Psychological contract formation - CiteSeerX

545523 research-article2014

IAS0010.1177/2233865914545523International Area Studies ReviewAdams et al.

Article

Psychological contract formation: The influence of demographic factors

International Area Studies Review 2014, Vol. 17(3) 279–294 © The Author(s) 2014 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/2233865914545523 ias.sagepub.com

Samuel Adams

Ghana Institute of Management and Public Administration, GIMPA School of Public Service and Governance, Accra, Ghana

Fanny Adams Quagrainie

Ghana Institute of Management and Public Administration, Business School, Accra, Ghana

Edem Kwame Mensah Klobodu

Ghana Institute of Management and Public Administration, Business School, Accra, Ghana

Abstract The study surveyed 292 respondents from Tema (a major urban municipality and manufacturing hub in Ghana) to examine the determinants of psychological contract. The study sought to examine whether demographic factors (age and gender) mediate the formation and the effect of a psychological contract. Using a Structural Equation Modeling estimation technique, the results indicate a positive relationship between employees’ expectations and the obligations of employers. Further, the findings show that older employees perceive higher relational obligations than younger employees, whereas younger employees perceive higher transactional obligations than older employees. Also, while men score higher on transactional expectations, women score higher on relational expectations. There was no difference, however, in the expectations of employees concerning the obligations of the employers. Keywords Age, demographic factors, gender, motivation, psychological contract, performance

Introduction Practitioners and academicians have always been concerned with the determinants of employee productivity and organizational performance (Haunschild, 2011; Levinson et al., 1962; Rousseau, Corresponding author: Samuel Adams, Ghana Institute of Management and Public Administration, School of Public Service and Governance, AH 50, Achimota, Accra, Ghana. Email: [email protected]

Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

280

International Area Studies Review 17(3)

2004). Consequently, researchers have focused on identifying the factors that help to achieve these objectives. However, the dynamic nature of human needs and behavior has made the search for solutions more complex and difficult. This has become even more relevant in the era of globalization and advances in communication and technology with the concomitant social and cultural changes (Straia, 2011). Obviously, global integration has resulted in not just global competition but also increased entrepreneurial activity and ever-changing needs of employees around the world (Currall et al., 2005). These developments have brought challenges to managers and leaders of organizations as to how to motivate and retain employees. In the search for solutions, the psychological contract (PC) has become a very important tool used to reduce the gap between employee expectations and employer obligations (Irving and Bobocel, 2002; Rousseau, 1995; Theron and Dodd, 2011). Straia (2011) describes PC as one of the modern methods used to motivate employees to enhance their performance and Wellin (2008) notes that PC can be used as a powerful vehicle to drive behavior and, more importantly, business performance. This is consistent with Schein’s (1965) view that, although the PC remains unwritten, it is a powerful determinant of behavior in organizations (Bal and Kooij, 2011). Morris (2010) argues that the increasing popularity of the PC concept is associated with the realization by managers that they do not just need efficient processes and technology to compete but also motivated people. In other words, the PC construct provides a broad framework for understanding employees’ attitudes and behaviors (Coyle-Shapiro and Kessler, 2003). The motivation for this study is based on the assumption that recognizing and making use of the PC can help to improve organizational behavior and performance. This is important because a breach of the expectations and obligations of the partners leads to dissatisfaction, low level of commitment and high turnover, and invariably performance suffers (Rigotti, 2009; Zhao et al., 2007). It is not surprising therefore that academicians and practitioners have developed an interest in PC as a tool to identify the factors likely to contribute to sustained employee motivation and commitment. In light of the theoretical assumptions of the benefits of PC, many empirical studies have been carried out, but their findings indicate that the determinants and impacts of the PC are context bound (Gresse et al., 2013; Shih and Chuang, 2013; Xander et al., 2011). The implication is that specific local conditions mediate the dynamics of the PC. Van der Smissen et al. (2013) report that employee beliefs in a particular setting or society affect how they interpret promises made. About a quarter of a century ago, Rousseau (1989) suggested that it is overly simplistic to assume that factors driving changes in the employment relationship have an equal influence across organizations, industries and countries. Thomas et al. (2013) also argued that it is naive to assume homogeneity of the nature and scope of the PC. Rousseau and Schalk (2000) assert that, in the modern economy characterized by workplace, diversity there can be no productive employment or successful organization without PCs that have society- and context-specific meanings. They claim that the PC is reinforced by society’s standards. This is supported by the National Institute for Working Life report by Isaksson (2006), which shows that even for the EU countries, with so much in common, differences still exist across countries in the nature of the PC. Building on Hofstede’s categorization of national cultural orientation, Street (2009) argues that high levels of collectivism are correlated with high levels of the relational type of PC and high levels of individualism are associated with high levels of the transactional type of PC. In support of the cultural orientation, Thomas et al. (2013) observe that employees from different cultures have different ideas about the promises and obligations of their employers. However, the increasing interdependence around the world (forces of globalization), suggests that global organizations could be transferring behavioral skills from their home country even as they adapt to their new Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

281

Adams et al.

