If you’re a manager, you may have heard about social exchange theory. It’s a concept that explains how people interact with each other and how they evaluate the benefits and costs of their relationships. In this article, we’ll explore what social exchange theory is, how it applies to management, and how you can use it to improve your team’s dynamics.

What Is Social Exchange Theory?

Social exchange theory is a concept that was developed in the field of sociology in the 1960s. It posits that people form relationships based on the benefits they receive from those relationships and the costs they incur. According to this theory, individuals are rational actors who weigh the pros and cons of their interactions with others before deciding whether to continue or end those relationships.

In social exchange theory, benefits can take many forms, including emotional support, financial assistance, access to resources, and more. Costs can also vary widely but may include time commitments, emotional stress, financial burdens, and others.

How Does Social Exchange Theory Apply to Management?

As a manager, social exchange theory can help you understand how your team members interact with each other and what motivates them to work together effectively. By recognizing the benefits that each team member brings to the table and addressing any costs associated with their work, you can foster positive relationships within your team that lead to greater productivity and job satisfaction.

For example, imagine that one of your team members frequently offers help to others when they are struggling with a task. This behavior provides a benefit to those who receive assistance but may come at a cost to the helper in terms of time or effort spent.

As a manager, you could acknowledge this behavior by publicly recognizing it or offering incentives for helping others. By doing so, you increase the benefits associated with this behavior while reducing its costs.

How Can You Use Social Exchange Theory in Your Management Approach?

To apply social exchange theory to your management style, start by identifying the benefits and costs associated with your team members’ work. Look for ways to increase the benefits and reduce the costs where possible. This may involve offering rewards or recognition for positive behaviors, providing additional resources or training to support your team’s work, or simply acknowledging and appreciating their efforts.

It’s also important to recognize that social exchange theory is a two-way street. You as a manager must also provide benefits to your team members and minimize any costs associated with their work. This can include offering fair compensation, providing opportunities for growth and development, and creating a positive work environment that fosters collaboration and open communication.


Social exchange theory provides a valuable framework for understanding how individuals interact with each other in social settings. By applying this theory to management, you can create a positive work environment that fosters strong relationships between team members and leads to greater productivity and job satisfaction. Remember to identify the benefits and costs associated with your team’s work, look for ways to increase the former while reducing the latter, and provide benefits of your own as a manager to create a mutually beneficial relationship between yourself and your team members.