SEISENSE Journal of Management

Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57

Research Article

Psychological Contract Fulfillment on Employees

Reactions within the Context of Organizational
Justice
Dr. Ch. Abdul Khaliq Superior University Lahore, Pakistan

Kashif Mehmood Superior University Lahore, Pakistan

Aamir Zamir Kamboh Superior University Lahore, Pakistan

Kainat Durani Superior University Lahore, Pakistan

Muhammad Haidar Zarar Superior University Lahore, Pakistan

Shaheen Nazar Superior University Lahore, Pakistan

Article History Abstract

Received 2019-03-20
Accepted 2019-03-28 Aim - The objective of the study was to examine the
Published 2019-04-18 psychological contract expectations by employees and the
impact of any deviation from its perceived benefits by the
Keywords employees of an organization, as they occur within social
Psychological Contract exchange relationships to account for employee responses.
Employee Reaction Methodology - This is an exploratory longitudinal study in
Organizational Justice which an investigation is made into the changes in employment
obligations as perceived by employees based on the level of
fulfillment of contract obligations by their employer(s).
How to cite? Findings - It was deduced that an employer's inability to fulfill
Khaliq, A., Mehmood, K., Kamboh, A. its contractual commitments was the foundational cause
Z., Durani, K., Zarar, M. H., & Nazar, associated with the decline in cooperation of the employees to
S. (2019). Psychological Contract fulfill their employment obligations.
Fulfillment on Employees Reactions within Significance - The results of the current study show that
the Context of Organizational Justice. there is a significant and positive relationship between
SEISENSE Journal of Management, Psychological Contract Fulfilment and Employee Reaction.
2(3), 42-57. doi: Results presented that there is a significant and positive
https://doi.org/10.33215/sjom.v2i3.131 relationship between Organizational Justice and Employee
Reaction. Results presented that there is a significant and
positive relationship between Organizational Justice and
Copyright © 2019 The Author(s) Psychological Contract Fulfilment.

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 SEISENSE Journal of Management
Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Introduction
In a modern business environment, a firm finds itself struggling to implement its human resources effectively
and efficiently. This is done to become more competitive in an environment that is very difficult to compete
in, therefore this is not astonishing that relationship of employee’s with the organization has recurrently
emerged as a major curiosity for executives and researcher (Capelli, 1999; Ehrlich, 1994; D. Rousseau, 1995;
Tsui, Pearce, Porter, & Hite, 1995). Psychological contracts in any organization are made up of the employees'
and the beliefs are considered as a shared obligation in between personnel and their respective firm lay at the
grounds of a successful employment relationship (D. M. Rousseau, 1989; Schein, 1965). Yet the diversity of
changes, such as downsizing of staff, restructuring of the organization, increased belief on part-time workers,
international competition and demographic diversity are having thoughtful effects on employees'
psychological contracts (Morrison, 1994; Turnley, Bolino, Lester, & Bloodgood, 2003).
These changes will affect the employee in a manner of ways. These effects will have a corresponding effect on
the employee’s reaction. These reactions are based on the emotional and logical evaluation by the employee.
These evaluations can be based on reality or perception of the employee on the environment they are
subjected too. Prior research has presented considerably more confirmation that aggregate of organizational
justice in management choices concerning personnel corresponds right towards the quality of consequential
social interchange relations between the organization and the employee. These relationships have been shown
to be an effective and significant conjecturer of employee behaviors and responses (Russell Cropanzano &
Mitchell, 2005; Rupp & Cropanzano, 2002). In this research the impact that the psychological contract and its
fulfillment have on the reaction of the employee in the context of organizational justice.

Research Objective
The aim of our research is to identify the psychological contract’s expectations by employees and the impact
of any deviation from its perceived benefits by the employees of an organization, as they occur within social
exchange relationships to account for employee responses.
The research objectives of this research are to answer the following points, as presented below,
1. To describe the fundamentals of psychological contracts and it constitutes components.
2. To determine the criteria by which a contract is considered as fulfilled or violated in the mind of the
employee.
3. To establish a direct link between the previous points with the reaction of the employee.
4. To establish a comprehensive understanding of the effect that organizational justice has on the
situation.
5. To compare the difference between perception and reality and the different results of these situations.
6. To analyses the links between the three factors when they are applied together in an organization.

