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SECTION VI. BIBLIOGRAPHIC ESS
Exchange Theory: A Potential Framework for
Cross-Cultural Research
by Arnold E. Dahlke
INTRODUCTION
The purpose of this essay is to suggest a theoretical viewpoint for cross-cultural re-
search. During the past decade, several expositions of what Secord and Backman (1964) call
"exchange theories" have emerged in social psychological literature. These theories have
their common intellectual, roots in a long string of expositions of a hedonistic view of man.
They are currently articulated in the combined language of modern economics and social psy-
chology. It is the thesis of this essay that exchange theories, collectively, offer a promising
theoretical vehicle for cross-cultural research.
The following presentation of exchange theory is a direct modification of an earlier article
(Dahlke, 1967). It draws heavily from Thibaut and Kelley (1959), Homans (1961), and Secord
and Backman (1964). No attempt has been made to specifically reference any of these sources
until section IV of the essay, in the pedagogical interest of a fluent presentation. The voice
given to exchange theory here is not entirely original but at the same time it is not a simple
summarizing of the other sources. It is an attempt to present a collective view of current
statements of exchange theory.
The order of presentation moves from one person to his society. The discussion begins
with the description of individual behavior, turns next to a consideration of individuals behaving
in groups, and then extends that consideration to entire societies.
EXCHANGE THEORY
Individuals
An individual is constantly interacting with both the social and nonsocial elements of his
environment. A single interaction is termed an exchang . The units of exchange are the
verbal and nonverbal actions traded between the individual and the social and nonsocial ele-
ments of his environment (these actions are called behaviors), and materials received from
his nonsocial environment (these materials are called goods) . An example of an exchange of
behaviors is the statement of liking from person B to person A as a result of a behavior of
person A directed to person B. An example of an exchange of a behavior for goods is an in-
dividual pushing a button for an elevator and "receiving" the opening of the elevator door.
The choice of these specific labels, behaviors and goods, is unimportant; the designations
could be otherwise. This holds for all of the terms presented throughout this essay. The im-
portant point is that they convey the basic idea of an individual continuously engaged in ex-
changes with elements of his environment.
Each exchange has an outcome, that is, it acquires or has attached to it some degree of
value or satisfaction ranging from extremely positive to extremely negative. We refer to the
positive outcomes as rewards and the negative outcomes as costs. The liking of person A by
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person B pleases person A. The outcome of that exchange is favorable. The opening of the
elevator door satisfies the individual pushing the button, another favorable outcome. An end-
less variety of such examples could be offered here.
The reward and cost associated with the outcome of an exchange for a particular person at
a specific time depend upon two classes of determinants. First are biogenic determinants
which originate in basic physiologic processes: the value of the outcome of an exchange is
often judged by the extent to which that exchange satisfies basic biological requirements and
self-regulating processes of the individual. He has to meet and react to certain organic
demands, such as hunger, thirst, and sleep, as well as organic states, such as the presence of
adrenalin in the bloodstream. Disequilibrium in his internal biological systems brought about
by these demands stimulates neural impulses which lead to exchanges resulting in restoration
of equilibrium.
The second class of determinants is referred to as sequential determinants. Values of
the rewards and costs derived from particular exchanges are affected by prior exchanges and
by anticipated future exchanges. Sequential determinants can be grouped roughly into four
types: states, expectancies, investments, and social needs.
A specified state refers to a relative deprivation being experienced by an individual with
respect to a particular reward. As some exchanges are repeated over and over, their reward
value decreases; the individual is in a state of satiation with respect to the rewards resulting
from those exchanges. On the other hand, when a reward is rare, or has not been experienced
for a long time, the individual is in a state of deprivation. Costs are likewise affected: re-
peated exchanges, as they become more fatiguing, and exchanges not leading to expected re-
wards, become more costly.
The second type of sequential determinants, expectancies, refers to the modification of
rewards and costs by expectations held by the individual, i.e., the value he places on the out-
come of an exchange is affected by the level of reward or cost he expects. These expectancies
are the results of experience and knowledge gained in previous exchanges, the availability of
other exchanges, and the implications of present exchanges for the outcomes of future
exchanges.
The third type of sequential determinants, 'investments, refers to all that has been "in-
vested" in an exchange or a sequence of exchanges, e.g., time, work, emotion, talents, abilities
brought to bear, etc. The more an individual has invested, the more important rewarding out-
comes become and the more costly their failure to materialize. Investments affect expectan-
cies: an individual expects his outcomes to be equitable with outcomes of others. He expects
that the extent of favorable outcomes as a function of his investments will be proportional to
the extent of favorable outcomes of another individual as a function of that other's investments.
Social needs, the fourth type of sequential determinants, originate during the course of the
individual's development in the social setting, arising from. the presence of other persons in
his environment. As we will see in later sections of this essay, individuals attain "status,"
11power, 11 etc ., through belonging to groups. While at first status and power, etc., are reached
functionally, i.e . , they are assigned to the individual because of his worth to the group, their
attainment eventually becomes (due to their reward value) a class of autonomous needs.
Hence we speak of the individual's social needs to gain status, power, etc.
It should be noted that the various determinants of the values of rewards and costs dis-
cussed above are not independent of one another. Biogenic determinants are modified by
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sequential determinants and vice versa. Expectancies result from states and investments,
investments affect rewar d value in terms of expectancies, etc. In short, the determinants of
the values of the outcomes of exchanges can be regarded as a complex, dynamic system of
interdependent factors, each constantly modifying the others - The total exchange process and
the classes of determinants of the value of an outcome are summarized in Figure 1. That
diagram portrays the core concept's of.the present exchange theory approach.
