Testing mediation effects of social and economic exchange in linking organizational training investment to employee outcomes

Purpose: Although social exchange theory has long been used to explain employees’ positive work attitudes in response to perceived investment in employee development (PIED), few studies have examined this theoretical mechanism by introducing a direct measure of social exchange between employees and their personified organization. Furthermore, most studies have focused solely on one type of exchange (i.e. social exchange) and have ignored another type of exchange characterized as economic exchange. The purpose of this paper is therefore to uncover the process by which PIED affects employees’ attitudes, including affective organizational commitment and job satisfaction, by examining the mediating roles of both social and economic exchanges. Design/methodology/approach: To test the hypothesized mediating model, this study conducted a three-phase, time-lagged questionnaire survey and collected data from 545 full-time employees. The model was tested based on structural equation modeling with a bootstrap test of indirect effects. Findings: In line with social exchange theory, the findings showed that social exchange perceptions positively mediated the relationships between PIED and affective commitment/job satisfaction, whereas economic exchange perceptions negatively mediated them. Additionally, social and economic exchange perceptions were found to partially mediate the relationship between PIED and affective commitment but fully mediate the relationship between PIED and job satisfaction. Practical implications: These results suggest that employers would benefit from investing in employee development, provided workers see the training investment as the employer’s side of social exchange, which in turn leads to increased affective commitment and job satisfaction. When employers do not achieve the expected returns from the training investment, they should check not only hard data (e.g. training attendance rate, hours of training, etc.) but also soft data (e.g. employees’ perceptions of training investment, social exchange, etc.) by conducting employee surveys and communicating with line managers. Originality/value: The main contribution of this study is that it provides important empirical support for social exchange theory in the context of organizational training investment and employees’ attitudinal outcomes, by directly testing the positive mediating role of social exchange and the negative role of economic exchange.