1. The impact of plant-plant interactions on species diversity patterns has been broadly addressed in stressful environments, such as alpine ecosystems, where foundation species promote species richness by creating habitat for other species. However, foundation species with contrasting phenotypes might modify the microhabitat differently, which would alter the subordinate community composition, and coincide with distinct feedback effects of those subordinate species on the foundation species. However, the precise interaction mechanisms that facilitate species are not fully understood, especially the relative contribution of above- and below-ground compartments of foundation species to subordinate species and the potential feedbacks they receive. 2. We explored whether two contrasted canopy phenotypes (tight and loose) of the shrub Cytisus galianoi differed in their effects on the microhabitat and on subordinate plant community composition in a dry subalpine system. We also experimentally distinguished the relative contribution of above- (canopy) and below-ground (soil) effects of C. galianoi on the most frequent subordinate species, Festuca indigesta, as well as the reciprocal effects of F. indigesta on C. galianoi. 3. We performed observational and manipulative experiments to assess the influence of phenotypic differences of the shrub on understory microhabitat and subordinate plant community composition. Reciprocal effects were assessed by removing either F. indigesta from the understory of the two shrub phenotypes or the C. galianoi canopy from the immediate vicinity of F. indigesta. 4. The two C. galianoi phenotypes differed in mean values of functional traits (like stem density or plant height), modified their understory microhabitats differently, and hosted distinct subordinate communities. Loose phenotypes had more positive effects on community composition and diversity than tight phenotypes. Additionally, tight phenotypes simultaneously showed both more positive aboveground and more negative belowground effects on F. indigesta than loose phenotypes. There were no significant feedback effects of F. indigesta on C. galianoi. 5. The two phenotypes of the foundation species C. galianoi showed contrasting effects on the subordinate plant community: compared to the tight phenotype, the loose phenotype had higher associated species diversity and reduced reciprocal interaction intensities above- and below-ground with the subordinate species F. indigesta. This highlights the impact of phenotypic variation for plant interactions and community-level diversity.