Colledions
Two or more individuals together are termed a collection of individuals. A collection can
simply be individuals in the presence of one another, possibly emitting behavior, but not be-
havior for or to each other. We call this kind of collection an aggreete. For example, sev-
eral injiiv_`Idual@ sitting in the same theater, watching the same movie, would be considered an
aggregate. Further, a collection of individuals can emit behavior for and to each other. It is
then a collectivity. Exchanges between a grocer and his customers, between a performer and.
his audience, between individuals waiting together for an event to occur, are examples of col-
lectivities. Finally, a collection of individuals who coordinate their exchanges for and to each
other in order to attain collectively desired positive outcomes is referred to as a group.
Examples of groups are a squad of marines attempting to take a hill, a meeting oi a city coun-
cil, a basketball team., etc.
Groups
Although individuals in a group can engage in exchanges with their environments either by,
themselves or with other members of their groups, their exchanges are constantly being in-
fluenced by their membership in groups. Thus, since all people belong to or have belonged to
one or more groups, it is important to note thatthe values,,of rewards and costs are constantly.
being socially modified, even those that have been biogenically determined. This is of central
importance to an exchange theorist; the behavior of an individual alone or with others in a
group is very largely a function of his memberships in groups.
Groups are characterized as formal or informal. These terms refer to the way in which
~ group has developed and is organized. A collection of Individuals very deliberately creates
~ formal. group when faced with the need for attaining some specific outcome. Government
bureaucracies, industrial organizations, military organizations, etc., are examples of formal
groups. Informal groups, on the other,hand, emerge, that is, they develop through exchanges
among their component individuals over a period of time. For the most part, informal groups
are not consciously or deliberately organized. Friendship groups are examples of informal
groups.
In addition to the formal-informal classification, groups have traditionally been charac-
terized as prima or secondary. In a primary group, individuals have warm, intimate per-
sonal ties with one another. Primary groups are most. often small, face-to-face groups.
Exchanges lead to more immediate outcomes which have gre ater salience to the individuals
involved, due primarily to sequential determinants. Secondary groups, on the other hand,
represent the other end of the intimacy continuum: exchanges among members are relatively
impersonal and formal or contractual. Secondary groups are typically larger and group mem-
bers usually are participating more in specified capacities. Exchanges are directed toward
more distant or long range outcomes. The difference between primary and secondary groups
is one of degree rather than kind. Secondary group exchanges are more indirect and less
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an behaviors (social)
INDIVIDUAL and ENVIRONMENT
goods
exchanges with his (nonsocial)
leading to resulting in
OUTCOMES
ranging from extremely favorable
to extremely unfavorable as a
function of rewards and costs
experienced
Values of rewards and costs determined by
PSYCHOLOGIC NEEDS
t
BIOGENIC
DETERMINANTS
SELF-REGULATING PROCESSES
STATES o 0 INVESTMENTS
. /
SEQUENTIAL
IS @E
DETERMI-
NANTS
I/ N\1
SOCIAL NEEDS-*o--EXPECTANCIES
Figure 1. THE PROCESS OF EXCHANGE
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frequent and demand less personal involvement than those of primary groups; outcomes are
not as immediately salient.
The formal- informal and primary-secondary characterizations of groups are not independ-
ent categorizations. The former, when applied to groups, refers more to the way in which the
structure, i.e., organization of the group has developed; the latter characterizes the pattern
of exchanges among members within the group. There is some correlation between the two
dimensions in that primary groups are most often informal groups, while secondary groups
are more often formal groups.
In the early stages of group formation, processes termed sampling and estimation occur.
In a collectivity that is moving toward becoming a group, a given individual samples the out-
comes of exchanges with other individuals and estimates the rewards and costs that would
ultimately be experienced in such a relationship. These perceived rewards and costs are, of
course, judged against the expectancies that the individual brings with him to the collectivity
and, at later stages, against the expectancies developed by such sampling with members in the
collectivity. In addition, each person exchanges behavior toward motivating the other to giving
him favorable outcomes, 'He can distort the other person's perception by falsifying what he is
actually giving and receiving and misleading him in his expectations for future exchanges. He
can attempt to elicit rewards from the other person by giving progressively greater rewards
that prompt the other to return in kind. He can improve the other's outcomes by lowering the
cost of the exchange to the other, which would insure the continuation of the exchange.
A group, then, is viewed as a collection of individuals engaging in interdependent exchanges
to attain desired favorable outcomes. Either the group members are working toward common
individual satisfactions or are working toward outcomes accepted by a consensus of the group.
GROUP NORMS
As a collection of individuals moves from being a simple collectivity to being a group and
members attempt to attain collectively desired favorable outcomes through interdependent ex-
change, a need arises to control and coordinate the large number of exchanges that take place.
To insure that group members are able to continuously engage in exchanges directed toward
attainment of individually favorable outcomes, they find that they must develop "trading rules."
These trading rules are referred to as norms.
A norm is said to exist when group members agree about the exchanges that should or
should not be enacted and develop mechanisms to produce adherence to these agreements.
