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    Journal of Managerial PsychologyEmerald Article: Social and economic exchange in the employee-organizationrelationship: the moderating role of reciprocation wariness

    Lynn M. Shore, William H. Bommer, Alaka N. Rao, Jai Seo

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    To cite this document: Lynn M. Shore, William H. Bommer, Alaka N. Rao, Jai Seo, (2009),"Social and economic exchange in the

    mployee-organization relationship: the moderating role of reciprocation wariness", Journal of Managerial Psychology, Vol. 24ss: 8 pp. 701 - 721

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    ttp://dx.doi.org/10.1108/02683940910996752

    Lynn M. Shore, William H. Bommer, Alaka N. Rao, Jai Seo, (2009),"Social and economic exchange in the employee-organization

    elationship: the moderating role of reciprocation wariness", Journal of Managerial Psychology, Vol. 24 Iss: 8 pp. 701 - 721

    ttp://dx.doi.org/10.1108/02683940910996752

    Lynn M. Shore, William H. Bommer, Alaka N. Rao, Jai Seo, (2009),"Social and economic exchange in the employee-organization

    elationship: the moderating role of reciprocation wariness", Journal of Managerial Psychology, Vol. 24 Iss: 8 pp. 701 - 721

    ttp://dx.doi.org/10.1108/02683940910996752

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    Social and economic exchange inthe employee-organization

    relationship: the moderating roleof reciprocation wariness

    Lynn M. ShoreDepartment of Management, College of Business Administration,

    San Diego State University, San Diego, California, USA

    William H. BommerDepartment of Management, Craig College of Business Administration,

    California State University, Fresno, Fresno, California, USA

    Alaka N. RaoCollege of Business, San Jose State University, San Jose, California, USA, and

    Jai SeoDepartment of Business Administration, Kyonggi University,

    Seoul, South Korea

    Abstract

    Purpose This paper examines the relationships that social and economic exchanges, two elementsof the employee-organization relationship (EOR), had with affective commitment, turnover intentions,

    employer trust, and altruism. The paper also aims to determine whether reciprocation wariness,reflecting fear of exploitation in reciprocation, moderated relationships that exchange elements hadwith outcomes.

    Design/methodology/approach A total of 453 employees of a large Korean electronicsorganization completed a survey on their work attitudes, behaviors, and demographic characteristics.

    Findings Results showed that reciprocation wariness moderated relations that social exchange hadwith commitment, turnover intentions, and trust, and that economic exchange had with turnoverintentions.

    Research limitations/implications The significance of examining social and economicexchange and of developing conceptualizations of the EOR that incorporate individual differencesis discussed.

    Practical implications Organizational leaders need to consider how individuals may differ inresponses to exchange elements of the EOR. Common assumptions about the EOR that social

    exchange is universally beneficial and that the necessity of economic exchange is accepted by allemployees may not be accurate.

    Originality/value New theorizing and testing of the role of reciprocation wariness in the EORcontributes to an emerging literature on social and economic exchanges and how individuals mayrespond to these elements of the EOR.

    Keywords Employee turnover, Employees, Korea, Job satisfaction

    Paper type Research paper

    The current issue and full text archive of this journal is available at

    www.emeraldinsight.com/0268-3946.htm

    Social andeconomicexchange

    701

    Received January 2009Revised May 2009

    Accepted May 2009

    Journal of Managerial Psychology

    Vol. 24 No. 8, 2009

    pp. 701-721

    q Emerald Group Publishing Limited

    0268-3946

    DOI 10.1108/02683940910996752

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    Central to conceptualizations of the employee-organization relationship (EOR) (Shoreet al., 2004) are the tenets of social exchange theory as enumerated by Blau (1964).Specifically relevant to the EOR are the beneficial effects of relationships based onsocial exchange for creating trust and a high degree of mutual obligation between

    exchange partners. Studies at both the micro (e.g. psychological contracts, Rousseau,1995; perceived organizational support (POS), Rhoades and Eisenberger, 2002) andmacro levels of analysis (e.g. the employment relationship, Wang et al., 2003) haveproduced empirical results consistent with the predictions of social exchange theoryand the norm of reciprocity (Gouldner, 1960). These studies have found that employeesgenerally reciprocate favorable organizational treatment with more positive attitudesand higher levels of performance.

    Until recently, most studies have focused on social exchange in the EOR with verylittle empirical research on economic exchange (Cropanzano and Mitchell, 2005). Basedon long-standing theoretical arguments supporting the potential value of both socialand economic exchange processes (Blau, 1964; Macneil, 1985; Rousseau, 1995), Shoreet al. (2006) posed an integrative model in which social and economic exchangeconstitute distinct elements of the EOR. Shore et al. (2006) based their model on classicsociological articles on social exchange and reciprocity (e.g. Blau, 1964; Gouldner, 1960)as well as scholarly applications of these ideas to work organizations (Eisenberger et al.,1987; Rousseau and McLean Parks, 1993).

    According to Blau (1964), social exchange involves indefinite obligations such thatwhen an individual does another party a favor, there is an expectation of some futurereturn. However, the timing and form of the return is often unclear, thus creating anopportunity for exchange partners to show their trustworthiness. Consistent with thisperspective, Shore et al. (2006) argued that when the employee perceives high levels ofthe social exchange element, he/she views the EOR as involving trust and mutualinvestment, diffuse and open-ended obligations between the employee and the

    organization, and a long-term orientation.In contrast, with economic exchange transactions between parties are not long

    term or ongoing, but represent discrete, financially oriented interactions (Shore et al.,2006, p. 839). When high levels of the economic exchange element are present, theemployee perceives the EOR as incorporating a set of financial and materialorganizational obligations in exchange for employee fulfillment of job duties.Economic exchange is impersonal and does not entail investment in the relationship byeither the employee or the organization.

