Psychological Contract: Addressing a Research

Gap with Engagement as a Moderator

Tristan Jun G. Esclamdo

Abstract:
The Psychological Contract (PC) emerged as a concept in the psychological literature almost fifty
years ago, as a footnote in understanding Organizational Behaviour. The Psychological Contract
refers to those implicit ideas about the relationship of the employees with organization. The
perceived violation of Psychological Contract of employees reflects unfulfilled promises from
employer side. This perception of violation might lead to adverse effect on the organization. As
much as it is very important for any organization to prevent any breach or violation of this
unwritten contract, it is just as crucial for management to fully understand that are antecedents that
might lead to the breach of the psychological contract. This study also shed some light on a
potential research gap with regard to psychological contracts. Engagement is considered a possible
gap as it occurs after the antecedent but before the actual breach of the contract. Engagement
somehow functions as a moderator as to how these antecedent influence the degree of violation on
the contract.

Keywords: Antecedents, Engagement, Psychological Contract, Organization Behaviour,

Violation, Breach, Employees, Organization.

Word Count: 7,712

I. Reason/Interest for/in choosing the Theory

With the rapid evolution in the fundamental important aspect of our way of life, our culture and
our society, there have been various modifications in human behaviour. In fact there has been an
increased level of interest in the area of employee relations. Emphasis is laid on bringing into line
the objectives of the organization and the interests of its employees.
Working conditions are of primary importance to us humans. It determines the thinking process of
humans, and the interaction between people. And with the passage of time, challenges have
increased and working conditions have become more complicated. Due to all these reasons,
management must modify their set up to cope with the national demands and even international
influences. Managers are ought to think in an erudite manner for them to deal effectively with
these ongoing changes.
Human relations at the workplace are often known, because employment relation is usually
associated with various other disciplines such as human resource management, industrial
psychology, labour law and even industrial economics. In addition to that, it can also differ in other
context, for example, in some European context, the concept of employee relation involves the
interaction at the broader scale and includes relationship among state, employer and organizations
(Stevenson, 2006). At this level, it includes micro level relations, which exists between managers
and employers.
And with the continuing changes in economic conditions, global competition and technology have
altered the way both organizations and employees function. There are different arguments
concerning the value of the psychological contract (PC) to practitioners nowadays and this work
considers both positive and negative interpretations as it will be shown later in this paper.
Theories of organisational behaviour suggest that a PC between an employee and its organisation
will appear and develop in virtually all employment relationship. Given that these PC consist of
the expectations that employees, in particular, will have of their employing organisation and on its
managers, it is clearly important that managers are at least aware of the existence of these contracts
and must recognise that employees have sincere expectations relating to how they are to be treated
at work. PCs are normally thought to be important because their breach has been found to lead to
serious consequences, which will also be discussed momentarily. Thus, it is of utter importance
that managers of any organizations should understand, manage and work to fulfil and hopefully
sustain psychological contracts if these adverse penalties are to be evaded.
Although most research attention has been paid to the effects of breaching PCs rather than the
effects of fulfilling those contracts, it is normally thought that highly committed, satisfied and
engaged employees will have a relatively strong and generally fulfilled PC with their organisation
(Guest and Conway 2002). Therefore we can conclude that positive, strong and satisfied PCs will
tend to subsidize positively to employees motivation and performance, especially those of the
relational variety. This raises the demand as to how managers can cope with these unwritten
contracts.

Now that we have accepted the fact that Pcs are implicit, potentially complex and inherently
subjective, it has been suggested that organisations with their employees should make the terms of
these contracts more obvious so that there is less chance of breaches being caused simply because
of misunderstanding. This suggests the necessity for open and honest discussions between
management and employees concerning their common expectations and perceptions of promises
and obligations. It also suggests a role for comprehensive induction programs, wide-ranging
performance and development meetings and regular feedback.
Organisations and managers need to recognise that organisational changes will often indicate
changes to the PC even if they dont involve changes to the formal employment contract and on
the working conditions of their employees. This emphasizes the importance of organisations and
managers recognising the need for effective policies for anticipating, recognising, managing
employee conflict and accommodating the expectations that employees might have. Common
strategies for managing employee resistance to change centre on the following (Brown and Harvey
2006):
-

Education and communication concerning the need for change

Creating and reinforcing the vision of where the organisation is headed
Ensuring participation and involvement of those affected in the change process
Facilitating and supporting change through training and resources
Negotiating with resistors
Use of reward systems to encourage changed behaviours
Use of explicit or implicit coercion

Researches in resistance to organisational change proposes that managers need to understand the
reasons for resistance in order to manage it. The PCs perspective highlights that the reason for
resistance might be linked with a perceived breach to the psychological contract. Effective
communication, participation, negotiation and reward strategies might therefore need to be in place
in order for management to address those apparent contract breaches.
It is therefore very clear that there is an urgency for managers to fully understand the context
behind the PC theory, from its antecedents, to its evolution as time passes and to the implications
if a breach or a violation have been committed. Failure to understand the nature of this theory can
prove costly for any entity because the loss of human capital can have a long term effect on the
organization. On the other hand, if an organization knows how to exploit this theory to its
advantage, it can lead to very favourable results.