Such norms encourage exchanges that maximize favorable outcomes and discourage exchanges
that lead to more costly outcomes. Their existence in a group is manifested by observed
regularity in the pattern of exchanges taking place within the group. When this regularity is
disrupted, attempts are made to restore it by appeal to the norm. The person responsible for
disrupting the regularity is likely to feel some obligation to adhere to the norm and experiences
conflict or guilt when deviating from it.
The strength of such norms in the group depends upon how necessary group membership
is for the attainment of specified outcomes. Whenever outcomes are likely to be adversely
affected by particular patterns of exchange, norms develop. Exchanges that are highly relevant
to maintaining the group toward individually favorable outcomes are subject to normative
pressures.
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Certain exchanges are less susceptible to normative pressures than others by virtue of
the fact that they are more strongly associated with very high rewards or costs. Examples
are the powerful biogenic and the more salient sequential motives. Similarly, costly behaviors
are sometimes exempted from normative control: some exchanges cannot reasonably be re-
quired of an individual, such as dangerous combat missions.
Besides the fact of norms arising from the shared desire of group members to achieve
favorable outcomes, the size of a larger group requires the formation of sets of norms to co-
ordinate exchanges. Since a larger number of members in a group increases the likelihood
that individual exchanges will interfere with each other, difficulty in achieving consensus with
respect to desired outcomes will be experienced, and specialization of exchanges and division
of labor will occur.
The operations by which norms are communicated and enforced within a group have been
termed narm-sending processes. Various activities are required in norm-sending: (1) a
rule must be stated concerning the desired exchange and the consequences of engaging or re-
fraining from engaging in it; (2) surveillance must be maintained over the exchanges of group
members to evaluate the extent of conformity; and (3) sanctions must be applied to group
members to produce conformity. These various activities may be performed by the same
agents within the group, by different agents within the group, or even by agents outside the
immediate group. For example, police maintain surveillance and judges apply sanctions; in
many families the mother states the rules to her children, while the father delivers punish-
ments and rewards. Having members outside the group perform these functions is often ad-
vantageous because the aggression aroused by punishment may be directed toward the outside
agent and not toward the group members, thus contributing to the continuity of exchanges with
favorable outcomes within the group. The ultimate control of conformity to norm.s occurs
when the norm is "internalized," i.e., when these norm-sending functions are taken over by
the individual himself.
Certain limits are placed upon the norm-sending processes in the group by the general
organizational properties of the group. For example, the ease with which communication is
possible among members determines how accurately the norm can be transmitted. The
greater the extent to which the actions of members are open to view, the more thoroughly can
surveillance be maintained. The norm.-sending processes are also limited by the nature of the
norm.. For example, some norms apply to behavior under virtually all circumstances. These
are referred to as universalistic norms. Others, particularistic norms, apply only under cer-
tain conditions. Finally, the norm-sending processes are further limited by the nature of the
group members involved. If a person is very valuable to the group (i.e., group members are
highly dependent upon him for favorable outcomes) maximal sanctions may not be applied to
him for fear of driving him out of the group.
Although this discussion of norms has focused on the functional value of norm.s to the
group, it does not mean that group members always consciously develop norms with the inten-
tion of achieving more favorable outcomes. It is true that some norms are developed in this
manner, such as many of the rules that regulate exchanges in formal groups, but others
emerge more as implicit understandings reached by processes of trial and error. Members
are reinforced for adhering to given rules because such rules out costly outcomes and increase
dependability of getting rewards.
Besides being deliberately developed, or developed by a process of trial and error, some
norms are imported from other groups. New group situations are seen to be similar to old
ones, and the norms applicable to the old are generalized to the new. Such adaptation of norms
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will not necessarily be the best solution to the various problems of control, coordination, and
synchronization of exchanges, but will generally be adequate and lead to more favorable out-
comes for group members. After a time, the sequences of exchanges within the group will
lead to a more adequate modification of the old norms for use in the now group.
ROLES OF GROUP MEMBERS
While some of the norms within a group apply to all members, others apply to certain
specific individuals or subclasses of individuals. These subclasses of norms provide a basis
for identifying different roles within a group; i.e., a role is a subclass of one or more norms
that applies to a group member Is exchanges with both his social and nonsocial environment.
Group members develop common expectations concerning the norms that govern the exchanges
of each member in the group. These expectations then guide the exchanges of group members.
One member anticipates how another member might react to his various actions, and shapes
the exchange accordingly. Thus, exchanges within the group have a "contingent" quality: one
person's behavior is contingent upon his anticipation of how the other will react toward him.
This is why sequential determinants are so important in considering the values of exchange
outcomes.
Early in the formation of the group, different members become associated with different
norms governing different sets of exchanges. This specialization has been called role'differ-
entiation in a group. The role expectations that accompany role differentiation provide for the
coordination of exchanges within the group, leading to the more efficient functioning of the
group in its collective pursuit of desired outcomes.
Within any group, a. given member may occupy several different roles. Problems then
result concerning relations between roles, both intrapersonally and interpersonally. Intra-
personally, there is the problem of keeping various roles mutually consistent with one
another. When inconsistency does exist, it may be minimized by mentally separating the
roles, by separating their enactment in space and time through establishing order or prece-
dence, or by changing or eliminating some of them. Interpersonally, roles'generally develop
within the group in a reciprocal fashion, since role differentiation is governed by the need of
group members to maximize the favorability of their collective outcomes.