Literature Review
Psychological Contract
Psychological contract, concepts were introduced in the 1960s by (Levinson, Price, Munden, Mandl, & Solley,
1962; Schein, 1965). In their hypothesis, they argued that psychological contract can be defined as
expectations by the contractor, otherwise also known as the employer and the contracted, which is the

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Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

employee about the mutual responsibilities that comprise a relationship of benefit exchange between firm and
employee.
In our point of view, obligations are defined as ‘beliefs’, apprehended by an employer or employee, that
everyone is bound by debt or promise to action or passage of the act in relationship with the other
organization. Obligations may be derived by explicit or implicit promises of future interchange or reciprocity,
but our concept is nevertheless an inherently perceptual one (Farnsworth, 1982). Everyone holds his/her own
observation on defining a relationship of mutual obligations. It is valuable to consider social phenomena to
understand perceived employment obligations, with which they are tangled. The psychological contract is a
set of beliefs alleged by all the organizations in a contract about what they are eligible to collect and obligated
to give interchange for one another’s contributions by (Levinson et al., 1962).
Many studies have been carried out by distinguished scholars. Early works were not detailed on psychological
contracts, with some implications that psychological contracts are consist of conjoint perceptions of
reciprocal obligations between all entities involved in a contract (Kotter, 1973; Levinson et al., 1962; Schein,
1965).
In advanced research, it is more detailed and emphasized the numerous sides of psychological contracts that
differentiate psychological contracts from related earlier constructs.
Firstly, the distinctive and perceptual essence of psychological contracts has been explained in detail, with
scholarly examiners stressing that a worker's beliefs about the responsibilities underlying his/her occupational
relationship are not necessarily shared by firm’s agents i.e. the employer (Lucero & Allen, 1994; Parks &
Schmedemann, 1994; D. M. Rousseau, 1989; Shore & Tetrick, 1994). Nonetheless, a clear discrepancy
between the expectation of employee(s) and the employer’s perception may not be mutually shared (D. M.
Rousseau, 1989). This is particularly true for implied contracts, which are shared or commonly understood
expectations by involved parties in the contract. Another feature has been highlighted is that psychological
contracts are grounded on perceived promises, wherever a ‘promise’ is explained as any communication of
future intent (D. M. Rousseau, 1989).
According to Maslow’s Theory of Employee Needs, published in 1943 under the title “A Theory of Human
Motivation”, he argued that employees have some needs, which may be expected in general. This is done in
order to fulfill these needs an employee will enter into a contract with an organization. The organization will
then specify in a contract, which of the needs are covered and will be fulfilled from the below-provided
hierarchy pyramid.

Figure 1 - Maslow's Theory of Employee Need

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 SEISENSE Journal of Management
Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Scholars have also underlined that psychological contracts are apprehended by employee(s), on behalf of
members' beliefs about responsibilities between the employee(s) and the firm rather than any definite
mediator of the party (Levinson et al., 1962; D. M. Rousseau, 1989; Schein, 1965). This means the business
accepts the contractual attributes in the views of the employee.

Contract Types
Finally, the different types of contracts entail different psychological expectation from the employee(s).
Verbal Contract is agreements that are not written down in a hard form but is none the less considered
binding by the involved parties.
Transactional Contract is a type which is limited and is linked to a process or action is short term and
usually monetize able obligation.
Relational Contract is which is longer term and open-ended obligation. These are constructed on not
individually by monetize able elements, such as payment on services, but also socio-emotional elements such
as faithfulness and other forms of support (Parks & Schmedemann, 1994; D. M. Rousseau & McLean Parks,
1993).
These distinctions have suggestions for employees’ responses on the probability of an employee’s recognizing
that their contract has been violated
To conclude, a psychological contract is explained as the personnel’s belief of the conjoint responsibilities
amongst that employee(s) and their firm, where these responsibilities/compulsions are founded on the
perceived promise(s) and are not essentially predictable by representatives of the party.
In further discussion, we must differentiate between contractual violations and perceived breach of contracts.
Significant amount of the body of work on psychological contracts, as a sample, it has been comprehensive
on the essence of psychological contracts and how psychological contracts are being shaped (Parks &
Schmedemann, 1994; D. M. Rousseau & Greller, 1994; D. M. Rousseau & McLean Parks, 1993; Shore &
Tetrick, 1994).