    Initial empirical findings suggest that social and economic exchanges are distinctand relate differently to organizational antecedents such as perceived investment inemployees, CEO leadership style, organizational culture, and the employmentrelationship (Hom et al., 2009; Kuvaas et al., 2008; Song et al., 2009) and outcomes such

    as commitment, OCBs, and performance (Gakovic and Tetrick, 2003; Kuvaas andDysvik, n.d.; Shore et al., 2006; Song et al., 2009) as well as employee perceptions offuture opportunities in the organization and acceptance of a co-workers i-deal (Lai et al.,2009). This emerging body of research supports Shore et al.s (2006) conceptualarguments that social and economic exchange elements of the EOR are different asshown by distinctive relations with antecedents and outcomes, and that employeesperceive both types of exchange elements to exist concurrently with their organization,and in varying degrees.

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    While the studies described above support the unique value of social and economicexchanges, yet to be explored is the role of individual differences in responses to theseexchanges with the organization. Individual differences may be associated withemployee perceptions and responses to the EOR (Colbert et al., 2004; Raja et al., 2004).

    Even though one individual may perceive social exchange as a sign of investment andcaring by the organization, another might view this type of exchange with open-endedobligations and a long-term reciprocity orientation as entailing greater personal risk(Eisenberger et al., 1987). Likewise, the impersonal nature of economic exchange mayexacerbate fears of being taken advantage of by some employees, while others mayaccept this exchange as a business necessity. Therefore, in the present research wehave included reciprocation wariness as a moderator of the relationships betweensocial and economic exchanges and several outcomes. Reciprocation wariness refers toa generalized fear of exploitation in interpersonal relationships involving reciprocation(Eisenberger et al., 1987), suggesting wariness may be associated with employeeresponses to social and economic exchange elements of the EOR. Following, we firstreview literature on outcomes of social and economic exchange, and then discuss therole of reciprocation wariness as a moderator of exchange-outcome relations.

    Outcomes of social and economic exchangesThe EOR literature has demonstrated strong theoretical and empirical support for theimportance of social exchange mechanisms for building organizational commitment(Shore et al., 2004). Affective commitment reflects an employees emotional attachmentto and identification with the organization (Meyer and Allen, 1984, 1997) and isassociated with high levels of the social exchange element of the EOR (Gakovic andTetrick, 2003; Hom et al., 2009; Shore et al., 2006). Given the strong predictive validityof affective commitment in relation to turnover intentions and turnover (Hom and

    Griffeth, 1995), we also expect social exchange to be negatively related to turnoverintentions. Not surprisingly, social exchange with relational components of mutualobligation and a long-term orientation lower employee intentions to leave theorganization (Hom et al., 2009).

    In contrast, economic exchange has been found to be negatively related to affectivecommitment (Gakovic and Tetrick, 2003; Shore et al., 2006) and likewise is not expectedto lower turnover intentions given the impersonal and narrow set of obligationsreflected in this exchange element. In fact, high economic exchange should serve toundermine affective commitment and increase turnover intentions by emphasizingformal and contractual relations, especially since, unlike social exchange, economicexchange does not involve the consideration of employee needs and preferences (Blau,1964; Emerson, 1981). Thus, social exchange should be positively related to affective

    commitment and negatively related to turnover intentions, and economic exchangeshould show the opposite pattern with these variables.

    Blau (1964) highlighted the role of trust in the emergence and maintenance ofrelationships that emphasize social exchange. Based on social exchange theory, Molmet al. (2000, p. 396) argued that:

    Trust is more likely to develop between partners when exchange occurs without explicitnegotiations or binding agreements. Under these conditions, the risk and uncertainty ofexchange provide the opportunity for partners to demonstrate their trustworthiness.

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    Thus, trust is an intrinsic social reward that serves as a basis for social exchangebetween partners, in which trust begets trust (Ferrin et al., 2007).

    We expect that social exchange will be positively related to trust in the employer, aform of cognition based trust reflecting integrity and reliability (McAllister, 1995),

    given that the open-ended and diffuse obligations inherent in such relationshipsprovides the employer and its agents with the opportunity to offer benefits to focalemployees for favors provided. Without such reciprocity, the employee will lose trustin the employer and the social exchange element of the EOR will decline.

    Economic exchange, on the other hand, should not be associated with trust in theorganization given that the short-term, tit-for-tat basis of this EOR element provideslittle opportunity to prove trustworthiness among exchange partners. There is littlerisk associated with the inducements and contributions provided in economicexchange, given the formalized and impersonal basis of this exchange. In addition, thefinancial and material inducements provided for performing the job in economicexchange is standard business practice, with potential legal ramifications for theorganization and job loss for the employee if the terms of the exchange are not fulfilled.

    Yamagishi and Yamagishi (1994) pointed out that structures that prevent exploitationin exchange such as legal or normative sanctions for failure to fulfill obligations alsoprevent the development of trust. In sum, the risk of non-reciprocity and opportunity toprove trustworthiness in social exchange should be associated with trust in theemployer, whereas the quid-pro-quo obligations in economic exchange should not leadto trust in the employer.

