A Psychological Contract Perspective of Expatriate Failure

Abstract

The expatriate literature needs to move beyond maladjustment as a primary reason for expatriate failure. This article draws on the psychological contract as a valuable lens to observe changes in expatriate behavior that may determine expatriate success or failure on international assignments. Prior research on the expatriate psychological contract has focused solely on an expatriate's social exchange relationship with the assigning parent company. This article offers a dual-foci perspective of the expatriate psychological contract and suggests that expatriates’ perceptions of psychological contract breach arise from two sources—the assigning parent company and the receiving host company. The conceptualization of breach with dual foci forms the basis for the proposed model of expatriate failure. The model proposes that differences in expatriates’ contexts will influence their likelihood of perceiving breach and that breach, once perceived, will affect expatriate behavior through its influence on sense-making, affect, conation, and attitudes. The propositions developed in this article provide a foundation for future theorizing and empirical work on expatriate cognitions of psychological contract breach.

Full text

Human Resource Management, May–June 2017, Vol. 56, No. 3. Pp. 479–499
© 2016 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI:10.1002/hrm.21788
Correspondence to: Hasuli Kumarika Perera, Department of Management, School of Business, Monash University
Malaysia, Jalan Lagoon Selatan, Bandar Sunway, 47500 Subang Jaya, Selangor, Malaysia, Phone: +603 5514 6296,
Fax: +603 5514 6192/619, E-mail: hasuli.perera@monash.edu.
A PSYCHOLOGICAL CONTRACT
PERSPECTIVE OF EXPATRIATE
FAILURE
HASULI KUMARIKA PERERA, ELAINE YIN TENG CHEW,
AND INGRID NIELSEN
The expatriate literature needs to move beyond maladjustment as a primary
reason for expatriate failure. This article draws on the psychological contract
as a valuable lens to observe changes in expatriate behavior that may deter-
mine expatriate success or failure on international assignments. Prior research
on the expatriate psychological contract has focused solely on an expatriate’s
social exchange relationship with the assigning parent company. This article
offers a dual-foci perspective of the expatriate psychological contract and sug-
gests that expatriates’ perceptions of psychological contract breach arise from
two sources—the assigning parent company and the receiving host company.
The conceptualization of breach with dual foci forms the basis for the proposed
model of expatriate failure. The model proposes that differences in expatriates’
contexts will infl uence their likelihood of perceiving breach and that breach, once
perceived, will affect expatriate behavior through its infl uence on sense-making,
affect, conation, and attitudes. The propositions developed in this article provide
a foundation for future theorizing and empirical work on expatriate cognitions of
psychological contract breach. © 2016 Wiley Periodicals, Inc.
Keywords: expatriate failure, host company, international assignments, parent
company, psychological contract breach, social exchange theory
Long-term international assignments are
not employed merely by large multina-
tional corporations (MNCs) today, but
also increasingly by smaller companies
that lack overseas operating experience
and established expatriate management sys-
tems (Hailey & Harry, 2008). Moreover, inter-
national assignments are rapidly expanding
into emerging locations that pose considerable
cultural, infrastructure, and security problems
and require significant expatriate adjustment
(Harvey & Moeller, 2009). As international
assignment dynamism and complexity escalate
due to such shifting mobility patterns, expatriate
failure may remain a challenge to the contin-
ued use of long-term international assignments.
Although the rate of expatriate failure is debated
(Harzing, 2002), failed international assignments
incur substantial costs when expatriates quit the
assignment prematurely or underperform on
the assignment (Harzing & Christensen, 2004).
Therefore, optimizing expatriate outcomes is of
paramount importance to the success of firms’
global strategies.

480 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
Harrison etal.
(2004) and Takeuchi
(2010) noted the
limited attention
in the literature to
interactions between
expatriates and their
key stakeholders,
such as the parent
company, in affecting
expatriate outcomes.
between an expatriate and the employer and
increases the expatriate’s vigilance and sensitivity
to potential breach (Guzzo etal., 1994). Second,
the broad, encompassing, and complex psycho-
logical contracts of expatriates are at a higher risk
of being breached than those of domestic employ-
ees due to the myriad tangible and intangible
elements involved in the expatriate-employer
exchange (Guzzo et al., 1994; Rousseau, 1989).
However, the precise nature and role of a perceived
breach of the expatriate psychological contract
remain underexplored in the expatriate literature,
providing us an important opportunity to extend
existing knowledge of PCB to the international
assignment setting.
The contribution of this article is three fold.
First, we highlight the dual nature of expatriates’
perceptions of PCB by presenting an argument
for their potential to hold psychological contracts
with two distinct but related constituencies—the
parent company and the host company—which
become the foci of PCB. Second, we discuss the
contextual variation in the development of PCB
perceptions by exploring some of the conditions
that make PCB more or less likely to be perceived
in an international assignment setting. Third, we
build on prior PCB research in domestic work set-
tings (e.g., Zhao, Wayne, Glibkowski, & Bravo,
2007) to frame a theoretically based process of the
effect of PCB on a range of expatriate outcomes
that are categorized into sense-making, affect,
conation, attitude, and behavior. Collectively, we
attempt to understand one of many complex psy-
chological processes involved in achieving inter-
national assignment success.
Before moving forward, it is important to set
the boundaries of our discussion. We use the term
expatriate to refer to employees who are temporar-
ily sent by their organization to an affiliated unit
in a foreign country to achieve an organizational
goal for a period of one or more years in a single
term. Hence, our focus in this article is on assigned
expatriates, not on self-initiated expatriates.
Dual Foci of Expatriates’ Psychological
Contracts and Perceived Breach
The psychological contract is defined as an
employee’s subjective beliefs about mutual obli-
gations between the employee and the employer
that are based on promises inferred from the
employee’s interpretations of verbal and written
agreements and observations of repeated patterns
of exchange with the employer (Rousseau, 1989,
1990). In the event of being assigned overseas,
new terms arising from the international assign-
ment contract will be overlaid upon old terms
in the psychological contract. Beyond these new
Although there are many reasons for expatri-
ate failure, the integral premise of much of the
literature is that adjustment difficulties are at
the root of expatriate failure (Harvey & Moeller,
2009). However, recent meta-analyses (e.g.,
Bhaskar-Shrinivas, Harrison, Shaffer, & Luk, 2005)
and some experts (e.g., Thomas & Lazarova, 2006)
have found that the relationship between adjust-
ment and performance ranges from weak to non-
existent and that the chain of causality is unclear.
Due to the unresolved nature of the adjustment-
performance link, calls for new theoretical inves-
tigations on expatriate performance have been
raised (Harrison, Shaffer, & Bhaskar-Shrinivas,
2004; Takeuchi, 2010; Yan, Zhu, & Hall, 2002).
Harrison etal. (2004) and Takeuchi (2010) noted
the limited attention in the literature to interac-
tions between expatriates and their
key stakeholders, such as the par-
ent company, in affecting expatriate
outcomes. Studies on an expatriate’s
relationship with the parent com-
pany typically restrict their focus
to types of parent company sup-
port (Bhaskar-Shrinivas etal., 2005;
Kraimer & Wayne, 2004) and firm-
level practices such as career devel-
opment programs (Selmer, 2000)
or mentoring (Mezias & Scandura,
2005).
There are a handful of studies,
however, that have recognized the
psychological contract as a valu-
able construct to examine the rela-
tionship between an expatriate and
the parent company in predicting
expatriate outcomes (e.g., Guzzo,
Noonan, & Elron, 1994; Haslberger
& Brewster, 2009; Pate & Scullion,
2010; Yan etal., 2002). The psychological contract
captures an employee’s beliefs about terms and
conditions of the exchange relationship with the
employer (Rousseau, 1989, 1990). The employer’s
failure, as perceived by the employee, to fulfill its
obligations creates a perception of psychological
contract breach (PCB), which adversely influences
employee outcomes even if such perceptions are
not entirely justified or accurate (Morrison &
Robinson, 1997; Robinson & Morrison, 2000).
Nevertheless, there has been little discus-
sion about PCB in an international assignment
setting compared to the domestic work setting.
The international assignment setting provides
an important context to examine PCB because,
first, the work transition brought on by an inter-
national assignment acts as a “triggering event”
that enhances the salience of mutual obligations

