What generates the violation of psychological contracts at multinational corporations? A contextual exploratory study

The violation of a psychological contract may have negative effects on employees such as mistrust, lower job performance, and reduced job satisfaction and organizational commitment. We demonstrate that the probability of these negative occurrences is prevenient at multinational corporations. This study adopts an exploratory approach based on data collected at four Israeli companies operating in the high-tech industry that outsource or have established subsidiaries in India. Results indicate five situations that may lead to psychological contract violation, as well as to specific cultural and contextual factors that generate such violation. We argue that the possibility of psychological contract violation anticipatory at multinational corporations due to their distinctive characteristics, namely, inherent cultural diversity, dynamic structure, and global dispersion. The study further contributes to general psychological contract research by showing that certain aspects of the psychological contract are culturally constructed and that incongruences in these aspects as constructed by members of different groups may lead to perceptions of violation.