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Psychological Contracts and Informal Networks in Organizations: The Effects of Social Status and Local Ties

July 2013
Human Resource Management 52(4)

July 2013
52(4)

DOI:10.1002/hrm.21540

Authors:

Guillermo E Dabos

National University of the Center of the Buenos Aires Province

Denise M. Rousseau

University Professor at Carnegie Mellon

Informal social networks in organizations shape how employees understand their employment relationship. Networks can aid or undercut HR efforts to promote psychological contracts that benefit both employees and the employer. Data collected from 96 university faculty members demonstrate that network influence from both social status in the organization's larger informal structure and local ties with socially proximate colleagues shape psychological contract beliefs. Specific effects, however, vary by type of contract term. When contract terms involve resources employees compete for (e.g., opportunities for career advancement), effects are found for social status, such that those who are better positioned in the advice network hold more positive beliefs regarding the extent of the employer commitment. When contract terms involve noncompetitive resources broadly available to all employees (e.g., concern for employee well-being), network effects reveal comparable beliefs between those who share a direct friendship tie (cohesion) or the same friends in common with other faculty members (structural equivalence). Implications for research and HR practice are discussed.

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PSYCHOLOGICAL CONTRACTS

AND INFORMAL NETWORKS IN

ORGANIZATIONS: THE EFFECTS OF

SOCIAL STATUS AND LOCAL TIES

GUILLERMO E. DABOS AND DENISE M. ROUSSEAU

Informal social networks in organizations shape how employees understand

their employment relationship. Networks can aid or undercut HR efforts to

promote psychological contracts that beneﬁ t both employees and the em-

ployer. Data collected from 96 university faculty members demonstrate that

network inﬂ uence from both social status in the organization’s larger infor-

mal structure and local ties with socially proximate colleagues shape psy-

chological contract beliefs. Speciﬁ c effects, however, vary by type of contract

term. When contract terms involve resources employees compete for (e.g.,

opportunities for career advancement), effects are found for social status,

such that those who are better positioned in the advice network hold more

positive beliefs regarding the extent of the employer commitment. When

contract terms involve noncompetitive resources broadly available to all em-

ployees (e.g., concern for employee well-being), network effects reveal com-

parable beliefs between those who share a direct friendship tie (cohesion) or

the same friends in common with other faculty members (structural equiva-

lence). Implications for research and HR practice are discussed.

Keywords: employee relations, social networks

Correspondence to: Guillermo E. Dabos, Secretaría de Ciencia y Tecnología, Facultad de Ciencias Económicas,

UNICEN, Pinto 399, Tandil, Buenos Aires B7000GHG, Argentina. Phone/Fax: +54 249 443-9580, E-mail: gdabos@

udesa.edu.ar, gdabos@econ.unicen.edu.ar.

Human Resource Management, July–August 2013, Vol. 52, No. 4. Pp. 485–510

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21540

HR managers and scholars increas-

ingly view the employment rela-

tionship through the lens of the

psychological contract (Guest &

Conway, 2002)—that is, the sys-

tem of beliefs an employee holds regarding

the terms of his or her exchange agreement

with the employer (Rousseau, 1995). Scholars

have extensively investigated the nature and

content of the psychological contract (e.g.,

Herriot, Manning, & Kidd, 1997; Rousseau,

1990; Rousseau & Parks, 1993) along with the

consequences associated with its fulfillment,

violation, and change (e.g., Coyle-Shapiro &

Kessler, 2000; Ng, Feldman, & Lam, 2010;

Robinson, 1996; Robinson, Kraatz, &

Rousseau, 1994; Turnley & Feldman, 2000).

This research indicates that contract fulfill-

ment by the employer increases the employ-

ee’s job satisfaction, trust in the employer,

486 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

The present study

contributes to

the evidence on

psychological

contract formation

by examining how

an organization’s

informal networks

impact employee

psychological

contract beliefs.

and intent to stay in the organization. In

contrast, contract violation causes intense

negative employee reactions, leading victims

to cut back on their job contributions. Where

employee and employer agree on contract

terms, both tend to obtain better outcomes

(Dabos & Rousseau, 2004).

Although contract outcomes are fairly

well understood, how psychological con-

tracts develop in the first place remains less

clear. Organizational factors such as HR prac-

tices and social cues can influence the ways

employees think about what they owe the

employer and are owed in return (Cooper &

Sparrow, 2003; Rousseau, 1995, 2001, 2010;

Rousseau & Greller, 1994). However, research

on the effects organizational fac-

tors have on psychological con-

tract beliefs is rather limited (see

Ho, Rousseau, & Levesque, 2006,

for an exception). The present

study contributes to the evidence

on psychological contract forma-

tion by examining how an organi-

zation’s informal networks impact

employee psychological contract

beliefs.

A hallmark of well-designed

HR practices is the mutual under-

standing that both parties achieve.

Whereas formal practices like

onboarding activities and other

HR programs promote this under-

standing and agreement, so, too,

can the organization’s informal

structure particularly depending

on how well it affirms such formal

practices. Social networks are of special con-

cern in organizations with poorly designed

HR practices. By default, organizations lack-

ing appropriate formal procedures rely on

the employee’s pre-employment education,

on-the-job experiences, and informal social

networks to provide information pertinent

to the psychological contract (Nicholson &

Johns, 1985; Rousseau, 1995). Reliance on

informal information is endemic to profes-

sional organizations, such as universities and

professional service firms, where professional

education and coworker/collegiate inter-

actions exert greater influence over roles,

responsibilities, and member behavior than

the formal organization itself (Greenwood,

Hinings, & Brown, 1990; von Nordenflycht,

2010).

In the present study, a professional organi-

zation serves as the research setting. Building

on research assessing the impact of social

interactions on work-related attitudes and

beliefs (e.g., Burkhardt, 1994; Dean & Brass,

1985; Ho, 2005; Ibarra & Andrews, 1993;

Pastor, Meindl, & Mayo, 2002; Roberson &

Colquitt, 2005), we adopt a social network

perspective to investigate patterns in psy-

chological contract beliefs. Two distinct net-

work influence mechanisms are examined

here. The first one derives from the proximity

among individuals in the informal network

and represents the influence individuals exert

through their social ties at the dyadic (person-

to-person) level. Based upon social contagion

(Burt, 1987), individuals tend to hold atti-

tudes and beliefs similar to those of their local

or more immediate social ties. The second

mechanism refers to the position that each

individual occupies in the larger informal

structure of the organization. It represents

influences arising from individual differences

in power or social status at the network-wide

level. Based on their control over important

resources, individuals in high-status or cen-

tral positions often enjoy better opportunities

for attaining their preferred goals (Friedkin,

1998; Ibarra & Andrews, 1993), and thus

are likely to develop more positive attitudes

and beliefs relative to those of their less well-

positioned counterparts.

This study also investigates whether the

effects of social status and local ties differ

across contract terms. In particular, we build

and test theory regarding differential net-

work effects upon contract terms involving

resources workers compete over (e.g., career

advancement) as compared to terms involv-

ing noncompetitive resources widely avail-

able to all employees (e.g., supportive work

environment). Further, since different types

of informal social networks exist, we exam-

ine the effects of two: personal friendships

and work-related advising. In all, we address

three fundamental issues: (1) the overall link

between informal networks and employee

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 487

Human Resource Management DOI: 10.1002/hrm

By simultaneously

examining the

effects of network

position (social

status in the larger

informal structure)

and proximity (local

ties connecting pairs

of employees), we

shed light on how

the psychological

contract can

be shaped by

network processes

occurring at two

levels of analysis

(organizational and

dyadic).

psychological contract beliefs, (2) the effects

of social status and local ties on specific con-

tract terms (i.e., those involving competitive

versus noncompetitive resources), and (3)

whether the effects on contract terms differ

by the type of social network tie or relation-

ship (i.e., friendship and advice).

This study is designed to overcome sev-

eral limitations of past research. By simul-

taneously examining the effects of network

position (social status in the larger informal

structure) and proximity (local ties connect-

ing pairs of employees), we shed light on how

the psychological contract can be shaped by

network processes occurring at two levels of

analysis (organizational and dyadic). Prior

research by Ho and Levesque (2005) exam-

ined how friends and advice-givers serve as

referents in evaluating contract fulfillment;

however, it did not directly test the effects of

referent beliefs on one’s own contract beliefs,

or the influence of network position. Because

people with positions that bestow advan-

tages in obtaining valuable resources tend to

have a more favorable view of the organiza-

tion, it is crucial to assess the effects of both

formal and informal position. Furthermore,

we examine specific contract terms attrib-

uted to the employer (e.g., career advance-

ment, concern for employee well-being) as

opposed to the more generic contract types

(e.g., transactional versus relational; Ho et

al., 2006) or general measures of fulfillment

(Ho & Levesque, 2005). Our study thus pro-

vides a more comprehensive investigation of

network influences on specific psychological

contract beliefs.