environment (Aoki, 1994). The convergence of cultures and the tendency towards biculturalism associated with globalization gives credence to the need for country and regional studies. Our study is an effort in this direction, especially with the selection of Tema, which is a major industrial hub with many multinational firms and also with one of the largest ports in West Africa. The main objective of the study is to investigate the nature and operation of PC in a major urban metropolitan area of Ghana. An additional contribution of the study is that we do not only investigate the exploratory factor structure of the inducement predisposition measure, but also replicate that factor structure using confirmatory methods. Further, we contribute to the literature on the complex mix of personality, demographics and incentive by examining how demographic characteristics influence or moderate the PC (Festing and Schafer, 2014; Hill and Montes, 2008; Xander et al., 2011). This is consistent with the argument against the use of global incentive elements and supportive of the fact that different demographic properties interact differently with regard to how incentives are perceived (Iwu, 2013; Rutherford et al., 2009). Also, as noted by Rousseau (1995) and Morris (2010), both external (etic) and internal (emic) factors influence the formation of the PC. Obviously, many studies on the nature and determinants of the PC have yielded ambiguous factors owing to the inherently subjective nature of the PC (Rousseau, 1995). This presumes that the potential sources of individual predispositions toward holding certain PC beliefs should be investigated. Our study contributes to the literature in that direction. In the sections that follow, we present a brief review of the literature, after which the methodology is described. The results are then presented and discussed and finally concluding remarks given.

Literature review The literature review gives a brief overview of the nature of the PC and presents the hypotheses for the study.

Psychological contract concept The concept of PC is associated with Argyris (1960), Levinson et al. (1962) and Schein (1965) to describe the unwritten agreements that spell out the expectations between the employees and employers. Schein (1965) and Rousseau (1995) portray the PC as representing beliefs about the reciprocal obligations between two parties engaged in an exchange relationship. Rousseau (2004) refers to the PC as beliefs based upon promises expressed or implied, regarding an exchange agreement between an individual and the employing firm and its agents. It is thus an unwritten agreement between the job holder and the organization. Guest (2007) regards it as the perceptions of both parties (employee and employers) of reciprocal promises and obligations in an employment relationship. In other words, the PC encapsulates mutual expectations in which both sides expect some benefits (Onici, 2009). What is clear from the various definitions of PC is that it is not easily defined. Morris (2010) explains it correctly when he asserts that the PC is lived and not defined. Psychological contracts deal with the underlying problematic issues between human beings, whether the persons are in dyads or groups. Levinson et al. (1962), in agreeing with difficulty in explaining what the PC is, pointed out that, unlike legal contracts in which the expectations are defined, the expectations in the PC are unspoken and antedate the formation of the contract. This contact is an unfolding process as expectations are formed, developed, changed, fulfilled or not fulfilled, and revised based on feedback that the individual receives and interprets (Conway and Briner, 2005; Rousseau, 2004).


282


Overall, the PC stresses the voluntariness and the incompleteness of an exchange relationship (Haunschild, 2011).

Types of PC A number of theoretical categorizations of the PC have been propounded, including those of Rousseau and Greller (1994), and Rousseau (1995, 2000) in terms of time and tangibility (Cavanaugh and Noe, 1999; Hall and Moss, 1998; Hiltrop, 1995; Kissler, 1994), in terms of old versus new, and those of Shore and Barksdale (1998) that shift from the content of the PC to a focus on the idea of the balance between employee and employer obligations. However, the most popular is Rousseau’s framework, and consequently, it is discussed briefly in the section below. Rousseau (2000) identifies four types of PCs based upon the dimensions of “time frame” and “tangibility”: transactional, relational, balanced, hybrid or team player, and a transitional psychological contract. Transactional contracts are those that are short-term, monetizable exchanges between employees and employers. These contracts involve very specific terms and little emotional investment on the part of the employee (Irving and Bobocel, 2002). They are characterized by a short-term employment relationship (short term time frame) in which the performance requirements or mutual obligations can be unambiguously specified (high tangibility). This leads to low organizational commitment, easy exit and consequently high turnover. The focus then is purely materialistic (Bal and Kooij, 2011), and there is no motivation for learning or integration and identification with the organization. Both employees and employers are likely to immediately terminate a transactional relationship that fails to meet their needs (Rousseau, 2004). Relational contracts are those that are more open-ended and relationship-oriented, sometimes with loosely specified performance terms. A relational contract is characterized by a long-term employment relationship (long-term time frame) in which the mutual obligations cannot be unambiguously specified (low tangibility). These contracts tend to involve considerable emotional investment on the part of both employees and employers (Rousseau, 1995). Thus, whereas transactional contract deals more with monetary exchange agreement between employees and their organization, relational contracts deal with aspects of the relationship that are aimed at mutual investment and career development (Bal and Kooij, 2011). In a relational PC, employees tend to be loyal, seek social support and make long-term, open-ended commitments. A third type identified by Rousseau is the hybrid or balanced or team player PC. This type of contract has the high tangibility of a transactional PC and the long-term time frame of a relational PC. It entails long-term commitments and mutual concerns (relational attributes), and demands high performance outputs and renegotiations (transactional attributes). It is likely to be found in a high-involvement team with high member commitment, high integration identification, ongoing development, mutual support and dynamic of nature. A fourth type is the transitional PC, which is characterized by a short-term time frame and low tangibility. A high level of uncertainty, high turnover/termination and instability typify such a PC. Such a PC is found in companies undergoing radical organizational change such as a merger or takeover and will spontaneously result in a more transactional or even relational psychological contract (Rousseau, 2000).

