Psychological Contract Breach and Impact

This assignment delves into the concept of psychological contract breach and its consequences within organizational settings. Students are tasked with critically analyzing relevant academic literature to understand how breaches occur, their impact on employee well-being and performance, and potential strategies for mitigating negative effects. The focus is on exploring both theoretical frameworks and real-world applications of psychological contract theory.

Comparison of psychological
contract in western world and
developing countries- A critical
look at SME's

EXECUTIVE SUMMARY

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CHAPTER-1 INTRODUCTION
1.1 Background
The modern era of globalization have bought numerous changes in the society. These
changes have in turn made a significant impact upon the business establishments as well. In
context to which, employees are nowadays designated as chief bodies in the entities. Due to
which, it gets important for their employers to treat them in a respectable manner (Dabos and
Rousseau, 2013). This section being a primary part of the study will tend to depict the factual
background of this survey that has principally focused upon comparing different type of
psychological contracts. These agreements are to fundamentally relate the relationship among the
employees and employers in small to medium entrepreneurial (SME) sectors. Such type of bonds
together assures a mutual bonding among the workforces in order to operate with a similar
acquisition of organizational goals. It therefore depicts a mutual sense of working in the
establishment where they together operates to accomplish the set targets of their enterprise.
Overview of the study
This is an elementary section of this chapter in context to overview the selected content
of this research. With whose reference, the entire study is hereby based upon a crucial aim of
comparing dissimilar types of psychological contracts at the workplace. It is furthermore based
upon a critical assessment of SME business organizations to acknowledge their equivalent
practices in terms of enforcing such type of agreements at their workplaces. SME ventures are
generally classified as small to medium size enterprises with less strength of their workforces
(McDermott and et.al., 2013). As a result to which, they merely owe a major number of 250
employees with low scale of their yearly turnover ratio that do not tend to exceed a maximal rate
of 50 million euro per year.
Beside this, psychological contracts are a meticulous depiction of employee- employer
relationship in a company. The SME firms are thus required to make a mandatory enforcement
of such type of contracts at their workplace. It will not only tend to strengthen the relationship
among the workforces but will together benefit the cooperation at a greater extent. The recent
study is mainly in context to define a similar status of Western world and developing countries
like Africa by critically focussing upon their small size companies. It is basically to distinguish
among the distinct set of perception in their employees as compared to other SME employees.
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1.2 Rationale of the study
This unit of the chapter is yet another most significant part of the entire research work. It
is basically in regard to justify the logical perception of the survey with respect to its designated
subject matter. With reference to which, a leading aim of this study is to compare distinct
psychological contracts in context to the active SME organizations in varied western regions of
the world. It is however a challenging perspective of these small scale industries as a mean of
positioning themselves at the developing continents (Warner, 2013). It is mainly due to a
competitive nature of their markets where there exists numerous other contenders with their
strong and vibrant market positioning. It hereby gets difficult for the organizational bodies of
SME’s to compete with the big establishments of developing regions who are working from a
longer period of time and have resultantly placed themselves at a higher level of business.
However, it is not only in terms of outlining their longer time period of work but also to think
upon their extensive business arrangements. There is greater importance of Small business
enterprise in terms that it offers greater success to the economy. Further it is effective not only in
providing success stories but also assist in meeting the local needs. The cultural as well as
educational differences to a greater extent affects the psychological contract. This is because it
demonstrates the level of understanding that prevails among the employer and employee. The
level of education possessed by one determines the policies that are being set at higher level. For
instance, there is greater impact of profile of society in relation to values, attitude, norms as well
as beliefs on the manner in which the individual perceives as well as manages the relationship
with that of employers. The mechanism relating to the cultural influences at individual level fall
in the cognitive as well as motivational domains. Variation among the culture affects the
perception and interpretation of the signals from the firm in relation to psychological contract.
Under motivational domain culturally varied self concepts affects what is being desirable in
relation to exchange relationships with employers. The level of education affects psychological
contracts in terms that people perceives the policies and norms in the contrast in different
manner.
The large scale organizations are relatively broader in nature with more number of
personnel’s and an even escalation of profits and revenues. Psychological contracts are hereby
evident to work as an assistive tool of reference to the SME’s in such instances as a mean of
positioning themselves at an apt position in the marketplace. It is essentially with reference to its
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appreciable dimensions where such contracts often tend to maintain a standard relationship
among the employees and employers (Zagenczyk and et. al., 2014). This in turn benefits the
entire set of organization with more productive workers who renders huge amount of profits to
them. However, productive set of workers will be itself created by the employers where they will
provide a valuable sense of accountability to their respective employees. The HRM bodies are
primitively responsible to implement these contracts at their workplace with a foremost
cogitation of observing their employee- employer relationship and accordingly choose such
contracts.
1.3 Research aims and objectives
This section is divided into three precise sections into which it has tended to lay down the
foremost aims and objectives of this survey along with some outlined queries that are framed on
the basis of those.
Research aims: It is mainly in regard to specify the intended goal of this survey with a prior aim
of making a “Comparison of psychological contracts in western world and developing countries-
A critical look at SME’s”. According to which, the investigator has also framed some
considerable objectives that are outlined in the subsequent section.
Research objectives: These objectives are basically in order to attain the defined aim of the
survey in context to complete in due amount of time. Below depicted are thus referred to be
some leading objectives of the thesis-
 To identify the nature of psychological contract in Western and African societies.
 To identify employees and employers perceptions about the psychological contract in
both societies.
 To identify issues in their comparison. To proffer solution to some of the challenges and issues.
Research questions: This part is based upon the above framed aims and objectives of the survey
in context to which, below defined are some research questions to clearly investigate the elected
subject matter. These queries are mentioned as-
 What is the nature of psychological contracts in Western and African societies?
 What are the factual perception of employees and employers about psychological
contracts in both these societies?
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 What are the leading issues in making a relative comparison of these psychological
contracts?
 What are the relevant solutions to deal with such upcoming challenges and issues?
1.4 Analysis and framework
The present study has depicted a descriptive study with a major stress upon describing the
comparative mean of all leading type of psychological contracts. It is thence depicted to be a
fruitful design for the survey where the investigator will hereby tend to acknowledge some
coherent sources of it. In addition to it, this design will also ensure to determine some
considerable application of these types of agreements among the employees where it will be easy
for the HRM bodies of the enterprises to make a clear depiction of their choice. Along with
which, an inductive approach has been employed for conducting this research work for moving
from a specific to general formulation of results (Cooper and et. al., 2006). The overall study is
hereby based on comparing different type of psychological contracts in order to apply them on
the SME entities.
An interpretivism philosophy of the study has been undertaken in the present
investigation where the obtained information by the investigator will be associated to the real
scenario. Apart from this, the information in the present survey has been collected from
secondary sources of data collection. These secondary sources have referred several books,
journals and online publications that are authentic in nature have been considered by the
researcher. It has provided a fundamental base to the entire study in assessing the SME
organisations that are situated in the African marketplaces of its Western region that are still
developing in nature (Dane, 2010). The collected set of data has been analysed as per the
qualitative method with different formation of themes that have been formulated by the
researcher in order to attain timely objectives of the survey.
1.5 Structure of the dissertation
It is the last section of this chapter that has defined the overall structure of the thesis, as
parted below-
Chapter 1- Introduction
It is the initial chapter of the thesis that has provided relevant information in regard to
define the topic that has been being chosen to conduct the present research work. It has covered
the key areas of this research that has involved the aims, objectives, rationale, background and