Psychological Contract Formation

An employee’s psychological contract is sub-

jective in nature and represents his or her be-

liefs regarding the extent of the reciprocal

commitments with the employer (Rousseau,

1995; Rousseau & Parks, 1993). A fundamen-

tal challenge that psychological contracts

raise for HR managers is the different under-

standings individual employees can form of

what the employer owes them, even when

trying to express comparable commitments

to all employees or to those in a particular

work role. Nonetheless, how employees inter-

pret HR practices is crucial to the effect those

practices have on their beliefs and behaviors

(Nishii, Lepak, & Schneider, 2008).

Multiple factors affect the formation of

employee psychological contract beliefs.

These include personal predispositions (e.g.,

cognitive styles, ideological beliefs) and orga-

nizational influences (e.g., HR practices, social

influences; Rousseau, 1995). Social interac-

tions on the job are likely to influence how

employees interpret their employer’s com-

mitments, for the basic reason that social cues

from coworkers and colleagues

tend to be more readily available

than are HR or managerial commu-

nications. In particular, coworkers

can help each other understand the

employment relationship through

the opinions, assurances, and

interpretations they provide. For

instance, coworkers play a crucial

role in socializing newcomers,

helping them interpret events,

learn the ropes, and assimilate

company norms (Louis, 1980;

Morrison, 1993; Nelson & Quick,

1991; Reichers, 1987). Social influ-

ence is also critical in professional

organizations given that prefer-

ence for professional autonomy

(von Nordenflycht, 2010) and

the resultant weaker HR systems

make employees particularly

dependent on their colleagues

for information and work-related

advice (Groysberg & Lee, 2009;

Groysberg, Lee, & Nanda, 2008).

An employee can get infor-

mation from coworkers by word

of mouth and their own eyes.

Coworkers can make certain

aspects of the workplace more

salient through how they speak

or act, or they can tip the balance

in ambiguous situations by offer-

ing their own interpretations. The

messages various coworkers con-

vey sometimes reflect inconsistent or con-

tradictory views of the same practices or

behaviors. Still, regardless of their consistency,

488 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

Although the role

of coworkers as

a critical source

of information in

forming employee

work-related beliefs

is well established,

more research is

needed to elucidate

how their social

interaction patterns

shape specific

psychological

contract beliefs

and, particularly,

the network

mechanisms through

which that influence

is exerted.

coworkers often play a fundamental role in

the psychological contracting process by

“providing messages for contract creation,

conveying social pressure to conform to the

group’s understanding of the terms, and

shaping how individuals will interpret the

organization’s actions” (Rousseau, 1995, p.

39). Prior research revealed that newcomers

with easy access to experienced coworkers

across functional units report greater orga-

nizational knowledge, whereas those with

denser networks within the same unit indi-

cate greater role clarity (Morrison,

2002). Even for more experienced

employees, coworkers tend to be

a key source of information about

the job and the organization

influencing their role perceptions,

attitudes, intentions, and behav-

iors (Chiaburu, 2009; Chiaburu

& Harrison, 2008). Psychological

contract research also supports

the roles of coworkers as social

referents in judging how well the

employer has fulfilled its organi-

zation-wide promises. This is par-

ticularly the case for coworkers

who are friends or advice givers

(Ho & Levesque, 2005).

Although the role of coworkers

as a critical source of information

in forming employee work-related

beliefs is well established, more

research is needed to elucidate

how their social interaction pat-

terns shape specific psychological

contract beliefs and, particularly,

the network mechanisms through

which that influence is exerted.

The present study addresses these

issues in two important ways.

First, it simultaneously investi-

gates the effects of both social sta-

tus and local ties on psychological

contract beliefs. This is important

because theories assessing the

effects of social factors point out

that the social influence on atti-

tudes and beliefs can stem from the larger

organizational context in which individuals

are embedded and/or their more immediate

social environment (Friedkin, 1991; Salancik

& Pfeffer, 1978). Thus, understanding dyadic

or organizational level effects requires control

for the influence of the other.

Second, we recognize that the type of

beliefs examined matters in understanding

network effects. In workplace psychologi-

cal contracts, the social information workers

look to can depend upon the nature of the

resources involved in the exchange. How

a resource is made available is a central dimen-

sion to whether individuals would compare

their own situation to others (Olson & Ross,

1984). Whether employees believe that their

employer owes them competitive resources

(that is, rewards contingent on their contri-

bution relative to others) or noncompetitive

resources (granted to all employees based

on membership) affects the sources of social

information they rely on (Ho, 2002). In the

following section, we discuss the dynamics

underlying the influences of both social sta-

tus and local ties and develop the hypotheses

linking these network mechanisms to specific

kinds of psychological contract terms.

Social Interaction Patterns

Social interactions affect individual attitudes

and beliefs—a long-standing finding dating

back to early social science research on influ-

ence and conformity (e.g., Asch, 1955;

Deutsch & Gerard, 1955; Festinger, 1954) as

well as on social information processing (e.g.,

Blau & Katerberg, 1982; Zalesny & Ford,

1990). They play a well-established and per-

vasive role in shaping work-related attitudes

and beliefs. The present study focuses on two

mechanisms arising from the social network

interactions at work: (1) influence exerted by

the local ties connecting socially proximate

pairs of employees and (2) influence resulting

from the social status or position each indi-

vidual holds in the organization’s larger in-

formal structure.

Inﬂ uence via Local Ties

People tend to share attitudes and beliefs to

the extent they are socially proximate and ex-

posed to each other’s opinions and behaviors

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 489

Human Resource Management DOI: 10.1002/hrm

When opinions

of people with

cohesive ties

become known,

mutual adjustment,

agreement, and

compromise occur,

leading them to hold

similar attitudes and

beliefs.

(Marsden & Friedkin, 1994). Two primary

mechanisms account for this convergence:

cohesion and structural equivalence.

Influence via cohesion occurs through direct

(i.e., nonmediated) ties to others. Cohesion

denotes frequent interaction and emotional

closeness. Cohesive ties offer ample opportu-

nities for information sharing and social

comparison. Over time, direct exposure to

others’ opinions and behaviors influences the

salience of that information, affecting an in-

dividual’s own beliefs and actions (Burkhardt,

1994; Rice & Aydin, 1991). Indirect exposure

occurs through intermediaries and has weaker

effects (Erickson, 1988; Friedkin, 1982).

Selection effects can also occur where people

seek out others sharing their beliefs. Direct in-

fluence is so powerful that firms often use

job-rotation and lateral moves across areas to

integrate members into the firm as a whole

via shared knowledge and relationships with

other members (Campion, Cheraskin, &

Stevens, 1994).

The direct effects of cohesion are well

documented. It influences work-related per-

ceptions (Ibarra & Andrews, 1993), beliefs

about personal mastery (Burkhardt, 1994),

behavior during job searches (Kilduff, 1990),

attitudes toward new technology (Rice &

Aydin, 1991), and opinions about fellow

employees (Krackhardt & Kilduff, 1990). The

influence of cohesion derives from the coop-

eration and trust that often exist between

two directly tied individuals. When opinions

of people with cohesive ties become known,

mutual adjustment, agreement, and compro-

mise occur, leading them to hold similar atti-

tudes and beliefs (Friedkin, 1998; Marsden &

Friedkin, 1994).

The effects of structural equivalence

occur when individuals share access to the

same people regardless of whether they

themselves interact (Lorrain & White, 1971;

Marsden & Friedkin, 1994). Two people are

structural equivalents if each has ties with

(or lack ties with) the same people. Because

structurally equivalent individuals occupy

similar roles in the social network, they are

likely to be exposed to comparable informa-

tion and social demands, thereby developing

similar attitudes and beliefs. Two things are

worth noting about structural equivalence.

First, it defines roles in terms of the social

ties among members of a social network, not

in terms of the formal organizational struc-

ture (Rice & Aydin, 1991). Thus, two product

managers who perform exactly the same job

are not structurally equivalent if they lack

common ties to the same other people in the

organization. Second, frequent contact is not

needed for structurally equivalent individuals

to develop similar attitudes and beliefs. Social

influence via structural equivalence occurs if

two individuals have access to the same other

people from whom they develop similar atti-

tudes and beliefs. For example, two doctoral

students are structurally equivalent in the

advice network if both have the

same advisory committee (regard-

less of whether the two students

interact). Insofar as structurally

equivalent people need not choose

their tie to each other, the effects

of structural equivalence are less

attributable to self-selection. Yet,

structural equivalents may hold

common beliefs as a result of hav-

ing selected themselves into roles

where those beliefs are compatible

with role senders. Such is the case

of graduate students who select

a similar set of advisors because

of shared interest in a specific

subject.

The effects of structural equiv-

alence are also well established.

It influences perceptions of task

variety (Meyer, 1994) and social

settings (Pattison, 1994), attitudes toward

computers (Burkhardt, 1994) and technol-

ogy adoption (Burkhardt & Brass, 1990), and

judgments regarding product development

(Walker, 1985). The effects of structural equiv-

alence on shared beliefs derive from compa-

rable role demands (Burt, 1987), as well as

similar sources of socialization and compari-

son (Rice & Aydin, 1991; Shah, 1998). In turn,

the common experiences employees have

in the informal organization promote similar

attitudes and beliefs.