    Lastly, we examine the relationships that social and economic exchanges have withsupervisor-directed altruism. Altruism has been conceptualized in the organizationalcitizenship behavior literature as employee behaviors directed at helping others in theorganization (Van Dyne and LePine, 1998). Since supervisors are agents of theorganization, employees should view employee-provided altruism directed towardsupervisors as a means of reciprocating favorable organizational treatment.

    Organ (1990) argued that social exchange theory was the best theoreticalexplanation for organizational citizenship behavior. Citizenship behaviors areconceptualized as being above and beyond the requirements of the job, suggestingthat economic exchange with the emphasis on a narrow set of bounded obligationsshould be unrelated to citizenship behaviors. In addition, the impersonal inducementsassociated with economic exchange would not be viewed by the employee as reflectingtheir value to the organization (Eisenberger et al., 1997; Shore and Shore, 1995) norinspire returns beyond meeting role requirements for continued employment. Insupport of these arguments, Shore et al. (2006) and Kuvaas and Dysvik (n.d.) eachtested a model incorporating both social and economic exchange elements, andprovided evidence that social exchange was associated with higher levels of

    organizational citizenship, while economic exchange was not predictive of citizenshipbehavior.Drawing on these findings, we expect that social exchange will be positively, and

    economic exchange unrelated to employee altruism.In summary, based on the above review:

    H1a. Social exchange will be positively related to affective commitment.

    H1b. Social exchange will be negatively related to turnover intentions.

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    H1c. Social exchange will be positively related to trust in the employer.

    H1d. Social exchange will be positively related to altruism.

    H2a. Economic exchange will be negatively related to affective commitment.

    H2b. Economic exchange will be positively related to turnover intentions.

    Reciprocation warinessSocial exchange in relationships necessarily entails uncertainty and risk (Molm et al.,2000), given the open-ended and non-negotiated exchange between parties. In socialexchange, the nature of the return is not bargained about but is left to the discretion ofthe one who makes it (Blau, 1964, p. 34). Such discretion provides an opportunity forthe recipient to show that they are trustworthy, since trustworthiness can only beproven without the assurance of negotiated exchange, or binding agreements (Blau,1964; Molm et al., 2000).

    Early research on reciprocity (e.g. Gouldner, 1960) generally assumed the norm of

    reciprocity to be universal. Subsequent research by Perugini et al. (2003) found thatindividuals differ in the extent to which they adopt and the degree to which they followthe norm of reciprocity. So, while all people may respond to the norm of reciprocity, thedegree to which they reciprocate appears to vary significantly between people. Suchindividual differences may affect responses to social and economic exchange.

    To capture this individual variance in the degree to which people follow the norm ofreciprocity, we focused on reciprocation wariness as a moderator of exchange-outcomerelations. Wariness is a generalized cautiousness in reciprocating aid stemming from afear of exploitation in relationships, including relationships with the organization(Lynch et al., 1999). Wary individuals either receiving or extending aid fear that otherswill violate the reciprocity norm through non-reciprocation of beneficial treatment. Asa result, highly wary employees adopt self-protective behaviors, such as minimal

    reciprocity (Cotterell et al., 1992; Kamdar et al., 2006; Lynch et al., 1999). Kamdar et al.(2006, p. 843) likewise concluded that wary individuals have lower baselineexpectations for exchange relationships including not only what they can expect toreceive from others but also what they are obligated to contribute to them than lesswary individuals.

    Since Blau (1964) contends that reciprocation is critical to reinforcing and stabilizingtrust and creating an on-going relationship between social exchange partners, highlywary individuals behave in ways that undermine trust building by approachingreciprocity in relationships with great caution. Therefore, the social exchange elementof the EOR should be more strongly and positively associated with the contributions oflow wary than of high wary employees. That is, the low wary should respond to socialexchange with the organization in a manner that is consistent with predictions basedon social exchange theory by showing more positive attitudes and behaviors towardthe organization. The highly wary employee, on the other hand, is much less likely torespond in this positive manner due to fears of exploitation in reciprocation.

    When the economic exchange element of the EOR is high, we expect waryemployees to respond more negatively than the non-wary by lowering theircontributions to a greater extent. Kamdar et al. (2006) argued that employees who arehighly wary focus on exchange in terms of the favorability of their own outcomes. Thisstrong focus on outcomes for the self, rather than others, stems from fear of

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    exploitation. With high economic exchange, the organization may be perceived to bebehaving in a self-serving manner by providing a narrow set of bounded obligations.Such limited inducements and seemingly self-serving arrangements should increasethe high wary employees fears of exploitation. Since highly wary individuals are more

    inclined than low wary individuals to endorse negative reciprocity norms ofreciprocating unfavorable treatment (Lee and Tetrick, 2005), these employees shouldrespond negatively to economic exchange by having lower affective commitment andhigher turnover intentions. In contrast, low wary employees commitment andintentions should be less affected by economic exchange in light of their lesserconcerns about exploitation in reciprocation.

    Consistent with the assertions above, we predict that employees responses toexchange will be moderated by reciprocation wariness. More specifically:

    H3a. Reciprocation wariness will moderate the relationship between socialexchange and affective commitment, such that the relationship will be morepositive for low wary than high wary individuals.

    H3b. Reciprocation wariness will moderate the relationship between socialexchange and turnover intentions, such that the relationship will be morenegative for low wary than high wary individuals.

    H3c. Reciprocation wariness will moderate the relationship between socialexchange and trust in the employer, such that the relationship will be morepositive for low wary individuals than for high wary individuals.

    H3d. Reciprocation wariness will moderate the relationship between socialexchange and supervisor-directed altruism, such that the relationship willbe more positive for low wary individuals than for high wary individuals.

