Psychological Contract Development,Distributive Justice,and Performance of Independent Contractors

Abstract

In today’s “gig economy,” more and more jobs are offered to independent contractors. Independent contractors have a highly defined, narrow, finite set of obligations to their employing organizations. As such, independent contractors gain the benefit of flexibility, choosing who and when they work, and organizations gain the benefit of nimbleness, expanding, and contracting their workforce at will without taking on the robust obligations they must typically offer to a full-time employee. As this sector of the U.S. economy grows, how our existing theories of employee–employer relationships apply is of interest. The present study sought to explore how one such theory (psychological contract theory) manifests in the independent contractor–organization relationship. Drawing on this theory’s findings with respect to key antecedents of an employment relationship, we explore how particular types of negotiation behavior an organization uses with an independent contractor affect the resources allocated to the independent contractor, vis-à-vis obligations that the independent contractor feels that the focal organization should fulfill (psychological contract). These resources are hypothesized to directly relate to the independent contractor’s sense of distributive justice, as well as the contracting organization’s evaluation of the independent contractor’s performance. Overall, the mixed results suggest that psychological contract theory can be applied to the context of the independent contractor–organization relationship in order to uncover how unique features of the relationship (e.g., highly negotiated terms) affect how obligations are created and reciprocated between the parties. Psychological contract type appears to be a partial linchpin between an organization’s negotiation behaviors on independent contractor performance.

Keywords

psychological contracts social exchange resources

The nature of the current fast-paced, global business environment has resulted in a shift in how organizations manage their human resources. In looking to decrease costs and maintain flexibility, organizations are increasingly utilizing noncore workers to fill roles traditionally held by salaried employees, especially in the technology and consulting sectors (Hathaway, 2015; Scheiber, 2015). One type of noncore employment status is being hired as an independent contractor. Independent contractors are those individuals hired on a job-by-job basis, and who are not afforded the employment benefits and rights allotted to core workers. The use of independent contractors may reduce costs because these workers bring their own set of tools (tangible and intangible) and expertise to the organization, reducing the need to train and develop internal employees. Furthermore, independent contractors are typically hired for highly specialized assignments, indicating that an organization may elect to not renew employment between itself and the independent contractor for any number of reasons, increasing the ease at which the organization can stop and start projects. This nontraditional employment arrangement brings to light a host of questions for management scholars as to how the employment relationship is perceived and managed between an organization and its hired independent contractors.

An important area of inquiry in understanding the employment relationship of independent contractors is identifying key antecedents independent contractors use to determine what they feel is owed to them by their employer. This sense of what is owed is called a psychological contract. As such, psychological contract theory, which describes how individuals come to understand the terms of their employment and react to these terms, is an important theoretic guide for the present study. Psychological contract theory proposes that how procedures and policies are communicated from an organization to employee is a key predictor of the type of psychological contract expected by the employee (Rousseau, 1995, 2001b). The developed psychological contract consequently influences the kind and quantity of resources received by the employee from the organization. Psychological contract theory (Rousseau, 1995) draws on its roots in social exchange theory (Blau, 1964) to predict that employees will reciprocate received resources in kind. As summarized next, the present study extrapolates these core tenants of psychological contract theory to the organization–independent contractor relationship.

Extending psychological contract theory to the context of an organization–independent contractor relationship leaves researchers with new questions. The primary question is “What are the key behaviors that drive the development of the psychological contract?” In this article, we describe how an organization negotiates with an independent contractor conveys to the independent contractor the type of psychological contract that is to develop. Specifically, negotiation behavior (e.g., forceful, avoiding, or problem-solving negotiation behavior) underpin the type and quality employer–independent contractor relationship as the terms of employment are typically more expressly determined (Rousseau, 1995). From the developed psychological contract, the organization will allot commensurate resources to the independent contractor (Blau, 1964; Lemmon, Glibkowski, Wayne, Marinova, & Chaudry, 2016; Mitchell, Cropanzano, & Quisenberry, 2012; Rousseau, 1995). A second question related to the use of psychological contract theory to understand the relationship between an independent contractor and organization is the nature of reciprocal exchange. Independent contractors have limited levers by which to reciprocate to their employing organizations. Their key lever is performance, which is under direct control of the independent contractor (Rousseau, 1995). We therefore anticipate that an independent contractor’s performance will be related to resources that contractor receives from the organization (Blau, 1964), making performance a key outcome of the psychological contract between an organization and independent contractor. Independent contractors are also acutely aware of equitability in the organization–independent contractor exchange, typically because of the express nature of the obligations between parties (Rousseau, 1995). As such, we anticipate that an independent contractor’s sense of distributive justice is a key outcome of its accounting of the resources received from its employing organization. Figure 1 outlines these proposed relationships.

Figure 1.

Hypothesized relationships.

In utilizing psychological contract theory to understand two critical outcomes of an organization–independent contractor relationship, this article extends psychological contract theory in three ways. First, it advances the field’s understanding of the development of psychological contracts for nontraditional employment relationships. It argues that the negotiation of the terms of employment through negotiation behavior is a principle way in which independent contractors glean clues as to what to expect in the future from their employing organization. It also extends psychological contract theory by identifying how particular types of psychological contracts influence perceptions of resources (e.g., goods, status, and love). This provides a more nuanced understanding of the psychological contract type-to-outcomes relationship by identifying resources received as a mediator of this relationship. Furthermore, this better operationalizes the exchange relationship articulated theoretically by psychological contract theory, specifically that the behavior of Party A to the contract influences how Party B feels about obligations between the parties, as well as subsequent fulfillment by Party A of those obligations. It is then that Party B determines how to reciprocate and assessing the fairness of what has been received from Party A. Finally, practically, the overall model describes how organizations employing independent contractors might increase these hire’s performance within the relationship. By using psychological contract theory to model resources as a proximal antecedent and negotiation behavior as a distal antecedent of performance and justice, this study uncovers a number of different levers organizations can use to enhance independent contractor performance.

Theory and Hypotheses

Negotiation Behaviors

Prior to the hypothesis development, this study first describes the unique, noncore employment relationship studied: that between a broker (sometimes referred to herein as the “focal organization” or “organization”) and an independent contractor. A broker is defined as an organization that receives a request for service by a customer and then organizes supply of that service with one of its independent contractor contacts. Important for the current study, the broker (a) owns no means to supply the service itself and instead relies solely on the independent contractor to deliver the service to the organization’s customers and (b) has no direct oversight over delivery of the service. That is, the independent contractor and the broker are not colocated, and as such, the broker is not able to observe the independent contractor delivering the service to its customer. It is thus very important that the broker promote feelings of good will and fair exchange in order to prompt the independent contractor to reciprocate via delivering excellent service to the broker’s customers (Blau, 1964). This article will explore key mediating mechanisms between particular ways in which a broker communicates terms of employment with an independent contractor and independent contractor performance for the broker, generally, and with receipt of broker resources, specifically.

