Africa. Therefore, a qualitative study using a phenomenological research design investigated the lived experiences of 12 purposively sampled employees from Kahigu Drive, Ruaka Township, to describe the factors that cause in-group and out-group formation in organizations in Kenya. Primary data were collected through 40 - 60 minutes in-depth interviews that were later transcribed and then analyzed through inductive coding method. Findings revealed major themes that emerged through first-cycle and second-cycle coding processes. These themes represent key factors that were considered as notable causes of in-group and out-group formation in organizations in Kenya such as favoritism, competition, organization politics, resources and opportunities sharing procedures amongst others. The findings were discussed along with literature reviews and recommendations made for contemporary practitioners and future research.
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