Psychological Contract

This paper will cite a number of significant studies. These will be cited to underscore the fact that psychological contracts are extremely important for the business organization for the simple fact that it is directly linked to productivity and efficiency, and, henceforth, profitability.The psychological contract concept was first coined and identified sometime in the 1990s to the 2000s although some semblance to it has been mentioned in previous literature as early as the 1970s and perhaps earlier. This fact underscores that the principle at work here is that one involving a system that is present in all interpersonal relationships wherein there are implicit and explicit promises. (Conway and Briner 2005, 20) There are numerous definitions of psychological contract and certainly, psychologists, academics, and other stakeholders could and would not agree on a standard or universal meaning. One of the most comprehensive, however, was that definition suggested by Denise Rousseau.According to her, the psychological contract is something that exists in the mind of an individual and that it is consisted of “individual beliefs, shaped by the organization, regarding terms of an exchange agreement between individuals and their organization” or that, in simple terms, it is “the actions employees believe are expected of them and what response they expect from the employer.” (Cited in Wellin 2007, 27) Central to this variable is the so-called employee’s agency, which, for its part, “manifests itself as self-actualization, action influence and creativity” – all of them contributing to the employee’s conception of the contract. (Seeck and Parzefall 2008, 473) It is important to underscore here that since the contract exists between two parties both of these exist in their respective minds – from the employee and the employer’s points of view.Further on, Makin et al.