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Working relationships in family business: a psychological contract theory perspective
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Date
2024
Authors
O'Leary, Olivia
Journal Title
Journal ISSN
Volume Title
Publisher
University College Cork
Published Version
Abstract
Family businesses have long been recognised as pillars of economies worldwide, with Ireland boasting a rich history of such enterprises dating back centuries. Despite their prevalence, the distinct characteristics of family businesses present challenges, with their unique dynamics and working relationships often shaping their success or failure. Drawing upon psychological contract theory, this study investigates the formation and content dimensions of psychological contracts among family and non-family employees in family businesses. By comparing and contrasting these perspectives, this study uncovers the underlying processes and implications for the working relationship within family businesses.
Conducted through an exploratory qualitative study with four independent family-owned retailers in Ireland, the study revealed distinct patterns in the formation of the psychological contract and illustrated that both family and non-family employees’ psychological contract formation is influenced by critical factors such as pre-entry and post-entry episodes, information sources, and agency relationships. However, family members have a protracted psychological contract formation process rooted in early organic experiences through their family membership. Non-family employees experience psychological formation through recruitment and standardised organisational entry processes. The research uncovers distinctive terms in the psychological contract with family employees, often emphasising familial obligations and legacy preservation, while non-family employees prioritise career development and stable employment. Both family and non-family employees feel obligated to the community in which the business operates. These findings shed light on the unique dynamics at play within family businesses, highlighting the importance of understanding and addressing the diverse needs and expectations of employees.
This study contributes to both psychological contract theory and the unique context of family businesses. Furthermore, this thesis deepens our understanding of psychological contract theory by introducing novel concepts such as dormant psychological contracts and the influence of family relationships on employment arrangements. It advances psychological contract theory by demonstrating how early experiences shape working relationships in family businesses. It contributes to the family business domain by illuminating the role of HRM processes and co-workers in constructing psychological contracts in working relationships.
Practically, this research offers valuable insights for organisational leaders and HR practitioners in managing working relationships within family businesses. By recognising and addressing the distinct dimensions of psychological contracts, family businesses can build positive employee-organisation relationships, enhance employee engagement, and ultimately improve organisational outcomes. Overall, this thesis comprehensively explores the formation of psychological contracts in family businesses, offering theoretical contributions and practical implications for organisational practice.
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Keywords
Psychological contract theory , Working relationships , Psychological contract formation , Family employee , Non-family employee , Psychological contract content dimensions , Human resource management , Employee-employer relationship
Citation
O'Leary, O. M. 2024. Working relationships in family business: a psychological contract theory perspective. PhD Thesis, University College Cork.