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Trust and breach of the psychological contract

Administrative Science Quarterly, Dec, 1996 by Sandra L. Robinson

In light of trends toward globalization, restructuring, and downsizing, psychological contracts are playing an increasingly important role in contemporary employment relationships. Organizations, under pressure to make rapid and constant changes, have had to alter employment relationships and the psychological contracts that underlie them. Psychological contracts refer to employees' perceptions of what they owe to their employers and what their employers owe to them. In this climate of change, the traditional contract of long-term job security in return for hard work and loyalty may no longer be valid (Sims, 1994), and employees and employers alike are now reconsidering their mutual obligations. More importantly, these changes have increased the likelihood of psychological contract breach. Organizations must now repeatedly manage, renegotiate, and alter the terms of the employment agreement continually to fit changing circumstances (Tichy, 1983; Altman and Post, 1996) and thus may be less willing or less able to fulfill all of their promises. In addition, constant contract change means increased opportunities for employees and employers to misunderstand the agreement and to perceive a contract breach even when an actual breach did not occur. It should not be surprising, therefore, that the majority of employees currently believe their employer has breached some aspect of their employment agreement (Robinson and Rousseau, 1994).

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Given the apparent prevalence of perceived contract breach, it is imperative that we develop a solid understanding of this phenomenon. Unfortunately, empirical study of psychological contract breach remains in its infancy. Prior research has thus far demonstrated that psychological contract breach and violation is relatively common (Robinson and Rousseau, 1994) and that it is associated with various negative outcomes such as a decrease in perceived obligations to one's employer, lowered citizenship behavior, and reduced commitment and satisfaction (Robinson, Kraatz, and Rousseau, 1994; Robinson and Rousseau, 1994; Robinson and Morrison, 1995). A fundamental and important unanswered question is what role trust plays in the experience and effects of psychological contract breach. Rare is the theoretical paper on psychological contracts that does not mention the word trust or note its central role in psychological contracts (e.g., Rousseau, 1989; Rousseau and McLean Parks, 1994; Morrison and Robinson, 1997). Despite the repeated mention of trust in the psychological contract literature, however, there has been virtually no theoretical explication or empirical examination of trust in relation to the experience of psychological contract breach. This lapse of systematic attention to the function of trust is found not only in the study of psychological contracts but in organizational science in general (Mayer, Davis, and Schoorman, 1995). As Gambetta (1988: unnumbered foreward) suggested, "scholars tend to mention (trust) in passing, to allude to it as a fundamental ingredient or lubricant, an unavoidable dimension of social interaction, only to move on to deal with less intractable matters." The purpose of this study is to develop and test a relatively parsimonious theoretical model of the role of trust in the psychological contract breach experience by exploring the multiple roles played by past and current trust in influencing the detection, interpretation, and impact of psychological contract breach.

Psychological Contracts Defined

The psychological contract is defined as an individual's beliefs about the terms and conditions of a reciprocal exchange agreement between that person and another party (Rousseau, 1989). Although the psychological contract was originally defined by Argyris (1960), Levinson (1962), and Schein (1980) to characterize the subjective nature of employment relationships, the present conceptualization focuses on individuals' beliefs in and interpretation of a promissory contract. Unlike formal or implied contracts, the psychological contract is inherently perceptual, and thus one party's understanding of the contract may not be shared by the other.

Psychological contracts, comprising perceived obligations, must be distinguished from expectations, which are general beliefs held by employees about what they will find in their job and the organization. For example, a new manager may expect to receive a high salary, to be promoted, to like his job, or to find the walls of his office painted a neutral color. These expectations emanate from a wide variety of sources, including past experience, social norms, observations by friends, and so forth. Psychological contracts, by contrast, entail beliefs about what employees believe they are entitled to receive, or should receive, because they perceive that their employer conveyed promises to provide those things. Thus only those expectations that emanate from perceived implicit or explicit promises by the employer are part of the psychological contract. For example, if a new manager believes she was promised pay commensurate with performance at the time of hire, it creates an expectation, but it also creates a perceived obligation that is part of the psychological contract. Although psychological contracts produce some expectations, not all expectations emanate from perceived promises, and expectations can exist in the absence of perceived promises or contracts.

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Trust and breach of the psychological contract

Administrative Science Quarterly, Dec, 1996 by Sandra L. Robinson

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