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Psychological contracts in the virtual environment

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An in-depth research on the relationship between the psychological contract and virtual team effectiveness.

An in-depth research on the relationship between the psychological contract and virtual team effectiveness.

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    Psychological contracts in the virtual environment Psychological contracts in the virtual environment Document Transcript

    • Psychological Contracts in the Virtual Environment -“An in-depth research on the relationship between thepsychological contract and virtual team effectiveness.” by Hjalmar van Marle 2010
    • STATEMENT OF AUTHENTICITYI have read the TiasNimbas Business School Regulations relating to plagiarism and certify that this project is all my own work and does not contain any unacknowledged work from any other sources. I confirm that the Word Count as per the Regulations is 19.290 words. Signed: Date: September 9th, 2010 i
    • KEYWORDS & ABSTRACTName: Hjalmar van MarleTitle: Psychological Contracts in the Virtual Environment KEYWORDSPsychological contract; Inferred Promises; Reciprocal Obligations;Psychological contract Violation; Virtual team; Virtual Team effectiveness; TeamDynamics. ABSTRACTThis study involves research on the psychological contract of the members of avirtual project team. Its aim is to define whether there is a relationship betweenthe psychological contract of virtual team members and their team’seffectiveness. Working with virtual teams is becoming increasingly popular atthe beginning of the twenty-first century. Advances in technology and thechanges on the labour market enable organizations to be flexible on the onehand, but threaten job security their employees on the other. Virtual teams arean example of this increase in flexibility, facilitated by advanced technology.This virtual environment however does introduce a new set of challenges tomembers of virtual project teams.The objective of this study is to gather information about the psychologicalcontract of virtual team members and gain more insight in its effects on thevirtual team’s effectiveness. An inductive approach is taken and qualitative datawill be gathered through in-depth interviews with twelve virtual team membersthat have been working on the same virtual project.Research results clearly show decreased levels of trust, commitment andcohesiveness. This indicates a more fragile environment in which psychologicalcontract violation is more likely to occur. Team effectiveness will be negativelyinfluenced in the events of contract violation. ii
    • Recommendations based on this research will include implications for humanresources and project managers. These groups will be concerned most with thedesign of a virtual team and the success of the virtual project. iii
    • PREFACEAfter a period of seven years of study, everything I have learned will finallycome together in this thesis project. Seven years feel like quite a long time, butthey went by so fast. It has been a difficult, but an inspiring period, in which Ihave put my dearest and myself to the test. A period in which sacrifices havebeen made, but that brought many new opportunities as well.The final two years at TiasNimbas have brought closure to this period, as I amabout to leave this business school as an International MSc in BusinessAdministration, specialized in Marketing Management. It has given me aplatform to not only broaden my knowledge, but to define the purpose for myfuture career as well.It is hardly possible to thank everyone, but some people deserve to bementioned. The very first person I would like to thank is my girlfriend Ingrid,whom has had to endure the most difficult times with me. She has given me allthe support necessary. She has brought up the patience to review my work and,even more important, she brought up the patience to live with me those years.More thanks go to my family. My mother, brother, sister and father have madethis study possible by being patient and supportive at all times.Of course, I would also like to thank my supervisor Prof. Alf Crossman for hiscontribution to this piece of work. He has brought up the best in me and I couldnot have had a better companion to work with.This thesis describes the psychological contract and its implications in thevirtual environment. This subject has been of my interest ever since the lecturesof my supervisor and it will certainly stay that way for quite a while.Hjalmar van MarleUtrecht, September 9th 2010 iv
    • TABLE OF CONTENTS v
    • vi
    • LIST OF FIGURESLIST OF TABLES vii
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Chapter 1 INTRODUCTIONThis document is the result of the master thesis project, written as part of themaster program International Business & Marketing at the TiasNimbasBusiness School in Utrecht. From July until September research has been doneon the relationship between the psychological contract and virtual teameffectiveness. This chapter provides an introduction on the subject matter,background information, the aims and objectives, theoretical relevance, andinformation on what to expect of the structure of this thesis project.1.1 Subject matterMost people are not familiar with the term psychological contract. Most of us arenot even aware of the fact that we have one ourselves, until we find ourselves ina situation in which it emerges. Imagine your latest performance appraisal. Didyou not feel betrayed your supervisor did not give you promotion? Did you notfeel, that you deserved that raise, because your manager said you haveperformed excellent? Well then... You should have written it all down.Psychological contracts are derived from inferred promises and obligationsbetween two parties. They include every unwritten agreement that resides in themind of an individual and to which each party is held responsible by theindividual. The psychological contract has been thoroughly researched byacademics. It is an increasingly hot topic in the field of HR, as the currentmacro-economic situation opposes a threat to job security and stability.Another macro-environmental factor becomes increasingly important. Theemerging virtual environment sets a new stage for organizations. A stage inwhich internationally assembled teams can work on the same project, enablingthem to work across space, time and culture. Virtual projects are subject ofresearch since the 1980s, but due to the technological advances that have been -1-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010made the last decades multinationals make increasing use of them. However,virtual working does come with a new set of characteristics. Virtual projectteams are different than traditional project teams. They require different inputsin terms of design, resources, skills and abilities. Socio-emotional and taskprocesses need a different approach as well.These changes in the environment we do business in are bound to have aneffect on the productivity and effectiveness. This thesis project is concernedwith the relationship between the two variables described above and the waythey affect the results of virtual project teams.1.2 Background informationAlthough the psychological contract has been introduced already more than fourdecades ago, research on this topic received significant attention from thebeginning of the ‘90s (Rousseau 1989; Rousseau 1990; Robinson andRousseau 1994). Early research described the psychological contract asreciprocal obligations between an employees and his/her organization.Rousseaus research has set the basic framework around the psychologicalcontract, being individual employees’ beliefs about the mutual exchangerelationship between employer and employee (Rousseau 1989).From the beginning of the 90s to later in the 90s, research on the psychologicalcontract was done on different subjects related to it, being violation, trust andbreach (Robinson 1996) and the perceptions of both parties and their offeringon the written contract (Herriot and Pemberton 1995). These perceptions,together with the unwritten promises would lead to mutual obligations, which arepartly put on record in the written formal contract of employment, but are for themost part implicit, covertly held and only infrequently discussed (Anderson andSchalk 1998).In the beginning of the 21st century, virtual teams became a topic in the field ofHuman Recourse Management (HRM) and organisational behaviour. This hasled to numerous reports on how working virtually affected the outcome of the -2-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010project (Maznevski and Chudoba 2000; Kayworth and Leidner 2002; Kirkman,Rosen et al. 2004) and virtual team processes (Jarvenpaa and Leidner 1999;Piccoli and Ives 2003).Jarvenpaa and Leidner (1999) were the first to actually relate virtual teams withtrust, which in its turn is linked to the psychological contract. Their researchfocussed on whether it was possible for trust, or swift trust, to exist betweenvirtual team members, concluding there were at least some forms of trustcreated within virtual teams. Later on in the 2000s, several more articles havebeen published, relating trust (Piccoli and Ives 2003; Coppola, Hiltz et al. 2004;Crossman and Lee-Kelley 2004) to team dynamics and behaviour control.Team effectiveness in virtual teams has only recently been a subject of study(Maznevski and Chudoba 2000; Kayworth and Leidner 2002). Their studiesmainly focus on how working in a virtual environment affects the perceived teameffectiveness. In their research, the relationship with the psychological contractexplicitly, is not subject of study, forming the so called gap which this thesisattempts to fill.This report will contribute to the ongoing discussion on working with virtualproject teams and gives new insights on how the psychological contract isrelated to team effectiveness. It involves reciprocal obligations and inferredpromises, and links these subjects to team effectiveness. This is done by givingan in-depth practical example of a virtual project team and their experienceswith the topic and placing these experiences in the theoretical framework.1.3 Aims & ObjectivesStudying the psychological contract in a virtual environment is relevant toorganizational studies today. The increasing use of virtual working in a newvirtual environment opposes virtual project teams to entirely differentchallenges, than they were used to in traditional project teams. Academicresearch has covered the topic of virtual teams broadly. However, therelationship between virtual work and psychological contracts is limited. The -3-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010psychological contract has been the subject of research for the past decadesand its implications have been broadly discussed. This study aims to close thegaps in the published academic research on virtual team effectiveness and thepsychological contract. Existing literature does confirm that some of the uniquecharacteristics of the psychological contract can be found within virtual projectteams. Besides that, there is enough reason to believe that virtual teammembers, as they are regular employees of an organization as well, hold theirown individual psychological contract. What we do not know, is how it isinfluenced by virtual working and the effects it will have on the team’seffectiveness.For that reason, the principal aim of this thesis project is to learn more about thepsychological contract within a virtual environment. The objective is to definethis relationship and provide recommendations to those organizations that workwith virtual teams. Another aim is to define the relationship between thepsychological contract and virtual team effectiveness. The objective here is toprovide more insight on what variables have an either positive or negative effecton the virtual team’s performance. The results of this research might be ofpractical use for organizations working with virtual teams and those working inthe field of organizational behaviour. It might be of particular interest to the fieldHR and project management, as these departments are most concerned withthe design and execution of virtual projects.1.4 Theoretical relevanceThis thesis project will contrast classical theories on the psychological contractwith current theories on its implication in working in project teams. As differentvariables of the psychological contract, like trust and commitment, will beresearched within a virtual environment, literature on these variables will beincluded. Subsequently, this research will include team dynamics and thedifferences between virtual and face-to-face team processes. It will identify gapsin the existing literature, related to the research question. Interview questionswill focus on filling the gaps identified. -4-
    • thPsychological Contracts in the Virtual Environment 9 of September 20101.5 Thesis project structureIn order to explore the concept of the psychological contract within the virtualenvironment, a theory will be built to explain the relationship between bothvariables. To accomplish the main research objectives, a theoretical as well asan empirical study was conducted, which is structured into seven chapters.The first three chapters are designed to introduce the reader to this thesisproject and the subject of study. This first chapter is the introduction to theresearch. The second chapter is an overview of the aims and objectivesregarding the research. In this chapter, the connections between thepsychological contract and virtual team effectiveness are made. The literaturereview, chapter three, is concerned with a thorough analysis of the availableliterature. First, the psychological contract is explored, and then the virtual teamenvironment is analyzed. In both cases a definition is given first, after which themain themes are elaborated on. The psychological contract literature will focuson the definition of this variable and its unique characteristics. The virtual teamliterature will focus more on the environmental context in which virtual teamsoperate. At the end of the literature potential gaps will be explored, as bothpsychological contract and virtual team literature are combined. Then theresearch question is drawn up, that will enable us to close these gaps.The fourth chapter includes the research methodology. Here the researchdesign is discussed. It consists of the research approach, the researchphilosophy, the research strategy, methods of data collection and a detailedresearch procedure. This chapter describes how the secondary data isprocessed and in what way the data of the primary research will be gathered.Final part of this research includes the last three chapters. These are concernedwith a presentation of the findings, reflections on the research and thediscussion of the results. The fifth chapter elaborates on the most importantfindings. The sixth chapter includes the lessons learnt during the researchproject and the seventh and final chapter will lead to the conclusions andrecommendations. -5-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Chapter 2 LITERATURE REVIEW2.1 IntroductionThis chapter reports the secondary data collection to map and assess theexisting intellectual scope of the relationship between the two variables at thefoundation of this research. The current academic background of thepsychological contract and the virtual team environment will be explored, inorder to develop a thorough understanding of previous research topics, relatedto the subject of this thesis.The literature review will first of all give a thorough theoretical background of thepsychological contract literature, in order to create a basic understanding of theholistic research topic. Then, the environment in which virtual teams operate willbe outlined, listing its challenges and benefits. The final paragraph of thisliterature review will discuss current literature on the relationship between bothvariables in order to identify the knowledge gaps. These will then besummarized, leading to the research question of this thesis project.2.2 The psychological contract2.2.1 Evolution of the psychological contractDuring its history, the psychological contract has evolved from “an implicitunderstanding between a group of employees and their foreman” (Argyris 1960)to “an individual’s beliefs regarding the terms of conditions of a reciprocalexchange agreement between the focal person and another party” (Rousseau1989). It is an exchange concept providing a broad explanatory framework forunderstanding employee-organization linkages (Anderson and Schalk 1998).The first definition of an implicit understanding has been further developed byseveral academics. This development presents the evolution this topic has gonethrough, while it has been criticized and refined throughout its academic history. -6-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010This paragraph is designed to explore this evolution and provide the reader ofthis thesis of a basic understanding of this research topic. Its complexity willbecome clear by discussing the definitions that academics have used in thepast.It is about fifty years ago, that the first definition of the psychological contractcan be found in academic literature. Argyris (1960), an academic in the field oforganizational behaviour, is considered to be one of the founders of this subject.He (1960) defined the psychological work contract as: “employee and employer expectations of the employment relationship, in terms of mutual obligations, values, expectations and aspirations that operate over and above the formal contract of employment.” (Argyris 1960)He used this concept of the psychological work contract to describe therelationship between employees and their leaders. During his research Argyrisfound that relationships could evolve between employees and their foremen.These