The role of the formal employment contract in the range and fulfilment of the psychological...

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PLEASE SCROLL DOWN FOR ARTICLE This article was downloaded by: [KU Leuven Biomedical Library] On: 25 November 2010 Access details: Access Details: [subscription number 918011597] Publisher Psychology Press Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37- 41 Mortimer Street, London W1T 3JH, UK European Journal of Work and Organizational Psychology Publication details, including instructions for authors and subscription information: http://www.informaworld.com/smpp/title~content=t713684945 The role of the formal employment contract in the range and fulfilment of the psychological contract: Testing a layered model Kerstin Isaksson a ; Nele De Cuyper b ; Claudia Bernhard Oettel c ; Hans De Witte b a Mälardalen University, Västerås, Sweden b University of Leuven, Leuven, Belgium c Stockholm University, Stockholm, Sweden First published on: 09 February 2010 To cite this Article Isaksson, Kerstin , De Cuyper, Nele , Bernhard Oettel, Claudia and De Witte, Hans(2010) 'The role of the formal employment contract in the range and fulfilment of the psychological contract: Testing a layered model', European Journal of Work and Organizational Psychology, 19: 6, 696 — 716, First published on: 09 February 2010 (iFirst) To link to this Article: DOI: 10.1080/13594320903142617 URL: http://dx.doi.org/10.1080/13594320903142617 Full terms and conditions of use: http://www.informaworld.com/terms-and-conditions-of-access.pdf This article may be used for research, teaching and private study purposes. Any substantial or systematic reproduction, re-distribution, re-selling, loan or sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material.

Transcript of The role of the formal employment contract in the range and fulfilment of the psychological...

PLEASE SCROLL DOWN FOR ARTICLE

This article was downloaded by: [KU Leuven Biomedical Library]On: 25 November 2010Access details: Access Details: [subscription number 918011597]Publisher Psychology PressInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

European Journal of Work and Organizational PsychologyPublication details, including instructions for authors and subscription information:http://www.informaworld.com/smpp/title~content=t713684945

The role of the formal employment contract in the range and fulfilment ofthe psychological contract: Testing a layered modelKerstin Isakssona; Nele De Cuyperb; Claudia Bernhard Oettelc; Hans De Witteb

a Mälardalen University, Västerås, Sweden b University of Leuven, Leuven, Belgium c StockholmUniversity, Stockholm, Sweden

First published on: 09 February 2010

To cite this Article Isaksson, Kerstin , De Cuyper, Nele , Bernhard Oettel, Claudia and De Witte, Hans(2010) 'The role ofthe formal employment contract in the range and fulfilment of the psychological contract: Testing a layered model',European Journal of Work and Organizational Psychology, 19: 6, 696 — 716, First published on: 09 February 2010 (iFirst)To link to this Article: DOI: 10.1080/13594320903142617URL: http://dx.doi.org/10.1080/13594320903142617

Full terms and conditions of use: http://www.informaworld.com/terms-and-conditions-of-access.pdf

This article may be used for research, teaching and private study purposes. Any substantial orsystematic reproduction, re-distribution, re-selling, loan or sub-licensing, systematic supply ordistribution in any form to anyone is expressly forbidden.

The publisher does not give any warranty express or implied or make any representation that the contentswill be complete or accurate or up to date. The accuracy of any instructions, formulae and drug dosesshould be independently verified with primary sources. The publisher shall not be liable for any loss,actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directlyor indirectly in connection with or arising out of the use of this material.

The role of the formal employment contract in the range

and fulfilment of the psychological contract: Testing a

layered model

Kerstin IsakssonMalardalen University, Vasteras, Sweden

Nele De CuyperUniversity of Leuven, Leuven, Belgium

Claudia Bernhard OettelStockholm University, Stockholm, Sweden

Hans De WitteUniversity of Leuven, Leuven, Belgium

This study investigates the employment contract (temporary vs. permanent) inrelation to psychological contract content and fulfilment. The psychologicalcontract includes employees’ perceptions of their obligations and theirentitlements. We hypothesize that transactional elements constitute a commoncore that is shared both by temporary and permanent workers. Relationalelements are added to this core to show employees’ and employers’ loyalty, andtheir intentions to do more than necessary. These elements are more likely to beperceived by permanent workers as compared to temporary workers.Additionally, we suggest that relational elements are difficult to fulfil.Accordingly, we expect lower levels of perceived fulfilment for permanentworkers as compared to temporary workers. Based on exchange theory, wefurthermore hypothesize that these perceptions follow a similar pattern in howemployees report entitlements (i.e., what they receive from the company) andreports of their own obligations (i.e., what they give in return). Results based on

Correspondence should be addressed to Kerstin Isaksson, Department of Social Sciences,

Malardalen University, Vasteras S-721 23, Sweden. E-mail: [email protected]

This article is based on data from the PSYCONES project (Psychological Contracts across

Employment Situations), www.uv.es/psycon, and includes partners from Belgium, Germany,

Israel, The Netherlands, the UK, Spain, and Sweden. The study was supported by a grant from

the EU’s Fifth framework programme (HPSE-CT-2002-00121).