Human Resource Management DOI: 10.1002/hrm
A PSYCHOLOGICAL CONTRACT PERSPECTIVE OF EXPATRIATE FAILURE 481
A limitation of
existing research
on the expatriate
psychological
contract is its
exclusive focus on
the relationship
between the
expatriate and the
parent company,
overlooking
the notion that
expatriates can also
hold a psychological
contract with the host
company.
organizational structures (e.g., the agency and
the client company). Marks (2001) argued that
employees can hold multiple psychological con-
tracts with individuals or groups within an orga-
nization. Drawing on the “foci of commitment”
perspective by Reichers (1985), Marks (2001) pro-
posed that groups and individuals in the organiza-
tion that are the foci of employees’ commitment
will also be the foci of employees’ psychological
contracts. This view was supported recently by
Bordia, Restubog, Bordia, and Tang (2010) who
examined employees’ psychological contracts
with their supervisor on the basis that employees
form distinct social exchange relationships with
differing organizational referents
(e.g., supervisors, senior managers)
who often make promises on behalf
of the organization.
In the international context,
the host company is an organiza-
tional unit that is nested in, albeit
geographically separated from, the
parent company. Strong empiri-
cal evidence shows that expatri-
ates distinguish between the parent
company and the host company as
sources of support and foci of com-
mitment as they develop and main-
tain relationships with both entities
(e.g., Gregersen & Black, 1992;
Kraimer & Wayne, 2004; Liu & Ipe,
2010; Stroh et al., 2000). Based on
this evidence, we propose that, in
addition to the psychological con-
tract with the parent company,
an expatriate also develops a psy-
chological contract with the host
company via repeated and ongoing
exchanges of tangible and intan-
gible elements. These may include
host-company inducements of
social support, language training, or
opportunities for socialization and
expatriate contributions of training and devel-
oping local coworkers or proposing changes and
improvements to the host company. The implica-
tion of reconceptualizing the expatriate psycho-
logical contract with the parent company and
the host company as dual foci is that it can be
breached by either one or both entities.
Expatriate-Perceived Psychological Contract
Breach
PCB is an employee’s subjective belief that the
employer has failed to meet one or more obliga-
tions in the psychological contract (Morrison &
Robinson, 1997). These beliefs can ensue from
terms, the psychological contract will also include
the expatriate’s beliefs about relational obliga-
tions based on his or her current employment
relationship with the assigning company (Stroh,
Gregersen, & Black, 2000). Added beliefs of obli-
gations will arise from observing the outcomes of
previous expatriates (Haslberger & Brewster, 2009)
and from interacting with multiple parties (e.g.,
supervisors, coworkers, human resource [HR] rep-
resentatives) prior to moving abroad (Stroh etal.,
2000).
The importance of the psychological contract
as a schema of the expatriate-employer relation-
ship is underscored by ambiguous or incomplete
information in the international assignment con-
tract, which highlights an expatriate’s vulnerability
to risk and uncertainty in the novel environment
(Haslberger & Brewster, 2009; McNulty, De Cieri,
& Hutchings, 2013). For instance, the formal
contract may cover the expatriate’s job responsi-
bilities and compensation, but career outcomes,
specific performance expectations, or acceptable
behavioral norms in the new location may not be
clear (Yan etal., 2002). The psychological contract
schema fills in these gaps of missing information
by providing the expatriate with important cues
to make sense of and handle novel or unexpected
situations that arise during the international
assignment (Shore & Tetrick, 1994).
An expatriate’s psychological contract is
unique from that of a domestic employee due
to its broad scope or pervasiveness that results
from extensive employer involvement (Guzzo
etal., 1994). The parent company is significantly
involved in the work and personal lives of the
expatriate by providing an array of benefits and
services (e.g., cost-of-living allowances, home
leave, education for children) to compensate the
expatriate for uprooting his or her life and family
to move overseas (Guzzo etal., 1994). Another dis-
tinguishing feature of the expatriate psychological
contract is that, compared to domestic employees
who work for a single employer, expatriates simul-
taneously meet their obligations to two employ-
ers—the parent company that assigns them and
the host company that receives them. However,
a limitation of existing research on the expatriate
psychological contract is its exclusive focus on the
relationship between the expatriate and the par-
ent company, overlooking the notion that expa-
triates can also hold a psychological contract with
the host company.
Research on multiple agency relationships
(e.g., McLean Parks, Kidder, & Gallagher, 1998)
suggests that contingent workers develop dual
psychological contracts when simultaneously
working for two employers that are not nested

482 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
The connotation of
this heterogeneity
is that contexts
are unique to each
expatriate and
engender distinct
experiences,
affecting the
likelihood that
expatriates will
perceive a breach of
their psychological
contracts with the
parent company or
host company.
Poor treatment by host-company employees, such
as withholding critical information and resources
that deters expatriates from achieving their key
performance indicators (KPIs) in the host com-
pany (Toh & Srinivas, 2012) or depriving expatri-
ates of social acceptance, support, or mentoring
(Mezias & Scandura, 2005), may also contribute
to expatriates’ perceptions of PCB by the host
company.
In the following section, we explore specific
contextual differences that influence the likeli-
hood of expatriates perceiving PCB by the parent
or host company.
Contextual Variation in the Development of
Breach Perceptions
Context is what surrounds and exists in an
employee’s external environment that constrains
or facilitates the individual’s attitudes and behav-
ior (Johns, 2006). Examining context, although
fairly overlooked in PCB research, is vital to
understand how person × situation interactions
influence the development of PCB perceptions.
Consideration of context is increasingly relevant
today as rapid international expansion of com-
panies, varying in size, overseas operating expe-
rience, and goals, into different locations has
resulted in a diversity of international assignment
types and expatriates (Haslberger & Brewster,
2009). The connotation of this heterogeneity is
that contexts are unique to each expatriate and
engender distinct experiences, affecting the like-
lihood that expatriates will perceive a breach of
their psychological contracts with the parent
company or host company.
Perceptions of PCB are ultimately rooted in
incongruence or reneging. Incongruence results
from differing views held by an expatriate and
organizational agents about the existence or
nature of obligations, while reneging occurs when
organizational agents knowingly fail to meet a
perceived obligation because they are unwilling
or unable to do so (Morrison & Robinson, 1997).
Both create a disparity between an expatriate’s
understanding of employer obligations and what
is veritably experienced, thus inducing the percep-
tion of PCB. A third condition that rouses PCB is
an expatriate’s vigilance. Due to active monitoring
of how well the organization is meeting the terms
of their psychological contract, vigilant expatri-
ates are more likely to perceive that their organi-
zation has failed to meet an obligation (Robinson
& Morrison, 2000). Across international assign-
ments, there is likely to be considerable variation
in the extent to which reneging, incongruence,
or vigilance takes place due to different expatriate
contexts. In the following subsections, we focus
delayed or reduced fulfillment of obligations,
changes to the type or form of promised rewards,
inequity compared to others in similar positions,
and reciprocal imbalance (Cassar & Briner, 2005).
More severe than unmet expectations, PCB dam-
ages the employee-organization relationship due
to the promissory nature of the obligations.
The sheer number of mutual obligations
between an expatriate and his or her employer
increases the likelihood of PCB because many obli-
gations could be overlooked or forgotten (Guzzo
etal., 1994; Shore etal., 2004). PCB is also more
likely when mutual obligations are implicit, com-
plex, and ambiguous, and expatriates make their
own biased interpretations of these obligations
that differ from those made by organizational
agents (Robinson & Morrison, 2000). Moreover,
given the novelty, ambiguity, and
complexity surrounding interna-
tional assignments, intermittent
PCB is more likely to occur than an
outright positive psychological con-
tract (Schalk & Roe, 2007).
During their international
assignment, expatriates may per-
ceive PCB by the parent company
due to inadequate support and com-
munication from HR representatives
and senior management, insuffi-
cient remuneration to meet high
relocation or living costs in the host
country, alterations in compensa-
tion due to overall cost cutting, or
changes in strategic directions and
priorities that disrupt expatriates’
achievement of assignment objec-
tives (Haslberger & Brewster, 2009;
McNulty etal., 2013; Pate & Scullion,
2010). Nearing repatriation, expatri-
ates may be particularly sensitive
to a lack of career fulfillment, poor
career management planning, and
diminution of domestic social capi-
tal (Harvey & Novicevic, 2006; Pate
& Scullion, 2010).
The host company may contribute to expa-
triates’ perceptions of PCB by failing to adhere to
corporate human resource management (HRM)
policies, not allocating enough resources for
expatriates’ execution of tasks, not empower-
ing expatriates sufficiently, or providing limited
opportunities for their participation in strategic
decision making in the host company. A lack of
support in terms of settling-in practices, language
courses, or cross-cultural training may also be
treated as PCB if such support is felt to be critical
to the expatriates’ and their families’ well-being.

