Social Exchange Theory



Social exchange theory is a critical social psychology concept that delves to highlight social shifts as being a way through which interactive exchanges occurs between different personnel. It is important to highlight that this theory has its roots in the fields of psychology, sociology and economics. However, it is interesting to highlight that this theory is not a standardized or unified theory (Solomon, 2014). Rather it is a combination of different theories that make huge contribution to the overall framework. The social exchange theory is based on fundamental concepts that human exchanges and interactions as being results driven social behaviour. Therefore, the underlying concept is based on there being rewards and cost which tend to drive behaviour and human decisions. For instance, costs are determined as being of significance as it is influenced by the negative consequences of a particular decision (Burgess, and Huston, 2013). 

On the other hand, rewards are termed as positive results that are characterized by social exchanges. Therefore, ultimately people tend to find the difference between rewards and the costs in the calculation of value. It is based on these concepts that these theory proposes that people tend to arrive at certain decisions based on particular outcomes. For instance, they will tend to expect long term benefits, positive outcomes, rewards and the most profit from a given interaction. That notwithstanding they will prefer those exchanges that bring about social approval and acceptance. On the contrary, they will be focused on alternatives that result to less consequences, fewer costs and low social disapprovals. Simply this theory is a complex decision making process which requires one to undertake a critical evaluation of the rewards and the costs (Mukai, M., 2014). Therefore, this paper will delve to highlight how the social exchange theory has been of critical importance in informing two marketing concepts; relationship marketing and the customer brand relationship perspective. Further, the theories of symbolic interaction theory and the equity theory will be used to further explain SET

SET theoretical framework

SET provides a vital lens for the examination of vital viral marketing and advertising processes in decisions through its application in three important areas. These include information and content sharing, customer brand relationships and interpersonal relationships. It is important to note that SET is of key importance in the conceptualizing and understanding viral advertising which entails the dissemination of information within the online network. That notwithstanding SET involves the conceptualizing on how interpersonal interactions are maintained and also constructed. It is vital to highlight that interaction are attained over a series of interrelation activities between different players. In such an interaction, there exists giving of gifts between the actors and both equitably benefit. For instance based on a Facebook context, there may exist a scenario where one party posts something that the other likes, the result is that when the latter party post something on their pages there will be a positive affirmation by the first party (Ngai, Tao, and Moon, 2015). 

From the SET, perspective in every exchange there is cost benefit analysis where there exists social actors who are mandated to analyse the likely value of the potential exchange with regard to the relationship that exists with the potential exchange partners. It is certain to note that the benefits and the costs can be both intangible and tangible in nature. Therefore, the occurrence of a series of interaction between the aforementioned parties results to the development of an emotional attachment which therefore results to the increase in trust between them (Craib, 2015). The product of trust is that both parties in the relationship end up attaching intrinsic value to the relationship and hence boost commitment. Such commitment acts a proper mechanism in the mitigation of risk that arises from the interaction with other unknown parties.

Relationship marketing

Relationship marketing first came to be termed as an extensive process which entails the attracting, maintenance and the enhancement of customer relationships. Simply it encompasses activities which are aimed at the establishment, development, maintenance and retention of successful relationships. On the contrary, there are scholars who note that a company’s effectiveness and efficiency is maintained and enhanced through the establishment of relationships with all the necessary company stakeholders. However, it is critical to observe that not all relationships are of importance or benefit to the company’s long term success all the time. Therefore based on this fact there ought to be a fundamental thesis that would encompass the strategies in relationship marketing in the identification, development and nurturing of proper relationship portfolio (Herman, Huang, and Lam, 2013). One theory that has been in use since the 1970s in highlighting relationship marketing has been the social exchange theory. It has widely been termed as one of the major theories and conceptual frameworks in the analysis of organizational behaviour. As most scholars would highlight that an exchange ideology as being of being great significance in the influencing of individuals sensitivity to job commitment, satisfaction and organizational politics; social exchange are used in the evaluation of the buyer seller relationships. SET outlines that there exist approximately six different resources that tend to have an influence on the interpersonal attachments. These resources include money, information, status, love, goods and services. 

SET has served as one of the critical theoretical foundations in the analysis of different marketing practice. One of the major theories that it has contributed to is relationship marketing. It is important to highlight that this theory stems from the economics and was further refined through the application of exchange theory. The latter theory tended to reflect on two questions; how exchanges are avoided, resolved and created, why organizations and people want to engage in exchange relationships. The presence of relationship trust and commitment is one of the most of the key aspects to any business as it creates a successful relationship marketing. Parties to a relationship that are committed end up expending effort in ensuring that relational bonds are maintained and strengthened (Cook et al 2013). The product of this is that it creates positive outcomes and improved performance. The type of relational bonds that exhibited by relationship partners is critical in the determination of relationship quality. The main characteristics that tend to influence the relationship bonds include the exchange efficiency, the reciprocity norms, trust and commitment. The existence of these aspects is of critical importance as it results to the creation of very strong relational bonds (Solomon, 2014). 

