The Impact of Psychological Contract Fulfillment on the Performance of In-Role and Organizational Citizenship Behaviors

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1 Journal of Management (2) The Impact of Psychological Contract Fulfillment on the Performance of In-Role and Organizational Citizenship Behaviors William H. Turnley Department of Management, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA Mark C. Bolino Department of Management, Mendoza College of Business, University of Notre Dame, Notre Dame, IN 46556, USA Scott W. Lester Department of Management and Marketing, College of Business Administration, University of Wisconsin Eau Claire, Eau Claire, WI 54702, USA James M. Bloodgood Department of Management, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA Received 8 December 2000; received in revised form 25 February 2002; accepted 17 May 2002 This research examines the relationships between psychological contract fulfillment and three types of employee behavior: in-role performance, organizational citizenship behavior directed at the organization, and organizational citizenship behavior directed at individuals within the organization. Using a sample of 134 supervisor-subordinate dyads, this study suggests that the extent of psychological contract fulfillment is positively related to the performance of all three types of employee behavior. In addition, the results indicate that psychological contract fulfillment is more strongly related to citizenship behavior directed at the organization than to citizenship behavior directed at one s colleagues. Finally, this research investigates if employees attributions regarding the reasons that psychological contract breach occurred also impact their work performance. However, the data provide only limited support for the idea that employees are most likely to reduce their work effort when they perceive that the organization has intentionally failed to live up to its commitments Elsevier Science Inc. All rights reserved. Corresponding author. Tel.: ; fax: addresses: turnley@ksu.edu (W.H. Turnley), mbolino@nd.edu (M.C. Bolino), lestersw@uwec.edu (S.W. Lester), jblood@ksu.edu (J.M. Bloodgood) /02/$ see front matter 2002 Elsevier Science Inc. All rights reserved. PII: S (02)

2 188 W.H. Turnley et al. / Journal of Management (2) The employment relationship has undergone a number of significant changes in recent years. In large part, this transformation has been brought about by the increasing globalization of business, by the dramatic rise in the number of mergers, restructurings, and layoffs, and by the increasing rate of change that permeates all of organizational life today (Kissler, 1994; McLean Parks & Kidder, 1994). As a result of these events, psychological contracts have become increasingly important in helping to define the contemporary employment relationship. Psychological contracts consist of the beliefs employees hold regarding the terms and conditions of the exchange agreement between themselves and their organizations (Robinson, Kraatz & Rousseau, 1994; Rousseau, 1989). Specifically, psychological contracts are comprised of the obligations that employees believe their organization owes them and the obligations the employees believe they owe their organization in return. Psychological contract breach arises when an employee perceives that his or her organization has failed to fulfill one or more of the obligations comprising the psychological contract (Morrison & Robinson, 1997; Robinson, 1996). Recent research on psychological contracts has generally focused on two areas. First, a number of articles have discussed the changing nature of the psychological contract and the general decline in mutual loyalty between employees and their organizations (e.g., Hall & Moss, 1998; Martin, Staines & Pate, 1998; McLean Parks & Kidder, 1994). These articles have typically provided anecdotal evidence of the types of psychological contract breach that employees have experienced or contrasted historical and contemporary psychological contracts. Second, another line of research has investigated the negative consequences of psychological contract breach (or violation) on employee attitudes and behaviors (e.g., Robinson, 1996; Robinson & Morrison, 1995a; Robinson & Rousseau, 1994; Turnley & Feldman, 1999a). This literature suggests that psychological contract breach results in a wide array of negative outcomes, including reduced job satisfaction, reduced trust in the organization, increased cynicism about organizational life in general, and increased intent to quit. This study aims to extend prior research on psychological contracts in three ways. First, most prior research has ignored the multi-dimensional nature of the psychological contract and has instead examined global assessments of psychological contract breach (e.g., Robinson, 1996; Robinson & Morrison, 1995a, 2000; Turnley & Feldman, 1999a). Therefore, based on prior conceptualizations which suggest that psychological contracts can be divided into transactional and relational elements (e.g., Robinson et al., 1994; Rousseau, 1990), this research focuses on the two dimensions that most strongly represent these orientations namely, pay and a supportive employment relationship. In addition, most prior research has ignored the fact that psychological contracts can be over-fulfilled as well as under-fulfilled (Turnley & Feldman, 1999b). To address this issue, this research employs a measure of psychological contract fulfillment that captures the full range of potential responses from under-fulfillment to over-fulfillment for each of the elements of the psychological contract examined here (e.g., the extent to which employees receive a competitive salary, receive a fair salary, are treated fairly, are treated with respect). In this way, the present study seeks to determine if employees treat the transactional and relational aspects of their psychological contract equivalently in how they respond to under-fulfillment or over-fulfillment on these elements.