Both cohesion and structural equivalence

reflect social proximity or local ties within

490 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

The influence of

centrality in the

informal structure

stems from

differences in social

status that affect

which individuals

get access to scarce

resources such as

financial benefits or

recognition.

the larger network, but their influence derives

from different mechanisms. Two structurally

equivalent individuals need not have a direct

relationship, just as two cohesive individu-

als need not be involved in similar relation-

ships with others. The network literature is

inconclusive regarding whether cohesion or

structural equivalence provides a better expla-

nation for social influence (Van den Bulte &

Lilien, 2001), and thus this study operational-

izes proximity using both.

Inﬂ uence via Status Position

The larger informal structure of the organiza-

tion shapes the opportunities and constraints

individuals encounter at work, af-

fecting their attitudes and beliefs.

The position each individual

holds in the informal network, as

defined by the overall pattern of

direct and indirect social ties, in-

fluences his or her access to scarce,

valued resources such as financial

support and promotions; a reason

why aspiring new recruits pursue

high-visibility assignments that

bring them in contact with top

management (Rousseau, 2005). In

network analysis, centrality is an

important indicator of an individ-

ual’s social status or position and

reflects the extent to which cer-

tain individuals are better con-

nected in the network in terms of

the quantity and quality of their

social ties (Bonacich, 1987;

Friedkin, 1993). Whereas most studies focused

on centrality as a source of leadership and

power (e.g., Brass & Burkhardt, 1993; Ibarra,

1993, Krackhardt, 1990), it also shapes atti-

tudes and beliefs by enhancing or constrain-

ing the opportunities for goal attainment

(Friedkin, 1991, 1993, 1998). Opportunities

often accrue to central individuals in high-

status positions (Brass, 1984; Frank, 1985),

who in turn are likely to hold more positive

perceptions of the organization.

Centrality differs from cohesion and

structural equivalence in the way it influ-

ences beliefs. It requires neither the frequent

interaction characteristic of cohesion nor the

involvement in similar ties with others char-

acteristic of structural equivalence. The influ-

ence of centrality in the informal structure

stems from differences in social status that

affect which individuals get access to scarce

resources such as financial benefits or recog-

nition (Emerson, 1962; Pfeffer & Salancik,

1978). High-status individuals tend to develop

more positive attitudes and beliefs than their

low-status counterparts because their network

position often provides advantages (Ibarra &

Andrews, 1993). At the same time, the more

favorable attitudes and beliefs of high-status

individuals can be reinforced by the influence

of the socially proximate others with whom

they interact (who are also likely to be highly

central in the network; Friedkin, 1991). Thus,

compelling explanations for how social influ-

ence works in an organization—that is, via

social status position or local ties—require

evidence of the effect of one mechanism

while controlling for the other.

Kinds of Psychological Contract

Terms

As mentioned earlier, the social information

workers use in forming their beliefs about the

contract terms can depend upon the nature

of the resources involved. Competitive re-

sources are scarce in an absolute or socially

imposed sense (Hirsch, 1976). Scarcity arises

due to constraints in the amount available

(e.g., limited budget) or rules that restrict who

gets a resource (e.g., committee membership

or partnership in professional service firms).

Attaining those competitive resources

depends on factors shaping the competitive

success of individuals at work, including

their performance and other factors deter-

mining performance, such as resource access

and support from powerful others. Employees

in powerful positions are likely to access valu-

able resources and to successfully negotiate

support from powerful others, which typi-

cally includes promises regarding develop-

mental activities, participation in decision

making, and information critical to job per-

formance (Rousseau, 2005). The social status

each individual holds can explain differences

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 491

Human Resource Management DOI: 10.1002/hrm

in resource access (Ibarra & Andrews, 1993).

Likewise, it can make it easier for high-status

employees to contribute more effectively to

the organization, leading them to hold higher

expectations of commensurate reward. It fol-

lows that those employees with high-status

positions in the informal network are more

likely to develop higher expectations of at-

tainment, or to infer that they are owed com-

petitively allocated resources, than are their

low-status colleagues.

Hypothesis 1: The social status an individual

holds in the organization-wide network will be

positively related to her or his psychological con-

tract beliefs involving competitive resources.

Conversely, when contract terms relate

to noncompetitive resources such as a safe

work environment or health care benefits,

one employee’s successful attainment need

not diminish another’s. People who are

socially connected are thus likely to expect to

hold comparable beliefs regarding the non-

competitive resources owed them by their

employer. Accounts of how social influence

occurs among socially proximate individuals

center around cohesion and structural equiv-

alence, as described earlier. Because direct ties

are built upon frequent interaction, cowork-

ers sharing cohesive ties are likely to openly

express their opinions and behaviors to one

another and, consequently, to develop con-

vergent beliefs regarding the extent of the

employer’s commitment to provide non-

competitive resources. By conforming to the

beliefs of cohesive others, an individual is

better able to secure social approval (Deutsch

& Gerard, 1955).

Alternatively, influence from structural

equivalence occurs through similar access to

or common ties with other people. Employees

who occupy similar social roles in the infor-

mal network are exposed to comparable social

demands, pressures, and socialization from

the same others. Regardless of the strength of

any direct relationship, those who share ties

to the same people are likely to develop simi-

lar beliefs regarding the extent of the employ-

er’s commitment to provide noncompetitive

resources. Conformity to the opinions of

structural equivalents satisfies a person’s con-

cern for adopting beliefs appropriate for a

particular social role (Burt, 1987).

In contrast, social status is unlikely to be

very influential in shaping beliefs that relate

to noncompetitive resources, since it offers

no advantage to obtaining resources broadly

available to all. Thus, both cohesion and

structural equivalence are expected to influ-

ence employee beliefs about commitments

that involve noncompetitive resources.

Neither is likely, on the other hand, to relate

to resources that are competitively allocated,

where an individual would first consider his

or her own social standing (relative to others)

before inferring comparable obligations.

Hypothesis 2a: Cohesion will be positively related

to psychological contract beliefs involving non-

competitive resources, such that the beliefs held

by others to whom an individual is directly tied

(cohesion) will positively inﬂ uence comparable

beliefs of that individual.

Hypothesis 2b: Structural equivalence will be posi-

tively related to psychological contract beliefs in-

volving noncompetitive resources, such that the be-

liefs held by others to whom an individual shares

similar ties (structural equivalence) will positively

inﬂ uence comparable beliefs of that individual.

Type of Network Ties

People have different reasons for interacting

with each other, and thus can participate in a

variety of informal relationships (Krackhardt

& Brass, 1994; Marsden & Friedkin, 1994).

Two extensively studied network ties reflect

very different motives: (1) instrumental ties

that arise from work-related interactions such

as giving or receiving advice and (2) expres-

sive ties that arise from emotional closeness

such as friendship and personal support.

These two network ties or relationships pro-

duce different outcomes (e.g., Ibarra, 1992;

Krackhardt, 1990). For instance, individuals

rely on friendship ties to cope with stressful

circumstances such as radical change or orga-

nizational crises (Krackhardt, 1992). However,

they often use advice ties to find ways of

492 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

overcoming job uncertainty (Burkhardt &

Brass, 1990; Rice & Aydin, 1991).

Advice and friendship networks channel

their influence differently. Advice ties emerge

through work-related interactions as individ-

uals mobilize resources to accomplish their

goals. As such, their patterns expose the social

influence resulting from power or status dif-

ferences and thus reflect asymmetrical or

nonreciprocal ties (Ibarra & Andrews, 1993),

because advice givers possess resources advice

seekers do not. Conversely, friendships are

often based upon similarity in interests,

personal attributes, or affiliation to spe-

cific work units (Krackhardt & Stern, 1988).

Friendship ties tend to be symmetrical or

reciprocated, characterized by frequent con-

tact and emotional intimacy (Granovetter,

1973, 1982). Because the information pro-

vided by friends can be more credible and

available, the hypothesized effects of local

ties on psychological contract beliefs (H2a

and H2b) are likely to be stronger for friend-

ship than for advice ties. In contrast, given

that the benefits from social status involve

the ability to obtain critical resources and

mobilize instrumental support throughout

the larger social structure, its hypothesized

effects on psychological contract beliefs (H1)

are likely to be stronger for advice than for

friendship ties.

Hypothesis 3: The effects of social status on psy-

chological contract beliefs will be stronger for ad-

vice relationships, whereas the effects of local ties

(via cohesion or structural equivalence) will be

stronger for friendship relationships.

Methods

Sample and Procedure

Data were collected at a science school in a

leading Latin American research university.

At the outset of this project, the first author

made regular site visits to conduct semistruc-

tured interviews with faculty and school

authorities. The goals were twofold: (a) to un-

derstand the research context and its culture,

structure, and core activities, and (b) to adapt a

widely used psychological contract instrument

(Rousseau, 2000) in order to be meaningful to

respondents. During the second phase, fac-

ulty members completed questionnaires in

Spanish. To assure consistency, survey mea-

sures were independently translated back and

forth from the original English version

(Brislin, 1980). Discrepancies were resolved

by consulting with bilingual members of the

school’s top management team (Frey, 1970).

Administrators, technical staff, and part-time

faculty were not surveyed due to the more pe-

ripheral content of their work. Demographics

were collected from official records.

Participants were assured confidentiality.