II. Theory Explained

As Argyris (1960) argues, the Psychological Contract (PC) emerged as a concept in the
psychological literature almost fifty years ago. The PC refers to implicit ideas about the employeeorganization relationship. Menningers (1958) concept of the psychotherapy contract, that
ascribes the intangible aspects of the contractual relationship that exist between psychoanalysts
and patients, was somehow translated to the work setting.
The notion of the PC gained growing popularity in the 1980s and 1990s.These years were
characterized by many organizational changes. Because of these modifications, the traditional
employment relationship was put to a test. Serious behavioural and attitudinal reactions among
employees were observed. The PC was used to describe, analyse, and to explain the consequences
of these deviations. Publications by Denise Rousseau (e.g. 1989, 1990, and 1995) defined and
limited the PC to an employees perception of the exchange of mutual promise-based obligations
between the employee and the organization. Conway & Briner (2005) suggests, questionnaire
surveys are the most commonly used method to examine the PC.
There are different types of measurements of the PC. In 1998 Rousseau and Tijoriwala stated: In
the past 10 years, field research into the content and dynamics of PC in organizations has generated
numerous published studies, with almost an equal number of somewhat distinct assessments. In
the year 2005, no progress had been achieved in this respect, according to Conway and Briner:
There are a variety of measures for assessing both breach and the contents of PCs, showing there
is no single, agreed upon measure of either of these constructs
This study concentrates on the concept of PC, its several aspects and its impact on Organization
while answering these questions.
What is PC?
What is nature of PC?
What is PC Violation or Breach?
How fulfilment or violation of PC affects Organizations?
PSYCHOLOGICAL CONTRACT: A CONCEPTUAL DEFINITION
As stated above, Argyris in 1960, PC is originally defined by Levinson as the unwritten and
implicit contract or mutual expectation between employees and their employers. The PC was
refined by Schein in his seminal work on organizational psychology in the form it is used today
by many human resource practitioners. He describes it as:
The unwritten expectations operating at all times between every member of an organization and
the various managers and others in that organization... Each employee has expectations about such
things as salary or pay rate, working hours, benefits and privileges that go with a job the
organization also has more implicit, subtle expectations that the employee will enhance the image
of the organization, will be loyal, will keep organizational secrets and will do his or her best.

The definition of the PC provided earlier by Schein, while clear, implies that the PC is what
management as a group expects from all individual employees. An important question was raised
that if the PC is made up of all managers views then how can a decision be made that the PC has
been fulfilled or broken? These and other questions create a significant trial about how we can
quantify and explain the PC that is prevalent in an organization. To address these and similar issues
Denise Rousseau redefined the PC as: individual beliefs, shaped by the organization,
regarding terms of an exchange agreement between individuals and their organization. Robinson
and Morrison (1995) also expresses that the appearance of the contract is the subjective agreement
on employees and employers mutual responsibilities and obligations.
PSYCHOLOGICAL CONTRACTS AND ORGANIZATIONS:
Rousseau (2004) argues that modern organizations cant succeed unless the people that they
employ will agree to contribute to their mission and survival. Workers and employers need to agree
on the contributions that workers will make to the firm and vice versa. Understanding and
effectively managing these PC can help organizations thrive.
As Robinson, Kraatz and Rousseau argue, unlike the formal contract, the interpretation of the terms
of the PC between employee-employer may not be shared by both parties since it is highly
perceptual. Furthermore, employees perceptions of the obligations established at the time of
employment may change as the years of employment increases. Employees tend to attribute
increasing perceived obligation from their employer while their own perceived obligation
decreases. A thorough preliminary investigation of existing benchmarks and three studies of De
Vos, Buyens & Schalk, 2001; De Vos & Buyens, 2002 support conceptualizing the PC as a multidimensional construct. Five dimensions are distinguished for organization promises (Table 1), and
the five dimensions for employee promises can also be distinguished (Table 2).
Career
development
Job content
Social environment
Financial
compensation
Work-private life
balance

Offering possibilities for development and/or promotion within the

organization (such as possibilities for development, chances of
promotion)
Offering challenging, interesting job content (such as work in which
employees can use their capacities, challenging tasks)
Offering a pleasant and cooperative working environment (such as good
communication among co-workers, good cooperation within the group)
Offering appropriate compensation (such as remuneration
commensurate with the work, conditions of employment that have
favourable tax consequences)
Offering respect and understanding for the personal situation of the
employee (for example, flexibility in working hours, understanding of
personal circumstances)

TABLE I. Organization Promises

Source: Ven Cv. The Psychological Contract; a big deal?.; Behavioral Sciences Service Centre
Ministry of Defense, The Hague, The Netherlands. Available from: cphw.vd.ven@mindef.nl

Effort and
performance

Flexibility
Loyalty

Ethical conduct

Availability

Willingness to make efforts to perform well for the organization (for

example, making efforts for the benefit of the organization, doing good
work both quantitatively and qualitatively, working well with coworkers)
Willingness to be flexible in carrying out the work that needs to be done
(for example, working overtime, taking work home)
Willingness to continue working longer for the organization (for
example, not accepting every job offer that comes along, working for
the organization for at least several years)
Willingness to conduct oneself ethically towards the organization (for
example, not making confidential information public, dealing honestly
with resources and budgets)
Willingness to keep ones availability status at an acceptable level (for
example, taking training courses that become available, keeping up with
trade literature)

