Social Exchange Theory

Definition: "Social exchange theory is based on a central premise that the exchange of social and material resources in a fundamental form of human interaction...interaction patterns are shaped by power relationships between individuals, and the resulting efforts to achieve balance in exchange relations." Source: Social exchange theory. (1996). Pathbreakers. Retrieved from http://www.washington.edu/research/pathbreakers/index.html#1978

Application: Social exchange theory is important to think about in the context of community development when it comes to organizing the community. When reaching out to community members to encourage their participation in the development process, their participation can hinge on what benefits they see it bringing them versus what costs might be accrued if they were to participate. For example, a resident might want to become involved in an organizing campaign, but doing so might cause them to have less time to spend with their family on the weekends. That resident may think through a small cost-benefit analysis to see if they would get as much out of the organizing process as they would have to put in, and if the benefits of the organizing outweigh the costs of spending less time with family.

Adaptation: Social exchange theory can be easily applied to the business world and economics . For example, a business that has the option to merge with another similar business will weigh the costs and benefits of agreeing to the merger versus continuing as a single, stand alone business before making a decision.