Contractual violation
These are situations when the written document or verbal agreements between the employee and the
organization are not fulfilled, either in a word or in spirit.
Actual breach of a contract occurs when one or more parties fail to fulfill their obligations as stipulated in the
contractual contract.
Perceived Breach, on the other hand, signifies to the understanding of one's party that has unsuccessful to
meet one or additional of its compulsions within one's psychological contract in a way equal to the one having
provided influences. Hence, Tang and Sarsfield-Baldwin (1996) perceived breach exemplifies an intellectual
valuation of indenture self-actualization that is based on personal observation of what every firm has assured
and provided to the other.
Minor Breaches also knew as the partial breach is a non-severe violation of an agreement that does not stray
into the material breach. Basically, an employee may pursue an internal and external course to enforce
fulfillment of contract but they would not be excused from further service to their organization.
Material Breach is any failure of performance that compels the involved parties to either to enforce
performance and/or terminate the contract and/or sue for damages.

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Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Basically, a material breach is a contractual firm’s inability to accomplish an integral portion of the agreement.
The purpose of the breach is to avoid the contract from being completed and/or defeats the contract and the
breach is significant. A non-breaching contractual firm is therefore no longer responsible to complete their
performance under the agreement.
Fundamental Breach is a violation of the contracts core aspects, also known as a repudiator violation this is
a breach so elemental that it allows the non-violated firms to terminate execution of the contract and stop
their obligations to the party that has violated the contract, in addition to labeling that party to plead for
damages.
In conclusion, when an agreement is not fulfilled it is considered void by the employee (aggrieved party in this
research), whether or not the law considers it as a violation. In conclusion, when an agreement is not fulfilled
it is considered void by the employee (aggrieved party in this research), whether or not the law considers it as
a violation.

Employee Reaction
This is the response that the workers or labor have to any organizational stimuli. In the area of Psychology,
there exist two paradigms which are there to make understanding that how personnel evaluates justice.
First is the justice prototype, which suggests that workers assess a certain occurrence based on the specified
interval and situation. This is also extended to the contractual obligation that the organization has agreed to
with the employee.
The second paradigm is the social establishment paradigm; this proposed that personnel assess the social
establishments, e.g. employer is considered as accountable for the occurrence and therefore impartiality
observations is the overall ability of individuals to perform impartial attitudes. Managers and the organization
are the insight for two social individuals particularly related to employees’ global justice. Individuals are able
to fully understand about employee’s reactions to the moral of occurrences by mixing these paradigms.
Personnel may have different understanding on how rational their organization and employer are, even
though personnel may practice some occurrences, fair or unfair, the variation in their responses may base on
their pioneer observation of the societal establishments involved, this is called “Expectancy Theory”.
Expectancy theory is an analysis of an individual’s expectation of the effort that they expend. Basically, this
argues that in return of effort an individual is rewards and benefits by the party that gains from the effort
expended.
However, Scholl (1981) argued that loyalty and commitment are independent forces and continues to define
that commitment and loyalty factors that are independent of behavior and expectancy. These measures are
investment, reciprocity, lack of alternatives and identification. “Theory of Planned Behavior” by (Ajzen, 1991;
Fishbein, 1967) is the most widespread theory of human behavior.
This theory basically was developed as an extension on the “Theory of Research Action”, its goal was to study
human attitude and intervene in those behavior patterns in order to guide them. The foundational argument
of this assumption is that actual behavior is a consequence of behavioral intentions. The commitment of
intention to undertake a specific attitude i.e. attitude is a purpose of ‘Subjective Beliefs’ or ‘Normative beliefs’,
both these are formed by a set of emotional and rational evaluation of the individual’s beliefs.
The first type of behavioral belief is ‘Subjective Beliefs’, these are the individual’s belief that a certain behavior
of interest, such as work will result in a certain outcome. In short, this argues that the individual has an
attitude of expected outcome for their effort.

