Role of Communication in Developing Psychological Contract Breach: Mediating Role of Power Distance

Abstract

The communication plays very important role across organizations. Similarly, the psychological contract exists all the time within the organization. This article explains the role of communication in minimizing the psychological contract breach (PCB) mediated by power distance. The organizations are required effective communication in order to create a strong bond between the organization and the employees. The PCB not only has harmful impact on employees but also negatively affect the performance of the organization. This research suggests the impact of communication on PCB if the communication is strong there are more chances of low PCB but if communication is not strong the chances of high PCB within the organization is observed. The research also examines the communication mediated by high and low PD and suggests its impact on the PCB. The research suggest within the organization if communication is strong its leads toward the lower PCB among the employees and when the communication is mediated by lower power distance it will leads toward the lower PCB vis-a-vis.

Full text

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Journal of Economics and Behavioral Studies (ISSN: 2220-6140)
Vol. 8, No. 3, pp. 6-13, June 2016
Role of Communication in Developing Psychological Contract Breach: Mediating Role of Power
Distance
Marvi Mallah, Sumaiya Syed, Salman Bashir Memon
Shah Abdul Latif University, Khairpur Mirs, Pakistan
ssm_syed@yahoo.com
Abstract: The communication plays very important role across organizations. Similarly, the psychological
contract exists all the time within the organization. This article explains the role of communication in
minimizing the psychological contract breach (PCB) mediated by power distance. The organizations are
required effective communication in order to create a strong bond between the organization and the
employees. The PCB not only has harmful impact on employees but also negatively affect the performance of
the organization. This research suggests the impact of communication on PCB if the communicatio n is strong
there are more chances of low PCB but if communication is not strong the chances of high PCB within the
organization is observed. The research also examines the communication mediated by high and low PD and
suggests its impact on the PCB. The research suggest within the organization if communication is strong its
leads toward the lower PCB among the employees and when the communication is mediated by lower power
distance it will leads toward the lower PCB vis-a-vis.
Keywords: Communication, Psychological Contract Breach (PCB) and Power Distance (PD), Pakistan
1. Introduction
The concept of psychological contract with its focuses on exchange promises and obligations is increasingly
used to understand employment relationship .Psychological contract PC refers to beliefs that people hold
regarding promises that others make with them (Guest, 1998). In organizations, these contracts include
employers’ and employees’ expectations to each other (Bambacas & Patrickson, 2008). PCB refers to the
employee’s perception of the extent to which the employer has failed to fulfill any or all of the obligations
owed to the employee (Morrison & Robinson, 1997). More specifically, PCB is the “cognition that one’s
organization has failed to meet one or more obligations within one’s psychological contract in a manner
commensurate with one’s contributions” (Morrison & Robinson, 1997, p.230). The communication plays an
important role in developing the PC in the internal promotion of employees as it is an important factor that
elicits the employee beliefs, feelings, perceptions (Bambacas & Patrickson, 2008) and eventually determines
the value addition of their service-providing motivation to the entity; this almost in turns arise as human
capital(Thomson & Hecker, 2001).
The communication literature categorizes communication’ into two broader categories: i) formal and ii)
informal (Bambacas & Patrickson, 2008). In case of formal communication, there is established set of rules
through which information discriminates vertically and horizontally. However, in case of an informal
communication, the information flows along the informal network of communication. During
the hiring process, the employer and interviewee communicate what they can offer in the prospective
relationship (Hiltrop, 1996). After the appointment they also communicate in order to assign responsibilities.
Instead, during their work in the offices, people communicate in daily activities. The effective communication
skills (Bambacas & Patrickson, 2008) strengthen interaction arena in an organization among working
employees. Some studies also determine that power distance helps in effective communication and
maintaining the PC development (Guest, 2004). Power distance refers to the degree to which less powerful
members of a society expect and accept the unequal distribution of power (Hofstede & Bond, 1984). Hofstede
Dimensions of Culture Pakistan is high power distance (Latif, 2015) with the score of 55, this might influence
on exchange process of employment relationship. Despite this, past research on psychological contracts has
focused on certain core areas of the exchange relationship, and has neglected a diverse range of other
possible aspects of communication. More specifically the research in Pakistan is dearth in the literature in
context of psychological contract breach, communication and power distance

