Effects of Resource Availability on Social Exchange Relationships: The Case of Employee Psychological Contract Obligations

Antecedents of Breach of Employee Psychological Contract Obligations

A psychological contract, as opposed to a formal job contract, comprises beliefs that include subjective interpretations of promises made by both parties that obligate them to a reciprocal exchange (Rousseau, 1995). A breach of employee obligations would occur when the employee fails to deliver on the promised obligations (Coyle-Shapiro & Kessler, 2002; Tekleab & Taylor, 2003). While performance-related contributions will form an important part of this assessment, the employee’s perceptions of breach will develop in the context of the reciprocity-based obligations in the employee–organization relationship (Lambert, 2011). A given level of job performance may (or may not) represent breach from the employee’s perspective, depending on whether (or not) it represents a failure on the part of the employee to deliver on what he or she feels is owed to the organization (Rousseau, 1995). Thus, a perception of breach is more than an assessment of job performance–related contributions: It refers to an employee’s overall belief that he or she has failed to contribute to the level that he or she was obligated to in the context of the reciprocal exchange agreement. This context includes the extent to which the organization has satisfied its obligations to the employee as well as the employee’s level of available resources.

We propose that employees’ perceptions of breach obligations could arise from two reasons: a willful breach in response to breach of obligations by the employer or an inability to fulfill obligations due to lack of sufficient resources. We integrate two theoretical perspectives, namely, the SET (Blau, 1964) and COR theory (Hobfoll, 2002), respectively, to explain the above two reasons and to identify antecedents of employee breach of obligations.

SET is the most widely used theoretical perspective to shed light upon the causes of breach of obligations (Coyle-Shapiro & Kessler, 2002). The psychological contract relationship between the employee and the employer is predicated upon a reciprocity-based social exchange relationship (Bal et al., 2010; Coyle-Shapiro & Neuman, 2004). If one party fails to deliver on promised obligations, it is likely that the other party will reciprocate in kind (Rousseau, 1995). Thus, if the employer breaches its psychological contract obligations, the employee is likely to respond by withholding contributions and committing a breach of employee obligations (Coyle-Shapiro & Kessler, 2002). Therefore, we predict a positive relationship between breach of employer obligations and breach of employee obligations.

An employee’s ability to deliver on the promised obligations is also likely to be influenced by the availability of personal and situational resources (Grandey & Cropanzano, 1999; Hobfoll, 2002; Peters & O’Connor, 1980). Resources include objects (e.g., work tools), conditions (e.g., marital status), and personal characteristics (e.g., traits, skills, and abilities; Halbesleben, Neveu, Paustian-Underdahl, & Westman, 2014; Hobfoll, 2002) required to meet the demands placed upon the individual. The impact of resource availability on performance and well-being has been examined under the theoretical framework of COR (Hobfoll, 2002). According to COR theory, individuals are motivated to acquire and conserve resources. This motivation is particularly active when there is a lack of available resources or a threat of resource depletion; such situations are perceived as stressful, and individuals react by seeking additional resources or conserving their current resources by reducing resource expenditure in other contexts (Hobfoll, 2002).

Lack of resources (e.g., skill deficiencies) or high demand on resources (e.g., time and attention to look after an ill member of the family) may limit the availability of resources needed to meet other demands (e.g., time and attention at work; Peters & O’Connor, 1980), including social exchange obligations. Based upon this idea, we propose that breach of employee psychological contract obligations may also be influenced by resource availability, over and above the state of the social exchange relationship. That is, inclusion of resource variables will shed unique light upon employee breach of obligations.

We now turn to predictions regarding specific resource-based variables. One kind of demand on resources that might affect fulfillment of work obligations is FWC (Grandey & Cropanzano, 1999). FWC refers to a role-based conflict in which family-related roles and responsibilities interfere with those at work (Allen, 2013; Netemeyer, Boles, & McMurrian, 1996). As predicted by COR theory, when employees experience resource drain due to family demands, they respond by conserving resources in the work context (Grandey & Cropanzano, 1999). Applying this idea to the context of employee obligations, we predict that when employees are faced with high levels of family demands that interfere with work performance, they will find it difficult to meet their obligations to the organization.

