Contract Perspective Research Articles

Outsourcing to an unknown workforce

This paper presents a psychological contract perspective on the use of the open source development model as a global sourcing strategy-opensourcing, as we term it here-whereby commercial companies ...

Job Insecurity, Union Support and Intentions to Resign Membership: A Psychological Contract Perspective

This article uses psychological contract theory to explore the consequences of job insecurity among union members. We hypothesize that the perception of job insecurity will correlate with a lower level of perceived union support and a higher intention to resign union membership. We also test whether the relationship between job insecurity and membership turnover is mediated by (a lack of) perceived union support. In Belgium, Italy and the Netherlands, an association is found between job insecurity and a reduction in perceived union support, and between job insecurity and the intention to resign membership; this association is also fully mediated by (a lack of) perceived union support. None of these hypotheses are corroborated in Sweden. We discuss implications of these findings for future research and for unions in Europe.

Determinants of Public Service Employee Corruption: A Conceptual Model from the Psychological Contract Perspective

A conceptual model is presented that explores the potential role of psychological contracts (PCs) upon corrupt acts within the public sector. The propositions we offer are based upon theoretical and empirical studies within the economics and management literatures. These have significant managerial implications because we postulate that even functional work environments can help foster corruption. Corruption may result when managerial decision makers overlook the range of expectations, embedded within the PC. On the one hand, contracts stimulate functional behaviours but when violations to these employee contracts occur, it is postulated that the resultant behaviour could lead to corruption because of the need for employees to recoup what they perceived are owed to them. Such propositions need to be empirically tested because, if confirmed will widen current thinking in relation to the antecedent factors causing corruption within the public service.

Outsourcing to an Unknown Workforce: Exploring Opensurcing as a Global Sourcing Strategy

This paper presents a psychological contract perspective on the use of the open source development model as a global sourcing strategy-opensourcing, as we term it here-whereby commercial companies and open source communities collaborate on development of software of commercial interest to the company. Building on previous research on information systems outsourcing, a theoretical framework for exploring the opensourcing phenomenon is derived. The first phase of the research concerned qualitative case studies involving three commercial organizations (IONA Technologies, Philips Medical Systems, and Telefonica) that had liberated what had hitherto been proprietary software and sought to grow a global open source community around their product. We followed this with a large-scale survey involving additional exemplars of the phenomenon. The study identifies a number of symmetrical and complementary customer and community obligations that are associated with opensourcing success. We also identify a number of tension points on which customer and community perceptions tend to vary. Overall the key watchwords for opensourcing are openness, trust, tact, professionalism, transparency, and complementariness: The customer and community need to establish a trusted partnership of shared responsibility in building an overall opensourcing ecosystem. The study reveals an ongoing shift from OSS as a community of individual developers to OSS as a community of commercial organizations, primarily small to medium-sized enterprises. It also reveals that opensourcing provides ample opportunity for companies to headhunt top developers, hence moving from outsourcing to a largely unknown OSS workforce toward recruitment of developers from a global open source community whose talents have become known as a result of the opensourcing experience.

The Effectiveness of Customer Service Policies On Intentions In Business-To-Consumer E-Commerce: A Psychological Contract Perspective

This study examines the influence of customer service policies on consumer purchase intentions in business-to-consumer electronic commerce. Prior research findings propose that practitioners can utilize these policies to influence customers' purchase intentions. Based on the psychological contract theory, this study conducts an experiment to examine whether customer service policies can influence consumers' intentions through their perceived psychological contract with the vendors. The experiment finds that a customer can form psychological contract beliefs with a vendor based on the vendor's customer service policies. These psychological contract beliefs may influence purchase intentions through trusting beliefs. These results should help web vendors realize the importance of customer service policies and improve their website design strategies.