3 W.H. Turnley et al. / Journal of Management (2) Second, although the links between psychological contract breach and employees attitudes have been reasonably well established, surprisingly little research has examined how psychological contract breach influences individuals work behaviors. Moreover, the few studies that have examined this issue have almost exclusively relied upon employees self-reports of their performance (e.g., Robinson, 1996; Robinson & Morrison, 1995a; Turnley & Feldman, 1999a). Thus, while these studies are often methodologically rigorous along other dimensions (e.g., by employing longitudinal research designs (e.g., Robinson, 1996)), some legitimate concerns have been raised about the inherent limitations of using self-reported measures of employee performance (e.g., Keeney & Svyantek, 2000). Therefore, it is important to determine whether psychological contract breach is related not just to employee self-reports of their own behaviors, but to supervisors perceptions of employee behavior as well. Another goal of this research, then, is to focus on the relationship between psychological contract fulfillment and employee behavior. In particular, this study uses social exchange theory to examine the ways in which psychological contract fulfillment influences job performance both in terms of the effectiveness with which employees carry out their formally-prescribed job responsibilities (i.e., their in-role behavior) as well as their willingness to go above and beyond the call of duty (i.e., their organizational citizenship behavior (OCB)). Moreover, this research seeks to determine which type of organizational citizenship behavior OCBs which benefit the organization (OCB-O) or OCBs which benefit other individuals (OCB-I) is most likely to be affected by the extent to which employees psychological contracts are fulfilled or unfulfilled. In addition, in order to avoid the methodological problems associated with using self-reported measures of employee behavior, this research assesses the performance of employees using data obtained from their direct supervisors. Third, and finally, prior research suggests that most employees report receiving less than they were promised on at least some of the job factors comprising the psychological contract (Robinson & Rousseau, 1994; Turnley & Feldman, 1998). However, employees do not always perceive instances of receiving less than promised as a psychological contract violation, nor do they always respond negatively to such occurrences (Robinson & Rousseau, 1994; Turnley & Feldman, 1998). One explanation for these results is that an employee s response to receiving less than promised is determined (at least in part) by the attribution that the employee makes regarding why the organization failed to keep its promises (Robinson & Morrison, 2000; Rousseau, 1995). However, prior research has not directly examined how employees attributions impact their responses to psychological contract breach. This research addresses that question. Specifically, this study examines whether employees reduce their work effort to a greater extent when they perceive that their organization willfully breached the psychological contract than when they perceive that the psychological contract was breached for reasons over which the organization had less control. Theory Prior research suggests that psychological contracts help to define the terms of the social exchange relationship that exists between employees and their organizations (Robinson &

4 190 W.H. Turnley et al. / Journal of Management (2) Morrison, 1995a; Shore & Barksdale, 1998). These relationships are made up of the voluntary actions that each party engages in with the belief that the other party will reciprocate these behaviors in one way or another (Homans, 1961). In contrast to relationships based purely on economic exchange, social exchange relationships involve obligations which can not be specified ahead of time and require the parties to trust one another (Blau, 1964). Although the obligations making up these types of relationships are somewhat diffuse, a general expectation of reciprocation drives their evolution. Social exchange theory provides a general approach for understanding how employees are likely to respond when they perceive that their psychological contracts have not been fulfilled. Breach of the psychological contract occurs when employees perceive a discrepancy between what they were promised and what they actually receive (Morrison & Robinson, 1997). From the employees perspective, such discrepancies create inequality in employment relationship. Thus, as long as employees perceive that they have adequately met their obligations to their employer, they are likely to feel shortchanged by the organization s failure to live up to its obligations and will be inclined to take actions to rebalance the employment relationship (Robinson, 1996; Rousseau, 1995). One way that employees can do this is by reducing the extent of their contributions to the organization. On the other hand, employees may sometimes perceive that their organization has actually provided more than it promised or agreed to provide (e.g., an unexpectedly large pay raise, increased opportunities for advancement, an improved benefits package). In such cases, employees may perceive a positive imbalance in the social exchange agreement. As a result, these actions are likely to result in a broadening or strengthening of the social exchange relationship. Moreover, when this occurs, employees may attempt to reciprocate by increasing their contributions to the firm (Homans, 1961; Wayne, Shore & Liden, 1997). The predictions of social exchange theory are also consistent with the predictions that would be made by equity theory (Adams, 1963, 1965). However, prior research in both areas suggests that the likelihood of perceiving under-fulfillment tends to be greater than the likelihood of perceiving over-fulfillment and that the motivation to increase contributions in cases of over-fulfillment is likely to be less compelling than the motivation to decrease contributions in cases of under-fulfillment (Carrell & Dittrich, 1978; Goodman & Friedman, 1971). Most prior research on psychological contracts has examined cases in which employees perceive that they have received less than promised. However, recent research focusing on different types of employment relationships suggests that, in some instances, organizations may benefit from over-fulfilling psychological contracts (e.g., Shore & Barksdale, 1998; Tsui, Pearce, Porter & Tripoli, 1997). According to this line of research, and consistent with the predictions of social exchange theory and equity theory, employee contributions to the firm may rise as organizations provide more than they originally agreed to provide. Hypothesis 1, then, suggests that the extent of psychological contract fulfillment will be positively related to the employee s level of in-role performance. Hypothesis 1: Psychological contract fulfillment will be positively related to in-role performance. Organizational citizenship behavior (OCB) has been defined as employee behavior that is extra-role, that promotes organizational effectiveness, and that is not formally recognized by