A personal resource characteristic that should enhance the likelihood that employees deliver on promised obligations is conscientiousness (Gellatly, 1996; Halbesleben et al., 2009). Conscientiousness is a particularly relevant and interesting trait-based resource. First, it affords its own advantages in achieving work goals. Conscientious individuals concentrate on the task at hand by the “diligent performance of role behavior” (Hofmann & Jones, 2005: 513). Second, conscientiousness serves as a “meta-resource” (Halbesleben et al., 2009: 1460). That is, individuals high on conscientiousness are good at managing their overall pool of resources. They are better at planning and time management, and these organizational skills allow them to allocate resources when and where most needed. We use these two characteristics of highly conscientious individuals to propose direct and moderating effects of conscientiousness, respectively.

We have chosen conscientiousness as the personal resource for several reasons. Of the Big Five personality variables, conscientiousness has the strongest relationship with employee contributions, such as performance (Barrick & Mount, 1991). Conscientiousness as a personality trait is characterized by self-discipline, efficiency, and reliability (Colquitt & Simmering, 1998; Marcus & Schuler, 2004). Those high in conscientiousness follow rules, prefer regular updates, and choose their words carefully (Goldberg, 1992). Highly conscientious individuals value their contribution toward the organization (Flaherty & Moss, 2007) and are likely to display higher commitment and job performance than individuals who are low in conscientiousness. Therefore, those higher in conscientiousness are more likely to fulfill their obligations to the organization (Barrick & Mount, 1991; Meyer, Stanley, Herscovitch, & Topolnytsky, 2002). Following from this, we predict the following:

We also expect that conscientiousness will moderate the effect of FWC upon breach of employee obligations. Personal resources, such as conscientiousness, act as meta-resources (Halbesleben et al., 2009) or key resources (ten Brummelhuis & Bakker, 2012; Halbesleben et al., 2014), in that they enable efficient use of other resources and better problem-solving and coping skills. For example, Halbesleben et al. (2009) found that expenditure of resources in the form of organizational citizenship behaviors was positively related to work interference with family; however, this relationship was weaker for employees high on conscientiousness. People high on conscientiousness have better organizational skills and engage in more optimal use of other resources, such as time and energy. In the context of our study, when confronted with FWC, employees high on conscientiousness will enlist other resources to ensure that they fulfill their psychological contract obligations (Hofmann & Jones, 2005). Put in terms of COR theory, people high in conscientiousness will have a lower need to conserve resources (and reduce contributions at work) when faced with FWC (Colquitt & Simmering, 1998), thereby attenuating the relationship between FWC and breach of employee obligations. On the other hand, people low on conscientiousness lack the extra organizational skills and will find it difficult to meet work demands when they experience a resource drain, such as FWC (Marcus & Schuler, 2004). Therefore, the relationship between FWC and breach of employee obligations will be stronger for those low in conscientiousness.

Similarly, conscientiousness is likely to moderate the positive relationship between breach of employer obligations and breach of employee obligations. People high in conscientiousness are performance oriented and have a long-term relationship with the organization in mind (Raja, Johns, & Ntalianis, 2004). When they experience breach from the employer, they are less likely to be perturbed by it and will persist with fulfilling their obligations (Flaherty & Moss, 2007). On the contrary, people who are low in conscientiousness are more likely to be emotion focused and impulsive in their reactions and may reciprocate breach with breach (Marcus & Schuler, 2004). Therefore, the relationship between breach of employer obligations and breach of employee obligations will be stronger for individuals low on conscientiousness.