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research questions, etc. Moreover, this chapter will also aid the investigator to provide a definite
idea in regard to outline the conceptual mean of its chosen subject matter.
Chapter 2- Literature review
It is yet another significant part of this chapter that has presented critical views of distinct
authors in context to the chosen research content of this study. It is based upon the framed set of
objectives that has in turn assisted the surveyor to form themes to confer the critical assumptions
of different authors.
Chapter 3- Research methodology
This is the subsequent section of the thesis in which different methods have been
employed by the researcher in order to carry out the study in a directional manner. It is also
depicted to be a principle part of the study in which the investigator is hereby liable to opt for
some considerable means of conducting the study in a reliable manner. It is thus important for
the surveyor to make a keen selection of research techniques.
Chapter 4- Data Analysis
It is the next section of the dissertation in which the collected set of data will be hereby
analysed by the surveyor. It is basically in order to evaluate the gathered information from
secondary method of data analysis. In context to which, the surveyor in the current research work
have adopted a qualitative method of analysing the data with some supportive means of books,
journal and online publications to generate attested information from it.
Chapter 5- Conclusion and recommendation
It is the eventual section of the dissertation where the investigator hereby tends to
showcase the liable findings that has been derived from the carried conducting research work. In
addition to which, a valid set of recommendations are being bestowed by the researcher on the
basis of the above concluded outcomes.
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CHAPTER 2 – LITERATURE REVIEW
2.1 Introduction
It is yet another significant part of the dissertation after overviewing its introductory part
that has outlined the elementary context of the elected subject matter of the research work. It is
one of the most substantive portion of the investigation where the surveyor has hereby referred to
critique distinct set of views that are being conferred by different set of authors. It is
fundamentally in relation to make a close depiction of the selected research topic where this
peculiar section of the study will tend to highlight certain essential sections that will further aid
in achieving the defined aims and objectives of the survey (Bal, De Cooman and Mol, 2013).
Thus, with a similar reference to it, the recent study is in regard to compare different forms of
psychological contracts in the SME establishments of Western regions like Africa. It is basically
in order to ascertain the active mindset of those employees who are appointed in the operational
SME's of those developing nations as a mean of relating it with their existent psychological
contracts.
2.2 Nature of psychological contracts in Western and African societies
The psychological contract is regarded as increasingly relevant aspect that relates with
the workplace relationships and wider is human behaviour. The concept of psychological
contract reflects the relationship among the employers and employees and it is particularly
concerned within mutual expectations of the inputs and outcomes. It is one that demonstrates the
beliefs, perceptions as well as informal obligations among an employer as well as employees. It
establishes dynamic association as well as defines the detailed practicality of the work to be
carried out. Psychological contacts are an outlined set of employment that clearly depicts the
carried relationship between the employees and employers of an organisation. These are certain
implicit terms that are mutually shared among the organisational people for a due
accomplishment of their predefined goals and objectives. As per the bestowed statement of
Botsford Morgan and King (2012), psychological contracts were firstly emerged in the period of
1960's. In context to which, it is related to a wide range of theoretical study with a major
contribution of behavioural scientists in it. It has therefore been a leading interpretation of many
other organisational bodies who have actively participated in it.
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According to the stated clause of Epitropaki (2013), these contracts are specified to be an
emotional standpoint of people where psychological agreements tends to depict the actual feeling
of employees that may directly affect their work assignations. Employees being the most
important part of an enterprise together owes numerous responsibilities of handling its related
number of tasks. It therefore gets important for their employers to always mitigate the workers in
a satisfactory manner as mentioned by Lioliou, E. and et. al., (2014). He has also presented yet
another leading cogitation for the employers where they are together required to value their
personnels in a considerable format. This necessitates them to include some prominent measures
of gratifying them via some potent involvement of reward systems, etc.
Metz and et. al., (2012) with a contradictory sense of this statement has provided yet
another substantial statements in support of the employers. It is mainly in context to the
employees where they are also required to showcase apt performances in order to complete their
given assignations. This will give a balanced outlook to both the sets where they will duly
respect the succeeding efforts of one other. Ren and et. al., (2013) has thence presumed a similar
sense of psychological contracts where a fine inclusion of such agreements lead to provide a
successful base of work to the organisations. With respect to which, they hereby tends to operate
in a committed way and hence make more viable performances of work that ultimately benefits
the entire organisation.
Robbins, Ford and Tetrick (2012) has hereby made a significant focus upon the
developing nations who are largely affected by the modernised concepts of globalisation.
Globalisation is thereby referred to be a vital factor of consideration over here and in context to
which, it has bought some leading advancements in the work association of SME organisations
that are operating in those Western arenas. The SME organisations with there small to medium
size nature are largely affected by such topical measures of work. In context to which, Tsui, Lin
and Yu, (2013) have articulated a major sense of psychological contracts where these are the
unwritten contracts among the appointed set of workers in a venture. It therefore possesses a
distinct nature as of the other contacts of employment at the workplace. However, such non-
codified contract on merging with the statute contracts defines the existent relationship among
the employees and employers.
As per the explicated concept of psychological contract by Vantilborgh and et. al.,
(2013), it is hereby showcased as an informal arrangement at the workplace. It has together
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involved some mutual set of beliefs along with a common ground of perception by its concerned
parties. These type of contracts keeps on developing with time where it is entirely based upon the
active set of communication among the employees and employers. It is for instance to depict the
promises made over promotion, salary increment, etc., that are usually made by the employers to
their employees. According to the conferred statement of Sonnenberg, van Zijderveld and Brinks
(2014), psychological contracts is thus referred to be a foremost consideration of the employers
where they are hereby required to manage the key expectations of their respective set of
employees. In context to which, the employers should hereby make a vigorous choice of the
commitments that they are making to their employees. It is mainly in order to ensure that they
are not attempting a mere materialisation of fake commitments to them.
Restubog and et.al., (2015) in contradiction to the preceding statement has specified
about a balanced outlook of working in psychological contract. With reference to which, the
employees should also tend to control their expectations where their work performances should
not be affected due to any of their personalised reasons. As such inauspicious circumstances at a
personal level are not depicted to be a major cause of deviation by the upper administrative
bodies. As a result to which, it becomes harder for the top level managers and leaders to stand by
their committed statements. Nichols (2013) have hereby made yet another valid point of
discussion where these non-coded contracts can also be breached by its solicitous parties. In
context to which, such perceived violation of these contracts can result in making major
atrocious outcomes of disagreement among the employees and employers.
This will in turn lead to another terrible outcome of decreased work productivity by the
employees that will pessimistically affect the entire organisation. With a contradictory viewpoint
of Lapointe, Vandenberghe and Boudrias (2013), fairness if hereby referred to be a leading
implication of psychological contracts. It is where the employees should hereby perceive a liable
sense of equalised treatment towards them. In relation to which, they should hereby feel that
their employers are treating them in an equal manner with no discriminative outlook towards
them. Bal and et. al., (2013) has hereby supported with the above given statement in context to
which, partiality is an interruptive element of this contract that could lead to break the entire
consideration of these contracts. It is therefore important for the employers to hereby consider
this valid prediction of treating the employees in an unbiased manner.
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Beside this, Bal, De Cooman and Mol (2013) has specified some well-defined forms of
psychological contracts where there exists total two leading type of agreements in it. These are
transactional and relational contracts of psychology with their distinguished set of depiction.
This includes both statutory and non statutory contracts that unites to create psychological
agreements among the employees and employers. The transactional contracts hereby represents
the coded contractual agreement of employment, whereas, another set of relational contract is the
non-coded agreement among the associated workers in the organisation. The former set of
agreement hereby tends to define the written standards of work in the organisation that are