    H4a. Reciprocation wariness will moderate the relationship between economic

    exchange and affective commitment, such that the relationship will be morenegative for high wary than for low wary individuals.

    H4b. Reciprocation wariness will moderate the relationship between economicexchange and turnover intentions, such that the relationship will be morepositive for high wary than for low wary individuals.

    MethodResearch contextThe application of western theories across cultures has been broadly debated (c.f.Gelfland et al., 2008). The employment relationship theory upon which the presentstudy is based was developed by western scholars, so that the testing of those theories

    in a South Korean context in the present study potentially raises some questions. InEast Asian societies such as Korea that is collectivistic, harmony in relationships isstrongly emphasized (Triandis, 1995). Trust is based on acquired social ties withfamily or other groups to which members of the society belong (e.g. educational ties;Bstieler and Hemmert, 2008; Han and Choe, 1994). While Korea has had a tradition oflifetime employment that is consistent with collectivism and also with social exchangein the EOR, in the last ten years there has been a greater adoption of western practicesthat are more consistent with economic exchange in the EOR such as layoffs (Chang,

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    2002; Lee and Corbett, 2006). These types of global trends in organizational practicessuggest the value of studying both the social and economic exchange elements of theEOR in non-Western settings. Furthermore, western theories of the EOR have beensuccessfully applied in other East Asian societies such as China (see Wu et al., 2006),

    suggesting that the current setting is a suitable one for studying theemployee-organization relationship.

    Participants and procedureA total of 453 employees completed a survey in a large Korean electronics organization.These employees performed similar types of technical jobs and were in entry-levelpositions. Due to missing data, the final sample size of the study was 421.Approximately 70 percent (69.8 percent) of the participants were males; they averaged28.9 years old (SD 5:1); and 21 percent of the sample graduated from college. Themean tenure of the employees in the organization was 6.8 years (SD 4:7) and thetypical employee had reported to their supervisor for 2.9 years (SD 2:8).

    The English version of the survey was translated into Korean by an author who isKorean and has a PhD in business from a US university, with the back translationindependently confirmed by another individual who was educated in the US and whois fluent in both languages (Brislin, 1986). A high-level executive in human resourcesgave permission to one of the authors to administer surveys to employees forcompletion during working hours, and no individual employee identifying informationwas associated with individual surveys. Employees were assured of confidentiality,and that participation was voluntary. Each respondent was asked to answer questionsregarding demographic information (age, tenure, and sex), their exchanges with theorganization, and questions about their work attitudes and behaviors.

    MeasuresControl variables. Age, tenure, and sex were used as control variables in the regressionanalyses. Age and tenure were reported in years, and sex was coded such that1 male and 2 female.

    All other measures utilized five-point Likert-type scales (1 strongly disagree and5 strongly agree). The measures were subjected to a confirmatory factor analysis(CFA) before being used in the study. The CFA is presented after the descriptions ofthe measures.

    Social and economic exchanges. We used Shore et al.s (2006) measures of social andeconomic exchange. These measures include 16 items overall, eight representing socialexchange and eight to measure economic exchange. Sample items from the twomeasures include I watch very carefully what I get from [my organization], relative to

    what I contribute as an item indicating economic exchange and I try to look out forthe best interest of [the organization] because I can rely on my organization to take careof me for social exchange. The items in this scale were found to load on theirrespective factors by Shore et al. (2006).

    Reciprocation wariness. To assess reciprocation wariness, we used Lynch et al.s(1999) ten-item reciprocation wariness scale. Sample items are I feel used when peopleask favors of me and When I help someone, I often find myself thinking about what isin it for me.

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    Affective commitment. Affective commitment was measured with six itemsassessing employees emotional attachment to their organization (Meyer et al., 1993). Asample item is I really feel as if this organizations problems are my own.

    Trust in employer. Seven items (Robinson, 1996) were used to measure the extent to

    which employees trusted their employer. A sample item is My employer is open andupfront with me.

    Turnover intentions. An employees intention to turnover was assessed with thethree items developed by Cammann et al. (1979) and reported in Cook et al. (1981). Asample item is I will probably look for a new job in the next year.

    Supervisor-directed altruism. Three items from Podsakoff and MacKenzies (1989)altruism scale were modified to reflect behavior directed at the supervisor. A sampleitem is I frequently lend a helping hand to my team leader.

    ResultsBefore testing the hypotheses, a measurement model was constructed to assess

    whether the survey items measured the latent constructs in which we were interested.First, a confirmatory factor analysis (CFA) was conducted using LISREL 8.53 with all45 items representing the seven measures. The full model exhibited marginal fit (Chisquare 2960.74, df 922, RMSEA 0:079, CFI 0:90, NFI 0:86). Anexamination of the factor loadings suggested that four items might be problematicdue to their low variance explained. After removing these four items (one each from thetrust in employer, the affective commitment, the social exchange, and the reciprocationwariness scales), an improved fit was achieved. This 41-item model fit the datarelatively well (Chi Square 2187.68, df 756, RMSEA 0:069, CFI 0:92,NFI 0:88), and thus the final scales were based on the elimination of these fouritems and the seven original scales were retained. While it is difficult to know exactlywhy these items did not load highly, the cultural context of the items may have differed

    and even though back translation was performed (Brislin, 1986), the items may havehad unintended contextual differences which resulted in them not tapping theirhypothesized domain to the expected degree.