Human Resource Management DOI: 10.1002/hrm
A PSYCHOLOGICAL CONTRACT PERSPECTIVE OF EXPATRIATE FAILURE 483
Perceptions of
PCB, resulting from
increased vigilance,
may be greater
among expatriates
who encounter
a larger change
between their home
and host locations
than those who are
more familiar with the
new environment.
differ (Harvey & Moeller, 2009). High cultural
distance magnifies the differences between cog-
nitive schemata held by the expatriate and host-
country agents about the exchange between them
(Morrison & Robinson, 1997), as the parties are
socialized differently by their respective cultures
(Thomas, Au, & Ravlin, 2003). Acutely different
beliefs between the expatriate and host-company
agents about the exchange terms and what con-
stitutes a breach of those terms will enhance mis-
interpretations and misunderstanding between
the parties, increasing the likelihood of PCB due
to incongruence. Problems in effective communi-
cation between the expatriate and the host com-
pany that could minimize incongruence are also
more pronounced with cultural distance.
An equally important feature of an expatri-
ate’s external environment is insti-
tutional distance, which is the
extent of dissimilarity between the
institutional environments of the
home and host countries (Kostova
& Zaheer, 1999). Unlike cultural
distance, institutional distance
captures differences in regulative
rules and laws between the coun-
tries, which incite, guide, and con-
strain individual behavior (Scott,
1995). Higher institutional distance
increases an expatriate’s unfamil-
iarity with rules and norms in the
host country and locally adapted
management practices and systems
in the host company that are imple-
mented to achieve legitimacy in the
local institutional environment.
For example, an expatriate mov-
ing from a rule-based system in the
home country to a relation-based
system in the host country will
have greater difficulty in interpreting and evaluat-
ing the exchange relationship with the host com-
pany, as the precision of exchange terms and the
scope of the relationship tend to differ between
the two systems for governing business (Maurer
& Li, 2006). As novelty and unfamiliarity with the
new system increases incongruence, the expatri-
ate may misinterpret the actions of host-company
agents in fulfilling the expatriate’s psychological
contract. Therefore, the expatriate may be more
inclined to perceive PCB when institutional dis-
similarity is high.
Proposition 1b: Perceived PCB by the host company
will be more likely to the extent that cultural and/or
institutional distance between the expatriate’s home
country and host country is large.
our discussion on some of the more pertinent
environment-, organization-, and individual-level
differences that influence the degree of reneging,
incongruence, or vigilance, thus making the cog-
nition of PCB more or less likely.
Environment-Level Factors as Contextual
Antecedents of Breach Perceptions
Magnitude of Change from the Home Country to
the Host Country
Expatriates who are assigned between countries
that are relatively similar in terms of their eco-
nomic, social, and political characteristics (e.g.,
between Western European countries or between
the United States and Canada) may not encounter
entirely unfamiliar and strikingly different envi-
ronments to their prior (home) setting. However,
unfamiliarity with the new setting increases when
there are real and perceived differences in key fea-
tures between the old and new settings (Louis,
1980). For example, expatriates who relocate from
developed to developing locations experience
lower living standards, less developed economic
infrastructure, and increased business complexity
(Shaffer & Harrison, 1998). While expatriates from
developing locations do find better living and
business standards in developed countries, they
still experience unfamiliarity with personal and
business norms, host-country language, and strin-
gent immigration rules, among others. Therefore,
the greater the perceived change from the home
to the host country, the higher the novelty faced
by an expatriate in the new setting, which creates
greater uncertainty about fulfillment of obliga-
tions by the parent or host company (Chaudhry,
Wayne, & Schalk, 2009). To reduce this uncer-
tainty, the expatriate may vigilantly monitor
fulfillment by both parties, sensitizing the indi-
vidual to perceptions of unmet employer promises
(Morrison & Robinson, 1997). Thus, perceptions
of PCB, resulting from increased vigilance, may be
greater among expatriates who encounter a larger
change between their home and host locations
than those who are more familiar with the new
environment.
Proposition 1a: Perceived PCB by the parent company
or the host company will be more likely to the extent
that the magnitude of change from the home country
to the host country is large.
Cultural and Institutional Distance
Cultural distance, a key feature of an expatriate’s
external environment, is the extent to which
cultures between the home and host countries

484 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
Expatriate
psychological
contracts in affected
industries may
change profoundly
as companies act
to contain costs
by using shorter
assignments, cutting
back benefits, and
using local hires to
replace expatriates,
making it difficult
for employers to
subsequently fulfill
what may have been
promised at the start
of the international
assignment
in exchange
for expatriate
contributions.
global experience, if assignments to a specific
country have been the norm for a company, oper-
ational experience in that host country will have
enabled the company to develop rigorous policies
that cater to the needs of expatriates in that loca-
tion and broadcast assignment- and location-rele-
vant information to employees even before they
become expatriates (Brookfield GRS, 2012b). This
information will bring expatriates’ expectations
in line with the realities of their assignment and
somewhat reduce the novelty and uncertainty
that may have otherwise been experienced. Then,
due to lower incongruence and a reduced need for
vigilance, expatriates from globally experienced
parent companies with prior experience in the
host location(s) are less likely to perceive PCB.
Similarly, established subsidiaries may have
built significant experience in working with their
parent company and familiarized themselves with
corporate organizational routines for managing
expatriates. These subsidiaries are more likely to
have institutionalized similar organizational rou-
tines for handling expatriates than new subsidiar-
ies (Belderbos & Heijltjes, 2005), which should
reduce expatriates’ uncertainty about fulfillment
of their psychological contract by the host com-
pany. Due to lower uncertainty, expatriates may
see little need for vigilance, which will decrease
the likelihood of breach being perceived.
Proposition 2a: Perceived PCB by the parent company
or the host company will be less likely to the extent
that the parent company has signifi cant overall and
host-country-specifi c experience and the host unit has
signifi cant experience in working with the parent com-
pany, respectively.
Strategic Importance of Subsidiary Operations
to the Parent Company
Strategically important subsidiaries are those that
have high levels of capability creation and global
or regional responsibility for a specific product or
product line, commanding more power in the orga-
nization’s network as they provide vital inputs on
which other units depend (Bouquet & Birkinshaw,
2008). Strategically important subsidiaries are also
those that operate in high-potential markets in
terms of size, rate of growth, or learning due to rapid
technological advances or sophisticated custom-
ers. As these subsidiaries are prioritized and receive
more discretionary resources, support, and visible
attention by the headquarters than others (Ambos
& Birkinshaw, 2010), expatriates in these host units
are also more likely to receive corporate support,
attention, and access to resources required to achieve
their KPIs (Yan etal., 2002). These expatriates are
Nature of the Industry
The likelihood that an expatriate perceives PCB
may also depend on the industry in which the
company operates. Industries like services are
more adversely affected than others by erratic
fluctuations in levels of economic activity, infla-
tion, exchange rates, or interest rates, due to
inherent characteristics of inseparability, intangi-
bility, and nonstorability (Brouthers,
Brouthers, & Werner, 2002). For
example, financial services was one
of the most severely affected and
slowest-to-recover industries in the
global recession of 2009 (Brookfield
GRS, 2012a). The vulnerability of
such industries to macroeconomic
uncertainty ultimately affects the
numbers and compensation of
expatriates. Expatriate psychological
contracts in affected industries may
change profoundly as companies
act to contain costs by using shorter
assignments, cutting back benefits,
and using local hires to replace expa-
triates (Selmer, 2001), making it dif-
ficult for employers to subsequently
fulfill what may have been prom-
ised at the start of the international
assignment in exchange for expatri-
ate contributions. Then, not only
may reneging be higher in industries
sensitive to macroeconomic volatil-
ity, but expatriate vigilance might
also heighten due to greater uncer-
tainty about psychological contract
fulfillment, which increases the like-
lihood of detecting breach.
Proposition 1c: Perceived PCB by the
parent company will be more likely in
industries that are more severely affected
by macroeconomic uncertainty.
Organization-Level Factors
as Contextual Antecedents of
Breach Perceptions
Parent-Company and Host-Company Experience
Organizations with significant international expe-
rience will have accumulated a stock of knowl-
edge relevant to managing expatriates, built and
refined global expatriate management policies,
and employed global staff to handle expatriate
issues than firms with less international experi-
ence (Forster & Johnsen, 1996). In addition to