Breach of Employee Obligations and Employee Career Progression

In the organizational literature, career advancement has been explained from the theoretical standpoint of Turner’s career mobility perspective (Turner, 1960; Rosenbaum, 1984). According to this theory, career progression is a result of two pathways: the contest mobility pathway and the sponsored mobility pathway. In the contest mobility pathway, career progression is a competition among employees. Those with stronger human capital–based performance win and get promoted to higher levels in the organization (Judge, Cable, Boudreau, & Bretz, 1995; Ng et al., 2005). In the sponsored mobility pathway, employees achieve career progression because of sponsorship from management; promising candidates are identified by senior management and provided unique access to career progression pathways in the form of support, encouragement, mentoring, and access to opportunities (Wayne, Liden, Kraimer, & Graf, 1999). On the basis of the career mobility perspective, we propose that employees’ breach of obligations will hurt their career progression in the organization. This prediction is supported by both the contest mobility and sponsorship mobility pathways. Breach of obligation implies that the employee performs poorly compared to the benchmark in the employment relationship (Tekleab & Taylor, 2003), making it less likely that the employee will be able to win the contest for promotion. Breach of obligations will also make it less likely that the employee will receive sponsorship from the supervisor and other senior managers. Indeed, SET and the norm of reciprocity also predict that if the employee does not fulfill his or her obligations to the organization, organizational agents are less likely to provide inducements, such as mentoring and support, necessary for career progression (Chen et al., 2008).

Finally, we consider the interplay among resource and social exchange variables in explaining career progression in the organization. Combining the propositions related to the antecedents and the consequences of breach of employee obligations, we suggest an indirect effect of the antecedents on the consequences via breach of employee obligations. That is, breach of employee obligations will carry indirect effects of breach of employer obligations, FWC, and conscientiousness upon career progression. Moreover, we expect that conscientiousness will moderate the indirect effects of breach of employer obligations and FWC (i.e., a first-stage moderation, as suggested by Hypotheses 4 and 5): The indirect effects will be stronger for employees low in conscientiousness compared to those high in conscientiousness. These predictions are captured in the form of the moderated mediation hypotheses presented below.

Participants and Procedure

Measures

Multi-item scales were used to ensure adequate measurement of each study variable. Unless otherwise specified, the response format for all items, excluding the demographic variables, was a 7-point Likert-type scale with items coded such that a higher score indicated a greater amount of the focal construct (except for reverse-coded items). Survey length constraints imposed by the participating organization made it necessary to shorten some of the scales (see details below).

Theoretical Implications and Future Directions

Our findings highlight the interconnections and dependencies among various social relationships (Coyle-Shapiro & Conway, 2004). Employees are embedded in a web of relationships, some at work (e.g., chain of hierarchical and horizontal relationships in the organizational structure) and some outside of work (e.g., in family and community structures). An employee’s ability to meet obligations in a social exchange relationship at work may be dependent upon successfully negotiating the demands of other social relationships (Blau, 1964). Emerson’s classic work on interconnected social exchange networks noted that exchange in one network may be dependent on resource exchange in another network (Cook & Emerson, 1978; Emerson, 1981). However, these interconnections have received limited examination. There is a need to expand the study of social exchange relationships at work by incorporating the interconnections between various exchange relationships within the organization as well as outside the organization. Of course, these interdependencies do not have to result in conflict; family and work roles may be mutually enhancing, making it more likely that employees meet their psychological contract obligations (Allen, 2013). Future research should adopt a more comprehensive approach, incorporating both conflict and enrichment processes, when examining the consequences of multiple role demands on psychological contract obligations.

The employee–organization relationship, as characterized by psychological contract theory, comprises mutual obligations involving the reciprocal exchange of inducements and contributions (Rousseau, 1995). In contrast to breach of employer obligations, breach of employee obligations has received scant research attention (Coyle-Shapiro & Conway, 2004; Coyle-Shapiro & Kessler, 2002). We have strived to gain some balance in the research literature by drawing attention to antecedents and consequence of breach of employee obligations. In this regard, our findings make several important contributions. We have drawn attention to the social exchange– and resource-based antecedents of breach of employee obligations. In fact, both the employee and the organization are situated in resource contexts that may influence their ability to meet the employee–organization social exchange obligations. Greater awareness of both resource contexts will have theoretical and applied benefits. In terms of theory, incorporating the resource context will enhance our predictions regarding the likelihood of reciprocity in the exchange relationship. In terms of practical benefits, an understanding of each party’s resource constraints may lead to greater agreement on each other’s obligations in the social exchange relationship (i.e., enhance mutuality; Dabos & Rousseau, 2004). An understanding of the extenuating circumstances underlying breach may also make the other party more willing to accept the breach and temper the reactions to the experience of breach (Robinson & Morrison, 2000).