    Based on the results of the measurement model described above, Table I reports thedescriptive statistics, scale reliabilities, and bivariate correlations. In general, thecorrelations reflect expected relations. Social exchange was positively related toaffective commitment (r 0:65), trust in employer (r 0:53), and supervisor-directedaltruism (r 0:55) and negatively related to turnover intentions (r 20:44) aspredicted in H1a-H1d. Economic exchange was less consistently related to thedependent variables, but was negatively related to the dependent variables posited inH2a-H2b. More specifically, economic exchange was significantly correlated withaffective commitment (r 20:31) and turnover intentions (r 0:26). These

    significant correlations were in the expected directions as predicted in H2a-H2b.While the correlations suggest initial support for the hypotheses, the hypotheses wereformally tested via regression.

    The hypotheses in our study were tested using moderated multiple regression. Theresults are presented in Table II as a series of hierarchical models. In each regression,the independent variables were entered in step 1 and the centered interaction terms (i.e.social exchange reciprocation wariness and economic exchange reciprocationwariness) were entered in step 2. Variance inflation factors (VIFs) were checked in all

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    Varia

    ble

    Mean

    SD

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    1.

    Sex

    1.3

    0

    0.4

    2

    2.

    Age

    28

    .85

    5.1

    1

    20

    .56

    3.

    Tenure

    6.8

    5

    4.6

    5

    20

    .32

    20

    .71

    4.

    Soc

    ialexc

    hange

    3.3

    6

    0.5

    6

    20

    .28

    0.2

    3

    0.1

    3

    (0.8

    6)

    5.

    Econom

    icexchange

    3.0

    3

    0.4

    9

    0.0

    2

    20

    .02

    0.0

    0

    20

    .08

    (0.7

    9)

    6.

    Rec

    iprocationwariness

    2.6

    2

    0.5

    8

    0.0

    2

    0.0

    4

    0.0

    4

    20

    .17

    0.4

    3

    (0.8

    6)

    7.

    Affect

    ivecomm

    itmen

    t

    3.3

    7

    0.6

    0

    20

    .21

    0.2

    3

    0.1

    4

    0.6

    5

    20

    .31

    20

    .24

    (0.7

    5)

    8.

    Turnover

    intentions

    2.5

    3

    0.8

    1

    0.0

    1

    0.0

    4

    0.0

    3

    20

    .44

    0.2

    6

    0.2

    8

    20

    .56

    (0.7

    3)

    9.

    Trustinemp

    loyer

    3.2

    7

    0.5

    1

    20

    .19

    0.2

    0

    0.0

    7

    0.5

    3

    20

    .17

    20

    .21

    0.5

    3

    20

    .35

    (0

    .78)

    10

    .Superv

    isor

    directe

    da

    ltru

    ism

    3.2

    7

    0.6

    3

    20

    .21

    0.2

    5

    0.1

    9

    0.5

    5

    0.0

    4

    0.0

    4

    0.4

    8

    20

    .23

    0

    .38

    (0.7

    8)

    Notes:Thea

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    Table I.Means, standard

    deviations, correlations,and scale reliabilities

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    Affect

    ivecom

    mitment

    Turnover

    intentions

    Trustinemp

    loyer

    Supervisor-

    directe

    d

    alt

    ruism

    Mo

    de

    l1

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    2

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    l2

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    2

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    l2

    Sex

    0.0

    4

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    4

    20

    .08

    20

    .09

    0.0

    1

    0.0

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    0.0

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    0.0

    0

    Age

    0.1

    0

    0.1

    1

    0.1

    0

    0.0

    7

    0.1

    6*

    0.1

    8**

    0.0

    7

    0.0

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    0.0

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    0.0

    0

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    20

    .10

    20

    .11

    0.0

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    0.0

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    ialexc

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    0.6

    1***

    0.6

    1***

    20

    .45***

    20

    .49***

    0.4

    8***

    0.4

    8***

    0.5

    5***

    0.4

    8***

    Econom

    icexchange

    20

    .24***

    20

    .20***

    0.1

    7***

    0.1

    5**

    20

    .09*

    20

    .04

    0.0

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    iprocationwariness

    20

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    0.1

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    20

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    20

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    9

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    20

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    2*

    20

    .13*

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    20

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    4*

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    F

    66

    .08***

    50

    .91***

    27

    .38***

    23

    .14***

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    24

    .47***

    34

    .53***

    27

    .24***

    df

    6

    8

    6

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    6

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    6

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    R2

    0.4

    89

    0.4

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    0.2

    84

    0.3

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    0.3

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    23

    0.3

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    0.3

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    0.3

    33

    Notes:Va

    luesarestand

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    21

    Table II.Regression results:testing the interaction ofsocial and economicexchange andreciprocation wariness onemployee outcomes

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    cases to assess multcollinearity and these results suggested that multcollinearity wasnot a major concern in the regression models. All of the hypotheses were evaluatedfrom the step 2 results (labeled model 2 in Table II).

    Social exchange was hypothesized to be associated with all four outcomes assessed

    in this study. Consistent with H1a, H1b, H1c, and H1d, when employees had strongersocial exchanges, they also demonstrated more positive attitudinal and behavioralcriterion variables. More specifically, in all four cases hypothesized in H1a-H1d, therelationship between social exchange and the criterion measures was consistent withthe direction hypothesized.

    Compared to social exchange, economic exchange was hypothesized to havenarrower associations with the criterion measures. H2a hypothesized a negativeassociation between economic exchange and affective commitment, whereas H2bposited a positive relationship between economic exchange and turnover intentions.H2a and H2b were supported due to the significant negative relationship betweeneconomic exchange and affective commitment (b 20:24, p , 0.001), and thesignificant positive relationship between economic exchange and intentions toturnover (b 0

    :17, p , 0.05).