The relationship between independent contractors and a broker is largely predicated on negotiations about terms of the business engagement between the two parties. This is because the broker has no formal authority (legally or socially) over the independent contractor as it does in a traditional employment relationship. Thus, the terms of the relationship are derived from active discussion about what the focal organization requires of the independent contractor and the reciprocal benefits required by the independent contractor (McLean Parks, Kidder, & Gallagher, 1998). An integral part of a successful relationship between an independent contractor and an organization is the negotiation behavior of the broker. The broker controls the number and duration of the employment engagements; however, the support received from the broker by the independent contractor is apt to trickle down to service of the broker’s customers (Liao & Chuang, 2007; Salanova, Agut, & Peiro, 2005), indicating that both parties have some sense of agency in the employment relationship. Specifically, the broker’s negotiation behavior with the independent contractor is an important cue as to the type and range of obligations the broker has to the independent contractor (Sels, Janssens, &Van Den Brande, 2004). This section will first discuss the various types of negotiation behavior that a broker may engage in. It will then proceed to explore how these negotiation behaviors contribute to the perceptions independent contractors have about obligations the broker owes them—that is, the type of psychological contract the negotiation behavior engenders.

Negotiation between two parties with divergent interests is guided by each party’s communication pattern (De Dreu, Weingart, & Kwon, 2000; Pruitt, 1981). Over time, this communication pattern allows one party to assess the typical negotiation behavior of the other. This could occur with repeat engagement of the independent contractors. What do these communication patterns look like? The dual concern theory of conflict management centers on the choices one makes in negotiations with regard to whose concern (self or other) guides action within the negotiation (Blake & Mouton, 1964; De Dreu, Evers, Beersma, Kluwer, & Nauta, 2001; Pruitt & Rubin, 1986; Rahim & Magner, 1995). The present study focuses on three types of negotiation behavior: problem solving, forcing, and avoiding.

Problem solving occurs when the parties of the exchange both have high concern for themselves and for the other. This type of conflict management seeks to “expand the pie” by focusing on finding solutions that fully satisfy both parties. This differs from compromise because it focuses on being innovative in finding a mutually optimal solution rather than being conditional or based on concession (Van der Vliert, 1997). In the broker–independent contractor relationship, an example of problem-solving negotiation is when the organization attempts to alter the work hours such that they assign jobs known to typically last 50% of their normal length in order to serve the independent contractor’s need for temporal flexibility. The second type of negotiation behavior examined in the present study is forcing. Forcing occurs when one has high concern for the self and low concern for the other (De Dreu et al., 2001). It typically indicates use of threats or positional commitments intended to derive maximum self-benefit without regard to the preferences or needs of the other party. This may occur within the broker–independent contractor relationship when the broker threatens to withhold future business unless the independent contractor reduces its payment rate. The final type of negotiation behavior examined in the present study is avoiding negotiation behavior. Concern for the self and the other are low in the avoiding conflict management condition. This type of negotiation behavior actually indicates an absence of active negotiation and communication; here, a party attempts to reduce thinking or rumination about the issues at hand (De Dreu et al., 2000). An example of this type of negotiation behavior occurs when an organization fails to acknowledge that there are issues to be negotiated between itself and the independent contractor, such as inconsistent timing of payment or insufficient notice about upcoming jobs.

Linking Negotiation Behavior to Psychological Contract Formation

A psychological contract is composed of “beliefs, shaped by the organization, regarding the terms of an exchange agreement between individuals and their organization” (Rousseau, 1995, p. 9; in the present case, the “organization” is the “broker”). Psychological contract theory is premised on the idea that the parties to the contract internalize behavior by the other party as an indicator of the type of psychological contract that is to be established. As such, this finds that the development of a psychological contract has a key benefit: It provides predictability in that both parties know, at least abstractly, the expectations of the other party and will behave in accordance with those expectations (Rousseau, 1995). Two main antecedents to psychological contract formation have been identified: formal employment characteristics and human resource management practices, and how these are communicated (Rousseau, 2001b). As outlined in the next section, negotiation behaviors on the part of the broker imply both human resource management and the tone or attitude of communication of these policies and procedures. While these two antecedent categories are broad, we anticipate that negotiation behavior does encapsulate their key attributes. Specifically, we will detail how negotiation behaviors observed by independent contractors are important cues as to the nature of the exchange between the independent contractor and the broker (De Dreu et al., 2000). In this way, negotiation behaviors may serve as indicators about what type of psychological contract, or perception of broker obligations owed the independent contractor, is formed between the broker and independent contractor.

External messages and social cues that affect an employee’s psychological contract are best described by Sels, Janssens, and Van Den Brande (2004). These researchers identified two specific antecedents of a psychological contract content formation that capture such messages and cues: formal employment characteristics, such as contract type (i.e., long-term, full- or part-time), and human resource management practices, such as reward systems and participation structures. Brokers’ negotiation behaviors play a large role in each of these antecedents. First, brokers arrange an independent contractor’s formal employment characteristics and convey them through negotiation. For example, the broker has discretion over the length of employment (day-to-day job or month-long engagement), through the independent contractor may simultaneously bargain for its preferred contract rate. Furthermore, brokers arrange any idiosyncratic deviation from formal employment characteristics, such as flexible hours or a unique compensation package (Rousseau, 2005; Rousseau, Ho, & Greenberg, 2006). The manner in which the broker negotiates with the independent contractor will be a clear cue about the nature of the psychological contract. Second, broker responsibilities include managing human resource policies, such as designing reward systems and determining what type of work force is required to achieve their organizational goals. The manner in which the broker conveys this information will influence how the independent contractor views their psychological contract. Through these decisions and actions, brokers shape and develop feelings of obligation between the parties (McLean Parks et al., 1998; Rousseau, 1995). Messages and cues from the broker are expressions of the organization about a particular action (Rousseau, 1995), and independent contractors readily integrate these commitments into their psychological contract to ensure a match between what they were promised and what they are receiving (Blau, 1964). Moreover, Rousseau (2001b) specifies situations in which commitments stemming from these messages and cues are most influential to one’s psychological contract composition: when an employee is hired, when an employee’s employment situation is changed (e.g., promotion or title change), when feedback on performance or expectation is provided, and when an organization’s mission or goals are specified. The broker’s negotiation patterns affect each of these four time periods. Thus, in summary, negotiation behaviors affect the way in which independent contractors come to perceive their psychological contract with the organization.