Hypotheses development Age and employee expectations. There are many theoretical arguments that show that as employees age their values and incentives (motivation) change and become more mature. From the life span and socio-emotional selective theories, older employees are expected to focus more on the protection of their current job and employment relationship, especially in the light of fewer career options Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

283

Adams et al.

and natural age-related losses (Carsten, 1995, 2006). The theory maintains that, as time horizons shrink, as they typically do with age, people become increasingly selective, investing greater resources in emotionally meaningful goals and activities. In support of the socio-emotional theory, Ng and Feldman (2009) claim that, as employees age, their PCs become more malleable and more tolerant to contract breach because they become altruistic. Osipow (1968), for example, argues that young employees are in the settling phase in their jobs and therefore are more concerned with tenure, securing promotion and career progression. With the rapid pace of globalization, many youth find themselves in a threatening work environment (unstable employment) and are more concerned with what they get in the short to medium term (Willem et al., 2007). Working together in a particular place for a long time helps the organizational members to become highly socialized (Conway and Briner, 2005; Rousseau, 2000). Accordingly, as employee age, their expectations appear to be more relational and they will prioritize tasks and goals that are meaningful. Koc et al. (2013), for example, in a study of Turkey based on 309 employees found no significant difference in the employees’ perceptions of PC according to their ages. Many more studies have shown significant positive correlations between older employees and relational PC. However, Mazur (2012), in a study carried out in Poland, found that increasing age is accompanied by the decrease in meaning of the relational contract but an increase in transactional contract values. She argued that this was related to young employees (age less than 25 years). Opposing Mazur’s (2012) view, Dadi (2012) examined the PC of black and white employees in the UKand found a difference of PC formation between the two groups. Additionally, the results show generational differences between the old and young black employees. However, there was similarity between the black and white youth. While the older people had a more extended family orientation, the younger generation was more concerned with seeking to develop their work careers, further their education and planning to have a family. Additionally, Bal and Kooij (2011) studied work centrality and PC in a Dutch health care organization (465 employees) and found that the relationship was stronger for the older workers than for younger workers. Van der Smissen et al.’s (2013) study of the nature of PC reported that generational differences matter in the formation and impact of the PC. In a related study, ArmstrongStassen and Schlosser (2008) found that work centrality is positively related to development orientation (i.e. the propensity to engage in development activities) among older workers, suggesting that older workers with high work centrality are more likely to negotiate a relational contract than young workers with low work centrality. From the above discussion we hypothesize that: H1: Older workers perceive higher employer obligations than younger workers. H2: Older employees perceive higher relational obligations than younger employees. H3: Younger employees perceive higher transactional obligations than older employees.

Gender and employee expectation Men and women bring different expectations to the work place as they hold conceptually similar but distinct perceptions of inducements, which may influence the formation of the PC (Hill and Montes, 2008; Hodson, 1989). Women are also seen as focusing more on their roles as homemakers (relation orientation) than their roles as workers (Veroff et al., 1981). Indeed, Palamino and Peyrachhe (2010) have reported that in many cases women select jobs that allow them to have a close relationship with their families and employers (Dawson and Henley, 2012; Dzisi, 2008), even at the risk of receiving low wages. Thus, how gender is structured affects the formation of the PC. These differences according to the gender schema theory (Bem, 1981) are based on the sex roles that societies have prescribed for men and women which are imparted to them during their Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

284


socialization. In her development of the Scale of Masculinity and Femininity, Bem (1981) argued that women were characterized as being more relational than men. Phrases such as ‘sensitive to the needs of others’, ‘being compassionate’ and ‘tender’ were used to describe women whiles men were seen as ‘willing to take risks’, ‘dominant’ and ‘competitive’. From the social cognitive theoretical perspective then it is expected that the gendered roles should be more pronounced in a developing context like Ghana than in the more developed Western world (Amuzu et al., 2010; Schultz, 2004). For instance, Koc et al. (2013), in a study of 309 respondents from Turkey, found that there was no significant difference between men and women in their perception of the PC. On the other hand, Bellou (2009) examined the PC of over 1000 Greek employees and found that there was no uniform view of the PC content among different groups of employees. Again, Hill and Montes (2008) report that women tend to find skill development, support and reliability inducements to be more important for positive employment relations than do men. The collectivist orientation and the hierarchical nature of the Ghanaian society suggest that women will be more likely to have a relational than a transactional PC. Based on the arguments above, it can be hypothesized that: H4: Women will score higher on relational expectations than men. H5: Men will score higher on transactional expectations than women.

