An Application of Equity Theory to Buyer-Seller Exchange Situations

The Equity Theory touches on the effects these situations have on the employee’s motivational level. In society today employees are constantly comparing how they are

Rather, Equity, and the sense of fairness which commonly underpins motivation, is dependent on the comparison a person makes between his or her reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation”(Balancing Employee Inputs and Outputs).

Though one may favor exchange processes that conclude with a social association that values the idea of equality, however Blau states that exchange processes can “give rise to differentiation of power” (Blau 1964: 114), which results with relation to superordination and subordination. Blau explains this disequilibrium as a result of needs for resources from unlike partners and efforts among equals to gain advantages over the other (Blau 1964: 114). Relating to intrinsic rewards, if one counterpart gains a reward from the exchange, the other counterpart expects repayment in the form of future wards – hence the principle of reciprocity (Blau 1964: 121). Reciprocity between unlike counterparts creates this sense of imbalance

Target has suggested that its vendors create special products or prevent price comparisons to help decrease consumer show-rooming (Kinicki & Williams, 2013). Pressure of this sort could create opportunities for vendors to participate in unethical practices and could create a negative image for Target (McKay, Nitsch, & Peters, 2015). Although laws, such as the Sarbanes-Oxley Act, are basic frameworks that business operations must comply with, there is no guideline that businesses have to follow when making business decisions. Furthermore, ethical behavior can be perceived by customers, investors, and society as corporate responsible while creating additional value for products or services (Kinicki et al., 2013). Target should ensure that it ethically follows all constraints of the law while considering the impacts its decisions will have on its stakeholders, and while fostering an image, responsibly by corporate.

Adam’s Equity Theory is a model of motivation which basically states that employees will perform at a more productive rate if they feel that they are being treated fairly (Kreitner & Kinicki, 2010). Equity is achieved when a worker perceives their reward for their amount of work to be equal to that of a relevant worker. Negative inequity is perceived by the employee when the relevant worker receives greater rewards for the same amount of work. Positive inequity is perceived by the employee when the relevant worker receives fewer rewards for the same amount of work (Kreitner & Kinicki, 2010).

I’ll consider this issue in the case study of underage drinking. The under 18s add demand to the market for alcohol; they seek to acquire what others seek to supply. They seek to fulfill what they believe to be a sensible appetite having exercised care, skill and judgement in terms of the type, quantity and price of alcohol they require. They believe their objective to be reasonable and rational. Therefore they contribute to the efficient operation of the market.  The U18s are seeking to satisfy their present appetite whilst paying less regard to the externalities of this preference; this is rational and reasonable in their view. They can afford to do so and probably exclude themselves from the risks of such consumption. Similarly the action of the supplier is both rational and reasonable in their eyes expanding their market and excluding themselves from any responsibility for the customers’ subsequent behaviour.

In 1994, the current President of H-E-B grocery- Charles Butt- opened the first Central Market. The store was located in Austin. Mr. Butt reached out to John Campbell an employee who had been with the company for over thirty years. Campbell started out at H-E-B as a cashier and moved up the ranks to become an Innovation Officer at HEB. Central market is a division under HEB Grocery which operates independently. The store remains privately owned by the Butt family and is not traded openly on the stock market.

The unequal wage policies at Simpsons Plastic Products Corporation may lead to production and political deviance within the company. Production deviance can be characterised by employees leaving early, taking excessive breaks working intentionally slow, and wasting resources. Political deviance can be characterised by favouritism, gossiping, and competing non-beneficially. Women working at Simpsons may engage in production deviance activities due to the unequal wage policies. Fairness refers to the judgements people make about decisions or outcomes that are based on measurements. Fairness cannot be determined by statistics. Fairness involves emotions and perceptions. It depends on what one considers to be fair. What is fair for one person may not be fair to another. A lower wage rate for most female households in the workforce versus male households is a form of direct discrimination. Female workers will perceive this treatment as unfair and may respond with production deviance actions. A reason for women receiving lower wages may be due to favouritism. Women may attempt to compete non-beneficially for their manager’s approval for a potential pay raise.

The study explains this process of Customer Complaint Behaviour (CCB) and finds that it is extensively helpful in discovering how and why cultures differ in the way they consume. Due to such desires to recognize how family values shape purchase behaviors, there is an escalating demand in the business world “to understand and respond more effectively to consumers ' dissatisfactions” (Kotler, P. 2000).

Indeed, its unit of explanation is almost confined to the dyad, of how people assess their worth and outcomes relative to possible and existing relationship partners. Perhaps, expanding the notion of justice, equity theory can be applied to the realm of intergroup behavior. This may occur through the process of comparing the ingroup’s investments toward achieving positive social outcomes against those of the outgroup, while also examining the returns of investment achieved by one’s group relative to others. Prejudice and discrimination may be attributed to one group’s perception that social outcomes (e.g. funding, employment, welfare) are not being distributed fairly across groups, regardless if these resources are shared equally in reality—only that the group subjectively believes that they are worth more than what they already have, or that other groups are not deserving of how much they are

Jody Clay-Warner and associates article “Justice Standard Determines Emotional Responses to Over-Reward” looks at a central concern in sociology, over-reward, and two justice standards’, classic equity theory and status value theory, impact on emotional responses to the over-reward. Classic equity theory emphasizes a zero sum approach, where if one person is being over-reward than another person is being directly under-rewarded. On the other hand, status value theory looks at over-reward with a larger lens, where people compare themselves to general categories of others. Clay-Warner has found that studies have been variable when looking at the emotional responses to over-reward. Clay-Warner argues that “the invocation of different justice standards--local equity versus referential--accounts for the variation in findings regarding emotional responses to over-reward”. This argument becomes the hypothesis of the journal article, answering the research question of why studies have shown different outcomes on emotional responses from over-reward. Clay-Warner explains that referential structures have more loosely connected comparisons, and therefore people have “no sense that one’s own over-reward results in reduced rewards for another”. Why would people feel negative emotions towards over-reward? Clay-Warner attributes that to justice theory, where expectations of reward override self-interest. There is an important issue with this journal article, though, as referential justice

The equity theory conceived by J. Stacy Adams is based premise that "people gauge the fairness of their work outcomes relative to others, any perceived inequity is a motivating state of mind" (Schermerhorn, Hunt, and Osborn, 2005, p.10, chpt.6). This theory when applied to a sales force would not be the best method to motivate this employee group as to what is deemed fair by a team leader could be perceived as unfair by the

While auctions are appealing in theory, the challenges of auction design in practice are insurmountable?

At Queen’s University, I am currently working on my master’s thesis, with the working title of “Paying to Jump the Queue: Consumer Perceptions of Fairness in Various Social Contexts”, under the supervision of Prof. Laurence Ashworth. My interest in the topic stems from observing social phenomena where increasingly more firms and governments employ product versioning to maximize profits or to increase efficiency. One type of product versioning, the queue-jumping option, was of particular interest to me because it often caused an uproar from the customers, mostly criticizing the firms on fairness grounds. I became curious as to why such an option resulted in negative reactions under certain circumstances when a similar option in concept has always been available in freight and courier industry. An initial literature

Case in point, in the event that you decide to purchase one extravagant brand in vogue shirt instead of two less expensive T-shirts from an in-store brand, you must surrender owning a second shirt less chic in return for the more stylish brand shirt. People use distinctive criteria to settle on choices and albeit all reparation things and experience costs, the expense will not be the same, as the quality they assign to specific products or administrations vary.