Psychological contract theory finds that contracts may be organized based on the type of obligations that underpin them. Three types of psychological contracts are the focus of the present study: balanced psychological contracts, transactional psychological contracts, and transitional psychological contracts.¹ As described above, the negotiation behavior enacted by brokers are key antecedents to the type of psychological contract formed. Balanced psychological contracts are contracts composed of long-term, yet specific terms (Rousseau, 1995). These types of psychological contracts make employees feel like they need to reach high-performance goals, yet at the same time that they have organizational support needed to achieve those goals (Aselage & Eisenberger, 2003; Hui, Lee, & Rousseau, 2004). In contrast, transactional psychological contracts are developed when employees perceive promises due and obligations owed to an organization as finite, unambiguous, and unemotional (Rousseau, 1990, 1995). Consequently, organizations tending to communicate and exchange with subordinates in a quid pro quo fashion will likely induce this type of psychological contract (Sturges, Conway, & Liefooghe, 2005). The final type of psychological contract examined is the transitional psychological contract. This type of contract is composed of ambiguous, uncertain terms, and is inherently unstable because little or no communication between the independent contractor and the broker occurs (Rousseau, 1995). Transitional psychological contracts are indicative of an eroding relationship (Lester, Kickul, & Bergmann, 2007, Rousseau, 1995; Rousseau & Tijoriwala, 1998).

Problem-solving negotiation behaviors focus on meeting the needs and goals of both parties. Because balanced psychological contracts are formed based on mutual concern for each other’s needs (focus on performance, which helps the employer, and focus on support for that performance, which helps the independent contractor), brokers exhibiting problem-solving negotiation behavior are likely to engender balanced psychological contracts with their brokers. Problem-solving behavior implies mutual concern for the other party’s needs and preferences, which is a staple of the terms of the balanced psychological contract (Rousseau, 1995). In contrast, problem-solving negotiation behaviors are likely to negatively relate to the development of transitional psychological contracts. As stated, the essence of problem-solving negotiation behavior is that the broker is concerned with two-way communication with the independent contractor about each other’s needs and desires (De Dreu et al., 2000; Dreu et al., 2001; Rahim & Magner, 1995). Transitional psychological contracts develop when there is a lack of communication about the terms of engagement between the broker and independent contractor. Thus, a negative relationship is expected between perceived problem-solving negotiation behavior on the part of the broker and independent contractor’s reports of having a transitional psychological contract with the broker. No relationship between problem-solving behavior and transactional psychological contract development is proposed because the effects of problem-solving negotiations on quid pro quo obligations is ambiguous. On one hand, problem-solving behavior is concerned with both parties communicating needs and preferences, which may lend itself to quid pro quo (known, finite) exchange. On the other hand, problem-solving negotiation behavior implies a sense of trust and caring because each party integrates concern for the self and the other into the exchange. This suggests that psychological contract development would extend beyond basic transaction.

Hypothesis 1a: Problem-solving negotiation behaviors will be positively related to independent contractor reports of having a balanced psychological contract with the broker.

Hypothesis 1b: Problem-solving negotiation behaviors will be negatively related to independent contractor reports of having a transitional psychological contract with the broker.

Forcing negotiation behaviors include attempts by the broker to push its own point of view and demand that its needs and preferences take precedent over that of the independent contractor (De Dreu et al., 2000; Dreu et al., 2001; Rahim & Magner, 1995). These behaviors will prompt the independent contractor to develop either a transactional psychological contract or a transitional psychological contract. First, because forcing negotiation behaviors imply that the broker does communicate clearly what it requires of the independent contractor, the independent contractor may perceive a transactional psychological contract because the terms of exchange are largely focused on finite, unambiguous exchange (Rousseau, 1995). However, forcing negotiation behaviors may also lead to the development of a transitional psychological contract because they may make the independent contractor feel dissatisfied or unwanted as an exchange partner given the low concern for that independent contractor (De Dreu et al., 2000; Dreu et al., 2001; Rahim & Magner, 1995). It is not hypothesized that forcing negotiation behaviors will have an effect on balanced psychological contract formation because, again, the relationship is somewhat ambiguous. Forcing negotiation behavior may be a signal that the broker is attempting to extract maximum performance from the independent contractor (an aspect of balance psychological contract development; Rousseau, 1995), and is simply taking charge of the negotiation in order to reach this goal. On the other hand, the lack of concern for the independent contractor on a more personal level may preclude the possibility that a balanced psychological contract will form.

Hypothesis 1c: Forcing negotiation behaviors will be positively related to independent contractor reports of having a transactional psychological contract with the broker.

Hypothesis 1d: Forcing negotiation behaviors will be positively related to independent contractor reports of having a transitional psychological contract with the broker.

The final negotiation behavior to be examined is avoiding. This behavior is exemplified by a lack of communication about terms of an exchange. Transitional psychological contracts are rooted in uncertain terms and ambiguity. Thus, when the broker engages in avoiding negotiation behavior, the independent contractor will likely perceive a transitional psychological contract because of its inherent uncertainty.

Hypothesis 1e: Avoiding negotiation behaviors will be positively related to independent contractor reports of having a transitional psychological contract with the broker.

Psychological Contracts and Resources

Psychological contract theory holds that, in the context of an independent contractor–organization relationship, a psychological contract is composed of an independent contractor’s beliefs about the reciprocal exchange agreement between itself and the broker. In its entirety, the psychological contract guides the employment relationship between the broker and independent contractor by setting forth promises for future obligations and action (Rousseau, 1995). Agreement about the terms of psychological contract, labeled mutuality, regulates the behavior of the broker and independent contractor as it specifies the specific exchange of resources required to meet organizational goals (Robinson, Kraatz, & Rousseau, 1994). Depending on the tangibility of the resources traded and the level of trust characterizing the employment relationship, the exchange is either social or economic in nature (Blau, 1964). Central to the present study, psychological theory finds that resources provided by one party to the other are a key manifestation of the psychological contract. Resources are the observable, tangible outcome of the psychological contract (Cropanzano & Mitchell, 2005; Foa & Foa, 1974; Lemmon et al., 2016; Rousseau, 1995, 2001b). Resources come in many forms, from the concrete to the abstract, from the particular to the universal (Foa & Foa, 1974).

