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Journal of Managerial Psychology

Emerald Article: Social and economic exchange in the employee-organization relationship: 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 employee-organization relationship: the moderating role of reciprocation wariness", Journal of Managerial Psychology, Vol. 24 Iss: 8 pp. 701 - 721 Permanent link to this document: Downloaded on: 21-01-2013 References: This document contains references to 54 other documents Citations: This document has been cited by 9 other documents To copy this document: This document has been downloaded 1483 times since 2009. *

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Lynn M. Shore, William H. Bommer, Alaka N. Rao, Jai Seo, (2009),"Social and economic exchange in the employee-organization relationship: the moderating role of reciprocation wariness", Journal of Managerial Psychology, Vol. 24 Iss: 8 pp. 701 - 721 Lynn M. Shore, William H. Bommer, Alaka N. Rao, Jai Seo, (2009),"Social and economic exchange in the employee-organization relationship: the moderating role of reciprocation wariness", Journal of Managerial Psychology, Vol. 24 Iss: 8 pp. 701 - 721 Lynn M. Shore, William H. Bommer, Alaka N. Rao, Jai Seo, (2009),"Social and economic exchange in the employee-organization relationship: the moderating role of reciprocation wariness", Journal of Managerial Psychology, Vol. 24 Iss: 8 pp. 701 - 721

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Social and economic exchange in the employee-organization relationship: the moderating role of reciprocation wariness
Lynn M. Shore
Department of Management, College of Business Administration, San Diego State University, San Diego, California, USA

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Received January 2009 Revised May 2009 Accepted May 2009

William H. Bommer
Department of Management, Craig College of Business Administration, California State University, Fresno, Fresno, California, USA

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

Jai Seo
Department of Business Administration, Kyonggi University, Seoul, South Korea
Purpose This paper examines the relationships that social and economic exchanges, two elements of the employee-organization relationship (EOR), had with affective commitment, turnover intentions, employer trust, and altruism. The paper also aims to determine whether reciprocation wariness, reecting fear of exploitation in reciprocation, moderated relationships that exchange elements had with outcomes. Design/methodology/approach A total of 453 employees of a large Korean electronics organization completed a survey on their work attitudes, behaviors, and demographic characteristics. Findings Results showed that reciprocation wariness moderated relations that social exchange had with commitment, turnover intentions, and trust, and that economic exchange had with turnover intentions. Research limitations/implications The signicance of examining social and economic exchange and of developing conceptualizations of the EOR that incorporate individual differences is discussed. Practical implications Organizational leaders need to consider how individuals may differ in responses to exchange elements of the EOR. Common assumptions about the EOR that social exchange is universally benecial and that the necessity of economic exchange is accepted by all employees may not be accurate. Originality/value New theorizing and testing of the role of reciprocation wariness in the EOR contributes to an emerging literature on social and economic exchanges and how individuals may respond to these elements of the EOR. Keywords Employee turnover, Employees, Korea, Job satisfaction Paper type Research paper
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) (Shore et al., 2004) are the tenets of social exchange theory as enumerated by Blau (1964). Specically relevant to the EOR are the benecial effects of relationships based on social 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) and macro levels of analysis (e.g. the employment relationship, Wang et al., 2003) have produced empirical results consistent with the predictions of social exchange theory and the norm of reciprocity (Gouldner, 1960). These studies have found that employees generally reciprocate favorable organizational treatment with more positive attitudes and higher levels of performance. Until recently, most studies have focused on social exchange in the EOR with very little empirical research on economic exchange (Cropanzano and Mitchell, 2005). Based on long-standing theoretical arguments supporting the potential value of both social and economic exchange processes (Blau, 1964; Macneil, 1985; Rousseau, 1995), Shore et al. (2006) posed an integrative model in which social and economic exchange constitute distinct elements of the EOR. Shore et al. (2006) based their model on classic sociological 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 indenite obligations such that when an individual does another party a favor, there is an expectation of some future return. However, the timing and form of the return is often unclear, thus creating an opportunity for exchange partners to show their trustworthiness. Consistent with this perspective, Shore et al. (2006) argued that when the employee perceives high levels of the social exchange element, he/she views the EOR as involving trust and mutual investment, 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, nancially oriented interactions (Shore et al., 2006, p. 839). When high levels of the economic exchange element are present, the employee perceives the EOR as incorporating a set of nancial and material organizational obligations in exchange for employee fulllment of job duties. Economic exchange is impersonal and does not entail investment in the relationship by either the employee or the organization. Initial empirical ndings suggest that social and economic exchanges are distinct and relate differently to organizational antecedents such as perceived investment in employees, CEO leadership style, organizational culture, and the employment relationship (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 and Dysvik, n.d.; Shore et al., 2006; Song et al., 2009) as well as employee perceptions of future 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) conceptual arguments that social and economic exchange elements of the EOR are different as shown by distinctive relations with antecedents and outcomes, and that employees perceive both types of exchange elements to exist concurrently with their organization, and in varying degrees.