Obligations of employees Not only do employees have expectations of their employers, but they also have obligations that define the parameters for the employment relationship. The PC is made up of actions that employees believe are expected of them and what response they expect in return from the employer (Rousseau and Greller, 1994). The PC is entered into on the belief that each party has some obligations. Obligations are promises, pledges and assurances that employees make to the organization to perform some present and future actions that assist the organization to achieve its goals. These obligations could be anything employees believe to be owed to their organizations and they can be written or unwritten (Millward and Brewerton, 2000). Failure to meet these expectations and obligations results in distrust, which disturbs the employment relations. This creates feelings of injustice, de-motivation and decline in commitment, or even termination of the employment relationship (Robinson and Rousseau, 1994; Conway et al., 2011). The effective management of each other’s expectations and obligations creates an environment that is characterized by mutual trust (Atkinson, 2008). This enables the two parties to work in such a way as to harmonize their individual interests and goals. Recognizing the reciprocal nature of the relationship between the employee and employer implies that: H6: There is a positive relationship between the employees’ expectations and the obligations of employers.

Methodology This study employs a quantitative cross-sectional study approach. Primary data was collected by means of convenience sampling. Data collected constituted workers in private and public institutions in the Tema Metropolitan Area via self-administered questionnaire. The questionnaires were distributed by hand with the support of two research assistants and staff of the various institutions who agreed to participant in the research. Tema was selected as it is a major industrial and manufacturing hub of Ghana. The key sectors included in this study are the chemical, textiles, Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

285

Adams et al.

food-processing, engineering, paints, fish cold storage, printing/artwork and woodworking industries. Access to these organizations was gained by obtaining the telephone numbers of organizations from the telephone directories, internet and Tema Municipal Authority. Personal visits were made to those who agreed to take part in the study. Two types software, PSAW (Predictive Analytic Software) version 18 and AMOS version 18, were used for the data analyses. PSAW was used for the descriptive statistics and exploratory analysis while AMOS was used for the confirmatory factor and structural equation modeling analyses. Tabachnick and Fidell (2013) claim that an appropriate sample size for Structural Equation Modeling (SEM) ranges between 200 and 300; hence a convenience sample of 292 respondents was used (van der Vaart et al., 2013). In all, 325 questionnaires were sent, resulting in a response rate of about 90%. The majority of the respondents were male (n = 160; 55%). A total of 149 (51%) had higher education (i.e. tertiary education), followed by 97 (33.2%) who had education to secondary-level, 41(14%) respondents who had education up to pre-secondary level and the rest (5 or 1.7 %) did not indicate their educational background. The mean age of the participants was 35 years. Those below the mean age are classified as young (34 and below) and those 35 and above as old. The SEM approach was used in testing the hypotheses and further tested with a t-test to assess the group differences between gender and age.

Measurement of variables The questionnaire measured key variables for the study, which included employee expectations, employee obligations and two key socio demographic variables: the age and gender of respondents.

Employee expectations Twenty items were used to capture employees’ expectations (Millward and Hopkins, 1998). Ten items each were used for transactional and relational expectations. All items were assessed using five-point Likert-type scales (1 = strongly disagree to 5 = strongly agree). See Appendix A for details.

Employee obligations The construct was measured using 10 items developed by Rousseau (2000). The response was measured using five-point Likert-type scales (1 = strongly not obligated to 5 = strongly obligated). See Appendix A for details.

Age of employee The age of the employees was measured as a continuous variable. Two groups of employees were measured. Young employees were those between 18 and 35 years and old employees those between 35 and 60 years, since the mean age was 35. A young employee was coded as 0 and an old employee coded as 1. See Appendix A for details.

Gender of employee The gender of employee was coded as 0 and 1 for male and female, respectively, thus a high score in the gender of employee indicates a female and a low score a male employee. See Appendix A for details. Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

286


Table 1. Factor loading of expectations and obligations of employees. Loading Transactional expectations • My organization assists me to develop my external marketability • I work only the hours set in my contract and no more • My commitment to this organization is defined by my contract • I prefer to be assisted to respond to every greater industry standards • I expect to receive fair wages and salaries for my services Relational expectations • I expect good inter personal relationship between my organization and me • I expect to grow in this organization • I feel part of a team in this organization • I expect to be given training only for my current job • I expect to gain promotion in this company with length of service Employee obligations • Quit whenever I want • I have no future obligations • Seek out assignment • I have much fewer commitments … • Make personal sacrifices for this organization • Protect this organization’s image • Seek out assignments that enhance the value in the organization

0.644 0.466 0.598 0.569 0.632 0.598 0.644 0.608 0.578 0.723 0.516 0.598 0.569 0.579 0.698 0.539 0.778

Results Exploratory Factor Analysis Exploratory Factor Analysis was used to determine the correlation among the variables in the dataset. This type of analysis provides a factor structure and it is good for detecting “misfit” variables. An Exploratory Factor Analysis prepares the variables to be used for cleaner structural equation modeling. Research construct items were retained based on a significant factor loading above 0.30 (Cohen, 1988; Hair et al., 2010), resulting in discarding five items from the transactional and three items from the relational expectation list and retaining seven items from the employee obligations list. The factor loadings obtained from the perspectives of employees are presented in Table 1. The reliability of the questions was also established using Cronbach’s α. Appreciating the internal consistency of a test item is important since it shows the extent to which all items in a test measure the same construct used in the questionnaire. The reliabilities obtained are presented in Table 2. As observed, the coefficients were within the generally acceptable limits of 0.70 or higher (Nunnally and Bernstein, 1994).

