Psychological Contract

Lineage of the concept

Chris Argyris (1960) observed an implicit understanding between factory foremen and workers: if foremen interfered less, workers would maintain productivity. He called it the psychological work contract. Harry Levinson and colleagues (1962) emphasized the largely unspoken expectations employees and companies hold of each other, and Edgar Schein (1965) introduced the idea in his organizational psychology textbook. Its theoretical foundation is Peter Blau's (1964) social exchange theory: people form exchange relationships grounded in trust and reciprocity, not just economic transactions, and feel obliged to return what they receive. Early versions covered both employee and organizational expectations but proved hard to measure and test.

Rousseau's redefinition and contract types

Denise Rousseau (1989, 1995) defined the psychological contract as an individual's beliefs regarding the terms of a reciprocal exchange agreement between that person and the organization, shifting the focus to individual perception. Because the contract consists of beliefs about promises, it can differ from person to person within the same organization. Rousseau distinguished two types. Transactional contracts are short-term, narrow and specific, such as exchanging performance for pay, while relational contracts are long-term and include socioemotional elements such as loyalty, development opportunities and job security. Robinson and Rousseau (1994) found that more than half of respondents felt their employer had broken its promises within two years of hiring, showing that violation is the norm rather than the exception. Rousseau (2005) later extended the work to i-deals, idiosyncratic work arrangements that employees negotiate individually.

Breach, violation and their consequences

Morrison and Robinson (1997) distinguished breach, the cognitive judgment that a promise has not been kept, from violation, the emotional response of betrayal and anger that may follow. Breach can arise from reneging, when the organization knowingly fails to keep a promise; from inability to keep it; or from incongruence, when the parties understood the promise differently. Robinson (1996) showed that breach erodes trust and subsequently lowers performance and intentions to stay, and Zhao et al.'s (2007) meta-analysis confirmed that breach reduces job satisfaction and organizational commitment and raises turnover intentions, with effects mediated by feelings of violation and mistrust. Conway and Briner (2005) critically reviewed conceptual ambiguity and measurement problems, and Coyle-Shapiro et al. (2019) set out research questions for an era of nonstandard and platform work. Together with equity theory and research on organizational justice, the concept is a leading framework for explaining trust at work.

FAQ

What is the psychological contract in simple terms?

It is the set of expectations and obligations an employee believes both sides have promised, such as working hard in return for promotion or development, even though none of it is written in the contract.

How does breach differ from violation?

Breach is the cognitive judgment that a promise has not been kept; violation is the emotional reaction, such as betrayal or anger, that may follow that judgment.

Sources reviewed: 2026-10-26

References

1. Argyris, C. (1960). Understanding Organizational Behavior. Homewood, IL: Dorsey Press.
2. Levinson, H., Price, C. R., Munden, K. J., Mandl, H. J., & Solley, C. M. (1962). Men, Management, and Mental Health. Cambridge, MA: Harvard University Press.
3. Schein, E. H. (1965). Organizational Psychology. Englewood Cliffs, NJ: Prentice-Hall.
4. Blau, P. M. (1964). Exchange and Power in Social Life. New York: Wiley.
5. Rousseau, D. M. (1989). Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal, 2(2), 121–139.
6. Rousseau, D. M. (1995). Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Thousand Oaks, CA: Sage.
7. Robinson, S. L., & Rousseau, D. M. (1994). Violating the psychological contract: Not the exception but the norm. Journal of Organizational Behavior, 15(3), 245–259.
8. Morrison, E. W., & Robinson, S. L. (1997). When employees feel betrayed: A model of how psychological contract violation develops. Academy of Management Review, 22(1), 226–256.
9. Robinson, S. L. (1996). Trust and breach of the psychological contract. Administrative Science Quarterly, 41(4), 574–599.
10. Zhao, H., Wayne, S. J., Glibkowski, B. C., & Bravo, J. (2007). The impact of psychological contract breach on work-related outcomes: A meta-analysis. Personnel Psychology, 60(3), 647–680.
11. Conway, N., & Briner, R. B. (2005). Understanding Psychological Contracts at Work. Oxford: Oxford University Press.
12. Rousseau, D. M. (2005). I-deals: Idiosyncratic Deals Employees Bargain for Themselves. Armonk, NY: M.E. Sharpe.
13. Coyle-Shapiro, J. A.-M., Pereira Costa, S., Doden, W., & Chang, C. (2019). Psychological contracts: Past, present, and future. Annual Review of Organizational Psychology and Organizational Behavior, 6, 145–169.