Psychological Contract

Abstract

Abstract The psychological contract is regarded as a major construct for understanding employee well‐being and behavior. It has been defined as an individual's beliefs, shaped by the organization, regarding terms of an exchange agreement between the individual and their organization. Research on the psychological contract has grown exponentially in the last 20 years and it has also received considerable practitioner interest. Psychological contract breach is the most important idea within psychological contract theory in terms of explaining employee well‐being, attitudes, and behavior. Researchers have, however, documented wide‐ranging critiques and challenges to the psychological contract. While there has been some impressive empirical support for the psychological contract, the components of the psychological contract concept are disputed and methods typically used to examine psychological contracts are limited, casting doubt over the value of the evidence base and how psychological contracts should be managed. Nevertheless, none of the critics recommend abandoning the psychological contract and the challenges can be viewed as opening up a rich research agenda for future studies.