GROUP ENVIRONMENT EXCHANGE AND GROUP MAINTENANCE
A typical group must deal both with the internal problem of relations among its members
and the external problem of dealing with its environment. To insure the ultimate survival of
the group, maximization of each member's outcomes must be a function of group participation;
the exchanges among group members must be regulated and coordinated toward that end. This
means that the favorable outcomes available to each group member must be greater than those
available in competing groups.
The first general problem that thus confronts the group is that of controlling its social
and nonsocial environments so that they will yield relatively positive outcomes for its mem-
bers. The activities required to do this are referred to as task functions. The task functions
are those activities that have to do with controlling the external environment in such a manner
as to yield high rewards or cut costs to the group. This would include such activities as
making discriminations about the present state of the environment (perceiving and assessing
the problem imposed on the group by the environment); making predictions about the
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favorableness of the outcomes for various combinations of actions and environment states;
adding behavioral items to the group repertoire (training the members, etc.); and changing
the state of the environment or maintaining it (organizing the group into action) - Adequate
role differentiation to carry out the successful operation of task functions insures a suitable
level of reward-cost input from the environment.
The second major problem that then faces the group is the handling of the distribution of
rewards received within the group, Including the various functions concerned with the estab-
lishment, surveillance, and enforcement of norms. This class of functions is referred to as
maintenance functions of the group. They, in essence, maintain the interdependence among
members in the group. They include activities such as diagnosing the reward-cost position of
the various members; equitably distributing the rewards among the various members; insuring
regular payoffs for members even though the group's intake from the environment is irregular;
cutting costs by improved communication; insuring that the present group and the perceptions
of its members are seen as more valuable than competitive groups; etc.
These task and maintenance functions are organized and carried out in the process of role
differentiation during which norms develop and stability of expectations concerning exchanges
occurs.
STATUS OF GROUP MEMBERS,
The development of norms and role differentiation in a group contributes to and is affected
by the emergence of a structure referred to as the 'status structure of the group. Status is the
worth of a person as estimated by a group or class of persons. The estimate of worth is
determined by the extent to which his attributes or characteristics are perceived to contribute
to the attainment of valued outcomes for members of the group or class of persons. Which
attributes contribute to status depends upon the persons making the status evaluation. Status
attributes may relate to valued outcomes shared by a small group or by a whole society, but
only those attributes related to outcomes shared in common by group members are status
attributes. A unique characteristic possessed by a person which is of value only to himself
and one or two others is not a status attribute.
The notions of exchange presented thus far suggest several determinants of status. First,
highest status is given to a group member to the extent that his behavior is rewarding to the
entire group. Such rewards, however, must be relatively rare. Only attributes in scarce
supply confer status. Second, status is given to a group member to the extent that he is a re-
cipient of things valued by his society, such as high income, esteem, etc. The more he is seen
as receiving such valued rewards, the higher he is ranked in the status structure of the group.
Similarly, a person who suffers costs that are not incurred by almost everyone in the group but
that assist in the realization of the values of the group is accorded higher status, e. g. , the
soldier who receives the Congressional Medal of Honor. Finally, an individual's investments
confer upon him a right to be accorded a certain status.
Basic to the development of a status structure is the process of interpersonal comparison.
Persons in a group are constantly comparing themselves to others with respect to the rewards
they receive, the costs they incur, and the investments they accumulate. A status structure
develops when there is a general agreement or consensus as to the status of each group
member.
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In comparing himself with another group member, an individual attempts to obtain
distributive justice, a situation in which the outcomes of each person are directly proportional
to his investments. When this kind of equality prevails, distributive justice is achieved.
Marked inequalities are perceived as unjust. If a group member perceives that his outcomes
are not as favorable as those of another group member, even though their investments are
equal, he feels an inequity, experiencing dissatisfaction and feelings of anger or abuse. If, on
the other hand, his outcomes are more favorable than another member's who has made the
same investment, his feelings of inequity will be experienced as guilt.
Closely related to the condition of distributive justice is that of status congruency, i.e.,
that condition in which all the status attributes of a person are in proportion to his place in the
status structure relative to others. An individual in a higher status rank, for example, expects
himself to be better in all facets of his role than an individual in a lower status rank. He at-
tempts to maintain status congruency by excelling in every manifestation of his role.
An important product of the processes of status congruency is the emergence of status
symbols. These are characteristics Which initially have no status value, but which are regu-
larly associated with certain status levels and eventually come to be perceived as symbols of
those status levels.
As nornis develop and roles differentiate in the group, the status structure emerges as a
stable social system. Processes that insure status congruency and distributive justice lead to
the stability of the system. Processes that increase the value consensus in the group also
further the stability of the system. Finally, a group member engaging in exchanges appropri-
ate to a role associated with a particular status rank thus validates his status position, adding
still further stability to the system..
POWER RELATIONS IN A GROUP
The development of norms, the process of role differentiation, and the emergence of a
status structure are interdependently linked to (i.e., all contribute to and are affected by)
differences in the relative power of the participants to influence one another. This pattern of
power differentials in the group is referred to as the power structure. Power differentials
arise from both the value to the group of individual members and the patterns of exchanges
among them.. The power structure, in turn, affects the distribution of rewards and costs
among group members.
Power is determined by three classes of variables: (1) resources, the properties of an
individual (possessions or aspects of the behavior, etc.) that enable him to affect the rewards
and costs experienced by another person; (2) dependencies of other persons on him; and
(3) alternatives, i.e., the availability of alternative sources of rewards and means of reducing
costs for each member in the power relationship.
