This document proposes a theoretical model to explain why legal contracts may be more negotiable in East Asian cultures compared to Western cultures. It suggests that individuals' lay beliefs about agency (individual vs group) guide their attributions and perceptions of behavioral integrity when a contract is breached. Those with a group agency perspective common in East Asia are more likely to make situational attributions, trust the other party's benevolence, view contracts as negotiable, and expect flexibility in future dealings. In contrast, an individual agency view prevalent in the West leads to dispositional attributions, less trust, viewing contracts as fixed, and expecting inflexibility. This integrated model draws on literature from psychology, organizational behavior, and attribution theory to understand

1. Why legal contracts are more negotiable for individuals in East Asia? : An integrative approach on agency beliefs and the breach of psychological contract on contract malleability. Nanyang Technological University Letty Kwan

2. Contents What is legal contract? How can we borrow from literature on psychological contract to understand legal contract? Our theoretical model Understanding our theoretical model Discussions and Limitations Q and A

6. Psychological interpretations, expectations and reactions on these concrete specifics are up for interpretations BY THE INDIVIDUALS.

8. What makes our RQ important (and interesting)? 1) No empirical evidences were provided to substantiate textbook claims on East-West differences on contract malleability. 2) Research that takes a psychological approach in understanding legal contract is still in its infancy. 3) With the current globalizing world, an answer to our research question becomes an urgency. 4) A model that seek to understand as well as predict cross-cultural behaviors in the realm of legal contract would be beneficial in organizational settings. To answer the above: Our theoretical framework seek to use an integrative approach to understand contract malleability through past research on psychological contract breach, attribution, and organizational behavioral (Mayer’s (1995) trust model, Friedman’s (2009) behavioral integrity model).

9. Two different routes of attribution guided by individuals’ agentic beliefs We propose that when individuals encountered a breach of legal contract, two psychological routes are possible based on their lay beliefs. Gp Agency Indv Agency The Individual Agency Route OR The Group Agency Route

10. Cultural Lay Beliefs Attributions Outcomes Behavioral Intention Behavioral Integrity Behavioral outcomes +Situational attribution +less accountable +Benevolence (higher trust) +High malleability in contract +Expectation of future contracts (high malleability) EA prevalent +Higher Behavioral Integrity Gp Agency Breach of promise Behavioral Intention Behavioral Integrity Behavioral outcomes Indv Agency +Dispositional attribution +More accountable +Benevolence (Less trust) +Low malleability in contract +Expectation of future contracts (low malleability) +Lower Behavioral Integrity Euro-Am prevalent

11. What guided these differences? - Cultural Lay Beliefs of Agency Individual Agency (Euro-Am more prevalent) - Individuals are producers of experiences and shapers of events. Group Agency (EA more prevalent) - The collective members in the group are producers of experiences and shapers of events.

12. Behavioral Intentions Vast amount of empirical evidences in the past suggested that attribution responses can differed across cultures (Morris et al., 2001; Kashima, McIntyre, & Clifford, 1998; Malle & Knobe, 1997) Individual and group agency presupposes intentionality. Since the determination of agency differed across individuals, attribution of intention towards the actions would consequently be different.

13. Behavioral Integrity Simons (2002) defined behavioral integrity (BI) as the “perceived pattern of alignment between another’s words and deeds”. Research in the domain of organization suggested that BI have significant impact in many areas of work life, including organizational commitment, turnover rate, trust and organizational citizenship behaviors (OCB) (Simons & McLean Parks, 2000; Dineen, Lewicki & Tomlinson, 2006; Simons et al, 2007 ). Friedman and colleagues (2009) discovered that participants from Western culture are more sensitive to word-action inconsistency. When a promise is broken by the speaker, Euro-Am would give a lower BI ratings than participants from Eastern culture. WHY? We propose cultural differences that was revealed by Friedman et al. (2009) are substantiated by the chronic differences in their belief in agency across Eastern versus Western cultures. And such agency beliefs leads to attribution intent which mediates behavioral integrity.

14. Behavioral outcomes Contract Malleability EA Ps more willing to re-negotiate after contract/ promise breach Euro-Am Ps less willing to re-negotiate after contract/promise breach Expectation of future contract dealings (malleability) EA Ps are in general perceive contract to be more negotiable Euro-Am Ps in general perceive contract to be less negotiable

15. Discussions and future directions Our model stepped away from previous dichotomy of Individualistic vs. Collectivistic traits and provide with an integrative model from different disciplines in explaining contract malleability. General psychological model that lead to contract malleability Limitations Specific types of contracts not accounted for. Societal elements could possibly moderate DVs in our model. Future research can integrate such.

16. Thank You!