Benefit of the doubt: the buffering influence of normative contracts on the breach–workplace performance relationship

Abstract

This study investigates the influence of employees' perception of managerial breach of the normative relational contract (i.e. the psychological relational contract at the group level) on workplace performance. Many employees in Australia are employed on a permanent or continuing basis and have normative relational contracts whose terms are embedded in human resource practices. We use normative relational contract theory to hypothesise that where there is a mutually recognised high-quality normative relational contract – a strong contract – the emotional bonds of loyalty that are developed by collective sense-making constrained negative reactions to breach. We also hypothesise that, where managers offer high-quality contract terms that are not recognised by employees, the failure to elicit loyalty means that breach has negative performance consequences. Panel data are obtained from a two-stage national, multi-source study of employees (n = 1,733) and senior human resource managers (n = 57). Results from hierarchical moderator regression analyses support the hypotheses. They demonstrate that a strong normative relational contract ‘buffers’ employees’ negative responses to breach.

Keywors:

• normative relational contracts
• psychological contract breach
• breach-performance relationship
• human resource practices
• high quality normative contracts
• strong relational contracts

Additional information

Funding

This work was supported by the Australian Research Council in partnership with the Australian Human Resources Institute [ARC Linkage LP0668042].