Measurement model (confirmatory factor analysis) During the confirmatory factor analysis (CFA) stage, validity and reliability must be established (Hair et al., 2010). The measures for establishing validity and reliability are Composite Reliability (CR), Average Variance Extracted (AVE), Maximum Shared Squared Variance (MSV) and Average Shared Squared Variance (ASV). According to Hair et al. (2010), the thresholds are as shown in Table 3. Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

287

Adams et al. Table 2. Reliability test for the questionnaire items. Construct

Number of items

Cronbach α

Transactional expectation Relational expectation Obligation

5 5 7

0.962 0.901 0.810

Table 3. Recommended values for reliability and validity during CFA. Constructs

Recommended values

Reliability Convergent validity Discriminant validity

CR > 0.7 CR > AVE ASV < AVE

Table 4. Construct validity. Construct

CR

AVE

ASV

Transactional expectation Relational expectation Obligation

0.962 0.903 0.717

0.834 0.651 0.359

0.508 0.304 0.346

The values in Table 4 indicate that construct validity and reliability were satisfied since the values obtained were in conformance with the recommended values. A CFA measurement model was created afterwards to check the model fit and validity of each construct in the proposed model (Anderson and Gerbing, 1988). The second step involves testing hypotheses among constructs in the model. The CFA involves several statistical tests to determine the adequacy of the model fit to the data. The measures used to assess model fit include chi-square (χ2), degree of freedom (d.f.) the χ2/d.f. ratio, Normed Fit Index (NFI), Tucker-Lewis Index (TLI), Comparative Fit Index (CFI), Adjusted Goodness of Fit Index (AGFI) and Root Mean Square Error of Approximation (RMSEA). In the determination of the model fit, the AMOS 18 statistical package was used to analyze three independent constructs: transaction expectation, relational transaction and obligation. Modification indices were used where appropriate in order to attain the desired values (Hair et al., 2010) for the model fit or measurement model. However, since the sample size in this study is large, the χ2 value and the related p-value are neglected for their over sensitivity to the sample size. The results are indicated in Table 5. Goodness-of-fit statistics of the structural model were good: CFI = 0.945; TLI = 0.927; RMSEA = 0.086.

Structural model and hypothesis testing The SEM results are presented in Figure 1. The results of the hypotheses testing are summarized in Table 6. All of the paths are significant at the 5% level except age → obligation, rejecting H1. The SEM results showed a significant relationship between age and relational expectation (β = 0.064, p < 0.001), thus older employees perceive higher relational obligations than younger employees, confirming H2. This is consistent with Dychtwald et al. (2006) and Lancaster and Stillman (2002), Downloaded from ias.sagepub.com at PENNSYLVANIA STATE UNIV on May 11, 2016

288


Table 5. Model fit indices. Fit index

Recommended criteria (Hair et al., 2010)

Results

χ2/d.f. p-Value for the model CFI

0.95 great; >0.90 traditional; >0.80 sometimes permissible >0.80 >0.90 >0.90 0.10 bad

2.532 0.000 0.945

AGFI NFI TLI RMSEA

0.862 0.938 0.927 0.086

Figure 1. Path diagram result.

who show that older workers make meaningful contributions to their organizations based on their emotional maturity and experience as well as loyalty. Studies by Rousseau (2000), Conway and Briner (2005) and Bal and Kooij (2011) also reveal that older employees have high relational expectation because of their years of work at a particular place, which make them highly


289

Adams et al. Table 6. Results of the hypotheses testing. Hypotheses

Path

Significance (p-value)

Standardized (β-value)

Results

H1 H2 H3 H4 H5 H6a H6b

Age → obligation Age → relational expectation Age → transactional expectation Gender → relational expectation Gender → transactional expectation Relational expectation → obligation Transactional expectation → obligation

0.824 0.000 0.000 0.000 0.000 0.000 0.000

−0.018 0.064 −0.600 1.793 −1.098 0.268 0.612

Not supported Supported Supported Supported Supported Supported Supported

socialized. Also, there was a negative relationship between age and transactional expectation (β = −0.600, p < 0.001), which indicates that younger employees perceive higher transactional obligations than older employees, confirming H3. The results also show that women score significantly higher on relational expectation than men (β = 1.793, p < 0.001) and men score higher on transactional expectation (β = −1.098, p < 0.001), confirming the argument that men and women bring different dispositions to the workplace, confirming H4 and H5.These results are also in line with previous studies (Bellou, 2009; Veroff, et al., 1981) which acknowledge that, even though there is no uniform view of PC among groups of employees, women tend to expect more from their employment relationship. Finally, the SEM results show that there is a positive relationship between the employee relational and transactional expectations (β = 0.268, p < 0.001; β = 0.612, p < 0.001) and the obligations of employers, confirming H6. This confirms Rousseau and Greller (1994) and Atkinson’s view that the PC is made up of actions that employees believe are expected of them and what response they expect in return from the employer.

Test of relational and transactional contracts An independent samples t-test was also conducted to compare the mean scores of transactional and relational expectations between the age groups (young and old) and gender (male and female), and the results are reported in Table 7. The empirical findings demonstrate that older employees perceive higher relational expectations than younger ones, younger employees perceive higher transactional obligations than older ones, and women will score higher on relational expectations than men. These further confirm H2–H6.