TABLE II. Employee Promises

Source: Ven Cv. The Psychological Contract; a big deal?.; Behavioral Sciences Service Centre
Ministry of Defense, The Hague, The Netherlands. Available from: cphw.vd.ven@mindef.nl
MAJOR TYPES OF PSYCHOLOGICAL CONTRACTS:
Rousseau (1995) distinguishes between transactional and relational contracts. Transactional
contracts refer to collaborations of limited duration (2 to 3 years most) with well-specified
performance terms. In contrast relational contracts are open-ended collaborations with only loosely
specified performance terms.
Transactional
Little organizational loyalty
Employees develop marketable skills
Unstable employment
Flexibility/ easy exit
Less willing to take additional responsibilities
Reward system focuses on short term

Relational
High organizational loyalty
Employees develop company-specific-skills
Stable employment
Willing to commit to one company
High intent to stay with organization
Members highly socialized

TABLE III. Types of Psychological Contract

Source: Rousseau, DM. Psychological contracts in organizations: Understanding written and
unwritten agreements. 1995. Newbury Park, CA: Sage.

Drawing on Rousseau and others, Shields (2007) has developed the following matrix elaborating
these four forms of the PC. (Table IV)

Short
-term

Specified performance contingencies

Unspecified performance contingencies

Transactional (new deal)

Transitional

Espoused deal: If you perform at a high

level for as long as we need you, we will
provide you with exciting work and
opportunities to develop your human
capital and employability
Rewards based on short-term role
performance,
especially
task
behaviour and results
Emphasis on individual performance
and rewards
Rewards matched to external markets

Espoused deal: If you work harder than

before, we may be able to keep you on, but
you may have to be prepared to take a pay
freeze or pay cut

Rewards not linked to performance or

membership
Work intensification
Reward levels in decline
Incentives to quit or accept
redundancy deals

Example: Sales, executive and senior Example: during

management roles
downsizing

Long
-term

restructuring

or

Balanced

Relational (old deal)

Espoused deal: If you contribute

consistently as a team player and
organisational citizen, we will offer you a
reward mix that balances your needs and
ours
Rewards based on contribution,
broadly
defined
including
competencies, membership, task or
results, and citizenship
Flexible balance between collective
and individual performance, intrinsic
and extrinsic rewards, short and long
term incentives, flexible benefits and
work-life balance.

Espoused deal: If you are loyal and work

hard and as directed we will provide you
with a secure job, steady pay increases and
internal
training
and
promotion
opportunities
Rewards based on individual
membership, length of service or
seniority, loyalty
Rewards emphasise internal equity,
incremental adjustment and fixed
benefits

Example: high involvement work teams

Example: traditional business

TABLE IV. Matrix elaborating these four forms of the psychological contract

COMPARISON
Old PC can be characterized by stability, predictability and growth. The workforces are viewed as
lasting based on such PC, and employee loyalty is built upon the organizations assurance of job
security as well as investment in training. (Sims, 1994) For example, this old PC was very apparent
in many Japanese enterprises before 1985, characterized by lifetime employment in other words,
in Japan job security was very high and the relationship between employers and employees was
stable and predictable (Matsuura, et al. 2003).
However, because of redundancy, restructuring and downsizing have become more common since
the 1980s, the traditional employee-employer relationship as discussed above have changed (Kew
and Stredwick, 2005). And according to some researchers such as Sorohan (1994), Cascio (1998),
Jaffe and Scott (1998), the workplace today has an increased workload and stress, but less job
security and commitment. This means that employers could no longer guarantee job security, while
employees would still need to provide time and loyalty but in return for the work experience and
training so that they would be able to find another job elsewhere or reduce the possibility of
unemployment (Kew and Stredwick, 2005).
In addition, in Japanese organisations which were known for their lifetime employment policy as
mentioned earlier, the situation has been changing and the new PC has been forming in order to
ensure organizations flexibility and effectiveness under the new global environment (Matsuura,
et al. 2003). Therefore, in todays career times, the old PC that employment security is based on
employee loyalty has been replaced by the new PC that employability is based on performance.
Table 1 summarizes this evolving relationship between employer and employee.
Table 1: Differences between old and new psychological contracts
Old Contract
Organization is parent to employee child
Employees identity and worth are defined by
the organization
Those who stay are good and loyal; others are
bad and disloyal
Employees who do what they are told will
work until retirement
The primary route for growth is through
promotion

New Contract
Organization and employees enter into adult
contracts focused on mutually beneficial work
Employees identity and worth are defined by
the employee
The regular flow of people in and out is healthy
and should be celebrated
Long-term employment is unlikely; expect and
prepare for multiple relationships
The primary route for growth is a sense of
personal accomplishment

(Source: Kissler, 1994)

In a another study conducted by Hiltrop (1996) thru surveying a group of middle managers,
changes have also been identified from the old PC characterized by stability, permanence,
predictability, fairness, tradition and mutual respect to the new PC characterized by a short-term
relationship with a stress on flexibility, self-reliance and achievement of immediate results.