Examples of resources are power based on the perception of on6 person that another
can deliver favorable outcomes for complying with specific kinds of exchanges; power based
on the assumption that one person can influence another by threatening the other with unfa-
vorable outcomes for not complying with certain exchanges; power based on identification or
the desire to be like another person; power based on the fact that one person has some special
knowledge in a given situation that other people do not possess; and power based on the ac-
ceptance by a person of group norms that dictate to him that he should accept the influence of
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another person because it is legitimate. These different resources give rise to types of
power that differ in the extent to which the power can be constantly exercised and still remain
effective. Also, continued use of power directly affects the value of the rewards or costs ex-
perienced: repeated use of power, based on ability to reward, reduces the favorability of out-
comes as a person's needs become satiated; continued use of power, based on threats of
costs, is likely to lead to urgent searches on the part of the person being influenced for a
means of getting out of the power relationship; etc.
Turning to dependencies, a particular resource is only an effective power base insofar as
it has some relevance to the satisfaction of the person being influenced. The degree of satis-
faction experienced is a function, in turn (as usual), of biogenic and sequential determinants
of outcomes. An example of a dependency related to sequential determinants is that in a
group in which a particular resource is frequently required; the more frequently situations
requiring a particular resource are likely to recur, the greater will be the perceived impor-
tance of this resource as a source of power and, hence, the greater the dependency.
Alternatives, the third class of power determinants, are closely related to resources and
dependencies. If the member being influenced himself has a particular resource in sufficient
quantity or if he is able to gain that resource at a lower cost in other relations, then influence
attempts directed toward him will be relatively ineffectual. If everyone were an expert, for
example, the expert would be powerless. The person being influenced is thus constantly com-
paring the favorability of the outcomes of his complying with the person in the power position
to the outcomes of not complying. If enough available alternatives provide as good or better
outcomes,,then there is no profit in complying.
In general, then, that group member is more powerful who can affect the outcomes ex-
perienced by other persons at rather low costs to himself. The extent to which he is able to
do this is a function of the resources, dependencies, and alternatives involved.
In this discussion concerning power we have been examining direct relationships between
members. Power of one person over another can also be exerted indirectly through other
group members. The hierarchy of members in the power structure and the communication
channels existing between them then become important considerations. Power structures vary
with respect to the number of levels of power, the degree of connectedness, and the extent that
persons have counterpower over those who exert power over them.
COMMUNICATION IN A GROUP
Norm development, role differentiation, and the status and power structures each affect
and are affected by the pattern of exchanges of information in the group by means of behaviors
and goods; this pattern is called the communication structure. The communication structure
is generally very closely related to normative, role differentiation, status, and power pro-
cesses, since all of these processes coordinate exchanges that lead to the equitable distribu-
tion of rewards and costs among group members.
An obviously important basic factor in considering the communication structure in a group
is the factor of spatial and mechanical restrictions on communications. At one end of the con-
tinuum, group members who are not allowed to communicate with each other cannot be ex-
pected to have much effect on each other. On the other hand, in a group in which all members
are communicating with one another, the pattern of communication exchanges can become very
complex. Presumably, the difficulties of spatial location and interactive contact decrease as
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the size of the group decreases. In a smaller group, the communication structure is more in-
fluenced by normative, role, and status factors. As size increases, the most active communi-
cators become increasingly active, relative to other group members.
I Besides the more physical restrictions, other factors already discussed affect the commu-
nication structure. For example, frequency of communication is associated with the degree
of status that a person has in a group: the higher the status, the more likely he is to initiate
and receive com'.munications. Communication is likely to be directed toward high-status per-
sons and toward persons of equal status. When the equality of two persons is in doubt, they are
likely to avoid communication with each other. Other individual characteristics also influence
the development of the communication structure. ' The amount of communication is affected,
for example, by the extent to which an individual conforms to the norms of the group; the
amount of communication engaged in by various members of the group is related to the amount
of communications that these members receive from others in the group, etc.
Societies
The discussion of exchange theory thus far has taken us from a consideration of individual
behavior to the functioning of groups. These same notions can be extended to the larger sub-
groups of societies and., in fact, to entire societies. Societies are composed of a large number
of overlapping and interdependent, groups. Every individual in the society belongs to a number
of groups simultaneously. The norms, the roles, the statuses, etc., of those groups overlap
with one another and often conflict with one another. Nevertheless, a society, like a smaller
group, has to organize itself in the pursuit of the common ends of its composite groups of
individuals. The groups of people in a society, just as individuals in a small group, must
function together. They require formal rules for defining their relationships to one another.
Thus society, like a small group, ends up with a structure or patterned arrangement of
relationships.
The structure of society is usually dealt with in terms of "institutions," such as familial,
religious, political, economic, etc. The functions of these institutions are coordinated just as
are the individual exchanges among members in a small group by the development of norms
that guide group exchanges in the society. As in the small group, these norms lead to and are
affected by roles, statuses, and power and communication structures.
As in examining the structure and processes in a small group, it is impo -rtant to note that
a society, too, is an integrated, functional system. It is not simply a collection of institutions
thrown together by chance. Each part of the society is related to other parts, Each fills a
definite function in relation to others and is more or less essential to the normal functioning
of the society as a whole. Each part in turn draws upon all other parts in some way for
existence. Changing one part necessarily implies changes in other parts. In other words,
like the small group, a society can be regarded as a system. attempting to maintain
equilibrium.