All 107 of the school’s full-time faculty

were surveyed, with 96 responding (89.72

percent). The HR strategy of the school was

to develop its own faculty by supporting their

formal education. Nearly 60 percent held a

graduate degree. Respondents represented

the five formal positions in the university’s

tenure system: 21 percent assistant professors

(the typical entry level), 27 percent senior

assistant, 28 percent associate, 18 percent

senior associate, and 6 percent full profes-

sors, fairly evenly distributed with respect to

gender (51 male and 45 female). Average age

was 39.42 years (SD = 7.43). Average organi-

zational tenure was 12.36 years (SD = 7.23),

reflecting relatively low turnover.

Measures

Sociometric Indices

Respondents received a roster of full-time fac-

ulty and were asked to put a check next to the

names of those (1) they went to for help or

advice on work-related problems and organi-

zational matters, or (2) they frequently went

to lunch with or met socially outside of work.

These answers provided the raw data for the

advice and friendship networks. Preliminary

interviews revealed the sensitive nature of

collecting friendship data in this setting,

characterized by intense political activity

given the autonomy and self-government tra-

dition of the public university system in Latin

America. Thus, we reworded the friendship

network question previous research used (cf.

Ibarra, 1992, 1995; Morrison, 2002) to avoid

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 493

Human Resource Management DOI: 10.1002/hrm

the term “friends” and emphasize frequent

social meeting instead.

Cohesion was operationalized using a

binary matrix reflecting the presence (1)

or absence (0) of a direct, nonmediated tie

between two persons. Because this research

required measures of status differentials, the

asymmetries or differences in how any two

members described their tie to one another

were preserved to distinguish indegrees (an

individual being the target of the relational

tie) and outdegrees (an individual being the

originator; Burt, 1982). A person has higher

informal status when he or she is the target

of a tie, reflected by his or her indegree score

in the sociomatrix. In the advice sociomatrix,

for example, a person’s indegree score indi-

cates the number of other people seeking his

or her advice. Thus, the transpose of the raw

sociomatrix represented the relationship (i.e.,

being sought for advice).

Structural equivalence represents simi-

larity in access to other people. Two people

are structurally equivalent when they have

identical ties or relationships with others in

a network (Lorrain & White, 1971; Marsden

& Friedkin, 1994). That is, the two people

either have ties or lack ties with identical sets

of other people. However, such a restrictive

definition of structural equivalence is sel-

dom realized in actual networks, given that

the likelihood of having two individuals with

exactly identical ties decreases with network

size. For that reason, structural equivalence

in either network (i.e., advice and friend-

ship) was operationalized in terms of degree

using the Pearson correlation coefficient for

each pair of individuals (Borgatti, Everett,

& Freeman, 2002). Diagonal elements were

treated as missing values. The greater the cor-

relation for a given pair of individuals, the

greater was their structural equivalence.

Social status was operationalized using

the Bonacich’s c(α,β) measure, which allows

for different relationships between power

and centrality (Bonacich, 1987). It is formally

defined as

c(α, β) = α

∑

k=1

∞

k Rk+11

where α is a scaling factor used to normal-

ize the measure, R is the transpose of the raw

sociomatrices, β is an attenuation factor, and

1 is a column vector of ones. Central to the

Bonacich’s power-based centrality measure is

the parameter β, which reflects the extent to

which an individual’s social status is contin-

gent on the status of those to whom he or

she is connected. When β > 0, it means that

not all relationships contribute equally to an

individual’s status; that is, being connected

to powerful others increases an individual’s

status within the network, whereas being

connected to powerless others does not. By

setting different β values, this measure can

account for all possible relationships between

power and centrality. When β = 0, the for-

mula yields results proportional to degree

centrality because the number of direct ties

an individual receives is taken into account

regardless of the other individuals’ centrali-

ties. Of particular interest is the case when β >

0, where an individual’s social status is posi-

tively affected by his or her connections to

powerful or high-status others. In the advice

network, for instance, a person with a high

social status index is a faculty member who

is sought after for advice by colleagues, who,

in turn, also give advice to others and so on.1

Because higher β values give greater weight

to the larger informal structure (as opposed

to local ties), we set the attenuation factor

β at three-quarters of its upper bound given

by the reciprocal of the largest eigenvalue of

the R matrix (cf. Jensen, 2003, 2008; Podolny,

1993). Whereas this measure is suitable for

both symmetric and asymmetric networks,

measuring power requires an assessment of

relational data asymmetries. Reciprocation

rates of 23.98 percent for advice and 60.47

percent for friendship reflect the distinctive

nature of these two networks.

Psychological Contract Scales

Using items adapted from the Psychological

Contract Inventory (PCI; Rousseau, 2000), fac-

ulty members evaluated the extent to which

the employer had made them certain com-

mitments or obligations on a Likert scale

from 1 (not at all) to 5 (to a great extent). In

particular, respondents were asked to “con-

sider your employment relationship” and

494 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

Interviews with

the school’s top

management

indicated that they

sought to build

an open-ended

relational agreement

with faculty in

order to provide a

stable workforce to

achieve the school’s

long-term strategic

goals.

answer “to what extent the employer has

made the following commitments or obliga-

tions to you?” Specific items pertained to ei-

ther competitive or noncompetitive

resources.

Three PCI dimensions assessed scarce

resources in this university environment and

thus denoted contract terms that involve

competitive resources. Support for performance

is the extent to which the employer owes the

worker support to enable successful perfor-

mance. This three-item scale measured the

employer’s commitment to provide support

to attain the highest possible levels of perfor-

mance, to respond to ever-greater academic

challenges, and to meet increasingly higher

goals. Its Cronbach’s alpha (α) was

0.89. Career advancement is the

commitment to provide advance-

ment and development opportu-

nities enhancing faculty long-term

employability. The scale consisted

of three items: training and devel-

opment within the organization,

support for conference atten-

dance and participation in profes-

sional events, and opportunities

for promotion and advancement

(α = .79). Involvement opportuni-

ties entail the commitment to

provide the worker influence in

the organization. The scale con-

sisted of three items: involvement

in general organizational mat-

ters, opportunities to participate

in decisions, and opportunities to

serve on ad hoc academic com-

mittees (α = .86). Based on infor-

mant interviews, these three PCI

dimensions were deemed suitable

to assess contract terms involving

competitive resources. In the case

of support for performance and career advance-

ment, budget constraints limited funding for

projects and faculty development opportu-

nities. Faculty competed for research sup-

port by submitting internal proposals. Due

to limited funds, many were denied support.

The competitive nature of involvement oppor-

tunities in the organization derives from for-

mal requirements restricting involvement. A

faculty member’s participation on key school

committees depended on formal rank and/

or being elected or appointed to the position

(often requiring political support).

Three other PCI dimensions include the

extent of the employer’s commitment to

provide certain noncompetitive resources.

Security and stable benefits describes whether

the employer has committed to offering

stable benefits and long-term employment.

The scale consisted of three items: secure

employment, wages and benefits employ-

ees could count on, and stable benefits for

employees and families (α = .85). A prom-

ise involving wages was categorized as non-

competitive because the federal government

regulated faculty wages in this national uni-

versity. Concern for employees describes the

employer’s commitment to show concern

for the welfare and long-term interests of

employees. The scale comprises three items:

employer concern for employee well-being,

responsiveness to employee concerns, and

whether the employer makes decisions with

employee interests in mind (α = .79). Finally,

predictability regarding future is the extent of

certainty regarding the future of the employ-

ment relationship. The scale has three items:

predictability of the future direction of this

employment relationship, certainty regard-

ing future commitments to employees, and

predictability regarding future job demands

(α = .82). Interviews with the school’s top

management indicated that they sought to

build an open-ended relational agreement

with faculty in order to provide a stable work-

force to achieve the school’s long-term stra-

tegic goals. Indeed, core features of relational

employment include security, concern for

employees, and predictability regarding the

future.

The discriminant validity of the contract

scales was examined using a confirmatory

factor analysis with maximum likelihood

estimation. Using AMOS 5, the factor struc-

ture attained good fit along all indices. The

ratio of chi-square relative to its degrees of

freedom (χ2/df) was 1.129, considerably bet-

ter than the suggested ratio of 2 (Arbuckle,

2003; Arbuckle & Wothke, 1999). The incre-

mental fit index (IFI) of .980, comparative fit

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 495

Human Resource Management DOI: 10.1002/hrm

index (CFI) of .979, and Tucker-Lewis index

(TLI) of .973 all surpassed the standard .90.

Finally, a root mean square error of approxi-

mation (RMSEA) of 0.037 was also better than

the standard of .05 (Browne & Cudeck, 1993).

Control Variables

We controlled for several variables to rule out

alternative explanations, including individ-

ual demographics, past performance, and for-

mal position. Demographic controls included

gender, organizational tenure, and educa-

tional level. Gender is often associated with

advancement in academic settings (e.g., Long,

Allison, & McGinnis, 1993), with men enjoy-

ing better opportunities than women. Faculty

tenure in the university, measured in years,

was controlled for because employees from

similar cohorts are likely to hold comparable

work-related beliefs (Krackhardt & Kilduff,

1990). Education is also likely to impact ac-

cess to valued resources, with faculty holding

doctoral degrees enjoying better opportuni-

ties. Control variables also include past per-

formance since faculty with higher prestige

can have greater resources. Prestige was mea-

sured using a weighted index of number of

refereed publications, conference presenta-

tions, and invited seminars that this univer-

sity used for internal appraisals. Academic

departments (dummy-coded) and faculty

rank (coded from 1 to 5, reflecting the five

formal positions of the tenure track) were two

structural variables included in the analysis.