EUROPEAN JOURNAL OF WORK AND

ORGANIZATIONAL PSYCHOLOGY

2010, 19 (6), 696–716

� 2010 Psychology Press, an imprint of the Taylor & Francis Group, an Informa business

http://www.psypress.com/ejwop DOI: 10.1080/13594320903142617

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a seven-country sample (Npermanent¼ 3354; Ntemporary¼ 1980) show thatpermanent workers as compared to temporary workers perceive morerelational entitlements and obligations but a similar level of transactionalentitlements and obligations. Thus, these results supported the idea of a layeredmodel. The relationship between contract type and fulfilment of thepsychological contract was only partly in line with expectations. Temporaryworkers reported higher fulfilment of entitlements and transactional obliga-tions, but no difference was found for fulfilment of relational obligations.

Keywords: Employment contract; Entitlements; Model; Obligations;Psychological contract.

During the last decade, a growing body of research has illustrated theimportance of the psychological contract and psychological contract breachor fulfilment in understanding employees’ attitudes and behaviours at work(Conway & Briner, 2005; Robinson & Rousseau, 1994). However, thesestudies have attracted criticism because they remain theoretically under-developed (Conway & Briner, 2002). First, little empirical effort has beenoriented towards clarifying differences between groups of workers in relationto the psychological contract, even though this may advance the developmentof a sound psychological contract theory. In this respect, the specific type ofemployment contract (i.e., temporary vs. permanent) has particularresonance, as it may define the zone of negotiability of the psychologicalcontract and as a consequence, the content of the psychological contract(Rousseau, 1995; Rousseau & Schalk, 2000).

Second, a critical issue in all psychological contract definitions concernsthe notion of reciprocity. For example, McLean Parks, Kidder, andGallagher (1998, p. 697) define the psychological contract as ‘‘theidiosyncratic set of reciprocal expectations held by employees concerningtheir obligations (what they will do for the employer) and their entitlements(what they expect to receive in return)’’. This suggests that the psychologicalcontract is rooted in the tradition of exchange models. However, earlierresearch has mainly focused upon how employees perceive their entitle-ments: It failed to consider employees’ perceptions of both their entitlementsand obligations and their possible interaction.

In response, the present study investigates the role of the formalemployment contract as a potentially important aspect in understandingpsychological contracts at work. In particular, we investigate similaritiesand differences between permanent and temporary workers in their reportsof obligations and entitlements perceived as part of the employmentrelationship. Their evaluation in terms of fulfilment of these obligations andentitlements is also investigated. The particular contribution of this study,compared with earlier studies, lies in the assumption that the psychologicalcontracts of temporary and permanent workers consist of different layers

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instead of distinct types. These different layers follow the transactional–relational dichotomy that is central to most psychological contract studies.Temporary employment is broadly defined, following the Organization forEconomic Co-operation and Development (OECD, 2002, p. 172) definition:‘‘A job may be regarded as temporary if it is understood by both employerand employee that the termination of the job is determined by objectiveconditions such as reaching a certain date, completion of an assignment orreturn of another employee who has been temporarily replaced’’.

THE CONTENT OF THE PSYCHOLOGICALCONTRACT

The content of the psychological contract refers to the concreteterms being part of the perceived exchange relationship (Rousseau &Tijoriwala, 1998). Empirical research has, however, been hampered by thedifficulty to make an exhaustive list of content items, or to select items thattogether reflect the core issues of today’s working life (De Vos, 2002;Kotter, 1973). Most authors have solved this problem by grouping contentitems along the transactional–relational dichotomy. Transactional psycho-logical contracts are characterized by economic, short-term, and specificexchanges, such as pay and performance. They are assumed to be tangible,stable, and publicly available through labour law, job descriptions, and thelike. In contrast, exchange in the relational psychological contract isdynamic and socioemotional rather than economic in nature (Millward &Brewerton, 2000; Rousseau & McLean Parks, 1993). It typicallyincludes job security and loyalty, and other more subjectively understoodexchanges that aim to establish and maintain a long-term employmentrelationship.

Researchers have established substantial evidence for the distinctionbetween transactional and relational psychological contract elements (e.g.,Coyle Shapiro & Kessler, 2000; Millward & Hopkins, 1998; Robinson,Kraatz, & Rousseau, 1994; Rousseau, 1990). However, researchers havefailed to find support for transactional and relational elements as mutuallyexclusive types (Millward & Brewerton, 2000). This implies that there maybe various possible combinations of transactional and relational psycholo-gical contracts. In this respect, most authors suggest that transactionalcontent is conditional for relational content. For example, Rousseau (1995)argues that relational elements may be added to a psychological contractthat was initially transactional in nature. Similarly, McLean Parks et al.(1998) suggest that the economic focus that characterizes transactionalpsychological contracts may yield little variance, as employment relation-ships vary predominantly in the degree to which they also focus onsocioemotional aspects. This interpretation could be described as a layered

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model of psychological contract content: All psychological contracts share acore of transactional exchanges. Relational promises may add to a commonbasis to show employees’ and employers’ intention to do more thannecessary. A layered psychological contract model would lead to variationsin range, in essence in the number of relational exchanges given as a surplusto the transactional core.