acknowledged at the time of joining the establishment as explicated by Dabos and Rousseau
(2013). This includes some specific clauses that are framed over the formal terms and conditions
of the service in order to stipulate the remuneration status with some other affiliated terms of
employment.
With reference to which, these agreements are mainly regulated by the employers on
basis of varied other presumptions of job description, person specification, educational
qualification and work experience of the employees, etc. Along with which, these contracts also
includes some other relative terms of reward management with some other additive benefits to
the employees. It is however with a conditional statement of provisioning them only on the basis
of an apt work performance as mentioned by Lapointe, Vandenberghe and Boudrias (2013). As a
result to which, these contracts makes an equivalent effect on the non-coded contracts of
psychology. It is where these formal contracts tends to make a significant impact on the
mutuality of obligation. It is mainly in relation to these formal set of contracts where they are
legally binding in nature. It therefore tends to make a substantial impact on the standpoint of
employees that in turn reflects in the psychological agreements.
McDermott and et. al., (2013) with a distinct viewpoint have hereby aimed at another
leading form of psychological agreements where relational contract are specified to be a factual
representation of such consents. In context to which, psychological contracts are essentially
depicted to be a relational format of work agreement among the employees and employers.
These contracts are mainly concerned with fine maintenance of a quality relationship among the
workers to balance out their emotional consent with some precise interpersonal means. It mainly
considers to outlook a maintained relationship among the employees and employers along with
an equal deliberation of maintaining the relationship among the peers who are operating at a
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similar level of work. Restubog and et.al., (2015) has hereby presented yet another major
consideration of merging the transactional and relational contracts. On whose unification, there
exists another substantial form of psychological contracts with a broad division of it in two vital
parts of individual career and organisational psychological contracts.
As a result to which, the above bestowed bifurcation of these contracts have led to evolve
two more segregated depictions of relational contracts as exemplified by MacKenzie (2016). Old
or traditional psychological contracts and new psychological contracts are these two leading
representations in which the former agreement with a conventional nature are anticipated to be a
less official concord among the workforce. In context to which, these contracts are specified to
be with an imperative portrayal of employee's expectations with a relative configuration of
working for a longer time period as a permanent employee. This thereby assists the employer to
retain their efficient number of employees with a vital prospective of making a long germ career
into a similar set of organisation.
2.3 Perception of employees and employers regarding psychological contracts in both societies
Psychological contract is a very well known terminology in the HRM departments of
almost all sort of organisations where it is mostly seen in the small scale industries of Western
and developing nations as per a conferred statement of McDermott and et. al. (2013). It is mainly
because a vital role of the HR personnels in directly handling their associated set of employees
and employers. As per its depicted nature of existing in an underlying term, it consists of certain
implicit commitments among one another. It is also referred to be a vital depiction of the
relationship that is being maintained among the appointed set of employees and employers in the
establishment.
In contrary to this, O’Leary-Kelly and et. al. (2014) have stated such type of contracts to
be a willing association among the employees and employers where they tend to attain a
particular sense of operating in a well-defined format. This is basically for a due completion of
their assigned work targets in the given amount of time with a standardised outlook that has been
configured by their top level administrative bodies. Beside this, these contracts comprises with
distinct standpoints of two divergent parties of the organisation who are primarily referred to be
the crucial participants of such contracts. Employers and employees are those two participant
bodies who are directly associated with such type of contractual agreements in the
establishments.
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Peng, Wong and Song (2016) with an associative context of psychological contracts have
related the above considered differences into the mindset of its active participants to have a close
transition with the nature and liability of these contracts. He has also rendered a two dimensional
set of such contracts where these agreements are merely associated with two critical
classifications of transactional and relational extremities. In which, the contracts with a
transactional nature of its own hereby tends to represent a short term nature of tasks and
assignations for the staff members. It is together associated with some major sort of material
objectivity to get the work done by the employees (Peng, Wong and Song, 2016). Such type of
psychological contracts are therefore integrated by the deputed set of employers in the SME
organisations of Western and developing societies with a short term duration of their live
existence. Due to which, these type of contracts are often composed of a constrictive range that
cannot be extended by its involved participants.
Restubog and et. al. (2013) with a more emphasised outlook over its secondary format of
relational contracts have stated it to be an unstructured sort of agreement among the participant
bodies of SME's. However, it is fundamentally due to its potent attribute of being less organized
with more low number of tangible rewards by the employers. In relation to which, these type of
contractual agreements tends to specify more intangible resources like higher work
responsibilities that is also known as a mere promotion in official designation with no raised
wages and remuneration (Restubog and et. al., 2013). Such type of contracts together has a
momentous continuance with no specific time period and that tends to depict its factual subject
that is directly in relation to the individual set of beliefs. It is basically due to their inexplicit end
date in which the carried tasks and assignations do not possess any time specification that tends
to determine its conclusive part.
Mauno, Ruokolainen and Kinnunen (2013) with an antonymous viewpoint has hereby
referred to enlarge the two dimensional representation of psychological contracts with an
additive contribution of the dimension team that refers to ascertain the social relationship among
the employees and employers. In is mainly with reference to determine a vital presence of
support and care among them in order to fulfil the reflected objectives of the ventures. It is also
in context to the Western background of developing nations like in the African societies where
people are mostly considerate about maintaining a fine behaviour with one another, This also
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showcases their work related deliberation with a primitive anticipation of conducting the work
with both personal and professional possession of attributes.
Bal and et. al. (2013) have hereby presented a contradictory mindset of active African
communities who are employing in the Western region with a developing nature of their trends.
It is mainly with a relative depiction of their work related perceptions that differs for each
organisational set of bodies. In relation to which, the workers are hereby associated with
meaningful tasks that rigorously prosecutes them in their work where they can make some better
contribution in accomplishing the committed goals and targets of their respective ventures. It is
basically with reference to a correlative aspect of employee- employer relationship with their
mutual objectives of achieving the organisational goals and targets. However, as per the
deliberated perspective of employees, they hereby perceive their employers as an organisational
agent who are working in behalf of the administrative parties.
Robbins, Ford and Tetrick (2012) have thus stated it to be a major reason of violation
where such psychological contracts are often breached by any of its involved set of parties. It is
where the employees hereby foresee their respective employers to work as agent and operate as
per the designed norms of their managerial bodies, they thereby tends to find out the factual
interest of those uppermost organisational parties as well. Here, the managers apparently
showcases a casual attitude towards the psychological contracts among the employees and
employers. They together tends to assume certain pessimistic views about the framed
commitments of their employers (Robbins, Ford and Tetrick, 2012). It is where the employers
deliberatively promised to provide either of tangible or intangible rewards to their employees in
exchange of an appreciable work performance. This will in turn showcase an unwilling sense of
the employers in fulfilling their oriented commitments that will consequently breakdown the
mutual bonding among the involved participants.
Scheel, Rigotti and Mohr (2013) with a contrasting state of mind have hereby professed
yet another substantial outlook of employers perception in regard to configure the actual sense of
psychological contracts in SME businesses of Western and developing regions. It is basically in
relation to the African societies who are enormously focussed towards fulfilling the set
organisational goals on time. It is therefore important for both the employers and employees to
maintain a balanced outlook towards satisfying the expected terms of one another. In context to
which, if an employer is making some sort of commitment to their respective set of employees,
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then it gets important for them to accomplish it as per the set standards and norms (Scheel,
Rigotti and Mohr, 2013). It is with a similar percept for another involved party of employees
where they should together clarify any active clause of an apathetic attitude of their top level
administrative bodies. The employees in such cases should rather make a direct interaction with