5 W.H. Turnley et al. / Journal of Management (2) an organization s reward system (Organ, 1988). In recent years, as organizational structures have become more flexible, much attention has been given to the role that employee citizenship behavior plays in improving organizational functioning (e.g., Borman & Motowidlo, 1993; Van Dyne, Cummings & McLean Parks, 1995). Given the perceived importance of OCBs, a significant amount of attention has been devoted to investigating the antecedents of such behaviors. Robinson and Morrison (1995a) suggest that psychological contracts are an especially important lens through which to view organizational citizenship behavior. However, somewhat surprisingly, there has been very little investigation of the relationship between psychological contract fulfillment and citizenship behaviors. Moreover, like the studies of in-role performance, the limited research on this topic has utilized employee self-reports of their citizenship behavior rather than using supervisor assessments of employees citizenship behaviors (Robinson & Morrison, 1995a; Robinson, 1996). Social exchange theory was used in the preceding section to help understand why employees are likely to alter their in-role performance based on the extent to which their psychological contracts are fulfilled. This theory is also useful in helping to explain how the level of employees organizational citizenship behaviors will be impacted by the extent of psychological contract fulfillment. In particular, Organ s (1990, p. 63) social exchange interpretation of OCB suggests that OCBs provide employees a means through which they might reciprocate the positive actions of employers who treat them well. In other words, social exchange theory suggests that employees are motivated to engage in extra-role behaviors when they perceive that their employment relationship is based upon the foundation of a fair social exchange (Moorman, 1991; Organ, 1988, 1990). Based upon these arguments, it is expected that employees perceptions of the extent to which their organizations have fulfilled the psychological contract will impact the extent to which they engage in OCBs. Specifically, it is expected that psychological contract fulfillment will be positively related to the performance of citizenship behaviors. Hypothesis 2: Psychological contract fulfillment will be positively related to the performance of organizational citizenship behaviors. In recent years, organizational scholars have begun to differentiate between different targets of citizenship behaviors (e.g., McNeely & Meglino, 1994; Williams & Anderson, 1991). Specifically, Williams and Anderson (1991) draw a distinction between citizenship behaviors which are intended to benefit the organization (OCB-O) and citizenship behaviors which are intended to benefit specific individuals within the organization, especially co-workers (OCB-I). For example, citizenship behaviors directed at the organization include such actions as adhering to informal rules designed to maintain order, demonstrating above average work attendance, and not taking extended work breaks. Citizenship behaviors that are more personally focused on helping specific individuals include such actions as assisting others who have been absent, helping colleagues who have heavy workloads, and taking a personal interest in the well-being of other employees. Robinson and Morrison (1995a) suggest that because psychological contracts consist of beliefs about organizational obligations, then psychological contract fulfillment/breach is likely to be more strongly related to citizenship behaviors directed at the organization than

6 192 W.H. Turnley et al. / Journal of Management (2) to citizenship behaviors targeted at specific individuals within the organization. However, Robinson and Morrison (1995a) did not actually test this idea. Instead, they used that explanation as the justification for examining whether psychological contract breach is negatively related to civic virtue. (Civic virtue is a specific type of organizationally-directed citizenship behavior that indicates that the employee actively participates in and is concerned about the life of the organization (Organ, 1988). Typical behaviors include attending organizational functions that are not required and keeping up with new developments in the company.) Consistent with the reasoning above, it is expected that psychological contract breach will primarily result in resentment that is directed at the organization rather than coworkers. In fact, in some cases, psychological contract breach could actually lead coworkers to band together if they all feel betrayed by the same organizational policies. Thus, psychological contract fulfillment (or the lack thereof) is likely to be more strongly related to citizenship behaviors directed at the organization than to citizenship behaviors directed at individuals. Hypothesis 3: Psychological contract fulfillment will be more strongly related to the performance of organizational citizenship behaviors directed at the organization than to citizenship behaviors directed at other individuals within the organization. When psychological contracts go unfulfilled, both Rousseau (1995) and Morrison and Robinson (1997) suggest that employees attributions regarding the reason for the breach play an important role in determining how they will respond. At the broadest level, employees are likely to view the breach as either intentional or unintentional (Turnley & Feldman, 1999b). Unintentional psychological contract breach tends to arise from one of two sources. First, incongruence occurs when the employee and the agent representing the organization have an honest difference of opinion regarding what the organization is obligated to provide (Morrison & Robinson, 1997). In these cases, while employees perceive that they are not getting all they expected to receive, they understand that those representing the organization believe that the organization is fulfilling its obligations. Second, disruption occurs when the organization is unable to live up to the promises and commitments it made to its employees (Morrison & Robinson, 1997). In many instances, psychological contract disruption occurs when the organization is experiencing financial difficulties. For example, when the organization is losing money or market share, it may have to cut back on the inducements that had previously been offered as a part of the employment relationship. On the other hand, there are instances in which organizational representatives make an intentional decision not to fulfill the terms of an employee s psychological contract. Specifically, reneging occurs when the organization is simply unwilling to live up to the commitments that were made to employees (Rousseau, 1995). For example, even during highly profitable periods, some organizations may decide to initiate layoffs or reduce health care benefits in order to save money. What is important in such cases is that employees perceive that the organization had the ability to keep its commitments, but that it intentionally chose not to. How an employee chooses to respond to getting less than promised is likely to be determined both by the magnitude of the discrepancy and by the individual s attribution regarding why the discrepancy occurred (Rousseau, 1995; Turnley & Feldman, 1999b). For example,