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 SEISENSE Journal of Management
Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

The second behavioral belief is, ‘Normative Beliefs’, these refer to the perceived expectation of others, such
as fellow employees, etc. In short, this argues that an individual has the motivation to not their significant
other’s contract and agreement to be honored as well.
In review, employee reactions are based on the type of contract that the individual believes that they have
entered into, i.e. verbal, transactional or relational.
The reaction of the employee is based on the return that they receive for their effort on behalf of the
employer. Whether these returns are economic, socio-economic or socio-emotional, a contract exists between
individuals that are engaged in economic exchange and the environment in which they operate must also
comply with their beliefs.
The reaction of the employee is based on the determination of employee of whether the contract is fulfilled
for them and their significant others.

Organizational Justice
This is the fairness or equity that is experienced by the employee from the organization.

Figure 2 - Organizational Justice

Distributive Justice addresses how material rewards and benefits are spread out in an organization. Equal
work should have equal rewards and benefits. Most of the researchers are in agreement that this type of
justice helps in ascending an organization’s efficiency (Tang & Sarsfield-Baldwin, 1996).
Procedural Justice addresses the idea of equity in the method by which disputes are resolved and resources
are allocated in an organization. Procedural justice emphases in the righteous manner through which the
decision-making process is conducted (Folger & Konovsky, 1989).
Interactional Justice was defined by Schermerhorn Jr (1975) as to how individuals react or behave when
treated with respect and dignity. This is divided into two parts, interpersonal and informational justice.
Interpersonal justice is described as the style an individual is treated by their superiors. This treatment is often
called dignity, respect, motivation, reassurance, etc.
Informational justice is described as the descriptions given to employees regarding why a procedure is to do
this way or why results are disseminated in a certain manner. According to Coleman, most of our existence is
spent around or in social institutions, such as offices, schools, courts. We interact with society on a regular
basis.
In order for this arrangement to be functional measures have to be taken for interpersonal cooperation
between involved entities; participants may have to pay a definite price in their slot, effort, and taxes. In
return, organizations permit us to get various tangible and non-tangible advantages. Predominantly speaking
researchers have arranged these benefits into two insecure categories; they are economic and socio-emotional
in nature (R Cropanzano & Schminke, 1997; Foa & Foa, 1974; Konovsky, Folger, & Cropanzano, 1987).

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Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Economic justice’s benefits, also called contributory justice paybacks are those which have to deal with
material comfort, well-being, and standards of existing. They are liable to be easily convertible to money and
are specifically solid.
Socio-emotional benefits are the one that assigns to one's upright in and recognition with a group. Socio-
emotional benefits are sometimes called figurative benefits because organizations provide a manifestation of
individuals’ value and status within the framework of some societal group. Of course, monetary and socio-
emotional possessions are closely related.
Equity theory by (Adams, 1963, 1965) analyses exchanges, disagreement and comparison theories in making
future forecasts about how entities accomplish their relationships with others.
Individuals assess their connections with others by matching their ratio of input to outcomes against the ratio
of outcome to the input of others. If that ratio is not apparent to be relatively equal, then inequality exists.
The higher the disparity the individual perceives the more distress it will create. The greater the stress on an
individual feels the more effort they will expand on correcting that unequal status in order to reduce the
distress or terminate that relationship.
In conclusion, ‘Organizational Justice’ will have a concrete effect on the employee, either positive or negative,
based on the evaluation of the organization's equity position on the employee and their fellow workers.

Literature Review Conclusion

From the literature review, many factors affect the employee’s reaction when it comes to psychological
contract fulfillment in the framework of organizational justice.
These reactions are based on logical and emotional evaluation of the organization's treatment of them and the
one around them. Whether the evaluation is based in reality or is just a perception of the lack of contractual
fulfillment, an effect will be induced and felt by the organization. Any breach of the contract is a failure of
organizational justice expectations by the employee.

