antecedents and consequences of psychological contracts - does organizational culture really matter(

Antecedents and consequences of psychological contracts:Does organizational culture really matter?

Orlando C.Richard a,?,Amy McMillan-Capehart b,1,Shahid N.Bhuian c,2,Edward C.Taylor d,3

a University of Texas at Dallas,School of Management,Box830688,JO.5.1,Richardson,Texas75083

b East Carolina University,College of Business,3124Bate Building,Greenville,NC27858

c Louisiana Tech University,College of Administration an

d Business P.O.Box10318Ruston,LA71272

d Piedmont College,School of Business,Camp Hall#221,Demorest,GA30535

A B S T R A C T

A R T I C L E I N F O

Article history: Received21May2006 Accepted22April2008 Available online xxxx

Keywords: Psychological contracts Relational contracts Transactional contracts Organizational culture Clan culture

Hierarchy culture Affective commitment Yearly earnings Exploring the role of psychological contracts,this study proposes that different organizational cultures are associated with relational psychological contracts compared to transactional contracts while both types of contracts serve as mediators.While clan cultures positively impact relational contracts and are negatively associated with transactional contracts,hierarchical cultures have the reverse effect.In addition, psychological contract types mediate the two culture types'relationship to both organizational commitment and employee yearly earnings.In sum,clan cultures relate to more positive organizational outcomes than hierarchical cultures,a?nding which as implications for future research and practice.

Published by Elsevier Inc.

The relationship between employees and their organizations has often been described as an exchange relationship.As such,the psychological contract provides an explanatory framework for under-standing employee-organizational linkages(McFarlane Shore and Tetrick,1994).Little contribution has been made regarding ante-cedents to psychological contracts(Kickul and Liao-Troth,2003;Raja et al.,2004)and in general research examining the organization's role in psychological contracts has been overlooked.Guest suggests that there are“potentially interesting questions about the role of the social construction of exchange relationships,the in?uence of organizational culture and climate…”(1998:658).We attempt to?ll these voids by examining the role of psychological contracts as a mediator of the organizational culture to affective commitment and employee yearly earnings relationship.

Current research is necessary to uncover more information about the antecedents and consequences of psychological contracts.Guest(1998)calls for research that focus on creating a model of the positive psychological contract process and in particular he suggests that such a model should be based on not only social exchange theory but transaction cost economics.Psychological contract research is often based on the basic tenets of social exchange theory.However,we believe that transaction cost analysis also provides support for the creation of such a model.In particular,social exchange theory(SET)emphasizes interactions that have the potential to generate high-quality relation-ships under certain circumstances(Cropanzano and Mitchell,2005). Transaction costs are de?ned as“any activity which is engaged in to satisfy each party to an exchange that the value given and received is in accord with his or her expectations”(Ouchi,1980:13).Transaction cost analysis(TCA)highlights three modes that govern exchanges:markets, bureaucracies,and clans(Ouchi,1980).These two theories,social exchange theory(SET),transaction cost theory(TCA)provide the foundation for our hypotheses.

Our research focuses on the relationships between organizational culture,psychological contracts,and organizational commitment.We hypothesize that psychological contracts mediate the relationship between organizational culture and affective organizational commit-ment as well as employee salary.In particular,we will draw from SET and TCA,including Ouchi's ideas about hierarchies and clans,as well as from Quinn's Competing Values Model(CVM)to support our hypotheses.

Journal of Business Research xxx(2008)xxx-xxx

?Corresponding author.Tel.:+19728834073;fax:+19728832799.

E-mail addresses:pretty@https://www.sodocs.net/doc/ff19046390.html,(O.C.Richard),mcmillancapeharta@https://www.sodocs.net/doc/ff19046390.html, (A.McMillan-Capehart),sbhuian@https://www.sodocs.net/doc/ff19046390.html,(S.N.Bhuian),etaylor@https://www.sodocs.net/doc/ff19046390.html, (E.C.Taylor).

1Tel.:+12523285337;fax:+12523284094.

2Tel.:+13182573580;fax:+13182574253.

3Tel.:+17067788500x1304.

