EXCHANGE THEORY
George Homans, the father of social exchange theory, was interested in what determines changes in the behaviour of human relationships. Social exchange theory suggests that we essentially take the benefits minus the costs in order to determine how much a relationship is worth. Positive relationships are those in which the benefits outweigh the costs, while negative relationships occur when the costs are greater than the benefits.
OUTCOMES = REWARDS – COSTS
(Behaviour (profits) = Rewards of interaction – costs of interaction)
Exchange theory has been developed and refined by many different scholars over the years, but it is often associated with the work of George Homans and Peter Blau.
In Homans’ Exchange Theory, individuals make rational choices based on the rewards they expect to receive and the costs they anticipate having to pay. Rewards can be tangible, such as money or goods, or intangible, such as social approval or emotional satisfaction. Costs can also be tangible or intangible, such as time or effort or feelings of guilt or anxiety. Homans argued that people seek to maximize rewards and minimize costs in their social interactions. In other words, they engage in the process of cost-benefit analysis, assessing the rewards and costs associated with different behaviours and choosing the course of action that is most likely to result in a positive outcome.
On the other hand, Peter Blau is best known for his work on the social exchange theory, which builds on the principles of rational choice theory and emphasizes the importance of social exchange and interpersonal relationships in shaping social behaviour. He argued that social exchange involves a process of giving and receiving rewards and that social relationships are based on a balance of these exchanges. Blau’s research on organizational sociology focused on the structure and dynamics of organizations, particularly the effects of size, complexity, and diversity on organizational behaviour. He also studied the role of social networks in shaping organizational behaviour and the distribution of power within organizations.
Since Homans and Blau, many other scholars have contributed to the development of exchange theory, including Richard Emerson, Karen Cook, and James Coleman. Today, exchange theory remains a prominent perspective in social psychology and sociology.
Sociologists George Homans (1961) and Peter Blau (1964) were the first to find out the theory of social exchange theory in the late 1950s and early 1960s.
George Homans
George Homans, in 1958, created the social exchange theory. There are basically two main fundamental properties – one is self-interest and the other is interdependence. Whenever there occurs an exchange between two parties, then an individual is looking out for their own economic and psychological needs or benefits. They want to satisfy themselves that their needs are being fulfilled. And when there is any social exchange, then there is some sort of interdependence on one another. Two parties are mutually dependent on one another for any kind of social exchange. If this dependence provides a positive outcome, then the relationship will be held on good terms and will be continued and if in case the outcome is negative, the two parties won’t work together.
Peter Blau
Blau’s work was very much influenced by that of Homans. His focus was merely future-oriented. He was the one to motivate theorists to look forward. He thought if people overthink about the returns that they will be getting as a reward, then they won’t be able to learn the developing aspects of the social exchange.
The basic propositions of exchange theory
Exchange theory is a social psychology perspective that seeks to explain how individuals interact and form relationships based on the principle of mutual benefit. The theory suggests that individuals engage in social interactions in order to gain rewards and minimize costs. Here are some of the basic propositions of exchange theory:
Rewards and costs:
Exchange theory proposes that individuals seek to maximize rewards and minimize costs in their social interactions. Rewards can be tangible or intangible and may include things like material goods, social status, or emotional satisfaction. Costs may include time, effort, resources, or social rejection.
Interdependence:
Exchange theory posits that social interactions are characterized by interdependence, meaning that the behaviour of one person is influenced by the behaviour of the other person. In other words, the actions of one person can affect the rewards and costs experienced by the other person.
Comparison level:
Exchange theory suggests that individuals have a comparison level or a threshold for what they consider to be an acceptable level of rewards and costs in social interaction. If the actual level of rewards and costs falls below the comparison level, the individual may feel dissatisfied and may seek to change the interaction.
Comparison level for alternatives:
Exchange theory also proposes that individuals have a comparison level for alternatives, which is the threshold for what they consider to be the rewards and costs of alternative social interactions. If the rewards and costs of an alternative interaction are perceived to be higher than the current interaction, the individual may be motivated to switch to the alternative.
Equity:
Exchange theory suggests that individuals strive for equity in their social interactions, meaning that they seek a balance between the rewards and costs they give and receive. If an individual perceives an inequity in the interaction, they may seek to restore balance by adjusting their behaviour or seeking compensation from the other person.
Power:
Exchange theory acknowledges that power dynamics can influence social interactions. Power refers to the ability to control or influence the behaviour of others and can be used to increase rewards or decrease costs in an interaction.
Reciprocity:
Exchange theory suggests that social interactions are often characterized by reciprocity, meaning that individuals will respond to the actions of others in a similar way. If one person provides rewards to another, the other person is likely to reciprocate with rewards of their own.
