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NotesBusiness ManagementTopic 2.4Equity theory — Adams (HL only)
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2.4.51 min read

Equity theory — Adams (HL only)

IB Business Management • Unit 2

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⚖️ Adams'' Equity Theory

Big Idea: People compare their inputs (effort, skills, time) and outputs (pay, recognition, promotion) to those of others. If the ratio feels unfair, they become demotivated.

  • Inputs = what the employee gives: effort, experience, skills, qualifications, time
  • Outputs = what the employee receives: salary, bonus, recognition, promotion, benefits
  • If my input/output ratio = your input/output ratio — I feel EQUITY (fair)
  • If I give more but get the same as you — I feel INEQUITY (unfair, demotivated)
  • If I give less but get more than you — I may feel guilt (over-rewarded)

How employees respond to inequity

  • Reduce effort (work less hard to match perceived unfairness)
  • Demand more pay or recognition
  • Change their comparison person (compare to someone else instead)
  • Leave the organization (turnover increases)
  • Rationalize the situation (convince themselves it is fair)
Equity theory explains why pay transparency and fair reward systems matter. If employees discover a colleague earns more for the same work, motivation drops sharply.

Related Business Management Topics

Continue learning with these related topics from the same unit:

2.1.1Functions of HRM
2.1.2Recruitment and selection
2.1.3Training and development
2.1.4Appraisal and performance management
View all Business Management topics

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IB Exam Questions on Equity theory — Adams (HL only)

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How Equity theory — Adams (HL only) Appears in IB Exams

Examiners use specific command terms when asking about this topic. Here's what to expect:

Define

Give the precise meaning of key terms related to Equity theory — Adams (HL only).

AO1
Describe

Give a detailed account of processes or features in Equity theory — Adams (HL only).

AO2
Explain

Give reasons WHY — cause and effect within Equity theory — Adams (HL only).

AO3
Evaluate

Weigh strengths AND limitations of approaches in Equity theory — Adams (HL only).

AO3
Discuss

Present arguments FOR and AGAINST with a balanced conclusion.

AO3

See the full IB Command Terms guide →

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2.4.4Causes of demotivation
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Drive theory — Pink (HL only)2.4.6

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