JBR-06609;No of Pages8

0148-2963/$–see front matter.Published by Elsevier Inc. doi:10.1016/j.jbusres.2008.04.001Contents lists available at ScienceDirect

Journal of Business Research ARTICLE IN PRESS

1.Culture,contracts,and commitment

There have been many de?nitions of psychological contracts put forth in the literature.In fact,a special issue of the Journal of Organizational Behavior just a decade ago was devoted to this topic. Based on work by Rousseau&Tijoriwala(1998)and Guest&Conway (2002),we de?ne psychological contracts as a set of reciprocal obligations or promises related to the employment relationship between an organization and an individual.“…by de?nition,a psychological contract is an individual perception”(Rousseau& Tijoriwala,1998;680).“The primary focus of the psychological contract is therefore the employment relationship at the individual level,between the employer and employee”(Guest&Conway,2002; 545).

Two distinct types of psychological contracts have been identi?ed(Rousseau,1990).Principal factor analysis indicates there are two separate factors:transactional and relational contracts(Raja et al.,2004).Transactional contracts involve speci?c economic exchanges between the employer and employee.These contracts take place within a speci?ed time period,usually with a short time orientation.Transactional contracts are often narrow in scope and de?nition(Rousseau,1990).In addition,these contracts involve limited connection between the employee and employer (Raja et al.,2004).Relational contracts,on the other hand,are often based on non-economic/socio-emotional exchanges.They are open-ended and do not cover any speci?ed time period.In addition, relational contracts may change over time with a broad scope and de?nition(Rousseau,1990).Relational contracts revolve around trust,respect,and loyalty(De Meuse et al.,2001).It is important to note that while the promissory beliefs involved in transactional contracts are indeed a part of work in general;they are limited to these exchanges.Relational contracts may include economic exchanges but they also move beyond them to other non-economic promissory beliefs.Surprisingly,scholars have not given much attention to antecedents for the two,very different,types of psychological contracts.The next section stresses the relevance of organizational culture.

There have also been many de?nitions of organizational culture presented over the years.We de?ne organizational culture as“the pattern of shared values and beliefs that help individuals understand organizational functioning and thus provides them with norms for behavior in the?rm”(Deshpande and Webster,1989:4).Quinn and colleagues'Competing Values Model is presented as the framework with which we will examine the organizational culture relationships presented in this study.Furthermore,we present our discussion of organizational culture within the competing values typologies created by Deshpande,Farley,and Webster(2000).

In particular,we focus on hierarchical and clan cultures as de?ned in the Competing Values Model.This model has been extensively studied and found to be a useful tool in differentiating organizations based on culture.We focus on these culture types because of their internal orientation and their more powerful effect on organization–employee relationships.Hierarchical cultures are characterized as being held together by formal rules and policies.They emphasize procedures and structure.Interactions are subjected to careful scrutiny,evaluation,and direction.Business effectiveness is charac-terized by consistency and control(Deshpande and Webster,1989).In addition,hierarchical cultures are not very adaptive and are resistant to change.Clan cultures emphasize cohesiveness,participation,and team work(Deshpande and Webster,1989).Clan cultures encourage horizontal communications and human relations.There is less emphasis on formal coordination and controlled decision making. Organizational members in clan cultures are focused on tradition and loyalty.It is important to point out that while these two cultural types appear on opposite ends of a continuum,organizations may contain characteristics of https://www.sodocs.net/doc/ff19046390.html,anizational culture and affective commitment

Previous research has examined the relationship between organi-zational culture and employee attitudes(e.g.,Cameron and Freeman, 1991;Goodman et al.,2001;Quinn and Spreitzer,1991;Zammuto and Krakower,1991).Results suggest that organizational culture does indeed have an impact on employee attitudes such as job satisfaction, organizational commitment,turnover intentions,and morale.For example,McKinnon,Harrison,Chow,&Wu(2003)examined organizational culture and commitment.They found that organiza-tional cultures based on respect for people,team orientation,and innovations were related to affective responses such as organizational commitment,job satisfaction,and propensity to stay.These values are characteristic of a clan culture.It makes sense that employees that feel appreciated,respected,and treated like family would be highly committed to the organization.Lok&Crawford(2001)also found that organizational culture was predictive of commitment in a study of hospital nurses.In particular,clan cultures are positively related to organizational commitment while hierarchical cultures are negatively related to organizational commitment(Goodman et al.,2001).We attempt to replicate the previous studies by presenting the following hypotheses.However,realizing that replication contributes to but not extends theory,we introduce a key objective criterion,yearly earnings, that most employees would consider an essential.We propose that organizational culture impacts not only individual level psychological constructs such as organizational commitment but also has implica-tions for the reward system.A setting that places people at the forefront and is based on human relations such as the clan culture is more likely to invest in their employees as re?ected in compensation. Consistent with TCT,hierarchical cultures provide a great deal of emphasis on cost reduction and ef?ciency.Thus,we propose such a culture will offer lower compensation.We propose that the clan culture which focuses on respect and relationship while also considering the economic exchange will reward their employees more than a hierarchical culture.We hope that the addition of yearly earnings as an important dependent measure and organizational behavior construct will stimulate future research on actual yearly salary.

