Incomplete Contracts and Employee Opportunism: How Machiavellianism Moderates the Effects of Impacting an Uncompensated Objective

Abstract

Employees could respond to impacting a valued, but uncompensated, organizational objective by behaving more or less opportunistically, depending on whether stewardship or justice theory is at play. Stewardship theory implies employees will be less opportunistic due to feeling more psychological ownership over the firm, whereas justice theory implies more opportunism due to feeling unfairly treated. In an experiment with Mechanical Turk participants, we predict and find lower Machiavellians are less opportunistic (on a subsequent budgeting task) when impacting an uncompensated objective, due to elevated psychological ownership. Also as predicted, higher Machiavellians feel less fairly treated when impacting the objective; however, they do not behave more opportunistically. Instead, they are highly opportunistic both when impacting and not impacting the objective. Collectively, our findings suggest that less complete contracts create stewardship benefits for lower Machiavellian employees that translate to less opportunistic behavior, but create a heightened sense of injustice for higher Machiavellians.