An investigation of the effects of psychological contract and organization-based self-esteem on organizational commitment in a sample of permanent and contingent workers.

In this cross-sectional research design, the authors explore and offer evidence of differential obligations of permanent and contingent workers to their organization. Additionally, they holistically investigate the relationships between different psychological contract obligations and two dimensions of organizational commitment. They found limited support for the hypotheses that psychological contract perceptions varied across permanent and contingent workers and levels of commitment. Additionally, they discovered that organization-based self-esteem partially mediated the relationship between psychological contract and organizational commitment. Implications for management practice, limitations of the study, and directions for future research are also offered.

Keywords: contingent workers; OBSE, organizational commitment; psychological contract

**********

According to the Bureau of Labor Statistics (2005), nearly 10% of the workforce in early 2005 was composed of contingent workers, a trend that has held steady for several years and is foreseen to continue. As a phenomenon relevant to management, many scholars have found the area of the contingent workforce and alternative work arrangements worthy of study (for a review, see Feldman, 2006). The contingent workforce, coupled with the variety of occupations in which these phenomena occur, presents managers with myriad challenges, for example, the challenge of managing workers in high-tech industries (Riolli-Saltzman & Luthans, 2001), but also provide organizational scholars with a research area of considerable importance and opportunity.

The contingent worker is defined as one without an explicit or implicit ongoing employment contract with their client firms. Workers with alternative work arrangements, such as on-call workers, are included in this definition (Kraimer, Wayne, Liden, & Sparrowe, 2005). Also, other contingent workers without a permanent employment arrangement are independent contractors and temporary-services employees (Gallagher & McLean Parks, 2001).

The aforementioned dynamism of the contemporary organization provides management researchers with an opportunity to explore existing constructs with time-tested measures but within this dynamic context. As Johns (2006) pointed out, context should be considered when studying organizational behavior. For example, psychological contracts, organizational commitment, and organization-based self-esteem (OBSE) are important and established constructs in the organizational sciences.

Over time, scholars have offered explanations of these constructs as well as measures to capture their effects. Rousseau (1995, 2001), among others (cf. Dabos & Rousseau, 2004; Deery, Iverson, & Walsh, 2006; Ho, 2005), has engaged in considerable theorizing and research to support the development of the psychological contract literature. Pierce and colleagues (Pierce, Gardner, Cummings, & Dunham, 1989; Pierce, Gardner, Dunham, & Cummings, 1993) conceptualized the OBSE construct and developed and validated a measure in the process. Many scholars have built a substantial research base by studying organizational commitment and have developed and validated a variety of organizational commitment measures (cf. Allen & Meyer, 1990a; Angle & Perry, 1981; Mayer & Schoorman, 1992, 1998; Meyer & Allen, 1984; Mowday, Steers, & Porter, 1979; Porter, Steers, Mowday, & Boulian, 1974).

[FIGURE 1 OMITTED]

The primary purpose of this study was to examine the effects of the relational and transactional dimensions of the psychological contract on OBSE, and continuance and value commitment, of both permanent and contingent workers in a technology firm. In this article, we advance a set of hypothesized relationships between these constructs and discuss the results of a study that indicate a positive relationship between perceptions of the psychological contract and organizational commitment. We also hypothesize and discuss the partial mediating effect that OBSE has on the relationships between the two dimensions of psychological contract and the two dimensions of organizational commitment.

Literature Review

The emergence of the contingent workforce has been a topic of interest for organizational researchers. However, there is limited research addressing the differences between permanent and contingent workers' attitudes and psychological experiences.

Offered here are a model (Figure 1) and a series of hypotheses about the interrelationships between the variables discussed in this article. We hypothesize that the two dimensions of the psychological contract, relational and transactional, have differential relationships with the two dimensions of commitment, value and continuance, respectively, as mediated by OBSE. Furthermore, we hypothesize that many of these relationships differ with regard to the employment status of the worker.

Psychological Contract

Szabo and Negyesi (2005) assert that the emerging knowledge-based economy necessarily resulted in the decomposition of traditional work arrangements. The so-called modular organization (Schilling & Steensma, 2001) is composed of changeable units, which are intended to adapt to the dynamism of the contemporary business climate. With the exception of key personnel, workers are "interchangeable, disposable, recallable, and transferable" (Szabo & Negyesi, 2005, p. 63). The contingent workforce is a response to this change in employment relationships and offers organizations the further benefits of altering their scope and scale. Employing a contingent workforce is also a method to rapidly infuse an organization with knowledge (Schilling & Steensma, 2001; Thompson, 1997).

Szabo and Negyesi (2005) said, "Traditional, irreversible employment ... is simply inconsistent with the dynamics of the economy in the post industrial age" (p. 73). Thus employment now exists on a continuum--a notion introduced earlier by McLean Parks, Kidder, and Gallagher (1998)--ranging from the absolute extremes of irreversible employment to reversible, ad hoc employment. How workers are actually employed exists somewhere in the middle, depending on a number of factors. These employment situations necessarily introduce a variety of issues or certain trade-offs in managing a dynamic workforce. There is evidence that contingent workers can rapidly bring knowledge to their host organizations but also that their loyalty is less than that of long-term employees (Schilling & Steensma, 2001).

The psychological contract is a social or intangible contract that is implicit in organizational membership. Psychological contracts exist when an individual and an organization's management each have expectations that are based on the aggregate obligations between employees and the firm (Rousseau, 1995).

The psychological contract is defined as "systems of beliefs that an individual and his or her employer hold regarding the terms of their exchange agreement" (Dabos & Rousseau, 2004, p. 53). In other words, psychological contracts are highly subjective, and what makes them binding is what an individual perceives the agreement to be (Rousseau, 1995). There are, however, inevitable similarities in people's perceptions, often determined by their common work situation, such as employment status.

Considerable empirical evidence supports the existence and importance of psychological contracts in the workplace. Following, we present examples of the different aspects of the psychological contract. Scholars have studied the effects of psychological contract breach on customer service workers (Deery et al., 2006) and the mutuality and reciprocity in psychological contracts at work (Dabos & Rousseau, 2004). As related to contingent employment, Kraimer et al. (2005) studied the relationship between contingent workers' perceptions and their performance, and McDonald and Makin (2000), whose measure is employed in this study, considered the psychological contract of contingent workers in relation to organizational commitment and job satisfaction.

Obligations under psychological contracts. McDonald and Makin (2000) said that psychological contracts exist on a continuum ranging from transactional to relational. These extremes comprise the two distinct anchors of psychological contract obligations.

The transactional obligation is short-term and economic in nature (Rousseau, 1995). Examples include a willingness to work overtime, to provide high levels of performance for contingent pay, and to give notice before quitting, all without loyalty to the organization. Contingent work is indicative of the transactional contract, where temporary workers fulfill a legal employment contract that states the precise remuneration for services rendered.

The relational obligation is composed of more long-term reciprocal expectations and obligations (McDonald & Makin, 2000). Relational factors are representative of a long-term employment relationship and focus on open-ended relationships involving considerable investments by both sides (Rousseau, 1995). For example, employees may believe that employers are obliged to provide job security (Kraimer et al., 2005) but understand that performance is their reciprocation for such security (Rousseau & McLean Parks, 1993).