While the studies described above support the unique value of social and economic exchanges, yet to be explored is the role of individual differences in responses to these exchanges with the organization. Individual differences may be associated with employee 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 and caring by the organization, another might view this type of exchange with open-ended obligations and a long-term reciprocity orientation as entailing greater personal risk (Eisenberger et al., 1987). Likewise, the impersonal nature of economic exchange may exacerbate fears of being taken advantage of by some employees, while others may accept this exchange as a business necessity. Therefore, in the present research we have included reciprocation wariness as a moderator of the relationships between social and economic exchanges and several outcomes. Reciprocation wariness refers to a generalized fear of exploitation in interpersonal relationships involving reciprocation (Eisenberger et al., 1987), suggesting wariness may be associated with employee responses to social and economic exchange elements of the EOR. Following, we rst review literature on outcomes of social and economic exchange, and then discuss the role of reciprocation wariness as a moderator of exchange-outcome relations. Outcomes of social and economic exchanges The EOR literature has demonstrated strong theoretical and empirical support for the importance of social exchange mechanisms for building organizational commitment (Shore et al., 2004). Affective commitment reects an employees emotional attachment to and identication with the organization (Meyer and Allen, 1984, 1997) and is associated with high levels of the social exchange element of the EOR (Gakovic and Tetrick, 2003; Hom et al., 2009; Shore et al., 2006). Given the strong predictive validity of affective commitment in relation to turnover intentions and turnover (Hom and Griffeth, 1995), we also expect social exchange to be negatively related to turnover intentions. Not surprisingly, social exchange with relational components of mutual obligation and a long-term orientation lower employee intentions to leave the organization (Hom et al., 2009). In contrast, economic exchange has been found to be negatively related to affective commitment (Gakovic and Tetrick, 2003; Shore et al., 2006) and likewise is not expected to lower turnover intentions given the impersonal and narrow set of obligations reected in this exchange element. In fact, high economic exchange should serve to undermine affective commitment and increase turnover intentions by emphasizing formal and contractual relations, especially since, unlike social exchange, economic exchange 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 exchange should show the opposite pattern with these variables. Blau (1964) highlighted the role of trust in the emergence and maintenance of relationships that emphasize social exchange. Based on social exchange theory, Molm et al. (2000, p. 396) argued that:
Trust is more likely to develop between partners when exchange occurs without explicit negotiations or binding agreements. Under these conditions, the risk and uncertainty of exchange 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 exchange between partners, in which trust begets trust (Ferrin et al., 2007). We expect that social exchange will be positively related to trust in the employer, a form of cognition based trust reecting integrity and reliability (McAllister, 1995), given that the open-ended and diffuse obligations inherent in such relationships provides the employer and its agents with the opportunity to offer benets to focal employees for favors provided. Without such reciprocity, the employee will lose trust in 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 the organization given that the short-term, tit-for-tat basis of this EOR element provides little opportunity to prove trustworthiness among exchange partners. There is little risk associated with the inducements and contributions provided in economic exchange, given the formalized and impersonal basis of this exchange. In addition, the nancial and material inducements provided for performing the job in economic exchange is standard business practice, with potential legal ramications for the organization and job loss for the employee if the terms of the exchange are not fullled. Yamagishi and Yamagishi (1994) pointed out that structures that prevent exploitation in exchange such as legal or normative sanctions for failure to fulll obligations also prevent the development of trust. In sum, the risk of non-reciprocity and opportunity to prove trustworthiness in social exchange should be associated with trust in the employer, whereas the quid-pro-quo obligations in economic exchange should not lead to trust in the employer. Lastly, we examine the relationships that social and economic exchanges have with supervisor-directed altruism. Altruism has been conceptualized in the organizational citizenship behavior literature as employee behaviors directed at helping others in the organization (Van Dyne and LePine, 1998). Since supervisors are agents of the organization, employees should view employee-provided altruism directed toward supervisors as a means of reciprocating favorable organizational treatment. Organ (1990) argued that social exchange theory was the best theoretical explanation for organizational citizenship behavior. Citizenship behaviors are conceptualized as being above and beyond the requirements of the job, suggesting that economic exchange with the emphasis on a narrow set of bounded obligations should be unrelated to citizenship behaviors. In addition, the impersonal inducements associated with economic exchange would not be viewed by the employee as reecting their value to the organization (Eisenberger et al., 1997; Shore and Shore, 1995) nor inspire returns beyond meeting role requirements for continued employment. In support of these arguments, Shore et al. (2006) and Kuvaas and Dysvik (n.d.) each tested a model incorporating both social and economic exchange elements, and provided evidence that social exchange was associated with higher levels of organizational citizenship, while economic exchange was not predictive of citizenship behavior. Drawing on these ndings, we expect that social exchange will be positively, and economic exchange unrelated to employee altruism. In summary, based on the above review: H1a. H1b. Social exchange will be positively related to affective commitment. Social exchange will be negatively related to turnover intentions.

