The Social Exchange Theory

Introduction

Whether they are romantic or not, the lasting of relationships depends on many aspects
but most importantly how each person in the relationship feels about the relationship. The Social
Exchange Theory, founded by George Homan, is an approach to how relationships work and
how the satisfaction of each participating member of a relationship has an impact on the outcome
of that relationship. It’s approaches, and assumptions still ring true to today’s human behavior.

In this paper, we will discuss the Social Exchange Theory and its description of how
relationships work based off of a person’s satisfaction in the relationship. We will also discuss
the assumptions of the theory such as cost and reward systems. We will go over how it has
evolved to today’s standards, what it’s strengths and weaknesses are and what improvements
have been made since its foundation.

Theory Definition, Author and Approach

The Social Exchange Theory suggests that relationships are formed and terminated based
on a cost-reward system, and a comparison of which outweighs the other. This cost vs. reward
system is based off of each participating member’s satisfaction (West & Turner, 2010, p. 187).
This satisfaction is decided when a person’s self-interests are met. For example, if a person feels
like they want their partner to be helpful in the kitchen because they think having help would
make things easier for themselves, then their partner needs to help in the kitchen for that person
to be satisfied.

If the partner sits in the living room watching television while the person is cooking and
cleaning up after dinner, their satisfaction will be very low. If the partner offers to clean up after
the person made them dinner, then their satisfaction would be very high, all because the persons
self-interests were met. In the theory, self-interest is considered to be a good thing as it is
important for each person to be pleased with the relationship, if they are not they may see the
relationship as a burden and terminate the relationship.

The original theorist George Homans, proposed examining interactions as an exchange of

certain economic principles that were based on rewards and costs (Redmond, 2015.) Homans
never used the term “Social Exchange Theory” as he believed his theory to be about more than
just behavioral exchanges between people. He also suggested that his theory being called an
exchange theory, made it seem as though it was something special and new when he himself had
drawn his research based off of the research of others. He admitted that his theory was definitely
not new.

Homans observed a study of William Foote Whyte, who observed a culture amongst a
gang of Italian boys. When a boy asked a favor of another boy, but then did not return the favor,
they were expected to not ask for a favor again in the future (Redmond, 2015). This sparked the
idea for Homan that if there is a negative return in the relationship, the relationship will suffer.
This began Homans interest in learning more about behavioral exchanges and social behavior
which eventually led to his more defined theory.

Current Theory Status

While there has not been very much recent work done on the Social Exchange Theory,
there has been some research done on other inter-personal theories, using the Social Exchange
Theory. It has mostly been used in the business world by weighing the costs and benefits
between companies and their employees. While using the theory, employers have found that
behavioral exchanges between employees has actually had a negative impact on companies.

Alexander Serenko and Nick Bontis are two professors of Business who use the Social
Exchange Theory to describe inter-employee relationships. They observed that the exchanges
between employees could have a negative impact on the relationship between the company and
its employees. They used the study at a macro-sociological level to “study the various aspects of
inter-organizational relationships” and at a micro-sociological level to “test the relationship
between perceived organizational support and leader-member exchange” (Serenko & Bontis,
2016, p. 690).

It has been observed using The Social Exchange Theory that employees voluntarily
exchange their knowledge that is based on previous work and experience with other employees.
As people exchange various resources, including goods, services and knowledge, they develop
their personal preferences expressed during the exchange process (Serenko & Bontis, 2016.)
Personal preference is a fancy way of saying “self-interest,” which may be considered a good
thing by the theory, but to Serenko and Bontis, this is what impacts inter-organizational
relationships. According to them, it threatens companies because if the knowledge that is shared
is negative knowledge, it can throw off the balance of the company and can undermine the
superiority of the managers. When this observation was made, it brought on the idea of the
Affect Theory.

The affect theory, based off the social exchange theory, introduces four types of
exchange modes, negotiated, reciprocal, generalized, and productive, which basically affects
one’s attitude towards knowledge sharing (Serenko & Bontis, 2016). When a person exchanges
knowledge with another colleague, they assume that that person will then share knowledge with
them in the future, similar to how the boys in the Italian gangs expected favors from each other.
If negative knowledge is shared, such as how to get out of a meeting, the need to spread more
knowledge that is similar in the future can result in an irresponsible work force.

