Social Exchange Research Paper

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Social exchange theory has its origins in the field of sociology in the work of George C. Homans and Peter Blau. Homans’ (1958) famous paper entitled ‘Social Behavior as Exchange’ laid the foundations of this orientation to the study of behavior. He subsequently expanded these ideas in Social Behavior: Its Elementary Forms, published in 1961 (1974). The primary focus of his work is what he referred to as ‘subinstitutional’ or elementary behavior, the actions of individuals in direct interaction with one another that form the bedrock of groups and/organizations. He contrasted elementary behavior with institutionalized forms of behavior, such as that involved in conforming to norms or to role prescriptions for appropriate behavior. For Homans, institutionalized behavior and elementary forms of behavior were most often distinct. He argued that elementary behavior could sometimes ‘crack the institutional crust,’ forcing changes in the institutionalized ways of doing things (e.g., the changes in social behavior and institutions forged by rebellions and revolutions).

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1. Major Theoretical Formulations: Blau And Homans

Blau (1964), in his famous book, Exchange and Power in Social Life, developed a much more extensive treatment of the links between microlevel social behavior and the groups, organizations, and institutions it constitutes. A major difference between the perspectives of Homans and Blau is the latter’s recognition of ‘emergent’ processes at more complex levels of social organization. For Blau the whole is more than the sum of its parts. Relationships between the parts or elements of the structure create emergent processes that evolve from the interaction of the parts, but are not reducible to properties of the individual elements. Homans, in contrast, adopted a reductionistic orientation to explanation using exchange principles arguing that many of the ‘laws’ of social organization could be understood in terms of the behavior of the interacting parts, typically individuals. For this reason, according to Homans, psychological principles ultimately laid the foundation for the laws of elementary social behavior.

While Homans’s efforts were aimed at understanding elementary behavior, Blau’s aim was much more macro in focus. He intended to formulate a theory of social structure and institutions based upon a sound microfoundation. He presents his book on social exchange as a prolog to a theory of social structure. The origin of Blau’s vision of social behavior was not behaviorism, as in Homans’s case; rather, it was a more sociological version of microeconomics, which he labeled ‘social exchange theory,’ borrowing the term from Homans. (For a lengthy critique of Blau’s use of microeconomic reasoning see Heath 1976, among others.) In many ways Blau’s work was one of the first major theoretical efforts to extend the logic of microeconomics to the analysis of social behavior, a task that much later won Gary Becker the Nobel Prize in Economics. Homans instead based his analysis of the social behavior he called ‘exchange’ on principles of behavioral analysis derived from the work of the behaviorists famous at the time he wrote. A major influence upon his theoretical work was the empirical research of B. F. Skinner, his well-known colleague at Harvard.

Both Homans and Blau addressed indirect exchange processes, though such processes form a much more significant component of Blau’s theoretical formulation. Homans acknowledged the importance of the indirect ties that actors have who are in direct exchange with the same sets of individuals. For example, employees of the same employer have indirect exchange relations with each other through their direct contacts with their employer. Blau extends the analysis of indirect exchange, acknowledging the role it plays in larger and more complex collectivities. In particular, Blau views indirect exchange as the basis for coordinated action in complex social structures (and the substructures of which they are composed). This coordination of action through indirect exchange in larger collectivities necessitates mediation by common values, which can be the focus of opposition and conflict, especially as the social structures involved become more complex. Blau discusses group formation, cohesion, integration, differentiation, opposition, conflict, and dissolution as forces of structural change and stability in complex social structures. These forces play a major role in his theory of social exchange as he endeavors to provide a comprehensive microfoundation for macrosociology. Homans and Blau were both engaged in distinctive efforts to produce a coherent theoretical alternative to Parsonian functionalism, the dominant paradigm in sociology until the late l960s.