The likelihood of exchange of any one resource is largely determined by the (a) institutional setting and (b) the need-states of the parties involved (Foa & Foa, 1974). Based on an understanding of these two factors, three types of resources are considered in the present study: goods, status, and love. Goods are tangible things; status is perceived judgments of regard, esteem, or respect; and love is perceptions of friendship and togetherness. For example, an independent contractor who perceives the broker as providing particular material resources, confidence in the independent contractor’s abilities, and social support in times of need will perceive receipt of goods, status, and love resources, respectively. In the broker–independent contractor relationship, the lack of a formal reporting relationship between the parties coupled with the sense of codependence on each other for outcomes are important and unique features of the relationship; unlike in traditional settings, an independent contractor cannot go to a coworker or other manager for resources. Specifically, the codependence indicates that material resources flowing from the broker to the independent contractor will be particularly useful in satisfying certain psychological contract obligations—that is, goods are an important resource provided to the independent contractor in terms of meeting the mutual goal of customer service. Moreover, the independent contractors need to feel social support with regard to providing service to the broker’s customers. Thus, the unique resource need of the independent contractor indicates that status and love are important resources used to fulfill psychological contract obligations.

As previously stated, psychological contract theory explains that the nature of the psychological contractor between an independent contractor and an organization is determinant of the resources exchanged between the parties. In examining how that exchange is viewed through the eyes of the independent contractor, the current study asks: What types of relationships are there between balanced, transactional, and transitional psychological contracts and the resources of goods, status, and love?

Balanced psychological contracts contain broker obligations to aid the broker in reaching certain performance goals (Rousseau, 1995). Key to reaching these performance goals are material resources provided by the independent contractor. An example may be a manual that instructs the independent contractor how to create successful interactions with customers. Love, or a sense of togetherness, is also an important resource flowing from balanced psychological contracts because love provides a sense of togetherness or camaraderie. An independent contractor needs to feel supported in its interactions with customers in order to gain confidence in its abilities and to feel a high sense of self-efficacy (Sosik, Avolio, & Kahai, 1997). No relationship between a balanced psychological contract and status is proposed because status implies that high performance has already been accomplished. Thus, in the present model, there are important mediating mechanisms between a balanced psychological contract (obligations) and status (resources) such as the independent contractor performing at a high level. For this reason, no relationship was hypothesized between balanced psychological contract formation and status.

Hypothesis 2a: Balanced psychological contracts will have a positive relationship with goods.

Hypothesis 2b: Balanced psychological contracts will have a positive relationship with love.

Resources stemming from the formation of a transactional psychological contract are distinct from those of a balanced psychological contract (Rousseau, 1995); resource allocation decisions are made in light of the needs of the other party and the relationship between the parties (Foa & Foa, 1974; Lemmon et al., 2016). The broker obligations in transactional psychological contracts are minimal. Receipt of resources based on this type of contract will also be comparatively lower than for those independent contractors perceiving a balanced psychological contract. And, because the resources contained in the transactional psychological contract are traded between the broker and independent contractor a quid pro quo basis, goods, status, and love will likely never all be at a higher level. Thus, there is an anticipated negative relationship between transactional psychological contracts and receipt of goods, status, and love.² Transitional psychological contracts, in direct contrast to transactional psychological contracts, have uncertain and ambiguous terms. Thus, there will be a lack of togetherness and camaraderie—that is, a lack of the resource of love—flowing from transitional psychological contracts. However, because of the uncertain nature of the transitional psychological contract, there may be instances when the broker provides large amounts of goods or status to gain temporary performance from the independent contractor (Blau, 1964). However, because of the inexact delivery of these two resources, no relationship was hypothesized to exist between having a transitional psychological contract and goods and status.

Hypothesis 2c: Transactional psychological contracts will have a negative relationship with goods.

Hypothesis 2d: Transactional psychological contracts will have a negative relationship with status.

Hypothesis 2e: Transactional psychological contracts will have a negative relationship with love.

Hypothesis 2f: Transitional psychological contracts will have a negative relationship with love.

Psychological contract theory describes a process of exchange and understanding between the two parties (Rousseau, 1995). Underscoring this exchange and understanding are reciprocal attitudes and behaviors enacted by the parties (Blau, 1964). Central to the current study, the provision of resources from the broker to the independent contractor is a proximal driver of that independent contractor’s attitudes and behavior toward the broker. Specifically, the receipt of resources from the broker will fulfill independent contractor’s perceptions of what the broker owes it. This recompense of the psychological contract obligation, commonly referred to as psychological contract fulfillment, will lead to overall feeling of the need to reciprocate on the part of the independent contractor (e.g., Dulac, Coyle-Shapiro, Henderson, & Wayne, 2008; Zhao, Wayne, Glibkowski, & Bravo, 2007; see also Blau, 1964; Conway & Coyle-Shapiro, 2012; Mitchell et al., 2012).

The independent contractor’s means to reciprocate is primarily its performance, and as such, we anticipate that there is a direct relationship between resources and the independent contractor’s performance. Here, resources are a clear prompt to the independent contractor that it must begin to fulfill its obligation to the broker (Conway & Coyle-Shapiro, 2012; Zhao et al., 2007). Receipt of resources will also contribute to perceptions that benefits were provided that were deserved or earned by the independent contractor (Adams, 1965; Colquitt, 2001; Leventhal, 1976). Through the lens of psychological contract theory, resources received by one party are the instigator of reciprocal attitudes and behavior. In the present study, we anticipate that the receipt of goods, status, and love will increase the extent to which an independent contractor perceives distributive justice, or the fairness one perceives with regard to outcomes of the focal organization’s behaviors.

Hypothesis 3a: Goods will have a positive relationship with independent contractor performance for organization.

Hypothesis 3b: Status will have a positive relationship with independent contractor performance for the organization.

Hypothesis 3c: Love will have a positive relation-ship with independent contractor performance for the organization.

Hypothesis 3d: Goods will have a positive relationship with independent contractor perceptions of distributive justice.

Hypothesis 3e: Status will have a positive relationship with independent contractor perceptions of distributive justice.

Hypothesis 3f: Love will have a positive relationship with independent contractor perceptions of distributive justice.

Method

Sample and Procedure

The focal organization, “X Corp,” is a large Midwestern insurance company. It has agents who sell insurance policies to individuals and businesses; it underwrites those policies. These agents are independent contractors, both legally and descriptively. In terms of the latter, the agents are conduits between customers and the focal organization, who provide the actual coverage.

To test this study’s hypotheses, a sample of 385 independent contractors around the Midwest United States were sent surveys. In total, 105 of these surveys were returned, a response rate of 27%. Because the nature of the X Corp–independent contractor relationship was such that the independent contractor was not an employee, this low response rate was expected. Furthermore, the independent contractors were not physically colocated with X Corp, which differs from traditional samples wherein the organization and respondents often work centrally. This may reduce the felt obligation to take the survey, contributing further to the lower response rate. The survey contained a variety of questions about the independent contractor’s business, including the size of the business, its tenure in the industry, and various inquiries with regard to its business practices. From these data, we found that the independent contractors had been selling insurance for an average 12.4 years, worked an average of 16 years in the insurance industry, and worked an average of 52.3 hours per week.

