What Happens When Relationships Become Transactions?

And How Helpfulness Can Protect Organizations from Quietly Falling Apart

“Before every show, we get into a circle, hold hands, and someone makes a speech. Most bands are too cool for that.” -Flea (Bassist for the Red Hot Chili Peppers)

Held Together by Helpfulness

When I was in graduate school, my mom’s uncle used to call me once a month. He’d begin with his characteristic “Asalamwalekum beta” (peace be upon you, son) and then ask how I was doing, whether I was praying, and if everything was OK. It was usually a short conversation, but I always looked forward to it. Recently, when I talked to my cousins about Nana, I learned that he did this with lots of people. It wasn’t only these “check-in” calls—he felt responsible for, and took seriously, other aspects of the family and its well-being. For instance, we have a ROSCA in the family, and for decades, he managed the dozens of monthly checks and frantic requests for money that came in. He was always ready to take a late-night call so that funds would be available for an urgent tuition payment, a health emergency, or to replace a broken-down car.

Nana didn’t just make calls; he created a web of support people could rely on.

Organizations often overlook this invisible glue, yet it’s the hallmark of companies that function and flourish. When team members help each other—sharing tacit knowledge, unblocking progress by providing resources, and offering creative insights purely out of a desire to support each other—the collective outcomes become far more significant than any individual could achieve alone.

While a culture of helpfulness can drive connectivity and innovation, it isn’t immune to the natural pull toward efficiency and self-interest—a transactional drift, so to speak.

Over time, organizations may shift away from a relational view of themselves as individual imperatives gradually replace the communal commitment that unifies people. Yet the power of the helpful act—supporting others without expecting anything in return—remains a potent antidote.

Relationships versus transactions

In the early part of my academic career, I spent a lot of time researching social networks. I always found it curious that a meaningful chunk of that literature is organized around a zero-sum, almost formulaic, framing: How can individuals leverage their networks to get ahead of others? “Your networks” are your “competitive advantage,” a means to an end for outperforming the competition.

As I’ve gotten older, I’ve come to view this framing with deep suspicion. It carries the seeds of what ultimately undermines networks: it turns relationships into transactions.¹

But, stepping back, what is the difference between a transaction and a relationship?

Are organizations just bundles of transactions?

From an economic perspective, organizations can be seen as bundles of transactions—exchanges between people, teams, and departments—all aimed at producing and selling products or services.

But what exactly is a transaction? At its core, it’s simple: I give you X, you give me Y. Each party knows what they’re offering and what they’re receiving. If the terms aren’t mutually beneficial, the transaction doesn’t happen or gets renegotiated.

This is a perfectly reasonable model of organizations, and many organizational activities can be viewed fruitfully through the lens of transactions.

Organizations are also bundles of relationships.

However, the transactional view of organizations is somewhat confining. Transactions aren’t all that organizations are. Organizations also consist of relationships—and these are qualitatively different from transactions. A relationship isn’t governed by “If I give X, you give Y,” but by what’s appropriate in the context of that relationship—by your responsibilities as a friend, teacher, or leader.

While transactions offer efficiency, they are not intended to nurture the deeper, less measurable aspects that relationships provide.

Relationships cultivate trust, empathy, safety, shared purpose, responsibility, and resilience—elements that can’t be easily measured or reduced to simple if X, then Y exchanges. Without relationships, organizations risk becoming efficient but weak, optimized for short-term gains at the expense of long-term prosperity, innovation, and adaptability.

What is transactional drift?

Of course, transactions and relationships aren’t discrete or mutually exclusive; instead, they represent a spectrum that can help us better understand which pole our organizations are moving toward.

Transactional drift refers to an organization’s slow—and often imperceptible—shift toward connections that are increasingly built on if give X, then get Y logic rather than what is appropriate for the relationship. I’ll also add that what is considered “appropriate” is likely shaped by norms that can shift over time. As these norms evolve, we may gradually view a transactional frame as normal for a relationship—even though it was different in the past.

Transactional drift and what we can do to fight it

I’ve been trying to wrap my head around “transactional drift” for some time now. While it isn’t a named phenomenon, I’ve found some research especially useful in helping me understand how it unfolds and its impact. I’ve tried to think about two things. First, what forces drive transactional drift inside our organizations? Second, what can we do to resist it?

Incentives and the Dilemma of Sharing

At work, we are confronted with a myriad of incentives². Promotions, raises, that new book deal—we have many carrots (and sticks) that kindle our strategic juices and cause us to choose how we allocate our time, channel our creativity, and, most importantly, change how we both view and relate to others.

My colleague Wes Cohen at Duke and his collaborator John Walsh at Georgia Tech have each written about a fascinating phenomenon crucial in scientific innovation: the sharing³ of technology and materials and how incentives affect this behavior.

In one paper, Walsh, Cohen, and Cho (2007) find that a shift from producing science to commercializing it leads researchers to share significantly less with their colleagues—not by withholding knowledge itself but by restricting access to critical materials and data that were once more freely exchanged within the scientific community. The net impact on the community is likely that many ideas that could have been pursued if materials were available are no longer explored by anyone, as researchers are increasingly concerned about how the broader use of their resources might affect their slice of what looks like a limited pie.

In another paper, Shibayama, Walsh, and Baba (2012) show that as academic entrepreneurship grows, scientists shift from freely sharing resources within the community to more transactional exchanges, where people expect something in return and share less overall. This paper's most critical point is that this shift isn’t limited to scientists who are directly involved in entrepreneurial activities; it spills over to everyone, showing how the push toward commercialization may reshape the culture of science itself.