2. The Roots Of Social Exchange Theory

Somewhat independently, Homans and Blau developed their theories of social exchange even though each had been well-versed in functionalism and Parsons’s social systems approach to the analysis of society. The vestiges of both traditions are clearly evident in Blau’s treatment of social exchange, though much less so in the work of Homans who labored skillfully to ground his theory of exchange explicitly on Skinnerian principles of behavioral analysis, repudiating the need for more macrolevel concepts and principles. Blau’s goal was to produce a theory of social structure by clarifying the nature of the social processes and associations that generate the more complex structures of organizations, communities, and societies. He explicitly attempted to link the sociology of everyday life popularized in the work of Simmel and Goffman with the broad theories of society characteristic of Weber and Parsons. Unlike Homans, however, his focus on the interpersonal was primarily as the basis for theorizing about more complex forms of association.

2.1 Psychological Roots

Besides functionalism and Parsons’s version of systems theory other influences on the development of social exchange theory came from an eclectic set of sources including pragmatism, utilitarianism, behaviorism (for Homans), and conflict theory (in the case of Blau’s work). Turner (1986) provides a fairly accurate and detailed account of the various roots of social exchange theory in his discussion of the development of this theoretical orientation and its impact in the field of sociology. In addition to these sources of influence, the major works of several psychologists and anthropologists provided further impetus to the development of the exchange paradigm in sociology. The dominant contribution from psychology is the work of John Thibaut and Harold Kelley (1959), The Social Psychology of Groups. This volume presents a lengthy treatment of the forms of interdependence among individuals engaged in various types of social interaction. In matrix format it lays out the rewards and costs attached to different behaviors under varying conditions of interdependence. The framework is used to make predictions about behavior given different types of control over the outcomes of the other actor(s) in the situation. For example, Thibaut and Kelley (1959) distinguish behavior control from fate control in social relationships using their basic orientation to interdependence. Their work formed the basis of much experimental research over the next two decades, particularly on cooperation, competition, negotiation, and coalition formation. It also dovetailed nicely with the emergence of game theory in the social sciences as a tool for understanding strategic interactions.

2.2 Anthropological Roots

The early work of anthropologists like Levi-Strauss ([1922] 1969), Malinowski (1922), and Mauss (1925) influenced exchange theory in an entirely different way. Sociologists drew upon the fieldwork of these scholars to provide examples of the significance of social exchange, often contrasted directly with economic exchange. Malinowski (1922), for example, in his comprehensive analysis of the Kula Ring among the Trobriand Islanders, argues that the exchange of arm bands for necklaces across the islands over time was an important source of social solidarity, the significance of which far exceeded the economic value of the items exchanged. Blau (1964), and subsequently Richard Emerson (1972, 1981), developed conceptions of indirect exchange and generalized exchange based to some extent upon Malinowski’s extensive fieldwork. Mauss’s (1925) complex analysis of the gift also provided input to the development of theory concerning generalized exchange and reciprocity (see also Molm, 1997, on reciprocal or non-negotiated exchange).

3. Exchange Theory: Empirical Research

Homans and Blau popularized exchange theorizing in sociology in the late 1960s and early 1970s, but sustained empirical research on the topic did not begin until the mid-1970s largely as a result of the influence of Emerson’s (1972) more formal theoretical work, based upon his earlier treatment of power-dependence relations (1962). Ironically, Emerson’s work on power-dependence relations also influenced Blau’s (1964) discussions of power and power gaining strategies. Emerson built a conception of social exchange around his fundamental insights concerning power in social relations. He, like Blau, made power and inequality central to his treatment of exchange processes. Similarly, like Blau, he viewed his theory of social exchange as the beginning steps toward formulating a general theory of social structure. In Emerson’s case, however, the structures of primary interest were the networks formed as a result of the connections among a set of actors engaged in social exchange with one another. Two of Emerson’s distinct contributions to exchange theory in sociology are his fundamental insight into the relational nature of power and his extension of exchange theory to analyze the social networks created by exchange relations.

Before expanding upon these two major contributions to the development of exchange theory it is worth noting that Emerson’s first efforts to formulate a theory of social exchange had more in common with Homans’s work than that of Blau, despite their common goal in building a theory of social structure. In the two papers written in 1967 (and subsequently published in 1972) in which Emerson laid out the foundations of his theory of exchange, he formulated a model of the actor built on principles of behavior analysis adopted from Skinner via Homans. Key concepts include reward (positive reinforcement), cost (rewards foregone), alternative exchange relations, dependence, and balance. Propositions are formulated based upon the basic reinforcement notions of behavior first introduced into exchange theory by Homans.