Corporate Governance, Intellectual Capital and Value Creation

This paper is a tentative to integrate, using a heterodox approach, the capabilities perspective, that raises the role of the manager's competences, and the incomplete contract perspective, that raises the role of agency problems, to describe how the corporate governance relationships work in high competitive and complex environments. This paper provides a redefinitions and reassessments of corporate governance theoretical models according to the changing nature of the firm. This paper tries to describe the corporate governance relationships by the interaction between authority, as the most valuable source of incentive to offer to the manager for firm-specific investment, and responsibility, as a mechanism to avoid opportunistic behaviors. The interaction between them allows managers to solve hold-up problems at the beginning and, after, moral hazard problems. These two factors balance the incentive problem with the need of a constraint to the manager's activities and explain the way to incentive innovation and managerial creativity to reach firm's success and support value creation processes.

Untangling Employee Loyalty: A Psychological Contract Perspective

ABSTRACT:Although business ethicists have theorized frequently about the virtues and vices of employee loyalty, the concept of loyalty remains loosely defined. In this article, we argue that viewing loyalty as a cognitive phenomenon—an attitude that resides in the mind of the individual—helps to clarify definitional inconsistencies, provides a finer-grained analysis of the concept, and sheds additional light on the ethical implications of loyalty in organizations. Specifically, we adopt the psychological contract perspective to analyze loyalty's cognitive dimensions, and treat loyalty as an individual-level construction of perceived reciprocal obligations. Based upon this perspective, we present a three-tiered framework of loyalty that provides a psychologically informed definition of the concept, specifies the variety of obligation types that loyalty can imply, and anticipates the potential for asymmetrical loyalty configurations between employers and employees. We use the framework to articulate moral issues associated with both symmetrical and asymmetrical loyalty configurations and discuss the implications of the framework for theory and practice.

The impact of job insecurity and contract type on attitudes, well‐being and behavioural reports: A psychological contract perspective

Research on the impact of job insecurity for temporary employees has been largely exploratory and atheoretical in nature. This paper addresses this issue by considering the role of job insecurity on job satisfaction, organizational commitment, life satisfaction, and self‐rated performance among permanent employees (N = 396) as compared with temporary ones (N = 148). Hypotheses are formulated using the tradition of transactional versus relational psychological contract types. Psychological contract theory assumes (1) that job insecurity effects are due to a violation of the relational psychological contract, and (2) that permanents as compared with temporaries engage more in relational psychological contracting. As a result, job insecurity is expected to be problematic in terms of outcomes for permanents, but not for temporaries. Results validate the assumptions made in psychological contract theory. Furthermore, job insecurity proved problematic for permanents but not for temporaries when job satisfaction and organizational commitment are concerned. No such differential effects are observed for life satisfaction and self‐rated performance. Implications for future research are discussed.

Psychological Contracts: A Nano-Level Perspective on Social Contract Theory

Social contract theory has been criticized as a “theory in search of application.” We argue that incorporating the nano, or individual, level of analysis into social contract inquiry will yield more descriptive theory. We draw upon the psychological contract perspective to address two critiques of social contract theory: its rigid macro-orientation and inattention to the process of contract formation. We demonstrate how a psychological contract approach offers practical insight into the impact of social contracting on day-to-day human interaction. We then articulate several potentially testable propositions that emerge from this nano-level perspective.

The consulting career in transition: from partnership to corporate

PurposeThe consulting industry is facing an inflection point as it shifts to being more populated by publicly traded entities than by private firms. Associated career patterns are affected in ways that have not yet been explored.Design/methodology/approachIn this paper we describe the industry shift to public ownership and resulting changes in consulting careers from a psychological contract perspective. We conclude by discussing the impact of emerging career dynamics that could impact the future effectiveness of the consulting industry.FindingsThere are dramatic transitions underway regarding career dynamics of professionals in major consultancies. We foresee a troublesome picture in some respects and a promising outlook in other respects for individuals and their firms in the consulting profession.Practical implicationsAspiring consultants will find this paper informative as a way to assess fit with career models offered by consulting firms. Firms can use points in the paper to understand their potential shortcomings associated with their current and evolving career models to manage career transitions and negative consequences.Originality/valueThis conceptual paper draws attention to the potentially negative consequences of inappropriate career models for consultancies in general, and with different firm strategies. It is a first look at career changes in consulting due to the drastic shift of the industry to public entities.