their employers to clarify any such existent doubts and dilemmas in relation to abide by their
framed psychological contracts.
2.4 Problem identification in comparing psychological contracts
It is yet again in context to underlay the distinct nature and types of psychological
contracts where it gets difficult for its involved participants to make a proper and prior
equivalence among its two well-defined formats. It is as per the bestowed statement of Agarwal
and Bhargava (2013), where these contracts are vitally associated with the framed set of HR
policies where they further tend to frame the distinct measures of two different contractual
agreements. These are basically referred to the relational and transactional sort of psychological
contracts with a prior inclusion of four additive elements in it. Employee influence, HR flow
with its three more constituents, reward and work systems are those four critical components that
distinguishes the two elementary types of psychological contracts.
Haggard (2012) have hereby bifurcated these four vital elements in differentiating the
divergent concept of both these psychological contracts. In is however with a major emphasis
upon the foremost factor of employee influence where a relational psychological contract
necessitates for a participatory outlook of decision making. This includes an imperative mean of
employee voice via different measures of collective bargaining and regulatory councils of work.
In relation to which, the transactional contract with their restrictive nature consists of high
administrative prospect with a Lockean perspective of observing the work performances of the
employees. In context to which, relational contracts are more collaborative in nature where both
set of employees and employers can directly communicate with one other. It is also due to
another leading significance of being in a networked structure with high sense of mutual relation
among the employees and employers.
Shoss and et. al. (2013) with a supportive consent have hereby presented some other
analogous features of relational psychological contracts where it is also referred give a
substantial chance of creating pioneering ideas to the employees. It is basically in context to a
subsidiary consideration of the employers who hereby tends to support them in the entire
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procedure of decision making by involving them in it. Shoss and et. al. (2013) with a similar
depiction of its another format of transactional contracts of psychology have conferred some
leading statements for it. It is mainly with reference to state about a confining nature of
transactional psychological contracts with an advanced structure of its hierarchical dispersion.
The organisations adopting this particular contractual agreement are more likely to operate in a
top down control system with a political intervention of labour unions who represents a biased
nature with standardised reasoning of their products and services.
Giannikis and Nikandrou (2013) with a more stress upon its another pivotal element of
HR flow have hereby detached into three vital dimensions of inflow, outflow and internal flow.
In context to which, the relational contracts are more subjective in nature where the HR
personnels hereby tends to make a close analysis of the social behaviour in their employees. A
prior benefit of functional flexibility is yet another associable factor of this format in which the
HR personnels are much more concerned about making an apt development of their people
procedures along with developing their existent skills and abilities. It is however done via a prior
formulation of arranging workshops for career development with some impelling tools of
motivation and a less monitoring approach on the workers. As a result to which, the employees
are hereby tended to work with a motivational sense for a timely fulfilment of their
commitments.
In contrast to which, Herriot (2013) have hereby defined an analogous conception of its
another format called transactional psychological contracts in which the HR flow with its three
similar components include high investments on technical structures with a support staff system
in it. Numerical flexibility is yet another exigent mean in such working format with continual
development of routines in order to minimize the costs of payroll and processing, etc. Companies
following this type of psychological contracts are mainly focussed on abiding by the
standardised rules and regulations of the establishment. Employee evaluation is therefore a vital
part of this format in which they rigorously pursue the utilising the tools of obligational
motivation that are in written agreement (Herriot, 2013). It means that the applied tools of
motivation to retain the efficient staff members through via reward systems are precisely
mentioned in the employment contracts. In addition to this, this format also postulates the HR
personnels to use a stick and carrot approach to observe the work executions of their workforces.
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It is where they are mainly configured to operate in a compliance based stipulation of work that
is more afflicted by extrinsic labour market.
Zagenczyk and et. al. (2014) has hereby referred to edify the two eventual elements of
reward system and work system and in context to which, the relational psychological contracts
depicts a contemporary format of both its reward systems and work systems. With reference to
which, the HR personnels with a relational agreement tends to pay for performances with some
other intrinsic rewards of bonus and fringe benefits, etc. These tools are however based upon
employee's creative outlook that in turn raises their external competition. Beside this, they also
tend to design lateral system of compensation with cross functional teams where they together
has a considerable culture of profit sharing by operating in groups. The benchmark strategy of
compensating the employees is a prior approach in this momentous format of relational
psychological contracts.
Bal, De Cooman and Mol (2013) have hereby presented a contradictory approach of
transactional contracts in which, the employees are hereby paid on the basis of their capable
proficiencies instead of getting paid on the basis of their work performances. They are hereby
based on external reward systems that foster their internal capabilities by inspiring them to
operate with a contending outlook. Productiveness is hereby postulated to be a major
consideration of those organisational bodies who are operating in such systems of transactional
psychological contracts with a top down approach of their recompense schemes. They are
rigorously cautious about attaining cost effective benefits by proportioning the work
performances of their individuals. Management by objectives (MBO) is depicted to be their
another major consideration with some deliberative action plans of tournament compensation.
Moreover, Kiazad, Seibert and Kraimer (2014) have also postulated there distinct work
systems in which, the relational psychological contracts consists of a binding outline of
occupations with specialised set of employees in it. A leading matter of concern for them is in
relation to depict a vital inventory of personnel resources with an upright quality of their career
with stipendiary arrangement of retrieving the employees. They hereby believes in emerging the
dynamic capabilities of their workforces with a long time perspective of continuing the
employment with a deflected sense of terminating them. It is basically due to a high transaction
cost in terminating the appointed set of employees where most of them reflects a specialised
background of cognition. This also tends to obviate status difference among the individuals by
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together destructing any possible clause of high transaction costs that could also lead to
detriment both solicitous parties of employees and employers.
Restubog and et. al. (2015) with a coherent perception have outlined the distinct
measures of work system in the transactional contracts in which there exists a vital range of
broadly outlined occupations with a frequent clause of rotating the deputed set of employees.
Listing fiscal sources is a major consideration of this format with a lateral quality of career that
tends to downsize the hierarchy of personnel costs. It is therefore with an in- out system of
employment with deficit arrangements of retrievals. Termination is a possible clause of such
arrangements that is possibly harmful for employees where unlike another considerable system
of provisioning retirement incentives in relational agreements, there is no such composition in
this format. As a result to which, the status symbolism is strengthened through their stratified
consent of work.
Ye, Cardon and Rivera (2012) has thence illuminated it to be a major cause of problem
where the SME organisations of Western regions with their developing state is primarily
required to determine a particular measure of handling their workforce. It is however a prime
accountability of their HR personnels to opt for a considerable format of psychological
agreement in order to depict their underlying terms of their chosen contract. It is basically to
decide from the two subsidiary alternatives of relational and transactional psychological
contracts where a relational contract is specified to be contemporary in nature (Ye, Cardon and
Rivera, 2012). It is due to its assistive nature of collaborating the two vital participants of such
contractual agreements where they hereby refer to operate with a mutual sense of working
towards a prior attainment of organisational goals and objectives. It is also in correspondence to
their associable tools of motivation that significantly aids them to retain the efficient staff
members at the workplace with a prior depiction of working for a long time period.
The transactional set of psychological contracts on other hand is referred to be a
conventional mean of handling the workforces with less existence of motivational tools in it as
per the elaborated outlook of Lub, X. and et. al. (2012). In relation to which, it is outlined to be a
less effective measure to prospect the future benefit of organisations working with an active
presence of psychological contracts at their workplace. Furthermore, a situational consent of
adapting the changing context of business operations with certain strategic conceptualisations of
change management is also referred to be a fruitful clause of operating the business towards a
17