    For the main effects, we conducted some additional analyses to assess whethersame source variance was a significant influence on the data. We did this byconstructing a model consistent with the recommendations of Podsakoff et al. (2003).Based on the Podsakoffet al. (2003) guidelines, we ran a single factor method model (i.e.model 3A). More specifically, we ran a series of main effects models where a commonsource latent factor is included in the model. The results of this analysis revealed thatfor all twelve main effects (i.e. the regression coefficients for social exchange, economicexchange, and reciprocation wariness across the four criterion measures) included inTable II, that the effects were only negligibly different. That is, the sign of these elevenrelationships was the same as is reported in Table II and the magnitude of the effect

    did not meaningfully differ (i.e. effects which are statistically significant in Table IIwere also statistically significant in the common source latent model and effects whichdo not meet statistical significance in Table II were also not significant in the commonsource latent model). As a result of this additional analysis, we had greatly increasedconfidence that the results we obtained were not primarily the result of same source orcommon method variance.

    In addition to the main effects discussed above, reciprocation wariness washypothesized to have relatively broad moderating effects on the relationships betweenthe exchanges and the criterion measures. More specifically, H3a-H3d posited thatreciprocation wariness would moderate the effects of social exchange across all fourcriterion variables measured. Table II indicates that moderation occurred in three ofthe four cases hypothesized. To determine the form of the significant interactions, the

    relationships were then graphed and simple slopes analyses conducted using a 1/21standard deviation split (see Figure 1).

    H3a-H3c were supported because the relationships between social exchange and thecriterion measures for the high reciprocation wary employees were weaker than therelationships between social exchange and the criterion measures for the less waryemployees. More precisely, social exchange had stronger relationships (b 0:63,p , 0.001 for affective commitment; b 20:58, p , 0.001 for turnover intentions;b 0:65, p , 0.001 for trust in employer) when reciprocation wariness was low, than

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    Figure 1.Split plots associated withsocial exchange

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    when reciprocation wariness was high (b 0:37, p , 0.001 for affective commitment;b 20:01, n.s. for turnover intentions; b 0:27, n.s. for trust in employer). As aresult, H3a-H3c were supported but H3d involving altruism was not supported.

    The last set of hypotheses (H4a and H4b) posited that reciprocation wariness would

    also moderate the relationships that economic exchange had with affectivecommitment and turnover intentions. Of the two effects hypothesized, anexamination of the regression results showed a significant interaction in one case.The split plot was then examined to determine the pattern of the relationship (seeFigure 2).

    H4a proposed that reciprocation wariness would moderate the relationship betweeneconomic exchange and affective commitment. The interaction term, however, was notsignificant. On the other hand, the interaction term associated with H4b wassignificant. H4b posited that reciprocation wariness would moderate the relationshipbetween economic exchange and turnover intentions. The findings support this

    Figure 2.Split plots associated with

    economic exchange

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    assertion, as the relationship between economic exchange and turnover intentions wasmore positive for highly wary individuals (b 0:20, p , 0.05) than it was for lesswary individuals (b 0:02, n.s.).

    The interaction term between economic exchange and reciprocation wariness,

    although not hypothesized, was also significantly associated with thesupervisor-directed altruism measure. An examination of its split plot revealed thatthe relationships were relatively weak in both cases, but were significantly differentfrom each others (b 0:06, n.s. for high wary versus b 20:12, n.s. for low waryemployees).

    DiscussionThe results of this study are generally consistent with social exchange theoryarguments (Blau, 1964), and prior empirical research (Gakovic and Tetrick, 2003; Shoreet al., 2006) that social exchange is related to positive employee attitudes andbehaviors. Likewise, economic exchange has independent and negative effects onaffective commitment and turnover intentions, as expected. These findings suggestthat both social and economic exchange elements of the EOR are associated withimportant organizational outcomes, and that these elements operate independently.

    Our study shows that unlike social exchange, economic exchange is not related tothe same types of positive outcomes desired by organizations, thus suggesting thatlimited compulsory terms and financially-focused inducements of the EOR may not beas liable to serve the organizations interests as those based on social exchange. Whatis less clear is how organizational agents shape perceptions of economic exchangethrough their policies, practices, and decisions. We suspect that high economicexchange may be especially likely when organizations are financially challenged, orduring times of major organizational change (e.g. mergers, acquisitions, and layoffs)

    when the less formalized relations underlying social exchange may be disrupted or notviewed by management as adequate for maintaining employee efforts on behalf of theorganization.

    Our findings also show that three of the effects of social exchange and one ofeconomic exchange, are moderated by reciprocation wariness. Specifically, ourfindings indicate that for three of the four outcomes, highly wary employees respondedless favorably to social exchange than those employees who are low on wariness.Likewise, highly wary employees were more liable than low wary employees to intendto turnover when they had perceptions of strong economic exchange. This suggests theimportance of more elaborated models of the EOR that consider the role of individualdifferences (Colbert et al., 2004; Raja et al., 2004).