Table I presents the means, standard devia-

tions, and correlations between all relevant

variables.

Data Analysis

A central methodological concern in social

network research is autocorrelation—that is,

the interdependence among observations

in the sociomatrices. A correlation exists be-

tween the beliefs of a person in a given loca-

tion within the network and those of socially

proximate others (e.g., friends, advice givers,

or structural equivalents). In the presence of

network autocorrelation, ordinary-least-

squares (OLS) procedures tend to overestimate

the significance of regression coefficients

(Krackhardt, 1987, 1988). In order to account

for data interdependence, the network auto-

correlation model (Anselin, 1988; Doreian,

Teuter, & Wang, 1984; Friedkin, 1991;

Leenders, 2002) incorporates a lagged depen-

dent variable (Wy) that captures the influ-

ences that operate among socially proximate

individuals and yields parameter estimates

interpreted in the same way as in OLS regres-

sion. We used maximum likelihood as the es-

timation procedure because it has the best

overall performance (Leenders, 2002).

Formally, the model can be expressed as

y = ρWy + Xβ + ε

where y is a vector of observations on

the dependent variable, W represents the

strength of social influences between every

pair of observations (dyadic data), ρ is the

network autoregressive coefficient that repre-

sents the average effect of others’ ratings on

the dependent variable on one’s own rating,

X is a matrix of observations on the exog-

enous variables with its vector of regression

coefficients β, and ε is the vector of normally

distributed random error terms with zero

means and constant variances. The network

autoregressive coefficient ρ associated with

the lagged term (Wy) estimates the degree

and direction of social influence—that is,

the extent to which an individual’s beliefs

are influenced by those of socially proximate

others. Including the lagged term also allows

for simultaneous examination of exogenous

variables (e.g., formal and informal position)

while controlling for network dependence at

the dyadic level.

Central to this approach is the specifi-

cation of the W weight matrix representing

dyadic social influences among proximate

individuals (Leenders, 2002). Different speci-

fications of the weight matrix can reflect dif-

ferent mechanisms of social influence and

types of network relationships. In particular,

we computed the weight matrices on the

basis of both cohesion (Wc

y) and structural

equivalence (Wse

y). Analysis was conducted

on separate models for advice and friend-

ship networks due to current limitations

in the estimation procedures for network

496 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

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TABLE I Descriptive Statistics and Correlations Among Variables

Variables Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Individual Characteristics

1. Gender (Male) 0.53 0.50

2. Organizational Tenure 12.36 7.23 .13

3. Educational Level (PhD) 0.58 0.50 .26** .46**

4. Prestige 7.39 3.97 .33** .34** .42**

Formal Position

5. Academic Department 1 0.26 0.44 .18 −.21* .07 .24*

6. Academic Department 2 0.42 0.50 −.01 .32** −.01 −.11 −.50**

7. Academic Department 3 0.32 0.47 −.15 −.14 −.05 −.11 −.41** −.58**

8. Faculty Rank 2.61 1.18 .33** .67** .50** .62** −.11 .13 −.04

Informal Network

9. Advice Status 0.28 0.23 .44** .30** .38** .51** .12 −.04 −.07 .56**

10. Friendship Status 0.32 0.21 .07 −.04 .24* .09 .04 −.12 .09 .09 .39**

Psychological Contract Scales

11. Support for

Performance 3.06 1.09 .28** .01 .23* .44** .25* −.18 −.05 .19 .47** .19

12. Career Advancement 3.23 0.89 .35** .12 .22* .29** .13 −.18 .07 .38** .53** .16 .20*

13. Involvement

Opportunities 2.99 1.07 .25* .38** .44** .42** .11 .00 −.11 .55** .54** .15 .20 .34**

14. Security and

Stable Beneﬁ ts 3.03 0.94 .22* .30** .24* .36** .03 −.04 .01 .44** .40** .12 .19 .25* .20

15. Concern for

Employees 3.20 0.90 .11 −.03 .01 .19 .36** −.38** .07 .02 .13 .17 .08 .08 .07 .01

16. Predictability

Regarding Future 3.22 0.93 .23* .19 .30** .42** .06 .02 −.08 .48** .49** .17 .29** .32** .33** .25* .06

Notes: N = 96 for all variables.

*p < 0.05, **p < 0.01.

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 497

Human Resource Management DOI: 10.1002/hrm

dependence. Using the SNA package (Butts,

2010) for R software, the effects of both cohe-

sion and structural equivalence are included

in the same equation for each type of net-

work (i.e., advice and friendship), yielding

two network autoregressive coefficients: one

for social influence via cohesion (ρc) and the

other for social influence via structural equiv-

alence (ρse). To estimate these models, all W

weight matrices were row-standardized by

dividing each element in a row by the cor-

responding row sum. In the case of binary

matrices (i.e., cohesion), this means that each

outgoing tie exerts the same influence on

the focal individual, and the total influence

accepted is equal for all individuals. Table II

presents the correlations between all relevant

W matrices.

Results

Beginning with network indices for advice

ties, Table III presents the regression analyses

for all competitive and noncompetitive con-

tract terms. Cohesion and structural equiva-

lence are included in the same equations.

Overall, results support H1 that the social

status position that each employee holds is

positively related to her or his psychological

contract beliefs involving competitive re-

sources. In particular, advice status was related

to employee beliefs regarding the employer’s

promised support for performance (B = 1.953,

p < .001), career advancement (B = 1.451,

p < .001), and involvement opportunities

(B = 1.419, p < .01), even after controlling for

formal position and local ties (cohesion or

structural equivalence). Faculty member pres-

tige was positively related to beliefs regarding

performance support (B = 0.096, p < .01),

whereas rank or formal position in the tenure

system was positively related to beliefs regard-

ing involvement opportunities (B = 0.258,

p < .05). Neither cohesion nor structural

equivalence predicted contract beliefs regard-

ing performance support or involvement op-

portunities. However, in the case of career ad-

vancement, we found an effect of structural

equivalence in advice ties (ρ = 0.510, p < .01).

In other words, having comparable access to

other faculty advisors leads employees to hold

similar beliefs regarding the extent of the em-

ployer’s commitment to provide them sup-

port for career advancement.

Turning to contract beliefs involving

noncompetitive resources, our results par-

tially support H2a and H2b. Neither cohe-

sion nor structural equivalence in the advice

network related to contract terms regarding

job security and stable benefits or concern for

employees. Cohesion in advice ties, however,

was related to employee beliefs regarding pre-

dictability about the future direction of the

employment relationship (ρ = 0.344, p < .05).

In other words, faculty tended to hold beliefs

regarding predictability similar to their advice

givers. Advice status position also related to

predictability beliefs (B = 0.936, p < .05), sug-

gesting that high-status faculty members in

the advice network (those who are sought

out for help or advice) develop more positive

beliefs regarding the certainty of their future

job demands and commitments. Lastly, fac-

ulty rank was positively related to predictabil-

ity (B = 0.265, p < .05), a plausible finding

given the stable employment characteristic of

higher levels in the academia.

Given the correlation between cohesion

and structural equivalence in the advice net-

work (r = .42, p < .001; see Table II), results

also were substantiated when cohesion and

structural equivalence were analyzed sepa-

rately. In all cases, results (not shown here)

confirm the patterns of social influence pre-

sented in Table III. In particular, in the case of

career advancement, we confirmed the influ-

ence exerted by structural equivalents in the

TABLE II QAP Correlations Among Social

Networks

Variable 1 2 3

1. Advice Cohesion

2. Advice Structural

Equivalence

.42*

3. Friendship Cohesion .35* .29*

4. Friendship Struc-

tural Equivalence

.24* .23* .35*

Notes: N = 96 rows × 96 columns.

*p < 0.01.

