I consider the social exchange theory to be one of the most influential paradigms in organizational behaviour. The exchange perspective views the employment relationship as comprising social or economic exchanges (Bryne, 2003).
Social exchange theory argues that employees will trade their efforts for the promise of rewards. I base the social exchange theory on five central elements.
The first element is that behaviour is predicted by the notion of rationality; individuals will behave in a way if they believe behaving in that way will give more rewards.
The second element is that each individual relationship benefits the other so long as the exchange is fair. The third element is that it bases the theory on a justice principle; for every exchange, there must be fairness governing behaviour.
The next element of the theory is that individuals will always seek to maximize gains and reduce costs and losses.
The last element is that individuals take part in a relationship out of a sense of mutual benefit rather than coercion (Searle, 2008).
Social exchange theory, therefore, suggests that employees who value benefits received from their organization, such as pay, fringe benefits or working conditions, will reciprocate with more positive work attitudes.
The theory posits that individuals form social exchange relationships if they receive worthwhile benefits and that they assign these benefits (Crapanzano et al., 2001; Haar, 2006).
Therefore, employees perceiving negative and distressing workplace conditions are likely to reciprocate with negative work attitudes.
While those perceiving the workplace conditions as positive and challenging will reciprocate with positive work attitudes.
It is, therefore, expected that employees dissatisfied with their financial and non-financial rewards are likely to reciprocate with negative work attitudes.
Such job dissatisfaction, low morale and reduced organizational commitment,
while those who perceive their rewards as satisfactory are likely to reciprocate with positive work attitudes,
Such as high commitment, job satisfaction and low turnover.
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