Measures

Negotiation Behaviors

Independent contractors rated how the focal organization negotiated with them with items adapted from De Dreu et al. (2001). Three dimensions with four items each were assessed: problem solving (α = .88), forcing (α = .89), and avoiding (α = .84). The independent contractors were asked the extent to which they agreed with statements that tapped each of these dimensions using a 5-point Likert-type scale, with 1 = not at all to 5 = to a great extent. The original scale asked the respondents to consider whether the organization engaged in particular behaviors. An example of a problem-solving item is “X Corp examines ideas from both sides to find a mutually optimal solution.” An example of a forcing item is “X Corp pushes its own point of view.” Finally, an example item for the avoiding dimension of negotiation behaviors is “X Corp avoids differences of opinion as much as possible.” It should be noted that although the referent in the items is X Corp, independent contractors transact and communicate almost exclusively with an assigned “account executive” of X Corp.

Psychological Contract Type

Adapting Rousseau’s (2001a) psychological contract inventory, independent contractors answered questions relating to what types of obligations they perceived X Corp owing them. The original Likert-type response scale was modified to 1 = not at all to 5 = to a great extent. Three types of psychological contracts were assessed: transactional (α = .78), which includes items about quid pro quo exchange between the independent contractors and X Corp (six items), transitional (α = .90), which includes items about the lack of concrete obligations to the independent contractors made by X Corp (seven items), and balanced (α = .83), which asks independent contractors to indicate the extent to which X Corp’s obligations to them are based on performance terms (six items). An example transactional psychological contract item is “X Corp requires me/my business to do only limited duties that we were contracted to perform.” Transitional psychological contract items include “X Corp’s commitment to a future with me/my business is limited.” Finally, an example balanced psychological contract item is “I feel that X Corp is obligated to help me/my business respond to ever greater challenges within the industry.”

Resources

Using items developed by Lemmon et al. (2016), the present study examined independent contractor’s responses to four items each about goods (α = .81), status (α = .91), and love (α = .93) resources. Items about receipt of goods asked independent contractors the extent to which they received tangible products, objects, or materials from X Corp. An example item is “X Corp provides me/my business with work-related resources.” Status resources are the extent to which the independent contractor received resources that boosted esteem or confidence as an independent contractor for the organization. An example item is “X Corp respects me/my business as an independent contractor.” Finally, love resources are those resources that induce feelings of warmth or camaraderie. An example item is “X Corp is concerned about me/my business on a personal level.”

Performance (α = .97)

Adapting a scale from Podsakoff, McKenzie, Moorman, and Fetter (1990), performance of the independent contractor was assessed by the top three loading items of this scale. (We used the top three items due to space constraints.) This measure assessed the extent to which the independent contractors were adequate performers. This measure was evaluated by account executives at the focal organization. These account executives were directly involved with hiring and negotiating with the independent contractor. An example item is “[Independent Contractor Name/Company Name] adequately completes assigned responsibilities.”

Distributive Justice (α = .94)

Distributive justice was assessed with four items by adopting Colquitt’s (2001) scale. The response scale was modified to 1 = not at all to 5 = to a great extent. Distributive justice asks the respondent to consider the extent to which X Corp has provided benefits congruent with the performance of the independent contractor/his or her organization. An example item is “Do the benefits received by you or your company reflect what you have contributed to X Corp?”

Results

Overview of the Analyses

Before proceeding to test the hypothesized model, clarification on the dimensionality of various measures was first determined. The three types of negotiation behavior have some conceptual overlap in that they all tap potential negotiation strategies enacted by X Corp. It could be that X Corp enacts different negotiation strategies either (a) with different independent contractors (as hypothesized) or (b) based on account executive preferences. To preclude the possibility of the latter, an exploratory factor analysis was conducted. Support for three factors was found, with all items loading greater than or equal to .40 on their appropriate factor. The three factors are problem solving, avoiding, and forcing. The resource items may also have some conceptual overlap in that independent contractors may (a) receive resources consistent with the types of obligations that X Corp promises (as hypothesized) or (b) randomly receive multiple types of resources. Similar to the negotiation measure, an exploratory factor analysis was conducted to support the use of three distinct types of resources: goods, status, and love. Support for this three-factor model was found with all items loading onto their respective factor with loadings greater than or equal to .40. However, one goods item and one status item was eliminated because of cross-loading.

Test of the Hypotheses

The means, standard deviations, and intercorrelations for this study’s variables are located in Table 1. To test each hypothesis, structural equation modeling was used. Structural equation modeling estimates the proposed relationships using the maximum likelihood method (LISREL Version 8.71; Jöreskog & Sörbom, 1993). A single indicator approach was used because of the smaller sample size (e.g., Rindova, Williamson, Petkova, & Sever, 2005; Tekleab, Takeuchi, & Taylor, 2005; see also Sass & Smith, 2006). In the proposed model, the residuals for performance and each of the resources were allowed to covary because there may be extraneous factors affecting the measurement of each variable, such as timeliness of payment for services by X Corp or amount of payment by X Corp. These two examples may lead an independent contractor to become more dissatisfied and perceive fewer resources. Furthermore, the error terms of transactional and transitional psychological contracts were allowed to covary because of the general “negative” evaluation of having each type of contract.

Table 1.

Means, Standard Deviations, and Correlations.

	1	2	3	4	5	6	7	8	9	10	11
1. Negotiation—forcing	(.89)
2. Negotiation—problem solving	−.363**	(.88)
3. Negotiation—avoiding	−.168	.650**	(.84)
4. Transitional pyschological contract	.567**	−.630**	−.364**	(.90)
5. Transactional psychological contract	.453**	−.223*	−.149	.594**	(.78)
6. Balanced psychological contract	−.057	.072	.118	−.103	−.015	(.83)
7. Status	−.252*	.601**	.370**	−.518**	−.276**	.080	(.91)
8. Love	−.346**	.670**	.420**	−.700**	−.444**	.233*	.756**	(.93)
9. Goods	−.322**	.430**	.272**	−.535**	−.470**	.171	.534**	.705**	(.81)
10. Performance of independent contractor^a	−.432**	.725**	.482**	−.792**	−.466**	.189	.683**	.771**	.617**	(.97)
11. Distributive justice	−.386**	.629**	.395**	−.713**	−.382**	.108	.533**	.713**	.560**	.789**	(.94)

Note. N = 105. Values in parentheses are reliabilities.

Evaluated by account managers at the focal organization. All other variables rated by the independent contractors.