Customer brand relationship perspective

One of the major concepts that SET has helped advance over the years is the customer brand relationship perspective. This concept tends to conceptualize different brands as being social entities as bearing some humanistic characteristics aimed at improving the relationship with customers (Arnett and Wittmann, 2014).. That notwithstanding brands tend to be viewed as partners that are active in the relationship who engage in reciprocal exchanges fostering the interdependence with their clientele. In the building of proper customer brand relationships there needs to be numerous satisfactory interactions where customers end up building their trust on the brand hence causing brand satisfaction. It is important to note that both brand trust and satisfaction are of critical importance as they both combine in the determination of the commitment levels that customers have in regard to a particular brand. Solomon, (2014) notes that human beings tend to perceive brands as a form of self-expression. It is similar to interpersonal interactions which are usually a product of perceived cost benefit ratio. Likewise, with brands there exists such as relationships where customers tend to analyse their previous interactions with the brand where the consumer is more focused on maximizing their benefits and reducing uncertainties. It is based on these realizations that brands have become more active in conceptual brand relationships through the use of channels such as Twitter and Facebook (Boley et al 2014). These social media platforms have provided a means through which brands can reach their market. Therefore being active social partners there exists collaboration between the customer and brand in the commencement, preservation and even the obliteration of the existing relationship which leads to the creation of interdependence.  

Cognitive dissonance or equity theory

It is a critical theory in the explanation of social exchange theory as when an individual perceives the existence of an inconsistency in a social exchange then it is likely to create a cognitive dissonance state. In specific, this dissonance can be termed as the psychological discomfort that is as a result of an individual having two or more beliefs that are contradicting. Equity theory therefore tends to note that an individual is more likely to reduce a dissonance when they feel that there exist inequalities in a particular exchange. This theory came to be introduced in a buyer seller exchange setting where it notes that services and prices can act as an input that a company can utilise in swaying the decisions of its customers. For instance, when marketers introduce the use of free sample then it acts as an input which is likely to influence a reciprocation by the customer.

 It is clear to note that in such an exchange the reward is high for the customer as they have a chance to enjoy a free utilisation of the product and since they perceive the exchange as benefiting them they tend to reciprocate. The sample creates an imbalance in the exchange which will influence the customer to act. By offering the sample, the seller has more input in the exchange and the outcome in most cases is the purchase which reverts the exchange to equity. This theory holds similarities with the social exchange theory which outlines the existence of costs and rewards in any exchange. People tend to maximise their rewards and positively perceives those exchanges where their rewards are maximised.  ‘

From a marketing perspective, it is important that organizations are conversant with this theory in designing their marketing approaches and interacting with their customers. Different markets have different ways through which people tend to perceive different things. What acts as a reward in one areas can amount to a cost and therefore these causes many people to seek alternative interactions. Therefore it is based on this that cultural values ought to be part and parcel of the process as each culture has distinct way of judging rewards, costs and values (Hillebrand, Driessen, and Koll, 2015). For instance, the Asian societies of japan and China have similar cultures which tend to emphasize on group harmony. Therefore taking this into account particular individual costs such as happiness or personal freedom cannot be as important as when compared to individualized cultures. Negative costs that arise from social disapproval tend to be huge negative impact in Asian cultures. 

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Symbolic interaction theory

One of the theories that can best explain the social exchange theory is that symbolic interaction theory which is basically a theory about social interaction and behaviour. It tends to explain how people tend to navigate their interactions with other people and as a result they are able to derive cues and make interpretations that they receive from such interactions. It is important to note that this theory tends to concentrate more on the behaviour of an individual and not of a group of people. Simply it can be termed as a micro level to social theory. From a marketing perspective individuals tend to purchase a product based on the symbols that are attached by the society on the product (Baker, and Saren, 2016). Therefore, this theory notes that humans tend to be influenced strongly by the interactions they bear with reference groups or the society. This theory can be of key influence in explaining social exchange theory which notes that individuals tend to perceive more exchanges that they can gain more benefit. From a social interactionalism theory perspective a positive exchange with either a reference group or society is one that has tend to strongly influence a purchase. If an individual is not influenced by the aforementioned parties then the result is that they will not utilise their influence in making any consumer decisions. Simply consumer behaviour is strongly influenced by the exchanges or relationships that a customer has with either the company or other vital influencers. 

The content that an organization chooses to share is one that is very crucial. This is based on the fact that SET proposes and expressive and exchange theory of information sharing. In specific SET notes that the decision to share information online ought to be based on the cost and benefit analysis. Therefore, for there to relational equity the information being shared ought to be of benefit to the receiver and on the other hand the sharer of the information ought to realize both intangible and tangible benefits. It is therefore important to highlight that goals are both self-expressive and pragmatic in nature (Slater, and Tonkiss, 2013). A proper analysis of this aspect by any company’ marketing team is critical in ensuring that the information shared can yield new leads for the company and therefore expand its customer base. Content sharing ought to ensure that a company fosters positive relationship with its customers which therefore results to the increase in the referrals. This is largely attributed to the growth of trust as a result of the benefits that the exchange relationship has derived from content shared. 


Based on the analysis it has been clear that social exchange theory highlights that people are engaged in a relationship where costs are incurred and rewards are sought. However, people tend to be in exchanges where people tend to gain more value than costs. However, these rewards and costs are dynamic and are dependent on one’s needs. Therefore, it is critical for marketers to constantly evaluate the relationship that exists with its customers to ensure that trust and commitment is strengthened. Failure to understand the rewards that the company stands to benefit from the exchange and also the benefits that customers stand to gain would negatively impact on a company’s brand image. It is thus therefore important to note that the concept of social exchange theory is one that marketers ought to critically understand. 

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