Social Exchange Theory
A broad conceptual paradigm that aims to predict how social interactions and relationships are built, maintained, and ended
Social exchange theory refers to a broad conceptual paradigm for understanding social interaction, which can be found in a number of social science disciplines including, for example, social psychology, anthropology, management, and sociology. It is therefore not a single theory of social exchange (Barbalet 2017) but can be better thought of as a family of conceptual models (Cropanzano et al. 2017; Cropanzano and Mitchell 2005). These conceptual models aim to predict how social interactions and relationships are built, maintained, and ended (Agnew and Lehmiller 2007). According to social exchange theories, social life involves a series of sequential interactions between two or more parties (individuals or institutions), in which resources, material and nonmaterial, are exchanged (Homans 1958). Over time, these interdependent, reciprocal exchanges have the potential to foster high-quality relationships characterized by loyalty, trust, and mutual commitments.
Background and Principles of Social Exchange Theory
The foundational work for social exchange theory can be found in the writings of scholars like George Homans (1958, 1961), Peter Blau (1964), John Thibaut and Harold Kelley (1959), and Richard Emerson (1962). Homans (1958) conceptualized social behavior as an exchange of activity between at least two people, which is more or less rewarding or costly. A behavior by one party elicits a reaction in the other party that “either reinforces the original action and therefore encourages its repetition or through punishment dissuades its recurrence” (Barbalet 2017, p. 1). Principles of operant conditioning in behaviorism thus underlie Homan’s approach to social exchange. In contrast, Blau’s (1964) approach builds on neoclassical economic theory and adapts a utilitarian view of human behavior. In his micro-exchange theory, Blau also believes social exchange to be a fundamental process in social life and considers the costs and benefits that accompany a person’s interaction. However, according to Blau’s (1964) utilitarian view, social exchange is characterized by voluntary acts of individuals that are motivated by the returns they are believed to bring. Moreover, albeit rewards might reinforce the behavior of individuals in social exchanges, Blau believes the process of reinforcement to be insufficient to explain the relation that develops between the interacting individuals. He therefore focuses on the emergent properties in interpersonal relations that arise from the reciprocal exchange of benefits between the participants.
Building on this early work different perspectives on social exchange have evolved over the years. These different perspectives, however, share some common features and guiding principles (see Cropanzano and Mitchell 2005): (1) exchange rules; (2) resources exchanged; and (3) interpersonal relationships. First, exchange rules reflect the guidelines of exchange processes and guide the behavior of the involved parties. Most research emphasizes the rule of reciprocity, albeit other rules are also relevant for understanding social interaction and exchange relationships. Reciprocity implies repayment in kind such that a positive treatment by one party is reciprocated by the other. While a positive norm of reciprocity has attracted the most attention by far, a negative reciprocity norm can also shape people’s behavior in exchange processes (Cropanzano and Mitchell 2007). For example, experienced harm by one party might be reciprocated. In addition, experienced workplace incivility was found to facilitate interpersonal deviance, particularly for individuals who were high in both hostile attribution bias and negative reciprocity beliefs (Wu et al. 2014). Some scholars assert that reciprocity is a tendency that is learned by people through the process of socialization, whereas others argue that it is driven by evolutionary considerations and facilitated by cognitive adaptations (e.g., Cosmides and Tooby 2005). In general, it appears that the norm of reciprocity is a universal principle, although the degree with which this principle is applied by individuals and cultures differs. Depending on whether individuals endorse the norm of reciprocity more or less, they are referred to as higher or lower on exchange ideology. For example, in their longitudinal study of conscripts to military service, Pazy and Ganzach (2010) found perceived pre-entry organizational support was positively related to combat choice service, particularly so for conscripts high in exchange ideology. While most research emphasizes reciprocal exchanges that do not require explicit bargaining, other forms such as negotiated agreements do exist (Cropanzano and Mitchell 2007). Negotiated exchanges tend to be more explicit and quid pro quo, they are often part of economic transactions and thus less likely to contribute to closer relationships, and they may or may not imply legal or contractual sanctions.
Second, exchange resources refer to the types of resources and potential benefits in exchange processes. These are typically classified into economic and socioemotional resources (Cropanzano and Mitchell 2005). Economic resources are commonly tangible and meet the individual’s financial needs (e.g., money, goods, etc.). In contrast, socioeconomic resources are commonly not tangible and yield symbolic value (e.g., loyalty, love, etc.). The receipt of socioeconomic benefits further conveys the message to its beneficiary that he/she is valued and respected.
Finally, a common feature of social exchange theories is the focus on the development of social exchange relationships. The focus on interpersonal connections is particularly relevant to the study of workplace relationships in management and organization science. According to Blau (1964), individuals either engage in economic exchange or social exchange with other parties. Economic exchange relationships entail clearly specified benefits of short-term financial and material nature, whereas social exchange relationships are characterized by unspecified obligations of socioemotional nature. Social exchange relations, thus, bear a greater risk that a favor demonstrated by one party is not returned and therefore require a certain level of trust at the beginning. Over time, mutually benefiting reciprocal exchanges foster positive, enduring relationships characterized by loyalty, trust, and commitment, whereas economic exchange relations do not. For example, employees who perceive their employers providing organizational support and caring about them, reciprocate with more positive work attitudes (e.g., commitment) and higher levels of extra-role performance.
Social exchange theory has emerged as one of the most prominent theoretical perspectives for understanding social interactions and relationships in the field of social sciences. It has become an integral part of theories such as psychological contracts, organizational justice, organizational support, and leader-member exchange, and social networks. Nevertheless, social exchange theory has its limitations. Individual self-interest, for example, is not the only possible reason for social exchange; other exchange rules do exist (e.g., altruism, competition) but have been less researched. In addition, social exchange is rarely an isolated event but rather implies a multitude of social exchanges in which actors are engaged simultaneously (Barbarlet 2017). Most recently, scholars have also criticized the lack of sufficient theoretical precision (e.g., overlapping constructs), which might undermine the utility of social exchange theory (Cropanzano et al. 2017). Social exchange theory, however, remains a powerful conceptual framework that explains how reciprocal transactions foster and maintain social relationships and – when mutually beneficial for the involved parties – contribute toward high-quality relationships over time.
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