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2. Communication and Its Significance
Generally, communication is a process of sharing information, ideas and messages with colleagues and
natives working or living around in a specific place (Dessler, 2013). It includes inscription and conversation,
as well as, non-verbal contact (e.g. facial expressions, body language, and gestures), visual contact (the usage
of images, such as paintings, photography, or videos), and electronic contact i-e. Telephonic, e-mail, or
satellite broadcasting (Dessler, 2013). It is a most important part of individual lives that holds a multiple role
and impact in the business practices, education, and any other state of affairs where inhabitants encounter
each other and develop PC (Hiltrop, 1996). Communication is most vital and fundamental element in the
management process (Hiltrop, 1996), as it is based on working with people; it is a reflective strategy in
business as blood stream of administrative organization or management heart. Thomson & Hecker (2001)
stated this as an ‘internal branding’ for an entity. It has deeply gotten undeniable position in modern-day
organizational setting. Communication is the exchange of information and transmission of meaning and that
is very essence of an organization (Khan, 2008-2009).
The communication forms of cognition are different within the organization, like initial entry, day to day
work and more future oriented top down communication (Guzzo & Noonan, 1994). Most of the
organizations, in Pakistan are information centric thus the key of this research would incline the formal and
vertical (top-to-down or down-to-top) communication as it more of the value to focus on task and role related
communication to ensure the outcomes of research study and signify the relationship of each dimension that
may consider innumerable skills at the same time (Bambacas & Patrickson, 2008). Besides this, some of the
studies suggest that if different forms of communication are used effectively within the organization it will
have obvious results in promoting the values (Clutterbuck, 2005), of psychological contract that will ultimate
trigger he employment force to job commitment and job satisfaction (Bambacas & Patrickson, 2008), and will
less frequently used to breach of PC (Gust, Conway, 2002; Gust, 2004).
Psychological Contract: Psychological contract is a set of ‘promises’ or ‘expectations’ that are exchanged in
between two parties (Guest, 2004). These parties include employers, employees and their work colleagues. It
is the trust (Guest, 2004), that two parties hold for each other to fulfill the promises as it forms a basis of
commitments (Jacobs, 2006) within the organization. In modern practices, PC is defined in between the two
nodes i.e. the link to provide discrete function ideology of giving and taking in relation to commitments
(Sparrow & Cooper, 2003). It also includes the simple definition of Herriot as the perception of two for what
their shared requirements are to each other. A PC is a shared agreement of responsibility in support to
specified terms and conditions (Guest, 2004). In other words, PC is a parameter of employment relations
(Coyle-Shapiro & Conwey, 2006) of promises and commitments must have a clearer sense of communicating
the obligations of both parties (Guest & Conway, 2002). PC can also be described as a’ transactional contracts’
and ‘relational contracts’. The transactional PC is economic based in which employees expect that the
organization will fairly compensate their performance delivered and punish inadequate or inappropriate acts.
However, the relational PC is a socio-emotional based in which expectations of shared ideals, values, and
respect (Clutterbuck, 2005) thereby support in the interpersonal relationships (David & Thomas, 2003).
Maintaining the PC is an important part of positive employee relation. PC requires interaction and
communication (Clutterbuck, 2005) between the two parties. Over time, a climate of trust is developed if
both parties are continuously fair in their actions, keep their explicit and implicit promises, and maintain
commitment. It is, especially important for management to be consistently fair and communicate what so
ever is perceived time by time.
Relationship between Effective Communication and Psychological Contract Breach: Organizations are
concerned to communication (Guzzo & Noonan, 1994) in numerous exceptional ways. Some builds and put in
contact tools such as, e-mail, fax, personal computers, and telephones; others create some of the
communication or content that those technologies transmit, such as orientation movies, manuals, handbooks
and learning software, even they can be a part of media or telecommunications. People in organizations
require communicating to coordinate their work and its outcomes (Bambacas & Patrickson, 2008); and to
inform to outer surface of the entity about their company products and corporate services (these kinds of
communication are called advertising or public relations). PC is having highest relationship with
communication (Jacobs, 2006) channel; as communication improves (Bambacas & Patrickson, 2008) the

