Academic journal article Journal of Leadership & Organizational Studies

Ideological Foundations of Perceived Contract Breach Associated with Downsizing: An Empirical Investigation *

Academic journal article Journal of Leadership & Organizational Studies

Ideological Foundations of Perceived Contract Breach Associated with Downsizing: An Empirical Investigation *

Article excerpt

This paper explores the effects of three managerial ideologies on the degree of psychological contract breach perceived in connection with a downsizing event. Results from surveys conducted in the U.S. and Singapore suggest that a strong belief in the ideologies of market competition or shareholder interest reduces the perceived contract breach associated with a downsizing, while strong belief in the third ideology, the ideology of employee worth, has the opposite effect. Theoretical implications and suggestions for future research are discussed.

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In recent years, the field of organization studies has seen a resurgence of interest in the construct of managerial ideologies. In this paper we explore a novel topic not often dealt with in the ideology literature. Specifically, the paper examines the effects of belief in managerial ideologies on the believers' perceptions of the degree of contract breach entailed in a downsizing episode. We begin the paper by further discussing the construct of managerial ideologies, providing a definition of ideologies and a more detailed review of previous research on the construct. We also review previous work on the psychological contract and breach of the psychological contract (e.g., Morrison & Robinson, 1997; Robinson, 1996; Robinson, Kraatz, & Rousseau, 1994; Rousseau, 1989). We note that organizational downsizing may stimulate perceptions by observers that the psychological contract between employee and employer has been breached, but those perceptions may also be influenced by the ideological beliefs that the observer holds. Specifically, we hypothesize that those individuals with a strong belief in the ideology of market competition, the belief that market competition is beneficial for one's industry, for customers, and for other organizational constituencies, or the ideology of shareholder interest, the belief that shareholder value should be the dominant criterion for managerial decision-making (Rust, 1999), will perceive less contract breach in connection with an observed downsizing episode. However, individuals with a strong belief in the ideology of employee worth, a belief system that focuses on employees, emphasizing their contributions to corporate activities and performance (Rust, 1999), will have just the opposite reaction: they will perceive more contract breach in connection with an observed downsizing episode. We test these hypotheses with data collected using the same survey instrument in two different samples of respondents that constituted replication sites. The results are supportive of the hypotheses, indicating that belief in managerial ideologies has a noticeable influence on the degree of psychological contract breach perceived by respondents when they are confronted with a downsizing event. The implications of the results are discussed and directions for future research are suggested.

The research reported in this paper is important because the degree to which downsizing is perceived as involving psychological contract breach has a potentially important effect on the acceptability of downsizing to the perceiver. If strong believers in certain managerial ideologies see a downsizing event as entailing less breach of the psychological contract between employee and employer, those individuals are likely to view downsizing in a more favorable light than their counterparts who are weak believers in the same ideologies. The former group may therefore be more willing to embrace the institutionalization of the practice of downsizing that has evolved in recent years (Edwards, Rust, McKinley, and Moon, 2003; McKinley, Sanchez, & Schick, 1995; McKinley, Zhao, & Rust, 2000). By contrast, believers in ideologies--such as the ideology of employee worth--that enhance perceptions of contract breach in connection with downsizing may see downsizing in a less favorable light. Those individuals may thus exhibit a greater tendency to resist the growing institutionalization of downsizing (McKinley et al. …

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