Psychological contract in relation to individualism and collectivism at an organisational and an individual level

Abstract

Talent retention, organisational commitment and diversity management is a key focus area for organisations’ human resource departments, wanting to compete effectively in the evolving business environment. The psychological contract provides a framework for organisations to acknowledge, understand and manage employee expectations to ensure positive employee attitude and importantly, reduce turnover. However, limited research has attempted to describe the relationship between individual cultural orientation, subcultural membership, organisational culture and the resultant impact on the type of psychological contract. Against this backdrop, this research aimed to determine whether individual cultural orientation in relation to subcultural membership and organisational culture influences the psychological contract. Prior to conducting the quantitative research, current literature was used to determine the cultural and psychological contract constructs that could be used to describe the relationship at an individual and organisational level, which were then incorporated as inputs in the self-administered online questionnaire. 113 respondents from within the medical devices and pharmaceutical industry completed the online survey. Individualism and collectivism at both an individual and organisational level was found to associate with the psychological contract. Irrespective of the cultural orientation, respondents were found to develop psychological contracts which consisted of both transactional and relational content. Collectivism was identified as being a strong predictor in reducing contract violation as well as maintaining the integrity of the psychological contract and thus congruence of individual and organisational collectivism would have the most positive impact on the contract. Subcultural differences were not apparent within the study and thus no inferences could be made. The results of this study assist organisations in better understanding the dynamics of the psychological contract and the role cultural diversity plays in shaping employees expectations