Perceptions of contracts, among both employers and employees, are generally labeled psychological contracts.
But in 1994, Rousseau proposed a more widely accepted definition of the psychological contract in which he defined it as “the understandings people have, whether written or unwritten, regarding the commitments made between themselves and their organization” (Rousseau1994).
In most of these definitions or descriptions of the psychological contract, the recurring theme is the promises, unexpressed beliefs, responsibilities, and/or expectations with respect to what is assumed to be a fair exchange within what are the perceived confines of the relationship between the employer and the employee.
Deuteronomy Chapter 10 & 11 makes mentionof what is assumed to be related to the psychological contract (Wellin 2008).
It talks about the mutual expectations between the Jewish people and their God.A psychological contract can be understood as a ‘deal’ between employer and employee concerning ‘the perception of the two parties, employer and employee, of what their mutual obligations are towards each other.This is an essay, written for the LSE Summer School 2013, focused on the comparison and analysis of transactional and relational, Psychological Contracts (PC) and their intreconnection with different working environments.The author tries to keep a deeper eye on the emerging trend of hiring initially on a transactional contractual basis and later on a relational one.The limited scope and academic requirements constrained a more elaborated view on the causes of psychological contract breach and a wider approach on the several PC models have already been developed.CHAPTER ONE: INTRODUCTION 1.1 Background The psychological contract is a widely researched issue that has affected many business organizations.And this is a challenge that many employees and their organizations face in trying to keep up the pace with a constantly changing business environment.In this study, we propose and test a mediated moderation model to explore the interactive effect of psychological contract breach and negative reciprocity belief on abusive supervision, and the mediating effect of organizational identification.Using a sample of 268 dyads of employees and their immediate supervisors (N = 536) from six companies and two industries in China, we find that when supervisors experience breaches in psychological contract they are likely to increase abusive behaviours toward subordinates, and that the positive association is stronger the more the supervisor holds negative reciprocity beliefs.On the other hand, the term ‘psychological’ refers to the mind and therefore something intangible.Taking a look at the perceived history of the psychological contract, reference has been made to what is written in the Bible as far back as the 3000 BC.