Hypothesis1a.Hierarchical organizational cultures are negatively related to affective organizational commitment.

Hypothesis1b.Hierarchical organizational cultures are negatively related to yearly earnings.

Hypothesis2a.Clan cultures are positively related to affective organizational commitment.

Hypothesis2b.Clan cultures are positively related to yearly earnings.

https://www.sodocs.net/doc/ff19046390.html,anizational culture and psychological contracts

Schein(1980)described the psychological contract as an exchange relationship between the employee and the organization.SET proposes that perceptions of the psychological contract are often contingent on the actions of another person,or in this case,the organization(Blau,1964).In fact,the psychological contract provides a useful framework to explore the relationship between the organiza-tion and employee attitudes and behaviors(Sturges et al.,2005).The psychological contract is in fact,“an individual's belief regarding the terms and conditions of a reciprocal exchange agreement between the focal person and another party”(Rousseau,1989;123).

Guest's(1998)proposed model of the psychological contract includes several organizational antecedents,including organizational culture,that have yet to be examined.Based on this model,we suggest that organizational culture plays a vital role in the creation of the psychological contract.For example,both employees and organiza-tions are responsible for carrying out the contract.The organization

2O.C.Richard et al./Journal of Business Research xxx(2008)xxx-xxx

therefore,has a role in creating and in?uencing the psychological contract.This role may center on the organization's culture.There are multiple sources which in?uence the development and modi?cation of psychological contracts(Levinson,1962).The exchange relationship implies that the organization,through its culture,can in?uence an employee's perception of the psychological contract.In addition, Kickul and Liao-Troth(2003)found that the psychological contract is formed by the organization's culture.

1.2.1.Hierarchical cultures

Organizational cultures based on hierarchies rely on the use of legitimate authority to achieve performance goals.The foundation of the hierarchical culture is the dependent relationship between subordinates and their https://www.sodocs.net/doc/ff19046390.html,anizations focus on control over employees through the use of monitoring and the implementa-tion of rules and standard operating procedures(Ouchi and Price, 1993).In addition,TCA suggests that hierarchies create a dependent relationship on employees.This dependence upon managers to direct and evaluate work may have a direct relationship on the type of psychological contract that is developed.

Hierarchical cultures encourage perceptions of a transactional psychological contract.Transactional contracts provide clear bound-aries for both employees and organizations(Anderson and Schalk, 1998)that seem more consistent with hierarchical organizational cultures.The various characteristics of transactional contracts are supported by the hierarchical organizational culture.For example, transactional contracts are focused on speci?c employee levels of responsibility,specialized workload,narrow span of control,and limited range of duties(Maguire,2002).These employee contribu-tions are often determined by the hierarchy of the organization. Speci?cally,TCA proposes that if employees are left to their own devices and allowed to have autonomy in the workplace,then chaos would result(Ouchi and Price,1993).The organization is responsible for providing the following in exchange for the employees' contributions:appropriate level of rewards,working conditions, and opportunity to demonstrate competence(Maguire,2002).It is worth restating that while transactional contracts involve the generally accepted exchanges included in most jobs in general,the relational contracts extend beyond these exchanges to include a broader range of promissory beliefs.These organizational attributes are often based on the culture,in particular,a hierarchical culture that is indeed consistent with a transactional as opposed to relational contract.

