Social Exchange Theory

Social exchange theory is one of the most well-known theories in understanding behaviour of individuals in the workplace due to its foundations of exchange among parties involved. It has roots in anthropology, social psychology, and sociology.

The core of this theory understands that relationships form when there are ‘rules of exchange’, many rules have been outlined Meeker (1971) outlines six – (reciprocity, rationality, altruism, group gain, status consistency, and competition). One of these rules, reciprocity, is the most well-known and generally is considered the most important element of exchange. This is a bidirectional transaction between two parties, meaning that both parties give and return something. The literature argues this is actually an inherent universal human principle, the concept of people exchanges things and being reliant and trusting of one another (first suggested by Gouldner, 1960). Social exchange can also involve negotiated rules, a more explicit verbalisation of the roles and exchanges people expect from a relationship (e.g. contract negotiations), although these are not the main focus of social exchange theory.

Social exchange involves a series of interactions that generate obligations, these interactions are usually seen as interdependent and contingent on the actions of another person, social exchange theory also emphasizes that these interdependent transactions have the potential to generate high-quality relationships” (Cropanzano, 2005, p.874)

These interdependent relationships have been used in organisational research to explain why individuals have higher job satisfaction and job performance, lower turnover intentions, lower levels of absenteeism, are more committed to the organization they work for, and record higher instances of organisational citizenship behaviours. Basically, what every employer wants for their employees!

This theory is comprehensive and long standing, so I won’t detail all the types and taxonomy of exchanges, however the most useful and common ones cited exchange relationships that result in all the great outcomes from the paragraph above are perceived organisational support (an employee who sees the employer as supportive is likely to return the gesture) and an equivalent for perceived supervisory support (an employee who sees their supervisor/manager as supportive is likely to return the gesture). Another common relationship that is more about the relationship between the employee and supervisor is leader-member exchange which has been viewed as the exchange relationship rather than specifically support for the employee.

In summary, according to social exchange theory, if an organisation (and the supervisor) supports their employees, the employees are likely to give back to this ‘exchange relationship’ through many different outcomes that are positive for the organisation.

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