Conclusion The study examined the determinants of the PC in Tema, an urban metropolitan city of Ghana. The findings of the study indicate that demographic factors (specifically gender and age of employees) play an important role in understanding the formation of PC. As mentioned earlier, organizational behavior and performance can be improved drastically when the PC is recognized and made use of, since a breach could lead to dissatisfaction, low level of commitment and high turnover, and invariably performance suffers (Rigotti, 2009; Zhao et al., 2007). The study contributes to literature on PC by looking at the case of Ghana to show differences from and similarities to other countries. The findings show that demographic factors (age and gender) are


290


Table 7. t-Test for relational and transactional expectations between the groups.

Relational expectation Young Old Transactional expectation Young Old Relational expectation Male Female Transactional expectation Male Female

Mean

SD

14.372 18.792

5.851 4.812

9.717

15.108 9.854

6.206 1.918

−7.040

11.849 20.431

5.168 2.436

8.647

15.159 10.338

6.754 1.853

−18.650

t-Value

p-Value 0.000 0.000 0.000 0.000

critical determinants of the PC. This means that Ghanaian employers can honor the expectations of employees more effectively if they consider their age and gender. The implication is that different weights could be attached to work processes, environment or conditions and procedures for different employees in incentivizing them towards higher productivity. Van der Smissen et al. (2013) have noted that insight into gender differences and their effects on organizational changes could help managers understand the specific demands and values of different groups of people and consequently enhance the competitiveness of the organization in attracting qualified applicants. For instance, employees must fulfill their expectations such as job security, support for personal problems, flexible work schedule, appreciation of work done, opportunities for training and development, high pay, promotion, communication and a good working environment with respect to these personal characteristics. An additional contribution of this research is that both employee expectations and obligations were examined in the PC formation as suggested by Rousseau (1995) and Coyle-Shapiro and Kessler (2003) to help improve the model fit. Even more important is the observation that effective management of each other’s expectations and obligations creates an environment that is characterized by mutual trust (Atkinson, 2008). This is also consistent with previous studies (Conway et al., 2011; Robinson and Rousseau, 1994; Stoner and Gallagher 2010), which emphasize a relationship between expectations and obligations by specifying that a breach in employee expectations and obligations results in distrust, which disturbs the employment relations further, creating a feeling of injustice, de-motivation and decline in commitment, and even terminating the employment relationship. In discussing the results it is worth mentioning a few of its limitations. First, the study design was cross-sectional in nature, which implies that no causal inferences can be drawn. However, the predictions are in line with the theoretical arguments and findings of previous empirical studies. Also, the study did not control for industry type or sector-specific factors, for example, industrial versus services sector and private versus public sectors. Time and financial constraints did not make this possible and therefore we suggest that future research could examine these issues using longitudinal data to deepen our understanding of the determinants of the PC. This will help to reduce the violation of the psychological contract, which could have a serious negative impact on organizational performance. The findings of the study are consistent with the gender schema theory that men and women bring different expectations to the workplace owing to their different evaluations and socialization.


291

Adams et al. Funding

This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

Reference Amuzu C, Jones N and Pereznieto P (2010) Gendered risks, poverty an vulnerability in Ghana: To what extent is the LEAP Cash Transfer Programme making a difference? ODI Report. Anderson JC and Gerbing DW (1988) Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin 103(3): 411–423. Aoki M (1994) The Japanese firm as a system of attributes: A survey and research agenda. In Aoki M and Dore R (eds) The Japanese Firm: Sources of Competitive Strength (pp. 11–40). New York: Oxford University Press. Argyris C (1960) Understanding Organizational Behavior. Homewood, IL: Dorsey Press. Armstrong-Stassen M and Schlosser FK (2008) Benefits of a supportive development climate for older workers. Journal of Managerial Psychology, 23: 419–437. Atkinson TN (2008) Textual mapping of the imitation and intersexuality in college and university mission statements. Semiotica 172(1/4): 361–387. Bal PM and Kooij D (2011) The relations between work centrality, psychological contracts, and job attitudes: The influence of age. European Journal of Work and Organizational Psychology 20(4): 497–523. Bem SL (1981) Gender schema theory: A cognitive account of sex typing. Psychological Review 88: 354–364. Bellou V (2009) Profiling the desirable psychological contract for different groups of employees: Evidence from Greece. International Journal of Human Resource Management 20: 810–830. Carstensen LL (1995) Evidence for a life-span theory of socioemotional selectivity. Current Directions in Psychological Science 4: 151–156. Carstensen LL (2006) The influence of a sense of time on human development. Science 312: 1913–1915. Cavanaugh MA and Noe RA (1999) Antecedents and consequences of relational components of the new psychological contract. Journal of Organizational Behavior 20: 323–340. Cohen J (1988) Statistical Power Analysis for the Behavioral Sciences (2nd ed.).Hillsdale, NJ: Lawrence Erlbaum Associates. Conway N and Briner B (2005) Understanding Psychological Contracts at Work. Oxford: Oxford University Press. Conway N, Guest D and Trenberth L (2011) Testing the differential effects of changes in psychological contract breach and fulfillment. Journal of Vocational Behavior 79(1): 260–267. Coyle-Shapiro JAM and Kessler I (2003), The employment relationship in the UK public sector: A psychological contract perspective. Journal of Public Administration Research and Theory 13(2): 213–230. Currall SC, Towler AJ, Judge TA and Kohn L (2005) Pay satisfaction and organizational outcomes. Personnel Psychology 58: 613–640. Dadi V (2012) Black British psychological contract. International Journal of Humanities and Social Science 2(24); 59–70. Dawson C and Henley A (2012) Push versus pull entrepreneurship: An ambiguous distinction? International Journal of Entrepreneurial Behaviour and Research 18(6): 697–719. Dychtwald K, Erickson TJ and Morison R (2006) Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent. Boston, MA: Harvard Business School Press. Dzisi S (2008) Women entrepreneurs in small and medium enterprises in Ghana. Doctoral dissertation, Swinburne University of Technology, Victoria, Australia. Festing M and Schäfer L (2014) Generational challenges to talent management: A framework for talent retention based on the psychological-contract perspective. Journal of World Business 49(2): 262–271. Gresse W, Linde B and Schalk R (2013) Sense of deservingness: What are the entitlement beliefs of students in their anticipatory psychological contract? Management Revue – Socio-economic Studies 24(4): 270–288.


