Are Relational and Transactional Contracts Independently or Inversely Related?

It has been proposed by Rousseau (1995) that transactional and relational components of the psychological contract denote opposite ends of a bipolar continuum linked respectively to the notions of economic and social exchange. These contractual 'types' are seen as extremes, anchoring either end of a single continuum, describing the full range of both organizational types, and individual contracts, perceived by employees. Transactional, or 'buy', organizations (according to the definition offered by Miles & Snow, 1980) include contract and recruitment agencies whose approach to employment in many cases epitomises the transactional contractual orientation – employees expect nothing more than monetary reward for their efforts at work, and organizations expect little commitment or emotional involvement in return. Alternatively, relational, or 'make' organizations will continue to provide support for employees, and expect commitment and good citizenship in return.

Individuals expected to fall along the proposed contractual continuum in terms of their beliefs or orientations are said to range from purely temporary workers who tend to adopt transactional psychological contracts, through to core staff with secure 'jobs for life' whose contracts tend to be more relational in nature. Indeed, there is some evidence that this is the case (Millward & Hopkins, 1998). However, as pointed out above, temporary staff continuously assigned to the same company on relatively long-term contracts may begin to develop a relational contract with the long-term host organization even though the nature of their job demands a transactional relationship with the employer (see e.g. Millward & Brewerton, 1999). Moreover, as Arnold (1996) points out in his concise and critical review of the psychological contract construct, it is yet to be made dear which specific aspects of the workplace are related to which type of contract and whether each aspect is exclusive to one or other of the contract types.

If we are to assume that the relational-transactional continuum is} indeed, bipolar, that is those employees displaying highly relational contracts fall at one end of a spectrum and those employees displaying highly transactional contracts fall at the other end, we would expect to find a strong inverse relationship between measures of the two components. On examination of data from well over 2000 employees across various organizations (where respondents have completed the Psychological Contract Scale as presented in Millward & Hopkins, 1998) it becomes apparent, however, that the moderate inverse relationship (generally -0.2 to -0.3) between relational and transactional orientation may be masking some more complex responses (Millward & Brewerton, 1998). Some respondents report both relatively high relational and transactional orientation and some respondents show the opposite pattern, in addition to the recognized high relational-low transactionals and low relational-high transactionals. Is this pattern describing something more than simply high relational or high transactional individuals? If we conceptualize high-highs as 'careerists' and low-lows as 'indifferent', we may unmask some of the apparent anomalies in response.

Some further pilot work on this topic has identified that the incidence of careerists and indifferent employees may differ according to sociological or organizational group membership (Brewerton, 1999). For example, careerists are more often to be found among younger age groups, and among those groups who have only been with the organization for a short period. As age and organizational tenure increase, so the incidence of careerism decreases and employees become more relationally oriented towards their employer. Of course, this makes sense intuitively – young, dynamic, recently acculturated organizational members will retain a drive and ambition which may lead to a self-managed career, or these employees may develop a less transactional relationship over time, as they become comfortable with their employer and lose the desire to move on in order to further their careers elsewhere.

Rousseau (1995, pp. 104-105) likewise describes a slightly more complex model than that suggested by the bipolar relational-transactional continuum, based on a four-way conceptualization of contract duration and on the level of stated specificity of employee performance. This model and its essential features are described below in Figure 10.1.

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