7 W.H. Turnley et al. / Journal of Management (2) previous studies indicate that when individuals receive less than they were promised, they often try to understand why the broken promises occurred (Kahneman, Knetsch & Thaler, 1986). In particular, research on social accounts has examined the impact that managerial explanations for organizational change (e.g., layoffs, budget cuts) have on employees responses when they fail to receive what they expected (Rousseau & Tijoriwala, 2000). Social accounts include the justifications and excuses that are used to explain why the undesirable outcome occurred (Sitkin & Bies, 1993). Common types of social accounts include blaming external factors or citing a lack of managerial control for the negative consequences which befall employees (Bies & Moag, 1986). By employing such explanations, managers hope to convince employees that the reason they did not receive a desired or expected outcome was justified. This previous research suggests that individuals are likely to be especially resentful when they perceive the organization s actions to be intentional and unjustifiable. Thus, responses to psychological contract breach may be especially strong when employees believe that the organization is simply unwilling to live up to the commitments it made (Robinson & Morrison, 2000). More specifically, it is expected that employees will reduce both their in-role performance and their organizational citizenship behaviors to a larger extent when they perceive that the magnitude of the psychological contract breach is great and that the organization intentionally reneged on its promises. Hypothesis 4: The attribution that employees make when their psychological contracts are breached will moderate the relationships between the magnitude of the breach and employee in-role performance and citizenship behavior. Specifically, the relationships will be stronger when employees believe that the organization intentionally reneged on its commitments. Sample Method Data were collected as part of a larger research project examining employee reactions to psychological contract fulfillment (Lester, Turnley, Bloodgood & Bolino, 2002). Two samples participated in this study (in both samples, participation in the study was voluntary). Sample 1 was comprised of students who were enrolled in two evening MBA programs associated with medium-sized, state-supported universities located in the United States. Sample 2 was composed of employees of a large health care company who worked in its telecommunications center. One hundred fifteen MBA students, who were also employed in full-time positions, completed a subordinate survey. Then, these students asked their supervisors to complete the supervisor survey and return it directly to the researchers (using a postage-paid envelope that had been provided). Sixty-eight supervisor surveys were returned, yielding a response rate of 59%. Surveys were administered directly to the supervisors at the health care company. Then, subordinates were given time to complete their surveys at work. In this case, 70% of the workforce chose to participate, resulting in data from 66 subordi-