Human Resource Management DOI: 10.1002/hrm
A PSYCHOLOGICAL CONTRACT PERSPECTIVE OF EXPATRIATE FAILURE 485
Localized HRM
policies may trigger
sense-making as
expatriates try to
interpret the host-
company HRM
practices that differ
from corporate-
espoused HRM
policies. This
sense-making
may motivate the
expatriates to monitor
local practices
that are potentially
unfavorable to
maintaining their
psychological
contract, thus
increasing the
likelihood of
perceiving PCB,
due to higher
incongruence and
vigilance.
as signals of the host company’s support of and
commitment to them (Eisenberger, Huntington,
Hutchison, & Sowa, 1986). These subjective inter-
pretations of implemented HRM practices (i.e.,
perceived HRM practices) are more important than
the actual (objective) practices in influencing
employee attitudes and behavior
(Wright & Nishii, 2013). Perceived
HRM practices that suggest that
the host company is invested in
its expatriates and recognizes their
contributions (e.g., participation
in decision making, fairness of
resource allocation and rewards)
signal that the host company cares
about its expatriates’ well-being and
is seeking to maintain the exchange
relationships with the expatriates
(Allen, Shore, & Griffeth, 2003).
Perceptions of supportive HRM
practices in the host company make
it less likely that expatriates will seek
out discrepancies between what the
company promised and provided
(Aselage & Eisenberger, 2003), thus
curtailing expatriate vigilance and,
in turn, decreasing the likelihood of
PCB being perceived.
Proposition 2d: Perceived PCB by the
host company will be less likely to the
extent that the expatriate believes that
supportive HRM practices are carried
out by the host company.
Nature of the International
Assignment
International assignments can be
classified as (1) demand-driven (to
serve the longer-term motive of posi-
tion-filling or shorter-term motive of
problem solving) and (2) learning-
driven (long-term developmental
assignments to groom high-potential
employees for higher-level internal
management positions). Expatriates
on demand-driven assignments,
referred to as functional expatriates
(Stahl, Chua, Caligiuri, Cerdin, &
Taniguchi, 2009), may be more likely
to perceive PCB than those on learning-driven
assignments (i.e., developmental expatriates) as,
first, they may experience more communication
deficiencies and a greater loss of domestic social
capital, because position-filling assignments tend
to be longer in duration and disconnected from
then likely to experience fewer unmet expectations,
which reduces perceptions of PCB. In addition, as
the strategic stakes for their international assign-
ments are high (Yan etal., 2002), they will have
more power in the exchange relationship vis-à-vis
the parent company, and reneging is likely to be
costly to the firm if the expatriates withdraw their
critical contributions in retaliation to perceived
breach. Therefore, as reneging is strived to be kept
to a minimum, breach by the parent company is
less likely to be perceived by expatriates located in
strategically important subsidiaries.
Proposition 2b: Perceived PCB by the parent company
will be less likely to the extent that the expatriate’s host
company is important to the parent company’s overall
strategy and success.
Standardization versus Localization of HRM
Policies and Practices
The strategic importance of the HRM function
prompts many MNCs to attempt to transfer home-
country HRM policies to their overseas subsidiaries
(Pudelko & Harzing, 2007). However, HRM prac-
tices in subsidiaries tend to closely resemble host
country practices (Rosenzweig & Nohria, 1994), as
strong pressures from the local institutional envi-
ronment may preclude the adoption of home-
country business practices (Björkman & Lervik,
2007). If HRM policies are standardized across
subsidiaries, HRM practices experienced in the
host company would, to some extent, correspond
to those previously experienced in the parent.
Fewer disparities may then exist between expa-
triates’ and host company agents’ understanding
and interpretation of local HRM practices, negat-
ing the expatriates’ likelihood to perceive PCB via
incongruence. Conversely, localized HRM poli-
cies may trigger sense-making as expatriates try
to interpret the host-company HRM practices that
differ from corporate-espoused HRM policies. This
sense-making may motivate the expatriates to
monitor local practices that are potentially unfa-
vorable to maintaining their psychological con-
tract, thus increasing the likelihood of perceiving
PCB, due to higher incongruence and vigilance.
Proposition 2c: Perceived PCB by the host company will
be more likely to the extent that HRM practices at the
host company are localized.
Perceived Supportiveness of HRM Practices in
the Host Company
Implemented HRM practices in the host company
communicate messages that expatriates interpret

486 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
Developmental
expatriates often
gain more power
in the exchange
relationship with
the parent company
due to their acquired
competencies that
make them valued
assets. Reneging
on its promises
will then be costly
to the parent firm
as turnover of this
valuable human
capital would be
detrimental to the
firm’s global strategy.
relationship (i.e., transactional or relational), level
of trust in the employer, nature of power asymme-
try in the relationship, time spent in the current
relationship, and prior history of PCB (Morrison &
Robinson, 1997). As expatriates may tolerate devi-
ations in psychological contract fulfillment inside
the zone of acceptance, expatriates whose psycho-
logical contracts have a broader zone of acceptance
(higher acceptance limit) are less likely to perceive
PCB than those with a narrow zone of acceptance
(lower acceptance limit; Schalk & Roe, 2007).
Proposition 3a: Perceived PCB by the parent company
and/or host company will be less likely to the extent
that the expatriate’s psychological contract(s) has a
broad “zone of acceptance.”
Expectations of Entitlement
Initially formed during the preassignment stage,
expatriates’ expectations about the international
assignment may often be inflated or unrealistic
relative to their role, which can lead to perceptions
of entitlement (Harvey, Buckley, Richey, Moeller,
& Novicevic, 2012). Given the complex nature of
international assignments, expatriates may feel
entitled to perks or special treatment because of the
perceived difficulty of the assignment and impor-
tance of their position (Harvey etal., 2012). As a
result of believing that the company thus depends
on them, these expatriates may feel that they have
more power in the relationship vis-à-vis the parent
company and “a perceived right to demand” (Hurst
& Good, 2009, p. 576). Hence, they may have a
lower threshold (narrow zone of acceptance) for tol-
erating PCB. Furthermore, unrealistic expectations
create incongruence because such flawed assump-
tions held by expatriates are likely to diverge from
those held by the parent company, which then
increases the likelihood of breach being perceived.
Nevertheless, expatriates who have undergone an
expectation lowering procedure or a realistic assign-
ment preview during the preassignment stage are
likely to have lower, more realistic expectations that
are aligned with those of the organization (Harvey,
Buckley, & Novicevic, 2007).
Proposition 3b: Perceived PCB by the parent company
and/or host company will be more likely to the extent
that the expatriate holds unrealistic expectations of
entitlement.
Tenure in the Parent Company and Host
Company
As the length of time that expatriates work
in the parent or the host company increases,
formal leadership development programs in the
parent company (Stahl etal., 2009). Second, they
may not always be allocated valued resources to
execute critical tasks due to generally lower com-
mitment by the parent company to position-filling
assignments (Yan etal., 2002). Third, functional
expatriates may perceive a lack of opportuni-
ties for internal career advancement if their skills
are in less need or considered to be partly obso-
lete (Stahl etal., 2009). However, developmental
expatriates often gain more power in the exchange
relationship with the parent company due to their
acquired competencies that make
them valued assets. Reneging on its
promises will then be costly to the
parent firm as turnover of this valu-
able human capital would be detri-
mental to the firm’s global strategy.
Lower reneging, in turn, decreases
the likelihood that developmental
expatriates will perceive PCB com-
pared to functional expatriates.
Proposition 2e: Perceived PCB by the
parent company will be more likely in
demand-driven than learning-driven
assignments.
Individual-Level Factors as
Contextual Antecedents of
Breach Perceptions
Threshold for Tolerance of Breach
Several authors have recognized
that individual psychological con-
tracts have thresholds or limits for
PCB (e.g., Rigotti, 2009; Rousseau,
1995). Rousseau (1995, p. 148) pro-
posed that psychological contracts
include a “zone of acceptance,”
which reflects what employees feel
is an acceptable variation or devia-
tion in the employer’s fulfillment
of obligations. It is bounded by the
“limit of acceptance” (boundary of acceptable
deviation) and the “limit of tolerance” (boundary
of unacceptable, intolerable deviation; Schalk &
Roe, 2007, p. 171). If the perceived deviation in the
employer’s fulfillment of obligations falls within
the zone of acceptance, expatriates are unlikely
to perceive breach. However, a major breach is
detected, and perhaps responded to, when the
perceived deviation passes the limit of tolerance
(Schalk & Roe, 2007). These thresholds for PCB
will vary among expatriates according to their per-
sonality (e.g., equity sensitivity), type of exchange

