Collectivist Values, Exchange Ideology and Psychological Contract Preference

The psychological contract describes a set of individual perceptions concerning the terms of the exchange relationship between individuals and their organizations. While this concept has substantially advanced our knowledge about how individuals relate to their organization, as organizations globalize and workforce diversity increases, it is important to understand how individuals with different cultural value orientations think about these relationships. Our purpose in this study was to isolate, insofar as possible, the effects of the individual level value of cultural collectivism. In this paper, we present evidence from two studies that examine the relationship between the cultural value of collectivism and the preferences that individuals have for firms exhibiting different psychological contract forms. First, we demonstrate experimentally that collectivist orientation has an impact on fundamental beliefs about the nature of exchange. Then, in the second study, we show that collectivist value orientation had its effect on preferences for the psychological contract through beliefs about social exchange. In so doing, we go beyond the simple demonstration of the effects of cultural values to describe the causal chain through which these values operate. Our results suggest that effective management in multicultural organizations ultimately requires a clear understanding of the process whereby values influence beliefs about employment relationships, which has implications for both theory and practice.