succeeding direction of success. It is especially in context to the SME establishments where it is
prominent for them to choose from a respectable format of psychological contracts that together
match to their agreed clauses of organisational structure and culture.
However, on depicting the difference among the two distinct societies in Western
countries and developing nations, one can easily determine their varied cultural differences. In
context to which, Blustein (2013) has hereby remarked a factual sense of distinction where the
individuals from developed nations or Western countries tends to have a broad mental perception
as compared to the people belongs to the developing regions. Due to which, they hereby possess
different cultural beliefs that in turn impact upon the framed psychological contacts in their
respective set of organisations. Beside this, Shih and Chuang (2013) has also emphasised upon
yet another significant factor of their different educational background with distinct scope of
learning for people coming from assorted areas that is either of the Western region or a
developing nation. On comparing these significant elements of both these arenas, it can be stated
that a leading variation exists wherein the developing regions are still embarking into varied
evolutionary things. It is in contrast to the developed nations like the Western regions who are
already composed of such progressive outlooks.
18

CHAPTER 3: RESEARCH METHODOLOGY
3.1 Introduction
Following the literature review analysis another part of the thesis includes research
methodology. It is regarded as the manner that acts as an aid for the analyst in attaining solution
to a specific issue under investigation in an effective manner. Under section of research
methodology several tools have been applied in order to gain evidence as well as make analysis
so as to respond towards the questions which are being developed under investigation. For the
present thesis that intends at making Comparison of psychological contracts in western world
and developing countries- A critical look at SME’s the decision regarding selection of suitable
research methods has been done with greater effectiveness. The tool that is being utilized has
been discussed. Along with this reason behind the selection of specific tool is being stated in the
present chapter. The present dissertation is based on secondary investigation therefore the
emphasis is over past researches which are being conducted on the particular subject matter.
3.2 Research philosophy
The research philosophy is referred to as overarching terms that is attached with devising
knowledge that relates with the research. It can be defined as the term that acts as an aid in
developing background of the investigation. It considers the factors that is the way in which
people look at things in different manner, varied beliefs and perception in real terms. There is
presence of two kinds of research approach which involves positivism as well as interpretivism.
In case of positivism the researcher makes development of hypothesis which can be tested. In
addition to this it offers opportunity for explanation that is being determined against the
knowledge which is acceptable across the globe where we reside (Beins, 2012). On the other
hand interpretivism philosophy is defined as one which provide appropriate justification
regarding the problem under research. Through the means of research philosophy the researcher
is able to make demonstration of the facts as well as figures which are attached with the issues
under investigation that are being explained. Interpretivism philosophy is regarded as approach
that lay emphasis on meaningful nature of one's participation within the social and cultural life.
In the present thesis that aims at Comparing psychological contracts in western world and
developing countries- A critical look at SME’s interpretivism philosophy will be applied. This is
because of the reason that collection of data would be done through secondary sources. In
19

