Psychological Contracts in the Virtual                   Environment                           -“An in-depth research on t...
STATEMENT OF AUTHENTICITYI have read the TiasNimbas Business School Regulations relating to plagiarism   and certify that ...
KEYWORDS & ABSTRACTName:         Hjalmar van MarleTitle:        Psychological Contracts in the Virtual Environment        ...
Recommendations based on this research will include implications for humanresources and project managers. These groups wil...
PREFACEAfter a period of seven years of study, everything I have learned will finallycome together in this thesis project....
TABLE OF CONTENTS                    v
vi
LIST OF FIGURESLIST OF TABLES                  vii
thPsychological Contracts in the Virtual Environment              9 of September 2010       Chapter 1       INTRODUCTIONTh...
thPsychological Contracts in the Virtual Environment            9 of September 2010made the last decades multinationals ma...
thPsychological Contracts in the Virtual Environment            9 of September 2010project (Maznevski and Chudoba 2000; Ka...
thPsychological Contracts in the Virtual Environment                9 of September 2010psychological contract has been the...
thPsychological Contracts in the Virtual Environment              9 of September 20101.5    Thesis project structureIn ord...
thPsychological Contracts in the Virtual Environment               9 of September 2010       Chapter 2       LITERATURE RE...
thPsychological Contracts in the Virtual Environment               9 of September 2010This paragraph is designed to explor...
thPsychological Contracts in the Virtual Environment               9 of September 2010The difference between Argyris’ defi...
thPsychological Contracts in the Virtual Environment              9 of September 2010       “... a set of unwritten recipr...
thPsychological Contracts in the Virtual Environment                        9 of September 2010         Psychological cont...
thPsychological Contracts in the Virtual Environment                               9 of September 2010                    ...
thPsychological Contracts in the Virtual Environment              9 of September 2010contract will again be shaped by the ...
thPsychological Contracts in the Virtual Environment            9 of September 2010accordingly. It is a promise for which ...
thPsychological Contracts in the Virtual Environment                              9 of September 20102003; Thompson and Bu...
thPsychological Contracts in the Virtual Environment                9 of September 2010Morrison and Robinson 1997). In oth...
thPsychological Contracts in the Virtual Environment                                  9 of September 2010decreasing and jo...
thPsychological Contracts in the Virtual Environment                   9 of September 2010dispersed environment (Jarvenpaa...
thPsychological Contracts in the Virtual Environment               9 of September 2010exchange information in an orderly a...
thPsychological Contracts in the Virtual Environment              9 of September 2010Snyder 2000). Early research results ...
thPsychological Contracts in the Virtual Environment            9 of September 2010(Chidambaram 1996). Compared to traditi...
thPsychological Contracts in the Virtual Environment             9 of September 2010missing as well. Therefore traditional...
thPsychological Contracts in the Virtual Environment                    9 of September 20102.3.5 OutputsVirtual team outpu...
thPsychological Contracts in the Virtual Environment               9 of September 2010consequences for task-related proces...
thPsychological Contracts in the Virtual Environment                                9 of September 2010                   ...
thPsychological Contracts in the Virtual Environment            9 of September 2010Without trust a certain form of exchang...
thPsychological Contracts in the Virtual Environment                9 of September 20102.5    Chapter Summary2.5.1 Psychol...
thPsychological Contracts in the Virtual Environment             9 of September 2010Virtual team inputs represent the desi...
thPsychological Contracts in the Virtual Environment               9 of September 2010Trust and commitment, representing t...
thPsychological Contracts in the Virtual Environment                           9 of September 2010                        ...
thPsychological Contracts in the Virtual Environment                     9 of September 2010       Chapter 3       METHODO...
thPsychological Contracts in the Virtual Environment               9 of September 20103.2.1 The research paradigmSaunders ...
thPsychological Contracts in the Virtual Environment             9 of September 2010identify irrationalities and explain w...
thPsychological Contracts in the Virtual Environment                     9 of September 2010approach, whereas the subjecti...
thPsychological Contracts in the Virtual Environment              9 of September 2010deductive approach relates more to th...
thPsychological Contracts in the Virtual Environment                   9 of September 2010analyse these perspectives and i...
thPsychological Contracts in the Virtual Environment              9 of September 2010errors that needed clarification befo...
thPsychological Contracts in the Virtual Environment                9 of September 2010The interviews are recorded and tra...
thPsychological Contracts in the Virtual Environment           9 of September 2010        IT Consultant    Two IT consulta...
thPsychological Contracts in the Virtual Environment             9 of September 2010      for the execution of the softwar...
thPsychological Contracts in the Virtual Environment                      9 of September 2010The research philosophy under...
thPsychological Contracts in the Virtual Environment              9 of September 2010       Chapter 4       RESEARCH RESUL...
thPsychological Contracts in the Virtual Environment                                                9 of September 2010   ...
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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

  1. 1. 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
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. TABLE OF CONTENTS v
  7. 7. vi
  8. 8. LIST OF FIGURESLIST OF TABLES vii
  9. 9. 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-
  10. 10. 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-
  11. 11. 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-
  12. 12. 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-
  13. 13. 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-
  14. 14. 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-
  15. 15. 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-
  16. 16. 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-
  17. 17. 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-
  18. 18. 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 -
  19. 19. 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 -
  20. 20. 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 -
  21. 21. 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 -
  22. 22. 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 -
  23. 23. 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 -
  24. 24. 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 -
  25. 25. 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 -
  26. 26. 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 -
  27. 27. 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 -
  28. 28. 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 -
  29. 29. 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 -
  30. 30. 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 -
  31. 31. 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 -
  32. 32. 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 -
  33. 33. 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 -
  34. 34. 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 -
  35. 35. 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 -
  36. 36. 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 -
  37. 37. 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 -
  38. 38. 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 -
  39. 39. 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 -
  40. 40. 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 -
  41. 41. 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 -
  42. 42. 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 -
  43. 43. 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 -
  44. 44. 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 -
  45. 45. 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 -
  46. 46. 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 -
  47. 47. 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 -
  48. 48. 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 -
  49. 49. 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 -
  50. 50. 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 -

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