3.1 Emerson’s Theory Of Exchange Relations

A central focus of Emerson’s theoretical framework is the exchange relation as the unit of analysis. As Turner (1986) notes, this move makes exchange theory less vulnerable to charges of tautology and reductionism. Emerson’s goal is to present a theory of the formation, maintenance, and termination of exchange relations and the forms of social structure created by connected exchange relations (e.g., networks of exchange). Less critical in this theoretical formulation is the precise nature of the values of the actors involved or the cognitive structure of their interests. Assuming actors enter exchange relations for reasons of reward (or avoidance of negative reinforcement in alternative relations), the focus shifts to understanding aspects of the exchange relations and the structure of the networks or groups in which they are embedded. The emphasis on the social relation as the unit of analysis distinguishes Emerson’s work from that of Homans and Blau and allows Emerson to present a more coherent theory of social structure.

3.2 Power And Dependence In Exchange

The primary legacy of Emerson’s work on social exchange is his conception of how power is determined by the dependence of one actor upon another in an exchange relation and how dependence is structured by the nature of the connections among actors in networks of exchange opportunities that deny or provide access to exchange alternatives. The key definition of power in Emerson’s formulation is: The power of actor A over actor B in the Ax: By exchange relation (where x and y represent resources of value) increases as a function of the value of y to A, and decreases proportional to the degree of availability of y to A from alternative sources (other than B). These two factors (resource value and availability) determine the level of B’s dependence upon A and thus A’s power over B. That is, the power of A over B is a direct function of B’s dependence upon A in the A: B exchange relation. The more dependent B is upon A, the more power A has over B. Embedding this relationship in a network of exchange opportunities creates the basis for a structural theory of power in exchange networks.

Exchange relations are connected to the extent that exchange in one relation affects or is affected by the nature of the exchange in another relation. The connection according to Emerson’s work can either be positive or negative. A negative connection means that exchange in one relation reduces the amount or frequency of exchange in another exchange relation involving one of the same parties (e.g., the A–B and B–C exchange relations are negatively connected at B if exchange in the A–B relation reduces the frequency or amount of exchange in the B–C relation). A connection is positive if the amount or frequency of exchange in one relation increases the amount or frequency of exchange in an exchange relation involving at least one of the parties to both exchanges (e.g., the A–B relation is positively connected to the B–C relation if exchange in the A–B relation increases the frequency or amount of exchange in the B–C relation). These are modal cases; however, exchange in two relations may also be ‘mixed,’ involving both positive and negative exchange connections relating to different aspects (or dimensions) of exchange. Exchange in more complicated networks often involves both positive and negative connections (see Cook et al. 1983).

3.3 Exchange Networks

Emerson (1972, 1976, Cook and Emerson 1978, etc.) expanded this important direction of development in exchange theory in subsequent publications formulating what is now known as ‘exchange network theory.’ A similar perspective was developed later by Markovsky et al. (1988) that came to be known as ‘network exchange theory.’ It derives from Willer’s (e.g., Willer and Anderson 1981) ‘elementary theory’ of social relations that has an affinity with exchange concepts, but is not derived from Emerson’s power dependence perspective. These traditions of work in recent research have much in common, despite the remaining subtle differences in assumptions about actor behavior, network connections, and bases of power. In all of these programs of research the main focus of the early empirical work was determining the structural determinants of the distribution of power in networks of varying configurations.