Note that breach of employees’ psychological contract obligations can include both over- and underfulfillment of obligations (Lambert, Edwards, & Cable, 2003). While we have examined underfulfillment, future research should also consider resource implications of overfulfillment. In the short term, overfulfillment may lead to expenditure of resources and result in lack of resources available for family or other nonwork social exchange obligations. However, overfulfillment at work may also result in an accumulation of resources, which can then be used later to attend to nonwork demands (e.g., a monetary bonus or vacation time; ten Brummelhuis & Bakker, 2012). Thus, there is a need to examine the longer-term resource implications of psychological contract over- and underfulfillment.

Another contribution of this paper is demonstrating the link between breach of employee obligations and career progression. Psychological contract processes have primarily been related to attitudinal or performance outcomes (Conway & Briner, 2009). We have provided evidence of the important impact of such processes on career progression across two distinct samples using a measure of promotability and of actual promotion. Our findings converge to demonstrate that breach of employee obligations can derail career progression. Given the importance of career progression in terms of tangible and intangible gains for employees, additional research needs to examine the extent of damage caused by breach to the career prospects of the employee. More specifically, how long does the negative effect of breach last? In Sample 1, we found effects lasted up to a year. Can the employee restore the career prospects by meeting (or even exceeding) future psychological contract obligations? Future research also needs to examine the moderators of the breach–career progression relationship, such as the role of supervisor attributions for employee breach (given that supervisors are likely to play a key role in the employee’s career progression).

Finally, we have demonstrated the interrelationships between resources across contexts—in particular, we have shown that the availability of a resource in one distinct context can compensate for another resource that has been drained in a separate context. Our finding contributes to the growing literature that looks at how multiple resources are utilized to manage contexts with scarcity or abundance of resources (Parker, Johnson, Collins, & Hong, in press). Our findings also contribute to the theoretical treatment of conscientiousness by considering it as a resource that not only helps fulfill work obligations but also buffers the negative impact of other resource drains (Halbesleben et al., 2009). We would like to draw attention to three implications of this finding and suggest future research directions. First, our findings support the notion of conscientiousness as a meta-resource. Future research needs to examine in more detail how precisely conscientiousness is utilized in the management of other resources. Second, conscientiousness buffered the effects of FWC but not breach of employer obligations. This suggests a motivational element to the use of conscientiousness as a resource; that is, individuals high in conscientiousness choose to apply this resource in light of the context. Future research should further explore the motivational preferences of highly conscientious employees. Third, note that resources are limited and they do exhaust (Hobfoll, 2002). Conceptualizing conscientiousness as a resource, therefore, has an interesting implication: Conscientiousness may be an exhaustible resource. This perspective suggests a within-person variation in conscientiousness as a result of high demand on resources (i.e., depletion of the conscientiousness resource). While between-person variation in conscientiousness is well established, within-person variation is yet to be examined. Remaining questions that need addressing include “What types of circumstances deplete conscientiousness?” and “How is conscientiousness regained?” Given the implications of conscientiousness for performance (Barrick & Mount, 1991), these would be highly worthwhile questions to pursue.

Methodological Strengths and Limitations

Conway and Briner (2009) noted that the majority of studies on psychological contracts have examined attitudinal variables as outcome variables. We were able to link breach of employee obligations to an objective indicator, actual promotion (in Sample 1). We were also able to replicate our findings, including the moderated mediation results, across two samples. Sample 1 involved data collection over multiple time points, strengthening causal implications of the relationships. However, we did not measure all variables at all time points, and thus our design was not truly longitudinal. Therefore, we cannot draw conclusive causal inference from our findings. Similar weaknesses have been noted in the work–family research, including predominantly cross-sectional survey designs (Allen, 2012, 2013). We provided extensive validation of the global measure of breach of employee obligations.