Human Resource Management DOI: 10.1002/hrm
A PSYCHOLOGICAL CONTRACT PERSPECTIVE OF EXPATRIATE FAILURE 487
As norms of
exchange tend to
be less important
for longer-tenured
employees than those
with shorter tenure
(who are driven by
the inducements
or rewards they
receive), the
employer may have
more leeway and
flexibility around
the fulfillment of
obligations.
less prone to detecting PCB due to their trusting
and cooperative nature (Raja etal., 2004).
Specific dynamic competencies may also
influence the development of PCB. For example,
cultural flexibility allows expatriates to accurately
interpret ambiguous situations by raising their
self-confidence and self-esteem (Mendenhall &
Oddou, 1985), which can reduce uncertainty
about psychological contract fulfillment and,
hence, decrease vigilance. Expatriates with vary-
ing degrees of task orientation or people orien-
tation may also be less likely to monitor their
exchange with the employer as task-oriented indi-
viduals tend to be preoccupied with achieving
objectives and people-oriented individuals may
provide the employer with greater
leeway for fulfilling its obligations
due to a strong desire to cultivate
high-quality work relationships
(Shaffer, Harrison, Gregersen, Black,
& Ferzandi, 2006). However, trig-
ger events or circumstances (e.g.,
organizational change) that impede
task-oriented expatriates’ progress
toward set goals and relationship-
oriented expatriates from maintain-
ing close work relationships could
increase the likelihood of PCB.
Proposition 3d: Perceived PCB by the
parent company and/or host company
is more likely to be perceived by expa-
triates who rate highly on neuroticism,
extraversion, or equity sensitivity than
those with high conscientiousness,
emotional stability, agreeableness,
cultural fl exibility, and task or people
orientations.
The Effect of Expatriate-
Perceived Psychological
Contract Breach
The beauty of the concept of PCB exists in “the
simple idea that breach has a straightforward
negative relationship with outcomes” (Conway &
Briner, 2009, p. 101). Not surprisingly, the major-
ity of studies on PCB experienced by domestic
employees examine simple, direct effects of PCB
on employee outcomes. However, less attention
is focused on elucidating the processes through
which PCB affects outcomes (Conway & Briner,
2009). Recent calls have been raised to examine
indirect paths from PCB and factors that may
strengthen or attenuate employee responses to
PCB (Orvis, Dudley, & Cortina, 2008; Raja etal.,
2004), in understanding why reported effect sizes
accumulation of firm-specific knowledge enables
the expatriates to accurately interpret mutual
obligations in the exchange with each firm,
which minimizes incongruence (Bal, De Cooman,
& Mol, 2013). They are also likely to have had
more time to engage in repeated exchanges of
intangible elements with the firm(s), building
high-quality relationships characterized by stabil-
ity, loyalty, and trust (Rousseau, 1995). As norms
of exchange tend to be less important for longer-
tenured employees than those with shorter tenure
(who are driven by the inducements or rewards
they receive; Lee, Liu, Rousseau, Hui, & Chen,
2011), the employer may have more leeway and
flexibility around the fulfillment of obligations
(Conway & Coyle-Shapiro, 2012). Furthermore,
due to assumptions of trust and good faith that
the employer will deliver on its promises in the
long run, expatriates who are veteran employees
of the parent or host company may see little need
for vigilant monitoring of psychological contract
fulfillment by the firms, which subsequently
reduces the chances of detecting PCB (Morrison
& Robinson, 1997).
Proposition 3c: Perceived PCB by the parent company
and/or host company will be less likely to the extent
that the expatriate has a long tenure in the parent com-
pany and/or host company.
General and Specifi c Individual Differences
An expatriate’s personality may strongly influence
how PCB is perceived, as the very nature of psy-
chological contracts is idiosyncratic and self-con-
structed (Raja, Johns, & Ntalianis, 2004). As certain
terms of the expatriate-employer exchange rela-
tionship can be ambiguous, expatriates with high
neuroticism may closely monitor the employer’s
delivery on its promises due to their low propen-
sity to trust, which increases their tendency to
perceive PCB (Raja etal., 2004). Those with high
extraversion or high equity sensitivity may also
be vigilant in monitoring psychological contract
fulfillment as they are outcome-oriented and
tend to seek materialistic, tangible gains (Costa &
McCrae, 1992; Miles, Hatfield, & Huseman, 1994).
Conversely, highly conscientious expatriates may
be less inclined to monitor the employer’s deliv-
ery of inducements as their cognitive efforts are
focused on task accomplishment due to their dili-
gent and self-disciplined nature (Costa & McCrae,
1992). Emotionally stable expatriates who are con-
fident, positive, and able to tolerate stress may be
less anxious about psychological contract fulfill-
ment, requiring little vigilance (Costa & McCrae,
1992). Highly agreeable expatriates could also be

488 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
are receiving something of value to maintain the
relationship. If the employer is perceived by the
expatriate as having failed to honor one or more
of its obligations (i.e., PCB), the latter reciprocates
by reducing the strength of his or her own obliga-
tions (Aselage & Eisenberger, 2003), resulting in
negative expatriate outcomes.
Affect, in line with predictions of affective
events theory, is the emotional response to the
cognition of an event or experience (Weiss &
Cropanzano, 1996). It is represented in this study
by the negative affective state of psychological
contract violation, which is well accepted as the
proximal, emotional reaction to the cognition of
PCB (Dulac, Coyle-Shapiro, Henderson, & Wayne,
2008; Raja etal., 2004).
Sense-making is triggered by the cognition and
involves an individual’s efforts to find meaning
in the accumulated knowledge. It often results in
biased judgments that subsequently influence the
intensity of the affect experienced (Morrison &
Robinson, 1997). We chose three constructs due to
their relevance for biased sense-making: perceived
organizational support (because it highlights the
quality of the relational context in which the
of PCB-outcome paths are weak to moderate at
best (Suazo, 2009).
Responding to these calls and the critical
need to understand how expatriate outcomes
are affected by PCB, given the continuing trend
toward the use of assigned expatriates and the
increasing complexity of international assign-
ments, we frame the effect of PCB as a multistage
process as illustrated in Figure 1. This process
extends Zhao etal.’s (2007) model and is outlined
by six key components of cognition, affect, sense-
making, conation, attitude, and behavior. Briefly,
we justify the inclusion of each key component
and offer logic for the choice of constructs that
will represent each component in our proposed
model.
Cognition is the knowledge or understanding of
an event or experience (Huitt, 1999), represented
in this study by the construct of PCB. The cog-
nition of PCB starts a chain of adverse employee
reactions, which is explained by social exchange
theory (Blau, 1964) and the norm of reciprocity
(Gouldner, 1960). Based on this theoretical frame-
work, both parties in the expatriate-employer
social exchange relationship must feel that they
FIGURE 1. A Model of Expatriate Failure from a Psychological Contract Perspective
SENSE-MAKING
Perceived Organizational
Support from
Parent/Host Company
Organizational Justice in
Parent/Host Company
Adequacy of
Social Accounts
by Parent/Host Company
BEHAVIOR
Expatriate
Performance
Turnover Intention
AFFECT
Psychological Contract
Violation
Toward Parent Company
Psychological Contract
Violation
Toward Host Company
CONATION
Work Engagement
ATTITUDE
Organizational
Commitment to
Parent and Host Company
Satisfaction with
the International
Assignment
Boundaryless Career
Orientation
COGNITION
Psychological Contract
Breach
By Parent Company
Psychological Contract
Breach
By Host Company
CONTEXT
Environment Level
Level of Change from
Home to Host Country
Cultural and Institutional
Distance
Nature of Industry
Organization Level
Parent and Host Company
International Experience
Strategic Importance of
Host Company to MNC
Standardization vs.
Localization of HRM
Perceived Supportiveness
of Host Company HRM
Nature of International
Assignment
Individual Level
Threshold for Tolerance
of Psychological Contract
Breach
Expectations of Entitlement
Tenure in Parent and Host
Company
General and Specific
Individual Differences