Overall, the model fit the data well: χ²(29, N = 105) = 88.58, incremental fit index = 0.95, comparative fit index = 0.95, and standardized root mean square residual = 0.15. The standardized root mean square residual was higher than recommended (Hu & Bentler, 1999; Kline, 2004), but the comparative fit index and incremental fit index were both above the recommended cutoff (Hu & Bentler, 1999; Kline, 2004). However, prior to interpreting the model as a test of the hypotheses, a series of alternative models were tested (Anderson & Gerbing, 1988). These nested models assessed the extent to which an alternative model provided improved fit over the hypothesized model. Three alternative models were tested, and these results are provided in Table 2. The first model added paths directly from negotiation behaviors to resources. Here, problem solving had paths to goods, status, and love. Forcing and avoiding also had these paths. This model did not result in a significant improvement in model fit (Δdf = 9; Δχ² = −8.25, p < .05)—the model’s fit was actually significantly worse than the hypothesized model. The second model added direct paths from each type of psychological contract to performance. It may be that independent contractors felt that X Corp’s obligations to them contributed to performance despite receipt or nonreceipt of resources. However, this model did not demonstrate a significant change in chi-square (Δdf = 3; Δχ² = 2.03, ns). The final alternative model added direct paths from each type of psychological contract to distributive justice. This model did not demonstrate improved fit (df = 3; Δχ² = 1.41, ns). Thus, the hypothesized model (Figure 1) was retained to test specific hypotheses. A summary of results via beta coefficients are provided in Figure 2. The amount of variance explained in performance was 41%, while the model explained 57% of variance in distributive justice.

Table 2.

Alternative Models.

Model	χ²(df)	IFI	CFI	SRMR	Model comparisons
Model 1: Hypothesized model	88.58 (29)	0.95	0.95	0.15
Model 2: Alternative model^a	96.83 (20)*	0.92	0.92	0.16	Model 2 compared with Model 1
Model 3: Alternative model^b	86.55 (26)	0.95	0.96	0.15	Model 3 compared with Model 1
Model 4: Alternative model^c	87.17 (26)	0.95	0.95	0.15	Model 4 compared with Model 1

Note. CFI = comparative fit index; IFI = incremental fit index; SRMR = standardized root mean square residual; df = degrees of freedom. n = 105.

Direct paths from negotiation behaviors to resources. ^bDirect path from psychological contracts to performance. ^cDirect path from psychological contracts to distributive justice.

p < .05. **p < .01.

Figure 2.

Structural equation modeling results.

Hypothesis 1a proposed that problem-solving negotiation behaviors would lead to the development of a balanced psychological contract. This hypothesis was not supported (β = 0.97, p > .05). However, Hypothesis 1b was supported—there is a negative relationship between problem-solving negotiation behaviors on the part of X Corp and transitional psychological contracts (β = −4.83, p < .01). Hypotheses 1c and 1d were also supported: There is a positive relationship between forcing negotiation behaviors and transactional psychological contract formation (β = 5.26,p < .01) and transitional psychological contracts (β = 4.64, p < .01). Additionally, as predicted by Hypothesis 1e, there is a significant positive relationship between avoiding negotiation behaviors on the part of X Corp and the development of transitional psychological contracts with independent contractors (β = 1.74, p < .05). Hypotheses 2a to 2f examined the relationships between psychological contract types and resources received by independent contractors. Balanced psychological contracts were related to receipt of goods (β = 1.77, p < .05) and love (β = 2.81, p > .01), in support of Hypotheses 2a and 2b. Hypotheses 2c to 2e were also supported, with transactional psychological contracts negatively related to receipt of goods (β = −5.95, p < .01), status (β = −3.96, p < .01), and love (β = −1.80, p < .05). And Hypothesis 2f was supported, with transitional psychological contracts being negatively related to reduced love (β = −5.41, p < .01). The last set of linkages examined the impact of resources on performance for X Corp and perceived distributive justice on the part of X Corp. There were mixed findings. Goods did not relate to performance (β = −0.37, p > .05) or distributive justice (β = 0.47, p > .05). Status also did not relate to performance (β = −0.25,p > .05). However, status was positively related to distributive justice (β = 1.87, p < .05). Love was positively related to performance (β = 4.97, p < .01) and distributive justice (β = 5.92, p < .01), in support of Hypotheses 3c and 3f, respectively.

Discussion

The present study sought to examine the organization–independent contractor employment relationship by identifying antecedents to perceived organization obligations to independent contractors and outcomes of fulfillment of those obligations as perceived by the independent contractors. Relying on psychological contract theory, we proposed that the antecedents to developing independent contractors’ perceived psychological contract with the hiring organization would be influenced by negotiation behavior from the hiring organization. Negotiation behavior is a key antecedent to psychological contract formation because it influences the formal employment characteristics of the exchange (such as duration of the contract between the organization and independent contractor) and how formal human resources policies and practices are conveyed to the independent contractor. As Rousseau (2001b) points out in her examination of the genesis of a psychological contract, formal employment characteristics and conveyance of human resource procedures are integral to the schema underlying one’s perceived psychological contract. This study argued that certain negotiation behaviors engender particular types of psychological contracts, and flowing from these contracts are resources, which affect performance of the independent contractor focal organization, and the distributive justice of the focal organization, as perceived by the independent contractor.

There was mixed support for the model, and we consider the importance of both the significant and nonsignificant paths next. Considering the model suggested by psychological contract theory—that key cues about the intentions of one party indicate the type of obligations the other party can expect—the first part of our model hypothesized links between negotiation behavior on the part of an organization and its relationship with how the independent contractor internalized those behaviors. We specifically found that forcing negotiation behaviors were key predictors of transactional and transitional psychological contracts. This indicates that when the organization forces the independent contractor to accept certain terms of engagement, the independent contractor perceives few or ambiguous obligations owed to them. However, organizations that engage in problem-solving behavior with independent contractors will mitigate instances of forming transitional psychological contracts with those independent contractors. Problem-solving behavior did not, however, lead to perceived obligations for performance and respect between the hiring organization and independent contractor. This was an unexpected result. It may be that having to actually problem solve indicates that there are recurrent or frequent problems between the organization and independent contractor, which would contradict the development of a balanced psychological contract, which focuses on more social exchange and mutual benefit. Finally, organizations that avoid negotiation with independent contractors will cause their independent contractors to perceive vague, ambiguous obligations.