Early debates about the value of exchange theory in the social sciences centered on the role of rationality, tautology, and reductionism (see Emerson 1976). These debates gave way during the 1980s and 1990s to more sophisticated arguments in the field concerning theoretical strategy and the best ways to develop microlevel models of exchange that inform macrolevel processes. More complex theoretical formulations emerged during this period based on the results of careful empirical work, much of it experimental, testing the fundamental propositions derived from exchange theory. Emerson’s formulation provided the impetus for much of this empirical work primarily because he formalized the theory to make it more precise and therefore testable. Subsequent formulations adopted a similar theoretical strategy (e.g., Markovsky et al. 1988, Bonacich 1998, Bienenstock and Bonacich 1992, Friedkin 1992, Skvoretz and Willer 1993, Yamaguchi 1996).

3.4 Key Assumptions Of Exchange Theory

The key assumptions of exchange theory summarized recently by Molm (1997, see also Molm and Cook 1995, p. 210) include: (a) behavior is motivated by the desire to increase gain and to avoid loss (or to increase outcomes that are positively valued and to decrease outcomes that are negatively valued); (b) exchange relations develop in structures of mutual dependence (both parties have some reason to engage in exchange to obtain resources of value or there would be no need to form an exchange relation); (c) actors engage in recurrent, mutually contingent exchanges with specific partners over time (i.e., they are not engaged in simple one-shot transactions); and (d) valued outcomes obey the economic law of diminishing marginal utility (or the psychological principle of satiation). Based on these core assumptions various predictions are made about the behavior of actors engaged in exchange and the effects of different factors on the outcomes of exchange. The power-dependence principle, in addition, allows for the formulation of predictions concerning the effects of increasing the value of the resources involved in the exchange and the availability of resources from alternate sources.

4. Power Inequalities

Empirical work since the early 1980s has established several primary facts about exchange in networks of social relations. Power inequalities in networks of exchange are determined by access to valued resources in the network. The networks structure this access by providing connections or links to certain actors and restricting access to others. The structure of the network determines the accessibility of resources and thus the nature of the distribution of power in the network (see, e.g., Cook and Emerson 1978, Cook et al. 1983, Markovsky et al. 1988, Whitmeyer 1999).

In exchange relations characterized by power inequalities the use of power varies depending upon whether the actors control positive or negative outcomes. Extending the theory to deal with the exercise of coercive power within social exchange relations, Molm (1997) has produced new insights into the nature of power relations in situations in which the actors have not only reward power, but also punishment power. Comparing the behavioral effects of the use of different bases of power in social exchange relations, Molm demonstrates that the results that hold for the exercise of reward power do not hold for the use of punishment. Specifically, punishment power is used much less frequently, in part because it carries with it the risk of withdrawal from the relationship on the part of the target of the punishment to the extent that the relationship can be exited. (Molm focuses primarily on exchange relations that are voluntary; that is, both parties have some degree of control over their involvement in the exchange and can exit if they so desire.) However, when punishment power is used it tends to be very effective in modifying behavior to make the relations more mutually rewarding in the long run. According to Molm (1997, p. 268): ‘When punishment is administered contingently and consistently, coercion is a powerful means of getting what one wants.’ However, coercive power is used rarely.

4.1 Coercive Power

Integrating the analysis of coercive power with reward power in social exchange relations allows for the investigation of a wider range of social situations in which more complex exchanges occur. Frequently, those involved in ongoing exchange relations have control over both rewards and punishments (even if it is only the withholding of rewarding behaviors). In addition, Molm’s (1997) work has made a major contribution to the analysis of the strategic use of structurally based power advantages and disadvantages. As she correctly notes, the missing link in Emerson’s (1962, 1972) original work on powerdependence relations was the nature of the precise mechanisms that relate structural determinants of power with the actual use of power by those in positions of power. In this effort norms of fairness or justice and attitudes toward risk play a key role. Conceptions of fairness constrain the use of power under some conditions, especially the use of coercive power, and aversion to risk makes some actors unwilling to use the structural power at their disposal for fear of loss.

4.2 Risk And Uncertainty

Recently additional empirical research has been conducted that extends exchange theories to deal with the effects of important factors such as uncertainty and risk on the nature and structure of social exchange. Facing uncertain environments, actors involved in exchange are more likely to seek to form committed exchange relations (Cook and Emerson 1978, Kollock 1994, Lawler and Yoon 1996). Commitment reduces the extent to which actors seek exchange with alternatives and thus serves to reduce the power inequalities both within the exchange relation and within the network in which the relation is embedded. As Kollock’s (1994) work demonstrates, uncertainty not only results in commitment formation as a means of reducing uncertainty, it also tends to be correlated with perceptions of trustworthiness of the actors involved in the exchange relations.