A final paper worth noting: Bandiera, Barankay, and Rasul (2005) find that when firms implement relative compensation schemes (e.g., paying employees based on their rank rather than their output), workers dramatically reduce their productivity to avoid harming their colleagues—especially when their colleagues’ output is easily observable. People are sensitive to the impact they have on others, but this sensitivity depends on their ability to internalize the costs they might impose, which likely stems from their relationships and their beliefs about their responsibilities to their colleagues.

The Impact of Market Substitutes for Social Connection

High-powered incentives aren’t the only way to weaken relationships. While relationships are complex, they often serve as crucial sources of essential resources—money, advice, etc. A recently published paper by Banerjee et al. (2024) uses a natural experiment and an actual RCT to study the impact of providing Indian villagers with access to formal microfinance (a financial product) on their social networks. They found something very interesting: not only did microfinance substitute for lending relationships, but it also weakened social networks more generally—even for those unlikely to borrow. This finding is quite striking (and similar to the Shibayama et al. one above) and suggests that the substitution effect of formal financial systems can have unintended and perhaps far-reaching effects on community relationships and risk-sharing mechanisms.

In other words, microcredit weakened social relationships in the village. I don’t want to say that access to microfinance is bad—it’s actually quite good because it provides credit to people who might not have gotten it before and perhaps reduces the power of certain groups who wield it over others. But there was a trade-off: the access to credit wasn’t “free,” and the transactional drift occurred quite rapidly.

We have likely seen similar substitutions in other contexts. Putnam believes that television may have caused some erosion of America’s social capital. There has been considerable discussion about smartphones and loneliness. And now, what will Generative AI (the omnipresent advisor) substitute for in our work relationships?

Specializing in People Drives Performance

While incentives matter, how we structure work also matters in balancing whether our connections are transactional or relational.

There’s fascinating work on this topic.

One of my favorite papers is Freyer’s (2018). While the paper isn’t explicitly about relationships, its underlying mechanism surely is. The experiment showed that when classrooms were organized to emphasize teachers who “know the subject” rather than those who “know their students,” student achievement suffered across the board. This suggests that a teacher who builds relationships with their students outperforms subject specialists who teach as if they worked on a student assembly line. Simply put, specializing in people drives the effectiveness of teachers and their students.⁴

This effect of “specializing in people” isn’t unique to education—we see it in other contexts. Chen (2021) finds that when proceduralists and physicians share experience working together, patient outcomes improve—boosting survival by cutting 30-day mortality by 10–14% and reducing resource use. These physicians specialize in each other: it’s relational, not transactional.

Sabtey (2023) finds that when patients lose a longstanding relationship with their primary care physician, adverse events spike—with mortality rising by 4%, emergency visits by 4%, and hospital admissions by 3%—underscoring the unique health benefits of enduring patient-PCP relationships. Similarly, Schwab (2025) finds that when a longstanding primary care–patient relationship dissolves, costs rise by 3–5%—primarily due to increased specialty care usage—without any observable improvement in patient outcomes, highlighting the hidden costs of losing relationship-based care.

These studies suggest that a key form of tacit knowledge in the economy is our knowledge about each other. This knowledge isn’t incidental but critical to driving the high performance of our essential social institutions: our schools, hospitals, and likely the companies tasked with creating economic progress. What happens when this knowledge is lost?

Helpful People Strengthen Networks.

What can be done to counteract these forces of transactional drift?

My friend and co-author, Alex Oettl at Georgia Tech, wrote a powerful paper studying the importance of helpfulness on the scientific contributions of research immunologists (scientists who study the immune system and its responses). He found something quite interesting: yes, collaborating with “stars” (i.e., highly productive peers) boosted scientists' productivity, but collaborating with highly helpful stars was what actually drove the productivity boost.

Who counted as helpful? The people who openly shared advice and guidance even without explicit rewards like co-authorship. These helpful stars were relational, not transactional.

In 2022, Alex, our friend Samsa Samila from IESE, and I published a paper titled "Helpful Behavior and the Durability of Collaborative Ties."

In it, we studied the impact of helpful people on the resilience of collaborative networks among research scientists (again, immunologists). Our findings were both surprising and telling.

We found that having a helpful collaborator makes you more helpful yourself. More importantly, the ripple effect of helpfulness fostered a culture of mutual support, strengthening the surrounding collaborative network.

As a result, collaborations with helpful individuals tended to be more durable, persisting even after the unexpected loss of the original helpful collaborator. In contrast, similar collaborations with highly productive but less helpful individuals were more likely to dissolve in their absence, highlighting how the spread of helpfulness enhanced both the resilience of specific collaborations and the broader scientific ecosystem.

The point is that helpfulness has ripple effects and might be a simple solution to transactional drift. It’s easy and impactful, though perhaps not entirely “free.” You do have to give things without expecting something in return. However, the reward could be an organization you enjoy being part of—and one you’re proud of.⁵

The end

Alright, that wraps up today’s deep dive into relationships, transactional drift, and the power of helpfulness. However, we’ve only begun to explore how to design thriving organizations and what organizational changes you might want to reconsider. Ask yourself: Am I building a relational organization or a transactional one?

1. In fact, the history of the social media era (nearly over!) is all about “transactionalizing” relationships—how can we monetize your friends?

2. Incentive comes from the Latin — incentīvus — setting the tune, or to kindle/set fire.

3. Sharing means providing materials without expecting credit or co-authorship in return.

4. Here is another paper on this topic: https://www.sciencedirect.com/science/article/abs/pii/S0272775717306635

5. This is perhaps worth a footnote: A single helpful person in a sea of unhelpfulness is unlikely to be sustainable (in fact, neither are unhelpful people in a sea of helpfulness). That’s why selecting people based on an organization’s culture of helpfulness—where most people believe being helpful is an appropriate characteristic of someone who works in that organization—is key to creating an organization with these aggregate properties.