Le droit de recours de l'entrepreneur contre l'ingénieur ou l'architecte à la lumière d'arrêts récents de la Cour suprême

This paper surveys recent Supreme Court decisions dealing with the relationship between building contractors and architects or engineers participating in the same project. Normally, the agreement between the owner and the architect or the owner and the engineer vests no rights in the building contractor. The latter may only sue the architect or the engineer on an extra-contractual basis. Proceedings may then take the form of a recursory action, where the contractor, having been held jointly and severally liable towards the owner, attempts to have the architect or engineer take their share of liability. Alternatively, proceedings could be taken on the basis of a delict, in cases where negligence is alleged by the contractor against the architect or engineer. The Supreme Court seems inclined to view the problem from a contract perspective, and to restrict opportunities to sue on the basis of a delict.

An Incomplete Contract Perspective on Public Good Provision

Abstract. This paper surveys what can be learned from recent advances in the incomplete contract literature to understand how public goods are or should be provided. The paper starts with a section on the full information case that presents and discusses the classical Samuelson condition on the optimal provision of public goods. The rest of the paper presents results under asymmetric information. It is constituted of two main parts. In the first one, the social planner has complete contracting ability. We discuss the basic setting and assumptions of this comprehensive contracting approach and study the trade-offs it generates. The second part of the paper is devoted to the study of contracting incompleteness. Such incompleteness can emerge from various sources, which we present and discuss. We then study the case of a politically chosen decision-maker and the consequences of its inability to commit for more than one period and of the ability for individuals to form groups. Finally, we address the problem of the choice between public and private forms of public good provision. The concluding section summarizes the main policy lessons.

IT Outsourcing Success: A Psychological Contract Perspective

Information technology (IT) outsourcing success requires careful management of customer-supplier relationships. However, there are few published studies on the ongoing relationships, and most of these adopt a customer perspective, de-emphasizing suppliers. In this study, we look at both customer and supplier perspectives, by means of the psychological contract of customer and supplier project managers. We apply the concept of psychological contract to perceived mutual obligations, and to how such fulfillment of obligations can predict success. Our research questions are (1) What are the critical customer-supplier obligations in an IT outsourcing relationship? and (2) What is the impact of fulfilling these obligations on success? We use a sequential, qualitative-quantitative approach to develop and test our model. In the qualitative study, we probe the nature of customer-supplier obligations using in-depth interviews. Content analysis of interview transcripts show that both customers and suppliers identify six obligations that are critical to success. Customers perceive supplier obligations to be accurate project scoping, clear authority structures, taking charge, effective human capital management, effective knowledge transfer, and effective interorganizational teams. Suppliers perceive customer obligations as clear specifications, prompt payment, close project monitoring, dedicated project staffing, knowledge sharing, and project ownership. In the second quantitative study, we assess the impact of fulfilling these obligations on success through a field study of 370 managers. Results show that fulfilled obligations predict success over and above the effects of contract type, duration, and size.

Coming to the Nuisance: An Economic Analysis from an Incomplete Contracts Perspective

Coming to the Nuisance: An Economic Analysis from an Incomplete Contracts Perspective

Violations of Principle: Ideological Currency in the Psychological Contract

We recommend the inclusion of “ideological currency” in the psychological contract perspective in order to broaden the range of employee-organization exchanges that the perspective can accommodate. We differentiate ideological currency from other forms of exchange currency and develop a model that articulates the conditions under which the breach and violation of ideology-infused psychological contracts will likely occur. We conclude by considering the opportunities and challenges implied by the inclusion of ideology in the psychological contract.

