Pan-Pacific Conference XXXIV. Designing New Business Models in Developing Economies

The adverse effect of psychological contract breach on psychological capital
Zondi, Mary
Botes, Ilze
Kodibona, Patiance
Ramurundo, Debrah
Monama, Mmadithame
Van Wyk, Rene*
University of Johannesburg
PO Box 524, Johannesburg, Auckland Park 2006 , +27 11 559 2119
rvanwyk@uj.ac.za
ABSTRACT
Although diverse studies have investigated
Psychological capital (PsyCap) and the
psychological contract as separate constructs, it
seems that the effect of breach on PsyCap has not
been investigated before. PsyCap has the potential
to advance the competitive advantage of business.
Psychological contract breach (PCB), on the other
hand may lead to adverse negative effects in
business. An exploratory quantitative investigation
on a sample of 597 individuals shows a significant
negative effect of breach on each of the PsyCap
scales, varying between 10.6 and 6.1%. This is a
clear indication to management that possible
violations of the psychological contract, resulting in
breach, should be prevented at all cost to preserve a
healthy PsyCap work environment.
INTRODUCTION
For businesses to stay globally competitive, there is
a need to identify and nurture psychological
variables that could provide a competitive edge. The
vicissitudes of soft skills are not always obvious in
employer/employee relationships. A critical
relationship is formed between an employer and an
employee – this exchange agreement is referred to
the psychological contract [1]. A healthy
psychological contract, i.e. the implicit congruence
of commitments and agreements between
employees and the organization, called fulfillment,
could enhance the effectiveness of an organization
[2], and employee performance [3]. On the other
hand, breach of the psychological contract, could
lead to ineffectiveness, absenteeism, weak
performance [2], lowered organizational citizenship
behaviors, higher forms of job neglect and an
increased intention to leave [4]. PCB is regarded as
the dissappointments of emplyees in the nonfulfillment
of the employer’s promised
commitments [2], therefore, an inconsistency
between expectations and delivered promises [5].
Perceptions of PCB are formed by high job
demands and limited resources, leading to negative
affect [6]. PCB does not only have a negative
relationship with affective commitment,
organizational citizenship and work engagement [7],
it is also negatively related to the trust relationship
between the employer and employee [8].
In the light of the potential negative affective role
that PCB may play in business, there is an implied
possibility of having a negative influence on
PsyCap. PsyCap is a soft skill that potentially
contributes to the value of an organization [9] by
improving performance [10], individual and team
creativity [11], supports a readiness to change [12],
as well as an improved ability to cope with change
[13]. PsyCap, the positive strengths and capacities
of the individual, may lead to improved
performance in an organization [14], consisting of
hope, efficacy, resilience and optimism [9],
represented by the acronym HERO [15]. The four
HERO factors are defined as:
Hope: The agency and pathways that serve as
direction in motivational states[16], that empower
individuals in achieving goals [9].
Efficacy: Self-efficacy is the belief of the individual
in his/her abilities to succeed at tasks or goals in the
future [17], leading to improved performance and
achievement of organizational goals [18].
Resilience: The psychological mindset in which the
individual develops competent functioning over
time, in reaction to the internal or external
environment [19]. It is an ability to re-organize and
maintain emotional functionality notwithstanding
challenges [20].
Optimism: The capability and emotional state of
the individual that contributes to the belief in being
successful in future [21], leading to improved
worker productivity and customer satisfaction [22].
Problem Statement
A more in depth knowledge of the effect that PCB
may have on PsyCap is unspecified and needs
further investigation
Research Question
What is the relationship between PCB and PsyCap?
METHOD
This exploratory quantitative design included the
electronic and manual distribution of a
questionnaire, consisting biographic and
demographic variables, as well as the Psychological
Contract questionnaire designed by Robinson and
Morison (2000) [23] consisting of 24 items,
measured on a 5-point Likert scale with a Cronbach
Alpha of .80. The PsyCap Questionnaire developed
by Luthans, et al (2007) [21], consisting of 24 items,
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