Human Resource Management DOI: 10.1002/hrm
A PSYCHOLOGICAL CONTRACT PERSPECTIVE OF EXPATRIATE FAILURE 489
As the parent
company and
host company are
dual foci of PCB,
expatriates may
focus their negative
emotions toward
the focal party they
believe is responsible
for the breach, due to
the target similarity
effect, to retain
balance in each
social exchange
relationship they hold.
and frustration to stronger emotions of anger
and resentment (Morrison & Robinson, 1997).
Conceptual and empirical research in the domes-
tic work setting clearly shows that PCB and
PCV are highly correlated, but are also theoreti-
cally and empirically distinct (Dulac etal., 2008;
Morrison & Robinson, 1997; Raja et al., 2004;
Robinson & Morrison, 2000; Zhao etal., 2007).
Expatriates may endure the negative affective
state of PCV in response to PCB as they are likely
to compare their sacrifices (e.g., family relocation,
career disruption, acceptance of lower living stan-
dards) with undelivered inducement(s) by the
employer. As the parent company and host com-
pany are dual foci of PCB, expatriates may focus
their negative emotions toward the focal party
they believe is responsible for the breach, due to
the target similarity effect (Lavelle,
Rupp, & Brockner, 2007), to retain
balance in each social exchange
relationship they hold. Mueller and
Lawler (1999) argued that employ-
ees can identify organizational “tar-
gets” for positive emotions in the
workplace and become committed
to those perceived as most respon-
sible for the positive affect. Hence,
PCB by the parent or the host will
best predict PCV toward that refer-
ent, as shown by the solid arrows
between PCB and PCV in Figure 1.
However, weaker “spillover
effects” (Lavelle et al., 2007) may
also occur, as depicted by the dashed
arrows between PCB and PCV in
Figure 1. Being an organizational
subunit that shares some attributes
(e.g., values, practices, goals) with
the parent company (Kostova &
Roth, 2002), expatriates may, to
some extent, identify the host com-
pany with the parent company and
perceive the latter as responsible
for breach committed by the host
company. This would result in the
direct influence of PCB by the host company on
PCV experienced toward the parent. Similarly, to
the extent that expatriates believe that the host
company embodies or represents the parent orga-
nization (Eisenberger etal., 2010), PCB by the par-
ent may influence PCV experienced toward the
host because the latter acts on the directions of
the parent company who is perceived to be the
perpetrator of the breach. Moreover, PCB by the
parent may contribute toward expatriates’ lev-
els of stress while working in the host company,
which can unconsciously build negative emotions
expatriate-employer relationship is placed), orga-
nizational justice (because it draws attention to
the fairness of the organization’s social context
in which the same relationship is placed), and
the adequacy of social accounts (because it alters
expatriates’ attributions of responsibility for the
perceived breach).
Conation is the specific approach an individ-
ual uses to act or behave in response to felt moti-
vation (e.g., directing, energizing, and persisting;
Huitt, 1999; Huitt & Cain, 2005). Bagozzi (1992)
believes that excluding the motivational ele-
ment of conation impedes successful prediction
of behavior. Conation is represented in this study
by work engagement as it epitomizes the manner
in which an expatriate channels physical, emo-
tional, and cognitive energy into his or her work
role (Kahn, 1992).
Attitude is an individual’s evaluation of an
entity, such as the job or the organization, which
can be positive or negative and assists the individ-
ual in deciding how to behave. Satisfaction with
the international assignment and commitment
to the organization are attitudinal constructs
with proven relevance to successful international
assignments (Birdseye & Hill, 1995; Kraimer &
Wayne, 2004; Naumann, 1993). We also incorpo-
rate career orientation (or attitude toward one’s
career) due to recent evidence of shifts in expatri-
ates’ career attitudes (as a result of organization-led
changes) that could alter work-related behavior
(McNulty etal., 2013; Pate & Scullion, 2010).
Behavior refers to an individual’s actions with
tangible impacts to the organization (Zhao etal.,
2007). We base our choice of constructs on Harzing
and Christensen (2004), who urge the use of the
well-established HRM concepts of performance
and turnover in evaluating expatriate success or
failure. However, we use turnover intention as a
proxy for actual premature turnover based on the-
oretical developments that specific intentions are
manifestations of the general behavior (Fishbein
& Ajzen, 1975), on empirical findings that turn-
over intention is the strongest precursor of actual
turnover (Tett & Meyer, 1993), and on the general
trend in the expatriate literature of using behav-
ioral intention as an indicator of assignment com-
pletion (Kraimer & Wayne, 2004).
Affect Stage: Psychological Contract
Violation with Dual Foci
Emotions are focused affective states resulting
from the cognitive appraisal of an event or experi-
ence (Cole, Bruch, & Vogel, 2006). Psychological
contract violation (PCV) is a blend of negative
emotions that stems from the cognition of PCB
and ranges from milder feelings of disappointment

490 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
procedures, and treatment from the parent com-
pany or host company are fair, they may feel that
they are valued and respected in their respective
social exchange relationships (Tyler & Lind, 1992)
and that their contributions will be reciprocated
over time (Morrison & Robinson, 1997). They
are then less likely to hold the parent or the host
company accountable for breach, when the level
of organizational justice in the focal firm is high,
which tends to weaken the relationship between
PCB and PCV.
Proposition 5b: Organizational justice in the parent
company or the host company will moderate the rela-
tionship between PCB by the parent company or the
host company and PCV toward both entities, such that
PCV will be lower following PCB when organizational
justice is high.
Social accounts are verbal strategies (justi-
fications or excuses) used intentionally by orga-
nizational agents to convince the employee that
PCB did not occur due to purposeful reneging
(Morrison & Robinson, 1997). By downplay-
ing the severity of the breach or explaining that
the organization is not at fault, social accounts
attempt to reduce blame on the organization as
a means to quell negative employee reactions
(Shapiro, 1991). Adequacy of social accounts
focuses specifically on the credibility of the content
of the explanation (Lester, Kickul, & Bergmann,
2007). If expatriates believe that the parent com-
pany or the host company has made genuine
efforts to provide, in a timely manner, accurate,
credible, and legitimate explanations for the per-
ceived breach that aid sense-making, the adequate
social account demonstrates that the organization
(and its agents) has acted with fairness and shown
respect and care for the affected expatriates (Dirks
& Ferrin, 2002), thus mitigating the impact of PCB
by the parent or the host on PCV.
Proposition 5c: Adequacy of social accounts by the par-
ent company or the host company will moderate the
relationship between PCB by the parent or host and
PCV toward both entities, such that PCV will be lower
following PCB when explanations for the breach are
credible, accurate, legitimate, timely, and helpful.
Conation Stage: Work Engagement
Harrison etal. (2004) found that there has been a
general lack of research on expatriates’ work moti-
vation. How one is able to translate work motiva-
tion into behavior to achieve set goals is captured
through the concept of work engagement (Huitt,
1999). Kahn (1992) defined work engagement as
toward the host in which they are located when
the breach is perceived.
Proposition 4: Perceived PCB by either the parent com-
pany or the host company will have a positive infl uence
on PCV toward both the parent and the host company.
Sense-Making Stage: Organizational
Support, Organizational Justice, and Social
Account Adequacy
Perceived organizational support (POS) refers to
an individual’s beliefs about the extent of the
employer’s care and concern toward his or her
well-being, which is inferred from company poli-
cies, practices, and treatment (Eisenberger etal.,
1986). A high level of POS is symbolic of a high-
quality employee-employer social exchange rela-
tionship, which induces a positive bias in the
employee’s evaluation of the extent to which
his or her psychological contract has been ful-
filled (Dulac etal., 2008). Having generally been
employed for some time in the parent company,
expatriates are likely to view their exchange rela-
tionship with the parent company as being of
high quality and are, thus, less likely to experi-
ence PCV because they may give the employer
the benefit of the doubt and view PCB as tempo-
rary or minor (Tekleab, Takeuchi, & Taylor, 2005).
Support from the parent could also atone for PCB
by the host company and reduce the intensity of
PCV directed toward both firms. Alternatively, as
support provided by the host is, at times, more
critical to the expatriate (Kraimer & Wayne, 2004;
Liu & Ipe, 2010), host-company support may go a
long way in redeeming PCB by the host company
as well as in downplaying PCB by the parent, thus
lowering negative feelings of PCV.
Proposition 5a: POS from the parent company and the
host company will each moderate the relationships
between PCB by and PCV toward both entities, such
that PCV will be lower following PCB when POS is
high.
Organizational justice is conceptualized as
an employee’s judgments about the fairness of
outcomes (distributive justice; Adams, 1965), of
procedures used to determine outcomes (pro-
cedural justice; Thibaut & Walker, 1975), and of
interpersonal treatment in the organization’s
delivery of procedures (interactional justice; Bies
& Moag, 1986). Expatriates use their beliefs about
organizational justice in the parent company
and the host company as an important heuristic
in making attributions about the fairness of the
two entities. If expatriates believe that outcomes,