In contrast to the relationship between hierarchical cultures and transactional contracts,we believe there will be a negative relation-ship between a hierarchical culture and relational contracts.The hierarchical culture does not promote the level of autonomy and trust that are an integral part of relational contracts.Hierarchical cultures are not very concerned with creating and maintaining supportive employee relationships.These relationships are an important aspect of relational contracts.The main goals and objectives of a hierarchical culture are therefore in direct contra-diction to the goals and objectives of relational contracts.As such,we present the following hypotheses:

Hypothesis 3.Hierarchical organizational cultures are positively related to transactional psychological contracts.

Hypothesis 4.Hierarchical organizational cultures are negatively related to relational psychological contracts.

1.2.2.Clan culture

Organizational cultures based on the clan concept are focused on supportive work environments.Employees are treated like family and individual interests are superseded by the organization's interests.In addition,the commitment of organizational members is ensured through participation.(Deshpande and Webster,1989).

Clan cultures encourage perceptions of a relational psychological contract.Employees agree to contribute loyalty,trust,and continued membership while the organization provides competent manage-ment,participation,and a sense of belonging(Maguire,2002).These contributions,on both sides of the contract are more likely to occur in a clan culture.In addition,Maguire(2002)found that organizational culture and human resource management policies were strong elements in the development of a relational psychological contract. We attempt to extend his study and suggest that clan cultures,in particular,are necessary in creating a relational psychological contract but not a transactional contract.

In contrast to the relationship between clan cultures and relational contracts,we believe there will be a negative relationship between a clan culture and transactional contracts.In particular,transactional contracts involve promissory beliefs that are limited in scope.For example,employees that perceive transactional contracts are focused on economic exchanges.Clan cultures on the other hand are based on social and emotional needs of employees.The perceptions of economic exchanges consistent with transactional contrasts are in direct contrast to the socially and emotionally based clan culture.As such,we present the following hypotheses:

Hypothesis5.Clan organizational cultures are positively related to relational psychological contracts.

Hypothesis6.Clan organizational cultures are negatively related to transactional psychological contracts.

1.3.Psychological contracts and consequences

Previous research has proven that there is a signi?cant relationship between psychological contracts and organizational commitment (Millward and Hopkins,1998;Raja et al.,2004;Rousseau,1990).In particular,Rousseau(1990)found that employees'perceptions of relational contracts were more committed to being loyal and maintaining a long-term employment relationship.In addition, Millward and Hopkins(1998)extended Rousseau's research and found that both job and organizational commitment are related psychological contracts.In particular,organizational commitment was negatively related to transactional contracts.Relational contracts have been shown to be positively related to organizational commitment.

Once again,we include yearly earnings a key objective criterion. We believe that most employees would consider an essential factor. Yearly earnings may be impacted by a variety of factors such as age, years of schooling,market experience,and occupation.In particular, Bowles,Gintis,and Osborne(2001)suggest that there is still much variance left unexplained in the individual earnings of employees. Although exploratory in nature,we believe a case can be made that psychological contract types impact individual earnings differently. Organizations that seek to nurture a long-term relationship(relational psychological contracts)compared to short term(transactional psychological contracts)with their employees are more likely to offer higher compensation to help sustain trust and loyalty.Our hypotheses regarding psychological contracts and yearly earnings are based on logical assumptions stemming from previous de?nitions and discussion.Therefore,we offer the following hypotheses. Hypothesis7a.Relational psychological contracts are positively related to affective organizational commitment.

Hypothesis7b.Relational psychological contracts are positively related to yearly earnings.

Hypothesis8a.Transactional psychological contracts are negatively related to affective organizational commitment.

Hypothesis8b.Transactional psychological contracts are negatively related to yearly earnings.

3

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1.4.Psychological contracts as a mediator

We have hypothesized that both organizational culture(i.e.,hierar-chical and clan cultures)as well as psychological contracts(i.e.,rela-tional and transactional)are antecedents of organizational(affective organizational commitment)and personal outcomes(yearly earn-ings).However,Guest's(1998)proposed model includes several organizational antecedents to psychological contract development, including organizational culture.Based on this model,we suggest that organizational cultures also play a pivotal role in the determination of psychological contract type.In other words,organizational culture acts as an exogenous construct of psychological contracts.Taken together,we expect organizational culture to have both direct effects on the dependent variables and indirect effects through its impact on psychological contracts.