H1c. H1d. H2a. H2b.

Social exchange will be positively related to trust in the employer. Social exchange will be positively related to altruism. Economic exchange will be negatively related to affective commitment. Economic exchange will be positively related to turnover intentions.

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Reciprocation wariness Social exchange in relationships necessarily entails uncertainty and risk (Molm et al., 2000), given the open-ended and non-negotiated exchange between parties. In social exchange, the nature of the return is not bargained about but is left to the discretion of the one who makes it (Blau, 1964, p. 34). Such discretion provides an opportunity for the recipient to show that they are trustworthy, since trustworthiness can only be proven 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 that individuals differ in the extent to which they adopt and the degree to which they follow the norm of reciprocity. So, while all people may respond to the norm of reciprocity, the degree to which they reciprocate appears to vary signicantly between people. Such individual differences may affect responses to social and economic exchange. To capture this individual variance in the degree to which people follow the norm of reciprocity, we focused on reciprocation wariness as a moderator of exchange-outcome relations. Wariness is a generalized cautiousness in reciprocating aid stemming from a fear of exploitation in relationships, including relationships with the organization (Lynch et al., 1999). Wary individuals either receiving or extending aid fear that others will violate the reciprocity norm through non-reciprocation of benecial treatment. As a 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 baseline expectations for exchange relationships including not only what they can expect to receive from others but also what they are obligated to contribute to them than less wary individuals. Since Blau (1964) contends that reciprocation is critical to reinforcing and stabilizing trust and creating an on-going relationship between social exchange partners, highly wary individuals behave in ways that undermine trust building by approaching reciprocity in relationships with great caution. Therefore, the social exchange element of the EOR should be more strongly and positively associated with the contributions of low wary than of high wary employees. That is, the low wary should respond to social exchange with the organization in a manner that is consistent with predictions based on social exchange theory by showing more positive attitudes and behaviors toward the organization. The highly wary employee, on the other hand, is much less likely to respond in this positive manner due to fears of exploitation in reciprocation. When the economic exchange element of the EOR is high, we expect wary employees to respond more negatively than the non-wary by lowering their contributions to a greater extent. Kamdar et al. (2006) argued that employees who are highly wary focus on exchange in terms of the favorability of their own outcomes. This strong 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 be behaving in a self-serving manner by providing a narrow set of bounded obligations. Such limited inducements and seemingly self-serving arrangements should increase the high wary employees fears of exploitation. Since highly wary individuals are more inclined than low wary individuals to endorse negative reciprocity norms of reciprocating unfavorable treatment (Lee and Tetrick, 2005), these employees should respond negatively to economic exchange by having lower affective commitment and higher turnover intentions. In contrast, low wary employees commitment and intentions should be less affected by economic exchange in light of their lesser concerns about exploitation in reciprocation. Consistent with the assertions above, we predict that employees responses to exchange will be moderated by reciprocation wariness. More specically: H3a. Reciprocation wariness will moderate the relationship between social exchange and affective commitment, such that the relationship will be more positive for low wary than high wary individuals. Reciprocation wariness will moderate the relationship between social exchange and turnover intentions, such that the relationship will be more negative for low wary than high wary individuals. Reciprocation wariness will moderate the relationship between social exchange and trust in the employer, such that the relationship will be more positive for low wary individuals than for high wary individuals. Reciprocation wariness will moderate the relationship between social exchange and supervisor-directed altruism, such that the relationship will be more positive for low wary individuals than for high wary individuals. Reciprocation wariness will moderate the relationship between economic exchange and affective commitment, such that the relationship will be more negative for high wary than for low wary individuals. Reciprocation wariness will moderate the relationship between economic exchange and turnover intentions, such that the relationship will be more positive for high wary than for low wary individuals.






Method Research context The application of western theories across cultures has been broadly debated (c.f. Geland et al., 2008). The employment relationship theory upon which the present study 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. In East Asian societies such as Korea that is collectivistic, harmony in relationships is strongly emphasized (Triandis, 1995). Trust is based on acquired social ties with family 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 of lifetime employment that is consistent with collectivism and also with social exchange in the EOR, in the last ten years there has been a greater adoption of western practices that are more consistent with economic exchange in the EOR such as layoffs (Chang,

