What is "Equity Theory"?i need to know any effectiv eapplicationof this theory.

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M.P. Ossa eNotes educator| Certified Educator

When it comes to organizations, equity measures whether the services and resources within the organization are being distributed fairly among its participants, or whether a parent organization is equally giving benefit to its subsidiaries and dividing the shares equally among those who are a part of it.

For instance, Company X receives dividents from profits and they are partaken by its beneficiaries. Company Z might receive less dividents from the same profits and the beneficiaries will not be equally rewarded.

It is also an important factor with motivation and how an organization performs proportionally to how it is being rewarded.