The Employment Relationship in the U.K. Public Sector: A Psychological Contract Perspective

The management of public servants has assumed increasing importance as public-service organizations are confronted with a rise in the demand for high-quality services in the context of limited resources. Much of the research on the treatment of public servants has focused on the notion of public-service motivation and whether the motives of public servants differ from those of private-sector employees. However, an organization's need to harness positive employee attitudes and behaviors as a means of coping with the pressures on public-service delivery encourages a focus on the factors influencing these attitudes and behaviors within the sector. We address this issue by drawing upon a psychological contract framework, which captures employee perceptions of the reciprocal exchange between employer and employee. This study investigates the relationship between the psychological contract and two outcomes: organizational commitment and organizational citizenship behavior using survey responses from 5,709 employees. The results support the underlying proposition that public-sector employees reciprocate the treatment they receive from their employers. Consequently, we argue that the psychological contract framework has some value in enhancing our understanding of public servants' attitudes and behaviors. We discuss the implications of our findings for the management of public servants, and we suggest that future research integrate individual predispositions and situational factors to provide a more comprehensive understanding of public servants' attitudes and behaviors.

The Employment Relationship in the U.K. Public Sector: A Psychological Contract Perspective

The Employment Relationship in the U.K. Public Sector: A Psychological Contract Perspective

A psychological contract perspective on organizational citizenship behavior

AbstractThis study examined the contribution of the psychological contract framework to understanding organizational citizenship behavior (OCB) using survey data gathered at three measurement points over a three‐year period from 480 public sector employees. Separating perceived contract breach into its two components (perceived employer obligations and inducements), the data suggest that perceived employer obligations explained unique variance in three dimensions of citizenship behavior (helping, advocacy and functional participation) beyond that accounted for by perceived employer inducements. Employees' acceptance of the norm of reciprocity moderated the relationship between employer inducements and the dimensions of advocacy and functional participation. Employees' trust in their employer moderated the relationship between perceived employer obligations and the dimensions of advocacy and functional participation. Contrary to the hypothesis, procedural or interactional justice did not moderate the relationship between employer inducements and OCB. The implications of the findings for psychological contract research are discussed. Copyright © 2002 John Wiley & Sons, Ltd.

The Theory of the Firm as Governance Structure: From Choice to Contract

The propositions that organization matters and that it is susceptible to analysis were long greeted by skepticism by economists. One reason why this message took a long time to register is that it is much easier to say that organization matters than it is to show how and why. The prevalence of the science of choice approach to economics has also been an obstacle. As developed herein, the lessons of organization theory for economics are both different and more consequential when examined through the lens of contract. This paper examines economic organization from a science of contract perspective, with special emphasis on the theory of the firm.

Covenants Not to Compete from an Incomplete Contracts Perspective

Covenants not to compete (CNCs) are used in employment contracts to prevent an employee from working for other employers, and in so doing pro- tect the firm's investment in human capital. We analyze the motives for including a CNC in employment contracts using an incomplete contracts perspective. We allow for both ecient and inecient breach, and compare covenants not to com- pete with the alternative breach remedies of specific performance and liquidated damages. We conclude that CNCs may be preferable to specific performance and liquidated damages when renegotiation of the contract is not possible, and thus eciency-minded courts should enforce CNCs. With renegotiation, a CNC can lead to both first-best performance and investment, but the eciency of the con- tract will depend on the scope of the CNC, namely how limiting it is in terms of restricting employment. A CNC with too broad a scope will be inecient by allowing a firm to extract quasi-rents from other firms, thus overcompensating the employer for investment. A CNC with too narrow a scope may not allow the em- ployer to appropriately recover his investment in human capital. We argue that courts need to deter parties from agreeing to covenants that are too broad, but also to recognize the eciency of CNCs, in particular when employees are capital constrained and judgment proof.