High Performance Work Systems and Psychological Contract Violations

Psychological contracts are individually held perceptions regarding exchange agreements between employees and organizations (Rousseau, 1995). These beliefs are based on promises made, accepted, and relied on between the individual employee and the organization, or someone acting on their behalf such as managers, recruiters, or owners (DelCampo, 2007). Employees process and incorporate these promises into their own unique and subjective contracts (Wade-Benzoni et al., 2006). Rousseau (1989) suggested that, in order to generate a work environment where employees know what is expected of them and perform in such a way that the strategic goals of the organization are supported, it is crucial that the parties have confidence that the other party will deliver on their promises. It is critical that the organization, or its agents, communicate consistent messages to current and prospective employees, as unfulfilled expectations are antecedents of decreased trust in management (Robinson and Rousseau, 1994). One problem with organizational communication is that managers have a tendency to exaggerate the benefits of human resource management (HRM) practices to individual employees, which again leads to inflated expectations (Grant, 1999). Such expectations can lead to psychological contract breach, which is an individual's recognition that a psychological contract has not been fulfilled by the organization (Rousseau, 1995), and more importantly, a contract violation, which is an emotional response or feeling of injury that results from failure to comply with a contract (Rousseau, 1995). Although breach and violation are closely related, breach does not automatically beget violation. The psychological contract literature has accumulated a vast amount of research about the impact of perceived contract breach and violations on outcomes of organizational interest, such as poor citizenship behavior, reduced job satisfaction, and intentions to quit (e.g., Blomme et al., 2010; Chen et al., 2008; Dulac et al., 2008; Orvis et al., 2008; Rigotti, 2009; Suazo, 2009). Further, research suggests that psychological contract breach and violations can be detrimental to organizational success as they are associated with decreased organizational commitment and trust (Grimmer and Oddy, 2007; Turnley et al., 2004), and decreased employee performance (Turnley et al., 2003; Turnley and Feldman, 2000). Whereas individual HRM practices (e.g., recruitment, compensation, and training) have been proposed to play a significant role in the development of psychological contracts through the communication of future promises to employees (Rousseau, 1995), a growing body of research focuses on collections of HRM practices, commonly referred to as High Performance Work Systems (HPWS). Such systems specifically target human capital competencies and desired employee behaviors (Takeuchi et al., 2007). Researchers believe that exposure to multiple and coordinated HRM practices have the potential to influence not only individual behaviors, but also collective behaviors and organizational outcomes (Arthur, 1994) as they send consistent messages about the organization's investments in the individual employee's human capital and well-being (Bowen and Ostroff, 2004; Huselid, 1995; Becker and Huselid, 1998). The first research question of this paper examines the extent to which HPWS impact perceptions of contract violations. As psychological contracts consist of individual perceptions about the exchanges between employee and employer, the content of these contracts will vary from one individual to the next (Rousseau, 1995). A common typology in organizational research is to differentiate between transactional and relational contracts in order to examine the factors underlying the individual psychological contract (Conway and Briner, 2005). Transactional psychological contracts are characterized by highly specified performance terms, narrow scope, and finite time periods (Robinson et al. …