Psychological contracts and independent sales contractors: an examination of the predictors of contractor-level outcomes

Abstract

Over the past decade, the independent sales contractor (ISC) has emerged as both an important distribution channel and a management challenge. This study makes two contributions to this evolving field. First, it explores the interrelations of the psychological contract with sales performance, voluntary turnover and organisational advocacy of ISCs, which have hitherto been largely unexplored. Second, it examines differences between high- and low-performing sales contractors on these linkages, due to findings in the literature that a small number of sales contractors often achieve a majority of sales. Based on survey data as well as 7 years of contractor-level data related to sales performance and voluntary turnover (n = 189), results indicate that psychological contract fulfilment and perceived dependency are important determinants of subsequent sales performance, voluntary turnover and organisational advocacy, with significant differences reported between high- and low-performing ISCs. A notable finding pertinent for sales managers responsible for managing ISCs is that high-performing sales contractors are motivated by psychological contract fulfilment and a low perception of dependency, while low-performing sales contractors are more likely to act as advocates for the firm due to perceived dependency, but may concurrently engage in organisational advocacy as a means to leave the firm.

Keywords:

• psychological contracts
• sales management
• voluntary turnover
• sales performance
• dependency

Notes

¹ In the context of this study high-performing ISCs are defined as the top 20% of the sales force based on sales performance. This will be further discussed under development of hypotheses and in the methodology section.

Additional information

Notes on contributors

David Finch

David Finch is an Associate Professor of Marketing and Strategy at the Bissett School of Business at Mount Royal University and a Visiting Scholar at Ohio University and the Henley Business School. Dr Finch is also the Director of the Business School Research Network. His research studies the empirical link among relationships, reputation and organisational performance.

Carola Hillenbrand

Carola Hillenbrand is Professor of Organisational Psychology, Academic Director at the John Madejski Centre for Reputation (JMCR) and Post Graduate Research Director for the School of Marketing and Reputation at the Henley Business School at the University of Reading. Dr Hillenbrand’s research aligns the subjects of responsibility, relationships and resilience with human decision-making, behaviours and emotions.

Norm O’Reilly

Norm O’Reilly is the Richard P. and Joan S. Fox Professor of Management and Chair of the world-ranked Department of Sports Administration in the College of Business at Ohio University. Dr O’Reilly has published 67 refereed journal articles and is a lifetime Research Fellow of the North American Society for Sport Management.

Paul Varella

Paul Varella is an Associate Professor of strategic management and the Associate Dean at the Bissett School of Business at Mount Royal University. Dr Varella is also the past president of the Administrative Sciences Association of Canada. Paul has published in Organizational Sciences and the Journal of Business Ethics.