obligations would not be written in the formal contract. Argyris found thatthe foremen realized that the employees were most likely to produce optimallyunder passive leadership. They reacted accordingly and in exchange forpassive leadership, the employee would maintain high production and goodwork ethic (Argyris 1960).As Argyris (1960) did not explicitly mention the concept of the psychologicalcontract, Levinson et al (1962) could, two years later, claim to be its designer.They changed the concept fundamentally by focussing on implicit and unspokenexpectations prior to the employee-employer relationship, regardingexpectations of salary or promotion prospects (Levinson, Price et al. 1962).Levinson et al. (1962) used the following definition: “a series of mutual expectations of which the parties to the relationship may not themselves be dimly aware, but which nonetheless govern their relationship to each other.” (Levinson, Price et al. 1962) -7-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010The difference between Argyris’ definition and the one of Levinson et al. is to befound in the perception of both parties to the relationship. Levinson et al. arguethat both parties might not be aware of each other’s expectations, though theydo hold each other responsible for them. This suggests that these expectationsarise in the perception of one party, based in the individual experiences andfeelings of this party.Kotter (1973) has done research on the role of the psychological contract in theprocess of assimilating new employees into an organization. During hisresearch, he created lists of expectations between the employee and theemployer and matched them to study job satisfaction, productivity and reducedturnover. The approach of Kotter is criticized of being oversimplified, as it isvirtually impossible to list the amount of expectations involved (Anderson andSchalk 1998). When Kotter mentions the psychological contract, he defines itas: “An implicit contract between an individual and his organization which specifies what each expect to give and receive from each other in their relationship.” (Kotter 1973).Kotter puts more emphasis on the individual and agrees that parties might notbe aware of the other’s expectations. Although Kotter is criticized foroversimplifying things, he acknowledges the individual perception on anexchange agreement. Furthermore he argues the perception of the individualincludes expectations from the organization as well. Kotter’s approach mighthave been oversimplified, but his definition is very specific.Another contributor to the development of the psychological contract constructis Schein. According to Schein (1978) the psychological contract exists on twodifferent levels: the individual and the organizational. Another determinant of thepsychological contract, first mentioned by Schein, is the term ‘reciprocity’(Schein 1978). Both parties to the relationship believe that their expectationstowards the other are reciprocal, making the psychological contract animportant determinant of behaviour in organizations. Schein (1978) defines thepsychological contract as: -8-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 “... a set of unwritten reciprocal expectations between an individual employee and the organization.” (Schein 1978)Schein does not mention the perception of the individual in which thepsychological contract resides. Instead he argues that the organization has acontract with the employee and vice versa. In academic literature this is referredto as a bilateral approach. Another element mentioned by Schein is, that theexpectations are reciprocal. Hereby he agrees with the previous definitions, thatat least one party to the contract holds the other accountable for its contents.The most commonly accepted definition of the psychological contract is the oneof Rousseau. Rousseau sets the basics of the modern understanding of thepsychological contract, breaking with two of the earlier arguments: a focus onthe individual level, instead of the level of a relationship and a shift fromexpectations to obligations (Roehling 1997). “An individuals belief regarding the terms and conditions of a reciprocal exchange agreement between the focal person and another party. A psychological contract emerges when one party believes that a promise of future returns has been made, a contribution has been given and thus, an obligation has been created to provide future benefits.” (Rousseau 1989)In comparison to the other definitions, Rousseau argues that in the perceptionof one party a promise of future return has been made by the other. The firstparty inferred this promise from the relationship with the other party and theexperiences that have come forth from this relationship. In return this party isobliged to fulfil the expectations that are connected to this promise and thusfeels obliged to deliver.The most recent view on defining the psychological contract is the one ofHerriot and Pemberton (1995). This view is again bilateral, as it includes theperceptions of both parties, instead of the individual. “The perceptions of both parties to the employment relationship, organization and individual, of the obligations implied in the relationship. -9-
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Psychological contracting is the process whereby these perceptions are arrived at.” (Herriot and Pemberton 1995)Harriet and Pemberton (1995) are the first to include the process ofpsychological contracting. This process entails that the perception is arrived at,meaning that one or both parties to the contract become aware of its existence.One understanding shared by all of the approaches above, is that thepsychological contact concerns an exchange agreement between both partiesof the employment relationship. It resides in the perception of each individualparty and includes inferred promises or assumptions of a future return. As it isunwritten and as it merely exists within the perception of an individual, theparties might not be aware of the contents. Not of their own, neither of the otherparty.This thesis project takes a unilateral approach, meaning it will focus on theperception of one individual, instead of the perception of both parties to theexchange relationship. This choice has been made due to the difficulties indefining the role of the organization as a uniform set of expectations (Andersonand Schalk 1998). As different agents of the organization are more likely to holddifferent sets of expectations, a unilateral approach would increasemeasurability. A more narrow definition is preferred for this project. It istherefore Rousseau’s (1990) definition that will be used in this thesis.2.2.2 Formation of the contractAs discussed earlier, the psychological contract resides in the perception of theindividual. The previous paragraph highlighted the definitions that have set thescene of academic literature during the past decades. This paragraph willprovide an explanation on how the psychological contract is formed and whatthe determinants are for its contents. The model below visualizes the process ofpsychological contract formation and will be used as the bases of thisparagraph. - 10 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Figure I: “The psychological contract” (Crossman 2004).The psychological contract is founded upon three principal constructs: theexchange relationship, trust and commitment. The psychological contract existsin the virtue of these three constructs and each of them interacts.The exchange relationship includes the needs, motives and expectations of theparties that hold the contract. The employee needs pay, or a social platform,while the organization needs labour, or knowledge. The drivers of both partiesto engage in the relationship are included in the motives. The expectations ofboth parties are a product of their motives and needs.The amount of commitment to and trust in this relationship, by the party thatholds the contract, are determinants of how tight the exchange relationship isand thus how strong the psychological contract will be held. When, at a certainmoment in time, the employee experiences that the contract is misaligned, forexample by not getting promotion during an evaluation of his work, as aconsequence, in the perception of the employee, the psychological contract iseither broken, or enhanced. After experiencing breach, the employee will reviewthe contents of the contract and decide whether or not to terminate it. If not, the - 11 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010contract will again be shaped by the degree of trust and commitment and theprocess will start all over again. This dynamic element suggests that items canbe discarded or added over time, as perceptions of the employer’s trust andcommitment evolve (Daniels, Lamond et al. 2000). In the model, theenvironmental and the organizational context are included as moderatinginternal and external factors contributing to how the psychological contract isformed.2.2.3 Reciprocal obligations & Inferred promisesAccording to Robinson and Rousseau (1994), the psychological contractemerges when one party believes that a promise of future return has beenmade, and therefore a contribution has been given, and thus an obligation hasbeen created to provide future benefits (Robinson and Rousseau 1994). Thisexchange relationship of promises and obligations can be inferred from “anycommunication of future intent” (Rousseau 1989; Montes and Zweig 2009).Reciprocal obligations, or reciprocal agreements, together with inferredpromises, are the basis of the psychological contract, as beliefs in reciprocaland promised obligations between employee and employer, when violated,generate distrust, dissatisfaction, and possibly the dissolution of the relationshipitself (Argyris 1960; Rousseau 1989).An important understanding of a psychological contract is that the beliefscomprising the contract result from promises (Rousseau and Tijoriwala 1998).By believing in a promise, the individual beliefs in a future return, in turn for acontribution. The other party is, in his perception, obliged to reward him. Thisreward might be an incentive bonus for a certain performance and thecontribution can be an employee’s input on a project. For example, when aproject manager, tells one of his employees, that after a successful ending ofthe project, the project member will be rewarded for his input, the projectmember might infer this as a promise for a financial reward. Although theproject manager does not explicitly state what the reward will be and what theterms are in order to make the project successful, in the perception of theemployee the psychological contract has been formed and he or she will react - 12 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010accordingly. It is a promise for which the project manager will be heldaccountable and is therefore reciprocal in the mind of the employee. A basicpremise of the psychological contract framework is the notion of reciprocitywhereby employees reciprocate their employer on how well they have beentreated. Consequently, employees will target their reciprocation toward thesource of the fulfilled or unfulfilled obligations, being their perceived employer(Coyle-Shapiro and Kessler 2000).Rousseau (1998) found that fulfilment of psychological contract obligationscontributed independently and more substantially to the prediction of trust,commitment, and satisfaction when compared with broader expectations(Rousseau and Tijoriwala 1998).2.2.4 Transactional vs. RelationalDifferences in the content of the psychological contract tend to cluster aroundthe extent to which they are transactional, based on transactions, or relational,based on the relationship with another party. Differences between both types ofcontracts will be outlined in the next paragraphs.Transactional contracts are characterized by limited involvement of the partiestaking part in the contract, and emphasize specific, short-term, often monetaryobligations. They involve an exchange of economic currency wherein theorganization provides adequate compensation, a safe working environment,and reasonable short-term guarantees of employment in exchange for theemployee’s fulfilment of narrow, specified role responsibilities (Thompson andBunderson 2003). In their research, Rousseau and McLean Parks state that“because employees are concerned about themselves as the primarybeneficiaries of the exchange, transactional contract imply an egoistic orinstrumental model of human nature”.In contrast, relational contracts emphasize broad, long term, socio-emotionalobligations, such as commitment and loyalty, consistent with collective interest,and have a pervasive effect on personal as well as work life (Thomas, Au et al. - 13 -
    • thPsychological Contracts in the Virtual Environment 9 of September 20102003; Thompson and Bunderson 2003). Relational contracts entail theexchange of socio-emotional currency, involving the organization’s provision oftraining and professional development, as well as long-term job security, inexchange for the employee’s fulfilment of generalized role obligations.Employees with such contracts, contribute their commitment and involvement tothe organization often in the form of organizational citizenship behaviours(Robinson and Morrison 1995).In the figure below, Rousseau has summarized the contractual continuum, inwhich the differences between the transactional and the relational contract aredescribed (Rousseau 1990). Figure II: “Transactional vs. Relational contracts” (Rousseau 1990).2.2.5 Psychological contract violationThe misalignment between the individual’s expectations of how things shouldbe, compared to how they really are is called psychological contract violation(Crossman and Lee-Kelley 2004). It is the perception of employees that theirorganization has failed to adequately live up to its promises (Rousseau 1989; - 14 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010Morrison and Robinson 1997). In other words, a gap between the desired andthe actual state has been identified in the perception of the employee.According to Robinson and Rousseau, the impact of psychological contractviolation can have serious individual and organizational implications, as itdecreases the level of trust between the employee and the employer and thelevel of satisfaction with the job and the organization. Contract violation cannegatively impact the perceived obligation to the organization and the intentionto remain within the current job (Robinson and Rousseau 1994). It is consideredto have a more intense effect than not living up to an expectation, as “brokenpromises produce anger and erode trust in the relationship” (Robinson andRousseau 1994).Whenever the employee perceives the employment situation as not consistentwith the standard, control theory suggests that an individual will respond toreduce the discrepancy (Shore and Tetrick 1994). As a result, the employeemight not live to his part of the obligation to adequately fulfil the assigned task.2.2.6 The psychological contract in its current stateThe psychological contract becomes increasingly important, as recent trends ofrestructuring, downsizing, demographic diversity and foreign competitionthreaten the traditional assurance of job security and steady rewards in returnfor hard work and loyalty (Sims 1994; Hiltrop 1995; Guest 1998). Guestproposes another issue, being the state of turbulence and uncertainty, whichmakes it difficult for organizations to fulfil the obligations that it has made to itsemployees. The result of both issues is a perception on the part of manyemployees that the terms of their psychological contracts have not beenadequately fulfilled.In his research, Hiltrop suggests that a shift is taken place within thepsychological contract construct. The psychological contract is moving from along-term and stable contract to “one which is more situational and short-term”(Hiltrop 1995). This shift implies that commitment to corporate goals is - 15 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010decreasing and job security and company loyalty might well be at their lowestlevels. Hiltrop has identified this shift in 1995, which means that by now, theyear 2010, this shift must already have taken place. In the figure below, which isan extension from Hiltrop’s original figure made by Anderson and Schalk, setsout the changing factors of the psychological contract as they would develop inthe future. Figure III: “Psychological Contract - Past vs. Emergent Form” (Anderson and Schalk 1998).Taking this new situation into account, Hiltrop expects implications for HumanResource Management (HRM), as it is bound to have consequences forattracting, retaining and motivating talent, management style and the way togain commitment (Hiltrop 1995).2.3 Virtual Teams & The Virtual Team Environment2.3.1 The virtual team environmentThe virtual team is currently considered to be one of the building blocks of asuccessful organization. Increasingly, these successful organizations areorganised in a dynamic network form that can more quickly adapt to ever-changing competitive landscapes and customer requirements. Enabled by theuse of Information Technology (IT), virtual teams can operate acrossorganizational boundaries in a geographically, organizationally and/or time - 16 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010dispersed environment (Jarvenpaa and Leidner 1999; Powell, Piccoli et al.2004; Lin, Standing et al. 2008). In general, virtual teams are defined as “groupsof geographically, organizationally and/or time dispersed workers broughttogether by information and telecommunication technologies to accomplish oneor more organizational tasks” (Jarvenpaa and Leidner 1999; Powell, Piccoli etal. 2004; Fiol and OConnor 2005). Virtual teams differ from the traditional team,by the limited amount of face-to-face interaction, which in its turn will haveprofound effects on the development of