Understanding individual responses to failure by the organisation to fulfil its obligations: examining the influence of psychological capital and psychological contract type

• Author: Nuttaneeya (Ann) Torugsa,Wayne O'Donohue,Angela Martin
• Date: 01 January 2015
• DOI: http://doi.org/10.1111/1748-8583.12055
• Published date: 01 January 2015

Understanding individual responses to failure by

the organisation to fulfil its obligations: examining

the influence of psychological capital and

psychological contract type

Wayne O’Donohue, Department of Employment Relations and Human Resources,

Griffith University

Angela Martin, School of Business and Economics, University of Tasmania

Nuttaneeya (Ann) Torugsa, Australian Innovation Research Centre, University of

Tasmania

Human Resource Management Journal, Vol 25, no 1, 2015, pages 131–147

This study advances both psychological contract (PC) and psychological capital (PsyCap) research by

testing a novel theoretical model predicting likely worker response, as a joint function of an individual’s

level of PsyCap and PC type, to perceived failure by the organisation to meet its obligations to the

worker–organisation relationship. With a large emergency services organisation using volunteer workers

as the research context, the study presents the first empirical evidence from a sample of 592 volunteers

that the integrated application of PC and PsyCap theory can contribute to a better understanding of

individual responses to an organisation’s failure to affirm ongoing support for the volunteer–organisation

relationship.

Contact: Dr Wayne O’Donohue, Department of Employment Relations and Human Resources,

Griffith University, Gold Coast Campus, Gold Coast, Queensland 4222, Australia. Email:

w.odonohue@griffith.edu.au

Keywords: psychological capital; psychological contract; volunteers; emergency services

INTRODUCTION

Awell-established construct for better understanding the exchange that characterises

the worker–organisation relationship is that of the ‘psychological contract’ (PC), i.e. the

individual worker’s subjective understanding of obligation-based exchanges with the

organisation (Conway and Briner, 2009). While PC research has identified individual differences

(e.g. Edwards et al., 2003; Raja et al., 2004) as important factors shaping the worker–organisation

relationship, new research possibilities are emerging from recent research investigating four

positive psychological attributes – self-efficacy, hope, optimism and resilience – that form a

broader concept called ‘psychological capital’ (PsyCap) (Luthans et al., 2004).

There have been no published studies relating the two concepts, and none examining their

joint impact on a worker’s response to perceived failure by the organisation to meet its

commitment to the worker–organisation relationship. Hence, our study aims: to advance PC

and PsyCap research by testing a novel theoretical model predicting likely worker response,

as a joint function of an individual’s level of PsyCap and PC type; and by locating our study

in the volunteer context, to publish the first empirical evidence that the joint application of

the two constructs can contribute to a better understanding of the consequences of a

perceived failure by the organisation to affirm its ongoing support for the volunteer–

organisation relationship.

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doi: 10.1111/1748-8583.12055

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 1, 2015 131

© 2014 John Wiley & Sons Ltd.

Please cite this article in press as: O’Donohue, W., Martin, A. and Torugsa, N.(A.). (2015) ‘Understanding individual responses to failure by the

organisation to fulfil its obligations: examining the influence of psychological capital and psychological contract type’. Human Resource

Management Journal 25: 1, 131–147.

First, we overview the two constructs and associated empirical research before presenting a

unique theoretical model and four hypotheses. Discussion of the study method, analysis and

results then follow. The article concludes with discussion of the findings, their implications,

study limitations and future possible research directions.

PCs

As commonly defined, the PC comprises an individual worker’s beliefs about a reciprocal

agreement involving economic and socio-emotional obligations that results from promises

perceived as having been exchanged with the organisation (Rousseau, 1995). Research has

underscored that, from the individual’s perspective, a functional PC requires ongoing fulfilment

of obligations by the organisation, with meta-analyses (Bal et al., 2007; Zhao et al., 2007)

showing that when the organisation is perceived to have failed in this regard, negative impacts

such as reduced performance, satisfaction and commitment occur. Several points of interest

follow from this research. First, while negative effects have been identified, many of the

reported correlations are weak to moderate (Suazo et al., 2005). Second, every instance of

perceived non-fulfilment by the organisation does not produce a negative response from the

individual (Zhao et al., 2007). Third, while the ‘PC literature is filled to the brim’ with studies

examining individual responses to non-fulfilment, all but one (Starnes, 2007) have been

conducted in the paid work context (Vantilborgh et al., 2014). Taken together, these points

suggest that there may be unaccounted factors, such as individual psychological differences,

influencing the individual’s response, and indicate that there is an important research gap in

the literature.

In this light, our study focuses on the response intention individual volunteers might be

expected to form after cognition by the individual that the organisation has not ‘lived up to its

side of the deal’. The concepts of ‘breach’ and ‘violation’ or the process leading up to and

including cognition of non-fulfilment are not a focus of study here; these topics have already

been examined at length in the literature (Conway and Briner, 2009).

PC theory and volunteers

Research clearly supports the usefulness of PC theory in the volunteer work context (Nichols,

2013; Scheel and Mohr, 2013). Theoretically, the PC concept is not just applicable to

promissory-based exchange between paid employees and employers. Rousseau (1995), whose

definitional approach is most widely used, theorised the concept as applicable to a variety of

contexts, people and working relationships. From this starting point, Farmer and Fedor (1999)

argued the PC can, therefore, be interpreted as embracing the volunteer–organisation

relationship. Support for this interpretation is provided by Thompson and Bunderson’s (2003)

extension of Rousseau’s conceptual framework to incorporate a values-based content focus,

consisting of ‘ideology-infused’ obligations reflecting a shared commitment by the individual

and organisation to a valued social cause, and Scheel and Mohr’s (2013) conceptualisation of

volunteering as not just leisure but as work in the sense of a productive occupation and a form

of employment relationship.

Empirical research examining the application of PC theory to volunteering is still in its

infancy (Vantilborgh et al., 2014). An early study of a large non-profit organisation (Farmer and

Fedor, 1999) concluded that the volunteer PC shares characteristic features with that of the paid

worker. Other research across a range of volunteer settings supports this conclusion (e.g. Taylor

et al., 2006; Nichols and Ojala, 2009; Vantilborgh et al., 2011, 2012). Empirical research has also

identified content similarities with paid workers, although with a different emphasis revealed.

Understanding individual responses

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© 2014 John Wiley & Sons Ltd.