Despite considerable research on the psychological contract (PC) breach, there exists limited research explicating how employees react to instances of PC breach in times of crisis and what organizations can do to mitigate the detrimental effects of PC breach on the employee-organization relationship during a crisis. Drawing on the risk management theory of corporate social responsibility (CSR, Godfrey, 2005), we argue that CSR effort enacted by an organization provides creates an effect much like insurance and tempers negative employee reactions to PC breach during a crisis. We manipulated CSR and PC breach during an organizational crisis in a scenario-based experiment of 108 working adults (Study 1). Findings suggest subjects in the high CSR conditions are more likely to make external attributions for PC breach, thus placing responsibility for the broken promises outside the company’s control. Then, we surveyed 394 employees from diverse industries in the context of COVID-19 crisis (Study 2). Results suggest perceived CSR moderated the indirect effect of PC breach on employees’ reconciliation with organization via external attributions, such that the effect was stronger when employees perceived a high level of CSR.
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