What is Social Exchange Theory?

Social Exchange Theory is an important social psychology concept that concerns social changes as a process of interactive exchanges between different people. This theory is often used within the business world to explain and analyze commercial transactions.

What is the History of the Theory?

Social Exchange Theory has strong roots in the fields of economics, sociology and psychology. From a historical perspective, early psychologists focused on the principles of reinforcement, functionalism, and utilitarianism. In fact, the famous French anthropologist Claude Lévi-Strauss incorporated the important ethnographic principles of gift exchange and kinship systems into the theory of social exchange.

Interestingly enough, the theory of social exchange isn’t a unified and standardized theory. Instead, there are different theories that contribute to the overall theoretical framework. However, all viewpoints agree on basic assumptions about humans. For example, people generally seek rewards, avoid punishments and are rational beings.

What is the Fundamental Concept of the Theory?

The theory of social exchange views human interactions and exchanges as a kind of results-driven social behavior. The fundamental concept of the theory of social exchange is cost and rewards. This means that cost and reward comparisons drive human decisions and behavior. Costs are the negative consequences of a decision, such as time, money and energy. Rewards are the positive results of social exchanges. Therefore, the generally accepted idea is that people will subtract the costs from the rewards in order to calculate the value.

For example, a person asks an acquaintance to help them move, but they only slightly know each other. The acquaintance will assess their relationship history, the state of their relationship and the potential benefits. If the acquaintance doesn’t feel close to the person and doesn’t plan on pursuing a social relationship, they may decline. However, if the person promises certain favors, such as helping out the acquaintance with a difficult problem, they may agree.

What are the Basic Principles of the Theory?

The theory of social exchange proposes that individuals will make decisions based on certain outcomes. For example, they will expect the most profit, rewards, positive outcomes and long-term benefits. They will also prefer the exchange that results in the most security, social approval and independence. In contrast, they will also choose alternatives that result in the fewest costs, consequences and least social disapproval. Therefore, every social exchange decision can be a complex decision that requires the person to evaluate different costs and rewards.

Cross-Culture Perspectives

Cross-cultural researchers note that when analyzing the decisions of different societies, cultural values should be included in the process. This is because every culture has their own unique way of judging value, costs and rewards. For example, Asian societies, such as China and Japan, are collective cultures that emphasize group harmony and sacrifice for the group. Therefore, certain individual costs, such as personal freedom or happiness, are not as important as in individualized cultures. In fact, the negative costs of social disapproval are more severe in collective Asian cultures.

Applied Social Exchange Concepts

The theory of social exchange is uniquely applied in different fields. For example, the theory of social exchange is central to the business concepts of relationship marketing. From this perspective, the client is an investment that must be properly managed and cultivated. On the other hand, psychologists often analyze relationships within the framework of social exchange. This is because a couple’s relationship health depends on how the individuals involved measure the costs and rewards of their relationship.

To recap, the theory of social exchange is important to understand human interaction and decision making. The theory has excellent applications for real-world situations, such as understand business and interpersonal relationships. The Social Exchange Theory is something that everyone should understand and incorporate into how they make decisions.

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