The second part of our model articulated how the type of psychological contract held by an independent contractor is indicative of what types of resources are expected the organization. Here, the organization uses resources to fulfill its obligations within its psychological contract with the independent contractor (Foa & Foa, 1974; Rousseau, 1995). This study found that balanced psychological contracts provided goods and love resources to the independent contractors. It also found that transactional and transitional contracts lead to significant decrements in perceived receipt of goods, status, and love from the organization. This finding is especially important given the final set of linkages. Independent contractor’s perceptions of love contribute to performance, and love and status influence independent contractor’s perceptions of fairness with regard to receipt of benefits for the service they provide for the organization. Thus, under conditions of transactional and transitional psychological contracts, the decrease in resources as the outcome will also lead to a decline in performance and perceived distributive justice. Notably, however, the pattern of relationships between resources type and outcomes was inconsistent. For example, goods predicted neither performance nor distributive justice. The nature of the organization–independent contractor relationship may explain these results. This relationship indicates that the independent contractor requires particular details and materials to complete the job assigned by the organization. Thus, goods may be an independent contractor’s prerequisite for fulfilling performance requirements set by the organization rather than a source of motivation to perform highly or perceive fairness related to receipt of benefits. The nonsignificant relationship between status and performance is more perplexing. Future research will have to explore possible causes of this nonsignificant, negative relationship when embedded in a larger negotiation framework.

Theoretical Implications

The study of independent contractors in the psychological contract literature has been virtually nonexistent (see McLean Parks et al., 1998, for a theoretical exception). However, studies are needed on this particular type of employment relationship because companies are rapidly choosing nontraditional employment relationships to compensate for a fast-paced, global business environment (McLean Parks et al., 1998; Tekleab & Taylor, 2003). Understanding the determinants of how independent contractor’s perceptions of organization obligations form are key to successfully managing the relationship. Furthermore, the application of psychological contract theory to the unique facets of the independent contractor–organization relationship has been underexplored, which leaves researchers with major questions about how psychological contracts form between organization and independent contractors. As such, the present study sought to take one step in understanding the process by which an independent contractor psychological contract develops and then is reciprocated. We discovered that negotiation behaviors, or the nature of the interaction between the employing organization and the independent contractor, influence the extent to which the independent contractor perceives limited or expansive organizational obligations. Negotiation behaviors, then, are important antecedents of psychological contract formation for independent contractors. This has ramifications for understanding which types of behavior on the part of the focal organization is integrated into an independent contractor’s understanding of the nature of its relationship with the organization. While the present study was a first, small step into understanding this process, it nonetheless described how the tone of communication between an independent contractor and organization can have long-lasting impact on how well that independent contractor performs for the organization, and the extent to which the independent contractor perceives fair treatment with respect to the employment relationship.

Another theoretical implication of this study is its operationalization of psychological contract theory. Specifically, it hypothesized the process by which behavior on the part of the organization ultimately manifests in reciprocal behavior on the part of the independent contractor. In doing so, it tested assumptions about the content and nature of resources within that exchange that is not commonly tested in psychological contract research (Cropanzano & Mitchell, 2005; Taylor & Tekleab, 2004). Indeed, the study’s mixed results demonstrate that the role of resources in the relationship between psychological contracts and reciprocal outcomes is more complex; resources cannot be assumed to simply exist as a linchpin. That is, psychological contract type does not automatically mean that resources of a particular kind are present (or not present) and able to spur reciprocation on the part of the independent contractor. Results demonstrate that fulfillment of a balanced psychological contract with the resource of love will contribute to performance and distributive justice. It also provides that transactional and transitional contracts are related to the independent contractor perceiving little resource receipt, which contributes to a lack of adequate performance and distributive justice. Thus, contrary to previous findings (Foa & Foa, 1974; Lemmon et al., 2016), not all resources used to satisfy psychological contract obligations are useful for increasing positive outcomes. However, for the present study, the needs-states of the independent contractors were assumed (rather than known) and may have contributed to faulty assumptions as to what resources are important to independent contractors. Thus, future research in the resource theory domain is needed to understand the expectations on the part of independent contractor as it relates to receipt of particular types of resources.–

Managerial Implications

In addition to contributing to psychological contract theory and resource theory, this study also has important practical implications. First, with regard to negotiation behaviors, organizations that force or avoid negotiation with their independent contractors will engender transactional and ambiguous obligations. This is a negative effect because these types of obligations are related to perceived receipt of fewer resources, as demonstrated in this study. Organizations need to become adept at more positive negotiation behavior, such as problem solving, in order to inspire exchange with independent contractors based on trust, performance, and long-term reciprocation. Second, transactional and transitional psychological contracts should be avoided. When an organizational bases exchange with an independent contractor on quid pro quo or extremely explicit exchange, it implies a lack of trust and openness (Rousseau, 1995). This contributes to a lack of perceived resources, resulting in lowered satisfaction. Additionally, transitional psychological contracts appear to offer no benefits to maintaining a successful psychological contract. Balanced psychological contracts, on the other hand, were found to link to a number of resources. Organizations hiring independent contractors may thus be wise to focus on more social exchanges with their hires. Future research, however, is needed to uncover additional antecedents to balanced psychological contracts.

A final managerial implication is that a focus on delivering love resources to independent contractors may be a vital way in which to increase satisfaction with the organization and perceptions of the organization fairly providing benefits (Adams, 1965; Colquitt, 2001; Leventhal, 1976). Love is a resource that provides feelings of warmth, identification, and togetherness. It is also expansive, in that it can be exponentially increased without cost. Unlike money, an organization can afford to provide increased amounts of love with little expense. This is an important, yet incremental way to successfully manage the organization–independent contractor relationship.

Future Research

Because of our use of psychological contract theory as a key theoretic foundation of our model, negotiation behavior was positioned as the key antecedent to psychological contract formation in the present study. However, there are other theories that describe various aspects of the relationship between an employer and independent contractor. For example, negotiation behavior is not the only antecedent that precedes development of perceived organization obligations. The perceived organizational support (POS) literature may be fertile ground for beginning to shape new hypotheses about the development of psychological contracts. This literature has found relationships between POS and reduced instances of violation of the terms of a psychological contract (i.e., reaction to a psychological contract breach) and decreased number of obligations to fulfill (Aselage & Eisenberger, 2003; Coyle-Shapiro & Conway, 2005; Tekleab et al., 2005). Future research should attempt to articulate what forms POS can take in the independent contractor employment relationship. It may also be that POS contributes to perceptions of negotiation in that support derived from the organization–independent contractor relationship.

Future research should also examine alternative predictors of balanced psychological contract formation, as this study revealed none. It may be that a negotiation behavior not captured by the present study contributes to these types of psychological contracts. For example, De Dreu et al. (2001) identified yielding negotiation behavior as a type of negotiation behavior that indicates the organization conceding to the demands of the independent contractor. These concessions may indicate to the independent contractor that the organization is truly trying to improve their performance and meet their personal needs and preferences. As a result, a balanced psychological contract may form. Furthermore, we also know that more negative forms of transactional contracts can have expansive consequences on attitudes, such as satisfaction, well-being, and commitment (Conway, Guest, & Trenberth, 2011).

