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A psychological contract is a persons perception regarding the reciprocal

exchange relationship that exists between an employee and organization


Generalization of findings for psychological contracts based on data from
Western countries is questionable, particularly in societies like India that
are undergoing profound transitions in institutional rules, social norms and
values.
Since 1991, India has undergone a significant techno-economic
transformation, precipitating many changes in employee organization
relationships (DCruz and Bharat 2001). Post-liberalization, Indian
companies faced intense competition in terms of product quality and
price. To cut costs, organizations withdrew many benefits such as job
security, retirement provisions and time-based career growth.
Contemporaneous to changes in employment relationships was a
noticeable presence of women in professional roles, resulting in a steady
increase of working couples. Managing work and family obligations
concurrently (Shah 2000) altered employee expectations such as work-life
balance and career growth, resulting in fragile and individualized
employee organization relationships. Increased globalization, changing
demography and a need to manage both employees and businesses
resulted in practitioners and academicians investing greater time,
resources and intellect to understanding employee organization
relationships in India. Although Indian managers are exposed to foreign
management styles and influences, it is not known whether employee
expectations and their reactions will be similar in India. Hofstede (1991)
argues that eastern and Western societies differ among six cultural
dimensions: power distance, individualism versus collectivism, uncertainty
avoidance, masculinity versus femininity, long- versus short-term
orientation and indulgence versus restraint (Hofstede, Hofstede and
Minkov 2010). Research suggests the most evident differences between
Asian and Western European/Anglo countries relate to individualism versus
collectivism and power distance, both of which have profound influences
on employee organization relationships. Collectivism is the degree to
which individuals base identities on group membership (Hofstede 1991).
India is a collectivist country in which relationships include a strong
normative component; protecting relationships is far more important than
retaliating in response to violations of fairness norms (Hofstede
1991).When treated disrespectfully or in cases of perceived inequity,
individuals in collectivist cultures maintain harmonious relationships, even
at personal costs (Markus and Kitayama 1991). Erdogan and Liden (2006)
found that when people in these cultures experience inequity, they find
covert ways such as ingratiation to prevent similar occurrences. India also
has a high power distance culture, and inequality in the distribution of
power is both approved and un-resented. Indians are submissive and
extremely status conscious, perceiving comfort with both personal ties to
supervisors and paternalistic treatment. Societal values of PCB Perceived
Organization Support Leader Member Exchange TRUST Affective
commitment Intention to quit Innovative work Behaviour Figure 1.
Proposed model of psychological contract breach. 1486 U.A. Agarwal and
S. Bhargava personalized relationships, dependence proneness and sneh-
shraddha (i.e. a superiors affection for subordinates and a subordinates
deference to the superior) encourage Indians to maintain amicable
relationships in personal and professional lives, especially regarding elders
and people in authority (Sinha and Sinha 1990). Given cultural orientations
of collectivism and high power distance, this study examines expectations
of Indian managers using psychological contracts as a framework. This
paper explores the influence of context (i.e. organization and supervisor
relationship quality and trust) on psychological contracts, uncovering
similarities in the literature regarding psychological contracts in
comparison to what Western literature suggests.
relationship between POS and psychological contracts, Aselage and
Eisenberger (2003) propose that high-quality POS (1) makes employees
less likely to notice minor contract breaches and (2) makes employees
who notice a breach more willing to give the organization the benefit of
the doubt. For example, they perceive the breach as a temporary or
unimportant occurrence rather than a breach.
Individuals enter relationships with organizations to maximize benefits
(Blau 1964). When one party provides something to another, the first
party expects reciprocation. NOR is a guarantee that an individual will be
paid back in a currency they value. If one party does not reciprocate, an
imbalance is created between the contributions of the two parties, and the
relationship dissolves. Perceived breach is a signal of imbalance in the
relationship (Morrison and Robinson 1997), serving as a shock that causes
employees to reassess their basic commitment to the organization (Lee
and Mitchell 1994, p. 61), resulting in negative consequences and creating
inequality in employment relationships.
Results suggest that although employees in collectivist cultures (e.g. India)
ascribe great importance to people in authority (Sinha and Sinha 1990;
Agarwal, Datta, Blake-Beard and Bhargava 2012), they are vulnerable to
incidences of breach and react with lower commitment and IWBs, and high
intention to quit. Perhaps the economic liberalization of the country
combined with a strong Western-style education, increasing ease of access
to technology, and various forms of media led to enhanced exposure to
Western ideals. Employees educated and socialized with Western values
possess a broader worldview. These new genres of employees, though
collectivist, possess strands of thoughts, feelings and actions that reflect
underlying individualism; they not only nourish Western values of
achievement and advancement, but also demand fairness and equity.

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