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PRINTED FROM the OXFORD RESEARCH ENCYCLOPEDIA, PSYCHOLOGY (oxfordre.com/psychology). (c) Oxford University Press USA, 2020. All Rights Reserved. Personal use only; commercial use is strictly prohibited (for details see Privacy Policy and Legal Notice).

date: 28 May 2020

Summary and Keywords

Employment generally entails a deal or a contract describing the exchange of work tasks, remuneration, and other obligations and entitlements. In addition to the formal agreement between the parties, the employment relationship also implicitly consists of perceptions and beliefs about what the deal really involves. This part of the relationship has been labeled the psychological contract (PC) and has been the focus of research for more than 50 years. Underlying principles for the employment relationship have been theories about social exchange and reciprocity. In line with these theories, the two parties aim to reciprocate what has been offered by the other party and achieve a balanced exchange. Clearly, the psychological contract is a useful theory for understanding the employment relationship, and how agreement or disagreement, very often based on unwritten and even unspoken perceptions, affect attitudes and behavior at work. Research confirming this notion has been abundant throughout the last decades. One conclusion, however, is that this research has been narrow, focusing heavily on employees’ perceptions of breach or violation of promises from employers. Results have shown negative effects on both attitudes and behavior toward the organization. Over the last decades, there has been an increasing interest in the interaction and processes involved in developing and maintaining psychological contracts and repairing them after perceptions of breach. There has been a debate about the definition of psychological contracts, and recent research shows a growing interest in the dynamics and interactions between employees and employers and the effect on that relationship. Still, there are many unanswered questions for research concerning the exchange, balance, and processes involved in maintaining and changing the employee-employer relationship. The changing labor market, as well as new forms of employment relationships developing as part of the gig economy (where workers get paid for the "gigs" they do, such as e.g., food delivery), also needs further investigation within this theoretical framework. Focus on the exchange and interaction between employees and employers has the potential to add new insight to previous organizational research, perhaps also expanding ideas about the very nature of that relationship. A definite advantage of the theory and concept of psychological contracts is their close connection to and applicability for management.

Keywords: psychological contract, employee-organization relationship, exchange relationship, reciprocal relationship, creation, breach, violation

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