8 194 W.H. Turnley et al. / Journal of Management (2) nates and their supervisors. Thus, the total sample consisted of 134 supervisor-subordinate dyads. The average age of subordinates was 32 years, and the average organizational tenure was 4.27 years (or, roughly, 4 years and 3 months). The subordinate sample was 44% male. The average age of supervisors was 41, and the average organizational tenure was years (or, roughly, 13 years and 6 months). The supervisor sample was 55% male. Measures Psychological contract fulfillment. Two dimensions of psychological contract fulfillment were examined in this study. Specifically, this study focused on the dimensions of pay and a supportive employment relationship. The items comprising these scales were taken from Robinson and Morrison (1995b). While Robinson and Morrison identified 6 separate dimensions of the psychological contract, only those items assessing pay and a supportive employment relationship were used here. These dimensions were chosen both because of their salience to employees and because they anchor the ends of the transactional-relational continuum that has been discussed in prior psychological contract research (e.g., Rousseau, 1990, 1995). In particular, Robinson and Morrison s (1995b) scale included three items which specifically assessed psychological contract fulfillment regarding pay (competitive pay, fair pay, and pay tied to one s performance). Cronbach s alpha for the scale was.83. In addition, three items representing a supportive employment relationship were used (respectful treatment, fair treatment, and management support). Cronbach s alpha for this scale was.87. For each of the six items, respondents were instructed to assess the extent to which the amount of the inducement they actually received from their organization was less than or greater than the amount that the organization had promised them. Responses ranged from 1 (Receive much less than promised) to 5(Receive much more than promised). Thus, the higher the score, the greater the extent of psychological contract fulfillment (or over-fulfillment). The psychological contract items were analyzed using confirmatory factor analysis (CFA). In order to ensure that there were two distinct factors, the fit of a two-factor model was compared to the fit of a one-factor model. The two-factor model fit the data very well (χ 2 = 14.24, df = 8; GFI =.95; RMSEA =.066; CFI =.99; TLI =.98). In contrast, the fit of the one-factor model was very poor (χ 2 = , df = 9; GFI =.65; RMSEA =.40; CFI =.50; TLI =.16). Moreover, the two-factor model fit the data significantly better than the one factor model (difference in χ 2 = , df = 1). The items, factor loadings, uniqueness estimates, and inter-factor correlation for the two-factor model appear in Table 1. Perceived cause of the psychological contract breach. Within the subordinate survey, the measure of psychological contract fulfillment was divided into sections based on the dimensions identified above. The employee s attribution for any psychological contract breach was measured at the end of each section. In particular, those individuals who reported receiving less than promised on one or more of the individual items regarding pay or the supportiveness of the employment relationship were instructed to indicate the single best explanation for why they thought the organization had failed to fulfill that aspect of the

9 W.H. Turnley et al. / Journal of Management (2) Table 1 Confirmatory factor analysis of psychological contract fulfillment items Scale items Factor loadings Pay A fair salary.88 (.23) A competitive salary.84 (.29) Pay tied to my level of performance.65 (.58) Relationship The extent to which I am treated fairly and impartially.91 (.17) The extent to which I am treated with respect.82 (.33) The amount of support I receive from management.77 (.41) All factor loadings are significant at p<.05. Values in parentheses are the uniqueness estimates for each item. The inter-factor correlation is.31. psychological contract. Thus, a single-item measure was used to assess the attribution that employees made about each type of breach they experienced. Items representing the response categories described below were based on the theoretical work of Rousseau (1995) and Morrison and Robinson (1997). Four possible attributions were presented: (1) The organization could have kept its promise, but it chose not to was used to assess instances of reneging; (2) A situation beyond the organization s control made it impossible for the organization to keep its promise was used to assess instances of disruption; (3) There was an honest misunderstanding between myself and the organization regarding what the organization would provide was used to assess instances of incongruence; and (4) I failed to keep my obligations to the company; thus, the company was no longer obligated to keep its side of the deal was used to assess instances of nullification. None of the employees selected the last option (nullification). As a result, this option does not appear in any of the data analyses. In addition, because it is expected that employees will be most concerned with whether the psychological contract breach was intentional (coded 1) or unintentional (coded 2), the responses of disruption and incongruence were combined to make up the single category of unintentional psychological contract breach. Employee performance. Supervisors provided their evaluation of the employee s performance along three dimensions. Specifically, in-role performance, organizational citizenship behaviors directed toward the whole organization (OCB-O), and organizational citizenship behaviors directed at other individuals (OCB-I) were assessed using 18 items developed by Williams and Anderson (1991). In each case, responses were given on a 5-point scale ranging from 1 (Strongly Disagree) to 5(Strongly Agree). Cronbach s alpha for the six-item in-role performance scale was.93. Cronbach s alphas for the six-item OCB-O and the six-item OCB-I scales were.83 and.88, respectively. All of the employee performance items were examined using CFA. A three-factor model (χ 2 = , df = 132) fit the data reasonably well, and all items loaded significantly onto their specified factor. The key fit indices were as follows: GFI =.85, RMSEA =.077, CFI =.93, and TLI =.92. Moreover, this three-factor solution fit the data significantly better than a one-factor model (χ 2 = , df = 135), a two-factor model in which the

