The Psychological Foundations of Supervisor–Subordinate Information Asymmetry

Abstract

Information asymmetry in an employment relationship is much researched in the organization studies literature because of its consequences for employment contracts, compensation, and rent appropriation by the involved parties. However, its psychological antecedents have not been adequately addressed so far. We conceptually investigate the psychological drivers of supervisor–subordinate information asymmetry by primarily invoking social exchange theory. Whereas agency theory examines how information distribution is driven by self-interest seeking, social exchange theory emphasizes how individuals may be motivated to fulfill social obligations and not by exclusive self-interest seeking. This paper advances several propositions regarding the influence of a subordinate’s and supervisor’s psychological variables, such as relational identification, disposition for relational trust, assumed similarity, and the shaping techniques used by a supervisor on information asymmetry. In doing so, it highlights the underlying social exchange (social attraction and reciprocity), and the cognitive, affective, and behavioral processes. The influence of the psychological variables on information asymmetry may be moderated by contextual factors, such as interactional justice climate in teams, agency costs, and the type of employment relationship.