interpersonal relationships,communication, task processes and performance (Warkentin, Sayeed et al.1997; Jarvenpaa and Leidner 1999; Coppola, Hiltz et al. 2004; Fiol andOConnor 2005; Bjørn and Ngwenyama 2009).In his work on virtual positions, Mackenzie describes the virtual team as avirtual position, involving three or more persons from different parts of anorganization working together on a recurring task process (Mackenzie 1986).Due to the considerable amount of literature available, virtual team literaturecan best be categorized in four sections, being inputs, socio-emotionalprocesses, task processes and outputs (Powell, Piccoli et al. 2004). Eachsection will be elaborated on in the following paragraphs.2.3.2 InputsVirtual team inputs represent the design and composition of the virtual team andthe donation of resources, skills and abilities with which the team begins itswork (Powell, Piccoli et al. 2004). They can be grouped under design, culture,technical expertise and training.The design of the team and the structuring of its interactions have been found toimpact the development of a shared language and shared understanding byteam members. Designs vary by the level of face-to-face interaction, planning ofactivities and the use of communication media, and the articulation of goals,structures, norms and values (Powell, Piccoli et al. 2004). In general, traditionalteams have been found to outperform virtual teams, regarding their ability to - 17 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010exchange information in an orderly and effective manner and their effectiveplanning (Galegher and Kraut 1994). Research on limiting these threats hasfound that team-building exercises, establishing shared norms, and thespecification of a clear team structure contribute to the team’s success (Kaiser,Tullar et al. 2000; Sarker, Lau et al. 2001). Another crucial factor, contributing tothe virtual team’s success, is the amount and rhythm of face-to-face meetingsduring project planning (Maznevski and Chudoba 2000). The more often thevirtual team meets in person, and the more these meetings are focussed onteam-building, the higher the team’s effectiveness.As virtual teams are generally geographically dispersed, they will most likelycontain different cultures. Inevitably, virtual team members will experience thisas a challenge, hence cultural differences often lead to coordination difficulties(Maznevski and Chudoba 2000). Besides that, they can create obstacles toeffective communication (Kayworth and Leidner 2002). Cultural differences cannegatively impact the team’s effectiveness. Even in virtual teams, that aredispersed by subtler differences than globally, like regionally or by function,culture can have a negative impact on the team’s effectiveness (Robey, Khoo etal. 2000).The need of technical expertise among team members has an effect on theoverall team performance and a team member’s individual satisfaction (Powell,Piccoli et al. 2004). Modern technological communication solutions come withpossible technological challenges. A range of challenges can be found, fromsoftware errors to connecting the right hardware. Especially the lack of technicalexpertise and the inability to cope with technical problems can have a negativeeffect on the individual satisfaction with the team experience and performance(Kayworth and Leidner 2002). When team members are able to deal withtechnical uncertainty and technology related challenges, high trust develops.Overcoming these challenges together can result in a more cohesive team(Jarvenpaa and Leidner 1999).As virtual teams are opposed to a significant amount of challenges, sufficienttraining will be a critical factor to the success of a virtual project (Duarte and - 18 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010Snyder 2000). Early research results suggest that consistent training among allteam members improves the team’s performance, while virtual teamscharacterized by diverse technology skills may experience conflict whenmembers are unable to resolve differences (Warkentin and Beranek 1999).Early and uniform training has also been found to foster team cohesiveness,trust, teamwork, commitment to team goals, individual satisfaction and a higherperceived decision quality (Kaiser, Tullar et al. 2000; Van Ryssen and Godar2000). The most effective way of training at the start of the project, is concernedwith team-building. In their research on training to improve virtual teamcommunication Warkentin & Beranek (1999) found that in most cases, virtualteam members receive little or no training to improve the virtual team’seffectiveness. When training is used, it often consists on skills to improvesoftware utilization. Interpersonal dynamics are rarely the subject.2.3.3 Socio-emotional processesVirtual team researchers define relationship building, cohesion, and trust as“fundamental processes that foster team effectiveness, while suggesting thatvirtual teams face significant difficulty in achieving them” (Powell, Piccoli et al.2004). Although these socio-emotional processes are hardly measurable, theyare at the heart of an effectively functioning virtual team.Compared to traditional teams, virtual teams develop weaker relational linksbetween teammates (McDonough, Kahn et al. 2001), due to their reliance onelectronic communication and the difficulties associated with it (Powell, Piccoliet al. 2004). In order to provide an answer to this problem, face-to-facecommunication among virtual team members early in the project has beenfound to foster the ability to form closer interpersonal relationships (Maznevskiand Chudoba 2000). Improved performance and enhanced learning, leading toan increase in team effectiveness, can be stimulated by early face-to-facemeetings, focussed on relationship building (Kaiser, Tullar et al. 2000).Cohesion is an important aspect of the virtual team. It has been associated withbetter performance (Maznevski and Chudoba 2000) and greater satisfaction - 19 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010(Chidambaram 1996). Compared to traditional teams, team cohesiveness invirtual teams is considered to be lower, due to collaborative technologies thathinder the development of cohesion (Warkentin, Sayeed et al. 1997). However,strong cohesion in virtual teams has been found in a later stage of the project,as virtual team members exchange enough social information over time(Chidambaram 1996).As the development of trust is difficult to assess between virtual team members,because they hardly meet in person, it forms another challenge in virtual teams(McDonough, Kahn et al. 2001). Yet, trust development is crucial for thesuccessful completion of virtual team projects (Sarker, Lau et al. 2001). Virtualteams, especially those assigned to a short-term project, do seem to develop aform a swift trust, enabling the team to achieve high levels of trust (Meyerson,Weick et al. 1996; Jarvenpaa and Leidner 1999). Swift trust can be describedas the process of assuming that team members are trustworthy at the start ofthe project and seeking conformation throughout the duration of the project theyare in (Meyerson, Weick et al. 1996). Trust combines both feelings and beliefsregarding the extent of confidence to be placed in another’s words and actionsand is derived from reliable acts and communications.2.3.4 Task processesTask processes consist of the categories communication, coordination andtask-technology-structure fit and contain every team process, contributing toaccomplish the given task (Powell, Piccoli et al. 2004).At the core of any team process is communication. In fact, the level ofinteraction largely determines team performance, as it facilitates informationexchange among group members (Potter and Balthazard 2002). The virtualenvironment presents considerable challenges to effective communicationincluding time delays in sending feedback, lack of a common frame of referencefor all members, differences in salience and interpretation of written text, andassurance of participation from remote team members (Cramton 2001). Inaddition, nonverbal communication, which is just as important, is usually - 20 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010missing as well. Therefore traditional teams tend to communicate moreeffectively, than virtual teams. Technology tends to restrict the communicationprocess because electronic media are intrinsically leaner than face-to-facecommunication and convey a limited set of communication cues (Sproull andKiesler 1992).Coordination represents the degree of functional articulation and unity of effortbetween different organizational parts and the extent to which the work activitiesof team members are logically consistent and coherent (Cheng 1983).Coordination is linked to team performance and comes with several challengesto the virtual team, as it attempts to coordinate across time zones, culturaldifferences and divergent mental models (Warkentin, Sayeed et al. 1997). Thetraditional social cues and mechanisms that facilitate human interaction anddecision-making are absent or altered by technology and creates problems infinding reference points for coordinating the work flow (Massey, Montoya-Weisset al. 2003). A distinction can be made between synchronous andasynchronous coordination. Asynchronous coordination refers to virtual workthat is carried out at different times, while synchronous coordination takes placein the same space and time. As virtual teams cannot necessarily rely ontraditional social cues and mechanisms, it opposes a threat to handlingproblems of team functioning (Montoya-Weiss, Massey et al. 2001).The fit between the various technologies available to the virtual team and thetask the team has to accomplish, along with the role of face-to-face meetings,are crucial to the team’s functioning (Powell, Piccoli et al. 2004). The choice oftechnology is often subject to the team’s own preference, though in allsituations, the team will first have to successfully develop a shared language tocommunicate effectively. The proper fit between technology and communicationgoals will lead to increased performance. When media capabilities are alignedwith communication processes, performance will be enhanced (Massey, Hunget al. 2001). - 21 -
    • thPsychological Contracts in the Virtual Environment 9 of September 20102.3.5 OutputsVirtual team outputs are described their effectiveness. This variableencompasses all virtual team characteristics mentioned before and evaluateseach aspect on its impact on how well the team is performing as a whole.Measures of these can be in decision quality, number of ideas generated, andtime it took team members to reach a decision (Powell, Piccoli et al. 2004).Maznevski and Chudoba (2000) propose that “effective global virtual teamoutcomes are a function of appropriate interaction incidents and the structuringof those incidents into a temporal rhythm”. In their research they found that aneffective team is characterized by effective interaction incidents, within thestructure of available technology. The interaction incidents have to take placeby intense face-to-face meetings at regular moments in time, followed by lessintensive, shorter interaction incidents, using various media (Maznevski andChudoba 2000). Depending on the level of interdependence required by thetask, the degree of a common perspective and the strength of interpersonalrelationships among team members, the team will, or will not, meet morefrequent.The majority of research that has been done on virtual team performance, hasdetected no difference between the traditional and the virtual team (Powell,Piccoli et al. 2004). Examples of factors contributing to successful performanceof a virtual team include training, strategy/goal setting team building (Kaiser,Tullar et al. 2000), team cohesiveness, coordination and commitment to theteam (Maznevski and Chudoba 2000) and communication (Kayworth andLeidner 2002).2.4 Virtual Teams and the Psychological Contract - Potential implications2.4.1 Team dynamics in a virtual environmentAs discussed in the previous chapter, socio-emotional and task processes canstrongly impact the effective functioning of a virtual team. They are related in away that socio-emotional factors, like trust and cohesion, can have - 22 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010consequences for task-related processes, like coordination and communication(Powell, Piccoli et al. 2004). Several researchers have studied the effects ofteam dynamics and their influence on team effectiveness (Meyerson, Weick etal. 1996; Robinson 1996; Jarvenpaa and Leidner 1999; Coppola, Hiltz et al.2004; Crossman and Lee-Kelley 2004; Robert, Denis et al. 2009). Theseresearchers point out that virtual project teams face unique difficulties inmeeting the socio-emotional needs of virtual team members. Even though theseresearches incorporate trust, cohesion and interpersonal relationships, nonehave explicitly studied the effects of the psychological contract and related thiselement to the virtual team’s effectiveness.In their study, Maznevski and Choduba (2000) defined virtual team dynamics byusing a series of interaction incidents, each incorporating a set of decisionprocesses via a particular medium and shaped by a limited set of structuralcharacteristics. Their research shows that the amount of face-to-faceinteractions correlate with the degree of trust and socialization between teammembers (Maznevski and Chudoba 2000). Early face-to-face communicationfosters closer interpersonal relationships within a team, leading to a higherdegree of effectiveness. The same relationship exists with team cohesion.Warkentin et al. (1997) found that collaborative technologies had a negativeeffect on the development of team cohesion in comparison to higher levels ofcohesiveness in traditional teams (Warkentin, Sayeed et al. 1997).In a virtual environment, team dynamics oppose a completely new set ofchallenges for the virtual team. Still, little is known to what extent they willinfluence the contents of the psychological contract of team members and whateffect that will have on the team’s effectiveness. In order to effectively study thisphenomenon, the following model of Dr. A. Crossman (2004) will be adopted(figure 4). - 23 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Figure IV: “Virtual Team Dynamics and the Psychological Contract” (Crossman 2004).This model visualizes the virtual project team and the relationships betweenteam members, their psychological contract and the agent of the organization,being a project manager or virtual team leader. It shows that each teammember holds a psychological contract, in which the agent of the organizationwill be held accountable for the contents of the contract. Next to this directrelation, team members influence each other, and each other’s contract,indirectly. How strong these indirect relations are, is determined by the level ofteam cohesiveness, described earlier.2.4.2 Trust & CommitmentAccording to Piccoli and Ives (2003), psychological and behavioural aspects ofvirtual team working can not at all be compared to those of traditional teams(Piccoli and Ives 2003). Their research on behaviour control mechanismsshows that situations can be found where individuals perceive team members tohave failed to live up to their obligations. This perception arises when othermembers of the organization ‘knowingly fail to follow through on their obligation’,or when the perception of obligations differs between team members and theindividual responsible held accountable for them (Morrison and Robinson 1997). - 24 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010Without trust a certain form of exchange is impossible to uphold, as it requiresone party to accept vulnerability, based on the positive expectations of theintentions of behaviour of another. The notion of a trustworthy relationship isreciprocal (Crossman and Lee-Kelley 2004).The concept of trust and commitment are at the foundation of the psychologicalcontract. Commitment is central to the psychological understanding betweenthe organization, the manager and the individuals (Crossman and Lee-Kelley2004). It reflects the trustworthy relationship between the employee and theemployer. As virtual teams require high mutual commitment between teammembers, as well as high trust levels, the psychological contracts of teammembers become increasingly important.As discussed in the previous chapter, communication in virtual teams ishindered by the absence of regular face-to-face meetings. It is thereforeacceptable to argue that communication about mutual responsibilities andobligations is hindered as well, developing incongruent perceptions of eachparty’s commitment to its obligations, again creating the potential for trustdecline (Piccoli and Ives 2003).2.4.3 Research assumptionsBased on earlier research, it is expected that lower levels of trust andcommitment will be found within the virtual environment. The difficulty ofestablishing well-founded interpersonal relationships in the virtual environment,along with lower levels of trust and commitment is expected to negativelyimpact the psychological contract of team members. The interviews will mostlikely indicate lower levels of trust and commitment. Furthermore they willdemonstrate the difficulties in establishing interpersonal relationships and theeffects this will have on virtual team effectiveness. - 25 -