The distinction should be made here between society and culture. Society is made up of
individuals who share systems and subsystems of norms, status structures, power structures,
etc. Culture consists of those norms and structures transmitted over time from one individ-
ual to another that shape the behavior of the individuals in the society. In other words, culture
can be thought of as the learned way of life shared by people who make up the society. An
individual in the society is socialized very early to responses of values of goodness or badness
for his particular exchanges: some exchanges are required, others are approved or
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disapproved. Thus, his culture provides for him "givens" with which he begins the jockeying
of exchanges required by people living together in their quest for collectively favorable
outcomes.
It is clear, then, that a society grows out of the formation of individuals into groups which,
in turn, define its institutions; conversely institutions and groups define the culture of the
society. This is the proverbial problem of "which came first, the chicken or the egg." The
point along this continuum. from individual to society at which we step in to develop a particular
analysis determines whether or not a specific concept will be treated as cause or effect. Thus
in looking at the larger society we shift our analytical emphasis to the concepts that have
grown from. looking at individuals interacting in groups: norms, roles, status, power, etc. In
other words, building on the primary concepts displayed in Figure 1, we derive a set of
intermediate concepts which are then used to delineate the complex characteristics of the so-
ciety. However, since these intermediate concepts grow out of the more individual exchange
concepts, the exchange theory approach allows one to move up and down appropriate levels of
abstraction. Institutions of a society define and/or are defined by the individuals that make up
their relevant groups.
A particularly useful additional concept in looking at the components of a society is the
concept of reference group . Any group is a reference group for someone if he uses it as his
frame of reference for appraising himself or his situation, or as a gauge of aspirations for
himself. In other words, when an individual aspires to membership in a group or strives to
be like (or unlike) the members of that group, it is referred to as his reference group. A
reference group, then, is his basis for evaluating himself. The term indicates the source of
the institutionalized definitions that guide behavior or form the attitudes of particular people
in particular situations. Because of his multiple group membership, any individual actually
has a number of reference groups.
Any group, whether a particular individual belongs to it or not, may be a reference group
for him if it is a source of his conception of his role in society, or in the groups to which he
belongs. Thus, the reference group is not necessarily a group. It may be a social category
consisting of persons who possess similar characteristics such as age, sex, income, race, or
religion. It may be a positive reference group whose norms are favorably perceived and
adapted, or a negative reference group whose norms are rejected. In short, reference groups
serve as frames of reference for an individual's definitions of situations.
Thus, the highly complex, interrelated exchanges among the individuals who make up a
society form the basis of the society's culture. The values explicated in that culture comprise
the background against which the individual becomes differentiated.
IMPLICATIONS
The exchange theorist, then, sees the individual exchanging behaviors and goods with his
environment for the purpose of obtaining favorable outcomes, i.e., attempting to increase the
frequency of rewards associated with exchanges and decrease the frequency of costs. The
values of these rewards and costs are determined by a number of factors: biogenic determi-
nants and several sequential determinants (states, expectancies, investments, and social
needs).
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As'we have seen, when individuals interact together, they find it necessary to develop
norms to coordinate their exchanges. This insures the attainment of collectively favorable
outcomes. They develop a system. of such norm.s and, through the enactment of roles within a
status structure, they attempt to maintain the equilibrium. of that system.. This complex sys-
tem. then leads to the institutions which define the culture and give identity to a society.
The most obvious characteristic of this theoretical view is that behavior can only be ac-
counted for by a large number of variables which fit together in a very complex, interacting,
highly interdependent fashion. Given this multi-variable systems approach one can enter the
analysis of behavior at several different levels of abstraction. This means, in fact, that cer-
tain variables at one point are being considered as antecedents, and at other points as conse-
quences. The particular level of abstraction which one uses is a function of what the theorist
is trying to accomplish.
The value of exchange theory does not come from the introduction of a host of new theo-
retical concepts; in fact, it introduces very few. Rather, its advantage is that it provides a
framework that integrates a variety of concepts that already exist at a number of levels of ab-
straction. It is a detailed systems approach which offers the potential of any systems ap-
proach: a common language at all levels of analysis that facilitates the input of cross-
cultural data from each level in a meaningful, integrated way without having to translate from
one theoretical scheme to another. Hence, the data collected at the institutional level of a
given society have relevance to other data collected at the individual level of dyadic exchange
and vice versa. Perhaps, in this sense, it would be more appropriate to call the statements
of the exchange theorist a "framework," a "system," or a "language" rather than a theory.
Whatever its label, the exchange theory approach does have the potential of providing a vocabu-
lary that is relevant at different levels of analysis and across social science disciplines.
RELEVANT BIBLIOGRAPHIC SOURCES
As pointed out in the introduction, the presentation of exchange theory offered in this es-
say draws heavily from three sources: Thibaut and Kelley (1959), Homans (1961), and Secord
and Backman (1964). The voices of these authors have been quite evident throughout this ex-
position. They, along with Blau (1964), are the current proponents of exchange theory in con-
temporary social science.
In his book, Social Behavior: Its Elementary Forms, Homans combines the language of
elementary economics and behavioral psychology. He says that persons give off activities
(behavior) and sentiments (indicators of attitudes and feelings) . These activities and senti-
ments either reinforce or punish the behaviors of others in an interaction. He bases his
brand of exchange theory on four propositions:
(1) If in the past the occurrence of a particular stimulus situation has been
the occasion on which a man's activity has been rewarded then the more
similar the present stimulus situation is to the past one, the more likely he
is to emit the activity, or some similar activity now. . . .