ARGUMENTS IN FAVOUR OF THE PSCYHOLOGICAL CONTRACT

As Rousseau (1990) mentions, the perceptions of those newly employed differ depending on the
type of employment, meaning the intentions of the individual to stay, long-term or short-term in
the organization and suggests the PC is a construct relevant to employment.
Over the years several searchers have treated the PC at great length and have concluded that it can
generate to specific results. For example, Shore and Tetrick (1994) suggest that the PC can
decrease employees uncertainty by creating a mutual agreement in the workplace; that it can
shape employees behaviours without strong supervision and it can also provide the employee
with the feeling that they can influence the organization and attain recognition by fulfilling all the
necessary responsibilities. Moreover, it is argued (e.g. Sturges et al. 2005, McDonald and Makin
2000) that the PC can have a serious impact on employment relationships, organizational
commitment, job satisfaction and organizational performance.
According to (Knights & Kennedy, 2005), job satisfaction is the individuals outlooks concerning
payment, job appraisal, training, security, career development and understanding from the
organization. Similarly the employer has several expectations of the employee, for example being
effective in the workplace, being ready to work extra hours if necessary, being committed to the
firm, working for at least two years in the organization and treat the companys information
confidentially.
As Guest (2004) states, the notion of PCs (e.g. Shore & Tetrick, 1994; Rousseau, 1995) has
proved to be useful for understanding employment relations, since many of their important aspects
are based on insights: most employment relations are implicit and thus parties may have different
understandings about them. The effectiveness of the PC can be found in the results of the study
by Guest and Conway (2002). They concluded that the presence of the PC in organizations is
useful in relation to employment relationships. Aichinger and Barnes (2010) suggest that since the
mid-1990s the literature on the PC has evolved significantly. Some of the reasons that have
contributed to this change are economic conditions, intense competition, evolution of technology
and long working hours.
ARGUMENTS AGAINST THE PSYCHOLOGICAL CONTRACT
On the other hand, it has been highlighted that the PC refers to the subjective understanding and
perception of the individual, this is considered to be one of the major limitations concerning the
PC and its usefulness to an organization.
Moreover, throughout the extensive literature on the PC, greater emphasis is given to employees
perspective. This statement can be associated with the opinion of Guest (2004) who suggests that
a potential challenge of the PC is that there is not a lot of research on the perspective of the
employer and how the organization reacts to the violation of expectations by the employee.
Rousseau (1990) distinguishes between the expectations and obligations of both parties and argues
that not all expectations are considered to be obligations. An employees expectations concern the
general nature of working conditions, while obligations that are not fulfilled can have an emotional
effect on the employee.

PCs can differ depending on the nature of the organization and the type of contracts and this is
why it is very difficult for managers to place great emphasis on it. Age and work experience also
play an important role in influencing employees beliefs and opinions and alter the way individuals
understand mutual obligations within the organization.
Thomas and Feldman (2009) suggest that there is a definite gap and thus further research is
required on PC, specifically the different interpretations and perceptions at different stages of an
employees life and work experience in order for managers be able to understand them. Nowadays,
managers have to deal with several other issues, including employee training and development,
perceived fairness by the individual, work-life balance. Furthermore change is an ongoing process
and thus the PC may fail to be identified by managers.
It is said (e.g. Dulac et al., 2008 and Conway and Briner 2002) that at some point, all PCs will be
violated by both parties. If the consequences of breach or violation have a great impact on
employee commitment and organizational performance, the hypothesis of the PC implies that there
will be a decline in the performance of all organizations at some point.
As Robinson and Rousseau (1994) present in their article Violating the PC: not the exception but
the norm, some aspects of the PC need more in depth investigation. For instance, they suggest
that employee behaviour goes beyond the contract, in terms of extra-role behaviour and
organizational citizenship behaviour (e.g. Organ, 1998,1990) and that in addition to breach by the
employer there should be a focus on the employees violation of the contract.
Arnold (1996) concludes that although the in-depth focus on the PC in recent years has led to key
findings, the concept seems to have some gaps. There is a collective acceptance that the PC
derives from explicit subjective individual perception of the organization, and this is why there
cannot be a general guidance as to how a manager should deal with the contracts of different
employees.

10

PSYCHOLOGICAL CONTRACT MODELS

Much of the theory surrounding PC is intangible and difficult to represent in absolute measurable
terms. These illustrations can be helpful in understanding and explaining intangible concepts. Here
are a couple of diagram interpretations offered as useful models in understanding PCs. (authorship,
Chapman, & terms, 2016)

employer
r

vc
pc

employee

market

Figure I. The Psychological Contract Venn diagram

vc = visible contract - the usual written employment contractual obligations on both sides to work
safely and appropriately in return for a rate of pay or salary, usually holidays also, plus other
employee rights of notice and duty of care.
pc = psychological contract - which is hidden, unspoken, unwritten, and takes account of the
relationship references (r) between employee and market (which includes other external factors),
also the employer's relationship with the market (also r), and the visible contract (vc). Note that
only the visible contract (vc) element is written and transparent. All the other sections are subject
to perceptions until/unless clarified.
This Psychological Contracts 'iceberg' diagram below is a helpful way to illustrate some of the
crucial aspects and influences within PCs theory.
As the iceberg rises with the success and experience of the employee, so does the contract value
and written contractual expectations on both sides. Increasingly deeper inputs and rewards emerge
from being hidden or confused perceptions below from the water-line, to become visible mutual
contractual agreement above the water-line.
The process can also operate in reverse, although in a healthy situation the natural wish of both
sides is for the iceberg to rise. (authorship, Chapman, & terms, 2016)