Yamagishi et al. (1998) report that trust emerges in exchange relations under conditions of high uncertainty as actors form commitments to exclusive exchange in an attempt to avoid the possibility of exploitation by unknown actors who enter the exchange opportunity structure. Under conditions of low uncertainty actors are much more likely to continue to ‘play the market’ and to avoid forming commitments to specific partners in order to maximize their access to valued resources. (Uncertainty in these experimental studies referred to the likelihood of being exploited by a new partner in an exchange network of opportunities that changes over time.) In the current work on trust, uncertainty and vulnerability are often defined as two of the key elements of situations in which trust considerations are paramount (e.g., Heimer 2001).

5. Relational Cohesion And Social Exchange

Lawler and his collaborators (e.g., Lawler and Yoon 1993) have developed a new theory of relational cohesion based on principles of social exchange. The focus of this work is to examine the conditions under which social exchange relations emerge out of opportunities for exchange and are linked to the emergence of positive emotions about the exchange relation. These positive emotions and subsequently conceptions of cohesion or solidarity, Lawler argues, develop based upon positive evaluations of the outcomes of ex-changes between actors and the frequency of their exchange. Low frequency and unfavorable (or less favorable) outcome exchanges are much less likely to lead to commitment to the relation, to positive feelings about the exchange, and to feelings of cohesiveness or solidarity (i.e., what Lawler terms a ‘we-feeling’). The significance of this new line of research is that it returns to some of the earlier anthropological work that examines the links between exchange and solidarity in social relations. It also integrates into existing theoretical conceptions of exchange theory important considerations of the emotional bases of exchange and commitment.

6. Applications Of The Theory

Applications of exchange theory and power dependence concepts extend from dyadic relations like dating and longer-term relationships including marriage (e.g., Sprecher and Metts 1999) to often shortterm relations characteristic of various practitioner– client interactions (such as physician–patient meetings under managed care, see Grembowski et al. 1998). In these contexts the focus of the analysis is often on the nature of the relationship and the factors that predict satisfaction (or dissatisfaction) and longevity (or termination) of the relation. Two dimensions that are frequently investigated in this respect are the degree of power imbalance in the relationship and the extent to which the relationship is embedded in a network of other important exchange relationships. Power imbalance in partnerships often creates additional tension in the relation as actors try to manage the resource differences between the parties to the exchange and attempt to maintain commitments in the face of alternatives. Within an organizational structure such as that produced under managed care in the health care delivery system, choice of provider is often limited exacerbating patient concerns with their dependence upon the available physicians. Mechanisms are put into place to provide patients in these settings access to redress if the power of the physician is abused. These include increased professional and utilization reviews by colleagues, administrators, and those who insure the patients. In all cases in which a power imbalance exists in an exchange relation there is the potential for exploitation, thus widely differing mechanisms have been created that serve to provide some monitoring to insure the equitable and fair treatment of those who are most dependent and thus vulnerable to the abuse of power. A prime example is the oversight demanded frequently in nursing homes that must deliver care to one of the most dependent populations in the USA, the infirm aged. Aspects of both power-dependence theory and exchange theory have proven useful in the study of power processes in many contexts.

At the more macro level, exchange networks now represent an interesting framework for analyzing the Internet revolution in business, as well as the reorganization of the workplace and the rapid increase in interpersonal connections over the World Wide Web. B2B (business to business) commerce becomes the dominant mode of conducting transactions at the macro level. Business to client (B2C) relations has now been superseded in significance by the global transformation of corporate relations. These relations represent complex networks of exchange and trade that include not only economic, but also political and social dimensions of transnational significance. Future research will likely see the expansion of exchange analyses of power in global networks of trade embedded in complex social and political realities.


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