2002; Lee and Corbett, 2006). These types of global trends in organizational practices suggest the value of studying both the social and economic exchange elements of the EOR in non-Western settings. Furthermore, western theories of the EOR have been successfully 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 the employee-organization relationship. Participants and procedure A 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-level positions. Due to missing data, the nal sample size of the study was 421. Approximately 70 percent (69.8 percent) of the participants were males; they averaged 28.9 years old (SD 5:1); and 21 percent of the sample graduated from college. The mean tenure of the employees in the organization was 6.8 years (SD 4:7) and the typical 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 is Korean and has a PhD in business from a US university, with the back translation independently conrmed by another individual who was educated in the US and who is uent in both languages (Brislin, 1986). A high-level executive in human resources gave permission to one of the authors to administer surveys to employees for completion during working hours, and no individual employee identifying information was associated with individual surveys. Employees were assured of condentiality, and that participation was voluntary. Each respondent was asked to answer questions regarding demographic information (age, tenure, and sex), their exchanges with the organization, and questions about their work attitudes and behaviors. Measures Control variables. Age, tenure, and sex were used as control variables in the regression analyses. Age and tenure were reported in years, and sex was coded such that 1 male and 2 female. All other measures utilized ve-point Likert-type scales (1 strongly disagree and 5 strongly agree). The measures were subjected to a conrmatory factor analysis (CFA) before being used in the study. The CFA is presented after the descriptions of the measures. Social and economic exchanges. We used Shore et al.s (2006) measures of social and economic exchange. These measures include 16 items overall, eight representing social exchange and eight to measure economic exchange. Sample items from the two measures 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 for the best interest of [the organization] because I can rely on my organization to take care of me for social exchange. The items in this scale were found to load on their respective 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 people ask favors of me and When I help someone, I often nd myself thinking about what is in it for me.

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Affective commitment. Affective commitment was measured with six items assessing employees emotional attachment to their organization (Meyer et al., 1993). A sample 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 and upfront with me. Turnover intentions. An employees intention to turnover was assessed with the three items developed by Cammann et al. (1979) and reported in Cook et al. (1981). A sample 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 modied to reect behavior directed at the supervisor. A sample item is I frequently lend a helping hand to my team leader. Results Before 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 conrmatory factor analysis (CFA) was conducted using LISREL 8.53 with all 45 items representing the seven measures. The full model exhibited marginal t (Chi square 2960.74, df 922, RMSEA 0:079, CFI 0:90, NFI 0:86). An examination of the factor loadings suggested that four items might be problematic due to their low variance explained. After removing these four items (one each from the trust in employer, the affective commitment, the social exchange, and the reciprocation wariness scales), an improved t was achieved. This 41-item model t the data relatively well (Chi Square 2187.68, df 756, RMSEA 0:069, CFI 0:92, NFI 0:88), and thus the nal scales were based on the elimination of these four items and the seven original scales were retained. While it is difcult to know exactly why 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 have had unintended contextual differences which resulted in them not tapping their hypothesized domain to the expected degree. Based on the results of the measurement model described above, Table I reports the descriptive statistics, scale reliabilities, and bivariate correlations. In general, the correlations reect expected relations. Social exchange was positively related to affective commitment (r 0:65), trust in employer (r 0:53), and supervisor-directed altruism (r 0:55) and negatively related to turnover intentions (r 20:44) as predicted in H1a-H1d. Economic exchange was less consistently related to the dependent variables, but was negatively related to the dependent variables posited in H2a-H2b. More specically, economic exchange was signicantly correlated with affective commitment (r 20:31) and turnover intentions (r 0:26). These signicant correlations were in the expected directions as predicted in H2a-H2b. While the correlations suggest initial support for the hypotheses, the hypotheses were formally tested via regression. The hypotheses in our study were tested using moderated multiple regression. The results 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 reciprocation wariness) were entered in step 2. Variance ination factors (VIFs) were checked in all

Variable 1.30 28.85 6.85 3.36 3.03 2.62 3.37 2.53 3.27 3.27 2 0.71 0.23 2 0.02 0.04 0.23 0.04 0.20 0.25 0.13 0.00 0.04 0.14 0.03 0.07 0.19 (0.86) 2 0.08 2 0.17 0.65 2 0.44 0.53 0.55 (0.79) 0.43 20.31 0.26 20.17 0.04 (0.86) 20.24 0.28 20.21 0.04 (0.75) 2 0.56 0.53 0.48 0.42 5.11 4.65 0.56 0.49 0.58 0.60 0.81 0.51 0.63




1. Sex 2. Age 3. Tenure 4. Social exchange 5. Economic exchange 6. Reciprocation wariness 7. Affective commitment 8. Turnover intentions 9. Trust in employer 10. Supervisor directed altruism

20.56 20.32 20.28 0.02 0.02 20.21 0.01 20.19 20.21

(0.73) 20.35 20.23

(0.78) 0.38


Notes: The alpha internal consistency reliability coefcients appear in parentheses along the main diagonal; n 421, all rs . 0.11, p , 0.05, rs . 0.14, p , 0.01

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Table I. Means, standard deviations, correlations, and scale reliabilities