Human Resource Management DOI: 10.1002/hrm
A PSYCHOLOGICAL CONTRACT PERSPECTIVE OF EXPATRIATE FAILURE 491
Satisfaction with
the international
assignment, although
an important
determinant
of expatriate
effectiveness, has
received limited
attention in the
literature, and its
conceptualization
has been somewhat
inconsistent.
the host could slightly lower commitment to
the parent company, as negative feelings condi-
tioned to the host company, who is perceived to
be a representative of the parent company, might
generalize to the overall organization, resulting in
reduced commitment to the parent.
Proposition 7: PCV directed toward the parent company
and/or the host company will have a negative infl uence
on organizational commitment to both entities.
Satisfaction with the international assign-
ment, although an important determinant of
expatriate effectiveness (Birdseye & Hill, 1995),
has received limited attention in the literature
(Froese & Peltokorpi, 2011), and its conceptual-
ization has been somewhat incon-
sistent. A common measure of
expatriate satisfaction includes
satisfaction with the job and with
living in the foreign country (e.g.,
Dunbar, 1992; Li & Tse, 1998).
However, a more comprehensive
approach would be to view expatri-
ates’ satisfaction toward the inter-
national assignment experience in
its entirety (Yavas & Bodur, 1999).
Recently, overall satisfaction with
the international assignment was
defined by Pinto, Cabral-Cardoso,
and Werther (2012, p. 190) as “a
general positive attitude towards
the assignment including overall
satisfaction with the assignment,
acceptance of the same assignment
again, recommendation to others,
and correspondence with expec-
tations.” Overall satisfaction with
the international assignment may
decrease if unfulfilled promises by
the parent company or the host
company deprive expatriates of important and
desired outcomes, causing feelings of anger and
resentment given the sacrifices made and risks
assumed when undertaking challenging interna-
tional assignments. Past research has shown that
both positive and negative affective experiences at
work spill over onto job satisfaction (e.g., Fisher,
2002; Judge & Ilies, 2004). Thus, PCV toward the
parent or the host will be an important mecha-
nism through which PCB reshapes overall satis-
faction with the international assignment.
Proposition 8: PCV directed toward the parent com-
pany and/or the host company will have a negative
infl uence on general satisfaction with the international
assignment experience.
employing oneself whole-heartedly in the work
role and channeling personal energy into perform-
ing this role, for which three conditions need to
exist: psychological meaningfulness (exists when
there are incentives for investing one’s energies),
psychological safety (exists when work relation-
ships are felt to be secure, predictable, and consis-
tent), and psychological availability (exists when
emotional and cognitive resources are available
to invest in the work role). However, these cog-
nitive preconditions may not be attained when
expatriates experience PCV toward the parent
company or host company. The intense nega-
tive affect experienced may drain the expatriates
of their emotional and cognitive resources and
discourage them from investing any remaining
personal energy into the work role, thus inhibit-
ing the conditions of psychological availability
and meaningfulness, respectively. The exchange
relationship will also seem less secure, consistent,
and trustworthy as the expatriates lose confidence
in the organization’s future reciprocation of their
current contributions, suppressing the condition
of psychological safety. Based on this theorizing,
it is predicted that:
Proposition 6: PCV directed toward the parent com-
pany and/or the host company will have a negative
infl uence on the expatriate’s level of work engagement.
Attitude Stage: Organizational
Commitment, Satisfaction, and Career
Orientation
One of the more frequently researched expatriate
attitudes is affective organizational commitment
(Kraimer & Wayne, 2004), a valued expatriate con-
tribution that is exchanged for inducements by the
employer (Rousseau, 1995). According to affective
events theory (Weiss & Cropanzano, 1996), work
attitudes are influenced by cumulated emotions
from cognitive appraisals of work events. Thus, the
negative affect of PCV, which may be elicited by
the cognitive perception of PCB, is likely to lower
expatriates’ organizational commitment (Dulac
etal., 2008; Raja etal., 2004). However, expatriate
PCV and commitment have distinct dual foci—
the parent company and the host unit (Gregersen
& Black, 1992). Thus, following the predictions of
the target similarity model (Lavelle etal., 2007),
PCV will decrease commitment to the focal party
that is perceived as responsible for eliciting the
negative affect. Nevertheless, PCV toward the par-
ent company may also weakly spill over to influ-
ence commitment to the host company because
the latter is an agent of the parent company who
acts on the parent’s behalf. Similarly, PCV toward

492 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
While scholars
agree that expatriate
performance is a
critical element in
the success of firms’
global strategies, only
few have actually
assessed expatriate
job performance.
parent company and the host subsidiary as well
as between subsidiaries (Riusala & Suutari, 2004).
The second key element in international
assignment success or failure is voluntary, pre-
mature expatriate turnover, which is costly to the
organization as expatriates are familiar with the
routines of the parent company and of overseas
units and transfer valued knowledge or technology
between them. Several turnover-related decision
outcomes were proposed by Takeuchi, Marinova,
Lepak, and Liu (2005), such as intentions to leave
the parent company to find a job at home or in
the host country, return prematurely to the parent
company, or request a transfer to another foreign
subsidiary. Turnover intention appears to be a
strong antecedent of actual turnover and scholars
advise that intentions may reveal more interest-
ing findings than actual turnover as many expa-
triates may wish to quit but do not act on these
intentions to avoid negative career repercussions
(Shaffer & Harrison, 1998).
In this article, we forgo the discussion of paths
from conation and attitude to behavior indicated
in our model, because the effects of work engage-
ment, organizational commitment, and job sat-
isfaction on performance and turnover intention
in both the domestic and international work set-
tings are well-documented (e.g., Bhaskar-Shrinivas
et al., 2005; Downes, Thomas, & McLarney,
2000; Kraimer & Wayne, 2004; Meyer, Stanley,
Herscovitch, & Topolnytsky, 2002; Rich, LePine, &
Crawford, 2010; Shaffer & Harrison, 1998). Recent
studies also show that boundaryless career orienta-
tion is related to turnover intention and job per-
formance (e.g., Briscoe & Finkelstein, 2009; Cerdin
& Le Pargneux, 2009). Hence, we do not develop
specific propositions for this part of the model.
Rather, we focus on developing the logic
underlying the reversed relationship or feedback
loop from expatriates’ behavior to their percep-
tions of PCB. Most prior studies, being cross-sec-
tional, focus exclusively on the effects of perceived
employer breach on employee behavior and
ignore employee behavior or contributions as an
input into the ongoing employee-employer social
exchange relationship (Conway & Coyle-Shapiro,
2012). The underlying process of social exchange
relationships relies on the norm of reciprocity
(Gouldner, 1960), whereby parties to the exchange
discharge their obligation to reciprocate benefits
received by providing more benefits in return and
so on, forming a cycle of repeated interactions
(Blau, 1964). If an expatriate is perceived by the
parent or the host company to have inadequately
fulfilled his or her own obligations in the respec-
tive social exchange relationship, by performing
less effectively than expected, the parent or the
Career orientations have been traditionally
characterized by employment security and vertical
advancement within the organization. However,
organizational-led changes, such as replacing
expatriates with local hires to reduce costs, have
forced expatriates to place less emphasis on job
security and assume more responsibility for their
careers (Pate & Scullion, 2010). As a result, con-
temporary career orientations are said to be more
“boundaryless.” The boundaryless career can be
described as “a sequence of job opportunities that
go beyond the boundaries of a single employ-
ment setting” (DeFillippi & Arthur, 1996, p. 116).
Expatriates oriented toward this type of career
will seek to move across multiple employment
settings, which has serious negative implications
for assignment success and long-term talent reten-
tion of these higher-level managerial personnel.
McNulty etal. (2013) found that expatriates may
experience a shift toward a bound-
aryless career orientation after hav-
ing experienced PCB. While not all
expatriates who perceive PCB will
develop this career attitude, those
who experience the strong, nega-
tive affect of PCV are more likely to
be “pushed” toward a boundaryless
career orientation (McNulty et al.,
2013; Pate & Scullion, 2010).
Proposition 9: PCV directed toward the
parent company and the host company
will have a positive infl uence on the
development of a boundaryless career
orientation.
Behavior Stage: Performance and Turnover
Intention and Implications for Breach
While scholars agree that expatriate performance
is a critical element in the success of firms’ global
strategies, only few have actually assessed expatri-
ate job performance (Mol, Born, & van der Molen,
2005). To date, the popular conceptualization of
expatriate job performance remains the empiri-
cally validated construct by Caligiuri (1997) with
technical, contextual, and expatriate-specific per-
formance dimensions. However, some scholars
have expressed concern over the third dimension
as it captures items that are of a general, mana-
gerial nature and are antecedents of performance
rather than elements of performance (e.g., “lan-
guage and culture proficiency”; Lee & Donohue,
2012). In place of this dimension, it may be more
useful and relevant to look at activities that are
specifically undertaken by expatriates, such as the
transfer and sharing of knowledge between the