10 196 W.H. Turnley et al. / Journal of Management (2) Table 2 Confirmatory factor analysis of employee performance items Scale items Factor loadings In-role performance This employee fulfills all the responsibilities specified in his/her job description.89 (.21) This employee consistently meets the formal performance requirements of his/her job.89 (.21) This employee conscientiously performs tasks that are expected of him/her.88 (.23) This employee adequately completes all of his/her assigned duties.86 (.26) This employee sometimes fails to perform essential duties of his/her job (rs).80 (.36) This employee sometimes neglects aspects of the job that he/she is obligated to perform (rs).66 (.56) OCB-O This employee sometimes takes undeserved or extended work breaks (rs).75 (.44) This employee adheres to informal organizational rules devised to maintain order.75 (.44) This employee always gives advance notice when he/she is unable to come to work.66 (.56) This employee sometimes spends a lot of time in personal phone conversations (rs).66 (.56) This employee s attendance at work is above the norm.64 (.59) This employee sometimes complains about insignificant or minor things at work (rs).58 (.66) OCB-I This employee generally helps others who have been absent.86 (.26) This employee takes a personal interest in the well-being of other employees.79 (.38) This employee generally helps others who have heavy workloads.78 (.39) This employee goes out of the way to help new employees.74 (.45) This employee generally takes time to listen to coworkers problems and worries.72 (.48) This employee passes along work-related information to coworkers.55 (.70) All factor loadings are significant at p<.05. Values in parentheses are the uniqueness estimates for each item. The inter-factor correlation between in-role performance and OCB-O is.85; the inter-factor correlation between in-role performance and OCB-I is.74; the inter-factor correlation between OCB-O and OCB-I is.71. OCB-O and OCB-I items all loaded onto one factor (χ 2 = , df = 134), a two-factor model in which the OCB-O and the in-role performance items all loaded onto one factor (χ 2 = , df = 134), and a two-factor model in which the OCB-I and the in-role performance items all loaded onto one factor (χ 2 = , df = 134). The items, factor loadings, uniqueness estimates, and inter-factor correlations for the three-factor model are presented in Table 2. Control variables. Three control variables were used in the analyses. First, because there were mean differences in supervisor-evaluated performance across the two samples, a dummy-coded variable controlling for the data collection sample was used (1 = MBA sample, 2 = healthcare sample). In order to control for the possibility that employees were evaluated differently based on their gender, this characteristic was also used as a control variable (1 = male, 2 = female). Finally, because the length of employment may be related to the number of psychological contract breaches experienced, the employee s tenure with the organization was included as a control variable as well. A correlation matrix of all the variables in this study is presented in Table 3. The means, standard deviations, and alphas for scaled variables are reported in this table as well.

11 W.H. Turnley et al. / Journal of Management (2) Table 3 Descriptive statistics and intercorrelations Variable Mean S.D Gender Tenure PC pay (.83) 4. Pay attribution PC relationship (.87) 6. Relationship attribution In-role (.93) 8. OCB-O (.83) 9. OCB-I (.88) Correlation coefficients >.19 are significant at p<.05. Correlation coefficients >.21 are significant at p<.01. Correlation coefficients >.31 are significant at p<.001. Values in parentheses are coefficient alphas for scaled variables. Results Before testing the hypotheses, multigroup structural equation modeling was used to determine if the two samples were equivalent and, thus, could be combined. This analysis was conducted by specifying a structural model in which all of the relationships (i.e., the factor loadings, error variances, and factor covariances) among the five key constructs (i.e., psychological contract fulfillment with regard to pay, psychological contract fulfillment with regard to a supportive employment relationship, in-role performance, OCB-O, and OCB-I) were constrained to be equal in both samples. This model is referred to as the constrained model. The number of respondents in the two samples was small relative to the total number of scale items across the five constructs; therefore, as recommended by Floyd and Widaman (1995), parceling was used to create six indicator variables for the employee performance scales. Thus, the overall number of indicators was reduced to twelve (six psychological contract fulfillment items and six employee performance indicators). The fit of the constrained model was then compared to the fit of an unconstrained model, in which all of these relationships were free to vary. Sample equivalence is tested by employing a χ 2 difference test. If the two models are significantly different, then the samples differ and should not be combined; if the difference is not significant, then the samples are considered equivalent and, therefore, combinable. The χ 2 value for the constrained model was (df = 122), and the χ 2 value for the unconstrained model was (df = 88). The χ 2 difference value of (df = 34) was not significant at the p<.05 level. Therefore, the two samples were combined. Hypotheses 1 and 2 (examining the impact of psychological contract fulfillment on employee performance) were tested using hierarchical regression. The results of these analyses are reported in Table 4. The control variables were entered in Step 1 of the regression equation. Next, in Step 2, the two dimensions of psychological contract fulfillment discussed above (i.e., pay and a supportive employment relationship) were entered into the regression equations.

12 198 W.H. Turnley et al. / Journal of Management (2) Table 4 Hierarchical regression analyses predicting employee performance Dependent variables In-role performance OCB-O OCB-I Step 1 Step 2 Step 1 Step 2 Step 1 Step 2 Control variables Sample Gender Tenure Independent variables PC pay PC relationship F Adjusted R-square Change in adjusted R-square Standardized regression coefficients are reported. p<.01. p<.001. In general, the results provide some support for Hypotheses 1 and 2. Collectively, the two dimensions of psychological contract fulfillment explained a significant amount of variance in employee performance. Specifically, the amount of additional variance explained was 8% in the equation predicting the extent of organizational citizenship behaviors directed at colleagues, 16% in the equation predicting in-role performance, and 21% in the equation predicting the extent of organizational citizenship behaviors directed at the organization. However, only the extent of psychological contract fulfillment with regard to the supportiveness of the employment relationship had a significant relationship with the various aspects of employee performance. In contrast, the extent of psychological contract fulfillment with regard to pay did not relate significantly to any aspect of employee performance (at least when both of these dimensions of the psychological contract were included in the regression equations). Hypothesis 3 was tested using a procedure for analyzing the difference between the strength of dependent correlations (i.e., correlations obtained from the same group of respondents). The procedure used to test these relationships was outlined by Steiger (1980) and Cohen and Cohen (1983, pp ). Specifically, this analysis examined whether the strength of the relationship between psychological contract fulfillment and organizational citizenship behaviors targeted at the organization was stronger than the strength of the relationship between psychological contract fulfillment and organizational citizenship behaviors targeted at individuals. In these analyses, the partial correlations between the dimensions of psychological contract fulfillment and the two types of organizational citizenship behavior were compared after removing the effects of the control variables (sample, gender, and organizational tenure). The correlations examined, and the significance tests associated with these correlations, are presented in Table 5. The difference in the strength of the correlations between psychological contract fulfillment and the two types of OCB were significant for both of the dimensions of the