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Sex Age Tenure Social exchange Economic exchange Reciprocation wariness Social exchange Reciprocation wariness Economic exchange Reciprocation wariness 20.08 0.10 0.00 20.45 * * * 0.17 * * * 0.13 * * 20.09 0.07 0.02 20.49 * * * 0.15 * * 0.08 0.12 * 0.14 * 66.08 * * * 6 0.489 0.481 50.91 * * * 8 0.497 0.008 * 0.487 27.38 * * * 6 0.284 0.273 23.14 * * * 8 0.309 0.026 * * * 0.296

F df R2 DR 2 R2 adj

Notes: Values are standardized regression coefcients; * * *p , 0.001, * *p , 0.01, *p , 0.05; n 421

Table II. Regression results: testing the interaction of social and economic exchange and reciprocation wariness on employee outcomes Affective commitment Model 1 Model 2 0.04 0.10 0.00 0.61 * * * 20.24 * * * 20.04 0.04 0.11 20.01 0.61 * * * 20.20 * * * 20.02 20.10 * 20.03 Turnover intentions Model 1 Model 2 Trust in employer Model 1 Model 2 0.01 0.16 * 2 0.10 0.48 * * * 2 0.09 * 2 0.09 * 0.01 0.18 * * 2 0.11 0.48 * * * 2 0.04 2 0.06 2 0.13 * 2 0.02 30.89 * * * 6 0.310 0.300 24.47 * * * 8 0.323 0.013 * 0.309 Supervisor-directed altruism Model 1 Model 2 0.01 0.07 0.07 0.55 * * * 0.03 0.11 * 0.00 0.06 0.07 0.48 * * * 0.08 0.09 2 0.06 0.12 * * 34.53 * * * 6 0.333 0.314 27.24 * * * 8 0.345 0.012 * 0.333

cases to assess multcollinearity and these results suggested that multcollinearity was not a major concern in the regression models. All of the hypotheses were evaluated from 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 stronger social exchanges, they also demonstrated more positive attitudinal and behavioral criterion variables. More specically, in all four cases hypothesized in H1a-H1d, the relationship between social exchange and the criterion measures was consistent with the direction hypothesized. Compared to social exchange, economic exchange was hypothesized to have narrower associations with the criterion measures. H2a hypothesized a negative association between economic exchange and affective commitment, whereas H2b posited a positive relationship between economic exchange and turnover intentions. H2a and H2b were supported due to the signicant negative relationship between economic exchange and affective commitment (b 20:24, p , 0.001), and the signicant positive relationship between economic exchange and intentions to turnover (b 0:17, p , 0.05). For the main effects, we conducted some additional analyses to assess whether same source variance was a signicant inuence on the data. We did this by constructing a model consistent with the recommendations of Podsakoff et al. (2003). Based on the Podsakoff et al. (2003) guidelines, we ran a single factor method model (i.e. model 3A). More specically, we ran a series of main effects models where a common source latent factor is included in the model. The results of this analysis revealed that for all twelve main effects (i.e. the regression coefcients for social exchange, economic exchange, and reciprocation wariness across the four criterion measures) included in Table II, that the effects were only negligibly different. That is, the sign of these eleven relationships 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 signicant in Table II were also statistically signicant in the common source latent model and effects which do not meet statistical signicance in Table II were also not signicant in the common source latent model). As a result of this additional analysis, we had greatly increased condence that the results we obtained were not primarily the result of same source or common method variance. In addition to the main effects discussed above, reciprocation wariness was hypothesized to have relatively broad moderating effects on the relationships between the exchanges and the criterion measures. More specically, H3a-H3d posited that reciprocation wariness would moderate the effects of social exchange across all four criterion variables measured. Table II indicates that moderation occurred in three of the four cases hypothesized. To determine the form of the signicant interactions, the relationships were then graphed and simple slopes analyses conducted using a 1/2 1 standard deviation split (see Figure 1). H3a-H3c were supported because the relationships between social exchange and the criterion measures for the high reciprocation wary employees were weaker than the relationships between social exchange and the criterion measures for the less wary employees. 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 with social exchange

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 a result, 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 affective commitment and turnover intentions. Of the two effects hypothesized, an examination of the regression results showed a signicant interaction in one case. The split plot was then examined to determine the pattern of the relationship (see Figure 2). H4a proposed that reciprocation wariness would moderate the relationship between economic exchange and affective commitment. The interaction term, however, was not signicant. On the other hand, the interaction term associated with H4b was signicant. H4b posited that reciprocation wariness would moderate the relationship between economic exchange and turnover intentions. The ndings support this

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Figure 2. Split plots associated with economic exchange