292


Guest DE (2007) HRM and the worker: Towards a new psychological contract? In Boxall P, Purcell J and Wright P (eds) The Oxford Handbook of Human Resource Management (pp. 128–146). New York: Oxford University Press. Hair JF, Black WC, Babin BJ and Anderson RE (2010) Multivariate Data Analysis: A Global Perspective. Boston, MA: Pearson. Hall DT and Moss JE (1998) The new protean career contract: Helping organizations and employees adapt. Organizational Dynamics 26(3): 22–37. Haunschild A (2011, October 15) Lifestyles as social contracts between workers and organizations. Schmalenbach Business Review 63: 361–375. Hill K and Montes S (2008) Potential psychological contract predisposition: Gender based differences in inducement importance. Available at: http://luxor.acadiau.ca/library/ASAC/ASAC2008/5/5–7.pdf (accessed 20 November 2013). Hiltrop JM (1995) The changing psychological contract: The human resources challenge of the 1990s. European Management Journal 13: 286–294. Hodson R (1989) Gender differences in job satisfaction. The Sociological Quarterly 30(3): 385–399. Irving G and Bobocel DA (2002) Correlates of transactional and relational psychological contract. Available at: http://attila.acadiau.ca/library/ASAC/v23/230505.pdf (accessed 20 December 2013). Isaksson K (2006) Psychological contracts across employment situations PSYCONES. National Institute for Working Life, EU Commission. Iwu CG (2013) The complexities of demographic properties, personality differences and incentives: A review of literature. Journal of Social Science 36(2): 137–151. Kissler GD (1994) The new psychological contract. Human Resource Management 33: 335–352. Koc H, Koc B and Avci C (2013) The relationship between psychological contracts and organizational justice: A case study in accommodation establishments. American International Journal of Contemporary Research 3(8): 51–58. Lancaster LC and Stillman D (2002) When Generations Collide: Who They Are. Why They Clash. How to Solve the Generational Puzzle at Work. New York: Harper Collins. Levinson H, Price CR, Munden KL and Solley CM (1962), Men, Management and Mental Health. Cambridge, MA: Harvard University Press. Mazur C (2012) The dynamics of psychological contract between employee and organization: The analysis of selected factors. Management 12(1): 51–64. Millward LJ and Hopkins LJ (1998)Psychological contracts, organizational and job commitment. Journal of Applied Social Psychology 28(16): 1530–1556. Millward LJ and Brewerton PM (2000) Psychological contracts: Employee relations for the twenty-first century? International Review of Industrial and Organizational Psychology 15: 1–62. Morris D (2010) Psychological contract and change. Available at: http://www.morrisonltd.com (accessed 15 December 2013). Ng T and Feldman D (2009) Age, work experience, and the psychological contract. Journal of Organizational Behavior 30(8): 1053–1075. Onici T (2009) An investigation into psychological contract formation from recruitment material in the context of public administration system: A case study on Moldovan Ministry of Finance. Available at: http:// essay.utwente.nl/60277/1/MA_thesis_T_Onici.pdf (accessed 12 December 2013). Osipow SH (1968) Theories of Career Development. New York: Appleton-Century-Crofts. Palomino F and Peyrachhe E (2010) Psychological bias and gender wage gap. Journal of Economic Behavior and Organization 76(3): 563–573. Rigotti T (2009) Enough is enough? Threshold models for the relationship between psychological contract breach and job-related attitudes. European Journal of Work and Organizational Psychology 18(4): 442–463. Robinson SL and Rousseau DM (1994) Violating the psychological contract: Not theexception but the norm. Journal of Organizational Behavior 15(3): 245–259. Rousseau DM (1989) Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal 2(2): 121–139.


293

Adams et al.

