Philippine E-Journals

Investigating the Moderating Role of Equity Sensitivity between Psychological Contract Breach and Employee Outcomes

Robert L. Tang | Simon Lloyd D. Restubog | Peter Lemuel T. Cayayan

Discipline: Psychology, Organizational Culture

 

Abstract:

Research on psychological contracts suggests that employees’ affective and behavioral reactions to breach may be influenced by their sensitivity to equity.The equity sensitivity concept, a refinement of Adam’s equity theory,postulates that individuals have varying levels of threshold to fair and unfair situations. It proposes that individuals differ in their reaction to under- and over-reward situations. At both ends of the continuum are benevolents, individuals having preferences for under-reward situations, and entitleds, individuals who place greater value on outcomes they receive rather than their contributions. This study integrates psychological contract breach and equity sensitivity in an effort to better understand how the interactive effects of these variables influence employee outcomes. We hypothesized that entitled individuals will have lower affective commitment and greater decrease in civic virtue behavior than benevolent individuals following a contract breach. A survey was administered to 185 sales personnelof eight pharmaceutical organizations. We used hierarchical multiple regression as our data analytic tool in order to retain the continuous natureof the variables and increase statistical power to detect interaction effects.We found support for most of our predictions. Psychological contract was negatively related with civic virtue behavior and affective commitment. Equity sensitivity also moderated the relationship between breach and civic virtue behavior. Both entitleds and benevolents reported a significant decrease in civic virtue behavior. However, the negative effects of breach were stronger for the entitleds.