    • thPsychological Contracts in the Virtual Environment 9 of September 20102.5 Chapter Summary2.5.1 Psychological Contract LiteratureAs the first pillar this literature consists of, the psychological contract literaturehas been fully elaborated on in this first chapter. During the last fifty years it hasbeen researched intensively, eventually leading to the generally accepteddefinition of “An individuals belief regarding the terms and conditions of areciprocal exchange agreement between the focal person and another party.”(Rousseau 1989).Reviewing the psychological contract shows that it consists of inferred promisesand reciprocal obligations, forming an exchange agreement in the perception ofthe employee. The strength of this exchange agreement is determined by theamount of trust and commitment the employee has towards it. Next to that, thecontract is influenced by internal and external factors, which to some extentmoderate the contents of the psychological contract.The contract’s content can either be transactional or relational. Transactionalcontracts refer to an economic focus, while relational contracts focus oneconomic and socio-emotional conditions. When being violated, thepsychological contract can have profound consequences to the employmentrelationship, as it affects the amount of trust and commitment the employeeinstils in the relationship.The psychological contract is becoming increasingly important, as currenttrends of downsizing, restructuring and foreign competition threaten the extentto which factors like job security and steady rewards can be assured by theemployer.2.5.2 Virtual Team LiteratureIn accordance with the work of Powell, Piccoli et al. (2004), virtual teamliterature can be dissected in four categories, being inputs, socio-emotionalprocesses, task processes and outputs. - 26 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010Virtual team inputs represent the design and composition of the virtual team andthe donation of resources, skills and abilities with which the team begins itswork (Powell, Piccoli et al. 2004). They can be grouped under design, culture,technical expertise and training.Socio-emotional processes consist of the fundamental processes of relationshipbuilding, cohesion, and trust. These socio-emotional processes are hardlymeasurable, but they are at the heart of an effectively functioning virtual team.Task processes consist of the categories communication, coordination andtask-technology-structure fit. They contain every team process, contributing toaccomplish the given task.Virtual team outputs are described their effectiveness. This variableencompasses all virtual team characteristics mentioned before and evaluateseach aspect on its impact on how well the team is performing as a whole.2.5.3 Potential implicationsAs the previous two chapters have given us more insight in the foundations ofthe psychological contract and the virtual team environment, this last chapter ofthe literature review has combined both subjects and discussed availableliterature on aspects of the psychological contract and the way in which theyrelate to the virtual environment.The psychological contract has not yet been studied within the virtual teamenvironment. Tough, elements contributing to the existence of the psychologicalcontract have. Team dynamics is a subject broadly researched in virtual teams.Most of these studies recognize the challenges a virtual team faces, incomparison to traditional teams. These challenges consist of task-relatedchallenges as well as socio-emotional challenges. In order to visualize the roleof the psychological contract within a virtual team, a model has been drawn up,in which these interpersonal relationships become visible. - 27 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010Trust and commitment, representing the core of the psychological contract,have been thoroughly researched within a virtual team environment. Ascommunication is hindered by being tied within virtual media, it becomes difficultto establish a high amount of trust and commitment.Altogether, the virtual environment opposes considerable challenges toestablishing trust and commitment within a virtual team. As a consequence, theparties involved in the exchange agreement will invest less to uphold theirobligations.2.6 Research QuestionIn order to achieve the aims and objectives discussed in chapter one and aftercritical evaluation of the academic background of both variables, it ishypothesized that there is a relationship between the psychological contract andvirtual team effectiveness. As this research is inductive, its goal is not to look inany specific direction in order to avoid biased answers. Therefore a choice hasbeen made to keep the research question as general as possible. “What is the relationship between the psychological contract and team effectiveness of virtual teams?”As this research question suggests, it evolves around two main variables. Theindependent variable is the psychological contract. When changed, it is arguedto affect the dependent variable: virtual team effectiveness. In order to measurethis causal relationship, both variables are measured within the virtualenvironment in which they are present. The figure below visualizes therelationship just described. - 28 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Figure V: “The research variables” (source: author).The way in which the information is gathered, that will later on provide moreinsight in the relationship described above, is discussed in the next chapter.This chapter entails the research methodology. It explains the way in which thisresearch is designed in order to provide an answer on the research question. - 29 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Chapter 3 METHODOLOGY3.1 IntroductionDuring the previous chapters the research problem has been introduced andthe foundation of available literature on the subject has been given. In thischapter, the research methodology will be described. In the followingparagraphs, first the research philosophy will be outlined in order to provide anunderstanding of the researcher’s view of the process by which knowledge isdeveloped. Second, the research approach will be discussed by explaining themost suitable approach for conducting research on the psychological contractwithin a virtual environment. Finally, this chapter finishes with the researchstrategy, providing detailed information on how the research question is going tobe answered. The last two paragraphs of this chapter describe the way in whichdata is collected and by which procedure this is done.The purpose of this chapter is to provide an answer to the research question:“What is the relationship between the psychological contract and teameffectiveness of virtual teams?” Eventually its aim is to close the gaps in thepublished academic research on virtual team effectiveness and thepsychological contract. The objective is to define this relationship and providerecommendations to those organizations that work with virtual teams.3.2 Research philosophyThe research philosophy includes the researcher’s philosophical assumptionsabout the way in which he interprets the world around him. These assumptionswill underpin the research strategy and the data collection methods. It is theway in which knowledge is developed. - 30 -
    • thPsychological Contracts in the Virtual Environment 9 of September 20103.2.1 The research paradigmSaunders et al. (2007) describe the research paradigm as “a way of examiningsocial phenomena from which particular understandings of these phenomenacan be gained and explanations attempted” (Saunders, Lewis et al. 2007). Inother words, it is the way in which the research is done. A way that leads tounderstanding and explaining a phenomenon. Describing the researchparadigm can be helpful in clarifying the epistemology and ontology. Fourparadigms can be distinguished: functionalist, interpretive, radical humanistand radical structuralist (Burrell and Morgan 1979). These paradigmscorrespond to four conceptual dimensions, being radical change and regulation,and, subjectivist and objectivist. The radical change dimension approachesorganizational problems from the viewpoint of overturning the existing state ofaffairs, while the regulatory dimension seeks to work within the existing state ofaffairs (Saunders, Lewis et al. 2007). The latter two terms will be discussed inthe ontology.The functionalist paradigm is a combination of the objectivist and regulatorydimensions. Objectivism is the ontological position a researcher is most likely toadopt, when operating within this paradigm. The regulatory dimension suggeststhat a rational explanation is sought to explain the subject. The interpretiveparadigm refers to the researcher’s aim to understand the fundamentalmeanings of a subject. The principal concern is to discover irrationalities and tounderstand and explain what is actually going on. A radical humanist paradigmis a combination of the subjectivist and radical change dimensions. Workingwithin this paradigm, a researcher would be concerned with changing the statusquo. The ontological perspective attached to this paradigm would be thesubjectivist. Finally, the radical structuralist paradigm is involved with structuralpatterns with work organizations and the extent to which these may producedysfunctionalities. It adopts an objectivist perspective because it is concernedwith objective variables, unlike the radical humanist paradigm which attempts tounderstand the meanings of social phenomena.Research on the psychological contract requests an understanding of thefundamental meanings of the subject. Within a virtual environment, the aim is to - 31 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010identify irrationalities and explain what the impact on team output. The proper fitbetween the type of research and the research paradigm, in this case, is takingan interpretivist perspective.3.2.2 EpistemologyThe epistemology is concerned with what is accepted as reality within theparadigm of the researcher. For one researcher reality represents facts. Thedata collected is argued to be less open to bias, or more objective. Otherresearchers perceive reality as the feelings and attitudes that play a role in theresearch environment. Of course, these feelings can be quantified, but they canalso be expressed in narrative form.The researcher that strives for objectivity by looking for quantitative dataembraces a so called positivist epistemology; a positivist position to thedevelopment of knowledge. On the opposite side is the interpretivistperspective, taken by the researcher that perceives reality in terms of feelingsand attitudes.As the psychological contract is held in the perception individuals who developsubjective meanings of their experiences, a narrow approach, where theseexperiences are reduced to just a few categories, will risk the consequence oflosing valuable data. An interpretivist perspective, where data is not quantified,is therefore taken towards the subject of this thesis.3.2.3 OntologyWhere epistemology is concerned with the meaning of reality in a field of study,ontology is concerned with the nature of that reality. It is about assumptions ofthe researcher about the way the world operates. Two aspects of ontology canbe described, objectivism and subjectivism, both of which are widely acceptedas producing valid knowledge by many researchers.The ontology is aligned to the epistemology, following the chosen interpretivistparadigm. As the word says, objectivism follows the perception of the scientific - 32 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010approach, whereas the subjectivist view is concerned with the socialphenomena. Taking an interpretivist perspective towards the subjectautomatically means that a subjectivist view is followed.3.3 Research Approach - Deductive vs. InductiveDefining a research approach means looking for a fit between the researchparadigm and research subject. During the previous paragraphs, theinterpretivist perspective has been elaborated on. In this paragraph the way inthis perspective approaches the research is discussed.The specific approach for this study is qualitative research, in which theresearcher identifies human experiences about the phenomenon of thepsychological contract. The purpose is to clearly identify the phenomenon andhow it is perceived by people that are in the specific situation in which it isresearched. Because research is done on the experience of people, which aredifficult to be gathered by surveys, information will be gathered throughinductive, qualitative methods, such as interviews that represent data from theperspective of the people involved.The research approach can be defined in terms of deductive or inductiveresearch. A deductive approach works from a general assumption to a morespecific research question. This type of research begins with a theory and thennarrows down to more specific hypotheses that can be tested. Ultimately, thehypotheses are, or are not, confirmed. Inductive reasoning works the other way.It moves from specific observations to broader generalizations and theories(Saunders, Lewis et al. 2007). This type of research begins with observationsand detecting patterns and regularities, then some tentative hypotheses areformulated which can be explored, and finally, this research ends withdeveloping some general conclusions or theories (Saunders, Lewis et al. 2007).When comparing both research approaches, the inductive reasoning is moreopen-ended and exploratory, when deductive reasoning is narrower in nature.As most social studies do, this thesis will follow an inductive approach. A - 33 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010deductive approach relates more to the positivist research philosophy, whereasan inductive approach better relates to the interpretivist philosophy.3.4 Research StrategyThis section of the thesis, different research strategies will be discussed, afterwhich the most suitable strategy for this thesis will be outlined. Saunders et al(2007) distinguish seven different ways to gather data. Some of them fit thedeductive approach, other would belong better to the inductive approach. Whatis most important in choosing a suitable strategy is whether it will enable theresearcher to answer the research question. The seven strategies are theexperiment, the survey, the case study, action research, grounded theory,ethnography and archival research (Saunders, Lewis et al. 2007).The strategy used in this dissertation process is based on grounded theory.This means that the theory of this thesis is built on a combination of theinductive and the deductive approach. It is particularly helpful to predict andexplain behaviour. Data is collected without the formation of an initial theoreticalframework. A series of observations form the foundation on which the theory willbe developed. Then predictions are made and tested with continual reference tothe collected data. The predictions that are made in this thesis are to be foundat the end of the literature review. After that, these predictions are testedthrough interviews, as the source of qualitative data. The interviews areconducted within a virtual organization, based on a specific case study. Theirmain objective is to explain behaviour, developing a theory on the bases ofexperienced professionals in the virtual environment.3.5 Data collectionAfter having analyzed the secondary data, on which is reported in the literaturereview, primary data will be collected through the use of interviews. This kind ofdata collection is chosen because it fits the chosen research paradigm. Withexploratory research, the key challenge is finding out what is really happening.The researcher needs to be open to all possible perspectives that concern theresearched variable. In-depth interviews are a helpful method to identify and - 34 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010analyse these perspectives and infer causal relationships between thesevariables (Saunders, Lewis et al. 2007).Interviews can be highly structured, using standardised questions, or they canbe informal and unstructured conversations. Three types of interviews can becategorised: structured, semi-structured and unstructured, or in-depth,interviews (Healey and Rawlinson 1994). Because this study aims to explorethe area of the psychological contract in-depth, the unstructured interview willbe used as a primary data collection instrument. The unstructured interview,also called the in-depth interview, allows the interviewee to talk freely aboutevents, behaviour and beliefs. The interviewee’s perceptions guide the conductof the interview. It is up to the researcher to later categorize and dissect thegenerated data.3.5.1 The pilot interviewPrior to conducting the actual interviews a pilot interview has been scheduled.Pilot studies are used to pre-test a particular research instrument, like theinterview schedule of this thesis (Teijlingen and Hundley 2001). It is a crucialelement that increases the likelihood of success.The pilot interview of this thesis project involved an in-depth interview with theproject manager. The objective during the interview was to identify potentialproblems in following the research procedure. During the interview severalpoints received special attention. The functioning of the recording device wasmore like a practical issue, as well as reducing the amount of noise in the area,the distance between the researcher and the participant, timing and a glass ofwater on the table.In order to assure the validity of the interview, the participant of the pilotinterview has been asked for feedback. An important finding here was the needto clarify the psychological contract construct to participants, prior to theinterview. It turned out, that without proper definition of the subject, theinterviewee would try and give meaning to the subject. This caused attribution - 35 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010errors that needed clarification before proceeding with the interview. To improvethis, the concept of the psychological contract has been put in the introductionand continual reference is made to it during the interview, using the case studyas an example.3.5.2 Primary data collection - research processAs mentioned, the primary method of data collection will be the use of in-depthinterviews. Several stakeholders to a virtual project will be interviewed, some ofwhich are members of the same virtual team. The