Creating psychological contracts in family firms: The role of family membership at organisational entry

Abstract

This conceptual paper develops a process model of psychological contract formation for family and non-family employees, addressing calls for more dynamic and context-sensitive approaches to understanding employment relationships in family firms. Although the construct of the psychological contract has been widely drawn upon by scholars to examine employment relationships in myriad work contexts, little is known about how these contracts are formed in family-owned firms. Drawing on organisational socialisation and social exchange research, we propose a dual-pathway process model of psychological contract formation that distinguishes how family and non-family employees create psychological contracts during the pre-entry and post-entry stages of socialisation. Consequently, we illustrate the nature of these differences by focusing on the unique architecture of their respective psychological contracts, namely six specific underlying properties or features: tangibility, scope, stability, time frame, exchange symmetry, and contract level. By theorising the mechanisms through which employment expectations are constructed in family firms, this paper advances a psychological contract perspective on family and non-family exchange relationships in family firms.