Our measure of conscientiousness in Sample 1 had several limitations. Due to survey length constraints imposed by the participating organization, we could use only a shortened four-item measure (although we did demonstrate its high correlation with the full measure using an independent sample). Moreover, this measure had a relatively weak alpha (.69). Sample 2 provided constructive replication with a different and longer measure of conscientiousness. We also used multiple sources of data, including self, peer, and supervisor sources, to address same-source bias. However, we acknowledge that common method variance may play a role in the relationships between breach of employer obligations, FWC, and breach of employee obligations as these were measured by self-reports.

Finally, breach of employee obligations can be assessed by self-ratings (i.e., employee’s own assessment of breach) or by supervisor ratings. We adopted the former approach because we were interested in the employee’s own assessment of his or her breach of obligations. However, we were able to replicate the results with another sample using supervisor ratings of employee breach (please contact the authors for details).

Practical Implications

Research on employer breach recommends that employers should manage employee attributions and sense-making by explaining reasons for breach (such as fall in market demand for products) and thereby mitigate the harmful effects of broken promises (Bordia, Restubog, & Tang, 2008). A similar rationale could apply to the management of employer perceptions. The findings of this research draw attention to a variety of reasons why employees may breach their obligations to the organization. Some of these reasons, such as FWC arising from caring for a sick child, could be beyond the employees’ control and may be considered extenuating circumstances for breach of employee obligations. Employers may be willing to grant an amnesty to employees who need to attend to a temporary spike in family demands. However, employees need to be aware that any amnesty is likely to be temporary and that ongoing breach of obligations will have damaging consequences for their career progression.

Our findings suggest that breach of obligations can result in a domino effect, whereby an employer breach is reciprocated by an employee breach, which in turn can result in the employee’s being turned down for a promotion. This negative reciprocity could ultimately result in the dissolution of the employment relationship, an outcome that may not be of interest for either party (Kacmar, Andrews, Van Rooy, Steilberg, & Cerrone, 2006). We recommend that employers and employees take steps to minimize the occurrence of breach of obligations. Employees should take into account their skills and abilities and nonwork demands before they promise to make contributions when negotiating a psychological contract. Employers should adopt measures that will help employees cope with resource demands. This may include help in dealing with FWC by providing formal (e.g., supervisor support; Hammer, Kossek, Anger, Bodner, & Zimmerman, 2011) and informal (e.g., a work climate that is supportive of family issues; Shockley & Allen, 2007) assistance to manage multiple demands (Allen, 2012). Indeed, research shows that when employees are able to achieve work–life balance, it enhances their career advancement potential (Lyness & Judiesch, 2008). Finally, although conscientiousness is a trait, characteristics of highly conscientious people can be inculcated in others (Bruck & Allen, 2003). For example, better planning behavior can reduce the interference between work and family domains (Lapierre & Allen, 2012), and therefore employees may benefit from time management training.

It would also help to minimize incongruence or lack of agreement on the mutual obligations in the employee–employer relationship (Dick, 2006). We recommend that given the important role of nonwork influences on work outcomes, there be an open discussion of mutual needs and responsibilities when it comes to expectations of support and family-friendly practices in the workplace. Employee preferences for contributions and inducements can be ascertained, and this may reduce instances of breach (Low & Bordia, 2011). If needed, idiosyncratic psychological contracts (i.e., “i-deals,” or unique arrangements between an employee and employer; Rousseau, 2005) can be developed that meet the special needs of employees. Such i-deals may avoid situations where uniformly imposed practices help some but hurt others. Flexible work practices have been shown to decrease FWC for women with high family responsibilities but increase FWC for women with low family responsibilities (Shockley & Allen, 2007).