Examining PCB-Outcomes Relationship: Moderating Role of Individualism

Abstract

In the current climate of continuing economic uncertainty caused by major developed nations struggling with high-debt and sub-par growth, employee goodwill, motivation, and cooperation are fragile yet critical for organizational success. These attitudes and behaviours can be powerfully influenced by the fulfillment of psychological contracts. Psychological Contract is a useful framework for examining the quality of employeeorganization relationship. Psychological Contract Breach (PCB), defined as the cognition that one's organization has failed to meet one or more obligations within one's psychological contract in a manner commensurate with one's contributions, has deleterious effects of employee motivation. Despite the growing amount of research about psychological contracting, a review of studies on PCB indicates that there are deficiencies in the literature which need to be addressed. Firstly, limited efforts have been made to examine the effects of individual dispositions on PCB. Secondly, although trust has been examined as an essential condition for establishment of social exchange, there is paucity of research on the effect of PCB on trust. Thirdly, there have been fairly good number of studies examining the effects of breach. However, these studies seem to have been stuck in terms of examining only specific group of outcome variables. Further, much of the published research on PCB has been experienced by a single cohort of MBA graduates making generalization of findings for more diverse sample populations difficult. Finally, much of our current knowledge about PCB is based on the studies conducted in the West. Since different national cultures display varied cultural elements in the workplace, drawing parallels from studies conducted in other collectivistic cultures will not be appropriate. This work is significant for four reasons: It examines the effect of PCB on trust and work engagement It examines the mediating role of trust in PCB-engagement relationship It tests the moderating role of individualism and collectivism value orientation It examines PCB in a novel geographical context. Results of this study with 501 Indian managerial employees working in eight organizations in India suggest that: PCB is related to trust and work engagement. Trust mediates the PCB-engagement relationship. Individualism⁄Collectivism moderates the PCB-trust relationship.