Hypothesis9a.Relational contracts mediate the relationship between Hierarchy culture and affective commitment.

Hypothesis9b.Relational contracts mediate the relationship between Hierarchy culture and yearly earnings.

Hypothesis10a.Transaction contracts mediate the relationship between Hierarchy culture and affective commitment.

Hypothesis10b.Transactional contracts mediate the relationship between Hierarchy culture and yearly earnings.

Hypothesis11a.Relational contracts mediate the relationship between Clan culture and affective commitment.

Hypothesis11b.Relational contracts mediate the relationship between Clan culture and yearly earnings.

Hypothesis12a.Transactional contracts mediate the relationship between Clan culture and affective commitment.

Hypothesis12b.Transactional contracts mediate the relationship between Clan culture and yearly earnings.

2.Methodology

2.1.Setting and data collection

We tested the hypotheses using data collected from employees of numerous organizations in the metro Atlanta area.Since our research questions focused on aspects of organizational culture, we selected a research design that would span as many organiza-tions as possible thereby maximizing the variance on variables such as organizational culture.We elected to distribute surveys through two MBA classes of about twenty students each with instructions that they?nd respondents who do not share the same boss.In this way,we avoided inadvertent nesting when the survey design was executed.Multiple responses by subordinates of the same boss would require that we account for variance both within groups and between groups.Our survey distribution method produced a data set that may have as many as twenty responses from a single business organization but no more than one response per boss within those businesses.Two-hundred?fty surveys were distrib-uted,220were returned and10were discarded due to incomplete data.Twenty variables were randomly selected as a test for monotonic responses—another form of non-response.These survey items were then scanned for the same response,if all twenty were equal to the same value then the survey was manually scanned for monotonic responses.Ten surveys were discarded as a result of this procedure.This left a data set with an N of200.Of the respondents 67%were over2525years old,90%of the respondents were Caucasian;54%were male,and the average yearly earnings were $35,500.2.2.Measures

2.2.1.Dependent measures

Affective commitment was measured using?ve items adapted from Meyer,Allen,and Smith(1993).Yearly-earnings appears as a continuous random variable.

2.2.2.Independent measures

Organizational culture was measured using the Competing Values Scale developed by Quinn and his colleagues(c.f.,Cameron and Quinn, 1999;Quinn,1988;Hall and Quinn,1983;Kimberly and Quinn,1984; Quinn and Rohrbaugh,1983;Quinn and Spreitzer,1991).The scale identi?es the relative in?uence of four culture types that comprise a ?rm's organizational culture.Likert-type items scored on a7-point scale ranging from“1=strongly disagree”to“7=strongly agree”comprised the scale.This scale has been widely used in previous research and acceptable levels of reliability and validity have been reported across numerous studies(Cameron and Quinn,1999;Quinn and Spreitzer,1991).In this study we use the clan(4items)and the hierarchy culture(3items).Based on Raja,Johns,and Ntalianis,(2004) we use nine relational contract items and nine transactional items.

2.2.

3.Non-response bias and common method bias

Non-response bias was tested by comparing the responses of the early respondents with the late respondents(Armstrong and Overton, 1977).All multivariate tests were nonsigni?cant:Pillai's Trace(Sig.= 0.285),Wilks'Lambda(Sig.=0.285),Hotelling's Trace(Sig.=0.285)and Roy's Largest Root(Sig.=0.285).Therefore,non-response bias was not a concern.Further,following Podsakoff and Organ(1986),Harman's one factor test was conducted where all survey variables were entered into a factor analysis.Not a single factor emerged nor was there a general factor that accounted for the majority of the covariance in these variables(8factors emerged;variance explained by?rst,second, and third factors were16%,11%,and10%respectively;each of the rest of the factors explained from9%to5%variance).Thus,common method bias was not a threat in this study.

2.2.4.Control measures

We measured negative affectivity using Tyler's(1994)method.For negative affect,we asked the respondents to indicate to what extent they had emotionally felt:distressed?;upset?;afraid?;jittery?; ashamed?;hostile?;nervous?Sex was dichotomized as male and female and not as gender which might be subject to more than one interpretation.Age was categorized into?ve year increments ranging from normal age of entry into the workplace to retirement;this https://www.sodocs.net/doc/ff19046390.html,cation categories were designed to capture high school dropouts,high school graduates,college attendees, college graduates,master's level graduates and doctoral degrees.“Years of experience”was entered as a continuous random variable.