group of participants aremainly situated in the Netherlands, however one participant is located inGermany. The project team consists of members from a similar functionalbackground, IT, and work within one large multinational organisation. By limitingthe variables of location, culture, language and functional background, thevariables relevant to this thesis project are isolated. This contributes to thevalidity of the project.The setting in which the interviews take place, is located in the HR department,situated in a different area than the one the participants work in. Participants arescheduled for an hour and are offered a drink at the start of the interview. As theinterview’s aim is to identify behavioural, emotional and social patterns, theinterviewer needs to succeed in gaining the maximum amount of trust of theinterviewees in order to have them talk freely about the subject. During thedrink, the interviewer will introduce himself and the subject, state the anonymityof the participant, and explain the purpose of the interviews. In order to preparethe participant for interview, a cased is provided a week in advance, which theparticipant is required to read (Case: “The Confidence Trick” - Appendix III). Thecase involves a virtual team undergoing the challenges of working in a virtualenvironment. By reading the case, the interviewee will be able to relate to thesubject. During the interview both the interviewer and the interviewee canswitch back and forth to case, in order to support their arguments. For theinterviewee it might provide a safe haven as well, when it feels uncomfortable totalk directly about the work environment. - 36 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010The interviews are recorded and transcribed afterwards. The transcriptions willthen be coded and categorized in order to find causal relationships.3.5.3 Profiling informationIn order to assure the richness of the gathered data, the interviews have beenheld with different stakeholders to the virtual project. All of them are contributingto a very large and comprehensive IT project, involving a new workflow systemfor the complete organization. The group of thirteen interviewees consists of twovirtual teams, project management, the Executive Vice President IT, onebusiness analyst and an external stakeholder. This paragraph providesbackground details of each participant, though due to confidentiality restrictions,the participants’ names are left out. Manager Development Team (external partner) From the beginning of the project, the organization chose to include an external partner to guide the virtual project. First a partner from the Philippines was attracted, based on costs. Due to difficulties in communication and the capabilities of this partner, a Russian partner was attracted. The relationship with this partner did not work either, so the organization chose to approach a native partner in the Netherlands. The project manager of this partner has been interviewed as he was concerned with the implementation of the project. The external project manager took the project in 2009 and is still involved with the process. IT Manager Application Support The IT Manager provides support for the online systems of the organization. This employee reports directly to the IT Vice President and is involved in the functional design. Next to that, he or she describes the functionalities of the interface and has direct communication with the end user to gather information. - 37 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 IT Consultant Two IT consultants have been interviewed, that belong to a team of German and Dutch employees. One of them has been with the organization for over 15 years and started as a developer. During the period he has work for the organization, several mergers have taken place. Collecting the requirements for the project and implementing them is the main objective of this employee. The other IT consultant is concerned with the development and design of the software and again implementing it. Both IT consultants report to the head of software engineering. Business Analyst Amongst the group of participants there was one business analyst. This employee entered the project in a later phase. His main objective was to create contracts and analyze the contract process. Next to that he was responsible for writing the requirements. Team Leader Two virtual team leaders have been interviewed. The first was responsible for executing the acceptation test and developing test cases. His team compared the test results with the requirements and was responsible for writing system documents. The other virtual team leader was promoted recently and his team of application managers was responsible for increasing the technical quality of the project. Head of Software Engineering The head of software engineering leads a team of software engineers that consists of employees from Germany, the US and the Netherlands. This employee has got years of experience with virtual work within the organization. Application Manager Two application managers have participated in the research. Both of them have got several years of experience with IT projects. They are responsible - 38 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 for the execution of the software and customization of the end users’ needs. Another responsibility of them is to design user interfaces and execute programs and updates. In order to achieve this, a lot of communication is necessary between them and the development team. Software Engineer In this particular project, the software engineers were responsible for identifying problems in the new system. The software engineer that has been interviewed has got a long history within the organization. She has worked in support, design, databases, training and engineering. Due to her background, the software engineer will be able to provide additional information on different disciplines. Project and Project Support Manager The project and project support manager has got 10 years of experience within the organization. By the time he joined the organization, the company had just started working with virtual projects. Currently his team gathers requirements and passes these requirements through to the software development team. Another duty is to plan the IT-projects. His virtual team consists of members from the Netherlands, the US and Germany.3.6 Chapter summaryThis chapter of the thesis project described the research methodology beingused to gather and analyse data, which will later on enable the researcher toanswer the research question. The purpose is to provide a solid plan toeffectively gather all necessary data on the relationship between thepsychological contract of virtual team members and the team’s effectiveness.As with most social studies, an inductive research approach will be taken, dueto its exploratory nature. Qualitative data will be gathered by using in-depthinterviews. This type of research serves the purpose of understanding people’sinterpretation on a holistic subject. - 39 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010The research philosophy underlying this thesis is described by the researchparadigm. An interpretivist ontology is chosen to approach the subject, whichallows for in-depth research on the virtual project team members and correctassessment of their interpretations on the subject. Accordingly aphenomenological epistemology is applied through the collection and analysisof qualitative rather than quantitative data.The research strategy used in this dissertation process is based on groundedtheory. Though, a specific organization is used as a case study in order toconduct the necessary interviews. The main objective here is to explainbehaviour, developing a theory as we go along. The researched phenomenoncan only be studied in an organizational context.As a method of data collection, conducting interviews seems to realize the bestfit with the research paradigm. As we want to explain behaviour, emotions andfeelings, in-depth interviews will provide the richest amount of data. However, astrict procedure has to be in place to ensure the project’s success. Differentperspectives of different stakeholders need to be obtained, to provide acomplete picture of the situation. The variables that are researched are isolatedas much as possible, to avoid the research being contaminated with irrelevantvariables. Finally, by conducting a pilot interview, a first impression can betaken, after which possible flaws can be corrected. - 40 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Chapter 4 RESEARCH RESULTS4.1 IntroductionIn the second chapter of this dissertation project, the theoretical framework wasdeveloped, based on the literature review on the psychological contract in thevirtual team environment. As this research revealed some aspects of thepsychological contract playing a role in the virtual environment, the possibleeffects on team effectiveness could be discussed. In this section, the theoreticalframework is refined, based on the results of the empirical study.The first section contains some general considerations derived from theinterviews. These descriptions also hold an understanding and analysis of therecords. Quotes from the interviews are intended in the text, and written incursive. The explanation of the empirical results, and the insights gained fromthe interviews, will form the foundation for the concluding chapter, in which theconclusions will be formulated.4.2 Repeating themes around the two main variablesThe coding of the interviews has resulted in a number of statements that can berelated to our research question. Many statements have been expressedseveral times by the same and by different participants and evolved around thekey themes, or categories, below: I. Psychological contract - limitations and implications of the virtual environment on the psychological contract. a. Exchange relationship; incorporating trust and commitment as the main factors influencing the exchange relationship. b. Context; elaborates on the internal and external environment of the case, in which the virtual team operates. - 41 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 c. Contract variation; describes the enhancement and breach of the contract within the virtual environment. II. Virtual Team Environment - includes an analysis on the virtual team characteristics found during the case. a. Inputs b. Socio-emotional processes c. Task processes d. Team effectivenessThe tables presented in the next paragraphs are derived from the results of theinterviews, summarizing the key issues that emerged from them. Each tablerepresents a category with its own codes. Then, the codes are derived inrelevant dimensions, which represent the range of issues found in this research.The aim of each table is to summarize the results and highlight importantaspects that enable a structured analysis and discussion.4.3 The Psychological Contract Category Code Key issues found Trust Trust, as a main element of the exchange relationship, enforces the strength by which each party is held to the contents of the contract. Trust can be expressed by the degree to which the employee expects the organization to fulfil its promises, related to the virtual project. Confidence and faith in the project outcome is one main determinant. External partners are perceived as more difficult to trust. Unclear/unrealistic planning decreases trust levels. Psychological contract Trust levels decline due to geographical distance. Lower trust levels due to unclear task division. Lack of trust in management capabilities leads to reduced Foundation motivation. Exchange Employees participated especially to secure their job within the relationship organization. Employees were given the opportunity to participate in a challenging and prominent project. The project was said to increase efficiency of the workflow process, leading to a more effective way of working. As a result, employees expected increased job satisfaction and a fair reward for their participation. Commitment Geographical distance reduces commitment to the project. As project members need to split their responsibilities between their day-to-day work and the project, commitment exists on - 42 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 project- as well as organizational level. In general employees were committed to the organization, but exceptions were found in commitment to the project and -team. Due to virtual interaction a certain degree of intimacy is lost, negatively impacting commitment to the project. Internal factors Less job security was experienced due to the organization’s history of outsourcing and merging. The internal communication structure increased confusion on the assigned tasks, negatively affecting work pleasure. Incremental project planning negatively affected task clarity, Context resulting in reduced commitment and trust. External factors The current labour market shows negative prospects for senior IT personnel, creating ‘lock in’ Trends of downsizing, outsourcing and reorganizing negatively affects job security Breach Reduced commitment and lack of trust creates an environment in which the psychological contract becomes fragile, chances of contract breach increase. Promises in terms of efficiency, building knowledge and increasing work pleasure have not been delivered on. The psychological contract can be negatively affected by internal environment, like the lack of clarity and the lack resources available. Contract variation Resistance has been found in terms of reluctance to share information, not willing to communicate with certain stakeholders, and reduced effort. Employees perceive outsourcing as unfair. Enhancement Reward systems were linked to project outcome, in terms of volume. Leadership providing a common vision and clear goals was lacking Table I: “Research Results - Psychological Contract” (source: author).The table above visualizes the psychological contract as it is measured in thevirtual environment. A categorization has been made between the foundation ofthe psychological contract, its context and variation. The foundation of thepsychological contract consists of its three pillars trust, commitment and theexchange relationship. The category context consists of the internal andexternal contextual factors that influence psychological contract formation.Contract variation, the third category, entails the output of an employeeevaluating the psychological contract. This results in either contract breach,after which the employee will most likely leave the organization or has toreconstruct the psychological contract, or contract enhancement. Contractenhancement entails the positive experience after evaluation.The overall picture that emerges corresponds with the assumptions made inchapter two. The foundations of the psychological contract seem more fragile - 43 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010within the virtual environment, compared to the traditional setting. Theinterviews revealed that due to the geographical distance, and the limitedamount of face-to-face contact accordingly, virtual team members experiencelower levels of trust. The fact that virtual team members cannot see eachother’s expressions and non-verbal signals when communicating virtually,negatively impacts the amount of trust they instil in each other. Examples of thishave been found in the following statements: “I would really prefer face-to-face meetings, because it creates a stronger relationship. The amount of trust increases because the employee will get a better image of the project team you work with.” - Business Analyst (translated by author) “Trust is often an underestimated variable in IT-projects. They usually concern result-driven people, experts in their own field. Especially then, it has a profound effect on teamwork. Teamwork without trust is very difficult, almost impossible. It creates an environment of resistance and therefore negatively impacts the project outcome.” - Software Engineer (translated by author) “The amount of trust will definitely have an effect on the psychological contract. It is crucial and will have intense consequences. A virtual project will fail, when trust cannot be established.” - Project and Project Support Manager (translated by author)Another factor influencing the degree of trust is the complexity of planning andcoordination. Due to the complex nature of the virtual project, virtual teamleaders found it difficult to coordinate their teams. Directly related to this, wasemployee distrust with its management. All virtual team leaders stated that theyhad difficulties managing employees abroad... “... and because of that, I tend to ignore my colleague in Germany. I have relieved him of any serious project activities, because I cannot be sure that he will follow up on them. I simply do not have the time to do that, because of the complex nature of this project.” - Virtual team leader (translated by author) ”The way management coordinates the project has caused me to lose faith in them. They do seem to know where they want to end up, but how to get there is unclear. Because of this, several external partners came with wrong estimates, while the set of requirements increased by the minute.” - IT Consultant (translated by author) - 44 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010In line with trust levels, the levels of commitment are affected as well. Due tocommunication difficulties employees are more likely to lose commitment to thevirtual project. The different responsibilities a team member has, often enablesthe project employee to chose and prioritize. Research has shown that thischoice enables the employee to opt the easiest way. In relation to the casestudy participants had to read prior to the interview, one of the respondents saidthat “... the effect from the person who gets mailed ‘Don’t ask these sillyquestions anymore’, the amount of commitment goes down. Eventually youwould see that, as this person does not know what to do, in some cases it willnegatively impact the results. It increases the amount of misunderstandingsabout the fulfilment of the task.” (virtual team leader). Virtual team members canchose to ignore an e-mail, or an incoming call, a stronger preference for theirregular job can be tempting in some situations. Team members that work on thesame location can gain more commitment by meeting face-to-face. One of thevirtual team leaders stated that “... commitment can only be established bymeeting physical, instead of virtual. There is no other way.” “The more physical the medium, the higher the commitment. If you talk to a person face-to-face, and this person can see how honest it is that you want to get this thing done, with all the ways in which you can express a wish, by voice, word, the face, then I think commitment is much bigger than when you just send an email. People can easily toss a mail aside. Even with a reminder you can still say you just didn’t have time to do it yet. But if you physically meet another person, this person will feel how urgent it is and it adds to the amount of commitment.” - Project and Project Support Manager (translated by author)Although lower trust levels have been found, several participants had differentopinions about the level of commitment. Participants did acknowledge theimportance of commitment and the lack of it would often be attributed to theorganizational agent. “Trust and commitment influence each other. If there is no trust between team members, you cannot understand each other’s problems. Without this mutual understanding you will lose commitment.” - Manager Development Team (translated by author) - 45 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 “Miraculously I do feel my team is still highly committed to its task. The fact that my colleagues sometimes work until 00.30h, says enough.” - Application Manager (translated by author) “... and the next day it turned out we could not meet the deadline that weekend. So I wrote them an email this morning saying I did not believe it was possible, although they thought it would be. ‘You said it would be possible, I don’t think it is, and we will certainly not do it this weekend.’ We are going through the whole mess all over again.” - Virtual Team Leader (translated by author)Contextual factors had an impact on the psychological contract as well. Both theinternal and the external environment indicated challenges to the psychologicalcontract. Examples of this relation are the increasing use of virtual technologiesand management capabilities to effectively manage and coordinate virtualprojects. The interviews did identify job security and the failing communicationsystem of the organization as internal factors relevant to the forming of thepsychological contract. Even though the organization has been working withvirtual technologies since the 1990s, it still experienced difficulties in setting upa sound communication network. According to some of the senior personnel,this has had a negative effect on project outcome. “After years of experience,the organization still does not get it right!” (senior virtual team leader). “Because of distortion in our communication system, the information transmitted was unclear. There were a lot of teams on different locations and although they often had their vision right, they did not take the right steps to achieve their objectives. This caused friction between some of the teams.” - Manager external partner (translated by author) “Because the virtual environment demands other forms of communication, like email, it takes more time. If you have thread of more than 10 emails, you really need a meeting to gather all the information. It is very often that people address less attention to emails. People are often better prepared for meetings and it is more difficult to ignore a direct question.” - Virtual team leader (translated by author)Another topic of this research has been whether the virtual environment wouldhave an impact on contract breach or enhancement. Elements supportingbreach have been identified, being the fragile foundation on which the contractis formed, the increased complexity of virtual communication and the internalstructure of the organization that facilitates it. Contract enhancement is a factor - 46 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010of which management should be extra aware within a virtual environment. Asthe psychological contract is more liable to breach, management might think ofproper control mechanisms, like reward systems and HR practices in terms ofmore suitable leadership. In terms of the increased complexity of virtualprojects, one could argue that reward systems based on merely output are lesslikely to be achieved. Again this creates an environment that supports breach,rather than it motivates the employee. Concerning this particular project, one ofthe virtual team leaders stated that “... for some targets it became the situationwhere they could not be reached. The project was behind and somefunctionalities had not yet been implemented in the environment. Some of theemployees had targets that could therefore not be achieved, because theproject did not run in time.” (Virtual team leader).4.4 The Virtual Team Environment Category Code Key issues found Team design Teams consist of members from different disciplines and (sub)cultures in the IT sector. This results in increased complexity in terms of leadership, coordination, interpersonal relationships. Different cultures require different approaches. Many different communication channels complicate interaction at different levels. Mix of F2F and virtual interaction locally, virtual interaction with different countries. Resources Limited amount of personnel available leads to coordination issues, reducing commitment to either project or functional tasks. Virtual team environment Limited amount of resources increases the level of work-related stress. Availability of resources influences employee motivation. Inputs Lack of knowledge/experience with similar projects results in less effective problem-solving Skills Lack of experience with complex virtual projects decreases individual satisfaction with the given task. This reduces motivation and increases the amount of stress. Employees were not empowered to make decisions, causing them to avoid taking responsibility. Different leadership skills are required in the virtual environment. Abilities Employees were unable to cope with unexpected problems, due to the lack of experience with complex virtual projects. Language barrier reduces the ability to quickly react to problems. Employees found themselves unable to solve technical virtual problems, like installing webcams. The ability to adequately react to conflicts within the virtual environment - 47 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 There is no indication that any team member received proper training to deal with these issues. Interpersonal All interviewees confirmed that relationships with team members relationships were valued stronger F2F, compared to virtual. Conflicts are more difficult to manage in a virtual environment. Variety of (sub)cultures increases difficulties in building a relationship. Cohesion Lack of a shared vision reduces the degree of cohesiveness. Difficulties in building relationships have a negative effect on cohesion. Amount functional disciplines and (sub)cultures participating in the project negatively influences cohesion. Socio-emotional processes Trust Trust enforces the strength by which each party is held to the contents of the contract. Lack of trust in the project outcome leading to the assumption that the organization will not fulfil its promises. External partners are perceived as more difficult to trust, as they do not share the organization’s values. Lack of trust in management’s capabilities to adequately plan the activities related to the project. Geographical distance reduces the amount of trust instilled in team members abroad. Their efforts are not visible to other members. Communication Lack of technological skills negatively influences interaction. Within the virtual environment it is more difficult to get the full message across. F2F interaction is considered to be more effective.Lack of F2F interaction The amount of channels to communicate through increases the difficulty to manage the information communicated. Information loss can occur due to the variety of media available. Importance to create and repeat a shared vision. Tasks were communicated, but it was unclear what they should lead to. Multiple contacts creates confusion whom to communicate to. Coordination Difficulties in coordinating due to geographical spread of management. Task processes Role ambiguity due to lack of clarity on the assigned tasks. Incremental planning lead to the lack of time to prepare different parts of the project. Lack of direction due to absence of a shared vision. Managers tend to avoid virtual coordination, because the lack of control. Local teams were coordinated effectively, but were not synchronized with overall objectives Task-technology- The complexity of the project did not fit with the technology. structure fit Complex virtual projects need regular F2F meetings. The virtual project did not fit the organizational structure, as the amount of hierarchical layers reduced the self-learning effect and empowerment of employees. Task performance Complex projects require a certain amount of skill and preparation in order to become successful. Coordination problems negatively affected overall performance. Highly skilled and trained personnel are necessary to perform Team well on complex projects. effectiveness Quality-/quantity Individual backgrounds; experience and education increase effectiveness effectiveness. The experienced learning effect on the individual level is considered almost none. - 48 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 New knowledge Acquiring new knowledge is made difficult due to the distance between team members, as it is more difficult to share information. Table II: “Research Results - Virtual Team Environment” (source: author).Table II presents the research results regarding the virtual team environment. Itincludes includes the virtual team characteristics of the researched teams andexpert opinions about the differences between virtual and traditional teams. Inaccordance with the literature, the virtual team environment has beencategorized in inputs, socio-emotional processes, task processes and teameffectiveness.Concerning virtual team inputs, the researched team consisted of membersfrom different functional disciplines and different cultures. The virtual projectoriginated from the production department and involved redesigning theworkflow of publishing content online. As the organization did not have anyexperience with this type of project, it soon turned out, that planning hadunderestimated the scope of the project, as it started to involve the completeorganization. When specifically looking at the difference between traditional andvirtual teams, the virtual team has faced several communication challenges.Technological issues consist of the variety of different media that have beenused by the organization, and the way in which they operate. The virtual teamsused MSN, Microsoft SharePoint, Skype, email, teleconferencing,videoconferencing, SMS, telephone, fax and face-to-face communication. Thisvariety of media creates confusion and reduces the clarity of the informationthat is shared. All participants favoured face-to-face interaction against virtualinteraction due to the reduction of possible complications. The research resultssuggest a different set of abilities is necessary to work within a virtualenvironment.The socio-emotional processes are closely related to the contents of thepsychological contract. Interpersonal relationships, cohesion and trust are itssubcategories. Although not identified before by academics, commitment mightwell be added as a fourth. The virtual environment has been found to negativelyinfluence the strength of relationships. Virtual team leaders experienced it to be - 49 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010more difficult to manage conflicts and the amount of subcultures involved madeit difficult to establish a well-founded team. One of them mentioned that “... dueto the difficulties in communication, conflicts are probably more likely to occur.When they do occur, how do you then solve the problem if you cannot approacheach employee directly? You just don’t bring bad news over the telephone.”(Virtual team leader). Team cohesion is more difficult to establish within a virtualenvironment, as managers experienced difficulties in communicating cleargoals. Because of that, employees felt left out and besides that, lost trust inmanagement capabilities. Concerning team cohesion, the next statement wasmade by one of the virtual team leaders: “The project is that complex, and so many disciplines are involved, each at a different location. Each discipline on itself has its problems with working together. Due to this geographical spread, you cannot speak of a cohesive team anymore.” - Virtual team leader (translated by author)The amount of trust instilled in the project has been one of management’s mainchallenges. When external partners gave wrong estimates on the amount oftime involved, trust levels were harmed when it turned out that employees couldnever meet the given deadlines. This even happened twice. The technicalbackground of the project and the software it was founded upon was questionedas well. Software developers believed it would never be possible to build thenew environment on the bases of the old platform. These developers had nofaith in the project from its very start.Communication, coordination and task-technology-structure fit are the threecodes, used to define the task processes. Participants have indicated that againthe lack of face-to-face interaction limited the ability to clearly coordinate tasks.A supporting communication system should be in place. Multiple channels wereaccessible to communicate through, however this seems to create moreconfusion. Also, the amount of disciplines involved made it difficult to effectivelyshare all information. Interviewees stated that the online information databasewas chaotic. Finding a way around the database would be too time-consuming.Most participants relied on good colleagues to share important information withthem, instead of looking for it on the intranet. Other indicators of coordination - 50 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010difficulties were the lack of clear planning, the lack of a common goal/sharedvision, and the lack of control over an employee abroad.All the categories just described directly influence the effectiveness of virtualteams. If the team does not have a unique set of abilities to cope with the virtualenvironment, team effectiveness can be negatively influenced. Especiallycommunication and coordination problems can arise, due to the difficulties incoordinating the project and communicating shared vision. This has, in its turn,a negative effect on socio-emotional processes. Participants suggest that highlytrained and educated employees are a prerequisite of virtual working. Onlythen, it is possible to fully use its benefits.4.5 Key IssuesThis paragraph aims to identify the relationship between the psychologicalcontract and virtual team effectiveness. In this perspective a choice has beenmade to build the theory around the components of the psychological contractand describe how they fit within the virtual environment.In general, an individual can have multiple psychological contracts. Researchhas shown that the employee has at least one contract with the organization, orits agent. During the interviews, it seems as though the participants had asecond contract within their own virtual team. During the next paragraphs thisphenomenon, along with the possible implications on virtual team effectivenesswill be further elaborated on.As stated in chapter two, the psychological contract is founded upon anexchange relationship that consists of the needs of both parties to the contract.Trust and commitment, along with the exchange agreement contribute to theconstruction and reconstruction of the psychological contract. Considering thisspecific project, the exchange relationship evolved around job security. The toplevel of management had the choice to either outsource the project, or toexecute it themselves. Eventually, when employees were asked whether or notto participate, they did. It offered them job security and the opportunity to - 51 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010participate in a challenging and prominent project. Next to job security, theorganization promised them, and other stakeholders, a more efficient way ofworking, leading to an increase in effectiveness. As a result, employeesexpected increased job satisfaction and a fair reward for their contribution.The degree to which the organization was held to the exchange agreement isdetermined by the amount of trust and commitment instilled in its content. Trust,as a main element of the exchange relationship, enforces the strength by whicheach party is held to the contents of the contract. It can be expressed by thedegree to which the employee expects the organization to fulfil its promises,related to the virtual project. Participants experienced lower trust levels withinthe virtual environment. Especially trust in the project outcome was harmed, asthe first project deadline turned out to be impossible to reach. An externalagency was initially asked to guide the process and gave an initial estimate ofsix months. At that time, they had not foreseen that the project would haveconsequences for the complete workflow of all functional