Equity theory, when applied to the workplace, focuses on an employee’s work compensation relationship and an employee’s attempt to reduce any perceived unfairness. Discover strengths and weakness of the theory and implementation advice on the two main processes an individual can use to restore equity.
Equity Theory Definition
Equity theory states that "people desire the ratio of their outcomes and investments to be roughly equivalent to the ratio for some other referent person or group. If ratios are not equal, and the difference is beyond some individual threshold level, emotional responses occur and the desire to restore equity manifests itself" (Schultz et al., 2006).
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Equity Theory References (4 of up to 20) *
- Adams, S. J. (1965) Inequity in Social Exchange. In: Derkowitz, L. (Ed.) Advances in Experimental Social Psychology, 267-299, Academic Press, New York.
- Adams, John S. (1963). Toward an Understanding of Inequity, Journal of Abnormal and Social Psychology, Vol.67(5), pp.422-436.
- Austin, W., & Walster, E. (1974) Reactions to Confirmations and Disconfirmations of Expectancies of Equity and Inequity, Journal of Personality and Social Psychology, Vol.30, pp.208-216.
- Fadil, P.A., Williams, R.J., Limpaphayom, W., & Smatt, C. (2005) Equity or Equality? A Conceptual Examination of the Influence of Individualism/Collectivism on the Cross-cultural Application of Equity Theory, Cross Cultural Management, Vol.12 (4), pp.17-36.
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