Until now, studies suggesting a layered model of psychological contractcontent have largely been speculative or exploratory, possibly because thelayered model has been related to tenure and the development of thepsychological contract over time. However, including the formal type ofemployment contract in the research design may provide an alternative testof the layered model. Previous research has established that differences inthe formal contract (i.e., differences between temporary and permanentworkers) relate to differences in the psychological contract (see, e.g., DeCuyper & De Witte, 2006, 2007; McLean Parks et al., 1998; Millward &Brewerton, 2000), even to the extent that differences in the perceptions ofpromises and commitment are assumed to build on the form employmentcontract. Additional differences will most probably develop over time,which underlines tenure or contract duration as important factors tocontrol for.

According to a layered psychological contract model, permanent workersmay perceive more entitlements than temporary workers, probably becauseof a surplus of relational entitlements. Indeed, van Dyne and Ang (1998)and Isaksson, Josephson, and Vingard (2003) found those on permanent ascompared to temporary employment arrangements to report more entitle-ments. Millward and colleagues (Millward & Brewerton, 2000; Millward &Hopkins, 1998) furthermore established that permanent workers reportmore relational entitlements than temporary workers. This pattern of resultsaligns with assumptions described in the Flexible Firm Model (Atkinson,1984) and Human Capital Theory (Sullivan, 1999). These frameworkssuggest that employers make minimal investments in temporary workers,whereas they invest considerably in a long-term employment relationshipwith permanent workers. Similarly, Human Capital Theory predicts thatemployers are less willing to invest in temporary workers as compared topermanent workers because a return on investment is unlikely (Delsen,1998). This implies that temporary workers may have difficulties in accessingcompany-specific training (Forrier & Sels, 2003; Virtanen, Kivimaki,Virtanen, Elovainio, & Vahtera, 2003) and this, in turn, may jeopardizetheir chances of promotion and long-term employment. Accordingly,temporary workers may have limited possibilities of (re)negotiating orbroadening the content of the psychological contract beyond the minimumrequirements. The broader content of the psychological contract ofpermanent as compared to temporary employees could be expected to

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consist of a larger number of relational promises. Therefore, we hypothesizethe following:

Hypothesis 1a: There will be no differences between temporary andpermanent workers regarding the number of transactional entitlements.Hypothesis 1b: Permanent as compared to temporary workers willreport more relational entitlements.

Ideas related to reciprocal and balanced exchange suggest that permanentworkers may also perceive to have more relational obligations as comparedto temporary workers. Social Exchange Theory (Blau, 1964) suggests thatemployees’ entitlements are matched by a similar level of employees’obligations. This idea was elaborated in studies on balanced psychologicalcontracts. Shore and Barksdale (1998), for example, found that mostpsychological contracts were balanced with regard to obligations andentitlements. Unbalanced psychological contracts were found among only15% of their respondents. Similarly, in their longitudinal study, Robinsonet al. (1994) showed that employees tune their obligations to theirentitlements. Furthermore, employees may be likely to first reportobligations that are required by law and written down in their employmentcontract, such as attendance or respect for company’s rules. These aremostly transactional in nature. Relational obligations may be added on topof these. Altogether, this suggests that employees tend to respond to theorganization on a similar level, i.e., transactional entitlements are exchangedfor transactional obligations, and relational entitlements are exchanged forrelational obligations. Accordingly, our second hypothesis reads as follows:

Hypothesis 2a: There will be no differences between temporary andpermanent workers regarding the number of transactional obligations.Hypothesis 2b: Permanent as compared to temporary workers willreport more relational obligations.

THE FULFILMENT OF THE PSYCHOLOGICALCONTRACT

The evaluation of the psychological contract refers to either a discrepancy ora match between psychological contract content terms and their fulfilment.Specifically, lack of fulfilment or breach refers to the perception thatobligations or entitlements have not been met (Robinson & Rousseau, 1994;Shore & Tetrick, 1994). Most research has concerned breach of employees’entitlements. Guest and Clinton (2005) and McLean Parks et al. (1998)suggest that there is less potential for breach when the psychologicalcontract is highly tangible, as in the case of transactional psychological

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contracts. This argumentation is built upon the assumption that highlytangible deals are less likely to be misunderstood by one of the contractparties. In contrast, relational content is much more open to interpretationand misinterpretation, and hence, relational entitlements may have a lowerlevel of fulfilment. If this proves true, permanent workers as compared totemporary workers would be expected to report lower fulfilment of theirentitlements than temporary workers, as their psychological contractincludes more relational entitlements. Empirical results generally supportthis hypothesis: Guest and colleagues (Guest & Conway, 1998; Guest,Mackenzie-Davey, & Patch, 2003) found indications that temporaryworkers report a better state of the psychological contract as compared topermanent workers. Similarly, Dorenbosch (2000) found permanent work-ers to be lower on fulfilment measures than temporary workers. However, inthese studies, it is unclear to what extent these results can be attributed todifferences in fulfilment of relational rather than transactional entitlements.This is elaborated in our third set of hypotheses:

Hypothesis 3a: There will be no difference between temporary andpermanent workers regarding the fulfilment of transactional entitlements.Hypothesis 3b: Permanent as compared to temporary workers willreport lower fulfilment of relational entitlements.