departments of theorganization. As it did, the employees lost trust in the external partner. Alongwith that, they found that their initial expectations of the project could never bemet. They had been working overtime for weeks in order to meet a deadline thathad not been set realistically.Another factor, negatively impacting the amount of trust instilled with the virtualproject, was the geographical distance between team members. Employeeswere divided in team, each with their own responsibility. Most of the teams hadat least one member from abroad in it. As a kick-off, participants of the projectwere invited to meet face-to-face at the company’s headquarters, the aim ofwhich was to build a relationship. However, as the project grew out ofproportion, more and more people were assigned to the teams. Mostparticipants experienced it was more difficult to trust someone you cannotphysically meet. This lead to result that foreign colleagues were excluded fromparticular information and they were given less responsibilities.As the project grew out to affect the workflow of all functional departments,planning shifted to a more incremental approach. The coordination was more a - 52 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010reaction to the effects the former plans had resulted in. Because of this,management faced the challenge of dividing workload, of which they did nothave a clue to where it would lead the organization. This caused employees tolose trust in their leaders’ capabilities and the coordination activities of theorganization.The amount of commitment to the project turned out to differ from the amount ofcommitment to the organization. Though participants showed reduced amountof commitment to their project activities, they seemed highly committed to theirrole within the organization. However, some of them argued that there was noother option, because leaving the organization at an age above thirty-five yearsold, did not provide an advantage on the labour market. It might thus be out ofnecessity. Commitment to the virtual project has been found to be negativelyinfluenced by the virtual environment. The geographical distance, the balancebetween regular- and project activities, and virtual communication were themain influencing factors.Research results show, that geographical distance had a negative effect oncommitment. Being invisible to colleagues abroad provides employees theopportunity to prioritize different than they would in traditional teams. As itbecame less attractive to work on the project, employees favoured their routinework above the project, meeting the demand of other colleagues. During theinitial phase of the workflow project, employees were supposed to divide theirtime between the virtual project and their regular work. This lead to a demand intime from direct colleagues on the one hand and from the project team on theother. The employee can shift this balance as pleased, providing a tool ofresistance. Eventually, top management decided that the workflow project wastop priority, attempting to solve this problem.Virtual interaction was yet another threat to commitment. Virtual team membersfavoured face-to-face interaction against virtual interaction. They argue thatbuilding a relationship with merely a voice, or an image, is just not the same asa physical appearance. Part of the message just does not come across with - 53 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010virtual communication. This statement was shared by all participants during theinterviews.Looking at the environmental context of the psychological contract, severalfactors can be distinguished that influence virtual team effectiveness. First ofexternal factors can be related to the labour market and other macro-economicelements. The current trend of downsizing, due to the global economicrecession, is a factor that influences job security. Mergers and acquisitionsshare that effect.Another macro-environmental trend, outsourcing, has left its mark on theinternal organization. The organization’s history of outsourcing in this case hasa profound effect on the psychological contract. One of the main issues beforethis project had started was whether to outsource the project, or not. It hadhappened before, that the organization outsourced certain projects that hadeventually replaced complete departments. Employees at the IT departmenttherefore feared they would lose their jobs when they did not participate. Andthis was a realistic fear, as the current labour market does not provide goodopportunities for aged senior IT personnel. Technological advances seem tooccur at an increasing speed and this specific group of people has not got theamount of skills, compared to young high potentials, threatening their positionon the labour market.Another internal factor was the existing communication system. A large varietyof media was available to share information through. Teleconferencing wasused to conduct weekly meetings. E-mail was the main day-to-day medium todiscuss objectives that were the result of the periodic meetings. Telephone,surprisingly, was used as a medium, when e-mail seemed ineffective. Then theorganization used SharePoint as the main database to store information thatcan be accessed by all departments. MSN was used by some teams as analternative to e-mail. Finally, the organization started videoconferencing in anattempt to increase cohesiveness between geographically dispersed teams.This chaos of available media seemed to increase confusion among theemployees. Information was not managed at all and it could take ages to find - 54 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010something. You had to trust on employees sharing information with you, andotherwise you would miss out on essential information. The unstructured flow ofinformation resulted in employees not knowing what they were supposed to do.It became increasingly unclear what was expected of them and this resulted inthem “... doing the minimum that was necessary”.Now the psychological contract within the virtual team has been defined,contract variation in a virtual context can be elaborated on. During theinterviews, contract breach or violation, has been found in numerous occasions.This was found with the psychological contract that is held between theemployee and the organization, and the employee and the virtual team.As mentioned earlier, the virtual environment includes challenges to maintainingtrust and commitment within the virtual team. The research findings showed thatindeed with reduced levels of commitment and trust, an environment is createdin which the underpinnings of the psychological contract are more fragile than inthe environment in which traditional teams operate. As a direct consequence,the chances of breach increase.During the interviews, participants gave clear examples of contract breach. Themost outspoken example was from one of the virtual team leaders. Thismanager lost trust on the project and did not believe it would ever become asuccess. According to him, the basic elements on which the new workflowsystem was built were never going to achieve the same performance estimatesas the former system. It was the commitment to the organization that kept himin the organization, but to him the project was lost effort.Broken promises in terms of efficiency, a positive experience and an increase inwork pleasure all lead to contract violation. Contract violation becomes visible inemployee resistance. During the interviews at least the reluctance to shareinformation and consciously delivering less input in the project have been found.Some of the participants even avoided talking to stakeholders abroad becausethey perceived it to be too difficult to get the message across. - 55 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010Factors that enhance the psychological contract were sought in acts of fairness,outspoken trust, exceeding expectations and promises preceding employeecontribution. The enhancing factors found were mainly by rewarding outputvolume and individual goals. Other attempts to positively reconstructpsychological contracts were done through a display of leadership by theproject leader visiting all end users and actively discussing the challengesduring meetings.4.6 Chapter summaryThis chapter has provided an overview of the main research results. At first therepeating themes around the two research variables have been projected. It hasshown that trust and commitment are the two main variables influencing theexchange relationship at the foundation of the psychological contract. Next tothat, the context in which the psychological contract is measured is taken intoaccount. Finally, contract variation is discussed. The second main variableincludes an analysis on the virtual environment, in which this research hastaken place.Concerning the first theme, participants have confirmed the importance of trustand commitment. All interviewees indicated that building a relationship withoutactually being able to meet in person, opposes a threat to trust andcommitment. By being able to only communicate virtually, relationships areconsidered to be less cohesive. A less cohesive team was thought of to be lesscommitted to the project. Other factors that threaten the degree of trust are thecomplexity of planning and coordination. Managers experience more difficultiesin coordinating and planning a virtual project. This causes a threat toemployees’ trust in management capabilities.The second theme has shown that team input is an important determinant forproject success. Participants argue that when engaging in a virtual project, thebackgrounds of team members, their location and experience need to match inorder to increase project success. Virtual teams that lack the ability and skill towork in a virtual environment are considered to be less effective in their work. - 56 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010The virtual team’s socio-emotional processes are linked to the psychologicalcontract. Participants indicated that compared to traditional project teams,virtual teams face difficulties on a socio-emotional level. Virtual communicationdecreases the level of cohesiveness. High trust levels are more difficult toestablish without face-to-face contact. The virtual environment limits the abilityto establish interpersonal relationships. The team’s task processes includecommunication- and coordination processes. Next to that, the fit between task,technology and structure is included. Within the virtual environment bothcommunication and coordination processes are different. They request newskills and abilities of team members, in order to create an effective team.Participants indicated that the amount of media available hinders effectivecommunication. Other remarks have been made about the contents of themessage. Participants indicated that missing physical cues of the messagemeant that the full message did not come across. Coordination is considered tobe more difficult due to the geographical spread of team members. Ascommunication is hindered, coordination is perceived to be more difficult aswell. Communicating shared vision and concrete objectives is considered to bemore difficult. - 57 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Chapter 5 REFLECTIONS ON THE PRIMARY RESEARCH PROCESS5.1 IntroductionDuring this chapter the most important lessons learned during this thesisproject, will be outlined and discussed. Primarily, it will include the mostimportant findings. Then the difficulties encountered during the project will bediscussed. The third paragraph will provide some suggestions on additionalresearch that could have been undertaken to support this thesis project. Finally,the lessons learnt from the research process will be outlined.5.2 LessonsThe aim of this research has been to gather qualitative data on the relationshipbetween the psychological contract and virtual team effectiveness. Inaccordance with the research of Rousseau (1990) and Rousseau and Tijoriwala(1998), the interviews are focussed on identifying the psychological contractand describing the interviewee’s virtual experience. After that, the participantswere asked for their personal opinion on the subject. The question that needs tobe answered in this paragraph is whether the interviews provide sufficientinformation to identify the relationship between the psychological contract andvirtual team effectiveness. The interview questions have been included in theappendix (Appendix III: Interview Questions).5.2.1 Making the contract emergeDuring the pilot interview it became clear, that a short introduction to theconcept of the psychological contract is necessary, for participants tounderstand the background of this research. Most participants were not awareof its existence. In order to prepare them for the interview, each participant hasbeen asked to read a case prior to the interview (Case: “The Confidence Trick” -Appendix III). During the interview, the case study was used to allowparticipants to project their feelings to. Another objective of this case was to - 58 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010introduce the concept of the psychological contract. At the beginning of theinterview, the participants were asked in general what was going on in thesituation described in the case. This was then placed in the context of thepsychological contract. As participants learned about the psychological contract,it was easier for them to relate it to their own experiences.5.2.2 General consentAs the psychological contract had emerged, participants seemed to agree, thatcontract breach and enhancement could have a profound effect on the overallproject outcome. The variables at the foundation of the contract, being trust,commitment and the exchange relationship, were experienced differently in thevirtual environment. Participants explained that it is hard to trust someone youcannot physically experience. The level of commitment seemed decreased aswell. The main issues here were the balance between regular and project-related activities. Overall, the participants clearly indicated that contract breachnegatively affects project outcome.The secondary data analysis revealed the topic of the psychological contractand the one of virtual teams as an increasingly popular theme in academicliterature. Current topics in virtual team literature include the notion of trust andcommitment in the virtual environment, building shared vision and resolvingconflicts. This research contributes to the existing academic literature as itincludes the complete context of the psychological contract and places it in thevirtual environment.5.3 Data display and analysisDue to the large amount of gathered data and the complexity of the researchresults, an inductive-based procedure will be adopted to visualize relationships.The technique called ‘Data display and analysis’ (Saunders, Lewis et al. 2007),supported by CAQDAS, is adopted to realize this. It is the second and third stepof the three step procedure, described by Saunders et al (2007) that enable theresearcher to effectively structure and analyze data. The step prior to datadisplay and analysis, data reduction, has already been undertaken in the - 59 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010previous chapter. This chapter provided an overview of the most significantfindingsThe main categories, their relationships and patterns are presented in thefollowing data display. Figure VI: “Data Display” (source: author).The figure shows the relationship between the contents of the virtualenvironment and which element of the psychological contract is influenced byeach of them. Elements like perceived fairness, expectations and promises, that - 60 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010influence the contents of the exchange relationship, are part of the input ofvirtual teams, which in their turn have an impact on the psychological contract,as they include internal factors. Interviews revealed that virtual team inputindeed has an effect on the psychological contract. Employees derive theirexpectations from the resources that are provided by the organization. Thesame is applicable to the skills and ability of the team. The amount of trust andcommitment that form the foundation of the psychological contract, togetherwith the exchange relationship, are part of the virtual team’s socio-emotionalprocesses. Participants linked cohesion and interpersonal relationships to trustand commitment. They indicated that misalignments between these variablescould have an intense effect on the team’s effectiveness. Task processes, nextto virtual team inputs, are part of the internal factors that influence thepsychological contract as well. This element includes the communication andcoordination difficulties that participants experienced in the virtual environment.The fit between task, technology and structure needs to be aligned to thecommunication systems and coordination mechanisms in order to maximizeproject success. The figure visualizes the way in which the virtual environmentcan impact the psychological contract and the effect it can have on virtual teameffectiveness.5.4 Difficulties encountered5.4.1 Unilateral versus bilateral approachesAccording to Freese and Schalk (2008), psychological contract research can becategorized in unilateral and bilateral approaches. The first considers thepsychological contract as an individual’s belief of mutual expectations andobligations, while the latter considers the contract to be the whole of theemployer as well as the employee perceptions on exchanged obligations. Interms of measurement a unilateral view is preferable. Freese and Schalk (2008)mention two reasons for this. First, psychological contracts are literallypsychological and should be measured accordingly. It is by definition anindividual’s perception. Methodologically, a bilateral view is problematic, as theside of the organization is represented