498 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

TABLE III ML Estimation of Network Autocorrelation Models for the Effects of Advice Ties on Psychological Contracts

Outcomes Contract Terms Relating to Competitive Resources Contract Terms Relating to Noncompetitive Resources

Predictors

Support for

Performance

Career

Advancement

Involvement

Opportunities

Security and

Stable Beneﬁ ts

Concern for

Employees

Predictability

Regarding Future

Controls: Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE

Constant 2.921*** 0.472 2.371*** 0.560 1.677*** 0.491 1.336** 0.464 2.865*** 0.569 1.133* 0.546

Gender (Male) 0.157 0.208 0.198 0.167 −0.079 0.185 0.065 0.184 0.064 0.186 −0.074 0.166

Organizational Tenure −0.014 0.019 −0.010 0.014 0.003 0.017 0.013 0.017 0.024 0.018 −0.028 0.016

Educational Level (PhD) 0.162 0.221 −0.075 0.157 0.375 0.212 –0.071 0.207 −0.242 0.200 0.190 0.193

Prestige 0.096** 0.032 −0.008 0.026 0.001 0.029 0.028 0.031 0.029 0.030 0.017 0.027

Formal Position:

Academic Department 2 −0.227 0.257 −0.159 0.251 −0.248 0.211 −0.103 0.220 −0.826** 0.264 0.165 0.199

Academic Department 3 −0.122 0.254 0.049 0.244 −0.326 0.218 0.016 0.215 −0.356 0.235 0.001 0.197

Rank −0.196 0.138 0.134 0.105 0.258* 0.129 0.124 0.127 −0.067 0.125 0.265* 0.116

Informal Network Position:

Advice Status 1.953*** 0.520 1.451*** 0.434 1.419** 0.487 0.671 0.468 0.116 0.479 0.936* 0.428

Social Inﬂ uence—Rho (ρ):

Advice Cohesion (ρc)−0.144 0.131 0.081 0.150 0.064 0.146 0.264 0.137 0.165 0.140 0.344* 0.152

Advice Structural Equiva-

lence (ρse)0.015 0.211 0.510** 0.160 −0.276 0.283 −0.147 0.242 0.035 0.218 −0.208 0.249

R-Square 0.336 0.293 0.426 0.247 0.205 0.358

df 85 85 85 85 85 85

Notes: *p < 0.05, **p < 0.01, ***p < 0.001.

Unstandardized coefﬁ cients.

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 499

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The effects of

friendship occurred

via both cohesion

and structural

equivalence,

although cohesion

dominated structural

equivalence in its

influence on beliefs

regarding concern

for employees.

advice network (ρ = 0.521, p < .001, when

cohesion was excluded from the model), and

in the case of predictability we confirmed

the influence exerted by cohesive advisors

(ρ = 0.278, p < .05, when structural equiva-

lence was excluded). No other network effects

emerged from this analysis.

Turning to the friendship network, Table

IV presents the regression analyses for all

competitive and noncompetitive contract

terms. Unlike findings for advice ties, no rela-

tionship was found between friendship status

position and employee psychological contract

beliefs. Yet, social influence via friendship

ties relates to noncompetitive contract terms.

Both cohesion and structural equivalence

were strongly related to beliefs regarding job

security and stable benefits obligations, even

after controlling for formal and informal posi-

tion in the friendship network (ρ = 0.319, p <

.01 for cohesion, and ρ = 0.418, p < .01 for

structural equivalence). Results suggest that

for obligations regarding security and stable

benefits, faculty tend to hold beliefs similar

to those of both their close friends and struc-

tural equivalents in the friendship network.

Likewise, cohesion in the friendship network

was related to beliefs regarding the employer’s

concern for employees (ρ = 0.397, p < .01).

Neither cohesion nor structural equivalence

related to beliefs regarding predictability.

Given the correlation between cohesion

and structural equivalence in the friendship

network (r = .35, p < .001; see Table II), results

for cohesion and structural equivalence also

were examined separately. In all cases, results

(not shown here) confirm the patterns of

social influence presented in Table IV. For

security and stable benefits, we confirmed

the effect of friendship cohesion (ρ = 0.436,

p < .001, when structural equivalence was

excluded from the regression equation) and

the effect of structural equivalence (ρ = 0.528,

p < .001, when cohesion was excluded). In

the case of concern for employees, we con-

firmed the effect of friendship cohesion (ρ =

0.400, p < .001, when structural equivalence

was excluded). However, in this case, we also

found an effect of structural equivalence in

the friendship network (ρ = 0.340, p < .01,

when cohesion was excluded), revealing a

confounding effect between cohesion (direct

friends) and structural equivalence (similar

friends in common) in the friendship net-

work. This finding suggests that a dense

friendship network exists among faculty in

this setting, making it tough to tease apart

that network’s dyadic-level effects.

Overall, our results suggest that the effects

of informal social networks on psychologi-

cal contract beliefs depend upon the type of

network tie or relationship. Status position in

the advice network influenced psychologi-

cal contract beliefs while friendship network

status position did not, supporting H3. This

pattern was evident for all contract terms

involving competitive resources. Because

the Bonacich’s measure allows for

different relationships between

power or status and centrality, we

conducted follow-up examina-

tions setting different values of β

(i.e., the parameter representing

the extent to which an individu-

al’s social status depends on that

of others with whom he or she is

connected). In results not shown

here, we confirmed that estimates

for both advice and friendship

status were stable and consistent

along an ample range of mean-

ingful β values (0.5 ≤ β ≤ 1). In

contrast, influence via local ties

was observed in the friendship

network, particularly for contract

terms involving noncompetitive

resources. The effects of friend-

ship occurred via both cohesion

and structural equivalence, although cohe-

sion dominated structural equivalence in its

influence on beliefs regarding concern for

employees (see Table IV). Advice ties also

demonstrated some effects on specific con-

tract beliefs (i.e., cohesion on predictability

and structural equivalence on career advance-

ment); nonetheless, friendship ties had more

consistent overall effects.

Discussion

In large measure, our hypotheses are

supported, demonstrating the impact of an

500 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

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TABLE IV ML Estimation of Network Autocorrelation Models for the Effects of Friendship Ties on Psychological Contracts

Outcomes Contract Terms Relating to Competitive Resources Contract Terms Relating to Noncompetitive Resources

Predictors

Support for

Performance

Career

Advancement

Involvement

Opportunities

Security and

Stable Beneﬁ ts

Concern for

Employees

Predictability

Regarding Future

Controls: Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE

Constant 2.458*** 0.454 2.105*** 0.441 2.076*** 0.384 1.604*** 0.442 2.027*** 0.533 1.766*** 0.475

Gender (Male) 0.454* 0.199 0.313 0.180 0.050 0.201 0.117 0.172 0.011 0.168 0.000 0.180

Organizational Tenure –0.018 0.020 –0.016 0.016 0.006 0.019 0.001 0.015 0.025 0.016 –0.030 0.017

Educational Level (PhD) 0.119 0.243 –0.001 0.195 0.334 0.228 0.031 0.176 –0.336 0.188 0.132 0.199

Prestige 0.130*** 0.032 –0.012 0.028 0.009 0.033 –0.011 0.027 0.038 0.026 0.038 0.028

Formal Position:

Academic Department 2 –0.175 0.236 –0.338 0.226 –0.303 0.263 –0.198 0.249 –0.678** 0.220 0.055 0.230

Academic Department 3 –0.181 0.230 0.090 0.229 –0.417 0.257 –0.242 0.247 –0.335 0.207 –0.088 0.232

Rank –0.106 0.140 0.333** 0.114 0.416** 0.129 0.185 0.106 –0.077 0.114 0.365** 0.119

Informal Network Position:

Friendship Status 0.704 0.428 0.228 0.386 0.461 0.439 0.327 0.374 0.340 0.451 0.398 0.395

Social Inﬂ uence—Rho (ρ):

Friendship Cohesion (ρc)–0.085 0.116 0.146 0.116 –0.143 0.102 0.319** 0.122 0.397** 0.124 0.120 0.140

Friendship Structural

Equivalence (ρse)–0.338 0.204 0.064 0.196 0.104 0.187 0.418** 0.153 0.009 0.256 0.063 0.219

R-Square 0.301 0.261 0.367 0.137 0.227 0.308

df 85 85 85 85 85 85

Notes: *p < 0.05, **p < 0.01, ***p < 0.001.

Unstandardized coefﬁ cients.

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 501

Human Resource Management DOI: 10.1002/hrm

The fact that the

effects of social

status were found

in the advice but

not in the friendship

network supports

the idea that advice

ties are critical

for instrumental

action as individuals

mobilize their

influence to realize

their goals.

organization’s informal networks on psycho-

logical contract beliefs. These effects operate

simultaneously at the organizational level

through the employee’s social status position

and at the dyadic level through the influence

exerted by the local ties with socially proxi-

mate colleagues. Both shape employee beliefs

regarding the extent of the employer’s com-

mitments, although the specific effects de-

pend on the contract term and network rela-

tionship involved. Whereas causal direction

is not directly tested, the pattern of results is

consistent with theory specifying the infor-

mal social structure as a source of influence

on the psychological contract beliefs and not

the reverse. For the reverse to be true, similar

beliefs would need to lead to specific ties and

in one network and not the other.

Individuals differing in their advice status

position hold distinct views of the extent of the

employer’s commitment, but only for contract

terms involving competitive resources such

as performance support and career advance-

ment. Despite high-status faculty being well

positioned to obtain information from HR

and senior colleagues regarding contract terms

that involve both competitive and noncom-

petitive resources, their privileged position in

the organizational advice network is related

only to competitive resources. Were it a sense

of entitlement that led people to seek powerful

or high-status positions, their levels of all psy-

chological contract beliefs should be elevated.

Since high-status individuals do not manifest

across-the-board entitlement, their belief in

access to competitive resources is therefore

likely due to their informal network position.

Individuals in high-status positions are bet-

ter able to fill requests for others, to contrib-

ute more effectively, and otherwise engage in

actions that engender beliefs that the employer

is obligated to recognize and reciprocate these

efforts (cf. Flynn, 2003; Rousseau, 2005). This

pattern of results suggests that status position

in the advice network is a cause rather than a

consequence of specific contract beliefs.