Human Resource Management DOI: 10.1002/hrm
A PSYCHOLOGICAL CONTRACT PERSPECTIVE OF EXPATRIATE FAILURE 493
The limited number
of studies in this
area have focused
on the nature of
the exchange
relationship between
the expatriate
and the assigning
organization only, and
our article shows that
deeper scrutiny of the
foci of expatriates’
psychological
contracts is
warranted.
discussion, we encourage researchers to separate
organizational referents when assessing PCB and
PCV as employees may condition their negative
emotional, attitudinal, and behavioral responses
toward the target perceived to be responsible for
PCB.
The conceptual model presented in this article
paves the way for future studies to demonstrate
validity of the paths between constructs. A mixed-
methods study that involves in-depth interviews
followed by a longitudinal survey can be under-
taken to investigate and refine the proposed model.
Most of the constructs in the model have existing
measures. For example, Robinson and Morrison’s
(2000) measures of PCB and PCV should each be
assessed twice with the parent com-
pany and the host company as dis-
tinct referents. Researchers could
also apply the dual-foci perspective
across Eisenberger et al.’s (1986)
scale of perceived organizational
support, Colquitt’s (2001) scale of
organizational justice, Lester etal.’s
(2007) scale of the adequacy of social
accounts, and Meyer, Allen, and
Smith’s (1993) scale of organizational
commitment. Work engagement,
boundaryless career orientation, and
satisfaction with the international
assignment can be measured using
the scales developed by Schaufeli
and Bakker (2003); Briscoe, Hall,
and Frautschy DeMuth (2006); and
Pinto et al. (2012), respectively. An
improved scale of expatriate job per-
formance that accurately captures
expatriates’ multiple responsibilities
may, however, need to be developed
through interviews with parties
involved in performance evaluation
to identify specific tasks completed
by expatriates.
We also encourage researchers
to adopt multilevel research designs to investigate
the influence of the proposed environmental-
level and organizational-level antecedents of PCB.
Some variables like expatriates’ tenure, industry,
and company experience can be easily measured
objectively. Other variables can be assessed using
existing measures, but will need to be adapted to
fit the host-company setting, such as Allen etal.’s
(2003) measure for perceived supportiveness of
the host company’s HRM practices. Assessing cer-
tain concepts like individuals’ thresholds for PCB
and expectations of entitlement are less clear and
may need to be developed based on the literature
or through a qualitative research study.
host company may then withdraw or reduce the
strength of its own obligations. Thus, undesirable
behavior on the part of the expatriate (e.g., poor
job performance) may increase his or her percep-
tions of employer breach over time.
Proposition 10: Lower levels of desirable expatriate
behavior will have a positive infl uence on subsequent
expatriate perceptions of PCB by the parent company
and/or host company.
Contributions and Directions for Future
Research
Given the high financial investment into inter-
national assignments, companies are actively
seeking to make better use of their expatriates’
experiences and mitigate the inevitable losses
from their underperformance and turnover.
The aim of our article was to articulate a model
of expatriate failure from a PCB perspective. We
advanced the idea that expatriates hold psycho-
logical contracts with dual foci as they simultane-
ously meet their commitments to both the parent
company and the host company. This idea led
to the conceptualization of the construct of PCB
with dual foci, forming the basis for our proposed
model of contextual antecedents and work-related
consequences of PCB. In examining antecedents,
we offered insights into key features of an expa-
triate’s context at the environment, organization,
and individual levels that are made salient by the
uncertain and dynamic nature of international
assignments. These contextual features create the
setting for PCB through their varying effects on
incongruence, reneging, or vigilance (Morrison &
Robinson, 1997). We finally provided a theoreti-
cal process of expatriates’ reactions to dual PCB to
demonstrate how expatriate success on interna-
tional assignments can be precluded by this nega-
tive work cognition.
We believe that this article contributes to
the international HRM literature by drawing on
research in organizational behavior to provide new
insight into the underpinning nature of the expa-
triate psychological contract. The limited number
of studies in this area have focused on the nature
of the exchange relationship between the expatri-
ate and the assigning organization only, and our
article shows that deeper scrutiny of the foci of
expatriates’ psychological contracts is warranted.
Likewise, we extend the extant body of research on
psychological contracts by grounding our inquiry
of PCB in the international assignment context,
which enabled us to take a dual-foci perspective
across the constructs of PCB and PCV. Given that
research on multifoci PCB has so far received little

494 HUMAN RESOURCE MANAGEMENT, MAY –JUNE 2017
Human Resource Management DOI: 10.1002/hrm
explored as the strength of expatriates’ ties to their
job can buffer the detrimental effects of PCB on
turnover intention (Cerdin & Le Pargneux, 2009;
Mitchell, Holtom, Lee, Sablynski, & Erez, 2001).
Furthermore, the impact of PCB on expatriates’
job performance may be mitigated by the amount
of pride they take in their job, the joy they experi-
ence in their work, or their perceived sense of pro-
fessionalism. Therefore, our model may provide
an important starting point for developing more
sophisticated models.
On the practical side, this article stresses the
importance for global organizations to manage
not only the expatriate’s psychological contract
with the parent but also ensure that the host
units are adequately fulfilling their obligations to
the expatriate. This can be achieved by standard-
izing and aligning the host company’s expatriate
management system with that of the company’s
global standard and maintaining communication
links to reach out to expatriates who are striving
to make sense of the exchange terms in their dual
psychological contracts. Before an international
assignment, organizations need to provide their
expatriates with realistic expectations about the
obligations of the parent company and the host
company to minimize incongruence in the inter-
pretations of the exchange terms among the three
parties. If expatriates do perceive breach by the
parent company or host company, organizational
agents from both entities should join to act as
“sense givers” (Parzefall & Coyle-Shapiro, 2011).
For example, affected expatriates may interpret
the breach in a more positive light if representa-
tives from both sides provide accurate, credible,
and consistent explanations for the organiza-
tional action perceived to have caused the breach.
In conclusion, we believe our proposed model
provides an important base from which new
avenues for expatriate success on international
assignments can be explored.
While we discuss several important contex-
tual antecedents of PCB, it is beyond our scope to
discuss all that are relevant to the international
assignment setting. Furthermore, due to space
constraints, we have not explained how different
contextual variables within or across levels will
interact with each other in predicting the develop-
ment of PCB. This is likely to be an important area
for future research as the host of possible combina-
tions and interactions will offer valuable insights
into the influence of context on expatriate-
perceived PCB. First, researchers can investigate
additional organizational-level predictors such as
communication quality in the parent company
or the host company (Smidts, Pruyn, & van Riel,
2001) as PCB will be less likely to the extent that
clear and continuous two-way communication
among the parties in the exchange relationships
reduces incongruence in their understanding and
interpretation of the exchange terms. Another
important antecedent would be misalignment
in the dual psychological contracts with the par-
ent and the host, which increases the ambiguity
of the contracts’ terms, as certain terms between
them may conflict due to differing performance
expectations, demands, and conflicts of interest
between the parent and the host unit (McLean
Parks etal., 1998). Alternatively, researchers could
explore another level of context, such as the job
or work role level. For instance, the more role
discretion that expatriates have, the more com-
mitted they may become to the organization, due
to their freedom to make task-related decisions
(Gregersen & Black, 1992), which may reduce the
potential for perceived breach.
Second, researchers can examine additional
moderators of the relationship between PCB and
expatriate outcomes. For instance, prior research
has shown that personality traits like equity sensi-
tivity can intensify the emotional reaction of PCV
(Raja etal., 2004). Job embeddedness may also be
HASULI KUMARIKA PERERA is a doctoral candidate of management in the School of Busi-
ness at Monash University Malaysia. Her research interests include international human
resource management and organizational behavior, with a primary focus on psychological
contracts and the management of expatriates.
ELAINE YIN TENG CHEW is a senior lecturer in the Department of Management of the School
of Business at Monash University Malaysia. She holds a doctorate from Nagoya University
in Japan and was a Visiting Research Fellow at the Tokyo University of Science, Japan. Her
research interests include strategic human resource management, organizational behavior,
international management, and tourism.

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