Self-Regulative Changes in Psychological Contracts over Time: A Case of Japanese Pharmaceutical Company

By Hattori, Yasuhiro; Morinaga, Yuta | Journal of International Business Research, January 1, 2011 | Go to article overview

Self-Regulative Changes in Psychological Contracts over Time: A Case of Japanese Pharmaceutical Company


Hattori, Yasuhiro, Morinaga, Yuta, Journal of International Business Research


ABSTRACT

This study focuses on the effect of an employer's psychological contract fulfillment on an employee's self-regulative corrective actions. In particular, the study investigates the three types of self-regulative reactions -revision (changing employee's expectation), balancing (changing employee's fulfillment), and desertion (changing their intent to leave the employer). A two-point survey was conducted involving 2,514 Japanese employees in a large pharmaceutical company. As a result of hierarchical regression analyses, this study revealed that employees compare a level of fulfillment with a level of expectation and perform three self-regulative reactions (revision, balancing and desertion) to address discrepancies. Additionally, employees who have changed jobs before tend to engage in revision, and employees in their first three years in organization are more likely to engage in balancing. Desertion is the least popular option chosen by employees.

INTRODUCTION

In Japanese companies, it is generally accepted that an employee makes a career-long commitment to his employer upon entrance to a company, and it is expected that the employer will not discharge the employee (Abegglen, 1958). Abegglen (1958) called this mutual expectation "lifetime commitment." In Japan, important mutual expectations such as "lifetime commitment (p. 11)" are preserved without written/regal contracts.

Although such mutual expectations have historically been safeguarded at a cost to each party, there are discrepancies in the mutual expectations of today's Japanese companies. For example, in a large-scale survey of Japanese companies (Japan Institute for Labor Policy & Training, 2008), it was found that there are several discrepancies between employees' expectations toward their employer and the employer's beliefs about those expectations. For example, many employees expect "high pay" (67.3%), "support from my boss" (47.4%), and "adequate allocation" (42.3%) from their employer. However, they did not think that their employer fulfills all of these expectations. In the surveyed sample, relatively few employees responded that their employer provided the following items: "high pay" (5.0%), "support from my boss" (17.6%), and "adequate allocation" (12.2%).

What do employees do in this situation? Some previous studies regard employees not only as passive one affected by their environment but as active agents that take self-regulative reaction (Bandura, 1989). This means that employees are motivated to take action to decrease the gap between their expectations and the current state of affairs when they recognize inconsistencies. Recently, many organizational behavior studies have focused on these actions; they are called self-regulation studies (Adams, 1965; Brief & Hollenbeck, 1985; Frayne, 1991; Frayne & Geringer, 2000; Latham & Budworth, 2006; Lyons, 2008). However, there have been few self-regulation studies of the cognitive gaps in employment relationship.

In this paper, we examine employees' responses toward the differences in mutual expectations from the perspective of psychological contracts. In particular, we will investigate employees' self-regulative actions concerning gaps between the level of employers' fulfillment and employee's expectation.

REVIEW OF EXISTING RESEARCHES

Psychological Contract Defined

Rousseau defined psychological contracts as "an individual belief regarding the terms and conditions of a reciprocal exchange agreement between the focal person and another party" (1989, p. 123). Rousseau did not view psychological contracts as involving the perspectives of two interconnected parties. Instead, she conceived of them as an individual-level, subjective phenomenon. In other words, agreement in psychological contracts "exists in the eye of the beholder" (p. 123). This holds true irrespective of whether or not the contract is legal/written or unwritten. …

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