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SOCIAL EXCHANGE AND EQUITY THEORY Social exchange and equity theory revolve around the balance between efforts and rewards in organizations. The individual-organization exchange relationship addresses the contributions and demands that each party makes in the relationship. A. Demands and Contributions 1. Demands Needs form the basis for the expectations or demands placed on organizations by individuals. Organizations express demands on individuals through job expectations, mission statements, and performance feedback. 2. Contributions Contributions are the basis for satisfying the demands expressed by the other party in the relationship. Individual contributions include knowledge, skills, abilities, and professional contacts. Organizational contributions include status, benefits, income, and affiliation. B. Adams’s Theory of Inequity Adams's developed a theory of social exchange that analyzes inequity in the workplace. Specifically, inequity is the situation in which a person perceives he or she is receiving less than he or she is giving, or is giving less than he or she is receiving. Individuals calculate an inputoutcome ratio for themselves and compare it with an inputoutcome ratio for another person. If the ratios are not equivalent, perceived inequity results. C. The Resolution of Inequity Individuals seek to resolve inequity because it produces tension. The seven strategies for restoring equity are (1) to alter the person's outcomes, (2) to alter the person's inputs, (3) to alter the comparison other's outcomes, (4) to alter the comparison other's inputs, (5) to change who is used as a comparison other, (6) to rationalize the inequity, and (7) to leave the organizational situation. D. New Perspectives on Equity Theory New examinations of

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