addition to this analysis will be made for the purpose of developing clear understanding of the
particular concept. This will act as an aid for the researcher in making development of wide
understanding with respect to theories and models executed within the research. Moreover, the
interpretation of the findings would be done by the researcher on own as per the issue under
investigation. The researcher would make utilization of the qualitative tools so as to attain
appropriate outcomes from the research.
3.3 Research approach
It is referred to as the manner in which the investigation is being carried out further by
the researcher. Research approach can be defined as the tool wherein specific set of research is
carried out in order to gain desired results. The implementation of research approach is being
done so that researcher is not distracted from the aim of the research. This acts as an aid for the
investigator in conducting research as the per objective under investigation. It offers guidance to
the investigator in making appropriate improvement in order to achieve feasible outcomes from
the information collected through secondary sources (Creswell, 2013). There is presence of two
types of research approach which is composed of deductive as well as inductive approach.
Inductive research approach is one that stimulate the researcher to move in direction that is from
specific situation so that broad general idea and theories can be developed with greater
effectiveness. On the other hand deductive approach starts with statement and moreover the
research is carried out for the purpose of responding towards it. Under this the main aim towards
concluding with the question that is yes or no responses. The process of deductive approach
moves from theory to research question. Moreover, it is composed of collecting data as well as
analysis of the findings for the purpose of responding in relation to the questions under
investigation.
In the present dissertation on Comparison of psychological contracts in western world
and developing countries- A critical look at SME’s inductive approach would be applied. This is
because through this the researcher is able to make development of empirical generalization.
This leads to identification of preliminary association as the investigation is being carried out.
Moreover, such includes search patterns by means of observations that leads to development of
explanation. Through development of understanding relating to secondary data on comparing
psychological contracts in western world and developing countries- A critical look at SME’s
20