The fact that the effects of social status were

found in the advice but not in the friendship

network supports the idea that advice ties are

critical for instrumental action as individuals

mobilize their influence to realize their goals

(Ibarra & Andrews, 1993). It also supports a

resource-based view of social status where

individuals with privileged informal posi-

tions enjoy better opportunities, and there-

fore develop more positive beliefs about their

employment terms. Status differentials often

coincide with a person’s formal position in the

organizational hierarchy. In this study, faculty

rank was positively related to beliefs regarding

organizational involvement—that is, faculty

with superior formal positions held stronger

beliefs of the employer’s commitment to pro-

viding better opportunities to participate in

key decisions. Both the organization’s formal

and informal structure influence psychologi-

cal contract beliefs but do so independently.

Friendship ties characterized

by frequent contact and emo-

tional closeness influence beliefs

pertinent to contract terms involv-

ing noncompetitive resources.

Notably, the effects occur both

directly through close friends

and indirectly via friendship ties

with similar others. This pattern

is likely to reflect the overlap-

ping effects of cohesion and struc-

tural equivalence (Burt, 1987).

When friendship ties are embed-

ded within cohesive subgroups

such as coworkers in the same

department or ethnicity, direct

ties are also likely among struc-

turally equivalent individuals.

Comparable results for cohesion

and structural equivalence in the

friendship network are consistent

with past research and suggest

that social influence via structural

equivalence occurs by means of

the solidarity and identification

common among similar people in

the same organization with the same friends

(e.g., Marsden & Friedkin, 1994; Shah, 1998).

Social influence via advice ties had less

effect than did influence via friendship ties.

Still effects were observed on one competitive

(career advancement) and one noncompeti-

tive contract term (predictability regarding

future). Individuals tied to similar advisors

shared beliefs regarding support for career

502 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

In organizations

where employees

represent diverse

backgrounds and

job categories, the

impact of social

status and local ties

on psychological

contract beliefs

could be limited to

those doing similar

work.

advancement (a competitive term). One plau-

sible explanation for this finding is that advi-

sors were instrumental for getting access to

career opportunities, and thus, faculty mem-

bers with the same advisors reported similar

beliefs. This situation might be particularly

likely in organizations like this university

where the dominant HR strategy was to

develop its own personnel (typically hired at

entry levels) by supporting their formal educa-

tion (e.g., pursuing a doctoral degree). Advice

ties, which typically reflect asymmetries in

rank or status, are likely to include junior fac-

ulty going to senior colleagues for guidance

regarding scholarly advancement and devel-

opment. Thus, in the case of the advice net-

work, similarity in beliefs can reflect shared

experiences among structurally equivalent

employees who rely upon the same advisors

to help them figure out the treatment each

can expect from the employer.

A similar pattern is observed re garding

predictability in the employment relation-

ship. Although we treated predictability as

a noncompetitive term, per the

organization’s emphasis on devel-

oping people, the fact is that both

formal rank and advice status posi-

tion were also related to it. The

effects of these instrumental influ-

ences on predictability suggest

that this contract term is viewed

as a scarce, competitive resource in

this university setting. Where the

HR strategy is to “make” employ-

ees by bringing them in at lower

levels and developing them over

time, employees must acquire an

array of knowledge, skills, and

accomplishments to advance

in their careers. In such circum-

stances, an explicit, transparent

career path system might be diffi-

cult to sustain without the support

of informal networks. A level play-

ing field for such opportunities is

also unlikely where senior faculty

channel developmental resources

to their advisees. Those with influential advi-

sors are likely to fare far better in both their

development and their confidence in their

future with the organization than those who

don’t.

Strengths and Limitations

This study overcomes several limitations of pre-

vious research. It demonstrates the advantages

of using the network autocorrelation model for

directly testing social influence (Leenders,

2002), which allows a simultaneous examina-

tion of network processes that occur at two lev-

els of analysis: dyadic and organizational. The

use of this methodology also allowed for an in-

vestigation of the effects of different influence

mechanisms among socially proximate em-

ployees (cohesion and structural equivalence)

controlling for potential confounding effects.

Another methodological strength is the con-

sistency assessment about the effects of social

status position, using alternative weights for

the Bonacich’s power-based centrality measure

to test for the sensitivity of this form of influ-

ence to a person’s ties to powerful or high-

status others.

One potential limitation is generalizabil-

ity in that the university setting studied here

may have provided an optimal environment

to observe the effects of informal organiza-

tional networks on the employment relation-

ship. Not only did faculty members do similar

work, but they also play a very active role

in their school’s governance and in select-

ing new colleagues, giving them manage-

rial responsibilities that can lead them to act

as the organization’s agents. Such an active

involvement is characteristic of professional

organizations but may be less common else-

where. In hierarchical organizations, direct

supervisors might be much more influential

than informal ties in shaping work-related

beliefs. Moreover, faculty members tend to

do similar work and can expect roughly com-

parable relationships with their employer.

Employees elsewhere might not be able to

infer that their coworkers are party to a com-

parable psychological contract. Differences in

background and job function are known to

reduce social comparison (Goodman, 1977).

In organizations where employees repre-

sent diverse backgrounds and job categories,

the impact of social status and local ties on

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 503

Human Resource Management DOI: 10.1002/hrm

psychological contract beliefs could be lim-

ited to those doing similar work.

Other limitations exist as well. The study

used Spanish translations from survey mea-

sures developed in the United States. Although

the scales’ validity and reliability are confirmed

in other regions and different languages (e.g.,

Hui, Lee, & Rousseau, 2004; Rousseau, 2000),

response patterns may differ. In addition, the

sociometric questionnaires assessed intra-orga-

nizational ties only, whereas social interaction

with outsiders remained unexamined. Future

research should investigate the circumstances

under which external ties are likely to play a

role in shaping psychological contracts (e.g.,

external board members, contractors work-

ing in client firms). Likewise, we assessed the

link between social status position and specific

psychological contract beliefs, whereas the

employee’s own perceptions of his or her own

status remained unmeasured. Future research

should examine the intervening role of indi-

vidual cognitions in how network position

relates to psychological contracts. Finally, as

noted earlier, selection effects can also occur

where people seek out ties with others shar-

ing their own beliefs. Although the pattern of

results is consistent with theory specifying the

informal social network as a factor shaping the

psychological contract, an assessment of causal

direction would require longitudinal data.

Implications for Theory and Research

The present study provides evidence regard-

ing two fundamental issues: the antecedents

of psychological contract beliefs and the fac-

tors shaping agreement among workers re-

garding these beliefs. Moreover, by offering

evidence of multiple forms of social influ-

ence, this study affirms seldom-tested as-

sumptions in psychological contract theory

regarding social cues.

Now research is needed on the boundary

conditions affecting the actual use of infor-

mation from social contacts in understand-

ing psychological contract beliefs. Because it

is reasonable for one faculty member to infer

that colleagues in the same faculty are party

to a comparable psychological contract, social

information regarding the employment terms

should be personally relevant. In contrast,

where coworkers are not expected to share

the same relationship with the employer, the

impact of social information on one’s psycho-

logical contract beliefs may be less likely. We

suggest that a key consideration is whether indi-

viduals believe that coworkers are party to the

same contract. The basis of individual beliefs

in commonality among contracts is impor-

tant not only to understanding the formation

of the psychological contract but to broader

issues of organizational justice (Roberson &

Colquitt, 2005) and effective implementation

of HR practices (Rousseau, 1995).

Resource type impacted how network

influence shaped psychological contract

beliefs; yet, more research is needed regard-

ing the mechanisms behind this influence.

Although close friends and structural equiv-

alents in friendship ties tended to agree on

beliefs regarding noncompetitive terms, we

do not know how this agreement arises in the

first place. Two friends might have spoken

about these exchange terms and arrived at a

common point of view, might have become

friends because they think similarly, or might

have observed each other accessing the same

noncompetitive resources and concluded that

they were each entitled to the same. Any and

all of these conditions can give rise to per-

ceptual agreement based on social proximity.

Teasing out these effects necessitates use of

in-depth interviews and longitudinal studies.

Social influence can create agreement

among workers that aids in the formation

of mutuality in understandings between

workers and their employer. Shared infor-

mation is critical to mutuality (Rousseau,

2001). Employers who communicate in a

fashion that promotes shared information

among workers (e.g., by conveying the con-

ditions of employment in a public setting

such as a town meeting) are likely to create

employee–employer mutuality. Mutuality is

an important feature of the employment rela-

tionship because it affects the outcomes both

worker and employer get from their exchange

(Dabos & Rousseau, 2004). More research is

needed on the kinds of information and ways

of communicating employers and employees

express that can lead to mutuality.

504 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

Our results offer

new insights into

why workers in

comparable jobs

can hold different

psychological

contracts. In

particular, an

individual’s

status position

in the informal

organization may

itself be a contract-

making signal.