Hypothesis
In this section, the hypothesis for the research project is developed and outlined. These are based on the
information collected in the literature review section (Refer Previous Section) and are designed to conclude
tangible quantitative data in the data analysis & interpretation section of the article.
Psychological Contract Fulfillment & Employee Reaction (Hypothesis 01)
From the literature review, psychological contract fulfillment is a utility of the organization, that employee’s a
worker. Levinson et al. (1962), describes psychological contract as a collection of beliefs held by every
organization in a contract about what they are authorized to collect and appreciative to give in return for one
another’s contributions. These expectations or beliefs can be based on verbal, transactional or relational.
Fulfillment, on the other hand, is the meeting of obligations.
Employee reaction, from the previous literature review, describes the response that the employee has to the
activities around them. Expectancy theory is an analysis of an individual’s expectation of the effort that they
expend. Basically, this argues that in return of effort an individual is rewards and benefits by the party that
gains from the effort expended.
However, Scholl (1981) argued that loyalty and commitment are independent forces and continues to define
that commitment and loyalty factors that are independent of behavior and expectancy. These measures are
investment, reciprocity, lack of alternatives and identification. The reaction of the employee is based on the

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 SEISENSE Journal of Management
Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

determination of employee of whether the contract is fulfilled for them and their significant others. This
reaction can be based on subjective or normative beliefs.
H 01: Psychological Contract Fulfillment (PCF) has a positive effect on Employee Reaction (ER).
Psychological Contract Fulfillment (PCF) has a positive effect on Employee Reaction (ER).
Organizational Justice & Employee Reaction (Hypothesis 02)
From the literature review, according to Coleman, most of our existence is spent around or in social
institutions, such as offices, schools, courts. We interact with society on a regular basis.
In order for this arrangement to be functional measures have to be taken for interpersonal cooperation
between involved entities; participants may have to pay a specific amount in their effort, time and tariffs. In
return, organizations permit us to acquire several tangible and non-tangible benefits.
Equity theory by (Adams, 1963, 1965) analyses exchanges, disagreement and comparison theories in making
future estimates that how persons in organizations build and manages their relations with others.
Individual entities gage their relations with others by matching their ratio of input to outcomes against the
ratio of outcome to the input of others. If that ratio is not supposed to be relatively equal, then injustice
exists. The higher the disparity the individual observes the more distress it will create. The greater the stress
on an individual feels the more effort they will expand on correcting that unequal status in order to reduce the
distress or terminate that relationship.
Employee reaction is the response that the workers or labor have to any organizational stimuli. There are two
paradigms in the area of Psychology, that occur which attempt to know how employees appraise justice.
Personnel can have contradictory perceptions of in what way impartial their supervisor or organization is
thus, either personnel might practice a related experience, unbiased or not, their responses differ centered on
their prior understanding of the societal entities involved, this is called “Expectancy Theory”.
Expectancy theory is an analysis of an individual’s expectation of the effort that they expend. Basically, this
argues that in return of effort an individual is rewards and benefits by the party that gains from the effort
expended.
H 02: Organizational Justice (OJ) has a positive effect on Employee Reaction (ER).
Mediation of Organizational Justice between Psychological Contract Fulfillment & Employee
Reaction (Hypothesis 03)
From the literature review justice, psychological contract fulfillment is a function of the mediation role of
organizational justice.
Organizational justice is the fairness or equity that is experienced by the employee from the organization. This
can be broadly categorized as economic or social justice. Also, this type of justice is distributed in three
methods distributive, procedural & interactional justice.
Psychological contract fulfillment, from the previous literature review, describes the completion of the
obligation of the organization to its employees.
Levinson et al. (1962), described psychological contract as a set of philosophies held by every organization in
a contract about what they are authorized to gain and obligated to give in return for one an other’s
contributions.

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 SEISENSE Journal of Management
Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Employee reaction, from the previous literature review, describes the response that the employee has to the
activities around them.
The reaction of the employee is based on the return that they receive for their effort on behalf of the
employer. Whether these returns are economic, socio-economic or socio-emotional, a contract exists between
individuals that are engaged in economic exchange and the environment in which they operate must also
comply with their beliefs.
The reaction of the employee is based on the determination of employee of whether the contract is fulfilled
for them and their significant others.
H 03: Organizational Justice (OJ) mediates the relation between Psychological Contract Fulfillment (PCF) and
Employee Reaction (ER).

Research Model
Variable
A variable in research is an event, idea, object, time period, feeling or any additional kind of cluster you are
focusing to measure. There are five categories of variables in research independent, dependent, mediating,
moderating and control variables.