11

Figure II. The psychological contracts 'iceberg' model

Left side of iceberg = employee inputs (and employer needs).

Right side of iceberg = rewards given by employer (and employee needs).
Above the water level: factors mostly visible and agreed by both sides.
Work | Pay = visible written employment contract.
Arrows above the waterline = mostly visible and clear market influences on the work and pay.
Red arrows = iceberg rises with success and maturity, experience, etc., (bringing invisible
perceived factors into the visible agreed contract).
Below the water level: factors mostly perceived differently by both sides, or hidden, and not
agreed.
Left side of iceberg = examples of employee inputs, which equate to employer expectations informal, perceived and unwritten.
Right side of iceberg = rewards examples and employee's expectations.
Arrows below the waterline = influences on employee and employer affecting perceptions,
mostly invisible or misunderstood by the other side.

The PC develops and evolves constantly based on communication, or lack thereof, between the
employee and the employer. Promises over promotion or salary increases, for example, may form
part of the PC.

12

III. Review of Related Literature

1st Order Antecedent (Content
Item Specific)
Induction/Training
Fairness/Justice
Needs
Communication
Discretion
Corporate Social Responsibility
Recognition
Environment
Pay/Benefits
Security

2nd Order Antecedent

(Broader Support Items)
Lack of Organisational
Support
Inadequate HR Provision
Lack of Line Manager
Support

Perceived Breach

Figure III Dual Order Model of the Antecedents of Psychological Contract Breach (Conway and
Briner 2005)
THE ANTECEDENTS
Antecedents of breach are those factors that are thought to cause breach (Conway and Briner,
2005). The current status of research in the field of PC breach is important in terms of the structure
of the review. In terms of classifying a variable as an antecedent to breach, this review requires
that it is both temporally and logically prior to perceived breach of the PC. This review will focus
on confirming antecedents to breach but also mapping out potential antecedents to breach based
on theoretical, qualitative studies. The above model is based on an aggregate model of the PC and
hence does not include a contextual element.

Breach
Moderators
Antecedents to
Breach

Perceived Breach

Breach Consequences
Employee Affect
Employee Attitudes
Employee Behaviours

Figure IV Breach Antecedent Variables in Existing Analytical Frameworks

Induction / Training - With pre-hire interaction (Robinson and Morrison, 2000), the research
design allowed the variable to be fully tested as an antecedent to breach. General provision of
training was examined in a case study by Martin et al (1998) though in a way that was quite
strongly linked to the organizational context. Differing aspects of training were explored including

13

the companys past record of training, provision of training across different worker groups and
relevance of training to job demands.
Fairness and Justice - Morrison and Robinsons (2000) study examined general fair treatment with
a robust longitudinal research design and this factor was also examined in two qualitative case
studies (e.g. Hubbard and Purcell, 2001; Hallier and James, 1997a). Hubbard and Purcell (2001)
focused on the perceived fairness of managerial action in a mergers and acquisitions context
though this research focused on the concept of expectations which is arguably less central to the
PC than promise-based approaches. Hallier and James (1997a) examined employee perceptions of
managers decisions in terms of moving employees between organisational sites. In some cases,
such changes and the related procedures were perceived as violating relational commitments such
as equity, care and consent.
A case study based on longitudinal data by Pate (2006) outlines a number of individual cases which
indicate that justice variants could be an antecedent to breach. However, an empirical study by
Tekleab et al (2005) with a robust research design in terms of empirically testing such a link
indicated that there was no link to breach of the PC. In terms of the remaining evidence, the
measures used in the quantitative study of Pate et al (2003) were misaligned with specific study of
the PC and the framework set out by Andersson (1996) was theoretical in nature. Additional work
is required to clarify the relationship between the different justice measure variants and perceptions
of breach.
Social comparisons (Ho, 2005a; Hallier and James, 1997b) have been included in the fair treatment
category as they relate to equitable treatment relative to others in a particular work context. Ho
(2005a) examined comparisons with cohesive others or those people in close social proximity
such as members of a work team and equivalent others or people in a similar general position in
terms of broader social networks in an organisation.
Counterfactual thinking (Shu-Cheng and Shu-Chen, 2007) was also included in the review due to
its strong conceptual links to social comparisons which have previously been considered as a
breach antecedent by Conway and Briner (2005). Counterfactual thinking is where individuals
perform mental simulations of referent cognitions, or alternative imaginable outcomes, when
comparing reality with an alternative (Folger, 1986). In terms of the PC, existing work has focused
on expatriates perceptions of alternative outcomes if they had not been sent on an overseas
assignment (Shu-Cheng and Shu-Chen, 2007). One study was also identified which examined
cognitive decisions to reconcile following a broken promise which included a prospective element
perceptions of possible future breach (Tomlinson et al, 2004).
Communication - General communication has been examined in a number of studies (Morrison
and Robinson, 1997; Andersson, 1996; Hubbard and Purcell, 2001; Hallier and James, 1997a). In
terms of breach, such studies examine infrequent or inadequate communication and potential shifts
to more informal sources of information. It should be noted that communication could be examined
at different levels of analysis and further work here would help in clarifying this specific
antecedent.