3.Results

3.1.Measurement model,unidemensionality,and convergent and discriminant validity

Table1shows means,standard deviations,intercorrelations,and reliability coef?cients for all study variables.Table2and Fig.1show the results.

Our measurement model had6multi-item constructs with 38items and5single-item variables.Given our small sample size, there was a concern about the number of parameters to sample size ratio.Thus we clustered items,also known as parceling technique, within each construct to reduce the number of items based on conceptual closeness of the items and the nearness of factor loadings generated from the exploratory factor analysis.This process reduced the number of items to19:hierarchy culture(2items),clan culture

4O.C.Richard et al./Journal of Business Research xxx(2008)xxx-xxx

(3items),relations contract (5items),transactions contract (3items),affective commitment (3items),and negative affectivity (3items).The CFA was run with these six multi-item constructs.The model produced a reasonable ?t:χ2=217.021,df =137,GFI =0.901,AGFI=0.885,CFI=0.956,RMSEA=0.052,and PCLOSE=0.581.The GFI and CFI exceeded the .90standard for model ?t.The RMSEA of .052is within .08representing a reasonable ?t.

Also,Cronbach alpha (ranged from .73to .86),average variance extracted (AVE)(ranged from .77to .93)and composite reliability (ranged from .91to .99)provided evidences of internal consistency (see Table 1).Average variance extracted and composite reliability are estimates of internal consistency in SEM analogous to coef ?cient alpha.Further,for each scale,we performed a CFA to assess whether the one-factor model adequately accounted for the covariances among the subset of items for each construct.In each case,a single-factor measurement model had an acceptable ?t,i.e.,GFI N .90,CFI N .90,which implied that the measures were unidimensional (Gerbing and Anderson,1988).

The convergent validity of the scales was supported because all the estimated coef ?cients of all the indicants were signi ?cant (t N 2.0)and ranged from 2.9to 16.0(Anderson and Gerbing,1988).In addition,no con ?dence intervals of the correlations for the constructs (Φvalues)included 1.0(p b 0.05),which supported the presence of discriminant validity (Anderson and Gerbing,1988).

Table 1

Descriptive statistics,correlations,and reliability estimates

1

234567891011

1.Hierarchy Culture

2.Clan culture

.284a 3.Relational contract ?.317a .700a 4.Transaction contract .299a ?.089.186a 5.Affective commitment ?.109c .586a .729a ?.268a 6.Negative affectivity .160b ?.168b ?.221a .218a ?.225a 7.Yearly earnings ?.155b .033.161b .420a .164b ?.1198.Age

?.173b ?.110?.066?.290a .040?.273a .414a https://www.sodocs.net/doc/ff19046390.html,cation .127c .026.117?.092.108?.003.278a ?.103c 10.Sex

.127c .185b .128c .105.131c ?.202a ?.186a .051.04111.Years of experience ?.178b ?.089?.007?.290a .083?.252a .409a .880a ?.129b ?.067Mean

3.27 3.43 3.58 2.45 3.47 2.1435532 3.46 3.33 1.461

4.0Standard deviation .91.84.82.61.94.7826561

2.50

.90

.50

11

Cronbach alphas

.73.81.78.75.86.81Average variance extracted (AVE)0.870.810.770.880.910.93Composite reliability (CR)

0.91

0.95

0.96

0.96

0.99

0.98

a Correlation is signi ?cant at the 0.01level.b

Correlation is signi ?cant at the 0.05level.c

Correlation is signi ?cant at the .10level.

