Theories of Social Exchange and Exc

Theories of Social Exchange and Exchange Networks

As anthropologists first recognized, many forms of social interaction outside the economic sphere can be conceptualized as an exchange of bene®ts. Both social and economic exchange are based on a fundamental feature of social life: much of what we need and value (for example, goods, services, companionship) can only be obtained from others. People depend on one another for these valued resources, and they provide them to each other through the process of exchange. Social exchange theorists take as their focus this aspect of social life the benefits that people obtain from, and contribute to, social interac-tion, and the opportunity structures and relations of dependence that govern those exchanges. Unlike classical microeconomic theories, which traditionally assumed indepen-dent transactions between strangers, social exchange theorists are primarily interested in relations of some length and endurance. This emphasis on the history of relations reflects the influence of behavioral psychology, the other discipline that played a key role in the theory's development.

Contemporary social exchange theory diverges from both psychology and microeconomics in its emphasis on the social structures within which exchange takes place. Whereas early exchange theorists primarily examined two-party relations, contemporary theorists situate those exchanges in the context of larger net-works, and explore how actors' structural opportunities for exchange with alternative partners affect power, coalition formation and related processes.

In this chapter I discuss the scope and accomplishments of contemporary exchange theories in the context of their historical roots and future prospects. I begin with an overview of the basic concepts and assumptions that all approaches share and a brief review of the contributions of early theorists. I then turn to contemporary theories and research programs, considering their similarities and differences, their achieve-ments and the challenges that remain for future work. Because earlier exchange theories are reviewed in depth elsewhere (for example, Molm and Cook, 1995; Ritzer, 1996; Turner, 1986), I focus most of my attention on more recent developments. Basic concepts and assumptions All exchange theories share a common set of analytical concepts and certain assumptions. These describe the basic `building blocks' of social exchange: actors, resources, structures and processes.

Actors and resources
Participants in exchange are called actors. Actors can be either individual persons or corporate groups,1 and either specific entities (a particular friend) or interchangeable occupants of structural positions (the president of IBM). This exi-bility allows exchange theorists to move from micro-level analyses of interpersonal exchanges to macro-level analyses of relations among organizations.

When an actor has possessions or behavioral capabilities that are valued by other actors, they are resources in that actor's relations with those others. Social exchange resources include not only tangible goods and services, but capacities to provide socially valued outcomes such as approval or status. Actors who perform an act as part of an exchange incur some cost to self and produce some outcome for another. The costs incurred always include opportunity costs (rewards forgone from alternatives not chosen) and some-times investment costs, material loss, or costs intrinsic to the behavior (for example, fatigue). The outcomes produced for others can have either positive value (gain or reward) or negative value (loss or punishment).

Exchange theories make no assumptions about what actors value; they might value riches and fame, time with family, or environmental causes. But virtually all exchange theories assume that actors are self-interested, seeking to increase outcomes they positively value and decrease those they negatively value.2 They differ in the extent to which they assume a rational actor model, derived from microeconomics, or a `learning model', adopted from behavioral psychology. In the former, actors cognitively weigh the potential benefits and costs of alternatives and make rational choices that seek to maximize outcomes; in the latter, actors respond only to the consequences of past choices, without conscious weighing of alternatives (and often without maximizing outcomes). Both classical and contemporary theories vary in their relative adherence to these two models.

Exchange structures

Exchange relations develop within structures of mutual dependence, which can take several forms: direct exchange, generalized exchange and productive exchange. In relations of direct exchange between twoactors, eachactor's outcomes depend directly on another actor's behaviors; that is, A provides value to B, and B to A (Figure 20.1a). In relations of generalized exchange among three or more actors, the reciprocal dependence is indirect: a benefit received by B from A is not eciprocated directly, by B's giving to A, but indirectly, by B's giving to another actor in the network. Eventually, A may receive a `return' on her exchange from some actor in the system, but not from B

Although generalized exchange was a particular interest of early anthropological exchange theorists (and, increasingly, of contemporary sociologists), relations of direct exchange have dominated research and theorizing for the past thirty years. Structures of direct exchange can consist of isolated dyads or networks of connected dyadic relations (Figure 20.1a). Networks can vary substantially in size, shape and type of connection, as I discuss later. These distinctions and their effects on exchange are the focus of many contemporary theories.

Exchange processes
The process of exchange describes how interac-tion takes place within exchange structures. Exchange opportunities provide actors with the occasion to initiate an exchange; when an initiation is reciprocated (or an offer accepted), the mutual exchange of bene®ts that results is called a transaction. An ongoing series of trans-actions between the same actors constitutes an exchange relation.

Transactions in direct exchange relations take two main forms: negotiated and reciprocal. In negotiated transactions (buying a car, dividing household tasks), actors engage in a joint decision process, such as explicit bargaining, in which they reach an agreement on the terms of the exchange. Both sides of the exchange are agreed upon at the same time, and the benefits for both partners comprise a discrete transaction. In reciprocal transactions, actors' contribu tions to the exchange are separately performed and non-negotiated. Actors initiate exchanges without knowing whether or when others will reciprocate, and exchange relations if they develop take the form of a series of sequentially contingent, individual acts; for example, you comment on a colleague's paper, she lectures in your class, and so forth.

Historical background

As Turner (1986) has observed, the philosophical roots of social exchange begin with the assumptions of utilitarian economics, broaden to include the cultural and structural forces emphasized by classical anthropologists, and enter sociology after further input and modification from behavioral psychology. The sociological development of the exchange perspective was particularly influenced by Blau (1964), Homans ([1961] 1974) and Thibaut and Kelley (1959), whose theories were published within a few years of one another. These early works demonstrated the ubiquity of exchange processes in social life, introduced key concepts that in¯uenced later theorists and established the importance of the exchange perspective for the study of social interaction.

Despite Blau's efforts to bridge the gap between interpersonal exchanges and more complex social systems, the focus of these early theories remained primarily dyadic. They also tended to stimulate more theoretical controversy than empirical research, as critics raised charges of psychological reductionism, tautological reasoning and the like (Emerson, 1976). Later, more sophisticated theories addressed most of these shortcomings, but some of the breadth and richness of the early theories was also lost and is only now beginning to be reclaimed. Emerson's contribution: the turning point The publication of Emerson's exchange formulation (1972a, 1972b) marked the beginning of a new stage in the theory's development. His approach departed from earlier formulations in three important ways. First, Emerson replaced the relatively loose logic of his predecessors with a rigorously derived system of propositions that were more amenable to empirical test. Second, he established power and its use as the major topics of exchange theory ± topics that would dominate research for the next twenty-five years. Third, by integrating behavioral psychology with social network analysis, he developed a theory in which the structure of relations, rather than the actors themselves, became the central focus, and the explanation of structural change the primary aim.

Power-dependence relations
The dynamics of social relations in Emerson's theory revolve around power, power use and power-balancing operations, and rest on the central concept of dependence. Emerson recognized that patterns of dependence provide the structural foundation for both integration and differentiation in society. Relations of depen-dence bring people together (to the extent that people are mutually dependent, they are more likely to form relations and groups and to continue in them), but they also create inequal- ities in power that can lead to conflict and social change.

Emerson defined an actor's dependence on another by the extent to which outcomes valued by the actor are contingent on exchange with the other. Consequently, he proposed that B's dependence on A increases with the value to B of the resources A controls,