would be able to achieve research objective. Through analysis of challenges generalization can
be made in broad way.
3.4 Research design
It is regarded as one of the most crucial aspect of the research. Research design can be
referred as whole strategy that is selected by the researcher in order to integrate various elements
under research in chronological manner. This demonstrates that problem under investigation is
being resolved with greater effectiveness. Therefore, such is considered as the blue print which
acts as an aid for the researcher in making collection, analysis as well as measurement of the
data. There are several kinds of research design. This includes descriptive, exploratory and
explanatory. There is greater effectiveness of explanatory research design towards determining
the cause and effect relationship (Crowther and Lancaster, 2012). The design has appropriateness
in determining the variables that leads to some behaviour. On the other hand exploratory
research design tends at developing hypothesis through determining set of data and making
examination of the association between the variables. Moreover, it is regarded as initial
investigation into theoretical idea. Such is applied in case wherein the researcher possess some
knowledge regarding the phenomenon under subject matter. It makes establishment of the
groundwork that assist the researcher in conducting more research (Gravetter and Forzano,
2015). On the other hand it makes establishment groundwork which assist the investigator in
conducting the research forward. However descriptive research design can be used effectively
for the purpose of addressing the responses to the questions that is composed of who, where,
what, how as well as when that relates with specific issues under investigation. It is referred as
statistical investigation. Such kind of design possess greater accuracy.
In the present research on Comparison of psychological contracts in western world and
developing countries- A critical look at SME’s exploratory research design is applied .This is
because of the reason that in present report the issue relating to investigation is not being
presented with effectiveness. Through this researcher is able to make determination of suitable
design, data collection tool and subject selection.
3.5 Research technique
The role of research tool is effective in carrying out the research in an effective manner.
Such is divided into two that is composed of qualitative and quantitative. The former is
concerned with exploring the issues as well as understanding with respect to phenomenon. It
21

offers answers to the question through means of analysis and sense of unstructured data. This
kind of investigation makes use of in depth studies. The outcomes attained through qualitative
tool possess descriptive nature (Mackey and Gass, 2015). On the other hand quantitative
investigation is regarded as systematic investigation of social phenomenon by the means of
mathematical as well as statistical tool. The major aim of the research is towards attaining
knowledge regarding psychological contracts in western world and developing countries from
the past literatures with greater effectiveness. In the present dissertation qualitative method is
being employed.
3.6 Data collection
Data collection is regarded as important aspect of the investigation. Such reflects that
appropriate tool is being applied by the researcher in order collect data so as to attain research
aims as well as objectives. There is presence two tools that can be utilized for collecting
information. Such is comprised of primary and secondary data collection tool. Primary method
involves collection of data for first time. Through this researcher has ability to gather new data
which is not being utilized in the past researches. This is collecting for the sakes of carrying of
research in effective manner (Grafton, Lillis and Mahama, 2011). The tool for gathering primary
data is comprised of questionnaire, focus group, surveys, interview etc. With this in-depth
knowledge can be attained through the opinions of the respondents with respect to subject
matter. On the other hand secondary data collection tool collects information by the means of
published studies. This is being regarded as second hand tool. For the present thesis which aims
at Comparison of psychological contracts in western world and developing countries- A critical
look at SME’s secondary data collection tool would be employed. In this data will be comprised
of information which already is utilized by other researchers within their literatures. In the
present report published articles as well as books of various researchers is used so as to attain
better knowledge with respect to psychological contracts in western world and developing
countries (Guercini, 2014). The techniques for collection of secondary data is comprised of
online, government reports, blogs as well as censuses. In the present investigation past studies
that is conducted on psychological contracts in western world and developing countries would be
involved for the research. This is due to the reason that it provide accurate and reliable
information.
22

3.7 Sampling technique
Sampling can be referred to as the tool which is being applied for the purpose of studying
some items. There is presence of two kinds of sampling tools. This is composed of probability as
well as non probability sampling method. Probability sampling tool can be defined as the one
that requires sample frame. Moreover, such depends on random selection to wider extent. In
contrast to this non probability sampling tool is considered as technique wherein the sample is
not being dismissed by apparent absence of rigour. Such is present in the situation when there is
absence of sample frame (Hill, 2007). Moreover, the complexity engaged in implementing such
is less. In the present study that aims at Comparison of psychological contracts in western world
and developing countries- A critical look at SME’s non probability sampling has been applied. In
this snowball sampling tool is being utilized by researcher. It is tool that begins with
determination of the criteria relating to inclusion within the investigation. In the present research
past literatures will be assessed and the references utilized within the study would be evaluated
again for the purpose of gaining deeper knowledge regarding the phenomenon under study. It is
regarded as the tool of chain sampling in which existing subjects making hiring of future subjects
from among their acquaintances.
3.8 Data analysis
After gathering data from several secondary sources another part of thesis is relating to
analysis as well as evaluation of the data that is being attained. Data analysis is referred to as the
procedure that assist in making application of logical as well as statistical tool in an effective
manner. Such is being conducted for the purpose of describing, condensing, illustrating and
evaluation of the information (Hogg, 2008). Through the help of this the investigation would
research, transform as well as clean the data in order to reach at particular conclusion. There is
huge significance of research findings as it acts as an aid for the researcher in development of
universal fact that can be utilized by other researcher for the study. In order analyse the data
there is existence of two tools like qualitative and quantitative.
In the present thesis that aims at Comparison of psychological contracts in western world
and developing countries- A critical look at SME’s makes analysis of secondary information by
the means of qualitative tool. The reason because of which qualitative tool is used is for the
purpose of better understanding in relation to psychological contracts. Further through this
analysis immense data can be attained in relation to western world and developing countries.
23