Independent Variable
Independent variable is a variable that doesn’t depend on any other variable it doesn’t change or fluctuate by
changes in other variables
In this research, it is being determined that what impact is psychological contract fulfillment is having on the
reaction of the employee in the context of Organizational Justice.
On the analysis of the research question, it is clear that “Psychological Contract Fulfillment” is the
independent variable.

Dependent Variable:
The dependent variable is a variable examined in a specific experiment and it fluctuates due to its dependence
on the independent variable that is why it is known as 'dependent'. With the changes in the independent
variable, the dependent variable also changes itself which is perceived and documented.
In this research, it is being determined that what impact is psychological contract fulfillment is having on the
reaction of the employee in the context of Organizational Justice.
On the analysis of the research question, it is clear that “Employee Reaction” is the dependent variable.

Mediating Variable
A mediating variable is a variable that intervenes in between the dependent variables and the independent
variables. In additional words, the mediator explains the relation between both the dependent variable and the
independent variable. A complete mediation defined as a process of complete intervention caused by
mediator variable. According to research, it is being determined that what impact is psychological contract
fulfillment is having on the reaction of the employee in the context of Organizational Justice.
On the analysis of the research question, it is clear that “Organizational Justice” is the Mediating variable.

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Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Organizational Justice

Psychological Contract Employee Reaction

Fulfilment

Figure 3 - Research Model

Measures & Questionnaire Design

Measures
The questionnaire was distributed to 190 individuals in a wide range of organization and professional
educational institutions. 188 surveys were filled to research satisfaction.
The survey was conducted for domestic organizations operating all over Pakistan in the services industries.
All those who were surveyed were employed at the moment that the survey was conducted. For further data,
please refer to the Data Analysis & Interpretation section of this article.
The measurement questionnaire was developed from the previous works of the following individuals:
 (Robinson & Rousseau, 1994)
 (Freese & Schalk, 2008)
 (Schalk & Freese, 1997)
 (Thomas & Anderson, 1998)
 (Turnley & Feldman, 1999)
 (Robinson & Wolfe Morrison, 2000)
 (Coyle-Shapiro & Kessler, 2002)
 (Kickul, Lester, & Finkl, 2002)
 (Conway & Briner, 2002)
 (Guest & Conway, 2002)
 (Tekleab & Taylor, 2003)
 (Ten Brink, 2004)
These survey questionnaires are the premier sources of questions developed and used by the research
community for this type of research.

Questionnaire Design
 Psychological Contract (PCF)
This part has 14 questions in total representing different elements of the internal variables. 10 questions of
this part are tested using a five-point Likert scale, with ‘1’ representing “Strongly Disagree” and ‘5’

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Research Article

representing “Strongly Agree”. 4 questions of this part are a dichotomous scale, with a “Yes” and “No”
answer options.
 Employee Reaction (ER)
This part has 12 questions in total representing different elements of the internal variables. 9 questions of this
part are measured using a five-point Likert scale, with ‘1’ representing “Strongly Disagree” and ‘5’
representing “Strongly Agree”. 3 question of this part is a dichotomous scale, with a “Yes” and “No”
answering options.
 Organizational Justice (OJ)
This part has 9 questions in total representing different elements of the internal variables. Five-point Likert
scale is used to measure 6 questions of this part, with ‘1’representing “Strongly Disagree” and ‘5’representing
“Strongly Agree”. 3 question of this part is a dichotomous scale, with a “Yes” and “No” answering options.

Data Analysis & Interpretation

Confirmatory Factor Analysis
Factor loadings are there to analyze the convergent validity of construct it is composite reliability and average
variance extract. The validity of constructs is considered to be convergent when items/indicators load results
high (> 0.50) on their subordinate constructs Joseph F Hair, Anderson, Babin, and Black (2010) and
outcomes indicate that factor loadings values are greater than (0.50). Average composite reliability and
variance extract are used to measure convergent validity of constructs. The AVE values of all items are above
(0.50), and composite reliability is higher than (0.8), representing that convergent validity of all constructs has
been established.