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assertion, as the relationship between economic exchange and turnover intentions was more positive for highly wary individuals (b 0:20, p , 0.05) than it was for less wary individuals (b 0:02, n.s.). The interaction term between economic exchange and reciprocation wariness, although not hypothesized, was also signicantly associated with the supervisor-directed altruism measure. An examination of its split plot revealed that the relationships were relatively weak in both cases, but were signicantly different from each others (b 0:06, n.s. for high wary versus b 20:12, n.s. for low wary employees). Discussion The results of this study are generally consistent with social exchange theory arguments (Blau, 1964), and prior empirical research (Gakovic and Tetrick, 2003; Shore et al., 2006) that social exchange is related to positive employee attitudes and behaviors. Likewise, economic exchange has independent and negative effects on affective commitment and turnover intentions, as expected. These ndings suggest that both social and economic exchange elements of the EOR are associated with important organizational outcomes, and that these elements operate independently. Our study shows that unlike social exchange, economic exchange is not related to the same types of positive outcomes desired by organizations, thus suggesting that limited compulsory terms and nancially-focused inducements of the EOR may not be as liable to serve the organizations interests as those based on social exchange. What is less clear is how organizational agents shape perceptions of economic exchange through their policies, practices, and decisions. We suspect that high economic exchange may be especially likely when organizations are nancially challenged, or during times of major organizational change (e.g. mergers, acquisitions, and layoffs) when the less formalized relations underlying social exchange may be disrupted or not viewed by management as adequate for maintaining employee efforts on behalf of the organization. Our ndings also show that three of the effects of social exchange and one of economic exchange, are moderated by reciprocation wariness. Specically, our ndings indicate that for three of the four outcomes, highly wary employees responded less favorably to social exchange than those employees who are low on wariness. Likewise, highly wary employees were more liable than low wary employees to intend to turnover when they had perceptions of strong economic exchange. This suggests the importance of more elaborated models of the EOR that consider the role of individual differences (Colbert et al., 2004; Raja et al., 2004). One implication of the pattern of ndings related to reciprocation wariness is that relationships emphasizing social exchange may not be as universally benecial for organizations as has been assumed (c.f. Shore et al., 2004). Our results are largely consistent with the research on reciprocation wariness which has also shown that high-wary individuals demonstrated less generosity than low-wary individuals following offers of cooperation from exchange partners (Cotterell et al., 1992). Furthermore, highly wary employees responded less favorably to procedural justice from the organization than low wary employees (Kamdar et al., 2006). In sum, we found that individuals who were wary of reciprocation did not respond as favorably to

