Social Exchange Theory (SET)

Several studies explain the positive effects of HRM policies and practices on innovation outcomes by using social exchange theory Social exchange theory or SET is based on the idea of social exchanges based on reciprocity.

Or in ‘simpler’ terms: quid pro quo. You give something and you get something in return. The SET suggest that it involves interactions that generate obligations in the short and long-term. These interactions are interdependent and contingent on the action of another person. Based on SET, scholars have argued that HRM policies and practices can lead to extra-role behaviours, which are behaviours related to tasks that are not necessarily part of employees’ jobs such as creativity and innovative work behaviour. When an organization invests in its employees, these employees in turn are more willing to invest in the organization, for example with the generation and implementation of innovative ideas.

If the costs of the relationship are higher than the rewards, for example when employees invest a lot of effort and resources in additional tasks, while they are not reciprocated, this can lead to problems. The reciprocity norm entails that a benefit should be returned and the actor that provides the benefit should not be harmed. Thereby, it can also bind actors together into a strong relationship. Organizations should thereby recognize and reward employees in a proper way when they invest their spare time and resources in innovative endeavours. Rewards do not only necessarily mean money; more important is appreciation and recognition.