13 W.H. Turnley et al. / Journal of Management (2) Table 5 Partial correlations between psychological contract fulfillment and organizational citizenship behavior OCB-O OCB-I t PC fulfillment PC pay PC relationship p<.05. psychological contract examined here (i.e., pay and the supportiveness of the employment relationship). In each case, the extent of psychological contract fulfillment was more strongly related to citizenship behaviors directed at the organization than to citizenship behaviors directed at individuals. Thus, these results provide support for Hypothesis 3. Hypothesis 4 suggested that the employee s explanation for why a psychological contract breach occurred would moderate the relationship between the extent of breach and his or her work behavior (i.e., the extent to which the employee was observed to perform his/her in-role duties and engage in organizational citizenship behaviors). Hypothesis 4 was tested using hierarchical regression. Because questions concerning the reasons for any perceived psychological contract breach were answered at the end of each section of the psychological contract questionnaire, separate analyses were run for attributions regarding pay and a supportive employment relationship. In addition, only those employees who had experienced a breach on at least one of the items in a section were included in these analyses. Of the 134 employees, 66 reported receiving less than they were promised on at least one of the items concerning pay. Among these individuals, 32 suggested that the organization had intentionally reneged on its commitments, while 34 indicated that the breach was unintentional. In addition, 63 of the 134 employees reported receiving less than promised on at least one of the items assessing the supportiveness of the employment relationship. In this group, 26 individuals suggested that the organization had intentionally reneged upon its commitments, while 37 individuals suggested that the breach was unintentional. The results of the hierarchical regression analyses examining the impact of employees attributions on their in-role and extra-role work behaviors are presented in Table 6. In the first step, the control variables of sample, gender, and organizational tenure were entered into the regression equations. In addition, the two independent variables extent of psychological contract fulfillment (coded such that lower scores represent a greater breach) and attribution for the breach (1 = intentional, 2 = unintentional) were also entered in the first step of the hierarchical regressions. Then, in the second step, the interaction term (extent of breach attribution for breach) was included in the regression analyses. To reduce multicollinearity problems and make the interaction term more directly interpretable, the two independent variables were centered at their means (Cohen & Cohen, 1983, pp ). Hypothesis 4 was not supported. Specifically, none of the interactions between psychological contract breach and the attribution for the breach were significant at the p<.05 level. However, these analyses included only those employees who experienced a breach; thus, the sample sizes for these analyses were much smaller than those used in the other analyses. For this reason, we also indicated which relationships were significant at the

14 200 W.H. Turnley et al. / Journal of Management (2) Table 6 Impact of attributions for psychological contract breach on employee performance Dependent variables In-role performance OCB-O OCB-I Step 1 Step 2 Step 1 Step 2 Step 1 Step 2 If employee perceived breach on pay Independent variables Sample Gender Tenure PC pay Pay attribution Interaction PC pay pay attribution F Adjusted R-square Change in adjusted R-square If employee perceived breach on relationship Independent variables Sample Gender Tenure PC relationship Relationship attribution Interaction PC Rel Rel attribution F Adjusted R-square Change in adjusted R-square Standardized regression coefficients are reported. p<.10. p<.05. p<.01. p<.10 level. Using this less conservative level of significance, the employees attribution for breaches concerning pay did moderate the relationship between the magnitude of the breach and both types of organizational citizenship behavior. In these instances, the results suggest that employees are most likely to decrease their citizenship behaviors when the size of the breach is large and when the employee believes that the organization intentionally reneged on its commitments in terms of pay. Moreover, using the traditional p<.05 level of significance, the results suggest that there is a significant main effect for attribution in the relationship predicting in-role performance. Thus, this result suggests that the type of attribution the employee makes does impact his/her in-role work performance (at least when the breach concerns pay). In this case, performance was lower when employees believed that the organization intentionally failed to keep its promises regarding pay.