Table 2

Path Coef ?cients (Mediated Model)Hypotheses/paths

βs t p Model ?Comments

H1a :Hierarchy culture -N affective commitment ?.307?1.6330.063Model 1Supported (p b .10)

H1b :Hierarchy culture -N yearly earnings ?.429?2.5770.010Model 1Not supported but signi ?cant H2a :Clan culture -N affective commitment .8607.4010.000Model 1Supported H2b :Clan culture -N yearly earnings

.379 2.7850.005Model 1Supported H3:Hierarchy culture -N transaction contract .687 4.6270.000Model 3Supported H4:Hierarchy culture -N relational contract ?.491?2.7860.037Model 3Supported H5:Clan culture -N relational contract .9278.2040.000Model 3Supported H6:Clan culture -N transactional contract

?.738?4.9680.000Model 3Supported H7a :Relational contract -N affective commitment .529 2.8950.004Model 3Supported H7b :Relational contract -N yearly earnings

.285 1.3650.172Model 3Not supported H8a :Transaction contract -N affective commitment ?.601?2.9170.035Model 3Supported H8b :Transaction contract -N yearly earnings

?.489?2.5450.011Model 3Supported

H9a :Relational contract mediate:Hierarchy culture to affective commitment linkage.?.258?1.3360.083Model 3Insigni ?cant (p b .05)—mediation effect supported H9b :Relational contract mediate:Hierarchy culture to yearly earnings linkage.

?.005?0.5590.576Model 3Insigni ?cant —mediation effect supported

H10a :Transaction contract mediate:Hierarchy culture to affective commitment linkage.?.258?1.3360.083Model 3Insigni ?cant (p b .05)—mediation effect supported H10b :Transaction contract mediate:Hierarchy culture to yearly earnings linkage.?.005?0.5590.576Model 3Insigni ?cant —mediation effect supported

H11a :Relational contract mediate:Clan culture to affective commitment linkage..406 1.9040.075Model 3Insigni ?cant (p b .05)—mediation effect supported H11b :Relational contract mediate:Clan culture to yearly earnings linkage.

?.004?0.5730.567Model 3Insigni ?cant —mediation effect supported

H12a :Transaction contract mediate:Clan culture to affective commitment linkage..406 1.9040.075Model 3Insigni ?cant (p b .05)—mediation effect supported H12b :Transaction contract mediate:Clan culture to yearly earnings linkage.?.004

?0.5730.567Model 3Insigni ?cant —mediation effect supported Negative affectivity -N affective commitment 0.4440.657Model 3Insigni ?cant Negative affectivity -N yearly earnings 0.9730.331Model 3Insigni ?cant Age -N affective commitment 0.1000.920Model 3Insigni ?cant Age-N yearly earnings

2.9430.003Model 3Signi ?cant Education -N affective commitment 0.9750.329Model 3Insigni ?cant Education -N yearly earnings 5.4820.000Model 3Signi ?cant Sex -N affective commitment 1.0630.288Model 3Insigni ?cant Sex -N yearly earnings

?2.9780.003Model 3Signi ?cant Years of experience -N affective commitment 0.5660.571Model 3Insigni ?cant Years of experience -N yearly earnings

0.244

0.807

Model 3

Insigni ?cant

?Model 1:IVs to DVs;Model 2:IVs to Mediators;Model 3:IVs to Mediators/DVs and Mediators to DVs.

5

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3.2.Structural model analysis (hypotheses test)

We ran three structural models.Model 1(IVs to DVs)included independent variables (hierarchy culture and clan culture),dependent variables (affective commitment and yearly earnings)and ?ve control variables (negative affectivity,age,education,sex and year of experience).Model 2(IVs to Mediators)had independent variables,mediators (relations contract and transactions contract),and the controls.Model 3(IVs to Mediator/DVs and Mediator to DVs)contained independent variables,mediators,dependent variables and controls.After entering mediators,if the IVs to DVs paths become insigni ?cant,there is a mediation effect.

Model 1demonstrated a reasonable ?t:χ2=111.292,df =74,GFI =0.886,AGFI =0.855,CFI =0.918,and RMSEA =0.050.Model 2produced a reasonable ?t:χ2=265.831,df =139,GFI =0.888,AGFI=0.831,CFI=0.937,and RMSEA=0.068.Model 3showed a good ?t:χ2=331.450,df =218,GFI=0.892,AGFI=0.869,CFI=0.958,and RMSEA=0.048.

In Model 1,the direct relationships between IVs and DVs were all signi ?cant (see Table 2).Hierarchical culture to affective commitment (p =.063)is marginally signi ?cant at p b .10level consistent with H1a.However,consistent with Hypothesis 1b,hierarchical culture to yearly earnings is signi ?cant and negative (t =?2.577,p =.010).Further,as per hypotheses H2a and H2b,clan culture is positively signi ?cant with both affective commitment (t =7.401,p =.000)and yearly earnings (t =2.785,p =.005).