14

Role ambiguity (Andersson, 1996) is the lack of clarity about expected behaviours or performance
levels and has been categorized as a communication issue though there is some overlap with the
second order support categories, particularly in terms of line manager support. This factor was
only examined briefly as part of a broader theoretical framework and hence additional empirical
work would be useful.
Corporate Social Responsibility - Potential breach antecedents were highlighted by the review in
terms of corporate social responsibility issues which were all based on theoretical frameworks.
The first, goal displacement, is where employees believe that the core ideological values of the
firm have been sacrificed at the expense of administrative survival (Thompson and Bunderson,
2003). The other, value interpenetration, relates to the perception that, in forming relationships
with other organizations, the company has diluted its own core ideological values.
Perceived corporate social responsibility or CSR (Andersson, 1996) has also been examined
briefly and addresses perceptions of women/minority rights, environmental performance and
community relations.
Pay / Benefits - Pre-entry pay expectations (Sutton and Griffin, 2004) have been included as a
confirmed antecedent to breach though again the centrality of expectations to the PC concept is
questionable. Both salary and benefit distribution inequalities (Davila and Elvira, 2007) are only
mentioned in passing in one qualitative study. Particularly in terms of understanding the role of
pay as a more transactional aspect of the concept, additional work is required to establish the
relationship between pay and breach of the PC.
Line Manager Support - General line manager support was fully supported as an antecedent to
breach in Tekleab et al (2005) though perceived misalignment between a managers words and
deeds was highlighted as a potential antecedent in a number of papers (e.g. Simons, 2002; Hubbard
and Purcell, 2001; Hallier and James, 1997a). The overall research design of the study by Tekleab
et al (2005) is robust but the three year intervals between data collection is arguably too long and
shorter time periods between data collection would have improved the overall findings.
Organisational Support - General organisational support (Tekleab et al, 2005) was supported by a
robust longitudinal research design though the three year gap between data collection points is
something of a limitation here. Work overload (Andersson, 1996) was examined briefly as a
potential antecedent to breach. The definition used here was somewhat unclear though in terms of
the review this refers to an individual being allocated excessive amounts of work in terms of
volume and/or complexity.
Perceived managerial competence (Andersson, 1996; Hubbard and Purcell, 2001) is categorized
as an organisational support item as the likely attributions of such breaches are limited to either
senior management or the anthropomorphized organisation. Additional empirical work based on
anonymous questionnaire-based research designs would be useful to explore this particularly
sensitive antecedent to breach. Though difficult to manage in itself, the degree of organisational
change (Robinson and Morrison, 2000) may be a somewhat indirect antecedent to breach based
on the assumption that there is likely a degree of underlying change in most organisations.
Perceptions of management pursuing only their own interests (Martin et al, 1998; Hallier and

15

James, 1997b) is one of the least precise of the breach antecedents examined. In this form, it could
be viewed as an organisational support or a voice issue. However, this has been categorized as the
former based on the assumption that employee perceptions will be that senior managers are able
to act to address such issues.
Human Resource Management Support - HRM support was highlighted as a potential antecedent
to breach in two studies. Existing studies by Guest and Conway (2002b; 2004) have been
conducted annually to gain empirical data on the state of the aggregate PC of employees. Future
research examining employee perceptions of HR practices and their effectiveness using a
longitudinal design would allow this clear gap in existing knowledge to be addressed.
THE BREACH
When the organization fails to fulfil promises and obligations towards an employee, a breach of
the PC occurs and violation of the contract is the employees response to the breach. Both parties
can experience a PC violation or breach at some point (Robinson and Rousseau, 1994). Violation
may lead to a lowering of the individuals performance and a lack of commitment toward the
organization. As mentioned before PCs are explicit to each individual, so (Chen et al. 2008) it is
very unusual that all employees would have similar reactions to contract breach as well as not all
supervisors would react in the same way to the violation.
Empirical evidence suggests that perceived contract breach is associated with reduced affective
commitment and loyalty (Coyle-Shapiro and Kessler, 2000; Lester et al., 2002; Turnley and
Feldman, 1999), lower trust (Robinson, 1996), greater willingness to leave the organization
(Robinson and Rousseau, 1994) and increased cynicism (Johnson and OLeary- Kelly, 2003).
Contract violation can result in changed employees behaviour, commitment, and obligation
toward the organization (Robinson, Kraatz, & Rousseau, 1994; Kickul, 2001).
Robinson and Morrison argue that PC violation can follow after PC breach. Violation refers to the
emotional and affective state of the individual that arises from the perception of PC breach. PC
violation can lead to anger and a changed view of the employee towards the organization.
Breach refers to the cognition of an individual that his or her organization has failed to meet the
obligations contained within the PC. It should be noted that it is the perception of broken promises
rather than the actual breaking of promises that matters in PC breach (Robinson, 1996).
Morrison and Robinson (1997) noted that as part of the interpretation process, the employee
assesses not only the outcome itself which is the alleged breach, but also why the situation
occurred. Wong and Weiner (1981) says that when faced with an unfavourable or unexpected
outcome, people tend to search for explanations that will enable them to determine the reasons for
that outcome.
Conway and Briner (2005) argue that managers need to be alert to the displayed emotions and
behaviours of their employees for signs of perceived PC breach. They identify frustration,
helplessness, anger and resentment as key displayed emotions that should send warning signals.