relationships involving diffuse obligations and long-term investment, as the low-wary in terms of affective commitment, turnover intentions, and trust in the employer. Future research should explore whether there may be other bases of exchange, such as employee values, that may more effectively enhance the contributions of the highly wary. For example, a number of researchers (McLean Parks and Smith, 1998; McLean Parks et al., 1998; Thompson and Bunderson, 2003) argue that in addition to social and economic resources, ideological resources may serve as a basis of exchange in the EOR. Such exchange with a focus on ideology may benet the reciprocation wary by enhancing trust through common values with the employer. Molms (2003) work on reciprocal and negotiated exchange may also inspire a new avenue of research on reciprocation wariness. To have a positive effect on the highly wary, stronger and more benecial guarantees may be required in the EOR than those reected in economic exchange. This may particularly be the case in light of the differences 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 likelihood of exploitation and non-reciprocation by the organization greater than with an individual partner. Therefore, when organizations need the support of highly wary employees, managers may nd it advantageous to engage in negotiated exchange with its focus on joint decision-making and agreement on the terms of the exchange, to provide the highly wary with the needed assurances to encourage their contributions. Likewise, employees who are reciprocation wary may benet from understanding that the self-protective responses that they display may be detrimental to building strong and positive work relationships (Cotterell et al., 1992). Such responses may prevent high wary employees from obtaining career-enhancing opportunities, as their weaker reactions to social exchange relative to low wary employees may be viewed as signifying a lack of responsiveness or concern for others. Future research should thus expand on the outcomes included in this study by examining the potential association of reciprocation wariness in relation to such important criteria as promotion rate, developmental feedback, and salary increases. The nding that supervisor-directed altruism was not affected by interactions between social exchange and reciprocation wariness was surprising given that the supervisor is an important organizational agent (Shore and Tetrick, 1994). Rather, the main effect for social exchange was the primary determinant, and the interaction between reciprocation wariness and economic exchange a secondary determinant. Note however, that this interaction was not hypothesized nor were either of the simple slopes signicant, suggesting little explanatory value. Since there is less ambiguity in an exchange with a supervisor than with an organization, reciprocation wariness may be less important when examining employee attitudes and behaviors toward the leader than in studies of the EOR. Another explanation for this nding is that in Korea, managing good relationships with the supervisor is critical to having a successful career (Yoon and Lim, 1999). As a result, wary employees may seek to carefully manage the levels of altruistic behavior toward the supervisor. Unlike altruistic behavior, attitudes such as affective commitment and turnover intentions are likely assumed by employees to be less apparent to the supervisor, and less likely to upset the harmony 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 establish whether culture played a role in determining these results. Similar to social exchange, we proposed that reciprocation wariness would moderate the relationship between economic exchange and affective commitment and turnover intentions. The pattern of results however, only supported one of our predictions (turnover intentions). The split plot suggests that high wary employees may respond somewhat more negatively to economic exchange than low wary employees by intending to leave the organization. This nding is consistent with Eisenberger and colleagues (Eisenberger et al., 1987; Cotterell et al., 1992) arguments that the highly wary fear exploitation in interpersonal relationships, viewing the provision of benets to an exchange partner as running the risk of being taken advantage of by a self-seeking partner (Cotterell et al., 1992, p. 658). Strong economic exchange with compulsory nancial and role-related provisions may be interpreted by the highly wary as signaling the presence of a self-interested organizational partner in the EOR. Low wary employees may view these same provisions as necessary and practical in order for managers to ensure that the best interests of the organization are served (Coyle-Shapiro and Shore, 2007). However, additional research is needed on economic exchange before we can make strong conclusions since this is a relatively new construct with limited empirical research available. In particular research is needed that examines how employees make sense of this type of exchange, and if responses to economic exchange are related to variables other than wariness such as power and status associated with the job and whether an employee is treated similarly or less favorably than peers. The results of this study suggest several signicant contributions to the literature on the employee-organization relationship. Our study highlights the role of individual differences in understanding the EOR. We found that individual differences can indeed, 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 the organization, another might view this type of employment relationship with open-ended obligations and a long-term reciprocity orientation as entailing greater personal risk (Eisenberger et al., 1987). Indeed, individuals who are generally cautious in relationships and fear being exploited might be more predisposed to perceive the latter where social exchange entails greater risk, causing them to engage in self-protective acts, such as reducing the strength of their positive responses. Another contribution of our study is that it incorporates the idea of risk in reciprocation for understanding the employee-organization relationship. Most prior research on the EOR has focused on the idea of support and mutual obligation to explain the dynamics underlying exchange (Shore et al., 2004). Here, we integrate literature that incorporates the role of risk in social exchange (Molm, 2003) to understand the same relationship. We nd that fear of non-reciprocation, creating perceptions that exchange relations may be exploitive, as represented in the individual difference variable of reciprocation wariness, helps to improve predictions about how individuals perceive and respond to the EOR. Note however, that the unique variance accounted for ranged from 1 to 3 percent, suggesting that the moderating effect of reciprocation wariness is somewhat small, and clearly, the present ndings need to be replicated to determine their generalizability.

It could be argued that since we did not use an experimental design with the ability to assess causality, that our view of wariness as a determining variable in responses to social and economic exchange is premature. However, two prior experimental studies involving students in a bargaining task (Cotterell et al., 1992; Eisenberger et al., 1987) established that reciprocation wariness is an individual difference variable that inuences reciprocation behavior. Additional research is needed however that provides more information about the properties of the reciprocation wariness construct including the stability of reciprocation wariness and its antecedents. Furthermore, additional experimental studies on wariness and social and economic exchange would be quite valuable to determine whether risk in the case of social exchange and a self-interested organization in the case of economic exchange are the basis for the inuence of reciprocation wariness in work settings. Like most research, our study is not without limitations. All of our measures were self-reports from employees, and all data were collected from a single survey. Some of the same-source variation problems, however, are mitigated by our tests of interaction effects, which are not subject to the same type of ination as are main effects. In addition, we conducted a single factor method model to determine whether same source variation was prevalent (Podsakoff et al., 2003). In this analysis, we found that the effects of common method variance were minimal and this provided increased condence in our ndings. Furthermore, our hypotheses were tested in a single sample taken from a large Korean organization. Future research should extend this study across multiple contexts to test the generalizability of our ndings. In spite of these limitations, the results of our study have important implications for those who study the EOR. This study suggests the value of examining both social and economic exchange elements of the EOR. Our pattern of results shows that social exchange has stronger effects than economic exchange, and that these effects are positive. Economic exchange, on the other hand, has more limited effects, at least in relation to the particular outcomes studied. Nonetheless, these effects are important, as they detract from positive outcomes for organizations. Another signicant implication is that individual differences should be included in studies of the EOR to better understand the relationships that social and economic exchanges have with employee attitudes and behaviors. The fact that high reciprocation wary individuals responded comparatively weakly to social exchange and somewhat more negatively to economic exchange paints a more complicated picture; one that urges us to elaborate on the foundations of exchange theory, to understand the meaning of exchange relationships across individuals and contexts.