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climate of trust by ensuring the interaction of organizational forthcomings to the employees, business
partners, customers, its stakes and management (Clutterbuck, 2005).
This literature of psychological contract has draws the attention to three areas of communication. Robinson
and Morrison (2000) highlight the importance of communicating the psychological contract during the
process of recruitment, while Herriot and Pemberton (1997), and emphasize the importance of ongoing
interaction between the employer and the employee in relation to the job and to personal issues such as
workload, development, and work-life balance and career prospects. More broadly, Turnley and Feldman
(1999) highlight the importance of formal top-down communications, such as mission statements for the
psychological contract. All these studies are suggesting that effective organizational communication will lead
to a more explicit and potentially more effective psychological contract that might reduce the Psychological
contract breach. Most employee studies (e g Turnley and Feldman, 1999; Robinson and Morrison, 2000) lend
support to psychological contract violation and psychological contract breach is major explanatory variable
for attitudes and behavior. There have, however, been very few studies that have considered antecedents to
such contracts. (Wanous et al., 1992) has highlighted the importance of clear communication Furthermore, as
Morrison and Robinson (1997) highlight, lack of communication is likely to lead to incongruence between
employer and employee perception of obligations is one of the causes of contract breach. In this context, PC
breach (Bhargava, 2013) occurs when employees perceive their employer fails to fulfill the promises and
obligation and when these promises and commitments are fulfilled by the employer (Guest, 2004) is more
likely to stay with the organization and commitment will also increase. Violation of the PC results in the
changing behavioral responses of the employees. These behavioral responses are categorizes as exit, voice,
loyalty (Hiltrop, 1996) and neglect. Thus, we come to know about the two hypotheses: in relation-1 (R1) as:
H1: Effective communication would lead to lower PCB
H2: Ineffective communication would lead to higher PCB
Power Distance: The influence of culture differences in employment relationship is very important but
neglecting area, according to Hofstede & Bond 1984 power distance is one the cultural dimension. Power
distance (PD) is a term that describes how people view power relationships as superior-subordinate
relationships. PD also remained part of the cultural dimensions theory (Hofstede, 1973-78, p-23) and can be
defined as;“representation of extent to which the less powerful individual members of institutions agree to
and look forward to an unequal sharing of power; his other study dimensions include individualism,
masculinity, uncertainty avoidance index, long-term orientation”. PD can be classified into two categories
such as, high PD and low PD. The employees residing in the horizons of high PD will reflect more real life and
believe to be having the specific place in organizational power hierarchy. The power distribution in high PD
organizations is unequal and people in such type of organizations easily accept the modes of autocratic and
paternalism leadership. They feel dependence in decision making (Hiltrop, 1996) and are worried of
management involvement; while employees in Low PD expect for power role and holds the strong nodes of
democratic and consultative leadership (Bambacas & Patrickson, 2008) in their organization, they feel
independence in decision making and are not worried of management involvement. The in low power
distance there is egalitarian relationship between the superior and subordinate. Dutch organizations are very
famous for the low power distance organization. Where manager does not make decisions but they make
teams and lead them. On the contrary the USA has mild power distance as we would not expect to see our
President waiting at an ATM machine on the side of the road. Where as in India culture prefer high power
distance organization. In high power distance manager will decide and subordinate will follow (Moore, 2006).
With a score of 55 on power distance, Pakistan can be considered a hierarchical society. This means that
people accept a hierarchical order in which everybody has a place and which needs no further justification.
Effective Communication and PCB Outcomes: Power Distance as a Mediator: In communication modes,
the mediating role of PD is a determinant to successful organizational setting, cultural manifestations (Jacobs,
2006) and PC development. At the organizational point, statement about relationship of PD not only reflect
the wider scope of organizational culture (Hiltrop, 1996), but it also differentiated the way through which it
can be used and implemented within organizational setting. There are following reasons that indicate that
why Power Distance may cause lack of Communication between subordinates and superiors: 1)
Communication apprehension - ‘Communication apprehension in an individual level of fear or anxiety
associated with either real or anticipated communication with another person or persons. 2) Unwillingness
to communicate - ‘Unwillingness to communicate is a predisposition representing a chronic tendency to avoid

