Social Exchange Theory in Organizations and Workplaces

Table of Contents


Social exchange theory is based on the premise that the interactions and communications between human beings occur from the motivation of rewards and reduction of losses (Thibaut & Kelley, 1959). The theory is also built on the premise that the outcome of profitable relationships is generally durable trust and attraction (Blau, 1964). Additionally, it is believed that such social exchanges which are profitable tend to yield material and psychological benefits including status in life, loyalty from partners, and general approval in professional and personal life. This paper aims to analyze the importance of social exchange theory in organizations and workplaces and the impact it has on interpersonal relationships between individuals, the exchanges which occur between leaders and other members, and the overall behavior within an organization.


In my previous paper, I had noted that efficient leaders motivate their teams to deliver results which is why is extremely essential to understand different styles of leadership and the situations in which they can be effectively applied. The social exchange theory will facilitate the understanding of the distinct styles of leadership and how they benefit member communication to yield optimal results. My experience of teamwork and communicating with my teammates has benefited the overall functioning of the team. This paper aims to explore the impact of interpersonal and group communication and its positive effects on the outcomes of the team. The research is based primarily on the training session which occurred and included important levels of communication between all the team members during the preparation stage, the training session itself, and after the session concluded.


The “Coming together” of the team was an important experience of teamwork and communication between the team members and enables the building and development of “relationship competence” between the teammates. The forming of a suitable climate was an important goal in the process of communication so that the team could function effectively and yield positive outcomes. The primary question which will be answered in this research is the impact of social exchange theory in the intercommunication process of the team members and the overall smooth functioning of the team process.

The research will highlight the communication styles which occur within members of a team so that teamwork can be enhanced and people work in a team rather than individually. The paper will specifically benefit any teamwork activities which may occur in organizations and in colleges or academic institutions where individuals will be able to vibe well with each other and work in such a manner that the entire process is conducive and the outcome is positive. Once the project is complete, I would like this paper to be shared by all members of my working team so that they can review the matter and provide any vital inputs I may have missed, since they were a crucial part of the team project and have had a crucial impact on the final outcome of the team project.

Literature review

Social exchange theory postulates that people working in organizations enter into professional relationships to function effectively and “acquire valuable resources” including material benefits of salaries and reimbursement in addition to social appreciation, “trust, esteem and prestige” (Fuller, Hester, Barnett, Frey and Relyea, 2006; Blau, 1964). Individuals could receive support from their organizations in the form of social rewards from their colleagues and co-workers in the form of co-operation and collaboration for the accomplishment of several tasks and activities, popularly termed as “coworker exchange” (Sherony & Green, 2002). Additional support can also be gained from the communication between leaders and members which is commonly known as LMX (Dansereau, Graen, & Haga, 1975) in addition to supporting from members of the team, termed as “team-member exchange (Seers, 1989).

Exchanges between team members of an organization can occur at two levels of communicative exchange; simple direct exchange and exchange of activity. Simple direct exchange occurs by virtue of communication between two members of an organization or team in which one of the members provides some form of advantage or assistance to the other member and must be rewarded directly by the exchange partner from whom they have directly benefited and not by any other member or even the institution which they serve (Fuller et al., 2006).

The direct social exchange has been defined as behavioral interaction which takes place between individuals functioning in a small group or community or team (Homans, 1961). Homans (1961) also asserted that in exchange relationships between two individuals of an organization, there are a number of “indirect, interpersonal transactions” which have an important impact in the interaction between the two individuals, which are of vital importance because they could “supplement or even replace” the direct exchange which occurs between the members (Fuller et al., 2006).

However, researchers have noted that the occurrence of social communication between individuals of an organization does not necessitate direct social contact between two members of a team or institution; rather it requires merely the actions of either member to influence one another in their communicative interaction (Thibaut and Kelley, 1959). When individual members are engaged in direct exchange and communication with one another there is a great likelihood for them to earn status, not only from the direct communication but also in the “larger social context” of the organization (Homans, 1961). For instance, the team activity for the preparation of interviews conducted by members of my team is likely to be beneficial to all the individual members through their active exchange for the successful planning, execution, and accomplishment of the activity.

In addition, it is also likely to benefit each of the individual members of the team for their contribution to the organization as a unit, when the process of interviews occurs optimally and the organization gains praise and financial gains from the collective members of the team. In this way, the individual members of the team not only gain rewards from building successful relationships and executing tasks through effective communication but also benefit from the status they gain from the employer or the organization as a whole (Homans, 1961).

Researchers have noted that individuals working in organizations and institutions generally strive to seek some association or bonding with “high-status individuals” or leaders because of their potential to yield optimal results in addition to the ability to gaining rewards through direct exchanges which they engage in (Thibaut and Kelley, 1959). Through associations with individuals reflecting leadership skills and traits, team members and colleagues “gain status and approval indirectly” through their communication and exchanges with other members who display leadership qualities (Fuller et al., 2006). Thus, members may attain status due to their relationship with another member of the team who illustrates leadership skills, which can be termed as “relational rewards” (Levinger & Huesmann, 1980).


Thus, members of the team who are skilled in leadership roles will impact the functioning of the team in positive ways so that the successful outcome will benefit all the members of the team through the exchanges and guidance of their leader. Through this exchange and interaction of positive communication, leaders have the ability to benefit not only themselves but also those with whom they collaborate and work. Social exchange theory is therefore crucial to management and communication since it explains the theories of communicative and interactive exchanges between members of organizations and how these exchanges prove beneficial to them to achieve personal as well as organizational rewards.


Blau, P. M. (1964). Exchange and power in social life. New York: Wiley.

Dansereau, F., Graen, G., & Haga, W. J. (1975). A vertical dyad linkage approach to leadership within formal organizations. Organizational Behavior and Human Performance, 13, 46-78.

Fuller, J. Bryan, Kim Hester, Tim Barnett, Len Frey, and Clint Relyea (June 2006) Perceived organizational support and perceived external prestige: predicting organizational attachment for university faculty, staff, and administrators. The Journal of Social Psychology 146.3: 327(21).

Homans, G. C. (1961). Social behavior: Its elementary forms. New York: Harcourt, Brace, & World.

Levinger, G., & Huesmann, L. R. (1980). An “incremental exchange” perspective on the pair relationship: Interpersonal reward and level of involvement. In K. Gergen, M. S. Greenberg, & R. Willis (Eds.), Social exchange: Advances in theory and research (pp. 165-188). New York: Plenum.

Seers, A. (1989). Team-member exchange quality: A new construct for role-making research. Organizational Behavior and Human Decision Processes, 43, 118-135.

Sherony, K. M., & Green. S. G. (2002). Coworker exchange: Relationships between coworkers, leader-member exchange, and work attitudes. Journal of Applied Psychology, 87, 542-548.

Thibaut, J. W., & Kelley, H. H. (1959). Social psychology of groups. New York: Wiley.

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