Figure 4 - Confirmatory Factor Analysis

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Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Table 1 – Factor Analysis

Constructs Loadings Alpha AVE CR
Psychological Contract Fulfillment PCF1 0. 79 0.743 0.915 0.776
PCF2 0.85
PCF3 0.76
PCF 4 0.74
PCF 5 0.87
PCF 6 0.785
PCF 7 0.77
PCF 8 0.69
PCF 9 0.99
PCF 10 0.88
PCF 11 0.65
PCF 12 0.88
PCF 13 0.79
PCF 14 0.733
Employee Reaction ER1 0.89 0.765 0.935 0.553
ER2 0.90
ER3 0.84
ER4 0.742
ER5 0.87
ER6 0.86
ER7 0.801
ER8 0.785
ER9 0.73
ER10 0.666
ER11 0.84
ER12 0.846
Organizational Justice OJ1 0.84 0.787 0.905 0.575
OJ2 0.846
OJ3 0.783
OJ4 0.844
OJ5 0.783
OJ6 0.808
OJ7 0.561
OJ8 0.425
OJ9 0.485

Discriminant Validity

Table 2 shows the results related to the discriminant validity assessment of less researched variables. All the
square roots of AVEs constructs are higher than the lower co-efficient or transverse elements in the
equivalent rows and columns, hereafter discriminant validity has been established.

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Research Article

Table 2 - Discriminant Validity

Variable ER OJ PCF
ER 0.385 -
OJ -0.766 0.479 -
PCF -0.660 0.035 0.615

Heterotrait - Monotrait Ratio

Table 3 shows the HTMT ratio it is an approach to access discriminant validity that is another effective and
alternative approach to determine discriminant validity. To ensure the discriminant validity HTMT ratio
should be less than 0.85 and in the case of evidence of discriminant validity all the ratio values are higher than
the lower threshold.
Table 3 - Heterotrait - Monotrait Ratio
Variable ER OJ PCF
ER -
OJ 0.750 -
PCF 0.703 0.724 -

Structure Equation Modeling

Table 4 - Structure Equation Modeling

Hypothesis Relationship St. Beta S.E. t-Value Decision R2 F2 VIF Q2
H1 PCF->ER -0.154 0.166 2.349 Supported 0.101 0.006 1.651 0.051
H2 OJ ->ER -0.183 0.094 5.687 Supported 0.613 0.037 1.103 0.233
H3 OJ->PCF -0.138 0.024 33.284 Supported 0.874 0.024 1.037 0.45
Hypothesis 1 predicted an impact of Psychological Contract on Employee Reaction. Results concluded a
significant positive impact of Psychological Contract Fulfillment on Personnel Reaction, thus supports H1
and H3. Lastly, H2 proposed the relations between Organizational Justice and Employee Reaction and results
purported that organizational Justice is positively related to Employee Reaction.
Blindfolding method is used to test the predictive relevance of theoretical model (Stone, 1974). To measure
the predictive relevance a cross-validated redundancy measure (Q2) was applied (Joseph F Hair, Ringle, &
Sarstedt, 2013). Q2 for research model is higher than zero that shows predictive relevance. Outcomes also
analyzed that there is none multi-collinearity issue with data as the value of VIF is fewer than 5 as suggested
by (Joe F Hair, Ringle, & Sarstedt, 2011).

Conclusion
We examine the psychological contract expectations by employees and the impact of any deviation from its
perceived benefits by the employees of an organization, as they occur within social exchange relationships to
account for employee responses. This is an exploratory longitudinal study in which an investigation is made
into the variations in employment obligations as perceived by employees based on the level of fulfillment of
contract obligations by their employer(s). It was deduced that an employer's inability to fulfill its contractual
commitments was the foundational cause associated with the decline in cooperation of the employees to
fulfill their employment obligations. We discuss implications for providing equity to employees in an
organization.

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 SEISENSE Journal of Management
Vol 2 No 3 (2019): DOI: https://doi.org/10.33215/sjom.v2i3.131 , 42-57
Research Article

Results presented that there is a significant and positive relationship between Psychological Contract
Fulfilment and Employee Reaction supported by H1.
Results presented that there is a significant and positive relationship between Organizational Justice and
Employee Reaction supported by H2.
Results presented that there is a significant and positive relationship between Organizational Justice and
Psychological Contract Fulfilment supported by H3.

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