(2) The more often within a given period of time a man's activity rewards
the activity of another, the more often the other will emit the activity.
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(3) The more valuable to a man a unit of activity another gives him., the
more often he will emit activity rewarded by the activity of the other. . . .
(4) The more often a man has in the recent past received a rewarding
activity from another, the less valuable any further unit of that activity
becomes to him.*
I-lomans then builds upon these basic propositions and some corollaries by examining a
number of fundamental social psychological concepts, e.g., norms, conformity, esteem, status,
etc. He illustrates his discussion with both field and experimental research carried out by
sociologists and social psychologists. He extends his discussion to a consideration of institu-
tions in society.
In The Social Psychology of Group , Thibaut and Kelley are concerned specifically with
the ideas of norm development and power relationships. Like Homans, they combine eco-
nomic language with psychological language. Their basic paradigm is a matrix of the possible
behaviors of interacting participants beginning with dyads and working up to large groups.
They contend that interaction must be rewarding to the interactors for it to continue. In addi-
tion, they introduce the notion of comparison level, which is the standard that a person uses to
evaluate the favorableness of a given exchange in terms of what he expects from it; and the
concept of comparison level for alternatives, which is the standard used to determine whether
or not the individual will remain in the exchange, i.e., the lowest level of favorable outcome
accepted by the individual for him to continue an interaction.
Secord and Backman, in their comprehensive attempt to present a broad view of social
psychology (Social Psychology), review the exchange theories of Homans and of Thibaut and
Kelley. They then weave exchange concepts into their discussions of various topics of inter-
est to the social psychologist. They do not use exchange theory as their major theoretical
viewpoint, however. Along with other theories, they demonstrate the application of exchange
concepts to an examination of status structures, power relationships, communication proc-
esses, etc. Theirs is a good second source book, because not only does it review the above ex-
change theories, but it puts them into perspective with other theoretical positions and extends
them by applying their language to other areas within social psychology.
In Exchange and Power in Social Life, Blau has combined concepts from exchange theory
with the thinking of Goffman (1959) who is concerned with the way in which people present
themselves to others in everyday life. Blau stresses the fact that a person interacting with
others impresses them with his reward value; he constantly displays characteristics to others
that they will perceive as valuable. Likewise, he minimizes characteristics that would prove
costly. Blau also develops an exchange model of institutionalization. He resorts More to in-
termediate theoretical concepts (power, authority, status differentiation, etc. ) than does
Homans. Finally, he emphasizes that individuals do not evaluate outcomes in a consistent
manner or pursue particular outcomes to the exclusion of others. His treatment of exchange
theory is a recommended second document to that of Homans.
*Homans, G. C., Social Behavior: Its Elementary Forms (New York: Harcourt, Brace,
1961), pp. 53-55.
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Like Blau, two other theorists (Coleman, 1963, and Parsons, 1963), emphasize in their
exchange viewpoints the investment of self in others. They deal with the exchange of self-
respect, self -identities, enhancement of self, etc. Their discussions are based primarily on
social influence literature and the focus is on the self in an exchange. Their brief statements
are more applicable to the interactions of individuals in smaller groups than to interaction in
society.
Of additional interest are the works of French and Raven (1959), Hollander (1958), and
Jones (1964). Each of these authors deals with a specific exchange concept, rather than pre-
senting a broad theory.
French and Raven provide a basis for the study of social power. It is from their theory
that we drew the power concepts of resources, dependencies, and alternatives.
Hollander introduces the notion of idiosyncrasy credit-the positive impressions of a per-
son held by others. It is his contention that this credit accumulates as a result of perceived
competence, conformity, and so forth. People with enough credit are then in a position to ex-
pend some of it. Hence, the leader who has gained much idiosyncrasy credit is able to deviate
from the norms of his group and innovate at the expense of that credit.
Jones introduces the concept of ingratiatio : when individuals are engaged in an asym-
metric power relationship, the individual with less power attempts to gain rewards by his
action and statements from'the more powerful person by ingratiation, i.e., compliments, signs
of agreement, making himself appear to be more valuable, etc. As the person in the lesser
power position becomes more attractive, the more powerful person is more likely to give
rewards.
One additional author is of peripheral interest, Berne (1964), who deals with the strat-
egies of interaction., While not a broadly based exchange theory as others discussed above,
Berne's work is based on a "transactional" analysis of interaction between individuals. His
thinking stems out of an earlier work (Berne, 1961) that attempted to analyze relationships in
psychotherapy.
Finally, it should be noted that a variety of other references, of indirect relevance to ex-
change theory, have been omitted. These are the various treatments of bargaining and game
theory, as exemplified by such works as Deutsch and Krauss (1962); the classical work of
Morgenstern (1944); Rapoport (1960); Rapoport and Orwant (1962); etc. Although bargain-
Ing and game theory models are similar to the exchange theory viewpoint, they focus more on
social conflict and the logical structure of conflict situations in which the parameters are
clearly quantified: They are highly mathematical and very specific.