    One implication of the pattern of findings related to reciprocation wariness is that

    relationships emphasizing social exchange may not be as universally beneficial fororganizations as has been assumed (c.f. Shore et al., 2004). Our results are largelyconsistent with the research on reciprocation wariness which has also shown thathigh-wary individuals demonstrated less generosity than low-wary individualsfollowing offers of cooperation from exchange partners (Cotterell et al., 1992).Furthermore, highly wary employees responded less favorably to procedural justicefrom the organization than low wary employees (Kamdar et al., 2006). In sum, we foundthat individuals who were wary of reciprocation did not respond as favorably to

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    relationships involving diffuse obligations and long-term investment, as the low-waryin terms of affective commitment, turnover intentions, and trust in the employer.

    Future research should explore whether there may be other bases of exchange, suchas employee values, that may more effectively enhance the contributions of the highly

    wary. For example, a number of researchers (McLean Parks and Smith, 1998; McLeanParks et al., 1998; Thompson and Bunderson, 2003) argue that in addition to social andeconomic resources, ideological resources may serve as a basis of exchange in the EOR.Such exchange with a focus on ideology may benefit the reciprocation wary byenhancing trust through common values with the employer.

    Molms (2003) work on reciprocal and negotiated exchange may also inspire a newavenue of research on reciprocation wariness. To have a positive effect on the highlywary, stronger and more beneficial guarantees may be required in the EOR than thosereflected in economic exchange. This may particularly be the case in light of thedifferences in power between the employee and organization (Shore and Shore, 1995),and the somewhat nebulous agents representing the organization in the EOR

    (Coyle-Shapiro and Shore, 2007). Both of these aspects of the EOR make the likelihoodof exploitation and non-reciprocation by the organization greater than with anindividual partner. Therefore, when organizations need the support of highly waryemployees, managers may find it advantageous to engage in negotiated exchange withits focus on joint decision-making and agreement on the terms of the exchange, toprovide the highly wary with the needed assurances to encourage their contributions.

    Likewise, employees who are reciprocation wary may benefit from understandingthat the self-protective responses that they display may be detrimental to buildingstrong and positive work relationships (Cotterell et al., 1992). Such responses mayprevent high wary employees from obtaining career-enhancing opportunities, as theirweaker reactions to social exchange relative to low wary employees may be viewed assignifying a lack of responsiveness or concern for others. Future research should thusexpand on the outcomes included in this study by examining the potential associationof reciprocation wariness in relation to such important criteria as promotion rate,developmental feedback, and salary increases.

    The finding that supervisor-directed altruism was not affected by interactionsbetween social exchange and reciprocation wariness was surprising given that thesupervisor is an important organizational agent (Shore and Tetrick, 1994). Rather, themain effect for social exchange was the primary determinant, and the interactionbetween reciprocation wariness and economic exchange a secondary determinant. Notehowever, that this interaction was not hypothesized nor were either of the simpleslopes significant, suggesting little explanatory value. Since there is less ambiguity inan exchange with a supervisor than with an organization, reciprocation wariness may

    be less important when examining employee attitudes and behaviors toward the leaderthan in studies of the EOR. Another explanation for this finding is that in Korea,managing good relationships with the supervisor is critical to having a successfulcareer (Yoon and Lim, 1999). As a result, wary employees may seek to carefullymanage the levels of altruistic behavior toward the supervisor. Unlike altruisticbehavior, attitudes such as affective commitment and turnover intentions are likelyassumed by employees to be less apparent to the supervisor, and less likely to upset theharmony in relationships that is important in collectivistic societies (Triandis, 1995).

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    Clearly, this relationship needs to be replicated in a Western setting to establishwhether culture played a role in determining these results.

    Similar to social exchange, we proposed that reciprocation wariness wouldmoderate the relationship between economic exchange and affective commitment and

    turnover intentions. The pattern of results however, only supported one of ourpredictions (turnover intentions). The split plot suggests that high wary employeesmay respond somewhat more negatively to economic exchange than low waryemployees by intending to leave the organization. This finding is consistent withEisenberger and colleagues (Eisenberger et al., 1987; Cotterell et al., 1992) argumentsthat the highly wary fear exploitation in interpersonal relationships, viewing theprovision of benefits to an exchange partner as running the risk of being takenadvantage of by a self-seeking partner (Cotterell et al., 1992, p. 658). Strong economicexchange with compulsory financial and role-related provisions may be interpreted bythe highly wary as signaling the presence of a self-interested organizational partner inthe EOR. Low wary employees may view these same provisions as necessary andpractical in order for managers to ensure that the best interests of the organization areserved (Coyle-Shapiro and Shore, 2007). However, additional research is needed oneconomic exchange before we can make strong conclusions since this is a relativelynew construct with limited empirical research available. In particular research isneeded that examines how employees make sense of this type of exchange, and ifresponses to economic exchange are related to variables other than wariness such aspower and status associated with the job and whether an employee is treated similarlyor less favorably than peers.

    The results of this study suggest several significant contributions to the literatureon the employee-organization relationship. Our study highlights the role of individualdifferences in understanding the EOR. We found that individual differences canindeed, color the lens through which employees view and respond to exchange

    relationships, as previous research (Colbert et al., 2004; Raja et al., 2004) has suggested.While one individual perceives social exchange as a sign of support from theorganization, another might view this type of employment relationship withopen-ended obligations and a long-term reciprocity orientation as entailing greaterpersonal risk (Eisenberger et al., 1987). Indeed, individuals who are generally cautiousin relationships and fear being exploited might be more predisposed to perceive thelatter where social exchange entails greater risk, causing them to engage inself-protective acts, such as reducing the strength of their positive responses.