Few studies have investigated balance and reciprocity in perceptions ofbreach. It could be argued that employees balance psychological contractbreach by the organization either by lowering their own obligations towardsthe organization or by breaching these obligations (e.g., Coyle Shapiro &Kessler, 2002; Robinson et al., 1994). Conway and Briner (2005) report thatbreach by the organization (i.e., breach of employees’ entitlements) isweakly related to poor performance and moderately related to loworganizational commitment. Performance is a crucial aspect of employees’obligations in the transactional psychological contract, whereas organiza-tional commitment may reflect loyalty as a relational content term.Permanent workers are expected to report a larger number of relationalobligations, which are less clear, and hence, more difficult to fulfil. Thissuggests that low fulfilment or breach might be more likely for relationalobligations as compared to transactional obligations. Possibly, the latterassumption could also reflect employees’ fear that breach of transactionalobligations may have detrimental consequences that can be imposed by law.For example, frequent absenteeism may lead to dismissal. These assump-tions are summarized in our fourth set of hypotheses:

Hypothesis 4a: There will be no difference between temporary andpermanent workers regarding the fulfilment of transactional obligations.

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Hypothesis 4b: Permanent as compared to temporary workers willreport lower fulfilment of relational obligations.

Table 1 summarizes the four sets of hypotheses. The layered psycholo-gical contract model is presented in Figure 1.

In all analyses, important background variables which could affect therelationship between employment contracts and psychological contractswere controlled for. Temporary working is an international phenomenonthat is likely to be shaped by national institutional factors. Thus, countryand sector differences could affect not only the conditions of temporaryworkers but also the zone of negotiability of the psychological contract assuggested by Rousseau and Schalk (2000). Finally, country and sectordifferences in the composition of the work force may lead to variation inimportant individual factors such as age, gender, union membership, andeducation. Young workers are more prone to have temporary contracts,which they may use to facilitate entering/leaving the labour market (OECD,2002). Union membership might be related to contract type, as in some

TABLE 1Summary of hypotheses

Transactional Relational

Content (number)

Entitlements H1a: Permanent¼Temporary H1b: Permanent4Temporary

Obligations H2a: Permanent¼Temporary H2b: Permanent4Temporary

Fulfilment (mean)

Entitlements H3a: Permanent¼Temporary H3b: Permanent5Temporary

Obligations H4a: Permanent¼Temporary H4b: Permanent5Temporary

Figure 1. A layered model of psychological contract content and fulfilment.

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countries temporary workers cannot claim full union membership (DeCuyper, Isaksson, & De Witte, 2005). Union and nonunion members mayperhaps differ in their power to negotiate good conditions in the work place.This may influence psychological contract perceptions with regard to jobsecurity, participation, and the like. Women and men could value differentelements of the psychological contract. Education can be used as a proxy forqualification level or occupational position, which is another factor assumedto influence the psychological contract.

These factors will be controlled for in order to rule out alternativeexplanations on the relationship between employment contracts andpsychological contracts (Hatt, 1997; Millward & Brewerton, 2000). Second,contract preference should be controlled for in order to investigate theindependent effect of contract type rather than other contract-relatedfactors. Still today, the majority of the workforce prefers permanent totemporary employment (Aronsson & Goransson, 1999). Hence, it is farmore likely to find permanent employees in the contract they prefer,whereas temporary workers mostly express a desire to gain permanentemployment.

Finally, certain features of the employment relationship, such as weeklyworking hours (Gakovic & Tetrick, 2003) and tenure (Tekleab & Taylor,2003) might affect the psychological contract. As discussed earlier, tenuremight have an important role in shaping psychological contract content. Astenure is generally higher among permanent compared with temporaryworkers, this may overestimate the role of the formal employment contract.Furthermore, the temporary workforce is heterogeneous also with respect totenure. It is not unusual for companies to use repeated fixed-term contractsas a means to control labour costs. As such, a short-term contract mayactually hide long contract duration. In much the same way, workers onfull-time contracts may have more possibilities to negotiate.

METHOD

Procedure

Data come from a large-scale European study, PSYCONES, funded by theEuropean Union’s Fifth Framework program (for more information seewww.uv.es/�psycon). Questionnaire data were collected by research teamsin Sweden, Germany, The Netherlands, Belgium, UK, Spain, and Israelduring 2004. Given our specific research question and in order to establishconsiderable variation in employment contracts, we made a special effort togather data in organizations with a considerable proportion of temporaryworkers (Isaksson, Bernhard, et al., 2003). Furthermore, the design of datacollection aimed at increasing possibilities of generalizing findings. Samples

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in all countries were stratified in order to obtain similar proportions oftemporary and permanent workers in similar occupations. Therefore, wecollected a sample in three sectors: food manufacturing (39%), education(33%), and retail/services (28%). Samples from the seven participatingcountries varied between 600 and 900 persons. In order to collect data, theresearchers either visited the organizations and distributed and collected thequestionnaires or sent the questionnaires to the organizations and they thenmanaged this process. In these cases, questionnaires were returned toresearchers in envelopes sealed by respondents.

Sample

The total sample consisted of 5334 employees. Of this sample, 37% weretemporary, 54% were female, 39% were union members, and the mean agewas 37 years. Mean level of education was 3.75 on a 5-point scale. Averagetenure of the sample was 8 years and average working hours were 35 hoursper week. In terms of position in the workplace, the largest group consistedof ‘‘intermediate white collar workers’’ (29%) followed by ‘‘unskilled bluecollar workers’’ (23%).