16

Ultimately the capacity of managers to read and interpret these signals will probably related to
their emotional intelligence (Goleman 1998).
Organisations and managers can try to redress breaches. Once a breach has occurred managers can
try to redress the situation by: a) explaining the reasons for the breach; b) compensating for the
breach; and/or c) ensuring organisational justice (Conway and Briner 2005). Evidence for the
effectiveness of these strategies is mixed: explanation appears to make little difference to
employees ascription of responsibility to the organisation (Robinson and Morrison 2000);
adequate compensation can apparently ameliorate the damage done by a breach (Conway and
Briner 2005: 173) ; and, organisational justice strategies need to be tailored to the specifics of the
breach to have any effect (Kickul et al 2002).
IV. My Proposed Revision / Articulation of the Theory
My own systematic review primarily focuses on the antecedents of PC breach. It is important to
precisely identify existing research gaps, which are quite numerous for my current understanding,
to develop effective future research designs. The increased interest in the concept of the PC over
the past fifteen years has produced a broad literature base to inform the review process. There has
been significant research in the area of PC breach and particularly its link to various employee
outcomes such as employee affect, attitudes and behaviours.
However, many aspects of this research subarea are theoretically underdeveloped and one key
weakness in the literature is the lack of development of perspectives where breach is viewed as
being part of an ongoing psychological contracting process. Secondly, in exploring ontology, I
believe that refining existing conceptual definitions will help to ground a shift to an alternative
ontological perspective on the PC which will have wider implications for the study of the construct.
A final goal is to determine if any literature on PC breach refers to the concept of engagement. As
the longer term focus of the research is potentially in the area of psychological antecedents to
breach, clarifying conceptual links here is particularly useful.

Research Gap

Antecedents of
Psychological
Contract Breach

Perceived
Psychological
Contract Breach

Figure V Proposed Research Gap

17

The outcomes of the review have highlighted the limited amount of research on the antecedents of
PC breach and the need for additional work in a number of areas. A number of variables including
levels of line manager support, perceptions of fair treatment and the adequacy of workplace
decision consultation have been identified as antecedents of breach though the review also
highlighted twenty three diverse factors that have been explored but not fully tested in empirical
terms. Based on the study, the findings suggest that the broader second order support categories of
line manager, organizational or HR support should be examined as a priority to build the
foundation of the empirical evidence base.
Once these overarching causes of breach have been sufficiently explored, further work is required
to test the more specific first order content categories such as perceptions of fairness or perceptions
of training provision. In terms of developing the field of PC research, additional research on the
antecedents of breach is important to determine the range of potential factors, the weight of
empirical evidence for each individual factor and the strength of the antecedent-breach linkage
through meta-analysis work once sufficient data is available.
Reviewing the ontological foundation of PC breach has indicated that a critical perspective is a
strong avenue for future research. This is in contrast to most existing research which is primarily
based on hypothesis testing with limited discussion which suggests that critical opinion is the
dominant philosophical perspective. Rather than focusing on objective empirical evidence of
breach, such approaches are more oriented towards understanding the complexities of breach from
a socially constructed view. This may help to develop research by addressing particularly complex
instances of breach where empirical data in itself may be limited in terms of its practical utility.
Though such research is arguably less generalizable, the improved practical understanding of the
PC may help to generate new ideas to develop theory in terms of an aggregate view of the concept.
The perspective of Harre (2002), specifically oriented towards the field of psychology, may assist
in focusing qualitative analysis on the cognitive process of psychological contracting rather than
the general employment relationship in a way that is analytically imprecise.
Finally, very little research was identified integrating the concept of the PC with engagement. This
is a clear gap in the existing literature and a tentative model has been proposed to be explored for
future work. In synthesizing the review findings across all included studies, a key avenue for future
research was highlighted in that both concepts could be individually explored from the perspective
of Harre (1972). However, as the review did not explicitly examine the ontology of the engagement
concept, further work is required to identify how the two concepts are related within this specific
ontological perspective.
Defining Engagement
In terms of research on human resource, personal engagement refers to the behaviour by which
people bring in or leave out their personal selves during work role performances (Kahn, 1990).
Personal engagement is defined as the harnessing of organizations members selves to their work
roles; in engagement, people employ and express themselves physically, cognitively and
emotionally during role performances. A central aspect of the concept is the role of three key
psychological conditions in meaningfulness, safety and availability which are thought to influence