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Rhoades, L. and Eisenberger, R. (2002), Perceived organizational support, a review of the literature, Journal of Applied Psychology, Vol. 87, pp. 698-714. Robinson, S.L. (1996), Trust and breach of the psychological contract, Administrative Science Quarterly, Vol. 41, pp. 574-99. Rousseau, D.M. (1995), Psychological Contracts in Organizations, Understanding Written and Unwritten Agreements, Sage Publications, Thousand Oaks, CA. Rousseau, D. and McLean Parks, J. (1993), The contracts of individuals and organizations, in Cummings, L.L. and Staw, B. (Eds), Research in Organizational Behavior, Vol. 15, JAI Press, Greenwich, CT, pp. 1-43. Shore, L.M. and Shore, T.H. (1995), Perceived organizational support and organizational justice, in Cropanzano, R. and Kacmar, K.M. (Eds), Organizational Politics, Justice, and Support, Managing Social Climate at Work, Quorum Books, London, pp. 149-64. Shore, L.M. and Tetrick, L.E. (1994), The psychological contract as an explanatory framework in the employment relationship, in Cooper, C. and Rousseau, D. (Eds), Trends in Organizational Behavior, Vol. 1, Wiley, New York, NY, pp. 91-109. Shore, L.M., Tetrick, L.E., Lynch, P. and Barksdale, K. (2006), Social and economic exchange, construct development and validation, Journal of Applied Social Psychology, Vol. 36, pp. 837-67. Shore, L.M., Tetrick, L.E., Taylor, S.J., Coyle-Shapiro, J., Liden, R., McLean Parks, J., Morrison, E.W., Porter, L.W., Robinson, S., Roehling, M., Rousseau, D., Schalk, R. and Tsui, A. (2004), The employee-organization relationship, a timely concept in a period of transition, in Martocchio, J. (Ed.), Research in Personnel and Human Resources Management, Vol. 23, Elsevier, San Diego, CA, pp. 291-370. Song, L.J., Tsui, A.S. and Law, K.S. (2009), Unpacking employee responses to organizational exchange mechanisms: the role of social and economic exchange perceptions, Journal of Management, Vol. 35, pp. 56-93. Triandis, H.C. (1995), Individualism and Collectivism, Westview Press, Boulder, CO. Van Dyne, L. and LePine, R.C. (1998), Helping voice extra-role behaviors, evidence of construct and predictive validity, Academy of Management Journal, Vol. 41, pp. 108-19. Wang, D., Tsui, A.S., Zhang, Y. and Ma, L. (2003), Employment relationships and rm performance, evidence from an emerging economy, Journal of Organizational Behavior, Vol. 24, pp. 511-35. Wu, J.G., Hom, P.W., Tetrick, L.E., Shore, L.M., Jia, L., Li, C. and Song, L.J. (2006), The norm of reciprocity: scale development and validation in the Chinese context, Management and Organization Review, Vol. 2, pp. 377-402. Yamagishi, T. and Yamagishi, M. (1994), Trust and commitment in the United States and Japan, Motivation and Emotion, Vol. 18, pp. 129-66. Yoon, J. and Lim, J. (1999), Organizational support in the workplace: the case of Korean hospital employees, Human Relations, Vol. 52, pp. 923-45. About the authors Lynn M. Shore is a Professor of Management at San Diego State University. She was previously on the faculty at University of California, Irvine, and Georgia State University. Her primary research areas are on the employment relationship and work force diversity. Her research on the employment relationship focuses on the inuence of social and organizational processes on the employee-organization relationship, and effects of this relationship on employee attitudes and behavior. Dr Shores work on diversity has examined the impact that composition of the work

group and employee/supervisor dyads has on the attitudes and performance of work groups and individual employees. She has published numerous articles in such journals as Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Journal of Organizational 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 and can be contacted at: William 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 the faculties of Cleveland State University and Georgia State University. His primary research areas are organizational citizenship, forms of intelligence, leadership, cross-level research, and the employment 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 Vocational Behavior, 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 and cultural divides. This research examines the critical role of national culture, employee cognition, and trust in the management of global collaborations, specically outsourcing relationships. Dr Raos also conducts research on how managers exchange and build trust in countries lacking institutional support. Her work has been published in the Journal of International Business Studies. Jai Seo is a professor of Management at Kyonggi University in Korea. He was previously on the faculty at Daegu University of Daegu, Korea. His primary research areas are on employees psychological attachment to an organization and leadership. His research on employees psychological attachment and leadership focuses on the inuences of a leader in the formation of attitudinal consistency toward an organization. Also, many of his studies focused on leader inuence on the development of employees positive organizational behaviors. His recent research moves toward the role of workplace spirituality in the process of developing employees positive psychological attachment toward an organization. He tried to rene the concept of workplace spirituality and its measures. Dr Seo published many articles in such journals as Korean Academy of Management Journal, The Korean Journal of Human Resource Management, The Korean Journal of Human Resource Development, Human Resource Management Review, and Journal of Management.

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