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and/or devalue oral communication.3) Dependency - ‘In countries in which employees are not seen as very
afraid and bosses as not often autocratic or paternalistic, employees express a preference for a consultative
style of decisions making: a boss who, as the questionnaire expressed, “usually consults with subordinates
before reaching a decision. Individuals thus need to be communicated time by time and across a distance in
the organizational setting that what type of behavior they might display at work, how they may communicate
and perceive the betterment of organization and self. More specifically, organizational goal setting (Bambacas
& Patrickson, 2008) is highly critical and subject to outcome differentiation based on what so ever is being
communicated to individuals in high or low PD orientation. Thus, we come to know about the two hypotheses
relation-2 (R2) as:
H3: Higher PD with effective communication would lead to Higher PCB
H3: Lower PD with Effective communication would lead to Lower PCB
Figure 1: Research Framework
3. Methodology
The research is an inclusive study of literature that tries to find the relationship, significance and outcome for
the considered variables.
Data Collection Sources: The research uses both primary and secondary sources of data; primary data
includes questionnaire for the three variables consisting of effective communication, PC and PD which can be
measured by using five point Likert scale; whereas secondary data includes reviewing the diverse periodicals
publication of the articles and related book chapters.
Data Sampling: The total number of respondents was 207 and data was collected from community colleges.
Data Analysis Techniques: In case of this study, the researcher employed quantitative data analysis
technique. The primary and secondary data sources were used for data collection.
Primary Data: Questionnaire was designed which consisted of four demographics and forty research
variables. Questions were based on five point scale:
1 Not Included 2 Poor 3 Fair
4 Good 5 Excellent
Secondary Data: Relevant and published research papers and research reports were used for quoting the
work related to our data.
Hypothesis:
H1: Effective communication would lead to lower PCB.
H2: Ineffective communication would lead to higher PCB.
H3: Higher PD with effective communication would lead to Higher PCB.
H3: Lower PD with Effective communication would lead to Lower PCB.
Diagnostic Tests
EC = α + LPCB β1 + HPCB β2+ LPD β3 + HPDβ4 + µ
EFFECTIVE
COMMUNICATION
No Mediator
Mediator
POWER DISTANCE (PD)
R1
R2
PSYCHOLOGICAL
CONTRACT
BREACH
(PCB)

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4. Results
The result of the diagnostic test suggested independent variable EC is positively associated with the LPCB and
LPD, which means if communication within the organization is strong it will lead toward low psychological
contract breach and power distance between the higher authority and subordinates is lower they frequently
communicate their problems and give suggestion. As discussed, PC and communication have very strong
relationship; communication improves the trust among the employees toward the organization which lead
toward committed, motivated workforce. It is proved that once the chain of communication is broken it is
hard to repair again the same status in the mind of employees.
By looking at the above table of reliability statistics, the value of cronbach’s alpha .961 of effective
communication shows the internal consistency of the scale. The Bambacas and Patrickson 2008 scale used in
this analysis that consists of 18 items. The value indicates the good correlation among the items used in the
scale. The good value of cronbach’s alpha shows the scale is free from error term. Now look at the value of
cronbach’s alpha for psychological contract breach .947 which is good enough to predict the reliability of
scale of (Robinson, 1996), (Robinson, 1997) and (Robinson & Morrison, 2000) used in the questionnaire. The
scale comprises of 12 items. The value of cronbach’s alpha for power distance .939 shows the good
correlation among items used in the scale of (Bochner & Hesketh, 1994) & (Cynthia Lee1, 2000). The total
numbers of items used in this scale are 10.
F1: Participative Communication
F2: Formal Communication
F3: Value Communication
Factor analysis has been done on each scale separately. The Eigen value of the software identifies the other
factors in different scales. Researcher identified effective communication as a single factor while software
perceives other three factors lying in the scale of effective communication these are named as participative
communication, formal communication and value communication.
Table1: Reliability Statistics
S.N
Factors
Cronbach's Alpha
No of items
1
EC
.961
18
2
PCB
.947
12
3
PD
.939
10
Table2: Effective Communication - Rotated Component Matrix
Questions
F1
F2
F3
Clarity of ideas and facts communicated to you in written
0.91
Effective implementation of creative organizational vision and values
0.74
Frequent communication in between you’re your higher bosses
0.59
Roles, rights, and responsibilities are properly communicated to employees
0.77
You find it respectable and confident for organizational consideration to you
0.88
Management is good at identifying the problems by itself (resolving conflicts)
0.65
Management keep you informed and up-to-date
0.53
Demonstration of well-organized and timely approachable goals
0.66
Direction and goals are communicated to all employees regardless of position
0.625
You find an empathetic (kind) work environment (empowerment)
0.50
Your supervisor listens you properly
0.59
Virtual communication tools are used in between you and organization
0.89
Communication of job-related issues to employees that affect them
0.91
Information sharing is promoted at all levels of organization
0.63
You are always informed about meetings and sessions
0.60
Word of mouth communication is optimistic at all
0.50
You find here being proactive and taking initiatives
0.66
Very good backup for emergency based communication to seniors
0.91