Another direction for additional research is to examine objective outcomes of resource receipt. Independent contractors may communicate and negotiate with a single individual within the focal organization. How do the attitudes and behaviors of that contact individual shape the employment relationship? Additionally, is contact with others in the employing organization, however small, also important to consider in the development of the psychological contract between an organization and independent contractor? For example, if the independent contractor must communicate with the focal organization’s accounts-payable department for administrative issues related to compensation, is this third party important to the independent contractor’s understanding of its relationship with the organization? The present study assumed that because the account executive generally engaged in the vast majority of communication with the independent contractor, rather than other peripheral focal organization employees, it was only the account executive’s behavior that the independent contractor considered. This assumption may have resulted in a biased understanding of the critical parties to the organization–independent contractor relationship. Related, the contact individual in the focal organization rated the performance of the independent contractor to assess if an exchange of resources is occurring, in that the independent contractors improve performance as a result of receipt of resources (e.g., Salanova et al., 2005). It is important to future research to identity the more tangible, objective outcomes of resource fulfillment and to determine if the organization’s perception of resource distribution and the independent contractor’s perceptions of resource receipt are the same.

Strengths and Limitations

The present study tackled a new area of research—that of the employment relationship with an independent contractor. There is a dearth of research on independent contractors, as evinced by few research articles outlining the employment relationship of an independent contractor. As such, initial investigations such as this research are informative to this nascent body of research. However, there are many limitations of this study, many of which suggest additional interesting avenues for future research. First, a broader view of “performance” would help triangulate the findings with respect to performance. For example, an objective evaluation of number of policies sold or size of policies may be a less-biased gauge of the performance of the independent contractor.

A second limitation of our study is the use of a single sample of independent contractors. Independent contractors can vary widely in their qualifications, experience, power within the relationship, supply in the marketplace, among many other features. Future research that defines more clearly attributes held across a set of independent contractors (such as the negotiation behaviors identified in this study) versus attributes that vary across independent contractors, with such variation perhaps causing spurious findings when developing a model of their relationship with an organization, is needed. Consider, for example, the stark functional differences between an Uber driver³ earning relatively little compensation in a crowded marketplace versus a wealthy adjunct professor who consults on the side as an independent contractor. Each contractor’s market power differs, which can color the intensity of demands for reciprocity between the independent contractor and organization (e.g., Hom et al., 2009). Here, it is likely that the Uber driver must accept compensation changes because he or she is replacable, while the wealthy adjunct can walk away from a relationship if the compensation terms are not favorable.

Another limitation of the present research was the somewhat unexplainable pattern of results linking resources to performance of independent contractors and their sense of distributive justice. It may be that the resources examined do not fully encapsulate the domain of resources exchanged given the types of psychological contracts independent contractors form with organizations. Although theoretical justification for goods, status, and love was provided, qualitative research may reveal more nuanced forms of resources exchanged from the organization to the independent contractor. Related, this may also suggest that the assumption that resources to fulfill a psychological contract are all expected in equal volume by the independent contractor, when in fact attributes of the independent contractor may impact resources needs (Foa & Foa, 1974). Specifically, there may be individual differences held by the independent contractors that color their desire for specific resources, irrespective of resource type. Consider again, for example, the Uber driver. An independent contractor of Uber relies on Uber’s corporate technology to tell him or her where and when clients are waiting for taxi service. Without this technology, an Uber driver would not have accurate information about how to increase the likelihood of finding someone who needs an Uber ride. This information is represented by the resource of “goods.” No matter the type of psychological contract that is formed based on that Uber driver’s negotiation with Uber headquarters, the resource of “goods” remain a critical outcome, without which the Uber driver is unable to perform. Therefore, future exploration of the role of independent contractor individual differences and their desire for specific resources is warranted. This desire may influence what an organization provides the independent contractor.

A final limitation is that the psychological contract was only measured in terms of organizational obligations to the employee. A related limitation is that data were also collected at one point in time, precluding the possibility that it made causal findings. As Tekleab and Taylor (2003) point out, there are two sides to the employment relationship, and independent contractors’ perceived obligations to the focal organization may provide clues as to the expected resources to be exchanged or overall satisfaction with the focal organization. While we do operationalize one part of psychological contract theory, because exchange underpins this theory, an extension of our model to include a full spectrum of independent contractor reactions to the formation of a specific psychological contract type, and subsequently how the organization responds to the independent contractor reactions, may be of interest. This continuous exchange provides ample opportunities for additional variables to alter again the nature of reciprocity between the parties. To explore this would require data collected at several time periods. In a similar vein, Dabos and Rousseau (2004) discuss the development of mutuality between parties to a psychological contract and its impact on reciprocity between the parties. The authors found that two things affect performance-based outcomes of a psychological contract: First, the content of that psychological contract (which has been detailed in this study, to an extent). And second, newly, the extent to which each party agrees with the other about the types of obligations that they have to each other—that is, that both parties clearly understand the type of psychological contract they are obligated to fulfill to the other party. While the nature of an organization–independent contractor relationship should include clearly understood tasks, this is not all that encompasses an employment relationship. Each party can also provide support, clear communication, citizenship behaviors, among a number of other obligations that shape the nature of the relationship. The extent to which those obligations are understood, mutually agreed on, and reciprocated can all influence the viability of any one psychological contract type and subsequent reciprocity.

Conclusion

This study drew on psychological contract theory to describe how negotiation behaviors on the part of an organization influence how independent contractors internalize and create schema about the psychological contract it has with the organization. The resources that satisfy these obligations, in turn, were proposed to lead to independent contractor performance with the organization and independent contractor perceptions of fairness with regard to the amount of resources they received. The overall model had mixed support. Importantly, forcing and avoiding negotiation behaviors contributed to economic, transactional exchanges with the independent contractors. These transactional and transitional obligations lead independent contractors to perceive fewer resources from the organization, and as a result reduced performance and distributive justice. On the whole, the model suggests that negotiation behaviors are linked indirectly to independent contractors’ performance, and perceptions of distributive justice, through the development and fulfillment of their perceived psychological contract with the hiring organization.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

Author Biographies

Grace Lemmon is an Assistant Professor of Management at DePaul University, USA. She studies the intersection of workplace engagement, resources, and health.

Morgan S. Wilson is an Assistant Professor of Management at Hope College, USA. She studies resources, work-family conflict, and the evolving nature of work due to technology.

Margaret Posig is an Associate Professor of Management at DePaul University, USA. She studies leadership, specifically the intersection of women and leadership, and corporate change management.

Brian Glibkowski is an Associate Professor of Management at Stonehill College, USA and Managing Director of Semplar, a strategy consulting firm. His research focuses on workplace exchange and relationships.

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