The temporary and permanent sample differed on important back-ground variables, except for gender, w2(1, N¼ 5275)¼ 4.44, ns. Temporaryworkers (M¼ 32 years) were on average 8 years younger than permanentworkers (M¼ 40 years), t(5221)¼ 25.16, p5 .001. Furthermore, tempor-ary workers had an average tenure of 5.7 years compared to 8.9 years forpermanent workers, t(5088)¼ 111.07, p5 .001. The temporary sampleincluded somewhat more blue collar workers (20%) as compared to thepermanent sample (13%), w2(1, N¼ 5162)¼ 137.38, p5 .001. On average,temporary workers worked 33 hours per week, and permanent workersworked 36 hours per week, t(5205)¼ 10.95, p5 .001. There was nosignificant difference in level of education, t(1474)¼ 0.18, ns. A largerproportion of permanent workers were union members, 72% comparedto 57% of the temporary employees, w2(1, N¼ 5264)¼ 111.07, p5 .001.

Measures

The questionnaires were developed, translated, and extensively piloted ineach of the participating countries (Isaksson, Bernhard, et al., 2003). Fromthis pilot study, we concluded that most measures worked well in terms ofreliability and validity.

Control variables. We created a set of dummy variables for country andsector,with Israel andRetail as reference groups.Gender (1¼ female; 2¼male)and union membership (1¼ no; 2¼ yes) were dichotomous variables.

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Five levels of education were distinguished (1¼ primary school; 5¼ collegedegree orhigher).Age, tenure (years), andweeklyworkinghours (averagehoursper week) were measured as continuous variables. Finally, contract preferencewas measured with a four-item scale adapted from Ellingson, Gruys, andSackett (1998) and Krausz (personal communication, 2002). Respondentscould express their agreement with each of the items on a 5-point scale(1¼ strongly disagree; 5¼ strongly agree). A sample item is ‘‘My currentcontract is the employment contract that I prefer’’. Reliability equalled .85.

Contract type. Respondents were asked about their specific contracttype. In this study, we contrasted permanent employment (1) with variousforms of temporary or fixed-term employment (0).

Psychological contract content. The content scale of the psychologicalcontract was developed for the purpose of this study, based on factoranalyses of earlier instruments (Schalk, personal communication, 2001),extensive pilot testing leading to some revisions of the scales (Isaksson,Bernhard, et al., 2003). The psychological contract content measuresincluded items related to both employees’ entitlements and employees’obligations. Based on exploratory factor analyses and using items withfactor loadings above 0.60, we constructed two scales for transactional andrelational entitlements (what employees perceive as organizational promisesand commitments) and two scales aiming to measure transactional andrelational obligations (what employees perceive as their promises andcommitments as employees).

For the entitlement scales, employees had to indicate for each entitlementwhether (1) or not (0) it was promised by the organization. The indexmeasuring transactional entitlements was a summary of responses to fiveitems: provide employees a good working atmosphere, ensure fair treatmentby managers and supervisors, help in dealing with problems encounteredoutside work, provide employees with a safe working environment, andprovide an environment free from violence and harassment. These itemsreflect issues related to job content, fair treatment rather than trust, andeconomic incentives, all of which are typically considered as transactional(Conway & Briner, 2005). The minimum score on this scale was 0, themaximum score was 5. Reliability was .84.

A relational entitlements index was based on six items that arecharacteristic for relational content (e.g., including loyalty, promotionopportunities, involvement in organizational practices, concern for employ-ees’ well-being): provide employees with interesting work, provide employ-ees with a job that is challenging, allow employees to participate in decisionmaking, provide employees with a career, provide employees opportunitiesto advance and grow, and improve future employment prospects of the

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employees. By adding up all ‘‘yes’’ responses, this scale could range from 0to 6. Reliability equalled .83.

Similarly, respondents had to indicate for each item on a list ofobligations whether (1) or not (0) it was part of their psychological contract.The transactional obligations scale included four items: ‘‘Have you promisedor committed yourself to: be a good team player, be punctual (prompt),assist others with their work, respect the norms and regulations of thecompany.’’ These items reflect basic requirements such as politeness andcompliance with company rules. This scale ranged from 0 to 4. Reliabilityequalled .82.

The relational obligations scale included five items: Have you promised orcommitted yourself to: go to work even if they don’t feel particularly well,protect your company’s image, show loyalty to the organization, workovertime or extra hours when required, and be polite to customers or thepublic even when they are being rude and unpleasant, These items reflectemployees’ commitment to be loyal and to engage in organizationalcitizenship behaviours, which are clearly relational in nature. Reliabilityequalled .82. Adding all ‘‘yes’’ responses created a scale from 0 to 6.

Psychological contract fulfilment. When answering ‘‘yes’’ to a specificentitlement or obligation, respondents could indicate the extent to whichthis promise was kept by the organization on a scale from 1 (not at all) to 5(totally). We constructed two scales by calculating a mean value ofresponses to the five transactional entitlements to obtain a measure of thefulfilment of transactional entitlements (a¼ .80) and a mean value of the sixrelational entitlement items for the fulfilment of relational entitlements(a¼ .89). Similarly, when answering ‘‘yes’’ to a specific obligation item, aquestion concerning fulfilment of the psychological contract followed: ‘‘Towhat extent have you kept this promise?’’ (1¼ not at all; 5¼ totally). Wecalculated mean values of the fulfilment of transactional obligations (a¼ .73)and of relational obligations (a¼ .80).

