Social exchange theory

Social Exchange Theory (SET) is a framework that explains social behaviour as a result of interactions based on the exchange of tangible and intangible resources. Central to SET is the norm of reciprocity, where individuals give benefits and expect rewards in return, striving to maximize gains while minimizing costs. This dynamic is driven by mutual benefit, with participants weighing costs and rewards, which can lead to loyalty, trust and long-term relationships. SET has evolved over time, with contributions from theorists like George Homans, Peter Blau and John Thibaut, each expanding on SET's principles by integrating concepts such as power dynamics, economic analysis and the role of obligations. SET is widely applied in employment relations (ER), where it helps to explain the reciprocal nature of employer–employee relationships. It emphasizes that fairness, trust and commitment are crucial for fostering positive workplace outcomes. The theory is particularly relevant in understanding how workplace exchanges, like pay or flexible working arrangements, impact employee behaviour, motivation and organizational outcomes. However, SET has faced criticism for oversimplifying social relationships and neglecting broader societal and institutional contexts. Critics argue that it does not fully address the complexities of social exchanges or the structural barriers employees may face. Future research in SET could explore the evolving workplace dynamics in the post-COVID era, the influence of technology like artificial intelligence (AI) on exchanges, and the broader political and economic barriers shaping workplace relationships.