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Whereas; in the case of factor analysis of PCB scale, researcher consider it as one factor and software also
identify this as a single factor. In the factor analysis of the power distance, researcher considers it a single
factor and software perceive the two factors contribute to PD named low power distance and high power
distance.
The value of adjusted R2 calculated as .993 which is too good to predict the dependent variable by keeping in
view the position of adjusted R2 all the three independent variables namely participative communication,
formal communication and value communication has significant contribution on the dependent variable. As,
the significant value is .000 in the ANOVA table shows the overall fitness of the model.
Table 5: Standardized and Unstandardized Coefficientsa
Model
Unstandardized
Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
.000
.006
.000
1.000
Participative
Communication
.661
.017
.661
39.421
.000
Formal Communication
.638
.026
.638
24.827
.000
Value Communication
.655
.013
.655
48.858
.000
Low Power Distance
-.081
.028
-.081
-2.882
.004
High Power Distance
-.122
.018
-.122
-6.965
.000
a. Dependent Variable: Psychological Contract Breach
Participative communication, formal communication, value communication, low power distance and high
power distance are positively and significantly related to psychological contract breach.
5. Discussion
The effective communication and its role in the organization for developing the psychological contract were
found positive and significant in the community colleges. The research findings greatly support the argument
of (Jacobs, 2006), that PC has highest relation with the communication. A good communication leads toward
the LPCB which creates the trust and commitment in the mind of the employee about their organization. The
H1 and H2 prove to be true after analysis. Empirically, it supports the (Thomson & Hecker’s, 2001) arguments
that effective communication leads toward the LPCB and if within the organization communication is not
strong the chances of the PBC are higher. The organization believes in the good employee and employer
relations needs to make strong communication system. Effective communication system motivates the
employees. PC help the management to develop the relationship with employees (Hiltrop, 1996) especially
when the PC is developed and maintained the organization find more committed employee and violation of
the PC results in the changing behavior of the employees (Hiltrop, 1996). The findings of the research suggest
that PD play a mediating role between communication and PCB, countries with higher power distance have
even more PCB e.g. Pakistan and countries with lower power distance have relatively low PCB e.g.
Table3: Model Summary
Model
R
R square
Adjusted R square
Std. Error of the estimate
1
.997a
.993
.993
.083
Table 4: Analysis of Variance (ANOVA) Results
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
204.595
5
40.919
5855.32
9
.000a
Residual
1.405
201
.007
Total
206.000
206
a. Predictors: (Constant), High Power Distance, Low Power Distance, Value Communication,
Participative Communication, Formal Communication
b. Dependent Variable: Psychological Contract Breach

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Netherlands because lower power distance will give the motivated, satisfied and committed employee
(Madlock, 2014). A comparative study by (Syed et al., 2015) shows that PCB is much larger in Pakistan than
the Netherlands this is because the collectivists would have a higher threshold for the perception of breach
compared to individualists.
The results further implies that when employees feel comfortable at work and they are communicated
properly the chances of PCB will be lower and if employees feel discomfort in the organizational setting
though the communication is effective the PCB will be higher (Bambacas & Patrickson, 2008). This study
suggests that organization needs to make their communication strong for getting the motivated, committed
and satisfied employees. For this, there is no need to use all types of communication but there is a need to
make it more effective for LPCB. The promises organization make with their employees must be fulfilled
because if this trust is broken will not be developed again in the mind of employees. In this way, the
organization will lose the qualified workforce; therefore, organization needs to work on the effective
communication and minimize the gap between employee and supervisors.
Scholarly Contributions: This study contributes to the psychological contract in several ways. First, it
examines the communication as an antecedent of psychological contract breach, which is largely missing in
the literature of PC (Morrison and Robinson, 1997). Second, exploring the antecedents of PCB outside the
European context is a contribution to the field of psychological contract. Third, most of the studies based on
cultural dimension individualism but we focused on power distance as a mediator between communication
and PCB.
Managerial Implications: Since affective communication is an important predictor of PCB, employers can
reduce the PCB by ensuring the communication between employees and employer is effective. This could also
be a way to reduce the negative outcomes of PCB such as employee emotions, attitudes and behaviors, and
responses including increased turnover (Maertz & Griffeth, 2004), reduced organizational citizenship
behaviors and in-role behaviors, and increased deviant behaviors (Kickul, Lester, & Finkl, 2002). Therefore,
managers could consider to reducing the power distance in this way psychological contract provides a useful
framework to help establish an open process of communication and negotiation about the employment deal
(Herriot & Pemberton, 1997). This process could contribute considerably to reducing the incongruence
between employee and management perceptions about communication.
Limitations and Directions for Future Research: The current study focused on understanding the
communication as antecedents of psychological contract breach. PCB could also be understood by considering
other relevant antecedents such as organizational cultural dimensions. In addition, future studies could be
based on designing a country more diverse sample by considering other sectors, which will improve the
generalizability of results.
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