A series of confirmatory factor analyses were conducted on the contentscales testing a one-factor solution (all items loading on one factor), a two-factor solution (obligations vs. entitlements), and a four-factor solution(transactional and relational entitlements, transactional and relationalobligations). Results clearly supported the four-factor solution (Table 2),w2(164, N¼ 5275)¼ 2551.70, p5 .001.

Analyses

The hypotheses were tested using regression analyses. The control variableswere entered in two steps, with countries and sectors in the first step,

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followed by the individual characteristics (age, sex education, unionmember, contract preference, working hours, tenure) in the second step.Type of contract was entered in the third step. Listwise deletion of missingvalues was applied with slightly smaller samples as a consequence.Confidence intervals were calculated to check whether possible differenceswere likely to be meaningful. Analyses were performed separately for eachpsychological contract indicator.

RESULTS

Table 3 shows descriptive statistics for all scales and their relationship toemployment contract. The correlation matrix in Table 3 shows severalsignificant correlations in expected directions. For example, there was nosignificant association between employment contract and transactionalentitlements, or between employment contract and transactional obliga-tions. An interesting observation concerned the significant correlationsbetween employees’ reports of perceived entitlements and perceptions ofobligations as employees. Significant correlations could be an indicationthat the norm of reciprocity is in action.

Employees’ entitlements and their fulfilment

Table 4 shows the results of the regression analyses concerning employees’entitlements. Employment contract was not significantly related to thenumber of transactional entitlements: Temporary workers perceived onaverage 3.3 transactional entitlements, and permanent workers perceived onaverage 3.6 transactional entitlements. The beta weight was nonsignificant

TABLE 2Confirmatory factor analyses of psychological contract scales

w2 df p GFI AGFI RMSEA NFI

One-factor model

(all items loading

to a single factor)

13,511.74 170 .000 .66 .58 .13 .63

Two-factor model

(obligations vs.

entitlements)

5,900.68 169 .000 .86 .82 .09 .84

Four-factor model

(transactional

and relational

entitlements;

transactional and

relational obligations)

2,551.70 164 .000 .94 .93 .05 .93

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.11***

.61***

—0–6

3.0

(2.18)

4.

Fulfilm

enttransactionalentitlem

ents

7.11***

.17***

.09***

—1–5

3.8

(0.90)

5.

Fulfilm

entrelationalentitlem

ents

7.05**

.13***

.16***

.61***

—1–5

3.4

(1.03)

6.

Transactionalobligations

.04

.41***

.28***

.03

.02***

—0–4

3.6

(0.96)

7.

Relationalobligations

.10***

.42***

.35***

.02

.02***

.66***

—0–5

3.7

(1.61)

8.

Fulfilm

enttransactionalobligations

7.06***

.04

7.03

.29***

.24***

.05**

.06***

—1–5

4.5

(0.50)

9.

Fulfilm

entrelationalobligations

7.03

.00

7.01

.33***

.28***

.06***

.06***

.58***

1–5

4.4

(0.61)

**p5

.01,***p5

.001.

708

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and the confidence intervals (7.185ß5.12) showed that, even thoughsome differences existed, these were unlikely to be meaningful. Furthermore,results indicated that a significant association between permanent employ-ment and relational entitlements: the psychological contract of permanentworkers (M¼ 3.2) included more relational entitlements than the psycho-logical contract of temporary workers (M¼ 2.5; CI: .175ß5.54). Thissupported our first set of hypotheses.

With regard to the fulfilment of entitlements, we observed a significantnegative association between permanent employment and fulfilment oftransactional and relational entitlements: Permanent workers as comparedto temporary workers reported slightly lower fulfilment on both thetransactional scale (Mpermanent¼ 3.8; Mtemporary¼ 4.0; CI: 7.335ß57.17)and the relational scale (Mpermanent¼ 3.4; Mtemporary¼ 3.5; CI:7. 405 ß5.21). Hypothesis 3a proposed no difference and, hence, wasnot supported. However, Hypothesis 3b was supported.

Furthermore, Table 4 shows that contract preference was particularlyimportant in explaining employees’ entitlements: It was positively related toall entitlements scales. Tenure was negatively related to fulfilment of bothforms of entitlements but not to the range of perceived entitlements.Opposite results were found for weekly working hours—a positiverelationship to number of entitlements but no effect on perceived fulfilment.Country and sector differences explained about 3% of the variance (notshown in Table 4).