Our results offer new insights into why

workers in comparable jobs can hold differ-

ent psychological contracts. In particular, an

individual’s status position in the informal

organization may itself be a contract-making

signal. High-status individuals tend to view

their employer as more obligated to provide

them competitively allocated resources than

do their low-status colleagues. Power or sta-

tus differences shape both the content and

direction of information flow and play a role

in creating different psychological contracts

among employees. When an individual’s psy-

chological contract combines terms coworkers

share with those idiosyncratic to that person

(Rousseau, 2005), we would expect network

influences to operate differently in

shaping beliefs about shared and

idiosyncratic terms. It is worth

noting that those social network

processes that reinforce mutuality

for shared terms may also foster

comparisons that erode agreement

where idiosyncratic terms exist.

Implications for Practice

Our findings inform practice in

three areas: in creating HR prac-

tices that are supported by the in-

formal social networks; effective

communication regarding re-

wards, compensation, and bene-

fits; and appropriate recognition

of contributions individuals make

to the organization.

Creating HR Practices With

Support of the Social Networks

Informal networks can exert

considerable influence on how

employees understand the orga-

nization and its HR broad policies and prac-

tices. Coworkers tend to be more accessible

to help employees figure things out than are

immediate bosses or senior management.

Note, however, that coworkers, in contrast to

managers, often provide more negative views

of the employer (Ho & Levesque, 2005).

Thus, if employees obtain information from

friends because more formal sources are not

available, the friendship network can work

against worker understanding of the employ-

er’s intent or interests. More immediate ties

are likely to best serve as supplements rather

than substitutes for direct information from

the employer. Thus, employers need to take

special care not to abdicate the role of infor-

mation provider to the informal networks.

Figuring out how best to work with

the informal networks involves attention

to mutuality. Mutuality is a quality of the

employment relationship to which both

employer and employee should aspire.

Achieving it improves the likely outcomes for

both worker and employer, including career

success and productivity (Dabos & Rousseau,

2004). Typical advice for attaining mutuality

is to avoid mixed signals by aligning super-

visory communiqués with the firm’s HR

practices. We suggest that social influence

also can contribute to creating mutuality.

Employers are advised to use multiple chan-

nels to convey explicit information regard-

ing HR policies and practices, increasing

the odds that coworkers will share the same

facts and understandings (reinforced through

their interactions with each other). Actively

pursuing mutuality means developing com-

munication plans that target all members of

a unit to which a policy applies. Such means

include public forums, preferably face-to-

face, where questions and answers can be

addressed, published FAQs on websites and

company documents, and broader efforts at

both redundancy and consistency. All indi-

viduals will not be available all the time to

attend such meetings. Many do not consis-

tently read or pay attention to printed mate-

rial. Thus, the use of multiple channels to

send redundant information is imperative if

achieving mutuality is taken seriously. On the

other hand, both worker and employer often

presume agreement, without directly testing

or confirming it. We advise periodic tests for

shared understanding via conversations with

employees and workplace surveys testing for

employee knowledge as well as beliefs about

policy.

PSYCHOLOGICAL CONTRACTS AND INFORMAL NETWORKS IN ORGANIZATIONS 505

Human Resource Management DOI: 10.1002/hrm

Changes in

practices regarding

competitive

resources must

make sense to and

be understood

by respected

employees to whom

others are likely

to go for help or

advice.

Rewards, Compensation, and Beneﬁ ts

The ways in which employers allocate com-

pensation, benefits, and other rewards have

direct implications for the kinds of network

mechanisms to incorporate into policy com-

munication plans. Given the connection be-

tween advice status position and contract

terms regarding competitive rewards, we sug-

gest that employers take special pains to ex-

plain why certain rewards are available only

to a few and the kinds of contributions that

warrant such rewards. Following up emails or

fact sheets with face-to-face gatherings where

people hear what top management has to say

and get answers to their questions increases

the odds that people (including the cowork-

ers individuals will go to for information) all

get the same message. Since respected or

high-status advisors appear to be more credi-

ble in providing information about career ad-

vancement, involvement opportunities, and

other competitively allocated rewards, it is

important not to limit only to those eligible

or likely to participate. Senior managers

should consider ways to involve opinion

leaders in the rollout of competitive reward

programs such as new development activities,

even when those opinion leaders themselves

may not be eligible due to their already high

rank. Changes in practices regarding compet-

itive resources must make sense to and be un-

derstood by respected employees to whom

others are likely to go for help or advice.

Appropriate Recognition

We find that employees who act as go-to peo-

ple, providing colleagues with advice, tend to

believe the organization should recognize

them for these special efforts. This finding is

consistent with findings that both workers

and managers tend to believe that the em-

ployer should recognize and reciprocate ex-

tra-role activities (Bock, Zmud, Kim, & Lee,

2005; MacKenzie, Podsakoff, & Fetter, 1993).

Care should thus be taken to recognize and

reward workers who are sought after for ad-

vice, share knowledge with others, provide

them support, or otherwise aid their

development.

A final comment is needed regarding

whether the informal networks and social cues

can (or cannot) be managed or, at least, influ-

enced by the organization’s agents. Managers

often believe there is not much they can do

about informal organizational networks.

They are inclined to view networks as attrib-

utable to common interests, personal affin-

ity, and similar personalities (Cross, Nohria,

& Parker, 2002). But this is only part of the

story. Social networks can also arise from the

organizational context itself, particularly by

the firm’s managerial and HR practices. In

professional organizations, such as the one

studied here, network ties can be expanded

through increasing opportunities to serve on

key strategic committees. By doing

so, top management can help

establish new social ties among

committee members from differ-

ent departments or increase the

status of the new appointees who

would be in a position to provide

critical information and advice to

others. Individuals in high-status

positions can also be supported to

play an active role as agent con-

veying expectations on behalf of

the employer. When high-status

individuals hold opinions in line

with managerial and HR prac-

tices (e.g., based on their involve-

ment in decision making or on

the political support they accrue),

they can help the employer com-

municate more consistent expec-

tations and beliefs. Creating the

time and space for building new social ties

or work-related interactions can also be espe-

cially important for hierarchical firms or

any setting where departmental boundaries

impair effective communication.

Conclusion

This study indicates ways in which workers

are likely to use the informal social networks

in making sense of the terms of their psycho-

logical contract. It also speaks to the critical

role that social interaction patterns play in

shaping employee understandings of HR

506 HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2013

Human Resource Management DOI: 10.1002/hrm

practices and policies, particularly regarding

rewards and benefits allocated to all employ-

ees or only some.

Acknowledgments

We are grateful to Guest Editors Robert Kaše,

Zella King, and Dana Minbaeva and the three

anonymous reviewers for their insightful feed-

back. We also thank David Krackhardt, Violet

Ho, and María del Carmen Romero for their

contributions. An H. J. Heinz II Research Chair

and a Grant—PAE-PICT 02338-2007—from the

National Research Agency of Argentina

(ANPCYT) partially supported this research.

Note

1. The Bonacich’s power-based centrality measure

also allows for negative β values. In cases where

β < 0, the social status of a given individual would

be negatively affected by his or her connections to

powerful or high-status others, such that those

connections would detract (rather than increase)

that individual’s social status in the network.

GUILLERMO E. DABOS holds a PhD in groups, organizational effectiveness, and tech-

nology from Carnegie Mellon. He is a professor of organizational behavior with a dual

afﬁ liation at UNICEN Business School and Universidad de San Andrés in Argentina. He

serves as secretary of science and technology at UNICEN Business School, coordinating

research initiatives at the institutional level. His research focuses on the changing em-

ployment relationship, career trajectories, and social networks in knowledge-intensive

organizations. His work has been funded by several research agencies and appears in

top management journals in Iberoamerica and worldwide. Major recognitions include a

Fulbright Scholarship and Best Paper Awards at the Academy of Management (2004) and

the ICSB Mercosur (2011) meetings.

DENISE M. ROUSSEAU is H. J. Heinz II University Professor of Organizational Behavior

and Public Policy at Carnegie Mellon. She has served as editor-in-chief of the Journal of

Organizational Behavior and president of the Academy of Management. Her research ad-

dresses organizational change, employee–employer relations, and worker inﬂ uence on

organizational practices. Two-time winner of the Academy of Management’s Terry Book

Award, with other recognitions in education, human resource management, and health care,

Rousseau is director of the Project on Evidence-Based Organizational Practices and an elected

fellow in the Academy of Management, the British Academy of Management, the American

Psychological Association, and the Society for Industrial/Organizational Psychology.

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Philippa Pattison

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The research objective was to examine the relative impact of “organizational citizenship behaviors” (OCBs) and objective sales productivity on sales managers’ evaluations of the performance of their sales personnel. Objective measures of sales productivity were obtained for three diverse sales samples: (1) 261 multiline insurance agents, (2) 204 petrochemical sales representatives, and (3) 108 district sales managers working for a large pharmaceutical company. Managerial evaluations of organizational citizenship behavior and overall performance were also obtained for each of these people. The results indicate that (1) managers do recognize several different dimensions of “citizenship” behavior, and these OCBs are distinct from objective sales productivity, (2) the combination of OCBs and objective sales productivity accounts for substantially more variance in managers’ overall evaluations than typically is accounted for by sales productivity alone, and (3) the OCBs (taken as a group) consistently account for a larger portion of the variance in managerial evaluations than does sales productivity. The implications of these findings for salesforce motivation and evaluation are discussed.

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