    Another contribution of our study is that it incorporates the idea of risk inreciprocation for understanding the employee-organization relationship. Most priorresearch on the EOR has focused on the idea of support and mutual obligation toexplain the dynamics underlying exchange (Shore et al., 2004). Here, we integrate

    literature that incorporates the role of risk in social exchange (Molm, 2003) tounderstand the same relationship. We find that fear of non-reciprocation, creatingperceptions that exchange relations may be exploitive, as represented in the individualdifference variable of reciprocation wariness, helps to improve predictions about howindividuals perceive and respond to the EOR. Note however, that the unique varianceaccounted for ranged from 1 to 3 percent, suggesting that the moderating effect ofreciprocation wariness is somewhat small, and clearly, the present findings need to bereplicated to determine their generalizability.

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    It could be argued that since we did not use an experimental design with the abilityto assess causality, that our view of wariness as a determining variable in responses tosocial and economic exchange is premature. However, two prior experimental studiesinvolving students in a bargaining task (Cotterell et al., 1992; Eisenberger et al., 1987)

    established that reciprocation wariness is an individual difference variable thatinfluences reciprocation behavior. Additional research is needed however that providesmore information about the properties of the reciprocation wariness constructincluding the stability of reciprocation wariness and its antecedents. Furthermore,additional experimental studies on wariness and social and economic exchange wouldbe quite valuable to determine whether risk in the case of social exchange and aself-interested organization in the case of economic exchange are the basis for theinfluence of reciprocation wariness in work settings.

    Like most research, our study is not without limitations. All of our measures wereself-reports from employees, and all data were collected from a single survey. Some ofthe same-source variation problems, however, are mitigated by our tests of interaction

    effects, which are not subject to the same type of inflation as are main effects. Inaddition, we conducted a single factor method model to determine whether same sourcevariation was prevalent (Podsakoff et al., 2003). In this analysis, we found that theeffects of common method variance were minimal and this provided increasedconfidence in our findings. Furthermore, our hypotheses were tested in a single sampletaken from a large Korean organization. Future research should extend this studyacross multiple contexts to test the generalizability of our findings.

    In spite of these limitations, the results of our study have important implications forthose who study the EOR. This study suggests the value of examining both social andeconomic exchange elements of the EOR. Our pattern of results shows that socialexchange has stronger effects than economic exchange, and that these effects arepositive. Economic exchange, on the other hand, has more limited effects, at least in

    relation to the particular outcomes studied. Nonetheless, these effects are important, asthey detract from positive outcomes for organizations. Another significant implicationis that individual differences should be included in studies of the EOR to betterunderstand the relationships that social and economic exchanges have with employeeattitudes and behaviors. The fact that high reciprocation wary individuals respondedcomparatively weakly to social exchange and somewhat more negatively to economicexchange paints a more complicated picture; one that urges us to elaborate on thefoundations of exchange theory, to understand the meaning of exchange relationshipsacross individuals and contexts.

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    About the authorsLynn M. Shore is a Professor of Management at San Diego State University. She was previouslyon the faculty at University of California, Irvine, and Georgia State University. Her primaryresearch areas are on the employment relationship and work force diversity. Her research on theemployment relationship focuses on the influence of social and organizational processes on theemployee-organization relationship, and effects of this relationship on employee attitudes andbehavior. Dr Shores work on diversity has examined the impact that composition of the work

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    group and employee/supervisor dyads has on the attitudes and performance of work groups andindividual employees. She has published numerous articles in such journals as Academy of

    Management Journal, Academy of Management Review, Journal of Applied Psychology, Journal ofOrganizational Behavior, and Personnel Psychology. Dr Shore was an Associate Editor for the

    Journal of Applied Psychology from 2003-2008. Lynn M. Shore is the corresponding author andcan be contacted at: [email protected] H. Bommer is an Associate Professor of Management and a Craig Faculty Fellow in

    the Craig School of Business at California State University, Fresno. Bill has previously on thefaculties of Cleveland State University and Georgia State University. His primary research areasare organizational citizenship, forms of intelligence, leadership, cross-level research, and theemployment relationship. He has published numerous articles in journals including Academy of

    Management Journal, Journal of Applied Psychology, Personnel Psychology, Organization Science,Organizational Behavior and Human Decision Processes, Journal of Management, Intelligence,

    Academy of Management Learning and Education, Leadership Quarterly, Journal VocationalBehavior, and Journal of Organizational Behavior.

    Alaka N. Rao is an Assistant Professor of International Business at San Jose State University.She received her PhD from the Merage School of Business at the University of California, Irvine.

    Her research centers on the management of complex collaborations across geographical andcultural divides. This research examines the critical role of national culture, employee cognition,and trust in the management of global collaborations, specifically outsourcing relationships. DrRaos also conducts research on how managers exchange and build trust in countries lackinginstitutional support. Her work has been published in the Journal of International BusinessStudies.

    Jai Seo is a professor of Management at Kyonggi University in Korea. He was previously onthe faculty at Daegu University of Daegu, Korea. His primary research areas are on employeespsychological attachment to an organization and leadership. His research on employeespsychological attachment and leadership focuses on the influences of a leader in the formation ofattitudinal consistency toward an organization. Also, many of his studies focused on leaderinfluence on the development of employees positive organizational behaviors. His recentresearch moves toward the role of workplace spirituality in the process of developing employees

    positive psychological attachment toward an organization. He tried to refine the concept ofworkplace spirituality and its measures. Dr Seo published many articles in such journals asKorean Academy of Management Journal, The Korean Journal of Human ResourceManagement, The Korean Journal of Human Resource Development, Human ResourceManagement Review, and Journal of Management.

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