TABLE 4Hierarchic regression analyses of employees’ entitlements and their fulfilment

Transactional

entitlements

(H1a)

(n¼ 4684)

Fulfilment

transactional

entitlements

(H3a) (n¼ 4100)

Relational

entitlements

(H1b)

(n¼ 4684)

Fulfilment

relational

entitlements

(H3b)

(n¼ 3800)

Step 2

Age .00 .07*** 7.04 .06***

Male .02 7.01 .06*** 7.02

Education 7.02 .06** .09*** .02

Union member .04 7.02 7.04 .00

Prefer permanent contract .10*** .23*** .09*** .26***

Working hours .06** .00 .14*** .03

Tenure 7.02 7.20*** 7.02 7.12***

Step 3

Permanent contract .01 7.14*** .08*** 7.14***

R2 adj. .06 .09 .09 .11

**p5 .01, ***p5 .001.

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Employees’ obligations and their fulfilment

Table 5 shows the results of the regression analyses concerning employees’obligations. Employment contract was unrelated to the number oftransactional obligations, as predicted in Hypothesis 2a (Mpermanent¼ 3.6;Mtemporary¼ 3.5, CI:7.015ß5.15). In line with Hypothesis 2b, we foundsignificantly higher levels of relational obligations among permanentemployees compared to temporary workers (Mpermanent¼ 3.8; Mtemporary¼3.4, CI:7.135ß5.40).

Differences related to employment contract were found on the fulfilment oftransactional obligations which was not proposed in Hypothesis 4a.Temporary workers had slightly and significantly higher values (Mpermanent¼4.5; Mtemporary¼ 4.4, CI:7.135ß57.04). On the fulfilment of relationalobligations, however, differenceswere not significant, with temporaryworkersand permanent workers scoring on average 4.4 (CI:7.085ß5.03). Hence,we did not find support for Hypotheses 4a and 4b.

Various control variables added in explaining employees’ obligations andtheir fulfilment. The pattern was slightly different for obligations comparedto entitlements. Here, contract preference had no significant effect.However, there was a positive association between weekly working hoursand the number of obligations reported. Fulfilment was negatively related totenure indicating that employees who had shorter tenure reported higherlevels of fulfilment. Older employees appeared to report generally higher

TABLE 5Hierarchic regression analyses of employees’ obligations and their fulfilment

Transactional

obligations (H2a)

(n¼ 4684)

Fulfilment

transactional

obligations

(H4a)

(n¼ 4532)

Relational

obligations

(H2b)

(n¼ 4683)

Fulfilment

relational

obligations

(H4b)

(n¼ 4339)

Step 2

Age 7.02 .11*** .05** .10***

Male 7.03 7.09*** 7.03 7.04

Education 7.02 7.06*** .00 .09***

Union member .05** 7.01 .01 7.01

Prefer permanent contract .00 .04 7.02 .06***

Working hours .05** 7.02 .06*** .05**

Tenure .02 7.10*** .03 7.11***

Step 3

Permanent contract .04 7.08*** .08*** 7.03

R2 adj. .05 .08 .11 .07

**p5 .01, ***p5 .001.

710 ISAKSSON ET AL.

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levels of fulfilment of both types of obligations. This age effect was also seenfor entitlements in Table 4. Finally, country and sector differencesintroduced in the first step of the analyses which was not shown in Table 5,explained about 3–5% of variation.

DISCUSSION

In line with the layered model of psychological contract content, permanentemployees reported a wider range of entitlements as compared to temporaryworkers. In particular, permanent workers reported a similar number oftransactional entitlements (Hypothesis 1a), but a higher number ofrelational entitlements (Hypothesis 1b). Contrary to Hypothesis 3a, but inline with Hypothesis 3b, temporary workers reported higher fulfilment ofboth transactional and relational entitlements. A similar pattern of resultswas found with regard to predictors of employees’ obligations. Contracttype was not associated with the number of transactional obligations(Hypothesis 2a). However, there was a positive association betweenpermanent employment and the number of relational obligations (Hypoth-esis 2b). Furthermore, contract type added in explaining variance in thefulfilment of transactional obligations, which was not in line withHypothesis 4a. Employment contract was not significantly related tofulfilment of relational (Hypothesis 4b) obligations; hence, this hypothesiswas also not supported. In summary, the idea of a layered model ofpsychological contract largely fits the results on the content of thepsychological contract, for perceived entitlements as well as obligations:thus, it appears that temporary workers and permanent workers share a setof transactional entitlements and obligations, whereas permanent workersperceive more relational entitlements and obligations.

As for the fulfilment of the psychological contract, however, we foundsome tendencies in the expected direction but only one of the fourhypotheses was supported. The general pattern indicated that temporaryworkers had higher reports of fulfilment than permanent workers. Anexception was the fulfilment of relational obligations, where we did notestablish differences between temporary and permanent workers. Instead,we consistently found that shorter tenure in the company was related tohigher reports of perceived fulfilment of both promises and obligations.

These findings may add to the theoretical and methodological debate thatexists in the psychological contract literature: In line with earlier research wefound that permanent employees reported a larger number of entitlementsand obligations than temporary workers (Guest & Clinton, 2005). Thefinding that temporary workers seem to perceive their psychologicalcontracts as more transactional than relational compared to permanentworkers (Millward & Hopkins, 1998) does not contradict the idea of a

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layered model. Instead of different types of psychological contract, thelayered model suggests that the psychological contract develops from a setof transactional entitlements, while relational entitlements are added toshow the organization’s intention to establish a different sort of employmentrelationship with a wider content, as in the case of permanent employment.Our results furthermore suggested that contract duration or tenure may notbe as important a decisive factor to explain these findings: Tenure wasunrelated to the number of promises reported. Instead, formal contract wasimportant, together with presence in the workplace in terms of weeklyworking hours and more subjective indicators such as voluntary choice ofthe employment contract. We realize, however, that there may be otherimportant characteristics implied in the contract, such as period of notice orjob security, for example, that we did not include in the present study. Mostimportant perhaps is that our results suggested that measurements of thepsychological contract should focus on relational entitlements to describethe variety in contemporary employment relationships.