Social exchange networks:
Exchange theory proposes that social interactions are not isolated events but rather occur within larger networks of relationships. These networks can influence the rewards and costs experienced by individuals in their interactions.
Time and history:
Exchange theory recognizes that social interactions can be influenced by factors such as time and history. For example, individuals may continue to interact with someone despite a temporary imbalance in rewards and costs if they believe that the interaction will be more beneficial in the long run.
Cultural variation:
Exchange theory acknowledges that social norms and cultural values can influence the expectations and behaviours of individuals in social interactions. Different cultures may have different norms regarding reciprocity, equity, and the use of power in social interactions.
From the above discussion, exchange theory provides a useful framework for understanding the dynamics of social interactions and how individuals make decisions about their relationships based on the principles of rewards and costs.
The behavioural perspective of exchange theory
The behavioural perspective of exchange theory is grounded in the principles of operant conditioning, which is a psychological theory that explains how behaviour is shaped by the consequences that follow it. Operant conditioning suggests that behaviour can be modified through the use of reinforcement, which is a process of strengthening a behaviour by rewarding it with positive consequences. Let’s talk about the following briefly from a behavioural perspective:
Social exchange is seen as a process of seeking reward or reinforcement through the exchange of resources with others. This exchange is governed by the expectations of reward and the consequences that follow different types of behaviour. Behaviours that have been reinforced in the past are more likely to be repeated in the future.
In addition to reinforcement, the behavioural perspective of exchange theory also considers the role of punishment or negative reinforcement in shaping social exchange behaviour. Negative reinforcement refers to the avoidance of a negative consequence or punishment, which can also influence behaviour.
The behavioural perspective of exchange theory also highlights the importance of social norms and expectations in shaping social exchange behaviour. Social norms define what behaviours are considered appropriate and desirable within a particular social context. Behaviours that are consistent with these norms and expectations are more likely to be reinforced and rewarded by others, while violating these norms may lead to negative consequences, such as social disapproval or rejection.
Thus, the behavioural perspective of exchange theory provides a useful framework for understanding the role of reinforcement and punishment in shaping social behaviour. By focusing on the rewards and punishments that individuals seek to gain or avoid through social exchange, this perspective can help to explain why individuals engage in certain behaviours and avoid others and how social relationships are shaped over time.
How do social scarcity, reciprocity and social cost of exchange work as an institutional base of social exchange behaviour
Social scarcity, reciprocity, and social cost of exchange are key institutional factors that shape social exchange behaviour.
Social scarcity:
Social scarcity refers to the idea that resources, opportunities, or other valued goods are limited within a social context. This can include things like jobs, housing, social status, or even attention and recognition from others. When resources are scarce, individuals may engage in social exchange as a way to acquire them. For example, in a job market with few opportunities, individuals may use their social networks to learn about job openings or to gain a referral from someone who has connections with a potential employer. Similarly, in a small community where social status is highly valued, individuals may engage in social exchange to gain status and recognition from others.
Reciprocity:
Reciprocity is another important institutional factor in social exchange. Reciprocity refers to the idea that individuals are more likely to engage in social exchange when they believe that their actions will be reciprocated in the future. This can create a sense of mutual obligation and trust among individuals and can help to establish and maintain social relationships based on mutual benefit. For example, individuals may offer assistance to a friend or neighbour in the expectation that they will receive help in return at a later time. This type of reciprocal exchange can help to build social ties and create a sense of community within a social context.
Social cost:
The social cost of exchange refers to the potential negative consequences that can result from engaging in social exchange. These costs can include things like social disapproval, loss of status or reputation, or even physical harm. When the social cost of exchange is high, individuals may be less likely to engage in social exchange or may seek to minimize their risk by only engaging in exchanges with trusted individuals. For example, individuals may be hesitant to offer their opinion in a group setting if they fear negative social consequences, such as being ridiculed or ostracized. Similarly, individuals may be cautious about engaging in business deals or financial transactions with unknown parties if they fear the risk of fraud or other negative outcomes.
When combined with the above, it provides an institutional base for social exchange behaviour. These factors shape the types of social exchange that are likely to occur in a given social context and can help to explain why individuals engage in certain types of social exchange while avoiding others. By understanding these institutional factors, we can gain a better understanding of how social exchange behaviour is shaped by broader social and cultural norms and how it varies across different social contexts.
References:
Homans, G. C. (1961). Social behaviour: Its elementary forms. Harcourt, Brace and World.
Blau, P. M. (1964). Exchange and power in social life. Wiley.
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