In Model 2,the direct relationships between IVs and mediators were signi ?cant as per the directions of the hypotheses.Hierarchical culture is positively and negatively signi ?cant with transaction contract (t =3.658,p =.000)and relational contract (t =?2.608,p =.043)respectively supporting H3and H4.Also,clan culture is positively and negatively related to relational contract (t =8.204,p =.000)and transactional contract (t =?4.968,p =.000)respectively in support of H5and H6.The results of these relationships are also consistent in Model 3(see Table 2).

In model 3,most direct relationships between mediators and DVs were consistent with the hypotheses.Relational contract is positively related to affective commitment and transactional contract is negatively related to both affective commitment and yearly earnings supporting H7a,H8a,and H8b.Only one direct relationship between relational contract and yearly earnings is not supported inconsistent with H7b (see Table 2for estimates).Further,when mediators,relational contract and transaction contract,were entered into the model,the direct relation-ships between IVs and DVs became insigni ?cant providing support for the presence of mediating effects.In other words,H9a through H12b were all supported (see Table 2for the

estimates).

Fig.1.Three models*.

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4.Conclusions and implications

4.1.Research Implications

This study examined the role of psychological contracts as a mediator of the organizational culture to affective commitment and employee yearly earnings relationship.The results were consistent with our predictions.In particular,clan cultures positively impacted relational contracts and negatively impacted transactional contracts. Hierarchical cultures had the reverse effect.Psychological contract types(relational and transactional)mediated the relationship between organizational culture and both organizational commitment and employee yearly earnings.

These?ndings support the theory that organizations have an important role in creating and in?uencing employee perceptions of the psychological contract.In fact,organizational culture plays a pivotal role in the determination of psychological contract type. Additionally transactional psychological contracts were negatively related to affective commitment and employee yearly earnings while relational psychological contracts were positively related to affective commitment and unrelated to employee yearly earnings.These ?ndings support previous research regarding psychological contracts and affective commitment as well as introducing another possible consequence,employee yearly earnings.

Our results support Guest's(1998)proposed model of psycholo-gical contracts.We have not only included organizational culture as a potential antecedent in the development of psychological contracts, but we have also examined these contracts within the context of both social exchange theory and transaction cost analysis.In addition,we have extended Maguire's(2002)research that suggests organizational culture plays a critical role in the development of relational psychological contract.Speci?cally,our?ndings reveal that a clan culture is essential for the creation of relational contracts while a hierarchy culture contributes to the creation of transactional con-tracts.Even more importantly,we have provided support for a comprehensive picture of the psychological contract model.

Future research is still necessary for a complete framework to be determined.For example,is it possible that the other two cultural types included in the Competing Values Framework impact the creation of psychological contracts?In addition,Guest's(1998)model proposed that along with organizational culture,human resource practices also play an important role in psychological contract development.Further research is needed to test this relationship.

We found that transactional psychological contracts were nega-tively related to employee yearly earnings consistent with our predictions.Further research is necessary to examine this relationship. Continued examination is needed to develop a better understanding of the relationship between psychological contracts and yearly earnings.In addition,future research should investigate under what conditions transactional contracts lead to more favorable outcome given the widespread usage of them.

4.2.Managerial implications

Research has suggested that when violations of psychological contracts are perceived by employees the results can have negative effects on the organization.As such,psychological contracts are a critical aspect of organizational behavior.Both social exchange theory and transaction cost analysis provide a useful framework for managers to understand psychological contract development.For example,while psychological contracts are determined by both the organization and the employee,it is the organization that can in?uence the type of contract created.By providing managers with an understanding of how such contracts are created and sustained they will be better equipped to ensure that the contracts are not violated.

In conclusion,both organizational culture and psychological con-tracts can be leveraged by managers in order to avoid the detrimental consequences of psychological contract violations.While relational contracts result in increased affective commitment,transactional contracts can actually decrease commitment and yearly earnings. These negative results can then lead to lower performance,increased absences,etc.As such,it is imperative that organizations understand these relationships and how to best manage them to everyone's bene?t. References

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