Through the help of qualitative analysis secondary data on psychological contracts can be
analysed in detail so that its comparison in developing countries and western world can be made
with greater effectiveness. For the present dissertation qualitative tool is being employed that
makes utilization of thematic tool. In this development of themes is done after making
examination of patterns across the information. This assist the researcher in attaining deeper
knowledge of the phenomenon under subject. The understanding with respect to subject matter is
being determined effectively. This would further help the analyst in drawing valid conclusion
through analysis.
3.9 Validity and reliability
There is huge requirement towards making application of appropriate research tools as
well as techniques for the purpose of conducting the research in an effective manner. Due to such
reason the concept relating to validity and reliability has attained greater importance when
conducting the research in an accurate way. Validity is regarded as quality of being factually and
logically sound. It is regarded as the extent to which the study makes determination of what is
needed to be assessed by the means of investigation. There is presence of two kinds of validity.
This is composed of internal and external validity. The former is referred as test of validity. On
the other hand latter can be defined as capability to make generalization of the outcomes of
research to target population (Kothari, 2011). In the present thesis having aim of Comparing
psychological contracts in western world and developing countries- A critical look at SME’s
maintenance of validity is being ensured. This is being by the means of gathering valid data from
secondary tools. With this tool's information can be attained with greater effectiveness. The
application with appropriate tools and technique facilitates in conducting the investigation with
effectiveness. This helps in making the study more reliable as well as authentic.
The concept relating to reliability is important aspect under research. It can be referred to
as the degree to which stable as well as consistent results are produced through assessment tools.
The concept is suitable in determining whether or not the investigation will produce same
outcomes in case it is conducted again (Kuada, 2012). The present research on Comparison of
psychological contracts in western world and developing countries- A critical look at SME’s is
considered reliable as data collection has been carried out from authenticated sources. This
makes sure that investigation is away from any kind of biasness. Moreover no manipulation is
24

being done within the information that has been attained from secondary sources. Therefore the
data is kept unchanged which demonstrates its reliability.
3.10 Ethical consideration
It is regarded as one of the important aspect which is considered by the researcher for the
purpose of carrying out investigation with greater effectiveness. By means of ethical norms study
can be completed with greater accuracy. For the present dissertation that aims at Comparison of
psychological contracts in western world and developing countries- A critical look at SME’s
ethical norms are being taken into consideration. These are as follows. There is greater demand
of investigation in crucially measurement for development of information as well as validating
so as to attain authentic outcomes (Crowther and Lancaster, 2012). The major emphasis of
ethical consideration is towards gaining valid as well as accurate information of the problems
relating to research. With the help of such the research can make delivery of reliable outcomes
with less objections. The present dissertation makes use of secondary data which is being
gathered through several studies that are being conducted in past on particular subject. Such
researches exists on several sites. There is restriction regarding usage of such sites. In this regard
permission is taken in advance by the researcher so to access suitable sites so as to attain
accurate data.
Another ethical consideration is being maintained by the means of proper citation within
the work in appropriate way. In the present thesis the work of various authors is being taken into
account for appropriate research. Ethical consideration makes sure that proper citation of the
work is considered in the study with greater effectiveness. No content has been copied and
pasted. Suitable care is given with respect to same (Mackey and Gass, 2015). Care has been
given on proper rephrasing of the content as this has been written in own words by the
researcher. As use of secondary data collection sources is done therefore information on
psychological contract is not manipulated in any manner. This is for the purpose of maintaining
the authenticity of the investigation. The data is being preserved in order to maintain the
confidentiality and reliability of the information with effectiveness.
3.11 Research limitations
The process of carrying out whole research is full of challenges and also it involves wide
range of the issue that are being faced by the researcher. For the present study on Comparison of
psychological contracts in western world and developing countries- A critical look at SME’s the
25

research limitations are as follows. The first and foremost limitation of the research is prolonged
procedure. The process of carrying out the research is lengthy. For the purpose of accomplishing
the whole research greater amount of time is needed. Greater amount of time is required so as
gather information through help of journals as well as books. As time frame for accomplishing
present report is limited therefore it is difficult for the investigator to consider every aspect that
has relevancy with the phenomenon under research (Grafton, Lillis and Mahama, 2011).
Researcher have absence of feasibility in considering several aspect relating to phenomenon
under research.
Another main limitation is relation to study is inadequacy of the secondary data. The
present investigation on Comparing psychological contracts in western world and developing
countries- A critical look at SME’s utilizes secondary resources for completion of the
investigation. For the purpose of developing better knowledge regarding the phenomenon under
subject adequate amount of secondary data is needed by the analyst. The main limitation is
experienced regarding attaining the information (Hogg, 2008). The researcher is not able to
attain information with ease. This is because of the restriction on usage of several sites.
Therefore there is huge chance that some information is missed in the present investigation. The
study is challenging task which demands for higher analytical skills for the purpose of managing
the information that has been collected through secondary sources. Such is for the sake of
developing valid outcomes from research. The investigation has major limitation in relation to
cost, time and sources of information. The main limitation is relating to cost that influence the
results of the research.
26

CHAPTER 4: DATA ANALYSIS(4200)
4.1 Introduction
It is another utmost important chapter of the thesis with a predetermination of the
methods selected for investigating the research content in a significant manner. It is basically in
relation to abstract the crucial prospect of the above collected data that has been referred from
the secondary means of data collection.
27

CHAPTER 5: CONCLUSION AND RECOMMENDATION(1500)
28

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