Examining the Nature and Effects of Psychological Contract: Case Study of an Indian Organization

Abstract

This study investigates psychological contract contents and the effects of different types of psychological contracts on the work outcomes of employees in an Indian organization. Analysis of case study interviews and secondary data suggests that employee expectations can be categorized into relational and transactional psychological contracts. The contents of these contracts, while largely similar to those in the West, reflected certain aspects that are unique to the sociocultural context of employment relationships in India. Further, the fulfillment or breach of these psychological contracts led to different effects on work outcomes. Relational psychological contracts affected long‐term affective work outcomes, such as prosocial work behaviors, psychological ownership, and engagement. Transactional psychological contracts had stronger effects on turnover intentions and attitude to work. © 2016 Wiley Periodicals, Inc.