Theory Evaluation
These are the strengths of the theory using the 7 Theory Evaluation Criteria. The Social
Exchange stands strong when being critiqued by Logical Consistency, Parsimony, and Test of
Time (West & Turner, 2010, p. 197). When being critiqued by logical consistency, the theory
proves to be so. It gains its consistency by showing that most, if not all, relationships do use a
cost vs reward system. If they did not, either relationships would never start, or they would never
end.
The Social Exchange Theory has also shown to be very easily critiqued when it comes to
Parsimony. It succeeds in doing so because it is simple to explain, and the research is thorough.
The theory does stand the test of time because it has lasted since the 1950’s (Serenko & Bontis,
2016) showing that it has lasted for almost 70 years. Since Logical Consistency shows that
relationships behavior is consistent in using the cost vs reward system, it implies that the Social
Exchange Theory will continue to last for a long time.

The weakness of the Social Exchange Theory, using the 7 Theory Evaluation Criteria, are
Scope, Utility, Testability, and Heurism (West & Turner, 2010, p. 197). As said in the text, the
theory fails to elaborate on the importance of group solidarity and more on individual fulfillment.
The Social Exchange Theory can also be critiqued when it comes to Utility because the theory
may imply that humans are all the same or that they are “rational calculators” by weighing costs
and benefits. This may make the theory appear less credible if humans are observed to be unique.
The Social Exchange Theory has failed to show that it is testable. While behavior can be
observed, analyzed, and its motives can be assumed, it can not be proved by scientific testing,
there for it is not testable

Improvements to the Theory

The Social Exchange Theory could be improved by analyzing its impact on groups as it
does mostly focus on interactions between two people and how their relationship is affected by
the cost/benefit ideology. As Serenko and Bontis have attempted to use the theory in a work and
group environment, the actual publication of the theory fails to explain this. Psychologists should
follow Serenko and Bontis’ lead in looking at its affects on groups. It could prove to be
beneficial in the work environment.

I would use the Social Exchange Theory to place focus on my actions in analyzing my
relationships by making sure that while I am satisfied, I am also doing my best to do what would
please my partner. While the Social Exchange Theory puts a focus on “self-interest” in
relationships, it also makes a point of stating that the lasting of relationships is determined by the
level of satisfaction by each member, while I need to be aware of whether or not my personal
preferences are met, I also need to ensure that I am doing my best to make sure that my partners
personal preferences are met. If I do not try to please the other person and solely look at my own
satisfaction, then the relationship will eventually fail.

Conclusion
To conclude, the Social Exchange Theory was first developed my George Homan, who
noticed that relationships are based off an emotional and economic standpoint. Since his ideas
have proved to be consistent in relationships the theory shows that it will stand the test of time
and that logical consistency is a factor in its success. While there haven’t been many
modifications made to the theory, it is still used to conduct studies, primarily in business.
However the theory could be improved if it were to be used in observing work relationships in
groups rather than just between two people. This could have a positive impact in the work field.
 I learned from my research of the Social Exchange Theory that relationships are based off
both an emotional stand point, but also an economic stand point, that even if they may start out
as completely emotional, our decision to continue these relationships is based off whether or not
the rewards outweigh the risks. By doing this, the lasting of our relationships moves from casual
to personal, or from personal to non-existent. Whatever the result may be, placing a focus on our
own self-interest, to ensure that we will be happy in our relationships, is shown to be the most
important.
References:

Redmond, M. V. (2015). Social Exchange Theory. Iowa State University Digital Repository:
English Technical Reports and White Papers, 5. Retrieved from
https://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=1003&context=engl_reports.

Serenko, A., & Bontis, N. (2016). Negotiate, Reciprocate, or Cooperate? The Impact of
Exchange Modes On Inter-Employee Knowledge Sharing. Journal of Knowledge and
Management, 20(4), 687-712.

West, R., & Turner, L. H. (2010). Chapter 11: Social Exchange Theory. In Introducing
Communication Theory Analysis and Application (4th ed., pp. 185-200). New York, NY:
McGraw-Hill Higher Education.