However, results on fulfilment of employees’ entitlements did only partlysupport the layered model: Temporary workers as compared to permanentworkers reported higher fulfilment of both transactional and relationalentitlements, and not, as hypothesized, only the latter. There may be variousexplanations for the higher levels of fulfilment of transactional entitlements.First, temporary contracts are by definition relative newcomers in theworkplace, which means that they may get more feedback from supervisorsthan the permanent workers with longer experience. It might also be eitherthat breaches did not occur during this time, or that potential breaches werenot noticed or evaluated as such, possibly because temporary workers stillanticipate fulfilment of specific entitlements in the future. Finally, previousresearch established that temporary workers receive less information ontheir working conditions (Aronsson & Goransson, 1999), and they are lesslikely to join a union (OECD, 2002). Accordingly, they might be unaware ofpotential breaches, or breaches may be less salient to them. This could alsohelp to explain why temporary workers as expected had higher levels on thefulfilment of relational entitlements.

Finally, our results supported an exchange perspective of the employmentrelationship, as is evidenced in the similar effects of employment contract inpredicting psychological contract indicators related to employees’ entitle-ments and obligations. Temporary workers and permanent workersreported similar numbers of both transactional entitlements and obligations,and permanent workers had higher levels of both perceived relationalentitlements and obligations.

As for fulfilment of obligations, hypotheses were not supported:Temporary workers reported higher levels of fulfilment on transactionalobligations and no difference was found for relational obligations.

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Generally, mean differences were small and reports of fulfilment were higherfor employees’ obligations. It is likely that respondents tended to display apositive bias towards the fulfilment of obligations. Employees do not easilyperceive breaches of their own promises (Coyle-Shapiro & Kessler, 2000;Rousseau & Tijoriwala, 1996). This aligns with definitions on the evaluationof the psychological contract, which rarely identify the employee as aviolator of the psychological contract. Hence, our results identify thepsychological contract as being characterized by balance in terms of thecontent as previously argued by Robinson and Morrison (2004) and generalsupport for the layered model regarding content but not fulfilment. The roleof tenure may be more critical than the formal employment contract when itcomes to evaluation of the psychological contract.

Limitations and implications for future research

Perhaps the most important study limitation was the cross-sectional natureof the data. We could not investigate whether employees’ perceptions oftheir entitlements possibly influenced their obligations or vice versa, or howthe psychological contract developed over time. For this specific study, alongitudinal design was, however, difficult to establish because of the highturnover among temporary workers. Furthermore, we included tenure tohave at least some idea on the importance of time for the development of thepsychological contract. Still, a longitudinal design might be an importantavenue for future research.

Second, in this study we have measured intraindividual self-reports forboth employees’ obligations and their entitlements, in line with thepsychological contract definition by McLean Parks et al. (1998), and inorder to analyse the perceptions of exchange and balance. However, itwould also be interesting to compare our results to actual balance andexchange by including the employer’s perceptions of organizationalpromises in future research.

Third, we focused on the employment contract as perhaps the mostimportant antecedent of psychological contract content and its fulfilment.Our results, however, suggested that other aspects such as contractpreference might be equally important in predicting employees’ entitlements.An interesting observation was that individual demographics appeared toexplain little variance in the psychological contract indicators, especiallywhen number of promises was concerned. Possible, the inclusion of countryand sector as control variables may have played a role here. A possibleinterpretation is that spurious effects of individual factors appear in sampleswhere temporary workers in different sectors are included, without addingsector as a control. Further investigation of country and sector effects wasout of scope for this article but clearly needs to be analysed and investigated

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in more depth. Moreover, the relatively low level of variance explained byindividual and contract factors in our study suggested that other potentiallyimportant antecedents such as human resource practices (Conway & Briner,2005) could be fruitful to include.

CONCLUDING REMARKS

In this study, a layered model of psychological contract content wasadvanced. The most important conclusion from our research was that thismodel seemed to be valuable in explaining employees’ perceptions of thecontent of their psychological contracts: Psychological contracts seem toshare a set of transactional promises, and relational elements are added tothis core in case of permanent employment. The model did not hold andcould not explain results on psychological contract fulfilment, however.Future research may want to further investigate these mechanisms, and toidentify possible important antecedents to further theoretical knowledge onpsychological contracts. Another potentially useful avenue for futureresearch concerns the question of what constitutes a good psychologicalcontract: We established that permanent workers as compared to temporaryworkers have a broader psychological contract in terms of entitlements andobligations, whereas fulfilment is higher among temporary workers. Ourstudy did not give a decisive answer, however, on how these results relate topsychological outcomes that are relevant for both the organization (e.g.,performance, sick leave) and the employee (e.g., job satisfaction, well-being).This is yet another opportunity for future research.

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