Investigating the dynamics of the psychological contract : how and why individuals' contract beliefs change

The overall objective of this thesis is to explore how and why the content of individuals' psychological contracts changes over time. The contract is generally understood as "individual beliefs, shaped by the organisation, regarding the terms of an exchange agreement between individuals and their organisation" (Rousseau, 1995, p. 9). With an overall study sampling frame of 320 graduate organisational newcomers, a mixed method longitudinal research design comprised of three sequential, inter-related studies is employed in order to capture the change process.

From the 15 semi-structured interviews conducted in Study 1, the key findings included identifying a relatively high degree of mutuality between employees' and their managers' reciprocal contract beliefs around the time of organisational entry. Also, at this time, individuals had developed specific components of their contract content through a mix of social network information (regarding broader employment expectations) and perceptions of various elements of their particular organisation's reputation (for more firm-specific expectations).

Study 2 utilised a four-wave survey approach (available to the full sampling frame) over the 14 months following organisational entry to explore the 'shape' of individuals' contract change trajectories and the role of four theorised change predictors in driving these trajectories. The predictors represented an organisational-level informational cue (perceptions of corporate reputation), a dyadic-level informational cue (perceptions of manager-employee relationship quality) and two individual difference variables (affect and hardiness). Through the use of individual growth modelling, the findings showed differences in the general change patterns across contract content components of perceived employer (exhibiting generally quadratic change patterns) and employee (exhibiting generally no-change patterns) obligations. Further, individuals differentially used the predictor variables to construct beliefs about specific contract content. While both organisational- and dyadic-level cues were focused upon to construct employer obligation beliefs, organisational-level cues and individual difference variables were focused upon to construct employee obligation beliefs.

Through undertaking 26 semi-structured interviews, Study 3 focused upon gaining a richer understanding of why participants' contracts changed, or otherwise, over the study period, with a particular focus upon the roles of breach and violation. Breach refers to an employee's perception that an employer obligation has not been met and violation refers to the negative and affective employee reactions which may ensue following a breach. The main contribution of these findings was identifying that subsequent to a breach or violation event a range of 'remediation effects' could be activated by employees which, depending upon their effectiveness, served to instigate either breach or contract repair or both. These effects mostly instigated broader contract repair and were generally cognitive strategies enacted by an individual to re-evaluate the breach situation and re-focus upon other positive aspects of the employment relationship. As such, the findings offered new evidence for a clear distinction between remedial effects which serve to only repair the breach (and thus the contract) and effects which only repair the contract more broadly; however, when effective, both resulted in individuals again viewing their employment relationships positively.

Overall, in response to the overarching research question of this thesis, how and why individuals' psychological contract beliefs change, individuals do indeed draw upon various information sources, particularly at the organisational-level, as cues or guides in shaping their contract content. Further, the 'shapes' of the changes in beliefs about employer and employee obligations generally follow different, and not necessarily linear, trajectories over time. Finally, both breach and violation and also remedial actions, which address these occurrences either by remedying the breach itself (and thus the contract) or the contract only, play central roles in guiding individuals' contract changes to greater or lesser degrees. The findings from the thesis provide both academics and practitioners with greater insights into how employees construct their contract beliefs over time, the salient informational cues used to do this and how the effects of breach and violation can be mitigated through creating an environment which facilitates the use of effective remediation strategies.