According to Thomas & Iding (2011), in social exchanges, “people weigh the potential benefits and risks of social relationships. When the risks outweigh the rewards, people will terminate or abandon the relationship” (Cherry, 2010, as cited in Thomas & Iding, 2011). Consequently, social exchange theory has become a broad concept that focuses on several scientific disciplines, such as management, social psychology, and anthropology. It is better understood as a family of conceptual models rather than a single theory (Cropanzano & Mitchell, 2005). According to Duong et al. (2024), “Perceived benefit (or positive impacts) and perceived cost (or negative impacts) are fundamental components of both Social Exchange Theory and Extended Social Exchange theory” (p. 2). The social exchange process begins when an organizational actor or perpetrator treats a target individual in a positive or negative fashion. In response to the initiating action, the target may choose to reciprocate this treatment with good or bad behavior of their own. Social exchange theory predicts that in reaction to positive initiating actions, targets tend to reply by engaging in more positive reciprocating responses and/or fewer negative reactions (p. 480). Positive interactions include justice and organizational support. On the other hand, negative actions may consist of incivility, abuse of supervision, and bullying. Researchers have also concluded that the social exchange theory is a broad framework that can describe almost any finding (Ahmad et al., 2023).
Historically, the origins of social exchange can be traced back to the 18th century, specifically with Adam Smith, a social philosopher who struggled to understand the mechanisms of social relationships (Cole et al., 2002, p. 144). Modern theorists generally agree that these exchanges are anchored in self-interest and are characterized by interdependency or “mutual dependency” (Huston & Burgess, 1979, as cited in Cole et al., 2002). However, an argument emerged between two different thoughts: the individualistic approach, supported by George Homans as the founder, which places individuals’ wants and desires at the center of social action, and the collectivistic approach, which Claude Levi-Strauss is considered a catalyst for, which asserts that social actions gain prominence if they contribute to the existence of society (p. 145).
To build this individualistic approach, Homans adopted axioms from both classical economic theory and behavioral psychology (Kullberg, 1977, p. 10). His work was unique because he made explicit rules and developed general theoretical propositions of behavior as social exchange (Kullberg, 1977, p. 11):
Success proposition: The more the action of a person is rewarded, the more likely they are to perform it.
Stimulus proposition: If an action someone performed was rewarded in the past, the more likely they are to do the same in a similar situation.
Value proposition: The more valuable to someone the result of their action is, the more likely they will perform that action again.
Deprivation-Satiation Proposition: If an individual receives a specific reward too many times, it loses its charm, so they are less motivated to work for it.
Aggression-Approval Propositions: If someone does something expecting a reward, they become upset when deprived of it. If they get a reward that was expected, they are likely to continue the behavior.
Rationality Proposition: Individuals not only look at how big a reward is from an action, but also at how probable it is that they can get it.
The previous propositions suggest that we act not on whim but on the calculation of all our previous experiences, and if our effort is worth the payback. It also supports reciprocity, and if a behavior worked before, we are likely to repeat it. Ultimately, these help explain why individuals might stay in a relationship and the reasons we might leave.
While Homans focused on individual motivations, the field expanded and included broader perspectives. In 1949, Claude Levi-Strauss introduced the collectivistic view of social exchange theory to explain how human societies are built. This theory rests on two main ideas: First, SET is a uniquely human behavior, and secondly, even though individuals have self-interests, those desires can't hold a society together on their own. This generalized model of SET involves multiple individuals, and the multiparty approach allows for even broader social connections (Cole et al., 2002, p. 145).
Following an individualistic approach, Peter Blau refined the economic basis of social exchange by arguing that people are drawn to relationships where they believe they will be rewarded. Since these come with risk, building trust over time is important. Blau’s theory ultimately suggests that high-quality relationships don’t come immediately, but instead trust needs to be earned slowly and mutually (Cole et al., 2002). To understand how these ideas were refined into a specific model used today, it is important to examine the contributions of the theory's primary scholars.