15 W.H. Turnley et al. / Journal of Management (2) Discussion In this final section, we discuss the empirical results obtained here, directions for future research on psychological contracts, and the implications of this study for managerial practice. Pattern of Empirical Results The pattern of results obtained here supports the general idea that psychological contract fulfillment is positively related to employee performance. Specifically, perceptions of psychological contract fulfillment were positively related to all three forms of employee behavior evaluated by the supervisors. However, while the results were significant for the relationship dimension of the psychological contract, they were not significant for the dimension of the psychological contract that focused on pay (cf. Table 4). In addition, an examination of the correlation matrix (cf. Table 3) suggests that psychological contract fulfillment with regard to the employment relationship is more strongly related to all three aspects of employee performance than is psychological contract fulfillment with regard to pay. Thus, at least among the individuals in this study, it appears that employees perceptions of the extent to which their organizations have lived up to their commitments to be fair, respectful, and supportive are a more important predictor of their work behaviors than are their perceptions regarding the extent to which their organizations have lived up to their commitments regarding pay. What is less clear, however, is the exact nature of the relationship between these two dimensions of the psychological contract. It is possible that rather than simply being the more important of the two dimensions, the employment relationship dimension may be a more general (or second-order) construct that is comprised of employees perceptions regarding several specific dimensions of the psychological contract. In other words, it is possible that employees perceptions of breach/fulfillment related to specific dimensions of the psychological contract (e.g., pay, benefits, the job itself) subsequently impact their perceptions of the extent to which the organization is generally supportive of its employees. Such a relationship could help to explain the results obtained here. Certainly, this possibility should be examined in future research. A second focus of this research was to examine whether psychological contract fulfillment was more strongly related to citizenship behaviors directed at the organization than to citizenship behaviors directed at other individuals. The results obtained here suggest that psychological contract fulfillment is, indeed, more strongly related to OCB-O than to OCB-I. Thus, consistent with the premises of social exchange theory, it appears that employees whose psychological contracts have been breached are most likely to withhold those behaviors that benefit the organization as a whole, rather than to withhold those behaviors that tend to more directly benefit their work colleagues. Likewise, when individuals perceive that the organization has exceeded the terms of the psychological contract by providing more than it was obligated to, they are most likely to reciprocate with actions intended to benefit the organization as a whole. However, these results need to be interpreted somewhat cautiously. Like most research on organizational citizenship behavior, evaluations of the participants actions were collected

16 202 W.H. Turnley et al. / Journal of Management (2) from the individuals supervisors. Thus, an alternate explanation for these results is that supervisors simply have better information concerning their subordinates organizationallydirected citizenship behaviors than they do their employees citizenship behaviors which are targeted at their colleagues. This alternative cannot be ruled out with the current data. Finally, the results generally did not support the hypothesis examining how attributions influence employees responses to psychological contract breach. Specifically, the attribution for the breach did not moderate the relationships between the magnitude of the breach and employee performance when using the traditional p<.05 significance level. There are several possible reasons for these results. One explanation is that, at least in some cases, employees are less concerned with why their psychological contract has been breached than they are about the occurrence of the breach itself. Second, it may be that attributions matter more for some aspects of the psychological contract (e.g., pay) than they do others (e.g., the supportiveness of the employment relationship). Third, approximately 50% of employees reported that their psychological contracts were generally fulfilled (such that they had not experienced a breach on the two dimensions of the psychological contract examined here). Thus, the sample size for these analyses (which examined only that subset of the participants who had actually experienced a breach) may not have been large enough to detect significant results (especially interactions). Finally, a single-item measure was used to assess the attribution that employees made when they perceived that their psychological contract had been breached. Although this item appears reasonable, the measurement of employee attributions for breach could be improved and our use of a single-item measure may have limited our ability to detect interactive effects in this study. Directions for Future Research There are several areas that need to be addressed in future research on psychological contracts. First, more research needs to examine how the psychological contract is formed. For example, employees may perceive the promises made by supervisors as more binding than those made by recruiters (Turnley & Feldman, 1999b). Thus, they may respond more negatively when breaches arise regarding commitments made by their supervisor than they do when breaches occur regarding commitments made by recruiters. Second, future investigations need to focus on how individual dispositional characteristics influence employees perceptions of and responses to psychological contract breach. For example, individual differences like negative affectivity may be important in determining how likely individuals are to interpret not receiving all they were promised as a violation of the psychological contract. In particular, individuals with high negative affect (who are predisposed to view situations in an unfavorable light) may be more inclined to view small discrepancies in the fulfillment of commitments as violations of the psychological contract. In addition, individual differences like equity sensitivity (Huseman, Hatfield & Miles, 1987) may play an important role in determining employees responses to psychological contract breach. Specifically, entitleds (individuals who have a higher tolerance for exchange relationships in which they receive more than they give) would be expected to respond more negatively to psychological contract breach than benevolents (individuals who have a higher tolerance for exchange relationships in which they give more than they receive).