A Study of Psychological Contract Breach Spillover in Multiple-Agency Relationships in Consulting Professional Service Firms

In: Organization science, Volume 25, Issue 1, p. 149-170

Abstract

Most psychological contract research examines single-agency situations in which a breach only affects one firm. In a multiple-agency relationship, however, the individual performs work that simultaneously satisfies the requirements of two firms, allowing for the possibility that breach outcomes extend across both the breaching and the nonbreaching firms. We theorize two mechanisms through which breach outcomes extend across organizational boundaries. First, we propose spillover effects for feelings of violation and for organizational citizenship behaviors from the breaching firm to the nonbreaching firm. Second, we propose that, in cases where the individual expects the nonbreaching firm to intervene and rectify the other firm's breach as part of a regulatory obligation, there are direct and moderating effects of meeting (or failing to meet) these perceived obligations. Using professional service firms as the empirical context, we find evidence of breach outcome spillover between the two firms in the multiagency relationship and direct and moderating effects of unmet obligations to intervene by the nonbreaching firm. We also find some key differences in the nomological networks depending on whether the breaching firm was the consulting firm or the client firm. These insights highlight the importance of extending psychological contract study to multiple-agency relationships.