Rousseau DM and Greller MM (1994) Human resource practices: Administrative contract makers. Human Resources Management 33: 385–401. Rousseau DM (1995) Psychological Contracts in Organizations: Understanding written and unwritten agreements. Thousand Oaks, CA: Sage. Rousseau DM (2000) Psychological contract inventory. Technical Report. Available at: http://www.andrew. cmu.edu/user/rousseau/0_reports/PCI.pdf (accessed 16 November 2013). Rousseau DM (2004) Psychological contracts in the workplace: Understanding the ties that motivate. Academy of Management Executive 18(1): 120–127. Rousseau DM and Schalk R (2000) Psychological Contracts in Employment: Cross-national Perspectives. Thousand Oaks, CA: Sage. Rutherford B, Boles J, Hamwi GA, Madupalli R, Rutherford L (2009) The role of the seven dimensions of job satisfaction in salesperson’s attitudes and behaviours. Journal of Business Research 62: 1146–1151. Schein EH (1965) Organizational Psychology. Englewood Cliffs, NJ: Prentice-Hall. Schultz U (2004) Negotiating gender: Gender relations and identities in African marketplace. In Wohlmuth K, Gutowski A, Knedlik T, Meyn M and Pitamber S (eds) African Enterpreneurship and Private Sector Development. London: Transaction. Shih CT and Chuang CH (2013) Individual differences, psychological contract breach, and organizational citizenship behavior: A moderated mediation study. Asia Pacific Journal of Management 30(1): 191–210. Shore LM and Barksdale K (1998) Examining the degree of balance and level of obligation in the employment relationship: A social exchange approach. Journal of Organizational Behavior 19: 731–744. Street J (2009) The implications of the cultural values of individualism and collectivism in the formation of the psychological contract and employee commitment. Journal of Behavioral & Applied Management 10(3): 433–448. Stoner JS and Gallagher V (2010) Who cares? The role of job involvement in psychological contract violation. Journal of Applied Social Psychology 40(6): 1490–1514. Straia C (2011) The psychological contract: A modern perspective for gaining employees fidelity and increasing the efficiency of their work. Annals of the University of Craiova Economic Sciences 41(39): 122–133. Tabachnick BG and Fidell LS (2013) Using Multivariate Statistics, 6th edn. Needham Heights, MA: Allyn & Bacon. Theron A and Dodd NM (2011) Organizational commitment in a post-merger situation. South African Journal of Economic and Management Sciences 14(3): 333–345. Thomas DC, Au K and Ravlin E (2013) Cultural variation and the psychological contract. Journal of Organizational Behavior 24: 451–471. Van der Smissen S, Schalk R and Freese C (2013) Contemporary psychological contracts: How both employer and employee are changing the employment relationship. Management Revue – Socio-economic Studies 24(4): 309–327. Van der Vaart L, Linde L and Cockeran M (2013) The state of the psychological contract and employees’ intention to leave: The mediating role of employee well-being. South African Journal of Psychology 43(3): 356–369. Veroff J, Douvan E and Kulka RA (1981) The Inner American: A Self-portrait from 1957 to 1976. New York: Basic Books. Wellin M (2008) Managing the Psychological Contract. Ashgate: Surrey. Willem A, Devos A and Buelens M (2007) Differences between private and public sector employees’ psychological contracts. Ghent University Faculty of Economics and Business Administration, working paper no. 07/440. Xander D, Lub J, Blomme and Bal PM (2011) Psychological contract and organizational citizenship behavior: A New deal for new generations. Available at: http://www.matthijsbal.com/articles/Lub_etal_2011_ AIHAL.pdf (accessed 15 December 2013). Zhao H, Wayne SJ, Glibkowski BC and Bravo J (2007) The impact of psychological contract breach on workrelated outcomes: A meta-analysis. Personnel Psychology 60(3): 647–680.


294


Appendix A Questionnaire Transactional expectation

Relational expectation

1. My organization assists me to develop my external marketability 2. I work only the hours set in my contract and no more 3. My commitment to this organization is defined by my contract 4. I prefer to be assisted to respond to greater industry standards 5. I expect to receive fair wages and salary for my services 6. I only carry out what is necessary to get the job done 7. It is important to be flexible and to work irregular hours if necessary 8. I have well-defined job duties 9. My career path in this organization is clearly mapped out 10. I expect to be paid for any overtime I do Employee obligations 1. Quit whenever I want 2. I have no future obligations 3. Seek out assignments 4. I have much fewer commitments

1. I expect a good interpersonal relationship between my organization and me 2. I expect to grow in this organization 3. I feel part of a team in this organization 4. I expect to be given training only for my current job 5. I expect to gain promotion in this company with length of service 6. I should be praised for good work done 7. The organization should be concerned for my personal welfare and well-being 8. I will work for this company indefinitely 9. I am heavily involved in my place of work 10. I feel this company reciprocates the effort put in by its employees

5. Make personal sacrifices for this organization 6. Protect this organization’s image 7. Seek out assignments that enhance the Demographic variables value in the organization 8. Make myself increasingly valuable to this Please specify your age group employer 9. Build contacts outside firm 18–30; 31–40; 41–45; 46–50; 51–60 10. Building skills to increase future Gender male/female employment Highest level of education: (Please mark the highest level reached) No formal education Secondary Post-secondary Tertiary