18

the levels of engagement that are displayed by the employee. It is primarily an involvementoriented construct though there is some overlap with employee affect, attitude and behaviour
concepts. As a result, it has been differentiated from a number of related theoretical concepts
including job involvement, job satisfaction, organizational citizenship behaviours, organizational
commitment and the PC (Aggarwal et al, 2007).
Linking the Psychological Contract with Engagement
As an objective of the study, the literature on breach was examined for articles which referred to
both the PC and engagement though only two studies were identified. Existing models (such as
Aggarwal et al, 2007; McBain, 2007) have suggested that the concepts are closely interrelated in
that both are anchored in social exchange theory, both focus on the individual level of analysis and
that the impact on employee outcomes is similar. For example, both constructs could be logically
succeeded by the frequently examined causal chain of employee affect, attitudes and behaviours
in the formation of research hypotheses.
This is in contrast to studies such as McBain (2007) which examine engagement as an attitudinal
construct though lack of discussion on this classification is a major limitation in supporting such
a view. Though no empirical research was identified, both studies examined in the review (e.g.
Aggarwal et al, 2007; McBain, 2007) advocate the operationalization of the engagement concept
through quantitative survey measures in a similar way to most research on the PC. However, based
on current research, the two concepts are thought to be conceptually distinct (Aggarwal, 2007).
Integration of the two concepts would help to develop research on the PC due to the unique focus
of the engagement concept which offers a new perspective on employee outcomes in the
workplace.
Psychological
Contract
Employee Attitudes
or Behaviours

Human Resource
Practices
Employee
Engagement
External
Environment

Figure VI Aggarwal (2007) Linking the Psychological Contract to Engagement

In the above model, engagement is considered to be at the same analytical level as the PC. One
main limitation is the lack of discussion of employee affect. (Vantilborgh, Bidee, Pepermans,
Griep, & Hofmans, 2015) is now addressing the influence of affect as an antecedent. There is a
degree of overlap between the emotional aspects of engagement and numerous affect constructs
such as mistrust or perceived violation which is not fully explored. Similarly, the key role of
psychological conditions from the original paper by Kahn (1990) is not recognized in this model.
As a result, additional theoretical work is required to build on such models to support future

19

empirical data collection. However, certain aspects of the engagement construct are potentially
problematic in terms of pursuing such an approach.
As the concept of Engagement was derived from a grounded theory study (e.g. Kahn, 1990),
further examination using qualitative methods seems particularly appropriate. PC has been
measured in mainly quantitative form though future research will likely focus on qualitative,
processual approaches. Additional research is required to develop a qualitative process model
integrating the PC and engagement as the little existing work here is either theoretical or lacking
in empirical detail.
Developing an Integrated Qualitative Model
Antecedents to
Breach
(In-Depth
Qualitative
Examination)

Psychological
Contract Perceived
Pattern of Breach

Degree of
Engagement

Employee
Attitudes /
Behaviours

Psychological
Conditions
- Meaningfulness
- Safety
- Availability
Figure VII A Qualitative Model Integrating the Psychological Contract and Engagement
This model is qualitative and what is outlined here has been developed from three main sources.
Firstly, in line with the main focus of the review, an antecedent to breach component has been
included. Secondly, a number of hypotheses have been posited by Aggarwal et al (2007) which
are useful to situate the PC and engagement within one model. These were that: A positive
imbalance in terms of the PC leads to engagement. There is a relationship between degree of PC
breach/fulfilment and degree of engagement PC fulfilment precedes employee engagement
Finally, a psychological conditions component has been included which was a key feature in the
original engagement paper by Kahn (1990) and has been closely linked to the employees
perceived pattern of breach.
This model suggests that the pattern of breach is likely closely related to the perceived
psychological conditions that prevail in a working environment and that these factors are the
primary drivers of the level of engagement that follows. In terms of how the process unfolds over
time, the model suggests that consistent fulfilment of the PC over time is important and this is
influenced by its circular relationship with the prevailing psychological conditions in the
workplace. As a result, a longitudinal research design with numerous data collection points may
be useful in exploring the model fully.

20

Relative to existing research, the main possible contributions of this model are the improved
theoretical detail and increased conceptual clarity. As mentioned previously, the practical benefit
of such a model is that it may have particular utility in terms of examining individual employee
outcomes in a more process-oriented and temporally dynamic way. For example, an approach
which fully integrates the engagement concept is likely more attentive to the affective dynamics
of individual employee performance in terms of complex discretionary behaviours than existing
static measures (an example here would be the distinction between the static measures of in-role
performance and Organizational Citizenship Behaviours in mainstream research). This may offer
a different perspective on the practical impact of the PC and help to build theory as a result.
Further discussion of the ontological basis of the model is limited as the engagement concept has
not been adequately explored in this regard. However, the findings of the review have suggested
that the perspective of Harre and Secord (1972) can be suited to both person concepts such as the
PC and involvement-oriented concepts such as engagement. Additional work is required to explore
how the two concepts are related within this specific ontological perspective.

21

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