Social exchange theory is a concept that has been widely used in the field of business relationships. It refers to the idea that individuals engage in social interactions with the expectation of receiving rewards or benefits. These rewards can be either tangible or intangible, and they play a crucial role in shaping our behavior towards others.

What Is Social Exchange Theory?

Social exchange theory is a theoretical perspective that explains how people interact with each other based on their expectations of rewards and costs. It suggests that individuals strive to maximize their benefits and minimize their losses in any given social interaction. This approach considers social behavior as an economic transaction, where people are constantly evaluating the costs and benefits of each interaction.

Benefits of Social Exchange Theory

One of the most significant advantages of social exchange theory is its ability to explain complex human relationships in business settings. Businesses operate under strict guidelines and rules, but at the core, all businesses rely on human relationships to succeed. Social exchange theory provides insight into why some business relationships work while others fail.

The Role of Rewards in Social Exchange Theory

Rewards play a central role in social exchange theory. When we interact with others, we expect some form of reward or benefit from the interaction. These rewards can be tangible or intangible, such as money, recognition, job satisfaction, or respect from our peers.

When businesses understand what motivates employees or customers, they can design strategies that leverage these motivations to improve performance or increase customer loyalty.

The Importance of Trust

Trust is another critical concept in social exchange theory. Trust is essential because it acts as a foundation for any social exchange to occur. When individuals enter into a social interaction, they do so with some level of trust that the other party will fulfill their obligations.

In business relationships, trust plays a crucial role. Without trust, it is challenging to build strong and long-lasting relationships with employees, customers, or partners.


Social exchange theory provides a valuable framework for understanding human behavior in business settings. By considering interactions as economic transactions, businesses can gain insights into how to motivate employees and build strong relationships with customers and partners.

Understanding the role of rewards and trust in social exchange theory can help businesses develop effective strategies to improve performance, increase customer loyalty and build long-term relationships.