The Effects of Psychological Contracts, and the Breach thereof, on Innovative Work Behaviour

• Author: Renier Steyn,Larysa Botha
• Date: 01 July 2021
• Pages: 1-28
• Published date: 01 July 2021
• DOI: 10.25159/2664-3731/9906

Article

African Journal of Employee Relations

https://doi.org/10.25159/2664-3731/9906

https://upjournals.co.za/index.php/AJER

ISSN 2664-3731 (Online), ISSN 2709-0426 (Print)

Volume 45 | 2021 | #9906 | 28 pages

© Unisa Press 2022

The Effects of Psychological Contracts, and the

Breach thereof, on Innovative Work Behaviour

Larysa Botha

https://orcid.org/0000-0002-9852-3066

Graduate School of Business

Leadership, University of South Arica

larysa@vodamail.co.za

Renier Steyn

https://orcid.org/0000-0002-2446-3662

Graduate School of Business

Leadership, University of South Arica

Abstract

The literature is clear that maintaining psychological contracts between

employers and employees is important, and that psychological contract breach

often leads to negative outcomes, including the withdrawal of discretionary

activities such as innovative work behaviour. Although most literature suggests

that a psychological contract breach affects the desired outcomes negatively, the

same literature is silent about under which type of psychological contract these

outcomes occur. This research aims to empirically determine the way in which

psychological contract breach affects the relationship between different

psychological contracts (relational and transactional) and innovative work

behaviour. A cross-sectional survey design was used, with respondents

answering questions on psychological contracts, psychological contract breach

and innovative work behaviour. Three results were dominant: transactional

psychological contract did not correlate with innovative work behaviour,

whereas relational psychological contract did so in a significant way;

psychological contract breach correlated positively and significantly with

transactional psychological contract and negatively and significantly with

relational psychological contract, but not with innovative work behaviour; and

psychological contract breach did not moderate the relationship between

relational psychological contract and innovative work behaviour. The

psychological contract type (relational psychological contract) therefore has a

direct effect on innovative work behaviour, but psychological contract breach

did not relate significantly to innovative work behaviour. Managers are alerted

to the importance of relational psychological contracts when innovative work

behaviour is the desired outcome, given the omnipresent psychological contract

breach. Researchers are encouraged to investigate through which mechanisms

psychological contract breach influences innovative work behaviour, as this link

seems well supported by the literature.

Keywords: psychological contract, psychological contract breach, innovative work

behaviour, moderation

Botha and Steyn

2

Introduction

Innovative work behaviour (IWB) is defined as “the intentional creation, introduction

and application of new ideas in a work role, group or organization, in order to benefit

role performance, the group, or the organization” (Janssen, 2000, p. 288). Facilitating

IWB is therefore at the top of managerial agendas (Bos-Nehles et al., 2017). This

facilitation is important because an employee’s innovative behaviour is central to

organisational success and is also an essential determinant of organisational

performance (Noruzy et al., 2013; Yen, 2013) and even survival (Agarwal, 2014a; Sanz-

Valle & Jiménez-Jiménez, 2018). In pursuit of successful innovative strategies,

employees’ behaviours must be aligned with strat egies fostering individual innovation

(Bos-Nehles et al., 2017). Agarwal (2014b, p. 43) affirms that “one option for

organisations to become more innovative is to encourage their employees to be

innovative”. However, this seems not to happen, as globally only a small number (15%)

of employees perceive that their organisations welcome innovation (Mercer, 2018) and

that “only half of employees say their company listens to their ideas for improving

business outcomes” (Mercer, 2019, p. 32). For organisations to benefit from employees’

intentional creative contributions, their employees must be willing to engage in IWB

(Akhtar et al., 2016; Milliken et al., 2003; Morrison, 2011; Zagenczyk et al., 2015).

As the large part of the desirable innovation resides outside the typical research and

development departments, the responsibility for innovation has shifted onto all

employees of the organisation (Cohen & Erlich, 2015). The expectation from managers

is that employees are able and capable to engage in IWB while delivering on their formal

commitments (Miron et al., 2004). Such expectations are rooted in IWB being usually

conceptualised as employees’ discretionary actions that “go beyond the prescribed” and

are often not directly or explicitly supported by the formal reward system (Janssen,

2000, p. 288). However, activating and encouraging these discretionary actions form

part of recognised management practices (Bos-Nehles et al., 2017; Sanz-Valle &

Jiménez-Jiménez, 2018; Veenendaal, 2015).

Discretionary activities or extra-role behaviours such as IWB have been explored

broadly with a large number of papers having studied its various antecedents

(Srivastava, 2017), including that of psychological contract (PC) (Kasekende, 2017),

PC fulfilment (Ahmad & Zafar, 2018; Kiazad et al., 2019) and PC breach (Akinwale et

al., 2021). This therefore implies the relevancy of the PC concept to this research. The

relationship between the employer and its agents and employees is determined by the

nature of the PC between the parties (Rousseau, 2004, 2011; Rousseau & McLean Parks,

1993). The PC is defined as “individual beliefs, shaped by the organization, regarding

terms of an exchange agreement between individuals and their organization” (Rousseau,

1995, p. 9). It assumes that employees expect their employer to meet a large number of

obligations as part of the explicit and implicit conditions in the employer-employee

relationship (Deery et al., 2006; Morrison & Robinson, 1997; Rousseau, 1989). At the

inception of the relationship, both the employer and the employee make a number of