by many actors who do not necessarilycommunicate a uniform set of expectations. Second, the definition of the - 61 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010psychological contract suggests it influences behaviour. However, asorganizational agents have differences in perception, it is unclear what thepsychological contract would include. Freese and Schalk (2008) therefore arguethat measurement needs to be limited to the unilateral perspective.This thesis project has measured the psychological contract in a unilateralperspective. The interviews did include organizational agents, but they wereseen as employees that contribute to the project team. As this the particularinterest of this thesis is team effectiveness, the perspective of the organizationalagent needs to be incorporated.5.4.2 Feature-, content- and evaluation-oriented approachesRousseau and Tijoriwala reviewed assessments used in psychological contractresearch and proposed an organizing framework for future research on thetopic. They distinguished three forms of measurement: the feature-, content-and evaluation-oriented approaches (Rousseau and Tijoriwala 1998).The feature-oriented approach compares the psychological contract to someattribute or dimension. Contracts can, for example, be characterised as shortterm, having an extended scope and influencing non-work activities, astransactional, and as flexible arrangements.The content-oriented approach examines the specific terms of the contract. Thisincludes the specific mutual obligations based on inferred promises made bythe employer and the employee. Examples of this approach are the provision ofopportunities for promotion, security, challenging work, working overtime whenneeded and the delivery of good services.The evaluation-oriented approach provides an assessment of the degree offulfilment, change or violation experienced within the context of the contract.The provision of promotion opportunities by the employer, or working overtimeby the employee, can be assessed. - 62 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010According to Freese and Schalk (2008) research into features attracted muchattention, due to the problem involved when studying the content of thepsychological contract by trying to describe the terms included (Freese andSchalk 2008). Psychological contracts can contain a large amount of differentitems, specific to an individual. Developing a standardized measure to study thecontent of the contract is therefore impossible. Freese and Schalk (2008)furthermore argue that the results of empirical research on psychologicalcontracts still remain inconclusive and the results often do not cross-validate.Examples of this are given in terms of feature-oriented characteristics that areattributed to the psychological contract. Differences between relational andtransactional contracts have been measured by the factor training in severalstudies. Though, these different studies have categorized this factor under bothtypes of contracts. Academics did not seem to agree on the attribution ofcharacteristics to either one type of contract.Freese and Schalk have outlined criteria that should ideally be met whenmeasuring the psychological contract, based on the general principles forassessing content and construct validity for scale development in psychologicalmeasurement. They argue that first a psychological contract measurement hasto be theory-based or inductively developed. Second, a psychological contractmeasurement should assess mutual obligations/promises. Third, thepsychometric properties of the psychological contract measurement and theappropriateness for the sample have to be assessed. Four, the evaluation of thepsychological contract has to be assessed for separate items to ensure thereliability of the measure. Fifth, in the evaluation of the psychological contract, itshould be assessed whether a certain item is important. The evaluation shouldbe direct. The sixth criterion includes the violation of the psychological contracthas to be distinguished from fulfilment and from contract breach. Freese andSchalk argue that most studies, and mainly questionnaires, do not meet all ofthe criteria.Although this research project does not include the use of questionnaires, themeasurement criteria of Freese and Schalk have been noticed and adopted in - 63 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010order to ensure the reliability of this project. A sample of the interview questionshas been included in the appendix (Appendix III: Interview Questions).5.4.3 Operationalizing the psychological contractRousseau (1990) and Rousseau and Tijoriwala (1998) have written about theoperationalization of the psychological contract. This entails the assessment ofthe contract by allowing the focal individual to report on beliefs regarding his orher own obligations as well as the beliefs regarding reciprocal obligations owedby another (Rousseau 1990). In their research, they make three concludingremarks. First, subjective and self-reported measures are the most directsource of information on the nature and content of the psychological contract.Second, the focus on promises and reciprocal exchanges are preferred forms ofassessment. Finally, the information needs to be limited to promissoryinterpretation and information about merely expectations needs to be excluded(Rousseau and Tijoriwala 1998).5.4.4 Difficulties during the research processFreese and Schalk (2008) argue that “...a complete psychological contractmeasurement needs to be manifold.” (Freese and Schalk 2008). According tothem, it needs to include perceived obligations, a breach and violation scale anda global assessment of fulfilment. The research that Freese and Schalkconducted is based on questionnaires only. It does not include in-depthinterviews. The objective of this particular thesis is therefore not to measure thepsychological contract, but to identify possible relationships between thisvariable and the virtual team environment.Another challenge during this research has been to get the virtual teammembers’ time and to place them in an environment in which they could talkfreely. As the project had just gone live, most virtual team members still hadproject-related duties to perform. The advantage of this was that theirexperiences were still fresh and as genuine as possible. On the other hand,they were limited in the amount of time they were able to spend on theinterview. Therefore the interview needed to be conducted within the team - 64 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010members’ direct work environment. This could have influenced their judgementabout the more sensitive topics. To limit the chance of biased answers,participants were assured the interviews would be done anonymously.5.5 Chapter summaryThis chapter mainly elaborates on the primary research process and thedifficulties that have been encountered during it.It starts with the most important lessons, learned during the process. Thisincludes the lesson that identification of the participants’ psychological contractwas necessary in order to explain the contents of it. Participants were generallyunaware of the presence of a psychological contract. Once they were, most ofthem argued that contract breach and enhancement has an effect on projectoutcome. Next to that they argued that, as the virtual environment comes with anew set of challenges, the effect would be even stronger.The data display and analysis presents both research variables in the virtualenvironment. It visualizes the relationship between the contents of the virtualenvironment and to which extent they relate to the contents of the psychologicalcontract.During the primary research process, several difficulties have been identified.Academic literature makes a distinction between unilateral and bilateralapproaches to measuring the psychological contract. This study takes aunilateral approach, as it is limited to the employee perspective on theexchange relationship. Feature-, content- and evaluation-oriented approachesare different approaches to measuring the psychological contract as well. Theseapproaches mainly evolve around questionnaires and do not exactly apply tothis thesis. However, in terms of reliability and validity, they do share importantelements that apply to interviews as well.The operationalization of the psychological contract contains information aboutpsychological contract measurement as well. This theory states that - 65 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010measurement of the psychological contract needs to be limited to promissorycontent and it is unilateral, as it reflects an individual’s perception.The difficulties to this project relate to the absence of literature on measuringthe psychological contract through the use of interviews. Next to that, it hasbeen difficult to get full dedication of participants. Due to time restraints, theparticipants had to be interviewed in their working environment, possiblycreating the threat that they could not fully pay their attention to the research. - 66 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Chapter 6 CONCLUSIONS & RECOMMENDATIONS6.1 General conclusionThe current body of academic literature consists of research on many of theelements related to the psychological contract and virtual team effectiveness.Yet none have actually compared both variables. This thesis does, by statingthat psychological contracts do influence virtual team effectiveness.This study has examined the way in which psychological contracts developwithin the virtual team environment and whether this relationship has a positiveor a negative effect on virtual team effectiveness. It has demonstrated that thefoundations on which the psychological contract is built are weakened by theenvironment in which they are held. Whereas several studies on virtual teamsdo not recognize differences in team effectiveness between traditional andvirtual teams (Galegher and Kraut 1994; Warkentin, Sayeed et al. 1997;McDonough, Kahn et al. 2001), this study supports the theory that psychologicalcontracts are more fragile in the virtual environment. Virtual team inputs areassociated with fairness, expectations and promises. They incorporate theteam’s design of different team member. In its turn, the virtual team inputsshape the internal factors that contribute to psychological contract constructionand deconstruction. The second factor that impacts an employee’s perceptionon the internal factors is the virtual team’s task processes. This variableconsists of communication systems and coordination. Interpersonalrelationships, trust and commitment are strongly associated with the virtualteam’s socio-emotional processes. They are the prerequisites of thepsychological contract and determine the contents of the psychological contractand the extent to which each party is held to the agreement. Finally, virtual teameffectiveness is associated with breach and enhancement of the psychologicalcontract. As argued in the literature review. Project teams can only succeed,when the team is motivated. Contract breach demotivates the employee andopposes a considerable threat to project success. Therefore it is argued that the - 67 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010as the foundations of the psychological contract are more fragile in the virtualenvironment, it creates a situation in which contract violation is more likely tooccur. This does affect virtual team effectiveness.Other relationships that have been identified, add to the academic literature onsocio-emotional processes in virtual teams. Virtual teams face significantdifficulties in achieving high levels of cohesion, trust, commitment andinterpersonal relationships. Interpersonal relationships are argued to fostertrust, cohesion and commitment (Powell, Piccoli et al. 2004). This researchindicated that traditional face-to-face communication is still preferred, abovevirtual communication. Participants argued that it is hardly possible to build andmaintain a relationship with another party in the virtual environment. High levelsof cohesion, trust and commitment are essential to a project team’s success.When these levels are not established in virtual teams, this is bound to have aneffect on the team’s performance.6.2 Implications for policy and practiceThe implications of the outcome of this research will mainly appeal to the field oforganizational behaviour and HR. It closes gaps in current academic literatureon the psychological contract and its implications in the virtual environment. Inthat perspective it is unique, as the link between socio-emotional processes inthe virtual environment and the psychological contract had not yet been made.The research findings of this thesis project suggest that when engaging in avirtual project, some thought needs to go to the design of the virtual team andthe presence of psychological contracts. When selecting the project teammembers that contribute to the virtual project, the background of each teammember and the presence of psychological contracts need to be considered,next to their skill and ability to work in the virtual environment. Later on duringthe project, this will reduce inefficiencies and possible errors in team working.This will improve the team’s effectiveness and increases the chance of success. - 68 -
    • thPsychological Contracts in the Virtual Environment 9 of September 20106.3 Implications for theory/researchIn general, the theoretical implications of this research exceed the practicalones. The literature review indicated that academic literature fell short onexplaining the psychological contract construct in relationship to theperformance of virtual project teams. This research closes this gap in theacademic background of this topic. It provides an in-depth view on the subjectand clearly shows how both variables are related in the virtual environment.Furthermore this thesis project provides suggestions for future research. Theresearch findings have not yet been confirmed by quantitative research andalthough this thesis provides suggestions on practical implications for projectmanagement, this has not been the explicit topic of research.6.4 Limitations of the researchEven though the research approach, design, strategy and analysis in this thesisare carefully developed in a conscious manner, there are limitations that needto be emphasized.This study resulted in a theoretical description of the relationship between thepsychological contract and virtual team effectiveness, in line with the mainobjective of this thesis project. In order to achieve this, twelve virtual teammembers of several virtual project teams working on the same virtual project,have been interviewed. Although the sample size of twelve interviewees issufficient, the interviews have been conducted within the IT industry. Eventhough the results might be generalizable, results might differ in other industriesand sectors. Further research in different sectors may be necessary.This study takes on a unilateral approach, as the psychological contract residesonly in the perspective of the individual. This is as well a limitation, as thedifferent perspectives of the organization, as the other party to the contract, isnot taken into account. - 69 -
    • thPsychological Contracts in the Virtual Environment 9 of September 20106.5 Recommendations for further researchBased on the findings of the research that has been undertaken for this thesisproject, and the limitations of the study already discussed earlier in this chapter,there are several areas in which additional research needs to be conducted.Some of these areas have already been addressed in the literature review,others still need attention.In general little research has been done on the practical application ofpsychological contract literature. Further research might address this topic froma management and HR perspective. This research has focussed on identifyingthe relationship between the psychological contract and virtual teameffectiveness. It does not entail research on leadership, neither does it providerecommendations in terms of how to manage this relationship.Another issue interviewees addressed was the use of reward systems toenhance the project member’s psychological contract. This area of interest andits effects on team effectiveness could provide new insights on employeemotivation in the virtual environment. According to the participants, rewardsystems need a different approach when working with complex virtual projects.Instead of rewarding employees on project outcome, interviewees suggested amore flexible approach, focussed more on the individual.Finally, another fascinating question arose while conducting the interviews.Based on the academic literature, it is known that individuals hold differentpsychological contracts next to each other. Interviewees clearly indicated that,to them, their experiences with the project did not really harm the way they feltabout their employer. It did not affect the reason why they joined theorganization. Other examples indicated that the level of commitment to and trustin the project could differ from those in the organization. This makes itparticularly interesting to study the relationship between different contract andhow they influence each other. - 70 -
    • thPsychological Contracts in the Virtual Environment 9 of September 2010 Appendices LIST OF APPENDICES Appendix I: Thesis Proposal Appendix II: Interview Schedule Appendix III: Interview Questions Appendix IV: Interview Transcript (coded) - 71 -
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    • thPsychological Contracts in the Virtual Environment 9 of September 2010Appendix II: Interview Schedule - 80 -
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    • thPsychological Contracts in the Virtual Environment 9 of September 2010Appendix IV: Interview Transcript (coded) - 86 -
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