Psychological Contract Development, Distributive Justice, and Performance of Independent Contractors

Abstract

In today’s “gig economy,” more and more jobs are offered to independent contractors. Independent contractors have a highly defined, narrow, finite set of obligations to their employing organizations. As such, independent contractors gain the benefit of flexibility, choosing who and when they work, and organizations gain the benefit of nimbleness, expanding, and contracting their workforce at will without taking on the robust obligations they must typically offer to a full-time employee. As this sector of the U.S. economy grows, how our existing theories of employee–employer relationships apply is of interest. The present study sought to explore how one such theory (psychological contract theory) manifests in the independent contractor–organization relationship. Drawing on this theory’s findings with respect to key antecedents of an employment relationship, we explore how particular types of negotiation behavior an organization uses with an independent contractor affect the resources allocated to the independent contractor, vis-à-vis obligations that the independent contractor feels that the focal organization should fulfill (psychological contract). These resources are hypothesized to directly relate to the independent contractor’s sense of distributive justice, as well as the contracting organization’s evaluation of the independent contractor’s performance. Overall, the mixed results suggest that psychological contract theory can be applied to the context of the independent contractor–organization relationship in order to uncover how unique features of the relationship (e.g., highly negotiated terms) affect how obligations are created and reciprocated between the parties. Psychological contract type appears to be a partial linchpin between an organization’s negotiation behaviors on independent contractor performance.