Also of indirect relevance to exchange theories are the various treatments of interpersonal
perception such as those presented by Heider (1958) and Tagiuri and Petrullo (1958). These
expositions are not, strictly speaking, exchange theories. They do, however, deal very ex-
plicitly with the way in which people perceive one another, and all of the classes of variables
that affect those perceptions. Such information, as is pointed out in the next section, is cru-
cial to a complete understanding of the exchange process.
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A FINAL NOTE
One qualifying note: exchange theory must be viewed within the bounds of three important
individualistic parameters. These are (1) physiological limits, (2) perceptual processes, and
(3) the dynamics of learning.
As an individual begins the sequence of exchanges that make up his life, the kinds of
sampling of information from others and from situations available to him are limited by his
physiology. As an infant, for example, his physical helplessness excludes him from certain
sets of exchanges. As he grows older, the potential number of those sets increases. The
kinds of exchanges he can engage in are also related to his health, his metabolism, etc. In
short, the number and variety of exchanges possible to him during his life are delimited by his
physiological makeup and by his physiological states.
Closely related to this physiological parameter is that of perception, here defined to in-
clude all sensory input: the way in which an individual receives information about his world
through seeing, hearing, touching, etc. The nianner in which an individual perceives his world
further defines the sets of exchanges he can experience. Just as a blind person cannot experi-
ence the same exchanges as a person with sight, so the perception of a prejudiced person de-
limits the kinds of exchanges possible to him..
The third delimiting parameter is the learning situations to which the individual is ex-
posed. The particular array of stimuli in his environment is related to how and what he will
learn. This consideration is especially important in looking at sequential determinants of the
value of exchange outcomes,
While these three parameters-physiology, perception, and learning-delimit the scope of
the sets of exchanges that can take place, they are, at the same time, influenced by those ex-
changes. A particular sequence of exchanges will alter the dimensions of any of these param-
eters. The exchange theory viewpoint as articulated in this essay emphasizes a dynamic, in-
terdependent systems view of man. Any variable of the complex multivariable system of human
behavior can at one time be an input and at others an output factor.
A cross-cultural study of man must consider every level of abstraction, from individual
to societal. A theoretical viewpoint is needed that can move flexibly across all levels. Ex-
change theory may be the answer.
REFERENCES
Berne, E. Transactional Analysis in Psychotherapy, A Systematic Individual and Social
Psychiatry. New York* Grove Press, 1961, p. 270.
Games People Play. New York: Grove Press, 1964.
Blau, P. M. Exchange and Power in Social Life. New York: Wiley & Sons, 1964.
Coleman, James S. "Comment on 'On the Concept of Influence, Public Opinion Quarterly,
XXVII (1962), pp. 63-82.
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Dahlkc, A. E. Social Psychological Factors for the Development of a Psychological Index,
in R. A. Terry, et al., Development of Weapons Design Criterion Based on the SRC Psy@
chological Index: An Investigation of Signature, Reputation, and Context Effects, Air
Force Armament Laboratory, Eglin Air Force Base, Fla., AFATL-TR-67-165, 1967.
Deutsch, M., and R. Al. Krauss. "The Effect of Threat on Interpersonal Bargaining,
Journal of Abnormal and Social Psychology, L)a, pp. 181-189.
French, J. R. P., Jr., and B. H. Raven. "The Bases of Social Power," pp. 118-149, in
D. Cartwright (ed.), Studies in Social Power. Ann Arbor, Mich.: University of Michigan
Press, 1959.
Goffman, E. The Presentation of Self in Everyday Life. Garden City, N.Y.: Doubleday-
Anchor, 1959.
Heider, F. The Psychology of Interpersonal Relations. New York: Wiley 8C Sons, 1958.
Hollander, E. P. "Conformity, Status, and Idiosyncrasy Credit, 11 Psychological Review, LV
(1958), pp. 117-127.
Homans, G. C. Social Behavior: Its Elementary Forms. New York: Harcourt, Brace, 1961.*
Jones, E. E. Ingratiation. New York: Appleton-Century-Crofts, 1964.
von Neumann, J., and 0. Morgenstern. Theory of Games and Economic Behavior. Princeton,
N.J.: Princeton University, 1944.
Parsons, Talcott. "On the Concept of Influence, " Public Opinion Quarterly, XXVII (1963),
pp. 37-62.
Rapoport, A. Fights, Games and Debates. Ann Arbor, Mich.: University of Michigan, 1960.
Rapoport, A., and Carol Orwant. "Experimental Games: A Review, " Behavioral Science,
V11, pp. 1-38.
Secord, Paul F., and Carl W. Backman. Social Psychology. New York: McGraw-Hill, 1964.*
Tagiuri, R., and L. Petrullo (eds.). Person Perception and Interpersonal Behavior. Palo
Alto, Calif.: Stanford University Press, 1958.
Thibaut, J. W., and H. H. Kelley. The Social Psychology of Groups. New York: Wiley &
Sons, 1959.*
Dr, Dahlke is Associate Director for Research and Plans, SSR I. He received a
Ph.D. degree in psychology from the University of Minnesota (1963). His publi-
cations include "Intraindividual Verbal-Numerical Discrepancies and Personality"
(with R. H. Dana), Journal of Consultinp Psychol XXVI 1, No. 182 (1963), and
2LO-U I
"Small Group Behavior in a Simulated Fanic Situation" (with H. H. Kelley et al.),
Journal of Experimental Social Psycholog , 1, No. I (VVinter 1965).
Most comprehensive sources relevant to exchange theory.
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